BLP Governance and Neds Trevor Rees Neil Thomas Oct 2010

HEALTHCARE Governance: the role of the NED during change Trevor Rees / Neil Thomas 28 October 2010

AUDIT Content

 The changing environment  Risk management  Dealing with transactions  NED/Board Behaviour, seeking feedback  Different organisation forms, different responsibilities  Managing the audit committee agenda

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Department of Health

Arms Length Bodies Likely to be 10-15, including regulators, and Health Protection Agency, etc Independent NHS Department for Public Board Health

Support services: • PCTs • Private companies • GP networks • Other

GP consortia x 500 (Minimum list size: 150,000)

Organisation Profession Regulators, Regulators Community Services Colleges and Trade Acute Trusts / FTs Mental Health Trusts CQC / Monitor / Super (Any Willing Provider) Bodies regulator BMA, GMC, RCN etc

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© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 3 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Risk management Getting the basics right

Board Risk Profile Business Objectives High level risk description

1 Outcome of the reform program is not aligned with 6 Strategy

2 Communication (Name) fails to establish its brand and credibility in the

Skills and capabilities are insufficient to effectively 3 Operational strategy 9 2 1 4 Assessment Risk description

5 Compliance Risk description

6 Strategy Risk description Likelihood 3 10 8 7 5 4 7 Compliance Risk description

8 Compliance Risk description 11 9 Strategy Risk description

10 Operational Risk description Impact

11 Operational Risk description

Residual risk (assessed after ‘Existing Controls’)

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1. Risk Description

Cause 1

For each high level risk Cause 2 description a number of risk Cause 3 causes can be identified. Cause 4 Understanding risk causes is important in putting the risk into context and providing

Management and Board with 1. Risk Description enough information to address Cause 1 the risk in more manageable Cause 2 Cause 3

activities. Cause 4

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What the analysis currently shows: Communicati Compliance Assessment Strategy Operations TOTAL ons Number of • Concentration areas of risk risk • Regulation & Compliance Business causes 1 2 5 2 1 10 Environment • Operations & Resources

Management • Strategy & Business 1 1 culture environment 6+ Core • Communications & business 2 2 1 5 Stakeholders. process 3-6 • The business objectives which are most at risk (defined as those Technology 1 1 3 5 with the most underlying causes) 1-3 • Compliance Management 3 2 6 information • Operations • Communications Resources 2 1 3 1 9 16 • The categories that are high risk • Business Environment Regulation 7 3 1 2 13 • Resources Stakeholders/ • Regulation 2 4 1 7 Relationships • Areas that may not have been Physical fully considered 5 5 disaster • Management culture (category) TOTAL 19 6 9 14 20 68 • Assessment (Business objective)

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Controllability by business objective Communication Assessment

1 Overall risk controllability Overall controllability of underlying causes 2 2 9 Compliance 4 7

1 20 39

11 Strategy Operations

Uncontrollable Partially controllable Controllable

3 4

3 13 4 Please note: Figures show the number of underlying causes

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© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 8 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Dealing with transactions Where to cooperate and to think competitively

Competitive Strategies Co-operative Strategies

Enable alliances between providers of • Consolidate number of providers • different services • Pool volume across PCTs

— “Upstream” or Management Relationship Supplier • Instigate performance measurement — “downstream” on the patient pathway • Aggregate services • Bundle care pathways Consolidate Vertical provision Alliance

• Enable alliances between providers of similar services • Introduce suppliers Strategic — For economies of scale • Unbundle services Diversify Horizontal Sourcing — Economies of scope • Negotiate quality provision Alliance improvement — Expanded geographical coverage

Choice and Joint Information Commissioning

• Enable choice (patients, GPs, • Enable alliances between commissioners to tertiary referral) — Create new or change existing markets • Provide comparative data and — Agree improvement or outcome targets benchmarks

Source: Originally produced with permission from NHS South Central © 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 9 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Dealing with transaction What are the different organisation forms for providers?

Types Description Pros Cons

Existing  Use of one of the existing  Less disruptive to establish.  Its management function will have to interface NHS trust NHS Trusts’ structures is a  Easier to scale activities and over time more between service provider teams and Trusts straightforward corporate may be converted to a separate entity. (service users) identity possibility.  Could also be used for a ‘centre of  The Trust has to manage operational risks excellence’ specialty.  Difficult to separate certain costs such as overheads  Typically an internal SLA will not have the punitive commercial penalties an outsourced contract would have

New NHS  In the past new entities have  Can have a more independent growth  Reduced cost saving opportunities as involves entity been set up as new Trusts or strategy with capacity to expand service new layer of management / governance (e.g. Special Special Health Authorities. offerings into new areas  Complex legal and regulatory hurdles to be Health Recently the Dept of Health  Possibility to establish a more understood during set up process. May prove Authority, has been reducing the independent relationship between the costly to establish etc) number of bodies it regulates Trusts and the new entity

Joint  Combine current pathology  The business model is designed around  Reduced influence and control Venture services activities with an the Trusts’ service requirements for a  Additional layer of consultation and contracting (private or external provider through a defined contractual period. costs competitive tendering NHS)  Spreads operational risks across two  Potential VAT impact subject to how the entity is process. entities. structured

© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 10 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Dealing with transaction What are the different organisation forms for providers?

Types Description Pros Cons

Social  In general terms social  Involve staff and service users in  Potential VAT impact subject to how the entity is enterprise enterprise refers to an designing the services they provide. structured organisation undertaking  Social enterprise benefits the whole  Still a new entity option in the healthcare market activities related to the community as well as the people who although variations of the charity form have been benefit of society and use their services as any surplus profits used already reinvesting the majority of its are re-invested into service profits into the business. developments. Examples are: - community interest companies limited by shares or guarantee, - cooperative societies; - charities and non- charitable companies limited by guarantee.

Limited  A corporation with  If a limited company does not perform  Considerably more corporate reporting Company shareholders whose liability well, its directors and shareholders have requirements than alternatives is limited by shares (Ltd). 'limited liability' in that their personal  Difficult to structure ownership given the complex Unlike sole proprietorships, assets cannot be touched. range of stakeholders across multiple sites personal assets are distinct  The company can form its own brand from company finances and commercial identity with greater commercial freedom.

© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 11 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Dealing with transaction What are the key issues for commissioners?

• How to build in stakeholders to current arrangements? • What will be done to continue to improve quality and patient experience? • What are the actual transition arrangements, to what? • Where will TUPE transfers take place? • What accounting officer responsibilities will be created? • How will business as usual be maintained? • How will public health responsibilities transfer and when? • What do the management cost savings actually mean? • Can governance arrangements remain robust? • What form will specialist commission take?

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Sponsor (bank) Duty of Care Underwrites issue

Long form report ABC plc Working capital report ABC plc Board of Directors Comfort letters Issues Provide funds prospectus Statutory declaration Investors Short form report

Reporting Accountants Comfort letter

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© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 14 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. NED/Board Behaviours, seeking feedback When did you last check your skill set?

Skills analysis for the Board

ED 1 + strong ED- most some NED 1+ strong NED- most some Strategic risk management     Financial strategic planning     Financial analysis/ awareness     Clinical awareness     Commercial focus     Strategy and structure     Legal awareness     Partnership working     Risk Management     Workforce planning and organisational     development Change management     Performance management     Estates/ asset management    

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Charity brand

© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 16 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Content

© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 17 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Different organisation forms, different responsibilities How to manage corporate structures?

