PricewaterhouseCoopers Inc., 4 Lisbon Lane, Waterfall City, Jukskei View, 2090Private Bag X36, Sunninghill, 2157, South AfricaT: +27 (0) 11 797 4000, F: +27 (0) 11 209 5800, www.pwc.co.za

Chief Executive Officer: L S MachabaThe Company's principal place of business is at 4 Lisbon Lane, Waterfall City, Jukskei View, where a list of directors' names is available for inspection.Reg. no. 1998/012055/21, VAT reg.no. 4950174682.

Independent auditor’s reportTo the Shareholders of Phuthuma Nathi Investments (RF) Limited

Report on the audit of the consolidated and separate financialstatements

Our opinion

In our opinion, the consolidated and separate financial statements present fairly, in all materialrespects, the consolidated and separate financial position of Phuthuma Nathi Investments (RF)Limited (the Company) and its subsidiaries (together the Group) as at 31 March 2020, and itsconsolidated and separate financial performance and its consolidated and separate cash flows for theyear then ended in accordance with International Financial Reporting Standards (IFRS) and therequirements of the Companies Act of South Africa.

What we have audited

Phuthuma Nathi Investments (RF) Limited’s consolidated and separate financial statements set out onpages 23 to 44 comprise:

● the consolidated and company statements of financial position as at 31 March 2020;

● the consolidated and company statements of profit or loss for the year then ended;

● the consolidated and company statements of comprehensive income for the year then ended;

● the consolidated and company statements of changes in equity for the year then ended;

● the consolidated and company statements of cash flows for the year then ended; and

● the notes to the financial statements, which include a summary of significant accountingpolicies.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Ourresponsibilities under those standards are further described in the Auditor’s responsibilities for theaudit of the consolidated and separate financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour opinion.

Independence

We are independent of the Group in accordance with the sections 290 and 291 of the Independent

Regulatory Board for Auditors’ Code of Professional Conduct for Registered Auditors (Revised

January 2018), parts 1 and 3 of the Independent Regulatory Board for Auditors’ Code of Professional

Conduct for Registered Auditors (Revised November 2018) (together the IRBA Codes) and other

independence requirements applicable to performing audits of financial statements in South Africa.

We have fulfilled our other ethical responsibilities, as applicable, in accordance with the IRBA Codes

and in accordance with other ethical requirements applicable to performing audits in South Africa. The

IRBA Codes are consistent with the corresponding sections of the International Ethics Standards

Board for Accountants’ Code of Ethics for Professional Accountants and the International Ethics

Standards Board for Accountants’ International Code of Ethics for Professional Accountants

(including International Independence Standards) respectively.

Our audit approach

Overview

Overall group materiality

● R56 million, which represents 5% of consolidated profit beforetax.

Group audit scope

● The associate, Multichoice South Africa Holdings ProprietaryLimited (MCSAH) and the subsidiary, Phuthuma NathiInvestments 2 (RF) Limited (PN2) were considered to befinancially significant components and subject to full scopeaudits.

Key audit matters

● Accounting for the finalisation of the additional 3.33%shareholding acquired in MCSAH in the 2019 financial year;and

● Accounting for the acquisition of PN2 and the resultingadditional 8.33% shareholding acquired in MCSAH.

As part of designing our audit, we determined materiality and assessed the risks of materialmisstatement in the consolidated and separate financial statements. In particular, we consideredwhere the directors made subjective judgements; for example, in respect of significant accountingestimates that involved making assumptions and considering future events that are inherentlyuncertain. As in all of our audits, we also addressed the risk of management override of internalcontrols, including among other matters, consideration of whether there was evidence of bias thatrepresented a risk of material misstatement due to fraud.

Materiality

The scope of our audit was influenced by our application of materiality. An audit is designed to obtainreasonable assurance whether the financial statements are free from material misstatement.Misstatements may arise due to fraud or error. They are considered material if individually or inaggregate, they could reasonably be expected to influence the economic decisions of users taken on thebasis of the financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality,including the overall group materiality for the financial statements as a whole as set out in the tablebelow. These, together with qualitative considerations, helped us to determine the scope of our audit

Materiality

Groupscoping

Key auditmatters

and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements,both individually and in aggregate on the financial statements as a whole.

