Merafe Resources : Download Annual Financial Statements 2021

Merafe Resources Limited

(Registration number 1987/003452/06)

Consolidated and Separate Annual Financial Statements for the year ended 31 December 2021

Contents

Busisiwe Nteyi CA(SA)

Financial Manager

Ditabe Chocho CA(SA)

Financial Director

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Merafe Resources Limited

(Registration number 1987/003452/06)

Consolidated and Separate Annual Financial Statements for the year ended 31 December 2021

Directors' Responsibilities and Approval

The directors are required in terms of the Companies Act of South Africa to maintain adequate accounting records and are responsible for the content and integrity of the consolidated and separate annual financial statements and related financial information included in this report. It is their responsibility to ensure that the consolidated and separate annual financial statements fairly present the state of affairs of the Group and Company as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with International Financial Reporting Standards, the requirements of International Financial Reporting Standards (IFRS), interpretations by the International Financial Reporting Interpretations Committee (IFRIC), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee (APC), the Financial Pronouncements as issued by Financial Reporting Standards Council, the JSE Limited Listing Requirements and the requirements of the Companies Act 2008 of South Africa.

The annual financial statements are prepared in accordance with International Financial Reporting Standards and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.

The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the Group and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the Board sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the Group and all employees are required to maintain the highest ethical standards in ensuring the Group's business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the Group is on identifying, assessing, managing and monitoring all known forms of risk across the Group. While operating risk cannot be fully eliminated, the Group endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The directors are of the opinion that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The directors confirm that the Company is in compliance with the provisions of the Companies Act, specifically relating to its incorporation and operates in compliance with its memorandum of incorporation.

The directors have reviewed the Company and Group's cash flow forecast for the 12 months from date of issue of the financial statements and, in light of this review, they are satisfied that the Company and Group has or had access to adequate resources to continue in operational existence for the foreseeable future.

The external auditors are responsible for independently auditing and reporting on the Group's consolidated and separate annual financial statements. The annual financial statements have been examined by the Group's external auditors and their report is presented on pages 14 to 17.

The annual financial statements set out on pages 3 to 81, which have been prepared on the going concern basis, were approved by the Board on 22 March 2022 and were signed on their behalf by:

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Merafe Resources Limited

(Registration number 1987/003452/06)

Consolidated and Separate Annual Financial Statements for the year ended 31 December 2021

CEO and FD's responsibility statement

The directors, whose names are stated below hereby confirm that:

• the annual financial statements set out on pages 2 - 81 , fairly present in all material respects the financial position, financial performance and cash flows of Merafe Resources Limited in terms of IFRS;
• no facts have been omitted or untrue statements made that would make the annual financial statements false or misleading;
• internal financial controls have been put in place to ensure that material information relating to Merafe Resources Limited and its consolidated subsidiaries has been provided to effectively prepare the financial statements of Merafe Resources Limited; and
• the internal financial controls are adequate and effective and can be relied upon in compiling the annual financial statements, having fulfilled our role and function within the combined assurance model pursuant to principle 15 of the King Code. Where we are not satisfied, we have disclosed to the Audit and Risk Committee and the auditors the deficiencies in design and operational effectiveness of the internal financial controls and any fraud that involves directors, and have taken the necessary remedial action.

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Merafe Resources Limited

(Registration number 1987/003452/06)

Consolidated and Separate Annual Financial Statements for the year ended 31 December 2021

Report of the Audit and Risk Committee

This report is provided by the Audit and Risk Committee (the Committee) appointed in respect of the 2021 financial year of Merafe Resources Limited (Merafe).

1. Introduction

The Committee is pleased to present its report for the financial year ended 31 December 2021. The Committee confirms that it has adopted formal terms of reference as its Audit and Risk Committee Charter (the Charter), and that it has discharged all of its responsibilities for the current financial year, in compliance with the Charter. The report has been prepared based on the requirements of the South African Companies Act, No 71 of 2008, as amended (Companies Act), King IV Report on Corporate Governance for South Africa, 2016 (King IV Code/King IV), the JSE Limited Listing Requirements (Listing Requirements) and other applicable regulatory requirements. The report provides an overview of the work done by the Committee during the year under review.

2. Objectives

The overall objectives of the Committee are to:

• Assess the adequacy of the internal financial controls and the accounting systems, including the Company's authority framework;
• Review the summarised financial statements, interim financial statements and annual financial statements and recommend these to the Merafe board of directors (Board) for approval;
• Assess and evaluate the Company's combined assurance and provide independent oversight of the effectiveness thereof;
• Nominate the external auditor who in the opinion of the Committee is considered independent for appointment, determine and approve external audit fees, set the Company and its subsidiaries' (the Group) policy on non-audit services provided by the external auditor and ensure that the appointment complies with legislation;
• Monitor compliance with legal requirements and debt covenants;
• Recommend budgets and plans to the Board;
• Consider and recommend to the Board any dividend;
• Conduct periodic reviews and assessments of the business risks the Group faces by considering Merafe's and the Glencore Merafe Pooling and Sharing Venture (Venture) risk reports;
• Receive and deal with any concerns from within, outside the Company or on its own initiative in relation to accounting practices, internal audit of the Company or any related matter and ensure that all issues are addressed;
• Make submissions to the Board on any matter concerning the Company's accounting policies, financial control, records and reporting. This includes a review of key matters requiring judgement such as impairment;
• Review the Company's related party transactions;
• Perform duties that are attributed to it by the Act, the Johannesburg Stock Exchange (JSE) and King IV Code; and
• Consider the JSE's proactive monitoring reports and the Company's responses to JSE letters.

The objectives of the Committee were adequately met during the year under review.

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