• Dealing with stakeholder governance? • Understanding roles of sub-committees? • Working through reporting lines and information requirements. • Keeping costs under control. • Understanding protocols for co-operation.

© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 18 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Different organisation forms, different responsibilities How can you think about shared functions / merging back offices?

The transition to potential shared services involves consolidation across four dimensions in a logical way Multiple Multiple Systems Processes  Processes are standardised as they are moved into Shared Services  Process and system standardisation are Rationalise Define managed hand-in-hand Systems Processes  Use of accelerated solution design Move to One Common System Policies programmes to dramatically reduce timelines Move to One Common  Manual / local work arounds are kept at a Database Shared Processes minimum Services  Process owners exist on a total system basis One Location One Organisation per Process and process standardisation is in harmony Consolidate with system standardisation Within sites Separate from Understand Business Units  Process standardisation is facilitated by a current state single integrated systems solution  Locations are managed within a common performance framework Multiple Multiple Locations Organisations

© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 19 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. 1 Different organisation forms, different responsibilities Thinking about the example, your finance function

Performance Management

Fiscal Compliance

Transac- CAPEX tion Approval Processing Sounding Board to Others

© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 20 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Different organisation forms, different responsibilities Thinking about the example, your finance function

Residual Finance Centres of Excellence Finance Business Partner

Business Corporate Control Business Projects Governance Performance Treasury Tax Relation- Management ships

Developing CAPEX Risk the Finance Sounding Approval Management Investment Performance Function Costing Board to Appraisal Management Others

Business Corporate Cost Control Management Scorekeeper Decision Strategy Appraisal Development

Shared Services

Transaction Management Fiscal Statutory Processing Reporting Compliance Reporting

© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 21 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Content

 The changing environment  Risk Management  Dealing with transactions  NED/Board Behaviour, seeking feedback  Different organisation forms, different responsibilities  Managing the Board and Committee agenda

© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 22 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Managing the Board and Committee Agenda What does the board pack need to do?

Group Financial Summary Budget Targets Group Financial Summary Group Financial Summary Key Macro Assumptions Investor Expectations Current Financial Focus (cont.)

Sections Headline earnings Group Financial Summary Average Exchange Rates – per US$ Years Trend Group – Plan 2007 vs. Consensus 2007 2004 2005 2006 2007 2006 2007 2008 2009 Actual Actual Outlook Budget Trend 06 v 07 $m 2008 2009 Trend

14,930 14,779 18,248 17,958  -1.03% Turnover (exc. associates) 18,467 18,783  Canadian $ 1.00 1.60 1.50 1.30  Group Headline Earnings Movement Analysis – Outlook 2006 vs Budg 3,5001,200 50 50 636 2,480 2,014 2,119 2,502  9.3% Adjusted operating profit 2,600 2,700   3,3001,000 Status Budget Highlights Euro 0.83 0.87 0.88 .090 359   3,100800 (45) 16.6 13.6 11.6 13.9 10.27% Adjusted operating margin 14.1 14.4  Australian Dollar 0.68 0.65 0.62 0.60 $m (%) Headline earnings 168 2,900600 3293   26 2,710 2,191 2,468 2,996 7.07% EBITDA 3,200 3,350 1.71 1.64 1.70 1.75  121  Increase due mainly to Industrial Minerals (+$72m), Corporate (+$62 Pound Sterling 2,700400 15 2657 18.2 14.8 13.5 16.7  1.16% EBITDA Return (%) 17.3 17.8  on the back of increased prices and volumes, positive exchange gai Chilean. Peso 650 710 750 755  2,500200 2549 costs at the Corporate centre. 27.6 28.0 28.3 28.5  0.71% Adjusted effective tax rate (%) 28.6 28.7  0 Average market commodity prices  Plan PlatinumBU1 BU2Gold DiamondsBU3 CoalBU4 BaseBU5 M etals IndustrialBU6 PaperBU7 & FerrousBU8 Consensus Target 1,689 1,367 1,414 1,549  5.59% Headline earnings 1,600 1,650  Decreased headline earnings vs Plan 2006 are reported for Diamon 2007 Minerals Packaging M etals 2007 2007 Aluminium - $/oz 385 370 370 375  2,800 Trend $23m), and Coal (-$8m) mainly due to increased cash costs and the 13.4 11.7 11.9 12.2  2.52% ROCE 12.3 12.5  increases. 31 Divisional – Plan 2007 vs. Consensus 2007 353 56 Diamonds - $/oz 750 725 730 740  Financial review of TSR 2,600 238  The Group as a whole has been negatively(25) impacted by increased i Target 210 82 250 510 540 180 330 555  (70) (56) Palladium -$/oz 180 150 160 180  Consensus 216 178 266 666 882 135 355 595 1.8 1.64 1.63 1.66  1.84% EPS 1.71 1.74  2,400 in Australia at 5%, and prices (-$99m), forecast to be lower at Coppe Rhodium - $/oz 550 520 530 550  1,200 (8,363) (7,765) (6,714) (5,049)  -24.8% Net Debt (5,000) (4,500)  (99) 2,549 Issues for 1,000 2,200 2,414 (293) Copper – cents/lb 94 96 94 90  Gearing HEADLINE EARNINGS GAP +$68m operations and impact 800 359 2,000 Zinc – cents/lb 44 46 48 50  $m (359) (320) (282) (212)  -24.8% Interest charge (210) (189)  600 50 CategoryOutlook Price AnalysisExch ($m)Inflation Vol Controllable Semi- Interest DBI Structural Budget 168 2006 costs controllable & Other Ferro - vanadium 17 14 14 12  400 523 Interest cover costs 498 50 15 26 45 545 discussion 200 Iron Ore - lumpy 28 27 28 29  305 1,786 1,810 1,790 1,715  4.19% Free cash flow 1750 1775  121 240 180 201 on patient outcomes / 0 57 3,608 4,388 3,908 2,873  -26.48% Capex – Total 3,000 3,000  2,600 Iron Ore - Fine 22 22 21 22  PlatinumBU1 GoldBU2 DiamondsBU3 BU4Coal BU5 BU6 PaperBU7 & BU8 63 23 22 1,798 1,917 1,869 1,194  -36.12% Capex – Projects 1,300 1,200  9 2,500 72 An exchange rate sensitivity analysis can be found in appendix 1 on page 27 Plan Gap (negative) Gap (positive) Lowest to highest Analyst estimate (23) (25) 1,810 2,471 2,039 1,679  -17.66% Capex S.I.B 1,700 1,800  2 Commentary Consensus – The generally accepted opinion based on the views of 10 external analyst for expected headline earnings. 2,400 Target – The adjusted Rio Tinto target based on the consensus (8) 2,549 experience 63% 78% 64% 51%  -20.31% S.I.B Depreciation (%) 55% 56%   The 2007 plan has been prepared in the context of continuing uncertainty about the outlook for the US and global economies. In particular, market anxiety is focused on the huge US current account and fiscal deficits 2,300 2,414 Based on market expectations of 10 leading analysts 2,668 2,790 2,600 2,416  -8% Working Capital 2,400 2,300  and their funding, as well as the implications for growth of rising US interest rates against a backdrop of high household indebtness and fragile consumer confidence. Fears of a hard landing in China may have abated  The group target has been adjusted to upwards by $108m, however this is still $636m below the market 1.5 1.6 1.4 1.2  -14.29% LTIFR 1.0 0.8  2,200 somewhat, but nonetheless remain a further cause for concern. consensus, this is due to: Outlook Plat Coal Base Ind Min Ferrous Paper & AngloGold DBI Other Budget Key Items for Discussion  2006 Pack Since the plan parameters were prepared in August, the US$ has continued to weaken, notably against the − The analysts adopting a more positive outlook on the impact of exchange rates. 49 57 53 Zero  % Fatalities Zero Zero  Australian $, while commodity prices have remained high. As a result, current exchange rates indicate downside risk to the plan of some $588m, while current spot metal prices indicate upside of some $699m. − The external view is that the price of Iron Ore will rise earlier and higher than is expected by RT. Agenda The current oil price is higher than assumed in the plan, indicating some $63m downside risk.  The group headline earnings gap of $719m is mainly made up of: − Aluminium (gap $121m) – This is primarily due to our future expected breaks in mining capacity − Coal (gap $168m) – New projects are unlikely to increase our mining capacity as quickly as was Business Unit Analysis ($m) originally expected