Overall groupmateriality

R56 million.

How we determined it 5% of consolidated profit before tax.

Rationale for themateriality benchmarkapplied

We chose consolidated profit before tax as the benchmark because, inour view, it is the benchmark against which the performance of theGroup is most commonly measured by users, and is a generallyaccepted benchmark. MCSAH is a profit driven entity and the profitfor the Group is impacted by the share of profit from MCSAH, whichis then also the key driver and performance measure of the Group.Therefore, consolidated profit before tax has been considered to be thekey benchmark in calculating materiality. We chose 5% which isconsistent with quantitative materiality thresholds used for profit-oriented companies in this sector.

How we tailored our group audit scope

We tailored the scope of our audit in order to perform sufficient work to enable us to provide anopinion on the consolidated financial statements as a whole, taking into account the structure of theGroup, the accounting processes and controls, and the industry in which the Group operates.

The Company owns a 25% interest in MCSAH which is accounted for as an investment in associate.For purposes of our audit, we considered MCSAH to be a financially significant component and subjectto a full scope audit.

The Company also owns a 100% interest in PN2. For purposes of our audit, we considered PN2 to be afinancially significant component and subject to a full scope audit.

In establishing the overall approach to the audit, we determined the type of work that needed to be

performed by us, as the engagement team and the component auditor from within the PwC network of

firms. Where the work was performed by the component auditor, we determined the level of

involvement we needed to have in the audit work at the component to be able to conclude whether

sufficient appropriate audit evidence had been obtained as a basis for our opinion on the consolidated

and separate financial statements as a whole.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance inour audit of the consolidated and separate financial statements of the current period. These matterswere addressed in the context of our audit of the consolidated and separate financial statements as awhole, and in forming our opinion thereon, and we do not provide a separate opinion on thesematters.

Key audit matter How our audit addressed the key auditmatter

Accounting for the finalisation of theadditional 3.33% shareholding acquiredin MCSAH in the 2019 financial year

(Consolidated and separate financialstatements)

In the 2019 financial year, as part of theformation of the Multichoice Group,MultiChoice Group Limited allocated, for anominal consideration, an additional 5% equitystake in MCSAH to the Company and PN2(collectively “Phuthuma Nathi”) as part of anempowerment transaction. The Company wasallocated 3.33% of the 5% additional equitystake.

In accordance with International AccountingStandard (IAS) 28 - Investments in associatesand joint ventures (IAS 28), paragraph 32,when the Company acquires an additional stakein an existing associate, any excess of the fairvalue of the net identifiable assets of theassociate over the consideration paid, isrecognised as income (“gain on empowermenttransaction”) in the separate statement of profitor loss.

As the Company paid a nominal considerationfor the shares acquired, a gain on empowermenttransaction amounting to R 716 million wasrecognised in the prior year with acorresponding increase to the cost of theinvestment in associate. This gain onempowerment transaction was determined bymanagement’s valuation experts in the prioryear through a fair value exercise that wasperformed. These provisional amounts werenoted to be subject to change based on thefinalised amounts.

The assessment was finalised in the currentfinancial year, which has resulted in a change tothe gain on empowerment transaction that wasrecognised in the prior year. The revised gain on

We obtained management’s revised fair valueexercise and, making use of our valuationexpertise, we performed the procedures below.

● Assessed the competency, capability,and objectivity of management’sexperts by obtaining evidence relatingto their professional certifications,experience in the industry andreputation in the field, and byconsideration of our previousexperience with the experts. We notedno aspects requiring furtherconsideration.

● Assessed the completeness of theidentified intangible assets, withreference to the understanding of thebusiness and industry, and perinspection of the MCSAH financialstatements and noted no exceptions.

