Tanga Cement Company Limited is committed to the principles of effective corporate governance and the Board is of the opinion that the Company currently complies with principles of good corporate governance.

The Board of Directors
The Board of Tanga Cement Company Limited consists of eight Directors. Apart from the Managing Director and Human Resource Manager, no other Directors hold executive positions in the Company. The Board takes overall responsibility for the Company, including responsibility for identifying key risk areas, considering and monitoring investment decisions, considering significant financial matters, and reviewing the performance of management against budgets and business plans. The Board is also responsible for ensuring that a comprehensive system of internal control policies and procedures is operative, and for compliance with sound corporate governance principles.

The Board is chaired by a Non-Executive Director, who has no executive functions. The roles of Chairman and Managing Director are separate, with each having set responsibilities.

The Board is confident that its members have the knowledge, talent and experience to lead the Company. The Non-Executive Directors are independent of management and exercise their independent judgment. With their depth of experience, they add value to Board deliberations.

The Board is required to meet at least four times a year. The Board delegates the day-to-day management of the business to the Managing Director assisted by senior management. Senior management is invited to attend Board meetings and facilitates the effective control of all the Company’s operational activities, acting as a medium of communication and coordination between all the various business units.

All Directors have access to the Company Secretary and his services and may seek independent professional advice if necessary. It is the Company’s philosophy to manage and control its business on a decentralized basis. Senior management meets on a monthly basis to review the results, operations, key financial indicators and the business strategy of the Company. Board meetings are held quarterly to
deliberate the results of the Company.

Performance evaluation and reward
Details of the remuneration of Directors are disclosed in Note 31 to the financial statements. The Company utilises the results of market surveys to ensure market related salaries are paid and that market related trends are followed in terms of changes in benefits, while at the same time, taking into account the intrinsic value of individual contributions. A portion of remuneration of all managerial staff, especially
senior management, is linked to the performance of their respective business units and of the Company as a whole.

Risk management and internal control
The Board accepts final responsibility for the risk management and internal control systems of the Company. It is the task of management to ensure that adequate internal financial and operational control systems are developed and maintained on an ongoing basis in order to provide reasonable assurance regarding:

The effectiveness and efficiency of operations:

The efficiency of any internal control system is dependent on the strict observance of prescribed measures. There is always a risk of non-compliance of such measures by staff. Consequently, even a strict and efficient internal control system can provide no more than a reasonable measure of assurance in respect of the above mentioned objective.

The Board assessed the internal control systems throughout the financial year ended 31 December 2009 and is of the opinion that they
met acceptable criteria.

Ethical behavior
The Company’s Code of Conduct governs all its activities, internal relations and interactions with stakeholders in accordance with its ethical values. It is expected of all staff to maintain the higher level of integrity and honesty in dealing with customers, suppliers, service providers and colleagues.

Compliance with the Code of Conduct is the ultimate responsibility of the Managing Director and the Company Secretary, with day-today monitoring delegated to line management with the support of personnel officers.

The code is supplemented by the Company’s responsibility philosophy as well as its employment practices, occupational health and safety controls.

Business ethics and organizational integrity
The Company’s Code of Conduct commits it to the highest standards of integrity, conduct and ethics in its dealings with all parties concerned, including its Directors, managers, employees, customers, suppliers, competitors, investors, shareholders and the public in general. The Directors and staff are expected to fulfill their ethical obligations in such a way that the business is run strictly according to fair commercial competitive practices.

Financial reporting and auditing
The Directors accept final responsibility for the preparation of the annual financial statements which fairly present:

The responsibility for compiling the annual financial statements was delegated to management.

The external auditors report on whether the annual financial statements are fairly presented.

The Directors are satisfied that during the year under review:

The Directors are also satisfied that no material event has occurred between the financial year-end and the date of this report.

The Directors are of the opinion that the Company has sufficient resources and commitments at its disposal to operate the business for the foreseeable future. The financial statements have been prepared on a going concern basis.

ENVIRONMENTAL
The Company has a formal environmental control accreditation program and all operations are following the ISO 14001:2004 system.

AUDITORS
The auditors, Ernst & Young have expressed their willingness to continue in office as auditors and are eligible for re - appointment. A resolution proposing the re-appointment of Ernst & Young as auditors of the Company for the year 2010 will be tabled at the Annual General Meeting.

Charles Naude - Chairperson
Jürg Flühmann - Managing Director