DRAFT DRAFT DRAFT DRAFT Item Responses to actions from last QPR Lead by Page

1 Business Unit 1 – update on impact of ore management progress. ABC [ ] 2 Business Unit 2 – update on permanent capture of market share. DEF [ ] Cooperation, 3 Business Unit 3 – update on plans for short-term expansion. GHI [ ] Iron Ore Value Drivers 4 Quantification of royalty impact. JKL [ ] competition, the overall Iron Ore Overview Volume Growth Rate Operating Profit & EBITDA Focus on 2004 2005 2006 2007 Key Items for 2007 Budget Discussion Actual Actual Outlook Budget Trend 06 v 07 $m 2008 2009 Notes

3,120 3,200 3,350 3,400  Turnover 3,600 3,800 1a  market and health Group Effective tax rate rising vs our peers – reasons. MN [ ] 20.8 21.3 22.0 22.5  Tonnes mined (m) 23.0 23.5 1b  Initiatives for reducing the tax rate. Major issues and forecasts 4.6 4.5 4.2 4.2  Head grade (g of pt) 4.0 3.9 1c

BU1  Head grade and recoveries dropping and impacting earnings. OP [ ] Financial 84 82 78 76  Recovery (%) 78 79 1d service developments  2,498 2,605 2,252 2,244 Refined production 2,243 2,262 1e  Remedial activities – grades and recoveries. YTD Year (k ozs)  Collective bargaining process is major risk. Trends 17 19 13 12  Prod. avail. (Average 14 14 1f Actual Plan Prior Year Actual P weeks)  Illustration of impact of strike and settlement scenarios. 350 +100 -75 +150  Net new projects +80 +200 1g Turnover 1,344 1,189 1,081 3,395 3, Additional volume (k ozs) BU2  Impact of increase in Australian iron ore royalties. QR [ ] Operating profit 279 167 204 504 Notes  Rail transport charges causing a decrease in margin. 179 Driving action 350 1a Prices falling but this is offset by increased COMPONENT 1 and COMPONENT 2 content in the UG2 ore.

300Headline earnings 186 4071 81 294  (4) Increase from 2004: PROJECT 1 Phase 2, 2005: PROJECT 2, 2006: Tailings project completed, 2007: BU3 Pit wall failure at “MINE” continues to hamper production. ST [ ] 250 (85) PROJECT 3 expansion. (18)  200EBITDA 446 314 336 306

Remedial activities planned. $m Forecast to Exchange Non Exchange Financial 150 Platinum Authorised Spent 279 complete impact impact Impact  Integration of “PROJECT” increasing overall margins. 100Capex SIB 116 226 125 559 167 External perspective Project 1 X X X X X X 50 1b, 1g BU4  Impact of EU environmental legislation on operating margin. UV [ ] Capex0 expansionary 75 93 111 258 Project 2 X x x x x x Plan Price Exchange Volume Cost Acquisition & Other Actual Project 3 X x x x x X  disposal Russian production contract positively impacting results. Free Cash Flow 272 76 328 `313 Key patient experience indicators Total 2,363 1,198 1,500 (78) 785 $Xm BU5  “METAL” prices returning to normal impacting margins. WX [ ] Working capital 425 410 317 446 450 48 1c COMPONENT 3 content is dropping but is being offset by increases in PRICE 1 as more XXX is mined.  Strategic initiative and 90 “PROJECT ORE” commences production. 400 20 3 XXX metallurgy is causing recoveries to drop – action should be initiated. 350 1d, 1e  (37) (9) Full year output is challenging – plans to achieve. 300 New projects are coming on line which haven’t had the necessary development work. Projects were brought on YTD250 Operating profit 1f line to drive revenue. Situation will be monitored. $m 429  Actual200 2006 vs Plan 2007 Exceptions BU6 Volumes driven by supply problems at competitors. JKL [ ] increasing benefits to 150 314  Actions taken to permanently capture market share. 100 50 0 Plan Price Exchange Volume Cost Interest Other Actual BU7  SIB/depreciation ratio impacted by cash conservation. JKL [ ]  Anticipated impact on production. patients Progress toward objectives  IAS 39 continues to adversely operating profit. DRAFT DRAFT  Remedial activities planned.

DRAFT

Iron Ore Value Drivers Key Items for Discussion Iron Ore Value Drivers Budget Targets Cost of Capital Competitor Review Capital Investments Gap Analysis and Initiatives