● Assessed the appropriateness of boththe valuation methodologies applied tovalue the intangible assets, withreference to market practice and therequirements of IFRS 13 - Fair valuemeasurement (IFRS 13), and acceptedthe methodologies used bymanagement.

● Tested the assumptions used in thevaluation of the brands as follows:

○ We recomputed the terminalgrowth rate with reference to thelong-term consensus ConsumerPrice Index (“CPI”) forecast. Wecompared this to management’srate used and noted no materialexceptions;

○ We compared the WACC rate withour internally developed range ofacceptable WACC rates, which

empowerment transaction was determinedthrough a fair value exercise performed bymanagement’s valuation experts in the currentyear and was determined at R851 million. Thisresulted in an additional gain on empowermenttransaction of R135 million. The gain onempowerment transaction amount in theseparate statement of profit or loss for the prioryear was restated accordingly with acorresponding increase to the investment inassociate for the prior year, which was alsorestated. The restatement of the gain onempowerment transaction also resulted in arestatement of the accumulated profit for theprior year.

The fair value exercise for the acquisition of anadditional stake in an existing associateincorporates fair value information at the datewhen the additional interest is acquired. Thereis no step up or remeasurement of thepreviously held interest, because there is nochange in the status of the investment.The fair value exercise is subject to significantjudgement and estimation by the directors, inthe following areas:

● Identification of intangible assets○ This consists of customer relationships

and brands.

● Valuation of intangible assets (includingnotional goodwill)○ The brands have been valued using the

Income Approach: Royalty ReliefMethod. The assumptions with themost significant impact on the value ofthe brands include the terminal growthrate, WACC and the royalty rate;

○ The customer relationships have beenvalued using the Income Approach:Multi-period Excess Earnings Method("MEEM"). The assumptions with themost significant impact on the value ofthe customer relationships include theattrition rate, WACC, adjusted EBITmargin and appropriate contributoryasset charges (CAC’s).

took into account current andforecast economic conditions. Thediscount rate adopted bymanagement fell within ourinternally developed range. Wefurther held discussions withmanagement and obtained anunderstanding of the rationale forthe discount rate applied; and

○ We independently obtainedresearched royalty rates based onmarketable research forcomparable target companies andour experience in the sector. Wecompared this to management’srate and noted no exceptions.

● Tested the assumptions used in thevaluation of customer relationships asfollows:

○ We accepted management’s use ofan attrition rate of 11% on thestraight-line method, as this wasdetermined with reference to thehistoric MCSAH subscriber baseattrition;

○ We compared the WACC rate withour internally developed range ofacceptable WACC rates, whichtook into account current andforecast economic conditions. Thediscount rate adopted bymanagement fell within ourinternally developed range. Wefurther held discussions withmanagement and obtained anunderstanding of the rationale forthe discount rate applied;

○ We recalculated the EBITDAmargin based on the incomestatement forecast informationobtained. We compared this to themargin applied by managementand noted no material differences;and

○ We performed the following

● The determination of the amortisationperiod for the identified intangible assets○ Management have calculated a useful

life of 9 years based on the inverse ofthe 11% attrition rate.

● Profitability forecasts, which were used forthe purpose of deriving a fair value for thebrands and customer relationships.

In determining the net identifiable assets ofMCSAH, management has assumed the bookvalue of the tangible net assets of R6 billion toreflect the fair value of the tangible assets atvaluation date.

We considered this to be a matter of mostsignificance in the current year audit due to thefollowing:

● the significant judgements andestimation applied by the directors inperforming the fair value exercise; and

● the magnitude of the investment inassociate in relation to total assets.