2004 2005 2006 2007 Status Product News Implications 2004 2005 2006 2007 Actual Actual Outlook Budget Trend 06 v 07 $m 2008 2009 Notes Actual Actual Outlook Budget Trend 06 v 07 $m 2008 2009 Notes Iron Ore – Headline earnings adjusted target $216m, baseline $201m, Gap ($15m)   (696) (1,116) (1,050) (950)  Net Debt Aus (850) (700) 7a BHP Biliton Earnings and key ratios continue If consensus is correct, RT plc share 78 84 87 91  SIB Depreciation (%) 88 83 5a Volume to be forecast above RT plc for the price is likely to suffer and its next 3 years (consensus view of recommendation status to be Net Debt ROW 7b 622 548 380 334  Capex - Project 375 350 5b Metric 2007 Baseline 2007 Target Gap analysts). negatively impacted. Volume 2,600 2,956 356 (650) (1,000) (950) (850)  Debt Due < 1 year (750) (575) 7c  Australian tax office has recently  Monitor progress and findings and 350 400 475 525  Capex - SIB 575 625 5c launched a major assessment determine whether RT plc has any What issues  against BHPB relating to 2000, similar issues that could impact level  (46) (116) (100) (100) Debt Due > 1 year (100) (125) 7d N/A N/A (25) (30) F’cast (Over)/Under on (38) (50) 5d 2001 and 2002 results. of provisions required. Key Capital Project Initiatives to close gap 1.4 1.5 2.0 1.8  Facilities available ($b) 1.8 2.0 7e  BHPB are delaying completion of  Negotiate competitive price 2,391 2,517 2,610 2,525  Project Pipeline 2,405 2,275 5e Focus for the month Cost Impact key iron ore supply contracts in contracts with Japanese customers 1,450 1,650 1,800 1,900  Distributable reserves 2,150 2,100 7f Initiative Benefits realisation ($m) ($m) Japan in hope of securing above that are above plan prices, but 158 160 156 204  Closing reserves position 217 235 5f benchmark prices. below BHPB prices in an attempt to (Moz)  Exploration study to investigate why recoveries  Target recovery increase of 3 16 should The Board 74.8 74.8 74.7 74.6  % Ownership 74.5 74.5 7g gain market share. are decreasing as more Iron Ore enters the 1% from 2nd half of 2007. syst em. Study to take 3 months at a cost of $3m. Anglo  Although earnings are not forecast  If consensus is correct, RT plc share 302 78 156 230  Shares issued (‘000) 310 87 7h Target recovery increase of 1% from 2nd half of Amercian to be as high as RT plc, key ratios price may suffer and its Notes 2007 - headline earnings impact +$16m. and growth rates continue to be recommendation status could be 37 45 40 35  Interest charge 30 25 7i forecast above RT plc for the next negatively impacted. Increased SIB caused by ageing plant at MINE 1. This itself leads to higher depreciation charge which limits the 1 13 Strategic milestones 5a  Improve blasting techniques to maximise ore  Target improvement in grade 3 years (consensus view of growth in the measure.  RT plc should initiate meetings with recovery and minimise waste dilution by of 0.3 g/t from Q2 onwards. 14.5 12.7 15.1 18.2  Interest cover 22.7 29.4 7j analysts). debate ? AA plc management with view to JV appointing shift champions to train and monitor The major project spend of the first half of the decade has been completed with projects now T a more steady  AA plc have indicated they are partnership. 5b crews. (696) (1,116) (1,050) (950)  Net Debt Aus (850) (700) 7a pace to keep growing production at a manageable rate. looking for a JV partner to develop 29 key copper reserves recently discovered in South America. 5c See 5a. Notes   Interna- Have started negotiations with Could impact RT’s current plans to The permanent shift in steel prices is causing overruns in the projects which were approved when steel prices Debt decreasing as cash generated is being increased by operations. Debt not dropping as quickly as tional Chinese government to build plant expand into Chinese market. 5d 7a were much lower. anticipated as SIB capex is consuming available cash. Copper in China (estimated revenue of Further research needs to be carried Cost Savings $1bn per annum). out on IP’s proposals to determine if Debt continues to be mostly < 1 year in duration. Investigation to take place into moving debt term out. Debt Project pipeline trending downwards but there is still capacity being brought online and budgeted reserves are 7b 5e due > 1 year is predominantly finance leases relating to mining machinery. it would impact project evaluations slowly growing which should help valuations. Metric 2007 Baseline 2007 Target Gap for RT, eg revenue projections, supply constraints etc. Cost savings ($m) 40 17 23 7c See 7b. 5f See 5e. Industrial  [ ]  [ ] 7d See 7b. Minerals Competitor Initiatives to close gap 7e Facilities kept at around $1.5 billion for strategic purposes and $0.5m for funding general requirements. Cost Impact Initiative Benefits realisation ($m) ($m) Distributable reserves continue to grow steadily due to the profitability of Iron Ore. However, the amount of cash 7f the company has available to pay the dividends needs to be managed.  Align daily maintenance inspections so plant  Anticipated benefits to start 10 Ownership decreases slightly due to the exercise of options by Iron Ore employees. These levels should not restart is always during off-peak price bands. from 2nd half of 2007. 7g trigger any “disposal” events.  Refocusing project management resources to  Cost savings to begin in Q2. 7 accelerate key projects and manage these See 7g. 7h carefully to avoid cost over runs.

Debt decreases continue to positively impact the interest charge and interest cover ratios. Need to review the 7i capital structure to ensure it is the most financially efficient from a Group perspective. 17

7j See 7i.

DRAFT DRAFT DRAFT DRAFT

© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 23 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Managing the Board and Committee Agenda What criteria can you apply to what you receive?

Key NED questions  Fast, quality close process  Common set of KPIs

Commonality of reporting ; o Is management information sufficiently Use system not off system  aligned suite of common  insightful and timely to enable you to act? reporting reports

Standard data definitions Do general managers and clinicians   No / limited re-keying o across the services understand and believe the management information that they receive?

 Balanced set of measures;  Measures derived from the key aligned to strategy drivers of patient benefit o Does management information focus on the important aspects of patient care ? Information on demand ; swift  Role based information delivery  response to ad-hoc requests

o Is management information delivered Focus on key issues, risks and efficiently without the need for manual   External perspective opportunities intervention or spreadsheet manipulation?

Trend analysis and exception Drill down from the desktop ;   o How has management information adapted reporting clear line of sight as you face change?

 Emphasis on analysis and  Supported by robust review focus on the future actions and challenge

© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 24 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Managing the Board and Committee Agenda What do you think of the information you currently get?

“Do you believe the “Would you rather it be less “Do people try and explain “How agile are you at “Does the Board focus numbers?” accurate but earlier?” big variances or movements identifying problems on the real issues?” to you?” and reacting?”

QUALITY & CONTENT TIMELINESS ABILITY TO ACT

“How much of the reporting “How much insight and value “How does your process ensure “What action would you “What action do pack is actually read and do you get from existing that you maximise short-term like to take when you you actually understood?” management information?” opportunities?” receive the take?” information?”

“How do you allocate resources “How do you make “Does everyone know where and “Does everyone know what is for the good of the whole of the trade-offs between how they contribute to expected of them?“ organisation?” Departments?” performance?”

ACCOUNTABILITY FOR MANAGING TRADEOFFS COMMUNICATION ACTIONS

Legend: “Can you clearly see the = Key conclusions “Do people implications of trading off “Are people held accountable for their decisions and understand the = Typical things people short for long term strategy?” find wrong performance?” actions?”

© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 25 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Managing the Board and Committee Agenda Key aspects of good reporting?

Group strategy map

 The information clearly links to the strategic objectives of the Financial Transparency organisation Customer Internal

People and learning

Alternative - Rappaport’s seven drivers of value

CORPORATE Shareholder Shareholder Return OBJECTIVE Value Added Dividends (SVA) Capital Growth  There is a consistent view across the business of the drivers of VALUATION Cash Flow From Discount Rate Debt Operations Value drivers performance, costs and cash COMPONENTS  Forecast  Sales Growth  Working Capital  Cost of VALUE DRIVERS Duration Rate Investment Capital  Operating Profit  Fixed Capital Margin Investment  Income Tax Rate

MANAGEMENT Operating Investments Financing DECISIONS

Source: Alfred Rappaport - Creating Shareholder Value 1 Turning Client Vision into Results

 The information cascades to all levels of the organisation to enable drill Alignment down into further detail where required. Local management information supports Group information

Group Financial Summary Budget Targets Group Financial Summary Key Macro Assumptions Investor Expectations

Headline earnings Group Financial Summary Average Exchange Rates – per US$ Years Trend Group – Plan 2007 vs. Consensus 2007 2004 2005 2006 2007 2006 2007 2008 2009 Actual Actual Outlook Budget Trend 06 v 07 $m 2008 2009 Trend

  Canadian $ 1.00 1.60 1.50 1.30  14,930 14,779 18,248 17,958 -1.03% Turnover (exc. associates) 18,467 18,783 3,5001,200 50 50 636 2,480 2,014 2,119 2,502  9.3% Adjusted operating profit 2,600 2,700  Euro 0.83 0.87 0.88 .090  3,3001,000 359

3,100 (45)   800 16.6 13.6 11.6 13.9 10.27% Adjusted operating margin 14.1 14.4  Australian Dollar 0.68 0.65 0.62 0.60 $m (%) 168 2,900600 26 3293 2,710 2,191 2,468 2,996  7.07% EBITDA 3,200 3,350   121 Pound Sterling 1.71 1.64 1.70 1.75 2,700400 15 2657 18.2 14.8 13.5 16.7  1.16% EBITDA Return (%) 17.3 17.8  Chilean. Peso 650 710 750 755  2,500200 2549

27.6 28.0 28.3 28.5  0.71% Adjusted effective tax rate (%) 28.6 28.7  0 Average market commodity prices Plan PlatinumBU1 BU2Gold DiamondsBU3 CoalBU4 BaseBU5 M etals IndustrialBU6 PaperBU7 & FerrousBU8 Consensus Target 1,689 1,367 1,414 1,549  5.59% Headline earnings 1,600 1,650  2007 Minerals Packaging M etals 2007 2007 Aluminium - $/oz 385 370 370 375  13.4 11.7 11.9 12.2  2.52% ROCE 12.3 12.5  Divisional – Plan 2007 vs. Consensus 2007 Diamonds - $/oz 750 725 730 740  TSR Target 210 82 250 510 540 180 330 555

Palladium -$/oz 180 150 160 180  Consensus 216 178 266 666 882 135 355 595 1.8 1.64 1.63 1.66  1.84% EPS 1.71 1.74  1,200 Rhodium - $/oz 550 520 530 550  (8,363) (7,765) (6,714) (5,049)  -24.8% Net Debt (5,000) (4,500)  1,000 Copper – cents/lb 94 96 94 90  Gearing 800 359 $m Zinc – cents/lb 44 46 48 50  50 (359) (320) (282) (212)  -24.8% Interest charge (210) (189)  600 168

Ferro - vanadium 17 14 14 12  400 523 Interest cover 498 50 15 26 45 545 200 28 27 28 29  305 1,786 1,810 1,790 1,715  4.19% Free cash flow 1750 1775  Iron Ore - lumpy 121 240 180 201 0 57 3,608 4,388 3,908 2,873  -26.48% Capex – Total 3,000 3,000  Iron Ore - Fine 22 22 21 22  PlatinumBU1 GoldBU2 DiamondsBU3 BU4Coal BU5 BU6 PaperBU7 & BU8

1,798 1,917 1,869 1,194  -36.12% Capex – Projects 1,300 1,200  An exchange rate sensitivity analysis can be found in appendix 1 on page 27 Plan Gap (negative) Gap (positive) Lowest to highest Analyst estimate

  1,810 2,471 2,039 1,679 -17.66% Capex S.I.B 1,700 1,800 Commentary Consensus – The generally accepted opinion based on the views of 10 external analyst for expected headline earnings. Target – The adjusted Rio Tinto target based on the consensus 63% 78% 64% 51%  -20.31% S.I.B Depreciation (%) 55% 56%   The 2007 plan has been prepared in the context of continuing uncertainty about the outlook for the US and global economies. In particular, market anxiety is focused on the huge US current account and fiscal deficits Based on market expectations of 10 leading analysts 2,668 2,790 2,600 2,416  -8% Working Capital 2,400 2,300  and their funding, as well as the implications for growth of rising US interest rates against a backdrop of high household indebtness and fragile consumer confidence. Fears of a hard landing in China may have abated  The group target has been adjusted to upwards by $108m, however this is still $636m below the market 1.5 1.6 1.4 1.2  -14.29% LTIFR 1.0 0.8  somewhat, but nonetheless remain a further cause for concern. consensus, this is due to:   Since the plan parameters were prepared in August, the US$ has continued to weaken, notably against the − The analysts adopting a more positive outlook on the impact of exchange rates. 49 57 53 Zero  % Fatalities Zero Zero  Australian $, while commodity prices have remained high. As a result, current exchange rates indicate downside risk to the plan of some $588m, while current spot metal prices indicate upside of some $699m. − The external view is that the price of Iron Ore will rise earlier and higher than is expected by RT. The Board Report contains forecasts and insightful commentary that The current oil price is higher than assumed in the plan, indicating some $63m downside risk.  The group headline earnings gap of $719m is mainly made up of: − Aluminium (gap $121m) – This is primarily due to our future expected breaks in mining capacity − Coal (gap $168m) – New projects are unlikely to increase our mining capacity as quickly as was originally expected

DRAFT DRAFT DRAFT

Iron Ore Value Drivers Iron Ore Value Drivers Budget Targets Cost of Capital Capital Investments Gap Analysis and Initiatives

2004 2005 2006 2007 2004 2005 2006 2007 Actual Actual Outlook Budget Trend 06 v 07 $m 2008 2009 Notes Actual Actual Outlook Budget Trend 06 v 07 $m 2008 2009 Notes Iron Ore – Headline earnings adjusted target $216m, baseline $201m, Gap ($15m) focuses on future corrective actions to bring performance back on track (696) (1,116) (1,050) (950)  Net Debt Aus (850) (700) 7a 78 84 87 91  SIB Depreciation (%) 88 83 5a Volume Forward looking Net Debt ROW 7b 622 548 380 334  Capex - Project 375 350 5b Metric 2007 Baseline 2007 Target Gap Volume 2,600 2,956 356 (650) (1,000) (950) (850)  Debt Due < 1 year (750) (575) 7c 350 400 475 525  Capex - SIB 575 625 5c

(46) (116) (100) (100)  Debt Due > 1 year (100) (125) 7d N/A N/A (25) (30)  F’cast (Over)/Under on (38) (50) 5d Key Capital Project Initiatives to close gap 1.4 1.5 2.0 1.8  Facilities available ($b) 1.8 2.0 7e 2,391 2,517 2,610 2,525  Project Pipeline 2,405 2,275 5e Cost Impact 1,450 1,650 1,800 1,900  Distributable reserves 2,150 2,100 7f Initiative Benefits realisation ($m) ($m) 158 160 156 204  Closing reserves position 217 235 5f (Moz)  Exploration study to investigate why recoveries  Target recovery increase of 3 16 74.8 74.8 74.7 74.6  % Ownership 74.5 74.5 7g are decreasing as more Iron Ore enters the 1% from 2nd half of 2007. syst em. Study to take 3 months at a cost of $3m.  302 78 156 230 Shares issued (‘000) 310 87 7h Notes Target recovery increase of 1% from 2nd half of 2007 - headline earnings impact +$16m. 37 45 40 35  Interest charge 30 25 7i Increased SIB caused by ageing plant at MINE 1. This itself leads to higher depreciation charge which limits the 1 13 5a  Improve blasting techniques to maximise ore  Target improvement in grade growth in the measure. recovery and minimise waste dilution by of 0.3 g/t from Q2 onwards. 14.5 12.7 15.1 18.2  Interest cover 22.7 29.4 7j appointing shift champions to train and monitor The major project spend of the first half of the decade has been completed with projects now T a more steady 5b crews. (696) (1,116) (1,050) (950)  Net Debt Aus (850) (700) 7a pace to keep growing production at a manageable rate. 29 5c See 5a. Notes The permanent shift in steel prices is causing overruns in the projects which were approved when steel prices Debt decreasing as cash generated is being increased by operations. Debt not dropping as quickly as 5d 7a were much lower. anticipated as SIB capex is consuming available cash. Cost Savings Debt continues to be mostly < 1 year in duration. Investigation to take place into moving debt term out. Debt Project pipeline trending downwards but there is still capacity being brought online and budgeted reserves are 7b 5e due > 1 year is predominantly finance leases relating to mining machinery. slowly growing which should help valuations. Metric 2007 Baseline 2007 Target Gap Cost savings ($m) 40 17 23 rather than explain past performance 7c See 7b. 5f See 5e.