Refer to the following notes in the consolidatedand separate financial statements that relate tothis key audit matter:

● Note 2, Principal accounting policies,Significant judgements and estimates;

● Note 4, Investments in associate;● Note 16, Gain on empowerment

transaction; and● Note 17, Prior period restatement.

procedures on the CACs to assessthe contribution of net workingcapital, fixed assets, the brandsand assembled workforce to thevalue of the customerrelationships:

❖ We assessed the return onassets method used tocalculate the CACs on networking capital withreference to valuationmethodologies and acceptedthe methodology used bymanagement. Werecalculated the CACs on networking capital andcompared this to the CACsutilised by management, withno material exceptions noted;

❖ We recalculated the CACs onfixed assets and theassembled workforce usingthe gross lease method. Wecompared this to the CACsutilised by management,noting no materialexceptions; and

❖ We recalculated the CACs onthe brands using the pre-taxroyalty rate. We comparedthis to the CACs utilised bymanagement, noting noexceptions.

● Assessed the reasonability of the usefullife of the customer relationshipsdetermined by management as theinverse of the attrition rate, bycomparing this to the range oftransactions in the sector, and foundthe useful life determined bymanagement to be within anacceptable range.

● Tested the profitability forecasts usedin the valuations of the intangibleassets as follows:

○ assessed the reasonableness of thebudgeting process by comparing

current year actual results with theprior year budgeted results and,based on our assessment, acceptedmanagement’s budgetingtechniques applied; and

○ assessed the reasonableness of thegrowth rate applied throughdiscussions with management tounderstand the business,management’s consideration ofinflation and management’s ten-year approved business plan. Wenoted no aspects requiring furtherconsideration.

We agreed the fair value of the tangible assets,which was assumed to reflect the book value, tothe carrying values of the tangible assetsrecorded in the audited financial statements ofMCSAH as at 28 February 2019.

We tested the mathematical accuracy of thevaluations and noted no material differences.

Utilising our valuation expertise, we sourcedindependent data and calculated a range of fairvalues for each identified intangible asset. Wecompared our results to the fair valuesdetermined by management and found the fairvalues determined by management to be withinan acceptable range of our independentlydetermined fair values.

Utilising our accounting expertise we assessedthe accounting applied in the determination ofthe additional gain on empowermenttransaction in accordance with IAS 28. Wefound no aspects in this regard which requiredfurther consideration.

Key audit matter How our audit addressed the key auditmatter

Accounting for the acquisition ofPhuthuma Nathi Investments 2 (RF)Limited and the resulting additional8.33% shareholding acquired in MCSAH

(Consolidated and separate financialstatements)

During the current year, the Company acquired100% of the share capital of PN2, resulting inPN2 becoming a wholly owned subsidiary of theCompany. In exchange for this acquisition, theCompany issued its own shares to the PN2shareholders at a 1:1 exchange ratio.

As part of the same transaction, PN2 distributedits 8.33% interest in MCSAH, to the Company,as a dividend in specie.

The Company’s investment in PN2 andcorresponding increase in equity is recognisedin accordance with IAS 28. The investment insubsidiary and increase in equity is recognisedat the fair value of the consideration that theCompany paid to the PN2 shareholders, beingthe fair value of the equity interests issued bythe Company.

Management calculated the fair value of theshares issued by the Company by using theaverage listed share price of the Company onthe effective date.

The Company and Group accounted for theadditional 8.33% investment in MCSAH,received as a dividend in specie, at the fair valueof the investment received which was R2.4billion. The Company has accounted for thedividend in specie received against the cost ofthe investment in PN2 as a return of capital.

Subsequent to the Company and Groupreceiving an additional 8.33% interest inMCSAH, the Company’s and the Group’sinvestment in MCSAH increased to 25%. Thisinvestment is accounted for using the equity

Accounting for the acquisition of PN2:

We obtained an understanding of theacquisition transaction by performing thefollowing procedures:

● Engaged in discussions withmanagement, which included theprocess followed by them indetermining the accounting for theacquisition transaction and the valueof the shares issued; and

● Inspected the share issue agreemententered into between the Company andPN2 for the 22.5 million ordinaryshares issued by the Company.