7d See 7b. Initiatives to close gap 7e Facilities kept at around $1.5 billion for strategic purposes and $0.5m for funding general requirements. Cost Impact Initiative Benefits realisation ($m) ($m) Distributable reserves continue to grow steadily due to the profitability of Iron Ore. However, the amount of cash 7f the company has available to pay the dividends needs to be managed.  Align daily maintenance inspections so plant  Anticipated benefits to start 10 Ownership decreases slightly due to the exercise of options by Iron Ore employees. These levels should not restart is always during off-peak price bands. from 2nd half of 2007. 7g trigger any “disposal” events.  Refocusing project management resources to  Cost savings to begin in Q2. 7 accelerate key projects and manage these See 7g. 7h carefully to avoid cost over runs.

7j See 7i.

DRAFT DRAFT DRAFT

© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 26 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Managing the Board and Committee Agenda Key aspects of good reporting?

 Information in the reports is structured to allow the user to easily Focus navigate through the document. Alerts (e.g. RAG traffic lights) highlight important issues and facts and tell you where to focus

20 10 18 9 16 8 14 7 12 6 bcm 10 5 $m 8 4 Trends and  Trends and visualisations help to focus on both long and short-term 6 3 4 2 2 1 Visualisations performance and set meaningful performance targets 0 0 Jan Feb M ar Apr M ay Jun Jul Aug Sep Oct Nov Dec

Actual / Forecast Sales Volume Sales Volume (Prior Year) Actual / Forecast Profit Prior Year Profit

Key Items for Discussion Agenda

Item Responses to actions from last QPR Lead by Page

1 Business Unit 1 – update on impact of ore management progress. ABC [ ]

2 Business Unit 2 – update on permanent capture of market share. DEF [ ]

3 Business Unit 3 – update on plans for short-term expansion. GHI [ ]

4 Quantification of royalty impact. JKL [ ]

Key Items for 2007 Budget Discussion

Group  Effective tax rate rising vs our peers – reasons. MN [ ]  Initiatives for reducing the tax rate.

BU1  Head grade and recoveries dropping and impacting earnings. OP [ ]  Remedial activities – grades and recoveries.  Collective bargaining process is major risk.   Illustration of impact of strike and settlement scenarios. The Board Report is produced and issued in less than 10 days and is BU2  Impact of increase in Australian iron ore royalties. QR [ ]  Rail transport charges causing a decrease in margin.

BU3  Pit wall failure at “MINE” continues to hamper production. ST [ ] Speed  Remedial activities planned.  Integration of “PROJECT” increasing overall margins.

BU4  Impact of EU environmental legislation on operating margin. UV [ ]  Russian production contract positively impacting results.

BU5  “METAL” prices returning to normal impacting margins. WX [ ] used as the source document for Board performance review meetings  “PROJECT ORE” commences production.  Full year output is challenging – plans to achieve.

BU6  Volumes driven by supply problems at competitors. JKL [ ]  Actions taken to permanently capture market share.

BU7  SIB/depreciation ratio impacted by cash conservation. JKL [ ]  Anticipated impact on production.  IAS 39 continues to adversely operating profit.  Remedial activities planned.

DRAFT

 Information in the report is consistent, accurate and reliable. It enables Accuracy the Board to confidently make its decisions  Information is the report is consistent, accurate and reliable. It enables the Board to confidently make its decisions

Above all, an effective Board Report allows you to deliver on your performance promises and mitigate against surprises

© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 27 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Managing the Board and Committee Agenda What does corporate good look like - RFU

DRAFT DRAFT DRAFT Overview Elite Rugby Commercial activities Performance overview Senior Squad Annual Overview

 England need to win the South Africa Autumn Internationals to have a IRB World ranking chance of regaining their position. Actual Target  7 Actual Target Sample Data 3 month £000’s £000’s Var Status YTD YTD trend Status Commercial Contribution 22,345 26,500 (4,155) A The Community Game Last month Last month Position Country Trend Score Position Country Trend Score Position Position No. of matches played 22,997 22,546  A Full year Contribution Forecast by Revenue stream 1 New Zealand  1 94.06 6 Argentina  8 79.01 1255          2 France  2 86.39 7 England  6 78.14 49 No. of Players 689 679  A 3 Australia  4 85.5 8 Scotland  7 77.72 10 0.4 0.3 47   (0.5) No. of Coaches 47 -  A 4 South Africa 3 85.24 9 Wales 9 77.02 458 (1.2) 5 Ireland  5 83.81 10 Samoa  10 73.86 (0.3) (0.7) No. of Referees A 6 Player Availability 4 No. of Volunteers A Position 2 A No. of Clubs at risk 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 0 1                Plan Ticket TV Sponsorship TEL Merchandise Stadium Other Hotel Leisure Forecast The Elite Game income Licensing 2                Commentary 3 Key: IRB Ranking 7 1  A Available                 World Class  Sponsorship revenue is forecast to be below budget and but also there is a current falling trend. This is mainly due to the loss of Tetley as a sponsor and a replacement has not been found. No. of players likely to exceed 32 games  A 1                 International Class  Merchandise trading has started slowly but costs are now under control.  2              Premiership Class EPS fitness scores A Injured 3   Revenue mix 3% Commercial, marketing and business Clear explanations 2006/07 27% 32% 25% 6% 5% 2% Critical Points Total Contribution growth £000’s 22,345 26,500  A  Full back – Josh Lewsey, under assessment not available for next 4 matches of movements 3%  Ticket Contribution A No. 8 – James Forrester under assessment and at the moment will be unavailable for the next match. 2005/06 26% 36% 24% 6% 4% 1%  Prop – Perry Freshwater, under assessment, should be available for next game. Rugby Store Sales A Tickets TV Sponsorship TEL Merchandising Stadium Other Enabling functions Commentary EPS Players Forecast to exceed 32 game limit  Growth in ticket income, due to the South stand development is contribution to the revenue mix. Pro-actively written articles published A Players forecast to exceed 32 Games  Still looking to reduce TV revenues to 20-25% by end of plan period, progress is slowly being made in this 40 1. Olly Morgan – Gloucester area. A 35 Key funding relationship activity 2. Peter Richards – Gloucester 30 32 game ceiling 3. George Chuter – Leicester Revenue growth by stream  A 25 Commentary Hours lost on systems downtime 49 50 20 20 '05/06  Planning permission secured for 3