We performed the following procedures to testthe accounting for the acquisition transaction:

● Recalculated the percentage allocatedto the Company and agreed this tomanagement’s determination of theshareholding of 8.33%;

● Agreed the fair value of the Company’sshares to the fair value information onthe Equity Express SecuritiesExchange (EESE);

● Recalculated the fair value of theconsideration paid by multiplying thedetermined fair value of R105 pershare by the number of shares issuedper the share issue agreement andnoted no exceptions; and

● Tested the appropriateness of theaccounting journals processed bymanagement to record the acquisitiontransaction in line with therequirements of IAS 28. We noted noexceptions.

method of accounting. The Company and Groupalready held a significant influence in MCSAHand as such, the cost of acquiring the additionalstake, including any directly attributable costswere accounted for using the cost accumulationapproach.

In accordance with IAS 28, paragraph 32, whenan investor acquires an additional stake in anassociate, any excess of the consideration paidover the fair value of the identifiable assets isrecognised as goodwill (notional goodwill).

As the Company paid a consideration equal tothe fair value of the shares issued to PN2shareholders, which is in excess of the fair valueof the net identifiable assets as determined inMCSAH, notional goodwill amounting to R87.9million has been recognised and included in thecarrying amount of the investment in MCSAH.The notional goodwill was determined througha fair value exercise performed bymanagement’s valuation expert.

The fair value exercise for the additional stake iscalculated using fair value information at thedate when the additional interest is acquired.There is no step up or remeasurement of thepreviously held interest, because there is nochange in the status of the investment.The fair value exercise is subject to significantjudgement and estimation by the directors, inthe following areas:● Identification of intangible assets

○ This consists of customer relationshipsand brands.

● Valuation of intangible assets (includingnotional goodwill)○ The brands have been valued using the

Income Approach: Royalty ReliefMethod. The assumptions with themost significant impact on the value ofthe brands include the terminal growthrate, WACC, and the royalty rate;

○ The customer relationships have beenvalued using the Income Approach:Multi-period Excess Earnings Method

Utilising our accounting expertise we assessedthe accounting applied in accordance with IAS28. We found no aspects in this regard whichrequired further consideration.

Additional 8.33% shareholding acquired inMCSAH:

We obtained management’s fair value exerciseand, making use of our valuation expertise, weperformed the procedures below.

● Assessed the competency, capability,and objectivity of management’sexperts by obtaining evidence relatingto their professional certifications,experience in the industry andreputation in the field, and byconsideration of our previousexperience with the experts. We notedno aspects requiring furtherconsideration.

● Assessed the reasonableness ofutilising the same fair value exerciseperformed to value the additional 5%in the above key audit matter, to valuethe intangible assets in respect of the8.33% additional stake acquired in thecurrent year. Based on our workperformed, we accepted the use of thesame fair value exercise assessment aswas used to value the 5%.

● Assessed the completeness of theidentified intangible assets, withreference to the understanding of thebusiness and industry, and perinspection of the MCSAH financialstatements, and noted no exceptions.

● Assessed the appropriateness of boththe valuation methodologies applied tovalue the intangible assets, withreference to market practice and therequirements of IFRS 13, and acceptedthe methodologies used bymanagement.

● Tested the assumptions used in the

("MEEM"). The assumptions with themost significant impact on the value ofthe customer relationships include theattrition rate, WACC, adjusted EBITmargin and appropriate contributoryasset charges (CAC’s).

● The determination of the amortisationperiod for the identified intangible assets○ Management have calculated a useful

life of 9 years based on the inverse ofthe 11% attrition rate.

● Profitability forecasts, which were used forthe purpose of deriving a fair value for thebrands and customer relationships.

In determining the net identifiable assets ofMCSAH, management has assumed the bookvalue of the tangible net assets of R8 billion toreflect the fair value of the tangible assets atvaluation date.

We considered this to be a matter of mostsignificance in the current year audit due to thefollowing:

● the significant judgements andestimation applied by the directors inperforming the fair value exercise;

● the magnitude of the impact on theinvestment value as a result of theacquisition transaction on the Companylevel; and

● the magnitude of the investment inassociate in the Company and theGroup in relation to total assets.

Refer to the following notes in the consolidatedand separate financial statements that relate tothis key audit matter:

● Note 3, Consolidation transaction (inrespect of the separate financialstatements); and

● Note 4, Investments in associate (inrespect of the consolidated and separatefinancial statements).

valuation of the brands as follows:

○ We recomputed the terminalgrowth rate with reference to thelong-term consensus ConsumerPrice Index (“CPI”) forecast. Wecompared this to management’srate used and noted no materialexceptions;

○ We compared the WACC rate withour internally developed range ofacceptable WACC rates, whichtook into account current andforecast economic conditions. Thediscount rate adopted bymanagement fell within ourinternally developed range. Wefurther held discussions withmanagement and obtained anunderstanding of the rationale forthe discount rate applied; and

○ We independently obtainedresearched royalty rates based onmarketable research forcomparable target companies andour experience in the sector. Wecompared this to management’srate and noted no exceptions.

● Tested the assumptions used in thevaluation of customer relationships asfollows:

○ We accepted management’s use ofan attrition rate of 11% on thestraight-line method, as this wasdetermined with reference to thehistoric MCSAH subscriber baseattrition;

○ We compared the WACC rate withour internally developed range ofacceptable WACC rates, whichtook into account current andforecast economic conditions. Thediscount rate adopted bymanagement fell within ourinternally developed range. Wefurther held discussions with

management and obtained anunderstanding of the rationale forthe discount rate applied;

○ We recalculated the EBITDAmargin based on the incomestatement forecast informationobtained. We compared this to themargin applied by managementand noted no material differences;and

○ We performed the followingprocedures on the CACs to assessthe contribution of net workingcapital, fixed assets, the brandsand assembled workforce to thevalue of the customerrelationships:

❖ We assessed the return onassets method used tocalculate the CACs on networking capital withreference to valuationmethodologies and acceptedthe methodology used bymanagement. Werecalculated the CACs on networking capital andcompared this to the CACsutilised by management, withno material exceptions noted;

❖ We recalculated the CACs onfixed assets and theassembled workforce usingthe gross lease method. Wecompared this to the CACsutilised by management,noting no materialexceptions; and

❖ We recalculated the CACs onthe brands using the pre-taxroyalty rate. We comparedthis to the CACs utilised bymanagement, noting noexceptions.

● Assessed the reasonability of the usefullife of the customer relationshipsdetermined by management as theinverse of the attrition rate, by

comparing this to the range oftransactions in the sector, and foundthe useful life determined bymanagement to be within anacceptable range.

● Tested the profitability forecasts usedin the valuations of the intangibleassets as follows:

○ assessed the reasonableness ofthe budgeting process bycomparing current year actualresults with the prior yearbudgeted results and, based onour assessment, acceptedmanagement’s budgetingtechniques applied; and

○ assessed the reasonableness ofthe growth rate appliedthrough discussions withmanagement to understandthe business, management’sconsideration of inflation andmanagement’s ten-yearapproved business plan. Wenoted no aspects requiringfurther consideration.

We agreed the fair value of the tangible assets,which was assumed to reflect the book value, tothe carrying values of the tangible assetsrecorded in the audited financial results ofMCSAH as at 30 November 2019.

We tested the mathematical accuracy of thevaluations and noted no material differences.

Utilising our valuation expertise, we sourcedindependent data and calculated a range of fairvalues for each identified intangible asset. Wecompared our results to the fair valuesdetermined by management and found the fairvalues determined by management to be withinan acceptable range of our independentlydetermined fair values.

Utilising our accounting expertise we assessedthe accounting applied in the determination ofthe additional gain on empowerment

transaction in accordance with IAS 28. Wefound no aspects in this regard which requiredfurther consideration.