A Players 15 concerts, currently negotiating to get No. of Leisure Teams 15 '06/07 10 EPS Rest Days permission for a total of 5 3 Players are forecast not to get 11 week Retention Rate A 5 10 0 uninterrupted rest period: 000's  1 2 3 4 5 6 George Chuter – Leicester 5 Played to date Forecast to play in rest of season  Ben Cohen – Northampton Saints  Jamie Noon – Newcastle Falcons 0 Tickets TV Sponsorship TEL Merchandising Stadium Hotel Leisure DRAFT for discussion DRAFT for discussion All values for illustration purposes 6 DRAFT for discussion Issues discussed on All values for illustration purposes 30 All values for illustration purposes 36 an exceptions basis Analysis of trends to with an agenda set Focus on core give greater insight based on these assets and forward looking commentary

© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 28 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Managing the Board and Committee Agenda What does corporate good look like – FTSE100

Management Board report addresses its audience and tells the story…

Key Items for Discussion Group Financial Summary Agenda Issues discussed on Current Financial FocusProvide (cont.) insight into

Item Responses to actions from last QPR Lead by Page

an exceptions basis1 Platinum – update on impact of ore management progress. ABC [ ] the management of

2 Paper and Packaging – update on permanent capture of market share. DEF [ ] Group Headline Earnings Movement Analysis – Outlook 2006 vs Budg with an agenda set3 Base – update on plans for short-term expansion. GHI [ ] Status Budget Highlights the portfolio 4 Quantification of royalty impact. JKL [ ] Headline earnings  Increase due mainly to Base Metals (+$72m), Corporate (+$62m) an based on these (+$22m) on the back of increased prices and volumes, positive exch Key Items for 2007 Budget Discussion interest costs at the Corporate centre. Group  Effective tax rate rising vs our peers – reasons. MN [ ]  Decreased headline earnings vs Plan 2006 are reported for DBI (-$2  Initiatives for reducing the tax rate. 2,800 Trend Industries (-$23m), and Coal (-$8m) mainly due to increased cash c

Platinum  Head grade and recoveries dropping and impacting earnings. OP [ ] forecast inflation increases.31 353 56  Remedial activities – grades and recoveries. 2,600 238  The Group as a whole has been negatively(25) impacted by increased i (70) (56)  Collective bargaining process is major risk.  2,400 in South Africa at 5%, and prices (-$99m), forecast to be lower at Pl  Illustration of impact of strike and settlement scenarios. Packaging. DRAFT for discussion (99) 2,549 2,200 2,414 (293) Coal  Impact of increase in Australian coal royalties. QR [ ] All values for illustration purposes HEADLINE EARNINGS GAP +$68m  Rail transport charges causing a decrease in margin. 2,000 CategoryOutlook Price AnalysisExch ($m)Inflation Vol Controllable Semi- Interest DBI Structural Budget Base Metals  Pit wall failure at Colluasi continues to hamper production. ST [ ] 2006 costs controllable & Other  Remedial activities planned. costs Analysis of trends to  Integration of Inco increasing overall margins.

Industrial  Impact of EU environmental legislation on operating margin. UV [ ] 2,600 63 Minerals  M4 toll road contract positively impacting results. 22give greater insight Produced by day 5, 23 9 2,500 72 (23) (25)  Ferrous Ferrovanadium prices returning to normal impacting margins. WX [ ] 2 Metals and 2,400  Sishen South commences production. (8) 2,549 reported by day 7Industries and forward looking  Full year output is challenging – plans to achieve. 2,300 2,414

 Volumes driven by supply problems at competitors. JKL [ ] Group Paper & 2,200 Packaging  Actions taken to permanently capture market share. Outlook Plat Coal Base Ind Min Ferrous Paper & AngloGoldcommentaryDBI Other Budget 2006 Pack AngloGold  SIB/depreciation ratio impacted by cash conservation. JKL [ ] Ashanti  Anticipated impact on production. Performance Pack  IAS 39 continues to adversely operating profit.  Remedial activities planned. Business Unit Analysis ($m) Executive Board Meeting Group Financial Summary 18 DRAFT Group Financial Summary 6 DRAFT June 2007 Current Financial Focus (cont.) Group Financial Summary 450 50 2004 2005 2006 2007 400 141 8 Actual Actual Outlook Budget Trend 06 v 07 $m 2008 2009 Trend 3 350 (40) (14) 24,930 24,779 28,248 27,958  -1.03% Turnover (exc. associates) 28,467 28,783  300 250

4,480 4,014 4,119 4,502  9.3% Adjusted operating profit 4,600 4,700  $m 200 Greater364 focus on the May150 2006 Headline Earnings vs Plan   17.9 16.2 14.6 16.1 10.27% Adjusted operating margin 16.2 16.3 100 216 (%) Focus on Group 50 7,710 7191 7,468 7,996  7.07% EBITDA 8,200 8,350  0 controllable Plan Price Exchange Volume Cost Interest DBI Other Actual Value Drivers 20.4 17.1 17.3 17.5  1.16% EBITDA Return (%) 17.6 17.9  27.6 28.0 28.3 28.5  0.71% Adjusted effective tax rate (%) 28.6 28.7  elements of the 2,689 2,367 2,414 2,549  5.59% Headline earnings 2,600 2,650 

13.4 11.7 11.9 12.2  2.52% ROCE 12.3 12.5 

TSR business

1.8 1.64 1.63 1.66  1.84% EPS 1.71 1.74 

(8,363) (7,765) (6,714) (5,049)  -24.8% Net Debt (5,000) (4,500) 

Gearing

(359) (320) (282) (212)  -24.8% Interest charge (210) (189) 

Interest cover

1,786 1,810 1,790 1,715  4.19% Free cash flow 1750 1775 

3,608 4,388 3,908 2,873  -26.48% Capex – Total 3,000 3,000 

1,798 1,917 1,869 1,194  -36.12% Capex – Projects 1,300 1,200 

1,810 2,471 2,039 1,679  -17.66% Capex S.I.B 1,700 1,800  Measure Headline Earnings vs Plan 63% 78% 64% 51%  -20.31% S.I.B Depreciation (%) 55% 56% 

2,668 2,790 2,600 2,416  -8% Working Capital 2,400 2,300  Structur $m Plan Price Exchange Volume Cost Interest O performance against1.5 1.6 1.4 1.2  -14.29% LTIFR 1.0 0.8  Used to inform Managed 49 57 53 Zero  % Fatalities Zero Zero  targets and gaps in Platinum 22 25 4 (1) investor5 1 Coal 64 12 (1) (23) (11) - Base Metals 47 49 (4) (8) (7) 1 expectations Industrial Minerals 28 2 - (1) expectations(3) - 5 7 DRAFT Ferrous Metals and DRAFT Industries 35 60 (3) 1 (12) (1)

© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 29 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity.

Managing the Board and Committee Agenda What does corporate good look like – international conglomerate

Board report adds transparency and structure…

Group Overview Value drivers Current market situation Deals & Investments

Status Industry New s Implications Are any of our deals and investments at risk?