Other information

The directors are responsible for the other information. The other information comprises theinformation included in the document titled “Phuthuma Nathi Investments (RF) Limited AnnualFinancial Statements for the year ended 31 March 2020”, which includes the Directors’ Report, theReport of the Audit Committee and the Certificate by the Company Secretary as required by theCompanies Act of South Africa, which we obtained prior to the date of this auditor’s report, and theother sections of the document titled “Integrated annual report to the shareholders of PhuthumaNathi Investments (RF) Limited for the year ended 31 March 2020”, which is expected to be madeavailable to us after that date. The other information does not include the consolidated or the separatefinancial statements and our auditor’s report thereon.

Our opinion on the consolidated and separate financial statements does not cover the otherinformation and we do not and will not express an audit opinion or any form of assurance conclusionthereon.

In connection with our audit of the consolidated and separate financial statements, our responsibilityis to read the other information identified above and, in doing so, consider whether the otherinformation is materially inconsistent with the consolidated and separate financial statements or ourknowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date ofthis auditor’s report, we conclude that there is a material misstatement of this other information, weare required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the consolidated and separate financialstatements

The directors are responsible for the preparation and fair presentation of the consolidated andseparate financial statements in accordance with International Financial Reporting Standards and therequirements of the Companies Act of South Africa, and for such internal control as the directorsdetermine is necessary to enable the preparation of consolidated and separate financial statementsthat are free from material misstatement, whether due to fraud or error.

In preparing the consolidated and separate financial statements, the directors are responsible forassessing the Group and the Company’s ability to continue as a going concern, disclosing, asapplicable, matters related to going concern and using the going concern basis of accounting unless thedirectors either intend to liquidate the Group and / or Company or to cease operations, or have norealistic alternative but to do so.

Auditor’s responsibilities for the consolidated and separate financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated and separatefinancial statements as a whole are free from material misstatement, whether due to fraud or error,and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level ofassurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect amaterial misstatement when it exists. Misstatements can arise from fraud or error and are considered

material if, individually or in the aggregate, they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these consolidated and separate financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintainprofessional scepticism throughout the audit. We also:

● Identify and assess the risks of material misstatement of the consolidated and separatefinancial statements, whether due to fraud or error, design and perform audit proceduresresponsive to those risks, and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatement resultingfrom fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,intentional omissions, misrepresentations, or the override of internal control.

● Obtain an understanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the Group’s and the Company’s internal control.

● Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the directors.

● Conclude on the appropriateness of the directors’ use of the going concern basis of accountingand, based on the audit evidence obtained, whether a material uncertainty exists related toevents or conditions that may cast significant doubt on the Group’s and the Company’s abilityto continue as a going concern. If we conclude that a material uncertainty exists, we arerequired to draw attention in our auditor’s report to the related disclosures in the consolidatedand separate financial statements or, if such disclosures are inadequate, to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor’s report. However, future events or conditions may cause the Group and / or Companyto cease to continue as a going concern.

● Evaluate the overall presentation, structure and content of the consolidated and separatefinancial statements, including the disclosures, and whether the consolidated and separatefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

● Obtain sufficient appropriate audit evidence regarding the financial information of the entitiesor business activities within the Group to express an opinion on the financial statements. Weare responsible for the direction, supervision and performance of the group audit. We remainsolely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing ofthe audit and significant audit findings, including any significant deficiencies in internal control thatwe identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethicalrequirements regarding independence, and to communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, relatedsafeguards.

From the matters communicated with the directors, we determine those matters that were of mostsignificance in the audit of the consolidated and separate financial statements of the current periodand are therefore the key audit matters. We describe these matters in our auditor’s report unless law orregulation precludes public disclosure about the matter or when, in extremely rare circumstances, wedetermine that a matter should not be communicated in our report because the adverse consequences

of doing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on other legal and regulatory requirements

In terms of the IRBA Rule published in Government Gazette Number 39475 dated 4 December 2015,we report that PricewaterhouseCoopers Inc. has been the auditor of Phuthuma Nathi Investments(RF) Limited for 14 years.

PricewaterhouseCoopers Inc.

Director: AM Motaung

Registered Auditor

Johannesburg

10 June 2020

rvandermer014Stamp