Chemicals  Political Climate  Implications Deal / Capital Investment Status Expected IRR, Schedule, Size of Investment Assessment of the  Economic Situation 20% Investment Risk Analysis  Other  deal specific risk Analysis of external Investment 1

Investment 1  Investment 3 and impact on the impacts on the Group’s Investment 2 10% Gas  Political Climate  Implications Group’s business performance (business, % Expected IRR Investment 4  Economic Situation Investment 3 as usual economic, political)  Other 0%

-4 and over -2 0 2 4 and over Months Ahead / Behind Schedule

Financial Reporting High Risk Medium Risk Low Risk Property  Political Climate  Implications Pack  Economic Situation Update on Deal Pipeline  Other

Project Commentary

Prospective Deal 1 The definitive version of our report shall be the English language version bearing our original manuscript signature PRIVATE & CONFIDENTIAL Effective cash Ot her  Political Climate  Implications Appendix: Cash Value drivers High Risk  Economic Situation CashProspectiveManagement Deal 2 Cash management  Other Full year cash flow forecast YTD – Group Cash Flow Variance Analysis Medium Risk Are we generating sufficient cash? Common measures at Prospective Deal 3 60 14 Purchase reporting provides Media Co. YY 5.92 50 18.49 4.87 Increased capital 12 43.87 Funding shortage Opportunity 4.33 required for GEMM (3.16) 10 40 (2.85) (1.14)(1.23) Group and Divisions (9.95) 8 28.59 long and short term Cash Requirements & Sources of Funding Building a Cash Forecast 30 $ m $ m Market Situation  Explanation of capital cash requirements 6 This page is usedIncreased to provide capital the management board with an update on changes to the current market situation in each of 20 4 Group600 DF’srequired key industries for Power Plantand to analyse the impact that these changes will have on the Group. 10  Identify actions to solve funding gap 2 cash forecast 500 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. 9 This document is CONFIDENTIAL and its circulation and use are RESTRICTED. 7 © 2008 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG 0 © 2008 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe0 LLP and a member firm of the KPMG 400 network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. AP

Jan Feb M ar Apr M ay Jun Jul Aug Sep Oct Nov Dec AR Tax Other Capex Interest 300 EBITDA

$m This report has been prepared solely in connection with and for use in accordance with the terms of our Inventory Budget Act ual Forecast Disposals Act ual engagement letter dated October 2007. This report is provided on the basis that it is for your information only and Budget 200 Net Cash Flow Net Cash

that it will not be copied or disclosed to any third party or otherwise quoted or referred to, in whole or in part, FlowNet Cash 100 without our prior written consent. In the event that this report is obtained by a third party or used for any other purpose any such party relying on our report does so entirely at their own risk. 0 M ar Apr M ay Jun Jul Aug Sep Oct Nov Dec Jan Feb Cash Facility Cash Requirements

Covenants Currecy Ri sk - $ : Euro

25 0.9

Monthly 0.8 Value of Covenant Actual Variance 20 0.7 Bank debt ($m) Covenant Limit position % 0.6 HBOS 10 Debt Equity 0.6 0.5 20% 15 0.5 First Ukainian 5 Interest 1.5 1.5 25% Gas Cash Flow and Profit Margin Effect of Gas Movements on Cash Position $ m

0.4 $:Euro International Cover 10 RAG (Red, Amber,  Explanation of gas movements 0.3 UkrExlm Bank 7.5 Debt Equity 0.7 0.5 40% Focus on the main Bank 4 3.5 Debt Equity 0.75 0.5 50% 5 0.2  Bank 5 2 Debt Equity 0.7 0.5 45% 0.1 60% 100 Highlight likely changes to gas position as a result of gas movements Green) analysis makes 90 Bank 6 1 Interest 1.7 1.7 15% 0 0 50% Cover 80 Jan Feb M ar Apr M ay Jun Jul Aug Sep Oct Nov Dec risk areas: bank 70 40% 60 Cashflow Hedged Ex Rate Ex Rate Forecast 30% 50 $m exceptions based 40 20%

Profit Margin % covenants and 30 20 10% 10 High Risk reporting more impactful 0% 0 Jan Feb M ar Apr M ay Jun Jul Aug Sep Oct Nov Dec Ri sk s Action Who When currency exposure

Profit Margin Actual / Forecast Cash Flow Medium Risk Covenant limit not at risk

Covenant limit close to being breached Opportunities Covenant limit reached

This document is CONFIDENTIAL and its circulation and use are RESTRICTED. 12 © 2008 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG This document is CONFIDENTIAL and its circulation and use are RESTRICTED. 6 network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. © 2008 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 30 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Managing the Board and Committee Agenda How can you redefine content?

Step 1 Step 2 Step 3

 Define and agree on the  Define the measures to  Develop reporting process objectives which describe track delivery against each  Align “Business Units” by what the organisation will do objective cascading these objectives, to deliver its strategy  Set targets for these measures and initiatives to  Shape and agree format of measures them Board Report and structure  Outline the initiatives  Undertake a similar exercise of meetings required to deliver the for each Business Unit  Develop principles of objectives  Link reporting into planning, reporting and of decision-  Design Board Report in draft budgeting and forecasting making and other performance management processes Group Strategy Map

Shareholder Shareholder Return Value Added Dividends (SVA) Capital Growth

Key Items for Discussion Cash Flow From Value Types Discount Rate Debt Operations Agenda ‘Value growth’ Differentiators, eg: Item Responses to actions from last QPR Lead by Page Extraction Technology Product Innovation 1 Business Unit 1 – update on impact of ore management progress. ABC 4 +ve Brand Management 2 Business Unit 2 – update on permanent capture of market share. DEF 6  Forecast  Sales Growth  Working Capital  Cost of Duration Rate Investment Capital 3 Business Unit 3 – update on plans for short-term expansion. GHI 8   Operating Profit Fixed Capital 4 Quantification of royalty impact. JKL 10 Value Margin Objectives,Investment Goals, Strategies, Measures  Income Tax Rate Wasted Objective Effort Key Items for 2007 Budget Discussion ‘Value maintenance’ OBJECTIVE Group  Effective tax rate rising vs our peers – reasons. MN 15  Initiatives for reducing the tax rate. Operating Investments Financing BU1  Head grade and recoveries dropping and impacting earnings. OP 20  Remedial activities – grades and recoveries. e-Finance  Collective bargaining process is major risk. Goals ‘Value protection’  Illustration of impact of strike and settlement scenarios. Effort BU2  Impact of increase in Australian coal royalties. QR 25  Rail transport charges causing a decrease in margin. -ve Threshold point GOAL GOAL GOAL GOAL & & & BU3  Pit wall failure at Colluasi continues to hamper production. ST 30  Remedial activities planned.  Integration of Inco increasing overall margins.

BU4  Impact of EU environmental legislation on operating margin. UV 35  M4 toll road contract positively impacting results. Strategies BU5  Ferrovanadium prices returning to normal impacting margins. WX 40  Sishen South commences production.  Full year output is challenging – plans to achieve. STRATEGY STRATEGY STRATEGY STRATEGY STRATEGY BU6  Volumes driven by supply problems at competitors. JKL 45  Actions taken to permanently capture market share.

BU7  SIB/depreciation ratio impacted by cash conservation. JKL 50  Anticipated impact on production.  IAS 39 continues to adversely operating profit.  Remedial activities planned. STRATEGY

18 DRAFT

© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 31 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Content

© 2010 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and 32 the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity.