MAHUBE INFRASTRUCTURE LIMITED — Annual Report 2021

Jul 5, 2021

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Building Community Wealth

2021

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INTEGRATED
ANNUAL
REPORT
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|||
|---|---|
|CONTENTS|
|1. ABOUT MAHUBE|
|About Mahube|4|
|Our assets|6|
|FY2021 salient features|9|
|Chairperson’s letter to stakeholders|10|
|2. OUR STRATEGY|
|Our business model|13|
|Risk management|14|
|Our stakeholder relationships|17|
|3. OUR PERFORMANCE|
|CEO’s report|20|
|Finance report|22|
|Sustainability|26|
|4. GOVERNANCE|
|Board of Directors|28|
|Corporate governance report|30|
|Governance structure|33|
|Remuneration Committee|37|
|Social and Ethics Committee report|42|
|5. ANNUAL FINANCIAL STATEMENTS|
|Audit and Risk Committee report|46|
|Directors’ responsibilities and approval|49|
|Directors’ report|50|
|CEO and FD’s responsibility statement|55|
|Company Secretary’s certification|56|
|Independent auditor’s report|57|
|Statement of financial position|60|
|Statement of profit or loss and other|
|comprehensive income|61|
|Statement of changes in equity|62|
|Statement of cash flows|63|
|Accounting policies|64|
|Notes to the Annual Financial Statements|71|
|6. SHAREHOLDERS’ INFORMATION|
|Shareholder analysis|91|
|Notice of Annual General Meeting|92|
|Form of proxy|101|
|General information|105|

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ABOUT THIS REPORT

WE ARE PLEASED TO PRESENT OUR 2021 INTEGRATED ANNUAL REPORT

Mahube Infrastructure Ltd (“Mahube” or the “Company”) is pleased to present its 2021 Integrated Annual Report to all its stakeholders. Our Integrated Annual Report is an expression of our commitment to transparency and open engagements with our stakeholders. Our aim is to enhance our stakeholders’ understanding of how we have addressed past issues, how we are dealing with current and future challenges and how we are leveraging our resources and relationships to create sustainable value in the short, medium and long term. We trust that this report will enable you to make knowledgeable and confident decisions when it comes to your relationship with us.

REPORTING PERIOD

Mahube is pleased to present its 2021 Integrated Annual Report to all its stakeholders. Our Integrated Annual Report is an expression of our commitment to transparency and open engagements with our stakeholders.

This report is produced and published annually, covering the financial year from 1 March 2020 to 28 February 2021 (“FY2021”). Any material events after this date and up to the Board approval date of 30 June 2021 have also been included.

MATERIAL ISSUES

The report discloses the Company’s approach to sustainability and identifies and explains the material issues facing the Company and their impact and the Company’s response thereto. The Board has considered matters viewed as material to the functioning of Mahube and its stakeholders.

These are determined through Board and Board Committees’ discussions, market research, engagement with our stakeholders, continuous risk assessments and the review of prevailing trends in our sector and the economy.

The issues we have identified as material in terms of the impact on Mahube’s long-term sustainability include the capital and ability to raise future investment capital and the scale of the current asset portfolio.

These material issues are addressed throughout this Integrated Annual Report. Sustainability issues that are not considered material to our operations are not discussed in this report. We believe that this approach should improve clarity for stakeholders to evaluate Mahube’s ability to create and unlock sustainable value over the short, medium and long term.

BASIS OF PREPARATION

This Integrated Annual Report has been prepared in terms of:

• Companies Act of South Africa, No 71 of 2008, as amended (“Companies Act”);

• [JSE Listings Requirements;]

Mahube Infrastructure Limited 2021 Integrated Annual Report 1

ABOUT THIS REPORT (CONTINUED)

• King Code of Governance of Corporate Principles for South Africa[TM] (“King IV[TM] ”); and

• Consideration of certain principles contained in the International Integrated Reporting Council’s Integrated Reporting Framework.

The King IV[TM] Application Register detailing the application of the King IV[TM] principles is available on the Company’s website www.mahube.africa.

INTEGRATED REPORTING

Mahube aims to adopt the guidelines outlined in the International Integrated Reporting Council’s Framework as appropriate. In line with the framework, the Integrated Annual Report includes all such information about matters that materially affect the Company’s ability to create and sustain value over the short, medium and long term. Comparative historical information is presented, where relevant, as an insight into future plans.

ASSURANCE

This Integrated Annual Report has been reviewed and approved by the Board of Directors. The Integrated Annual Report has been signed on behalf of the Board by the Chairperson of the Board, Khalipha Eddie Mbalo, and the Chief Executive Officer (”CEO”), Gontse Moseneke.

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For additional contact details, please see the inside back cover. Mahube welcomes feedback and any suggestions for the Company’s future reports.

Please forward any comments to: Tel: +27 11 684 1230 Email: info@mahube.africa

The Annual Financial Statements have been prepared under the supervision of Petro Lewis CA(SA), the Financial Director (”FD”).

Our combined assurance model relies on review by management, as well as internal and external assurance. The Audit and Risk Committee and the Board depend on combined assurance in assessing the adequacy of internal controls and risk management processes.

The Annual Financial Statements have been audited by the independent auditors, BDO South Africa Incorporated, who issued an unqualified opinion.

FORWARD-LOOKING STATEMENTS

This Integrated Annual Report includes forward-looking statements that involve inherent risks and uncertainties. If one or more of these risks materialise, or should the underlying assumptions prove incorrect, actual results may be different from those anticipated.

Forward-looking statements apply only as of the date on which they are made. Mahube does not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise.

STATEMENT OF RESPONSIBILITY

The Board acknowledges its responsibility to ensure the integrity of this Integrated Annual Report. The Directors confirm that they have collectively assessed the content of the Integrated Annual Report and believe that it addresses material issues and is a fair representation of the performance of the Company. The Board has therefore approved the 2021 Integrated Annual Report on 30 June 2021.

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Khalipha Eddie Mbalo Gontse Moseneke Independent CEO Non-Executive Chairperson

2

Mahube Infrastructure Limited 2021 Integrated Annual Report

1 ABOUT MAHUBE

About Mahube 4 Our assets 6 FY2021 salient features 9 Chairperson’s letter to stakeholders 10

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WHO WE ARE

Mahube is an infrastructure company that offers investors exposure to infrastructure assets in Southern Africa.

The vision of Mahube is to stimulate fast, inexpensive and sustainable delivery and upkeep of infrastructure on a significant scale.

Mahube aims to generate investment returns that are characterised by predictable and regular cash flows generated from infrastructure assets, long-term investment into ownership and operation of assets, and blue-sky upside from providing disruptive solutions to infrastructure-related market inefficiencies.

Currently Mahube has invested in and holds equity interests in two wind farms and three solar photovoltaic farms with a collective power generation capacity of approximately 400 MW. All five renewable energy assets were licensed during Round 1 of the Renewable Energy Independent Power Procurement Programme in South Africa, each to generate electricity that they sell to Eskom under a 20-year power purchase agreement.

OUR HISTORY

Mahube was listed on the JSE Limited in Johannesburg in 2015, as a Special Purpose Acquisition Company. Trading as GAIA Infrastructure Capital Limited at the time, the Company raised R550 million upon listing and most of these funds were deployed in 2016 during the acquisition of its first viable asset, an interest in the Dorper Wind Farm.

The 100 MW plant in the Eastern Cape province, South Africa has been in operation since 2014 and has a 20-year Power Purchase Agreement (“PPA”) with Eskom. The Company earned its first investment income from this asset in early 2017, which enabled it to declare and pay its maiden dividend distribution of 63.5 cents per share in the same year.

Since its founding, Mahube has invested in four more infrastructure assets in the renewable energy sector in South Africa – one wind farm and three solar PV farms – and, together, all the energy assets were licensed by South Africa’s Department of Energy in the first round of bids of the Renewable Energy Independent Power Producer Procurement Programme.

In November 2020 the company transformed from GAIA Infrastructure Capital Limited to Mahube Infrastructure Limited. Mahube is a SeTswana word commonly derived from the phrase ”Mahube a naka tsa kgomo”, which refers to the dawn of a new day. This moment in history encapsulated our renewed focus towards maximising shareholder value from various emerging infrastructure

WHY INFRASTRUCTURE

According to an article republished in 2018 by the World Economic Forum, Africa’s urban population is expected to nearly triple by 2050 to 1.34 billion people.

This extreme rate of urbanisation is creating significant infrastructure deficits that impede the provision of basic services in these burgeoning urban centres. Private capital has historically played a marginal role in financing infrastructure, owing to political instability and lack of regulatory clarity. These conditions have been improving in recent years and are creating a climate where the private sector ought to be able to confidently make meaningful contribution towards closing the infrastructure deficits.

In addition, a natural solution to moderating the rate of urbanisation is to stimulate economic activities and opportunities in the rural areas. Investment in some of the infrastructure that is required to support urban living is typically located in rural areas, where it can and should have the positive impact of accelerating rural economic activity, development and prosperity.

Importantly, the scale of the infrastructure needs is such that there should be attractive financial returns for private capital to earn without overburdening the economies and society with excessive charges.

INVESTMENT THESIS

We aim to provide investment returns that are characterised by:

 Predictable and regular cash flows generated from infrastructure assets;

 Long-term investment into ownership and operation of assets; and  Blue-sky upside from providing disruptive solutions to infrastructure-related market inefficiencies.

CORPORATE SOCIAL RESPONSIBILITY

INVESTMENT POLICY

As a corporate citizen, we approach our responsibility to society with diligence and utmost good faith. We believe that through our corporate actions and decisions, we can impact society positively. The consequences of this positive impact on society is that it supports an atmosphere of social stability and prosperity, which results in sustained good performance of our businesses and Mahube’s investments in these businesses.

Our efforts in community development are predominantly channelled through the businesses that we own. The corporate and social responsibility activities of these businesses can be accessed through our website on: https://mahube.africa/about/#csr.

INVESTMENT CASE

OUR ASSETS

Mahube is invested in five renewable energy assets across Southern Africa – two wind farms and three solar PV farms – which collectively have the potential to generate enough energy to power more than 350 000 South African homes.

The assets were all licensed by South Africa’s Department of Energy (“DOE”) in the first round of bids of the Renewable Energy Independent Power Producer Procurement Programme. They are also key ventures for the economic development of rural communities in the Eastern Cape, Northern Cape and Free State provinces, with the construction phases of the solar farms alone creating more than three million man hours of job opportunities.

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Free State
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Northern Cape
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Free State
Northern Cape
Eastern Cape
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CURRENT ASSETS UNDER MANAGEMENT

NOBLESFONTEIN WIND FARM Victoria West, Northern Cape

DORPER WIND FARM Molteno, Eastern Cape

JASPER SOLAR PV FARM

Postmasburg, Northern Cape

LESEDI SOLAR PV FARM Postmasburg, Northern Cape

LETSATSI SOLAR PV FARM Mangaung, Free State

Effective economic Investment interest Mahube Infrastructure 20% Investment; SARGE

Renewable 9.9% Energy G

Renewable 4.5% Energy G Renewable 5.3% Energy G Renewable 5.3% Energy G

6 Mahube Infrastructure Limited 2021 Integrated Annual Report

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Noblesfontein Wind Farm

The Noblesfontein Wind Farm is located on Farm Noblesfontein, approximately 35 km south of the small Northern Cape town of Victoria West. The wind farm, which became operational in July 2014 following a construction period of 16 months, produces 73.8 MW of clean renewable energy through 41 Vestas V100 (80 m hub height) wind turbine generators that can each produce up to 1.8 MW. The total expected annual electricity generated is 221 GWh, and the government-guaranteed Power Purchase Agreement with Eskom for this asset runs until June 2034.

Dorper Wind Farm

Located between the Molteno and Sterkstroom communities in the Eastern Cape, the Dorper Wind Farm has been feeding 100 MW of clean, renewable energy into Eskom’s electricity grid since August 2014. The government-guaranteed Power Purchase Agreement with Eskom for this asset runs until July 2034.

Jasper Solar PV

Located near Postmasburg, Northern Cape, the Jasper Solar PV Farm is currently the largest photovoltaic power plant on the African continent. With more than 325 000 Solar PV modules installed over an area covering 150 hectares, the plant comprises 39 central inverter stations, each of which has capacity of 2 MW-AC. These are expected to generate 180 GWh of electricity annually. The facility, which is adjacent to the Lesedi Solar PV Farm, became operational in December 2014 and has a government-guaranteed Power Purchase Agreement with Eskom that runs until November 2034. Mahube holds a 4% stake in this asset.

Lesedi Solar PV

The Lesedi Solar PV Farm is located on Humansrus Farm approximately 30 km east of Postmasburg, Northern Cape. The area is sun-drenched and is characterised by minimal rainfall and vast open areas, placing it amongst the best locations in the world for high irradiance. Construction of the plant started in January 2013 and commercial operations began in May 2014. The power plant currently supplies approximately 140 GWh of power to Eskom annually in accordance with a government-guaranteed Power Purchase Agreement that runs until April 2034. Mahube holds a 5.3% stake in this asset.

INVESTMENT POLICY

Mahube’s

Investment Policy is to invest in large-scale infrastructure assets in Southern Africa’s energy, transport and water and

sanitation sectors.

Letsatsi Solar PV

The Letsatsi Solar PV Farm is located on Jedwater Farm, some

35 km northwest of Mangaung Metropolitan Municipality in the Free State province. The asset comprises HANWA SolarOne SF260 photovoltaic modules, plus Siemens PVS500 inverters. The asset became commercially operational in May 2014 and has been supplying approximately 140 GWh of power to Eskom annually in accordance with a government-guaranteed Power Purchase Agreement that runs until April 2034. Mahube holds a 5.3% stake in this asset.

7

Mahube Infrastructure Limited 2021 Integrated Annual Report

INVESTMENT STRUCTURE

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Mahube Infrastructure Limited
100% 100%
RMBIA - A & B Pref RMBIA A & B Pref
Mahube Capital Fund 1 Mahube Asset
Shares R188 million Shares R143 million
(RF) (Pty) Ltd Management (Pty) Ltd
33% A & B Pref Shares R54.7 million 100%
Mahube Infrastructure Investment
Renewable Energy G (Pty) Ltd SARGE GAIA
1 (RF) (Pty) Ltd
C Pref Shares R130 million
30% 100%
Dorper Wind A, A1 & B Pref Shares R273 million
Intikon Solar
Farm SARGE GAIA SPV
47.5%
49.3%
32% 26% Noblesfontein
N1
Wind Farm
Oakleaf 83 Oakleaf 90
50% 50% 46%
Lesedi Letsatsi Jasper
solar PV solar PV Wind
farm farm Farm
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* Company has been dormant to date.

INVESTMENT STRATEGY

Mahube aims to be a diversified infrastructure company, and will invest in large-scale energy, transport, water and sanitationrelated infrastructure projects in a responsible and transparent manner. In so doing, the Company will provide investors with good, predictable, inflation linked, liquid and long-term yielding investments. Although the Company’s primary focus is on South Africa, Mahube will consider opportunities in the rest of Southern Africa.

Mahube adheres to the United Nations backed Principles for Responsible Investment and the Code for Responsible Investing in South Africa. The Board is responsible for the Company’s objectives, business and investment strategies and its overall supervision. Executive Management is responsible for the identification, assessment, structuring, resultant acquisition and potential disposal of viable assets.

INVESTMENT RISK

The risks of an investment in infrastructure may be generally divided into those specific to the infrastructure asset and those affecting the broader asset class. The asset specific risks encompass risks pertaining to the design, construction and operation of the infrastructure asset while the asset class risks include economic, regulatory and political risks.

Asset specific risks largely depend on the maturity of the particular asset. In the construction phase, there is considerable risk associated with the construction process, such as the construction period and budget overruns. Notably as an asset matures, its risk profile declines and its valuation increases.

APPROVAL OF INVESTMENT POLICY

The Investment Policy was approved by the Board, shareholders and the JSE as envisaged in section 15 of the JSE Listings Requirements. Any future material changes to the Investment Policy must be approved by shareholders by way of ordinary resolution.

8 Mahube Infrastructure Limited 2021 Integrated Annual Report

FY2021 SALIENT FEATURES

FINANCIAL

Dividends received to up 119% R54.9 million from R25.1 million in the comparative period last year

Basic earnings and headline earnings per share down 69.7% to 21.71 cents per share

in comparison to 71.64 cents for the comparative period last year

Total revenue down 29.3% to R44.7 million in comparison to R63.2 million for the comparative period last year, due to an unfavourable adjustment to financial assets measured at fair value

Tangible NAV per share at R10.63 comparative period last year

Final cash dividend declaration of

Tangible net asset value per share at R10.63

32.00 cents per share

OPERATIONAL

Gross assets under management at R754.2 million

Investment in a diversified asset portfolio with long-term benefits over the life of the assets

Mahube Infrastructure Limited 2021 Integrated Annual Report 9

CHAIRPERSON’S LETTER TO STAKEHOLDERS

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Khalipha Eddie Mbalo Independent Non-Executive Chairperson

On behalf of the Board of Directors, it is my privilege to report to our various stakeholders (shareholders; funders; employees; business partners, etc) on the year that has come to pass.

In a year that continued to be characterised by the Covid-19 pandemic, I am proud of Mahube’s achievements in the period ended February 2021. We managed to produce solid financial results whilst setting the Company on a surefooted path towards being able to create and unlock further value for our shareholders into the future.

achievements at cost containment, but also in how the capital markets have reacted since their appointment. Despite the persisting low liquidity in the trading of the Company’s shares on the listed markets, the share price has been tracking favourably upwards since the current Executive team took over the reins to oversee the operation of the Company’s business. The shares have traded at a materially narrower discount to net asset value. We believe that our adopted strategy for the Company over the next three years will deliver value accretive growth that should narrow this discount even further.

In my last letter I shared with you the views of my Board about how good a company Mahube is, as well as the good prospects that should be available to it. I am delighted with the subsequent work of the Executive team in bringing into sharp focus the greatness that this Company can achieve. The alignment between the Company and its largest shareholders has improved significantly over the past year. The Board now has clarity about how we should move forward to be able to grow the Company’s capital base. This should benefit the Company’s prospects going forward, whilst creating and unlocking new value for investors. We commend the excellent efforts of the Executive team in this regard.

The Executive Directors have been working together for almost 12 months and I am pleased with the progress that we have made in gelling the team into an effective organisation. The outcome of their inspired interventions is noticeable not only in their

In November 2020 the Company transitioned from GAIA Infrastructure Capital Ltd to Mahube Infrastructure Ltd. This transition represents more than simply the change of name. It heralds a new era for the Company to champion true sustainability in its business model, which should create extraordinary value for all our stakeholders, particularly our investors and providers of financial capital. This is our demonstrable commitment to the social compact that I wrote about in my last letter. Those of us who have the privilege of being part of Mahube today are grateful for the courage and passion of those who paved the way and laid the groundwork for the Company, a leading infrastructure company that looks to bolster its contribution to society.

Since the last Integrated Annual Report, we have retained the same Board structures and Board members, as we sought to finalise the strategic review for the business. The Board of

10 Mahube Infrastructure Limited 2021 Integrated Annual Report

CHAIRPERSON’S LETTER TO STAKEHOLDERS (CONTINUED)

Directors have performed reasonably well under the circumstances, and I am pleased with the progress that we have achieved. As we implement the revised strategy we are likely going to bring onboard new Director capacity to complement the skills base of the Board in guiding the business of the Company into the future.

The unprecedented economic period we are in (due to the Covid-19 pandemic) and magnitude of change today demands more courage to challenge convention and explore new directions, spot opportunities and take calculated risks to reach strategic goals. Passion in believing we can accomplish great aspirations, to be an impactful infrastructure company, we continue to seek out commercially sound investments in energy assets, transport assets, water and sanitation-related assets in a responsible and transparent manner. In so doing, the Company aims to provide its investors and providers of financial capital with attractive investment returns that are characterised by good running yields. Even though to date the Company’s primary focus has been on South Africa, Mahube will explore and pursue qualifying opportunities in the neighbouring countries.

Mahube is well positioned for this journey. Clarity about our product offering, superior technology of implementation and management, a good market presence and significant investments in our infrastructure in recent years provide a strong foundation to build on. Revenues are well diversified across infrastructure sites with a push to diversify and add scale. We are refining present and new opportunities to work with our stakeholders to advance the dividend pool.

to place great emphasis on corporate social responsibility not least because we are convinced it makes for sustainable good business. A good reputation, responsible use of resources, taking care of the environment and having employees who take pride in their work is good business.

Calls for rethinking the role of businesses in society are growing louder. Companies are continuously being pressured to play a more prominent role in addressing social challenges. The combined forces of public, private and civil actors are necessary to achieve the required scale and impact. The immense societal challenges of sustainably providing for the region’s growing population can only be addressed with technology, innovation and changes in behaviour. We simply must find ways to do more with less. This is the core of Mahube’s business, increasing yields and quality, optimising the use of natural resources in fields such as water and energy, as well as improving employee satisfaction and the region’s welfare.

Our business is about creating economic value that also makes a positive contribution to society. On behalf of the Board of Directors, I congratulate the Mahube team on their show of resilience and promising results in the year that ended in February 2021. We express our recognition of their dedication and hard work. We fully appreciate the continuing commitment and support of our shareholders.

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Khalipha Eddie Mbalo

The Board of Directors of Mahube is committed to good corporate governance and ethical business practices, which we believe promote the long-term interests of shareholders. We strive for Mahube to be a responsible corporate citizen. We have continued

Independent Non-Executive Chairperson

Chairperson of the Board of Directors, Mahube Infrastructure Limited

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Those of us who have the privilege of being part of Mahube today are grateful for the courage and passion of those who paved the way and laid the groundwork for the Company, a leading infrastructure company that looks to bolster its contribution to society.

11

Mahube Infrastructure Limited 2021 Integrated Annual Report

2 OUR STRATEGY

Our business model Risk management Our stakeholder relationships

13 14 17

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OUR BUSINESS MODEL

INPUTS

The capitals below are key to Mahube creation of value for our stakeholders in terms of our group operating structures and strategic objectives:

Financial Reputational People Asset Social Capital Capital Capital Capital Capital Debt and Strong presence[Stable and highly ] REIPPPP asset base Projects with equity raised in the SA skilled management impactful ESG Extensive infrastructure sector team with vast consideration Borrowings infrastructure infrastructure pipeline Responsible expertise investing Diverse network and (UN Codes) deep sector reach BUSINESS ACTIVITIES Diversified infrastructure investment company Infrastructure Deal Due asset sourcing diligence investment management Deal Deal pipeline execution

Operational/ Energy, transport, maximum six Visible ESG ROI – inflation water and Large-scale months of appreciation +6% (before costs) sanitation operation

VALUE CREATED

• A diversified infrastructure investment company.

• Investing in large-scale assets.

• Investing in high quality assets that yield predictable and sustainable returns for shareholders.

• Provide investors with low risk, predictable, inflationlinked, liquid and long-term yielding investment.

• Return on initial investment of at least CPI +6%.

• Target a consistent, stable and inflation-linked dividend.

• Diversify the assets under management in the energy, transport, water and sanitation sectors.

• Manage cost and achieve financial excellence.

• Responsible and transparent investments.

• Visible ESG appreciation.

• REIPPPP projects underway benefit local communities.

RISK MANAGEMENT

Mahube’s Board oversees risk management through the Integrated Risk and Compliance Framework with the responsibility for implementation delegated to the Audit and Risk Committee. This includes the process of independent audit assurance with regards to the implementation and adherence to Mahube’s policies, plans, procedures and controls. The framework ensures that Mahube achieves the level of strategic and operational efficiency and compliance as required by the Board. The Audit and Risk Committee is also responsible for

assessing the effectiveness of the Risk Management Policy and processes and reporting to the Board on the overall risk management process.

Mahube’s key risk management objective is to embed an effective risk management culture. The Company’s strategic objectives are managed continually to identify, analyse, prioritise and treat relevant risks appropriately to ensure an optimal risk-reward profile for all stakeholders.

RISK MANAGEMENT FRAMEWORK

Responsibilities

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 [ Oversight of the risk management function]
Board  [ Sets the tone and influences the culture of risk management within the organisation]
 [ Ensures integrated risk management and internal control systems are implemented ]
and maintained
 [ Assists in carrying out Board’s responsibilities in relation to risk ]
Delegates to: management
Audit and Risk  [ Tasks in the development, implementation and annual review of a Risk ]
Committee Management Policy and the risk management process
 [ Ensuring that compliance forms an integral part of Mahube’s risk ]
management process
 [ Day-to-day risk management including identifying and ]
evaluating the significant risks faced by Mahube and
Delegates to: determining how to respond to the risks
Executive  [ Implementing an effective risk management process, including ]
Management the identification, analysis and evaluation of risks specific to
their area of responsibility
 [ Setting the tone and influence of the culture of risk management]
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14 Mahube Infrastructure Limited 2021 Integrated Annual Report

RISK MANAGEMENT (CONTINUED)

Mahube has adopted a Combined Assurance Model based on three lines of defence which makes use of the following assurance providers:

• Management provides the Audit and Risk Committee with assurance that the risk management plan is integrated and functioning as part of the daily operations.

• The internal assurance providers (Board Committees) assess the effectiveness of the internal control and risk management processes.

• The external assurance providers provide assurance on specific aspects of the Company’s operations (external and internal audit).

The Audit and Risk Committee monitors, supervises and evaluates the effectiveness of the internal controls taking account of the risks documented in the risk register and approved by the Committee. The Audit and Risk Committee meetings are attended by the external auditors, the CEO and

FD as well as other Board members and invitees as considered appropriate by the Chairperson of the Audit and Risk Committee.

Assurance providers have unrestricted access to the Audit and Risk Committee, which ensures that their independence is in no way impaired.

RISK MANAGEMENT PROCESS

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Establish context
Our risk environment
Risk identification
Risk analysis
Determine level of risk
Likelihood of it occurring
Consequence if it were to occur
Monitor and
Control in place to mitigate risk
review strategic risks
Communication
– quarterly
and consultation
Risk evaluation operational risks
Determine whether controlled risk is – monthly
acceptable using risk matrix
Determine whether controlled risk
needs further treatment
Prioritise risk treatment
Treat risks
Identify the treatment for risks that do not meet
acceptable tolerance level on risk matrix
Prioritise risk for monitoring and review
Escalate priority one and two risks as required
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Mahube Infrastructure Limited 2021 Integrated Annual Report 15

RISK MANAGEMENT (CONTINUED)

The Company’s five key risks are set out below: LIKELIHOOD Almost certain Likely Possible Unlikely Rare Large shareholders 1 Access to capital 2 Share performance and illiquidity 3 Investor returns 4 Key person 5		Almost certain		1
		Likely		2 4 3 5
		Possible
	OOD	Unlikely
	LIKELIH	Rare
			Insignificant Minor Moderate High Major
			IMPACT
Risk Risk description			Mitigation approach
Large shareholders 75% of shares in issue are owned by large shareholders Shareholder approval required for issuance of additional shares or share buy-back programme Seeking support from existing shareholders Implementation of the Board’s engagement strategies 1
Access to capital Lack of investor appetite for the asset class due to economic climate and overall market sentiment Constrained support from existing shareholders Communication of Mahube’s investment case to the broader market to understand infrastructure as an asset class Developing multiple funding channels: equity, debt, preference share structure 2
Share performance and illiquidity Share price trading at a discount Dominant shareholders own 75% of issued shares Restrained free float Infrastructure industry uncertainty Diversification of shareholder base to achieve bigger investment scale 3
Investor returns Assets not yielding returns within expected timelines Varying investor expectations Dividend Policy Implementing the Investment Plan and identify low-risk assets with high yield Proper Dividend Policy in place and communicated regularly to investors 4
Key person risk Small management team with key dependency on CEO and FD Grow employee count of the Company as the business grows 5

16 Mahube Infrastructure Limited 2021 Integrated Annual Report

OUR STAKEHOLDER RELATIONSHIPS

Mahube is committed to improving and maintaining honest and mutually beneficial relationships and partnerships with all its stakeholders as integral to our sustainability and a critical part of our communication strategy. Effective and meaningful stakeholder engagement provides the Company with information that leads to improved decision-making processes and assists the Company and the Board to shape its long-term direction. The Board monitors relations with stakeholders while the Social and Ethics Committee oversees stakeholder relations. The CEO is responsible for stakeholder engagement.

We strive to ensure open and transparent engagement with all stakeholders. A stakeholder evaluation is constantly under review on a Company level as well as at the investee company level.

We communicate with various stakeholders through our website, stakeholder presentations, the Annual General Meeting (“AGM”), interaction with the media, one-on-one meetings, community forums and ongoing informal and formal discussions.

The stakeholders of our investee companies, providers of capital, Government, and employees are equally fundamental to Mahube’s success and the Company is committed to ongoing engagement with all its stakeholders.

Our key stakeholders and the issues that concern them are outlined below:

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Stakeholder Key interests Our commitment Engagement
 [ Servicing of debt]
 [ Financial performance]  [ Keeping providers of ]  [ Regular contact sessions ]
capital informed of around status of operations
 [ Dividend yield]
project developments and and specific projects
 [ Investment returns]
Providers of managing expectations  [ Interim and annual results ]
capital  [ Share price performance]  [ Effective management of finance ] announcements
 [ Solvency and liquidity] facilities  [ Regular website update]
 [ Strength of the Management ]  [ Regular tracking of ]  [ Roadshows]
and Board financial obligations  [ Ad hoc meetings]
 [ Quality of underlying assets]
 [ Continuity of business ]
relationships on commercially
 [ Conducting business in ]
optimal terms an ethical, responsible  [ Board representation]
Suppliers and  [ Service delivery and quality] and transparent manner  [ Management meetings]
partners  [ Fair and ethical treatment]  [ Regular engagements ]  [ One-on-one engagement]
 [ Preferential procurement] with suppliers
 [ Fair payment terms]
 [ Financial sustainability]
 [ Value adding relationships]
 [ Purchase consideration ]  [ Mutually beneficial relationships]  [ Ongoing regular meetings]
Potential
(attractive assets)  [ Conscious effort to meet ]  [ Presentations and ]
investee
 [ Integrity of the Company] expectations where applicable correspondence
companies
 [ Relationship building]
 [ Asset optimisation initiatives]
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Mahube Infrastructure Limited 2021 Integrated Annual Report 17

OUR STAKEHOLDER RELATIONSHIPS (CONTINUED)

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----- Start of picture text -----

Stakeholder Key interests Our commitment Engagement
 [ Increase asset base]
 [ Diversified investee company mix]
 [ SENS announcements]
 [ Strong business strategy ]
 [ Diversification into Southern ] that is ESG-linked  [ Interim and final results ]
presentations and investor
Africa region  [ Delivery of strategic objectives] conference calls
 [ Strength of the Board]
 [ Experienced Board and ]
 [ Statutory update on SENS ]
 [ Financial performance (asset ] Management team
announcements and regular
Investors quality, yields and valuation)
 [ Communicate all related- ] website updates
 [ Sustainability of the Company] party transactions  [ Calls and meetings with ]
 [ Strategy and ESG responsible ]  [ Communication in line ] strategic shareholders if
investing with JSE Listings Requirements and when required
 [ Growth in investment]  [ Provide summary of all transactions ]  [ Roadshows]
in the interim and final results
 [ AGM]
announcements and Integrated
Annual Report
 [ Staff development and ]  [ Focus on employee wellness ]  [ Formal performance review ]
career planning to achieve strategic objectives process
 [ Market-related and fair ]  [ Annual Department of ]  [ Regular engagement]
Employees rewards and benefits Labour submissions on  [ Staff training and ]
 [ Employment equity] employment equity development initiatives
 [ Company sustainability ]  [ Reports and workplace ]  [ Benchmarking remuneration ]
and growth skills plans in investee companies against industry average
 [ Relationship management ]
 [ Sustainability of long-term ] initiatives
economic empowerment and  [ Complete agreement for waste ]
sustainability initiatives management with EnviroServ  [ Engagement forums with ]
Communities  [ Company’s ESG initiatives] Waste Management local communities through
 [ Job creation (enterprise and local ]  [ Focus on social licence to operate ] investee companies
economy development)  [ Forming long-term mutually beneficial ]
 [ Local infrastructure development] relationships for communities,
investee companies and Mahube
 [ Regulatory and legislative ]
compliance of investee companies
 [ Compliance with JSE ]
requirements  [ Management of REIPPPP ]
 [ Regular formal meetings ]
 [ Legislative compliance] uncertainty through positive
Government with relevant authorities
 [ B-BBEE codes compliance] relations
and regulators  [ Monitoring regulatory ]
 [ Timely payment of taxes]  [ Formalised B-BBEE Policy]
changes
 [ Private-public partnerships]  [ Partnership with Government]
 [ Eskom Holdings SOC Ltd’s ability ]
to honour the Power Purchase
Agreements
 [ Understanding of our business ]  [ Retrospective and proactive ]
(operationally and financially) one-on-one engagement with  [ Interim and final results ]
 [ Reliability of information and ] financial and trade editors and presentations
Media
company correspondence journalists  [ Specific direct engagements]
 [ Effective stakeholder ]  [ Media alerts through SENS ]  [ Company website]
communication announcements
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18 Mahube Infrastructure Limited 2021 Integrated Annual Report

3 OUR PERFORMANCE

CEO's report 20 Finance report 22 Sustainability 26

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CEO’S REPORT

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A once in a lifetime crisis hit the global economy in 2020, Covid-19 reached every corner of the world and has impacted hundreds of millions of lives worldwide. The immediate effects of the pandemic in our operations were in general muted, as the operations of our infrastructure assets were largely unaffected by the pandemic-induced lockdown. In addition, the key customer to our businesses continues to honour its payment obligations for the delivered electricity in spite of its widely reported financial strain. Despite all the challenges, we used the financial year that ended in February 2021 to make Mahube a better company. The carrying value of our gross assets under management is at a respectable R754.2 million. This value compares favourably to the significant loss of capital value that many asset-laden businesses in South Africa experienced as a result of the Covid-19 pandemic.

Not surprisingly, our financial results were impacted by the effects of the pandemic. Dividends received were up by 119%; basic earnings and headline earnings per share were down 69.7% to 21.71 cents per share in comparison to 71.64 cents per share for the comparative period last year; revenues decreased by 29.3%; tangible net asset value per share at R10.63 and final cash dividend declaration of 32.00 cents per share.

Our continued purpose-driven execution and efficiency has placed us in a healthy position to push through these enormously challenging times. We managed the disruptions within our

Gontse Moseneke Chief Executive Officer

operating environment in a responsible manner while driving our strategy and protecting our employees in what has been one of the toughest economic impactful periods of our company’s existence.

While it remains difficult to predict the future development of the pandemic and its impact on the macroeconomic conditions, we are confident that the biggest challenges are behind us with the evolving and balancing of business being at the forefront of future lockdown measures. This ”new world” pushes us to adapt. Our performance through these trying times is a testament of the resilience of Mahube to prevail in an obstacle-laden operating environment. We step into the new dawn reassured of our role and presence as a sustainable entity.

November 2020 marked the transition of your company, GAIA Infrastructure Capital Limited, to Mahube Infrastructure Limited. ”Mahube a naka tsa kgomo” is a Setswana phrase that describes the dawning of a new day, when only the tips of the horns of herds of cattle can be seen etched against the morning sky. Mahube encapsulates our renewed focus towards sustainable generation of value for our shareholders and other stakeholders. The symbolism of cattle espouses deep-rooted African pride for wealth accumulation and aligns with our intention to build wealth for the various communities of stakeholders.

20 Mahube Infrastructure Limited 2021 Integrated Annual Report

CEO’S REPORT (CONTINUED)

Our vision remains striving to stimulate fast, inexpensive and sustainable delivery and upkeep of infrastructure on a large scale. Having acquired five infrastructure assets since 2015, the Company is operationally geared for growth in the next financial year. We currently have stakes in two wind and three solar PV farms. We aim to provide investment returns that are predictable and regular cash flows generated from infrastructure assets; we seek long-term investment in the ownership and operation of infrastructure assets, and we seek to provide disruptive solutions to infrastructure-related market inefficiencies.

LOOKING FORWARD

We all hope that 2021 will be the year in which the world can leave the coronavirus pandemic behind. We continue to invest in sustainability initiatives, and we look to significantly broaden our range of sustainable products and services in the following areas: energy, transport, water and sanitation-related infrastructure projects.

Mahube will be fast out of the starting blocks in the first year of pursuing the implementation of our revised strategy. Combined with a pipeline of value accretive infrastructure opportunities, we hope to drive strong growth across the market segments of our interest. Mahube will play an integral role in important infrastructure acquisitions and development in its industries of choice. We firmly believe that through our operations, we have the power to transform communities and shape the future of the African continent.

Sustainability is at the core of Mahube’s business philosophy. According to an article republished by the World Economic Forum in 2018, ”Africa’s urban population is expected to nearly triple by 2050, to 1.34 billion”. This extreme level of urbanisation is creating a significant gap in the financing and delivery of

infrastructure that will enable the provision of basic services in these burgeoning urban centres. Investment in such infrastructure can and should have the positive impact of accelerating rural economic activity, development and prosperity. It is our stated intention to champion fair, equitable and sustainable aggregation of capital for the communities who have made available their resources to enable the operation of our businesses. A recent (June 2021) energy policy announcement by the South African government now allows energy intensive users to generate up to 100 MW of power without any constraints imposed through licensing requirements. These developments are expected to provide substantial investment opportunities for Mahube in the energy sector.

APPRECIATION

2020 was a difficult year, I would like to extend my heartfelt thanks to our team. They have demonstrated resilience and great commitment in these unprecedented times. I would also like to thank our shareholders for the trust you have placed in us. We shall maintain open and transparent engagement with all stakeholders; we look to do everything we can to remain worthy of this trust. I am confident that the attractive prospects will continue to present Mahube as a leader in our industries of focus. We are very well positioned for the years ahead.

Stay safe and I look forward to the year ahead.

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Gontse Moseneke Chief Executive Officer

CEO, Mahube Infrastructure Limited

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==> picture [22 x 29] intentionally omitted <==

Our vision remains striving to stimulate fast, inexpensive and sustainable delivery and upkeep of infrastructure on a large scale. Having acquired five infrastructure assets since 2015, the company is operationally geared for growth in the next financial year.

Mahube Infrastructure Limited 2021 Integrated Annual Report 21

FINANCE REPORT

SALIENT POINTS

Dividends received up 119% to R54.9 million from R25.1 million in the comparative period last year

Basic earnings and headline earnings per share down 69.7% to 21.71 cents per share in comparison to 71.64 cents for the comparative period last year

Final cash dividend declaration of 32.00 cents per share

FINANCIAL COMMENTARY

The Company’s underlying investments performed well for the financial year ended 28 February 2021 resulting in an increase in dividend income to R54.9 million from R25.1 million in the comparative period. Despite the healthy growth in dividend income, the Company’s revenue for the year decreased by 29.3% to R44.7 million compared to R63.2 million in the previous year. This decrease in revenue was the result of the unfavourable change in the fair value of the financial assets. The unfavourable adjustment was caused by the adverse impact on asset valuations, of future expectations of general price inflation (i.e. consumer price index).

Operating expenses for the period decreased to R14.3 million compared to R23.2 million in the corresponding period. This is mainly due to an amount of R8.6 million in prepayment of transaction cost (marketable investment reports) that was written off in the previous corresponding period, as well as success on

Total revenue down 29.3% to R44.7 million in comparison to R63.2 million for the comparative period last year, due to an unfavourable adjustment to financial assets measured at fair value

Tangible NAV per share at R10.63

Gross assets under management at R754.2 million

cost savings initiatives undertaken during the period. Cost control will remain a focus area going forward.

A once-off expense of R18.0 million was incurred and paid in the period for the termination of the management services agreement that the Company has in place with GAIA Infrastructure Partners (Pty) Ltd. This expense further impacted the cash balance as at the period end.

The tangible net asset value per share of the Company decreased from R10.74 in the comparative reporting period to R10.63 in the current reporting period as a result of the decrease in the fair value of the investments held by the Company.

Basic and headline earnings per share decreased by 69.7%, from 71.64 cents in the comparative reporting period to 21.71 cents per share in the current reporting period. The decrease resulted from the unfavourable fair value adjustment and the termination fee paid.

22 Mahube Infrastructure Limited 2021 Integrated Annual Report

FINANCE REPORT (CONTINUED)

INVESTMENT PORTFOLIO BY FAIR VALUE

Entity		Investment	Income received		Fair value	% of portfolio
Mahube Infrastructure Limited		Mahube Capital Fund Noblesfontein Education Trust	54.9 – 54.9		539.6 5.5 545.1	99.0 1.0
Mahube Capital Fund 1		Renewable Energy G Mahube Infrastructure Investment C-pref share SARGE A&B pref shares	86.6 61.6 21.1 3.9		748.7 528.6 138.8 81.3	70.6 18.5 10.9

INCOME RECEIVED

Entity		Investment	Income received 2021 Rm		Income received 2020 Rm
Mahube Infrastructure Limited		Mahube Capital Fund	54.9		25.0
Mahube Capital Fund 1		Renewable Energy G Mahube Infrastructure Investment C-pref share SARGE A&B pref shares	61.6 21.1 3.9		55.0 10.7 3.8

Mahube Infrastructure Limited 2021 Integrated Annual Report 23

FINANCE REPORT (CONTINUED)

STATEMENT OF FINANCIAL POSITION

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----- Start of picture text -----

||||||
|---|---|---|---|---|
|F2021|F2020|% change|Commentary|
|Assets|
|Non-current assets|
|Property, plant and equipment|204 406|276 605|(26.1)|Consist of computer and office equipment.|
|Right-of-use assets|986 846|1 550 758|(36.4)|Lease relating to head office building.|
|Financial assets|545 089 756|556 789 636|(2.1)|R501 million loan to Mahube Capital Fund|
|for investment in Renewable Energy G +|
|R5.5 million Noblesfontein Education Trust|
|+ R38.6 million Mahube Capital Fund net|
|asset value.|
|Deferred tax|114 001|89 040|28|
|546 395 009|558 706 039|
|Current assets|
|Trade and other receivables|35 521 805|7 340 063|383.9|Increase due to dividend income still|
|receivable.|
|Tax receivable|–|59 480|
|Cash and cash equivalents|6 340 772|29 196 275|(78.3)|Lower cash balance due to R18 million|
|termination fee paid and increase in|
|dividends receivable.|
|41 862 577|36 595 818|
|Total assets|588 257 586|595 301 857|
|Equity and liabilities|
|Equity|
|Share capital|545 851 762|545 851 762|
|Retained income|40 135 886|46 360 183|(13.4)|
|585 987 648|592 211 945|
|Liabilities|
|Non-current liabilities|
|Lease liabilities|561 081|1 194 227|(53)|Lease liability on head office building.|
|Current liabilities|1 708 857|1 895 685|(9.9)|Trade and other payables.|
|Total liabilities|1 708 857|1 895 685|
|Total equity and liabilities|588 257 586|595 301 857|

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24 Mahube Infrastructure Limited 2021 Integrated Annual Report

FINANCE REPORT (CONTINUED)

STATEMENT OF COMPREHENSIVE INCOME

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----- Start of picture text -----

||||||
|---|---|---|---|---|
|F2021|F2020|% change|Commentary|
|Interest income|1 492 163|1 853 832|(20)|Decrease due to lower cash balance.|
|Dividends received|54 923 679|25 072 710|119.1|Higher dividend income from Mahube|
|Capital Fund.|
|Net (loss)/gain from financial|(11 759 129)|36 239 020|(132.4)|Result of the unfavourable change in|
|assets at fair value through|the fair value of the financial assets,|
|profit or loss|caused by the adverse impact on asset|
|valuations, of future expectations of|
|general price inflation.|
|Other income|6 384|–|
|Total revenue|44 663 097|63 165 562|(29.3)|
|Other operating expenses|(14 344 289)|(23 226 152)|(38.2)|Due to an amount of R8.6 million in|
|prepayment of transaction cost|
|(marketable investment reports) that was|
|written off in the previous corresponding|
|period, as well as success on cost savings|
|initiatives undertaken during the period.|
|ManCo termination fee|(18 000 000)|–|
|Finance costs|(188 581)|(246 634)|(23.5)|A once-off expense of R18.0 million|
|was incurred and paid in the period for|
|the termination of the management|
|services agreement that the Company|
|has in place with GAIA Infrastructure|
|Partners (Pty) Ltd.|
|Taxation|(154 692)|(183 118)|(15.2)|
|Profit for the year|11 975 535|39 509 659|(69.7)|

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Mahube Infrastructure Limited 2021 Integrated Annual Report 25

SUSTAINABILITY

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Environmental, social and governance considerations are the centre of our philosophical and practical approach to operating our business.

We believe that committed application of ESG policies will precipitate sustainably improving prosperity for all stakeholders, particularly our investors and providers of financial capital.

Consequently we have improved our approach to ESG considerations to emphasise formation of a capital base for each of the host communities of our businesses, as well as (legal and financial) protection of such capital.

The SEC is responsible for reviewing Mahube’s policies relating to sustainable development. This includes ethics and compliance, Corporate Social Investment, Socio-Economic Development and Enterprise Development activities, stakeholder relations, B-BBEE, labour relations and working conditions, and management of the impact of Mahube’s businesses on the environment.

The SEC actively manages activities of the organisation to promote a culture of ethical conduct. The committee monitors and reports on the environment, health and public safety issues, including the impact of the Company’s activities.

Mahube is invested in its infrastructure assets through companies that operate these assets. We exercise oversight in these asset-operating companies to ensure they are upholding

Our management team is represented on the board directorships of some of the companies that own and operate the infrastructure assets in which Mahube is invested. This enables us to monitor and contribute meaningfully to activities and decisions that may impact sustainability considerations.

On a quarterly basis, Management reviews the reports on social development activities of each asset-operating company. We keep track of compliance by these companies with social development contractual obligations that were agreed with the IPP office. Where necessary we seek clarity and resolution from the management team of any asset-operating company that has incurred penalties from the IPP office for non-compliance on social development contractual obligations.

Through participation in governance oversight of the operating companies, we contribute towards upholding the requisite level of ESG standards in the conduct of the business operations of our companies.

On a regular basis, we report to the Social and Ethics Committee on the risk management of ESG matters relating to the companies that operate our infrastructure assets.

acceptable standards on environmental, social and economic development practices. If there are any issues we, through our management team, engage with the management of the operating companies on these matters.

Refer to Social and Ethics Committee report on pages 42 to 44 for information on socio-economical and environmental development of our asset-operating companies.

At Mahube we are committed to promoting environmental, social and governance responsibility in all our investments and ESG considerations are incorporated in our investment analysis and decision-making. In selecting investments, we are conscious of the potential environmental as well as socio-economic impact of the assets.

26 Mahube Infrastructure Limited 2021 Integrated Annual Report

GOVERNANCE[4]

Board of Directors	28
Corporate governance report	30
Governance structure	33
Remuneration Committee	37
Social and Ethics Committee report	42

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BOARD OF DIRECTORS

The Board provides strategic direction and leadership and monitors implementation of strategic objectives. It acts as the focal point for, and custodian of, corporate governance by managing its relationship with management, shareholders and other stakeholders of the Company.

Nomination Remuneration Audit and Risk Committee Committee Committee

Social and Ethics Transaction Committee Committee

* Permanent invitees to all Committees of the Board.

EXECUTIVE MANAGEMENT

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Gontse Samuel Moseneke (40)

Chief Executive Officer BSc (Statistics and Actuarial Science), MSc (Acturial Management)

Skills brought to Mahube: Communication; financial Management; corporate governance, board experience, business development, strategic leadership and corporate management.

Appointed: 1 July 2020

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Petro Lewis (39)

Financial Director

CA(SA), BCom (Honours)

Skills brought to Mahube: Financial management, governace, financial reporting, board and commitee experience.

Appointed: 1 July 2020

28 Mahube Infrastructure Limited 2021 Integrated Annual Report

BOARD OF DIRECTORS (CONTINUED)

INDEPENDENT NON-EXECUTIVE DIRECTORS

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Khalipha Eddie Mbalo (58)

Independent Non-Executive Chairperson Television Engineering Certificate – NHK Institute: Japan Skills brought to Mahube: Advisory, strategic leadership, governance, entrepreneurial, management, board and committee experience.

Appointed: 1 October 2015

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Karén Breytenbach (63)

Independent Non-Executive Master of Business Leadership, BCompt

Skills brought to Mahube: Project management, corporate advisory, strategic leadership, business development, infrastructure public private partnerships conceptualisation and design. Appointed: 2 March 2020

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Sisanda Tuku (42)

Independent Non-Executive CA(SA), BCom (Honours)

Skills brought to Mahube: Operational, corporate advisory, business development, accounting and capital raising. Appointed: 21 November 2016

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Thembani Bukula (57)

Independent Non-Executive

BSc (Eng); Post Graduate Diploma (Eng Bus Management); MSc (Math, Science and Technology Education)

Skills brought to Mahube: Engineering, strategic leadership, management, board and committee experience. Appointed: 1 June 2017

Mahube Infrastructure Limited 2021 Integrated Annual Report 29

CORPORATE GOVERNANCE REPORT

INTRODUCTION

The Mahube Board is the custodian of corporate governance and plays a prominent role in the strategic development and risk management processes of the Company. The Board understands that adhering to the highest standards of corporate governance is fundamental to the sustainability of the Mahube business and continue to advocate strong ethics standards as the foundation for leadership accountability within the Company.

The Board supports the governance outcomes, principles, and recommended practices of King IV[TM] as appropriate for the Company. Through the application of the King IV[TM] principles, the Company aims to achieve the following governance outcomes: ethical culture, good performance, effective control, and legitimacy. The Board believes that these principles and recommended practices are integrated throughout the Company, supporting the achievement of King IV[TM] governance outcomes and confirms that the Company has in all material aspects applied the principles of King IV[TM] . A report on the Company’s application of the principles is available on its website.

This report is aimed at assisting stakeholders in assessing the Company’s approach to corporate governance and application of the King IV™ practices and principles.

THE BOARD OF DIRECTORS

The Board is also responsible for the establishment and maintenance of the ethical culture of the Company. The Board determines the Company’s strategic direction and regularly engage with Executive Management to understand the factors that are required to be considered to ensure sustainable strategies for the Company’s business activities. Decisions, deliberations, and actions are taken with cognisance of the Company’s ethical values and principles.

The Board is ultimately responsible to ensure that the Company’s mission, vision, and objectives are ethically sound. Active measures are taken by the Board to ensure that ethical standards of the Company are adhered to, including implementing appropriate governance structures, policies and processes to support an ethical culture. The Social and Ethics Committee and Audit and Risk Committee each have acute focus on matters of ethics and governance.

As set out in the King IV[TM] Report, the Board appreciates that the Company’s core purpose, its risks and opportunities, strategy, business model and sustainable development are all inseparable elements of its value-creation process. Decisions need to be made in an integrated manner, taking into account the effects of strategy on all stakeholders and the social, economic and environmental context.

BOARD COMPOSITION AND CHANGES THERETO

A key aspect of Mahube’s governance philosophy is that no one individual has unfettered powers of decision-making. During the period under review the Board comprised six Directors, two of whom are executive and four of whom are Independent NonExecutive Directors. The Board welcomed Karén Breytenbach, appointed as an Independent Non-Executive Director with effect from 2 March 2020, as well as Gontse Moseneke and Petro Lewis, who were appointed as Executive Directors to the Board and respectively as the CEO and FD with effect from 1 July 2020.

Each of the Directors brings to the Board a wide range of qualifications, expertise, commercial experience, and business acumen that allow them to exercise independent judgement in Board deliberations and decisions in directing Mahube’s value-creation processes to ensure that they are sustainable for all stakeholders. All Directors receive regular briefings on changes in risks, laws and the business environment and have unrestricted access to management.

The Board, with the assistance of the Nomination Committee, annually considers the composition of the Board and was satisfied that it has the appropriate mix of knowledge, skills, experience, diversity, and independence to objectively discharge its governance role and responsibilities.

While retaining overall accountability and subject to matters reserved to itself, the Board has delegated to the CEO the authority to run and manage the day-to-day affairs of the Company. The CEO is held accountable through regular reports to the Board and is measured against agreed performance criteria, key performance indicators and objectives appropriate to the current stage in the business cycle.

The role of the Chairperson of the Board and the CEO are independent and not held by the same person, as clearly defined in the Board Charter, to further ensure that no individual has unrestricted decision-making power. During the period under review, Eddie Mbalo remained the Independent Chairperson of the Board and is responsible for leading the Board, while Gontse Moseneke, the CEO, is responsible for the executive management of the Company.

The Board considered the Chairpersonship of Eddie Mbalo and agrees that he is an Independent Non-Executive Director and remains the best person to lead the Company and the Board.

Non-Executive Directors bring an independent judgement to bear on issues of strategy, performance and resources and act in the interest of the Company’s stakeholders. Executive Directors provide insight into day-to-day operations and are responsible for implementing strategy and all operational decisions.

The curriculum vitae of the members of the Board can be found on the Mahube website www.mahube.africa.

30 Mahube Infrastructure Limited 2021 Integrated Annual Report

CORPORATE GOVERNANCE REPORT (CONTINUED)

BOARD DIVERSITY

The Board promotes diversity through a variety of attributes including knowledge, skills, experience, age, culture, race, independence, and gender. During 2020, the Board adopted a Broad Diversity Policy to replace the previous Gender and Race Diversity Policy. The Board remains satisfied with its voluntary targets in respect of achieving broader diversity at Board level

and takes the policy into account when making Board appointments. The Board is satisfied with the diversification of the Board through the appointments of Gontse Moseneke, Petro Lewis and Karén Breytenbach during 2020.

The Board comprises three female and three male members and retained its composition of 67% black Directors. All Board members are between their late thirties and early sixties.

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----- Start of picture text -----

Mix Gender Diversity
67%
67% 33% 50% 50% 33%
 NEDs  Executive  Male  Female  African  White
----- End of picture text -----

INDEPENDENCE

All Directors have a duty to act with independence of mind and in the best interests of the Company. Directors are further required to declare any conflicts of interest in relation to matters on the agenda at Board meetings. Directors recuse themselves from discussion or decisions on matters in which they have a conflict of interest, subject to any other action required in terms of the Companies Act.

The classification of Independent Non-Executive Directors is determined by the Board and evaluated on an annual basis. In determining the independence of these Directors, and with due regard to the relevant criteria set out in King IV[TM] , the Board Charter and the JSE Listings Requirements, character and judgement are considered, along with any relationships or circumstances that may affect their judgement.

Any term in office by an Independent Non-Executive Director exceeding a period of nine years is subject to a rigorous review by the Board. No Independent Non-Executive Director has been in office for a period exceeding nine years and therefore no independence assessment was required.

The Independent Non-Executive Directors are highly experienced and have the skills, background, and knowledge to fulfil their responsibilities and the Board remained satisfied with the independence of Sisanda Tuku, Eddie Mbalo, Thembani Bukula and Karén Breytenbach.

RESPONSIBILITIES OF THE BOARD

The Board Charter guides Directors on the Board’s responsibilities, authority, composition, meetings and need for performance evaluations. The Board Charter is reviewed annually to ensure that it is aligned with the principles and practices recommended by King IV[TM] in addition to other regulatory and legislative requirements.

The Board has oversight of the application of corporate governance principles, supported by specific statutory and other Board Committees. The provisions set out in the Companies Act, King IV[TM] and regulatory requirements have been applied to the delegation of authority of the Board Committees in assisting the Board with specific duties and functions.

Board meetings are held at least quarterly, with additional meetings called when necessary. The quorum for meetings is a majority of Directors.

The responsibilities of the Board include:

• [ ethically leading the Company for sustainability in terms of the ] economy, environment, and society, taking account its impact on internal and external stakeholders;

• [ strategically direct, control, set the values, align management ] to the latter and promote the stakeholder-inclusive approach of governance;

• [ determining the strategy and strategic objectives of Mahube;]

• [ ensure that the Company is and is seen to be a responsible ] corporate citizen;

Mahube Infrastructure Limited 2021 Integrated Annual Report 31

CORPORATE GOVERNANCE REPORT (CONTINUED)

• [ providing ethical leadership and direction to Mahube in all ] matters by ensuring the Company’s ethics are managed effectively through building an ethical culture, setting ethics standards, measuring adherence and incorporating ethics into its risk management, operations, performance management and disclosure;

• [ ensuring that Mahube has an effective and independent Audit ] and Risk Committee and Remuneration Committee;

• [ monitoring that Mahube complies with all relevant laws, rules, ] codes and standards of business practice through a Compliance Framework;

• [ reporting on the effectiveness of internal controls; and]

• [ determine and set the tone of Mahube’s values.]

Key focus areas of the Board in the year included:

• [ response to Covid-19; ]

• [ evaluating the B-BBEE strategy and implementation thereof;]

• [ internalisation of the management agreement; ]

• [ recruitment and appointment of a suitable CEO and Financial ] Director; and

The application of the King IV[TM] principles and recommended practices is on an apply and explain basis and are entrenched in many of the Company’s internal controls, policies and procedures governing corporate conduct. The Board is satisfied that in the main, Mahube has applied the principles set out in King IV[TM] .

The Board continually assesses the Company’s governance practices and procedures to make timeous adjustments where necessary.

APPLICABLE GOVERNING FRAMEWORKS

Mahube complies with:

• [ the Companies Act No 71 of 2008, as amended (the ] Companies Act);

• [ the JSE Listings Requirements; ]

• [ relevant statutes and regulatory requirements applicable to ] South African companies;

• [ the regulations of its Memorandum of Incorporation; and]

• [ other authoritative directives regulating its conduct.]

• [ development and approval of a new Company strategy. ]

KING IV[TM] AND GOVERNANCE

The King IV[TM] Report advocates an outcomes-based approach, and defines corporate governance as the exercise of ethical and effective leadership toward the achievement of the following governance outcomes:

• [ Ethical culture;]

• [ Good performance;]

• [ Effective control; and]

• [ Legitimacy.]

32 Mahube Infrastructure Limited 2021 Integrated Annual Report

GOVERNANCE STRUCTURE

SHAREHOLDERS AND OTHER STAKEHOLDERS

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THE BOARD
EXECUTIVE INDEPENDENT NON-EXECUTIVE
MANAGEMENT DIRECTORS
Gontse Moseneke Eddie Mbalo
CEO Chairperson
Appointed: 1 July 2020 Appointed: 1 October 2015
Petro Lewis Sisanda Tuku
FD Appointed: 21 November 2016
Appointed: 1 July 2020
Thembani Bukula
Appointed: 1 June 2017
Karén Breytenbach
Appointed: 2 March 2020
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Audit and Risk Social and Ethics Remuneration Nomination Transaction Committee Committee Committee Committee Committee Sisanda Tuku Eddie Mbalo Thembani Bukula Eddie Mbalo Sisanda Tuku Chairperson Chairperson Chairperson Chairperson Chairperson Thembani Bukula Thembani Bukula Eddie Mbalo Thembani Bukula Thembani Bukula Karén Breytenbach Karén Breytenbach Sisanda Tuku Sisanda Tuku Karén Breytenbach Karén Breytenbach INVITEES Gontse Moseneke Gontse Moseneke Gontse Moseneke Gontse Moseneke Gontse Moseneke Petro Lewis Petro Lewis Petro Lewis Petro Lewis Petro Lewis Company Secretary Company Secretary Company Secretary Company Secretary Company Secretary External auditors Internal auditors

NUMBER OF INDEPENDENT NON-EXECUTIVE DIRECTORS PER COMMITTEE

3/3 3/3 3/3 4/4 3/3 Executive management

Notes:

Karén Breytenbach was appointed as a member to the Audit and Risk Committee on 2 March 2020.

Mahube Infrastructure Limited 2021 Integrated Annual Report 33

GOVERNANCE STRUCTURE (CONTINUED)

INDEPENDENT ADVICE

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

DIRECTORS’ ATTENDANCE AT BOARD MEETINGS

Following the outbreak of the Covid-19 pandemic and the resultant national lockdown restrictions imposed on the country, Mahube transitioned seamlessly to video and tele-conferencing for Board and Committee meetings.

Attendance at Board and Committee meetings for the financial year ended 28 February 2021 are set out below:

Director	Board (6 meetings) Audit and Risk Committee (4 meetings) Remuneration Committee (3 meetings) Social and Ethics Committee (2 meetings) Nomination Committee (2 meetings) Transaction Committee (1 meeting)
Eddie Mbalo (Chairperson)	6/6 3/3 2/2 2/2 1/1
Prudence Lebina1	3/3 1/1 1/1 1/1 1/1
Thembani Bukula	6/6 4/4 3/3 2/2 2/2 1/1
Sisanda Tuku	6/6 4/4 3/3 2/2 1/1
Karén Breytenbach2	6/6 4/4 2/2 2/2 1/1
Gontse Moseneke3	3/3 3/3 2/2 2/2 1/1
Petro Lewis3	5/5 3/3 2/2 2/2 1/1 1/1
Company Secretary	6/6 4/4 3/3 2/2 2/2 1/1

Notes:

1. Resigned 26 June 2020

2. Appointed 2 March 2020

3. Appointed 1 July 2020

BOARD COMMITTEES

The Board Charter allows for the delegation of responsibilities to committees formed by it to assist it in the execution of its duties, power, and authorities. The Board acknowledges that the delegation of authority to its committees does not detract from the Board’s responsibility to discharge its fiduciary duties to Mahube.

The Companies Act and the JSE Listings Requirements also dictate the formation of certain committees as well as their composition and statutory mandates. The Board has delegated additional responsibilities to these committees, over and above their prescribed mandates. The Board presently has four standing committees, namely the Audit and Risk Committee, the Social and Ethics Committee, the Remuneration Committee, and the Nomination Committee. The Board has also established a Transaction Committee which assists the Board on an ad hoc basis on matters falling within its mandate.

Delegation of authority to a sub-committee is set out in the terms of reference for that committee. The terms of reference also set out, inter alia, the composition, purpose, powers and authority of the committee, the scope of its mandate and its relationship to the Board; the committee’s access to the Company’s records, employees, and any other resources necessary to discharge its duties and responsibilities; and the prescribed frequency of attendance at and procedure to be

followed in meetings. The terms of reference of the various committees are reviewed annually and any changes are approved by the Board. Only directors are appointed as members of the committees, with members of Executive Management attending committee meetings as standing invitees. Each committee’s terms of reference detail the role, functions, and responsibilities of the committee. Each committee’s terms of reference set out the delegated authority in respect of decision-making, responsibility, and fulfilment of its duties.

As provided for in these committees’ terms of reference, members of the Social and Ethics Committee, Remuneration Committee and Nomination Committee are appointed by the Board for an indefinite period, provided that if a member ceases to be a director that member will simultaneously cease to be a member of the committee. The Board has the power to remove any members of a committee and to fill any vacancies created by such removal. Members of the Audit and Risk Committee are elected annually by shareholders and their tenure is accordingly from one Annual General Meeting to the next. Vacancies on the Audit and Risk Committee may be filled in terms of the provisions of the Companies Act. Each committee’s terms of reference detail the process for reporting to the Board. The Social and Ethics Committee is required in terms of the regulations to the Companies Act to report to shareholders at the Annual General Meeting on the matters within its mandate, which it does.

34 Mahube Infrastructure Limited 2021 Integrated Annual Report

GOVERNANCE STRUCTURE (CONTINUED)

No committee assessment was done during the period under review and in line with the recommended practices of King IV, the next committee assessment will be conducted during FY2022. Attendance schedules for committee meetings held in FY2021 and the qualifications and experience of each of the committee member are set out respectively on pages 27 and 28 of this report.

DIRECTOR APPOINTMENTS

The Non-Executive Directors have no fixed terms of appointment as they are subject to appointment and reappointment by the shareholders.

Appointments to the Board are formal and transparent. After review, proposals for election/re-election to the Board are recommended by the Nomination Committee and are considered by the Board as a whole, subject to the approval/ratification of shareholders. All recommended director appointments are subject to background and reference checks.

Mahube’s MOI provides that, at every AGM of the Company, one-third of the Non-Executive Directors shall retire from the Board by rotation. If eligible, such Directors may offer themselves for re-election. If a Director is appointed as an Executive Director or as an employee of the Company in any other capacity, he or she shall not, while he or she continues to hold that position or office, be subject to retirement by rotation. At the upcoming Annual General meeting of shareholders, Sisanda Tuku will be retiring in accordance with the provisions of the Company’s MOI but is eligible and available for reappointment. The Nomination Committee, taking into consideration the past performance and contributions of Sisanda Tuku and has recommended that she is eligible for re-election.

Non-Executive Directors are required to dedicate sufficient time to Mahube Board matters. They may serve on other boards, provided that such other appointments do not create a conflict of interest or interfere with their duties to the Mahube Board, but rather afford the ability to add value by bringing a broader perspective to Board deliberations.

BOARD EVALUATION

The Board, through its Company Secretary, performed evaluations of the performance of the Board and of the individual Directors during the reporting period and the Board was satisfied with the results and outcome of the evaluation.

DEALING IN SECURITIES AND INSIDER TRADING

Mahube has a share dealing policy in line with the Listings Requirements and the Financial Markets Act. Closed periods are implemented as per the Listings Requirements, during which the Company’s Directors, Executives and Company Secretary are not allowed to deal in Mahube shares. Additional closed periods are enforced should Mahube be subject to any corporate activity

requiring a cautionary announcement. All dealings in shares of Mahube by Directors are reported on the JSE Limited Stock Exchange News Service (“SENS”) within 72 hours of the trade.

Share dealings for the period under review are highlighted below:

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|||
|---|---|
|Number of shares acquired|
|Date of trade|in the open market|
|10 February 2021|1 142|
|9 February 2021|40 000|
|27 January 2021|34 000|
|20 January 2021|24 102|
|18 December 2020|45 998|
|17 December 2020|26 000|
|15 December 2020|47 000|
|14 December 2020|5 000|
|11 December 2020|46 302|
|10 December 2020|2 500|
|9 December 2020|58 200|
|Total|330 244|

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Directors are aware that when a matter is considered by a Board in which they individually have a direct or indirect interest, this should be disclosed prior to the Board meeting. These disclosures are noted by the Board when necessary and recorded in the minutes of a Board meeting.

All Directors, officers and employees of the Company are advised of closed and prohibited periods in terms of the requirements of the JSE. Directors, employees, consultants and agents are prohibited from trading in the Company’s securities during closed and prohibited periods.

Director interest in securities is available on page 53 of the report.

RISK GOVERNANCE

Risk governance and management are integral elements of the Company’s governance framework. The Company ensures that business-specific risks are adequately and timeously identified and mitigated, whether they are operational, strategic or emerging risks, or risks posed by the external environment. The responsibility of designing, implementing and monitoring the risk management plan is delegated to Management and the Audit and Risk Committee. The overall risk profile of the Company has not changed materially in the period under review. The Board confirms that the Company’s risk management, mitigation and monitoring processes were effective and limited the impact of risks on the business during the period. For detail on the material risks and issues facing the Company, and how these inform the Company’s strategy, please refer to page 14 of this report.

Mahube Infrastructure Limited 2021 Integrated Annual Report 35

GOVERNANCE STRUCTURE (CONTINUED)

POLITICAL PARTY SUPPORT

The Company does not, as a principle, donate to political parties, neither is it affiliated to any specific political party.

COMPANY SECRETARY

All Directors have access to the advice and services of the Company Secretary, Fusion Corporate Secretarial Services Proprietary Limited (“Fusion”), who was assessed during the financial year as being competent, suitably qualified, and experienced. Neither the Company Secretary, nor any of its representatives, are Directors of the Company and accordingly maintain an arm’s length relationship with the Board. Furthermore, the Board is of the opinion that there were no direct or indirect relationships between the Company Secretary and any of the Board members which could comprise an arm’s length relationship with the Board.

While not a member of the Board, the Company Secretary is responsible for engaging with the Board Chairperson and committee chairs on meeting agendas, ensuring compliance with Board and committee procedures, terms of reference, and relevant legislation and regulations. In addition to the statutory duties of the Company Secretary, the Company Secretary supports the Board as a whole, and Directors individually, by providing guidance on how to fulfil their related responsibilities in the best interests of Mahube.

IT AND INFORMATION GOVERNANCE

The Audit and Risk Committee is responsible for IT governance on behalf of the Board and reviews the reports from Management and external assurance providers to ensure that an adequate and effective IT system is maintained. Management is responsible for the implementation of an IT governance framework for the Company to ensure that IT expenditure and investments in IT infrastructure are managed effectively and are aligned with business objectives.

GOING CONCERN

The Board considers and assesses Mahube’s going concern basis in the preparation of the Interim and Annual Financial Statements. In addition, the solvency and liquidity requirements per the Companies Act are considered. The Board is satisfied that Mahube will continue as a going concern into the foreseeable future.

MATERIAL LITIGATION

During the financial year, Mahube was not involved in any material litigation or arbitration proceedings nor are the Directors aware of any pending or threatened legal issues, which may have a material impact on Mahube’s financial position.

The certificate that the Company Secretary is required to issue in terms of section 88(2)(e) of the Companies Act is on page 56 of the report.

36 Mahube Infrastructure Limited 2021 Integrated Annual Report

REMUNERATION COMMITTEE REPORT

The objective of this report of the Remuneration Committee (the “Committee”) is to provide an overview and understanding of Mahube’s remuneration philosophy and to report on the remuneration paid to Executive Directors and the Non-Executive Directors.

COMPOSITION AND MEETING ATTENDANCE

During the period under review the Committee comprised the following members:

• [ Independent Non-Executive Director Thembani Bukula ] (Chairperson)

• [ Independent Non-Executive Director Sisanda Tuku ]

• [ Independent Non-Executive Director Eddie Mbalo ]

The Board is satisfied that the members of the Committee have the necessary skills and experience to enable the Committee to fulfil its duties. An overview of the Directors’ qualifications and experience appear on page 27 of the Integrated Annual Report.

In line with the recommended practices of King IV™, the Chairperson of the Board of Directors is a member of the Committee, but not its chairperson. The CEO and the FD attend the meetings of the Committee as standing invitees but recuse themselves from the meeting before decision-making pertaining to their remuneration and/or bonuses.

The number of meetings and attendance per committee member, during the period under review, is shown in the corporate governance section of the Integrated Annual Report on page 34.

ROLE AND RESPONSIBILITIES

The Committee is responsible for overseeing the governance of remuneration matters. It is specifically responsible for ensuring that the Company remunerates its Executive Directors fairly and responsibly, and that the remuneration policies in place serve the Company’s long-term interests. In discharging its responsibility, the Committee reviews the remuneration policy and its implementation on an annual basis. The remuneration policy and implementation report are outlined in the remuneration report, on page 38 of the Integrated Annual Report.

The Committee operates under terms of reference that are aligned with the recommendations of King IV™ and are reviewed on a regular basis. In addition to the above, the Committee’s duties and responsibilities include:

• [ ensuring, in consultation with the Nominations Committee, ] that formal succession plans for the Board of Directors, the CEO and the FD are in place;

• [ reviewing other remuneration-related matters, as the Board of ] Directors direct may from time to time;

• [ ensuring that the Directors and executives are fairly and ] responsibly remunerated and that the disclosure in respect thereof is accurate and transparent. The Committee does this by overseeing the implementation of remuneration policies in

relation to the Executive Directors and the Non-Executive Directors, reviewing the outcomes of the implementation of these policies and evaluating whether they promote the achievement of the Company’s strategic objectives and encourage high individual performance. Where circumstances necessitate, the Committee recommends appropariate improvements to the Board of Directors;

• [ considering the results of the CEO and the FD evaluations in ] determination of bonus awards.

ACTIVITIES DURING THE YEAR

The Committee met three times during the year and focused on:

• [ overseeing executive management’s engagement with ] shareholders regarding the Company’s remuneration policy and implementation report;

• [ reviewing the Committee’s terms of reference; ]

• [ assessing the outcome of the Committee’s self-evaluation; ]

• [ overseeing the development of a staff incentive scheme, which ] is earmarked to be a key instrument in the Company’s revised strategic direction;

• [ considering the human capital requirements of the Company; ]

• [ assessment of the proposed revisions to fees payable to the ] Non-Executive Directors prior to recommending to the Board of Directors and then to shareholders for approval.

In its assessment of the proposed revisions to the remuneration to be payable to Non-Executive Directors, the Committee considered the proposed new fee structure against a benchmark of the Company’s peers. The proposed increments are reasonable when compared to the remuneration paid by peer companies to their Non-Executive Directors.

The Committee is satisfied that it has fulfilled its responsibilities in accordance with its terms of reference for the reporting period.

PLANNED FOCUS AREAS FOR FY2022

Future focus areas include the finalisation and implementation of the Short-Term Incentive Scheme and the Long-Term Incentive Scheme, with the objective to help the Company to attract and retain experienced and skilled personnel. This will also help the Company to adopt and implement a sound succession plan.

The Committee has considered the impact of the King IV™ Report on the remuneration policy as well as the amended JSE Listings Requirements and present this report in three parts:

• [Part 1: ][the background statement, the remuneration philosophy ] and the context of the decisions and considerations taken during the reporting year which influenced the remuneration outcomes.

• [Part 2:][ Mahube’s remuneration policy. ]

• [Part 3:][ the disclosure on the implementation of the ] remuneration policy during the year.

Mahube Infrastructure Limited 2021 Integrated Annual Report 37

REMUNERATION COMMITTEE REPORT (CONTINUED)

PART 1: Background statement Remuneration philosophy

The Board has delegated to the Committee to review the Company’s remuneration policy. The remuneration policy has been formulated with Mahube’s key objectives in mind. For the Company to be able to achieve these objectives, it requires experienced and skilled personnel that the Company can hire, retain and motivate them to work diligently to deliver on achieving these objectives. This requires the Committee to ensure that all of Mahube’s remuneration and reward offerings are commercially sound, market competitive and at all times adhere to all legal and regulatory prescripts. The Committee assists the Board of Directors by applying a remuneration strategy that ensures a balance in attracting, motivating, rewarding, and retaining key personnel through competitive remuneration practices, while creating shareholder value. In determining remuneration, the Committee takes into account the financial performance of the Company, operational requirements and future plans of the Company, as well as the interests of the

shareholders. The Committee formulated a remuneration policy designed to give effect to the remuneration strategy and to support Mahube’s business and strategic objectives.

Voting results and shareholder engagement

At the Company’s 2020 AGM (the “2020 AGM”), the Company’s remuneration report was presented and voted on in sections, namely:

Remuneration policy – supported by 59.89% (2019: 12.96%) of the Company’s shareholders who voted.

Remuneration implementation report – supported by 59.89% (2019: 13.07%) of the Company’s shareholders who voted.

The dissenting votes on both resolutions exceeded 25%. Even though the resolutions were advisory and do not have binding legal implications on the Company, the Board of Directors fittingly tasked the management to engage the dissenting shareholders post the 2020 AGM in order to understand the reasons for their lack of support on the two resolutions. The outcome of these engagements resulted in several refinements to the remuneration policy, including but not limited to:

Shareholder feedback	Mahube’s action taken or response to feedback
Development and implementation of short-term incentives and	The Company developed a Long-term Incentive Scheme and a
long-term incentives, in order to attract and retain a skilled	Short-term Incentive Scheme for consideration and
winning team	subsequent implementation
Targets for the current executives were yet to be set	Targets for all current executives were set
The current policy was CEO-specific and should be amended to	The policy was amended to be applicable to all the executives
address and include all executives
The Key Performance Areas and Key Performance Indicators with	Key performance areas and indicators together with weightings
the weighting needs to be allocated to the respective executives	were developed and implemented for all executives
while being expanded appropriately, to cover the remaining
period of the current financial year and FY2021
The table in the Remuneration Policy was to be updated to	The remuneration policy was updated to cater for the CEO and
address the CEO and FD roles and responsibilities	the FD roles and responsibilities
Inclusion of a rewards claw-back incentive	A rewards claw-back incentive was included in the incentive scheme

The remuneration policy and the remuneration implementation report will again be tabled separately for non-binding advisory votes by shareholders at the Company’s forthcoming AGM. The Board of Directors commits to take measures in the event that either the remuneration policy or the implementation report, or both, are voted against by 25% or more of the voting rights exercised, which measures will provide for taking steps in good

faith and with best reasonable effort to:

• [ engage the dissenting shareholders in order to ascertain the ] reasons for their lack of support; and

• [ seek appropriate and lawful means to address legitimate and ] reasonable objections and concerns raised, which may include amending the remuneration policy, or clarifying and adjusting remuneration governance and/or processes.

38 Mahube Infrastructure Limited 2021 Integrated Annual Report

REMUNERATION COMMITTEE REPORT (CONTINUED)

PART 2: Remuneration policy

Overview of the remuneration policy

A copy of the full remuneration policy is available on request from the Company Secretary and for inspection at the Company’s registered offices or available on the Company’s (www.mahube.africa).

Fundamental principles

The Committee focuses on ensuring that the Company’s remuneration policy and framework is appropriate and relevant based on key principles including:

• [ to align to the Company’s business strategy;]

• [ to support the human capital strategy of the business of the ] Company;

• [ to appropriately remunerate employees for the services they ] render to the Company;

• [ to encourage and promote a high-performance culture;]

• [ to remain flexible and adaptable to business requirements in a ] dynamic market environment;

• [ to meet and comply with applicable legislative requirements ] and best practice;

• [ to manage risk and adhere to corporate governance ] prescripts; and

• [ to achieve a fair, transparent, equitable and responsible ] remuneration framework.

Remuneration practices

Mahube’s remuneration practices include the following procedures:

• [ benchmark remuneration packages against the market;]

• [ provide an appropriate level of transparency;]

• [ annually conduct performance assessments for all the ] Executive Directors and the Non-Executive;

• [ the annual adjustment will be guided by, amongst some ] factors, the general price inflation, the Company’s retention strategies, the financial performance of the Company relative to its peers, projected growth, and industry average increase surveys, which are taken into consideration when assessing recommended increases;

• [ the Committee is afforded the requisite independence on ] matters of remuneration governance.

Executive Directors

Executive Directors are full-time employees of the Company and, as such, each has an employment agreement that is subject to, amongst others, the Company’s standard conditions of service, with a notice period that does not exceed three months. Unless

otherwise stated in the contract of employment, there are no fixed terms of employment.

The objective of the Company’s remuneration policy is to attract and retain, amongst others, high-calibre executives, as well as to motivate and reward them for developing and implementing the Company’s strategy to deliver consistent and sustainable shareholder value, while promoting an ethical culture and corporate citizenship. During the period under review, the remuneration for the CEO and the FD consisted of only the base salary.

A 20% ex-gratia payment/annual acting allowance was extended to the previous CEO by the Board of Directors, on the recommendation of the Committee, for fulfilling the dual roles and function of CEO and FD and was paid up to her resignation with effect from 26 June 2020.

Short-term incentives and long-term incentives

There were no short-term incentives nor long-term incentives paid for the period under review. We have subsequently conceived, independently benchmarked and then approved staff incentive schemes that align with the future strategic direction of the Company. The board of directors will procure the requisite authorities in relation to these schemes.

Elements of remuneration

The Company has adopted an integrated approach to rewarding its employees based on the following principles:

• [ Total Guaranteed Package (”TGP”), being guaranteed base ] salary;

• [ Incentive-based rewards, being incentives earned through the ] achievement of financial and non-financial performance targets;

• [ Short-term incentives, being cash bonuses quantified with ] reference to a percentage of annualised total guaranteed pay, and subject to achievement of positive profitability by the Company;

• [ Long-term incentives, being equity value-based awards that ] are used to align the long-term interests of the recipients with those of the Company and of its shareholders, and which are responsibly implemented so as not to expose shareholders to unreasonable or unexpected financial impact. During the period under review the Company did not have any long-term incentive plans in place. In addition the Company does not have any post-retirement obligations;

• [ Executive Directors do not receive Directors’ fees for attending ] meetings of the Board of Directors nor meetings of the Committees of the Board.

Mahube Infrastructure Limited 2021 Integrated Annual Report 39

REMUNERATION COMMITTEE REPORT (CONTINUED)

Details of Executive Directors’ remuneration for the year under review are provided in the implementation report below.

The table below provides a detailed breakdown of the elements of employee remuneration for the Company:

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----- Start of picture text -----

Remuneration element Component Component description and intent Delivery mechanism
Fixed remuneration Base salary The employee receives a fixed amount of remuneration, which TGP
is benchmarked against the median remuneration amount paid
by other South African companies of comparable size, scope,
and business complexity.
The base salary amount reflects the nature of the role, and the
employee’s skill and experience.
Benefits When the Company elects to put these in place, the benefits TGP
may include retirement provision, health, and other life
insurance protection (including protection against dread
diseases, death, and disability), all to be included in the TGP
on a total cost to company approach.
Variable remuneration Short-term These are cash bonuses intended to align the interests of all Staff Incentive
incentives (“STI”) employees (including the Executives) with profitable trading
Scheme – Bonus
by the Company.
Pool
The quantification of the actual bonus amount payable to an
employee seeks to encourage a high-performance culture by
rewarding individual outperformance against key performance
indicators (both financial and non-financial) that would have
been pre-agreed for the period under review.
Long-term LTI enables employees (including the Executive) to participate Staff Incentive
incentives (“LTI”) in the wealth that they create in the Company progressively Scheme – Equity-
over the long term, and to so participate equitably in linked Units + Share
comparison to the shareholders. It is a mechanism to promote Subscription Plan
a long-term commitment to the Company by employees.
A high-performance culture is similarly encouraged by
rewarding individual outperformance against the financial and
non-financial performance indicators that would have been
pre-agreed for the period under review.
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NON-EXECUTIVE DIRECTORS Terms of service

The Board, through the Nominations Committee, proposes the election and re-election of Non-Executive Directors to shareholders. No Director is appointed for an indefinite period and accordingly, in terms of the provisions of the Company’s memorandum of incorporation, one-third of the Non-Executive Directors retire by rotation each year at the Company’s AGM. At the upcoming AGM, Sisanda Tuku retires by rotation and being eligible will be standing for re-election.

Basis of remuneration

In terms of the Companies Act, fees for Non-Executive Directors for their services as Directors must be put to shareholders for approval by special resolution. At the AGM held on 16 October 2020, the resolution relating to Non-Executive Directors’ remuneration was presented to shareholders and approved by 97.51% of shareholders present and voting.

• The following pertains to Non-Executive Directors’ fees: [ Non-Executive Directors fees will be tabled for shareholder ] approval on an annual basis at the Company’s AGM;

• [ Board retainer fees, as well as fees for attendance of Board ] and Committee meetings are paid quarterly and in arrears;

40 Mahube Infrastructure Limited 2021 Integrated Annual Report

REMUNERATION COMMITTEE REPORT (CONTINUED)

• [ Non-Executive directors are remunerated per meeting ] attended, in accordance with the attendance fees for scheduled meetings as approved by shareholders at the AGM;

• [ Attendance of ad hoc or special purpose committee meetings ] as appointed by the Board shall be rewarded on the basis applicable to an existing committee, whose purpose must closely relate to that of the particular purpose or ad hoc committee;

• [ Fees for special assignment of one or more tasked members of ] the Board or of any Committee, which may also include travel locally and abroad, are to be agreed upfront with the Chairperson of the Board;

• [ Travel, fares and reasonable subsistence shall be in line with ] the Company’s relevant policies; and

• [ Non-Executive Directors and members of the Committee ] complete detailed self-evaluations, which are collated and tabled at the Board.

PART 3: Implementation report

Executive Director remuneration

The Company has followed the King IV recommendation and disclosed the single figure remuneration for the Executive Directors’ remuneration for FY2021. The total remuneration outcomes are reflected in note 20 of the Annual Financial Statements, comprising salary and benefits for FY2021.

NON-EXECUTIVE DIRECTOR REMUNERATION

There are no short-term incentives, long-term incentives nor pension benefits applicable to Non-Executive Directors.

Fees for FY2021

The actual fees paid to the Company’s Non-Executive Directors during the period under review were as follows:

during the period under review were as follows:
Rand	FY2021
Independent Non-Executive Directors E Mbalo T Bukula K Breytenbach S Tuku	408 043 304 236 270 568 320 048
Total	1 302 895

Fees beyond FY2022

A special resolution relation to the payment of the Non-Executive Directors’ remuneration will be tabled to shareholders at the upcoming AGM. The fees proposed are tabled below:

Rand	Proposed	2020
Retainer
Chairperson	74 680	71 124
Non-Executive Director	74 680	71 124
Attendance fees per meeting
Board Chairperson	22 716	21 634
Board Non-Executive Director	12 447	11 854
Audit and Risk Committee Chairperson	16 592	15 802
Audit and Risk Committee Member	12 447	11 854
Nomination Committee Chairperson	16 592	15 802
Nomination Committee Member	12 447	11 854
Social and Ethics Committee
Chairperson	16 592	15 802
Social and Ethics Committee Member	12 447	11 854
Remuneration Committee Chairperson	16 592	15 802
Remuneration Committee Member	12 447	11 854
Special/Ad Hoc Committee
Chairperson	16 592	15 802
Special/Ad Hoc Committee Member	12 447	11 854

Directors’ shareholding in the ordinary share capital of the Company

Refer to note 7 Directors’ Interests in shares on page 53.

Changes in Directors’ and their associates’ shareholding subsequent to the reporting date

The Committee and the Board are not aware of any changes in the Directors and their associates’ shareholding subsequent to the report date.

==> picture [96 x 32] intentionally omitted <==

Thembani Bukula

Chairperson of the Remuneration Committee

30 June 2021

Mahube Infrastructure Limited 2021 Integrated Annual Report 41

SOCIAL AND ETHICS COMMITTEE REPORT

The Social and Ethics Committee (“the Committee”), is a formal Committee operating in accordance with a Board-approved mandate and assists the Board with monitoring, developing, reviewing, and improving Mahube’s social, ethical and sustainability practices. In addition to its statutory responsibilities, the Board assumes responsibility for ensuring that the Company’s ethics are effectively managed, which it does through exercising ethical leadership, integrity, and judgement in directing the Company. Employees, Directors, and other stakeholders of the Company are in turn expected to act in a manner that upholds the Company’s values as contained in the Mahube code of business conduct and ethics (“the code”). The purpose of the code is to set the standards for conducting the business of the Company and applies to all activities undertaken on behalf of the Company.

This report outlines how the Committee has discharged its responsibilities as set out in section 72 of the Companies Act and regulation 43 of the Companies Regulations 2011 issued in terms of the Companies Act and its terms of reference.

COMMITTEE COMPOSITION AND MEETING ATTENDANCE

The Committee comprises three suitably skilled and experienced members appointed by the Board, all of whom are neither involved in the day-to-day management of Mahube’s business nor been so involved at any time during the previous four financial years. During the period under review the Committee comprised the following members:

• [ Independent Non-Executive Director Eddie Mbalo ] (Chairperson);

• [ Independent Non-Executive Director Karén Breytenbach; and]

In discharging its duties, the Committee gives regard to:

• [ the 10 principles set out in the United Nations Global ] Compact;

• [ the OECD recommendations regarding corruption; ]

• [ the Employment Equity Act; ]

• [ the Broad-Based Black Economic Empowerment Act;]

• [ good corporate citizenship; ]

• [ environment, health, and public safety; and]

• [ labour and employment.]

The responsibilities of the Committee include:

• [ Monitoring activities relating to social and economic ] development, good corporate citizenship, the environment, and health and public safety;

• [ Monitoring functions required in terms of the Companies Act ] and its regulations;

• [ Monitoring changes in the application and interpretation of ] empowerment charters and codes;

• [ Reporting, through the Chairperson of the Committee, to the ] shareholders at the Company’s Annual General Meeting on any part of the business of the meeting that concerns the Committee’s functions;

• [ Determining clearly articulated ethical standards (Code of ] Business Conduct and Ethics, conflict of interest, anti-fraud) to be adopted by the Company, thus achieving a sustainable ethical corporate culture. This includes management of potential and actual conflicts of interest, fraud and corruption;

• [ Monitoring and overseeing sustainability matters including ESG ] matters;

• [ Oversee the implementation of King IV as it pertains to social ] and ethics issues; and

• [ Ensuring that the Company’s ethics are managed effectively. ]

• [ Independent Non-Executive Director Thembani Bukula .]

Their qualifications and experience are available on page 27 of the Integrated Annual Report.

In accordance with its terms of reference, the Committee meets at least twice annually, but more often if necessary. The number of meetings and attendance per Committee member are shown in the corporate governance section on page 34.

The CEO, FD, and the Company Secretary (who acts as the secretary of the Committee) are permanent invitees at the meetings.

The Committee is satisfied that it has fulfilled its responsibilities in accordance with its terms of reference.

FY2021 FOCUS AREAS

• [ Oversaw and monitored the implementation of the Company’s ] various policies and procedures dealing with ethics, social and economic development, good corporate citizenship and sustainable development; and

• [ Monitored the impact of the Covid-19 pandemic on the ] Company’s investments and its employees.

PLANNED FY2022 FOCUS AREAS

ROLE AND RESPONSIBILITIES

The Committee’s role and responsibilities are governed by a formal Terms of Reference, as approved by the Board and which is subject to annual review by the Board. A copy thereof is available on the Company’s website.

Going into the 2022 financial year the Committee will:

• [ Continue to monitor the impact of the Covid-19 pandemic on ] the Company’s investments, its employees, and the communities within which the Company operates;

• [ Focus on skills development of employees; ]

42 Mahube Infrastructure Limited 2021 Integrated Annual Report

SOCIAL AND ETHICS COMMITTEE REPORT (CONTINUED)

• [ Implementing initiatives to improve Mahube’s B-BBEE ] credentials; and

• [ Developing a POPI Policy. ]

SOCIO-ECONOMIC DEVELOPMENT: COMMUNITY, SOCIAL AND ENVIRONMENTAL ISSUES

Mahube is intent on being an active corporate citizen in the communities in which it is invested. The Committee is satisfied with the contributions made to the various projects during the year, the successful implementation of various activities and the positive impact thereof on the communities. The following projects and activities were undertaken in the various communities during the period under review:

DORPER WIND FARM COMMUNITY

The SED activities in the communities of Molteno and

Sterkstroom are mainly focused on skills creation and development to the unemployed youth, progressing and supporting the bursary scheme and implementing personal mastery for professional success. The ED activities were mainly focused on beneficiary engagement, mentoring and providing support, coaching and development training.

The Covid-19 pandemic has hindered plans to implement further ED programmes besides the Mini Chess Micro-enterprise programme as well as the Malmat Skills creation programme.

These SED and ED projects include:

The Inkqwithelo Zotshintsho Bursary

This bursary aims to fund the tertiary level study of selected Molteno and Sterkstroom youth beneficiaries resulting in:

• [ An increase in the beneficiary’s employability;]

JOJO TANK PROJECT

The JOJO Tank Community Project was implemented to assist with curbing water shortages in the water scarce communities. The project involved the procurement and provision of JOJO tanks to various schools, community centres and community-run social development initiatives in the communities.

The JOJO tanks will assist in catching rainwater and any runoff following snow fall in the communities, which will assist in circumstances when the local municipality is unable to supply water to the identified recipients.

JASPER

Learn to Drive Programme 2020

The community requested assistance for the unemployed youth from local communities to obtain their driver’s licences. Two driving schools in the area, the municipality and community members have been engaged in order to get this programme off the ground.

JASPER BURSARY SCHEME

Jasper offers bursaries to previously disadvantaged students residing within 50 km radius. The bursary policy outlines minimum requirements as qualifying criteria. The bursaries are for degree university courses at a South African university as well as diplomas from reputable technical institutions.

Lesedi Solar Power Project and Letsatsi Solar Power Project

Lesedi Solar Project is a 75 MW Round 1 REIPPPP solar photovoltaic (”PV”) power project developed in Northern Cape province near the town of Kimberley, South Africa. The construction of the project started in January 2013 and full commercial operations began in May 2014.

• [ An increase in the beneficiary’s skills base;]

• [ Encouragement of gainful engagement within society;]

• [ Encouragement of higher academic achievement; and]

• [ An increase in economic contribution. ]

Support was also provided to the bursary students to enable them to continue their studies online.

COVID-19 RELIEF SUPPORT

Covid-19 relief support to assist the vulnerable communities of Molteno and Sterkstroom during the Covid-19 pandemic through procurement of safety resources, were implemented. Small businesses making masks in the communities were identified and used to procure masks for community members. Taxi Associations in Molteno and Sterkstroom were supplied with sanitizers and safety resources.

Lesedi was involved in, amongst others, the following projects:

Lebelelang Centre for the Disabled

The centre is currently run from a community hall which does not cater for the special needs of the attendees. In collaboration with Assmang Beeshoek Mine and Kolomela Mine, Lesedi has embarked on a project to construct a disability centre in Postmasburg as per the standards and regulations of the Department of Social Development.

SANITARY PAD DRIVE

The Sanitary Pad Drive supports grade 5 to 12 female learners from seven schools in impoverished communities within the priority area:

• [ Ratang Thuto;]

• [ Blinkklip High School;]

• [ Kuilsville Combined School;]

Mahube Infrastructure Limited 2021 Integrated Annual Report 43

SOCIAL AND ETHICS COMMITTEE REPORT (CONTINUED)

• [ Danielskuil Intermediary;]

• [ HTT Bidi Memorial Primary School;]

• [ Postdene Primary School; and]

• [ Lebelelang Centre for the disabled.]

Female toilets at the schools have been equipped with sanitary bins to promote the correct disposal of sanitary waste. Distribution of sanitary pads has been put on hold due to school closures during the national lockdown.

JASPER WIND FARM

Community projects are mainly focused on:

• [ Education enrichment at all phases through increased ] resources

• Teacher training at all phases through increased resources (early childhood development, primary and high school)

• Digital learning aids

• Schools counsellor/social worker presence for primary and secondary schools

• Post matric bursary funding

• [ Welfare]

• Transporting community members to government facilities on targeted days each month in order to obtain ldentity documents

WHISTLEBLOWING

Mahube endeavours to promote a culture of openness and transparency within the Company and, as such, employees and other stakeholders are encouraged to report unethical conduct and other transgressions. The Committee remained satisfied with the current whistle-blowing guidelines and procedures for reporting suspected instances of corruption, as outlined on the Company’s website at mahube.africa.

As the Company expands, the Committee will consider outsourcing the whistle-blower function to an independent service provider.

COMPLIANCE

In terms of the JSE Listings Requirements, the Committee confirms that it has during the reporting period fulfilled its mandate as prescribed by the Companies Act and its regulations and that there were no material instances of non-compliance.

==> picture [38 x 49] intentionally omitted <==

Eddie Mbalo

Social and Ethics Committee Chairperson

• [ Economic participation and enterprise development]

• Internship programme or job placement programme targeted at youth without education and training to reduce poverty and increase economic participation

30 June 2021

• Gant funding, mentorship support and training for small startup enterprises

ENVIRONMENTAL

Bird and bat monitoring continue to be undertaken at both the Dorper and Noblesfontein sites. No excessive mortalities were reported during the period under review.

A number of recommendations to improve the quality of reporting and carcass searching emanated from the five-year Wildskies report. These recommendations are in process of being implemented.

44 Mahube Infrastructure Limited 2021 Integrated Annual Report

5

ANNUAL FINANCIAL STATEMENTS

Audit and Risk Committee Report	46
Directors’ responsibilities and approval	49
Directors’ report	50
CEO and FD’s responsibility statement	55
Company Secretary’s certification	56
Independent auditor’s report	57
Statement of financial position	60
Statement of profit or loss and other
comprehensive income	61
Statement of changes in equity	62
Statement of cash flows	63
Accounting policies	64
Notes to the Annual Financial Statements	71

These Annual Financial Statements were compiled internally by the Financial Director, Petro Lewis CA(SA) and approved by the Board.

These Annual Financial Statements have been audited in compliance with the applicable requirements of the Companies Act 71 of 2008.

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AUDIT AND RISK COMMITTEE REPORT

The Audit and Risk Committee (the “Committee”) has pleasure in submitting its report, describing how it discharged its duties assigned in terms of the Companies Act No 71 of 2008, as amended (the “Companies Act”), and the additional duties assigned to it by the Board, in respect of the financial year ended 28 February 2021.

COMPOSITION AND MEETING ATTENDANCE

The Committee is a statutory committee of the Company, responsible for the statutory duties outlined in section 94 (7) of the Companies Act, as well as other duties as contemplated in the King IV[TM] Report on Corporate Governance for South Africa, 2016 (“King IV™”), assigned to it by the Board.

As at 28 February 2021, the Committee consisted solely of independent non-executive directors being:

• [ Sisanda Tuku (Chairperson) ]

• [ Thembani Bukula (Member) ]

• [ Karén Breytenbach (Member)]

The Committee members’ qualifications and experience appear on page 27 of the Integrated Annual Report.

The Committee meets at least three times a year. The CEO, the FD, the external Audit Partner and the Company Secretary attend all meetings by permanent invitation. The number of meetings and attendance per committee member during the period under review is shown in the corporate governance section on page 34.

The re-election of these Committee members, which has received the support of the Nomination Committee and the Board, is subject to the approval of shareholders at the upcoming Annual General Meeting (the “AGM”).

ROLE AND RESPONSIBILITIES

The Committee’s role and responsibilities are governed by formal terms of reference as approved by the Board and which are subject to annual review. A copy of the Committee’s terms of reference is available on the Company’s website.

The Committee assists the Board in discharging its duties related to:

• [ statutory duties in terms of the Companies Act;]

• [ the auditors and external audit;]

• [ reporting and accountability; ]

• [ legislation and regulations;]

• [ policies and procedures; ]

• [ combined assurance;]

• [ risk management and insurance;]

• [ internal audit and internal controls; ]

• [ FD and finance function; ]

• [ financial statements; and ]

• [ information and technology governance. ]

ACTIVITIES DURING THE PERIOD UNDER REVIEW

The principal matters attended to by the Committee during the year included:

Effectiveness of internal controls

The Committee considered the effectiveness of the Company’s systems of internal controls, including business risk management and internal financial controls and recommended to the Board that it issue a statement as to the adequacy of the Company’s internal control environment.

The Committee was satisfied that there were no material breakdowns in the functioning of the internal financial controls during the year under review.

External auditors and non-audit services

During the period under review, the Committee assisted by management, embarked on a request for proposal (“RFP”) process to replace the Company’s external auditors, Deloitte & Touché. Following a formal process the Board of Directors, at the recommendation of the Committee, appointed BDO South Africa Incorporated as the Company’s new external auditors.

46 Mahube Infrastructure Limited 2021 Integrated Annual Report

AUDIT AND RISK COMMITTEE REPORT (CONTINUED)

ACTIVITIES DURING THE PERIOD UNDER REVIEW (CONTINUED)

The Committee assessed the independence, suitability, and accreditation of the incoming audit firm and was satisfied with same. In addition, the Committee considered the Independent Regulatory Board for Auditors’ latest findings report and the latest inspection reports and summary of internal review findings in terms of paragraph 22.15(h) of the JSE Listings Requirements.

Subject to the approval of the shareholders at the AGM, Mr Mohamed Zakaria Sadek will oversee the audit process as senior audit partner of BDO South Africa Incorporated for the financial year ending 28 February 2022. In the opinion of the Committee, Mr Sadek is sufficiently independent of the Company.

The Committee also considered and approved the fees for the 2021 financial year’s audits and will assess and determine the fees to be paid to the external auditor, the terms of engagement and the nature and extent of any non-audit services and related fees that the external auditor may provide to the Company going forward.

The external auditors are afforded unrestricted access to the Company’s records and management are invited to present to the Committee any significant issues arising from the annual audit. In addition, the designated audit partner, where necessary, raises matters of concern directly with the Chairperson of the Committee.

During the period under review the external auditors did not render any non-audit services to the Company.

Annual Financial Statements and Integrated Annual Report

The Committee reviewed the accounting treatments and the appropriateness of the accounting policies, and any changes thereto, and the Annual Financial Statements of the Company. It is satisfied that they are appropriate and comply with IFRS. There were no changes in the accounting policies.

The Committee recommended the Annual Financial Statements for the year ended 28 February 2021 to the Board for approval. The Board approved these Annual Financial Statements on 30 June 2021. The Annual Financial Statements will be open for discussions at the AGM. The Chairperson of the Committee, and in the instance of her absence, the other members of the Committee, will attend the AGM to answer questions falling under the mandate of the Committee.

Solvency and liquidity and going concern

The Committee reviewed quarterly assessments by management of the going concern premise of the Company before recommending to the Board that the Company will be a going concern in the foreseeable future.

The Committee reviews all proposed distributions to shareholders in terms of sections 44, 45 and 46 of the Companies Act, recommending such distributions to the Board for consideration, subject to the Company meeting the requirements of the solvency and liquidity test, as outlined in the Companies Act.

Evaluation of the expertise and adequacy of the FD and the finance function

Petro Lewis was appointed as the FD of the Company with effect from 1 July 2020, following the resignation of the former CEO, Prudence Lebina, with effect from 26 June 2020. Ms Lebina fulfilled the functions of both CEO and FD in line with dispensation granted by the JSE Limited in this regard, up to her resignation.

The Committee considered and satisfied itself of the appropriateness of the expertise and adequacy of resources within the Company’s finance function and that of the FD.

The Committee is satisfied that the Company has established appropriate financial reporting procedures and that such procedures are operating satisfactorily.

Risk management oversight, including information and technology governance

The Committee is responsible for reviewing the effectiveness of systems for internal control, financial reporting and financial risk management and considering the major findings of any internal investigations into control weaknesses, fraud or misconduct and management’s response thereto. The Committee relied on the work of the Social and Ethics Committee on the non-financial related risk areas.

47

Mahube Infrastructure Limited 2021 Integrated Annual Report

AUDIT AND RISK COMMITTEE REPORT (CONTINUED)

ACTIVITIES DURING THE PERIOD UNDER REVIEW (CONTINUED)

The policies on risk management, including the risk management framework and risk register, is in process of being updated and aligned to the Company’s restructuring strategy. Information on risk management is disclosed on page 14 of the Integrated Annual Report, including the top risks pertaining to capital raising and the share price trading below the net asset value per share.

A whistle-blower process is in place, as outlined on the Company’s website. There were no matters reported through the whistle-blower process during the process under review.

The Committee periodically reviews the Company’s maturity in respect of IT governance by considering reports from management in this regard.

KEY AUDIT MATTERS

The Committee has applied its mind to the key audit matters identified by the external auditors and is comfortable that they have been adequately addressed and disclosed. The valuations of investments at fair value through profit and loss was the singular key audit matter identified by the external auditors and required significant judgement.

FY2022 FOCUS AREAS

• [ Updating of the risk register and risk management framework in line with the Company’s revised strategy. ]

• Review by the internal auditors of effectiveness of the disaster recovery plan (“DRP”) and IT security measures implemented by management.

INTERNAL AUDIT

An important function of the Committee is the oversight and monitoring of the effective functioning of the internal auditors.

The internal audit function provides information to assist in the establishment and maintenance of an effective system of internal control to manage the risks associated with the Company. The role of internal audit is contained in the internal audit charter. The charter is reviewed annually and is aligned with the recommendations of King lV™.

Internal audit facilitates the combined assurance process and is responsible for the following:

• [ evaluating governance processes, including ethics;]

• [ assessing the effectiveness of the risk methodology and internal financial controls; and]

• [ evaluating business processes and associated controls in accordance with the annual audit plan and combined assurance model.]

Whilst the Company previously engaged the services of Ngubane and Company to conduct an internal audit in terms of an agreed scope, the engagement was placed on hold in view of the implementation of the Company’s revised strategy.

PROACTIVE MONITORING

The Committee considered the 2020 JSE Report on JSE Proactive Monitoring, issued February 2021, as well as annexure 3 thereto, and has taken the appropriate action to apply the most relevant findings when preparing the Annual Financial Statements.

COMPLIANCE

The Committee is responsible for reviewing any major breach of relevant legal and regulatory requirements. The Committee is satisfied that there has been no material non-compliance with laws and regulations during the current reporting period.

CONCLUSION

The Committee is committed to ensure that the financial results of Mahube fairly represent the performance of the Company and that adequate controls are maintained over the next financial year.

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Sisanda Tuku

Chairperson of the Audit and Risk Committee

30 June 2021

48 Mahube Infrastructure Limited 2021 Integrated Annual Report

DIRECTORS’ RESPONSIBILITIES AND APPROVAL

The Board of Directors (“the Board”) is required in terms of the Companies Act 71 of 2008 to maintain adequate accounting records and is responsible for the content and integrity of the Annual Financial Statements and related financial information included in this report. It is their responsibility to ensure that the Annual Financial Statements fairly present the state of affairs of Mahube Infrastructure Ltd 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 external auditors are engaged to express an independent opinion on the Annual Financial Statements.

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 Board acknowledges that they are ultimately responsible for the system of internal financial control established by the Company and place considerable importance on maintaining a strong control environment. To enable the Board 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 Company and all employees are required to maintain the highest ethical standards in ensuring the Company’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the Company is on identifying, assessing, managing and monitoring all known forms of risk across the Company. While operating risk cannot be fully eliminated, the Company endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The Board is of the opinion, based on the information and explanations given by management, 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 Board has reviewed the Company’s cash flow forecast for the year to 28 February 2022 and, in light of this review and the current financial position, they are satisfied that the Company 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 Company’s Annual Financial Statements. The Annual Financial Statements have been examined by the Company’s external auditors and their report is presented on pages 57 to 58.

APPROVAL OF ANNUAL FINANCIAL STATEMENTS

The Annual Financial Statements set out on pages 60 to 89, which have been prepared on the going concern basis, were approved by the Board of Directors on 30 June 2021 and were signed on their behalf by:

==> picture [38 x 50] intentionally omitted <==

Khalipha Eddie Mbalo Authorised Director Chairperson of the Board

==> picture [35 x 49] intentionally omitted <==

Sisanda Tuku Authorised Director Chairperson of the Audit and Risk Committee

Mahube Infrastructure Limited 2021 Integrated Annual Report 49

DIRECTORS’ REPORT

The Directors submit their report on the Annual Financial Statements of Mahube Infrastructure Limited for the year ended 28 February 2021.

1. CORPORATE INFORMATION

The Company is domiciled in South Africa, and listed on the Main Board of the JSE Ltd.

The address of the registered office is: 3rd Floor, Penthouse 5, 4 The High Street, Melrose Arch, 2196

Mahube was incorporated on 16 April 2015 and successfully listed as a special purpose vehicle (“SPAC”) on the Main Board of the JSE on 12 November 2015. The Company is focused on investing in emerging Southern African infrastructure assets, specifically in the energy, transport, water and sanitation sectors. The Company aims to be a leading investment company of infrastructure assets in South Africa. The Company’s investment philosophy is to invest in infrastructure assets that are operational or near operational, offer low risk and yield uncorrelated inflationary linked returns.

The Company makes substantially all its investments through its wholly owned subsidiary Mahube Capital Fund. The two companies have the same investment objectives.

On 20 December 2016, the Company acquired through Mahube Capital Fund an effective see through economic interest of 25.2% in Dorper Wind Farm for a consideration of R501 million and transaction costs of R11.6 million (“Dorper Acquisition”). On completion of the Dorper Acquisition, the Company transferred to the Investment Services sector on the Main Board of the JSE. The investment in Dorper Wind Farm was through a subscription of shares in Renewable Energy G (Pty) Ltd (“Renewable Energy G”).

Effective 12 December 2018, Mahube Capital Fund diversified its investment portfolio by converting its convertible loan to Renewable Energy G into indirect minority interests in three renewable energy projects, being Jasper (4.0%), Lesedi (5.3%), and Letsatsi (5.3%) Solar PV Farms. The Company’s shareholding in Renewable Energy G is currently 33%.

Effective 19 September 2017, Mahube Capital Fund acquired C Preference Shares in Mahube Infrastructure Investment for an aggregate subscription price of R130 million and, as a result, acquired an effective economic interest of 13.0% in the combined distributions linked to the ordinary shares and shareholder loan claims against Coria (PKF) Investments 28 (RF) (Pty) Ltd (“Noblesfontein Wind Farm”).

In addition, Mahube Capital Fund entered into funding agreements with South African Renewable Green Energy (Pty) Ltd (“SARGE”) whereby Mahube Capital Fund subscribed for A Preference Shares and B Preference Shares in SARGE for an aggregate subscription price of R58 million (the “SARGE Transaction”). As a result of the SARGE Transaction, Mahube Capital Fund acquired a further effective economic interest of 7.0% of the distributions linked to the ordinary shares in the Noblesfontein Wind Farm.

Mahube Capital Fund Services obtained funding to facilitate, inter alia , its subscription for the Mahube Infrastructure Investment C Preference Shares; and subscription for the SARGE Preference Shares by way of the issue, by it, of A Preference Shares and B Preference Shares to RMBIA for an aggregate subscription price of approximately R188 million in terms of the Mahube Capital Fund Preference Share Subscription Agreement.

The Annual Financial Statements for the year ended 28 February 2021 were authorised for issue in accordance with a resolution of the Board of Directors on 30 June 2021.

2. REVIEW OF FINANCIAL RESULTS AND ACTIVITIES

The Annual Financial Statements have been prepared on the going concern basis and in accordance with, and in compliance with, International Financial Reporting Standards (”IFRS”), International Financial Reporting Interpretations Committee (”IFRIC” interpretations issued and effective at the time of preparing these Annual Financial Statements, the Companies Act 71 of 2008 of South Africa, as amended and the JSE Listing Requirements.

These Annual Financial Statements comply with the requirements of the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the Financial Reporting Pronouncement as issued by the Financial Reporting Standards Council. The accounting policies have been applied consistently compared to the prior year.

50 Mahube Infrastructure Limited 2021 Integrated Annual Report

DIRECTORS’ REPORT (CONTINUED)

2. REVIEW OF FINANCIAL RESULTS AND ACTIVITIES (CONTINUED)

The Company is focused on investing in emerging Southern African infrastructure assets, specifically in the energy, transport, water and sanitation sectors. The Company aims to be a leading investment company of infrastructure assets in South Africa. The Company’s investment philosophy is to invest in infrastructure assets that are operational or near operational, offer low risk and yield uncorrelated inflationary linked returns.

On listing, the Company issued 55 150 000 shares at R10 per share, thereby raising R551.5 million.

The principal activities of the Company are that of an investment company and the purpose of listing was to give institutional investors access to an attractive alternative asset class that is usually only accessed through illiquid private equity investments. The investments are not held indefinitely and if not exited earlier in the secondary market through a trade sale or private placement, they will be held until the end of the power purchase or concession agreements of the investee companies, post which the Company will liquidate the investee companies when the underlying assets cease to generate cash flows.

The Company makes substantially all its investments through its wholly owned subsidiary Mahube Capital Fund. The two companies have the same investment objectives.

Investment strategy

Mahube’s investment strategy is to invest in large-scale operational assets that meet the following criteria:

• [ Target investment return of CPI + 6% (before costs) over the term of the offtake/concession agreement;]

• [ Operational or six months to commercial operation;]

• [ Low risk, inflation linked and predictable long-term cash flow generation profiles; and]

• [ Acceptable third-party credit risk exposure.]

Mahube will invest directly or indirectly into ordinary equity or any other financial instruments that yield our target investment return. In addition, Mahube will pursue value adding management and directorship roles to optimise the potential of all the underlying assets.

Salient features of the Company

• [ Dividends received up 119% to R54.9 million from R25.1 million in the comparative period last year;]

• Basic earnings and headline earnings per share down 69.7% to 21.71 cents per share in comparison to 71.64 cents for the comparative period last year;

• [ Tangible NAV per share at R10.63;]

• [ Final cash dividend declaration of 32.00 cents per share; and]

• [ Gross assets under management at R754.2 million.]

Commentary

The Company’s underlying investments performed well for the financial year ended 28 February 2021 resulting in an increase in dividend income to R54.9 million from R25.1 million in the comparative period. Despite the healthy growth in dividend income, the Company’s revenue for the year decreased by 29.3% to R44.7 million compared to R63.2 million in the previous year. This decrease in revenue was the result of the unfavourable change in the fair value of the financial assets. The unfavourable adjustment was caused by the adverse impact on asset valuations, of future expectations of general price inflation (i.e. consumer price index).

Operating expenses for the period decreased to R14.3 million compared to R23.2 million in the corresponding period. This is mainly due to an amount of R8.6 million in prepayment of transaction cost (marketable investment reports) that was written off in the previous corresponding period, as well as success on cost savings initiatives undertaken during the period. Cost control will remain a focus area going forward.

A once-off expense of R18.0 million was incurred and paid in the period for the termination of the management services agreement that the Company had in place with GAIA Infrastructure Partners (Pty) Ltd. This expense further impacted the cash balance as at the period end. The tangible net asset value per share of the Company decreased from R10.74 in the comparative reporting period to R10.63 in the current reporting period as a result of the decrease in the fair value of the investments held by the Company.

Basic and headline earnings per share decreased by 69.7%, from 71.64 cents in the comparative reporting period to 21.71 cents per share in the current reporting period. The decrease resulted from the unfavourable fair value adjustment and the termination fee paid.

51

Mahube Infrastructure Limited 2021 Integrated Annual Report

DIRECTORS’ REPORT (CONTINUED)

3. INVESTMENTS UNDER MANAGEMENT

Performance of assets

Mahube’s current portfolio of operational assets, the majority of which are held through Mahube Capital Fund, a wholly owned subsidiary of the Company, continues to perform to expectation. Some variability around the predicted average resource was experienced, but the expected distributions were in line with long-term forecasts.

Mahube is indirectly invested in five Round 1 Renewable Energy Independent Power Producer Procurement Programme (“REIPPPP”) assets. Below is a summary of the diversified investment portfolio:

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----- Start of picture text -----

Effective End of power
Asset interest purchase
Investment Instrument exposure % agreement
Renewable Energy G Equity Dorper Wind Farm 9.9 July 2034
Renewable Energy G Equity Jasper Solar PV Farm 4.0 December 2034
Renewable Energy G Equity Lesedi Solar PV Farm 5.3 June 2034
Renewable Energy G Equity Letsatsi Solar PV Farm 5.3 June 2034
Mahube Infrastructure
Investment C – preference shares Noblesfontein Wind Farm 13.0 August 2034
A & B –
SARGE preference shares Noblesfontein Wind Farm 7.0 August 2034
Noblesfontein Educational Trust Loan Noblesfontein Wind Farm n/a n/a
----- End of picture text -----*

* South African Renewable Green Energy (Pty) Ltd.

4. STATED CAPITAL

There have been no changes to the authorised or issued stated capital during the year under review or in the prior year.

The authorised stated capital of the Company comprises 6 000 000 000 (2020: 6 000 000 000) ordinary shares at no par value. The issued stated capital of the Company comprises 55 151 000 (2020: 55 151 000) no par value shares.

5. DIVIDENDS

The Company’s dividend policy is to pay a consistent and stable inflationary linked return. At its discretion, the Board may consider a special dividend, where appropriate. Depending on the perceived need to retain funds for expansion or operating purposes, the Board forego on the payment of dividends.

An interim cash dividend of 18.00 cents per share, for the six months ended 31 August 2020, was paid in December 2020. The final gross cash dividend of 32.00 cents per share brings the total dividend for the 2021 financial year to 50.00 cents per share (2020: 40.00 cents per share).

Dividend tax will be withheld from the amount of the gross interim and final dividend at a rate of 20% unless a shareholder qualifies for exemption. The Company had a total of 55 151 000 shares in issue at the declaration date.

6. DIRECTORATE

The Directors in office at the date of this report are:

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----- Start of picture text -----

Directors Office Appointed
Khalipha Eddie Mbalo Chairperson 1 October 2015
Sisanda Tuku Independent Non-Executive Director 1 October 2015
Thembani Bukula Independent Non-Executive Director 1 June 2017
Karén Breytenbach Independent Non-Executive Director 26 February 2020
Gontse Samuel Moseneke CEO 1 July 2020
Petro Lewis FD 1 July 2020
----- End of picture text -----

52 Mahube Infrastructure Limited 2021 Integrated Annual Report

DIRECTORS’ REPORT (CONTINUED)

6. DIRECTORATE (continued)

The following Director resigned during the year under review:

DIRECTORATE(continued) The following Director resigned during the year under review:
Director Office held up to resignation date	Resigned
Kuby Prudence Lebina Chief Executive Officer	26 June 2020

7. DIRECTORS’ INTERESTS IN SHARES

As at 28 February 2021, the following Directors held direct or indirect beneficial interest in the Company’s ordinary shares:

Director name	Nature of interest Number of shares % shareholding
2021
Gontse Samuel Moseneke	Indirect beneficial through an associate company – Encha Infrastructure Investments (Pty) Ltd where GS Moseneke is a director. 330 544 0.6

As at 29 February 2020 no Directors held direct or indirect beneficial interest in the Company’s ordinary shares.

There have been no changes in beneficial interests that occurred between the end of the reporting period and the date of this report.

8. PROPERTY, PLANT AND EQUIPMENT

There was no change in the nature of the property, plant and equipment of the Company or in the policy regarding their use.

Property, plant and equipment is made up of leasehold property, furniture and fittings and computer equipment.

9. SPECIAL RESOLUTIONS

No special resolutions, the nature of which might be significant to the shareholders in their appreciation of the state of affairs of the Company, were made by the Company during the period covered by this report.

10. EVENTS AFTER THE REPORTING PERIOD

The Board is not aware of any material event which occurred after the reporting date and up to the date of this report.

11. GOING CONCERN

The Board believes that the Company has adequate financial resources to continue in operation for the foreseeable future and accordingly the Annual Financial Statements have been prepared on a going concern basis. The Company has satisfied itself that the Company is in a sound financial position and that it has access to sufficient borrowing facilities to meet its foreseeable cash requirements. The Company is not aware of any new material changes that may adversely impact the Company. The Company is also not aware of any material non-compliance with statutory or regulatory requirements or of any pending changes to legislation which may affect the Company. For further information on the going concern assessment, refer to note 21 in the Annual Financial Statements.

12. AUDITORS

During the period under review the Company embarked on a request for proposal (“RFP”) process to replace the company’s external auditors, Deloitte & Touché. Following a formal process, the Board on the Audit and Risk Committee’s recommendation, appointed BDO South Africa Incorporated as the Company’s external auditors for the year ending 28 February 2021.

Mahube Infrastructure Limited 2021 Integrated Annual Report 53

DIRECTORS’ REPORT (CONTINUED)

13. SECRETARY

The Company Secretary is Fusion Corporate Secretarial Services (Pty) Ltd.

Postal address: PO Box 68528 Highveld Pretoria 0169 Business address: Suite E014 Midlands Office Park East Mount Quray Street Midlands Estate Midstream 1692

14. DIRECTORS’ FEES

Refer to note 19 in the Notes to the Annual Financial Statements.

15. PREPARER

These Annual Financial Statements were compiled and prepared internally by the FD, Petro Lewis CA(SA), and approved by the Board.

16. LEVEL OF ASSURANCE

These Annual Financial Statements have been audited in compliance with the applicable requirements of the Companies Act 71 of 2008 and in compliance with the Company’s Memorandum Of Incorporation..

54 Mahube Infrastructure Limited 2021 Integrated Annual Report

CEO AND FD’S RESPONSIBILITY STATEMENT

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

• (a) the Annual Financial Statements set out on pages 60 to 89, fairly present in all material respects the financial position, financial performance and cash flows of the issuer in terms of IFRS;

• (b) no facts have been omitted or untrue statements made that would make the Annual Financial Statements false or misleading;

• (c) internal financial controls have been put in place to ensure that material information relating to the issuer have been provided to effectively prepare the financial statements of the issuer; and

• (d) 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 King IV™. Where we are not satisfied, we have disclosed to the audit 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.[1]

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Gontse Moseneke CEO

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Petro Lewis FD

30 June 2021

1.[.] Whilst the Directors are aware of their responsibility to communicate such fraud incidents to the Audit and Risk Committee and auditors, no incidents of such fraud were identified for communication during the year under review.

55

Mahube Infrastructure Limited 2021 Integrated Annual Report

COMPANY SECRETARY’S CERTIFICATION

for the year ended 28 February 2021

Declaration by the Company Secretary in respect of section 88(2)(e) of the Companies Act

In terms of section 88(2)(e) of the Companies Act of South Africa 71 of 2008, as amended, I certify that, to the best of my knowledge, the Company has lodged all such returns and notices as are required of a public company for the year ended 28 February 2021 and that all such returns are true, correct and up to date.

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Fusion Corporate Services (Pty) Ltd Company Secretary

30 June 2021

56 Mahube Infrastructure Limited 2021 Integrated Annual Report

INDEPENDENT AUDITOR’S REPORT

for the year ended 28 February 2021

To the Shareholders of Mahube Infrastructure Limited

Report on the Audit of the Financial Statements

OPINION

We have audited the financial statements of Mahube Infrastructure Limited (”the Company”) set out on pages 60 to 89, which comprise the statement of financial position as at 28 February 2021, and the statement of profit or loss and other comprehensive income, statement of changes in equity and the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the financial statements present fairly, in all material respects, the financial position of Mahube Infrastructure Limited as at 28 February 2021, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing (”ISAs”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of Financial Statements section of our report. We are independent of the Company in accordance with the Independent Regulatory Board of Auditors’ Code of Professional Conduct for Registered Auditors (”IRBA” Code) and other independence requirements applicable to performing audits of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance with the IRBA Code and in accordance with other ethical requirements applicable to performing audits in South Africa. The IRBA Code is consistent with the corresponding sections of the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide an opinion on these matters.

Key audit matter How our audit addressed the key audit matter Valuation of the financial assets through profit or loss

Valuation of the financial assets through profit or loss

As disclosed in note 5, the company holds an investment in Mahube Capital Fund 1 RF (Pty) Ltd (”Capital Fund”). The valuation of Capital Fund is derived from the valuations of its underlying investments.

In considering the appropriateness of management’s judgement used in determining the valuation of the financial assets, we performed the following audit procedures with the assistance of our internal valuation specialists:

• �� Assessed the design and implementation of key controls in the valuation process performed by management;

Management uses discounted cash flow models in determining the fair value of the financial assets in the underlying entities and has engaged an external specialist to perform the valuation models for all the investments.

• �� We have assessed the independence and competence of both our internal valuation specialist and management’s expert;

• �� We held discussions with management to obtain an understanding of the process applied by them to determine the value of the financial asset and to ensure compliance with IFRS;

The value of the investment in Capital Fund is directly impacted by the assumptions, estimates and judgements applied in the valuations of the investments held by Capital Fund.

• �� We assessed the valuation model methodology to be in line with generally accepted valuation methodology being a discounted cash flow model;

The valuation requires significant estimation and judgement to be applied by management in the key assumptions underlying the valuations such as the forecasted cash flows, growth rates and the discount rates used.

• �� We tested the mathematical accuracy of the financial forecast model used by management’s expert to calculate the cash flows attributable to the holding of the financial asset;

Mahube Infrastructure Limited 2021 Integrated Annual Report 57

INDEPENDENT AUDITOR’S REPORT (CONTINUED)

for the year ended 28 February 2021

KEY AUDIT MATTERS (CONTINUED)

Key audit matter How our audit addressed the key audit matter

The valuation of the investment was a matter of most significance to the current year audit due to the following:

�� the significant level of assumptions, estimates and judgement applied by management, in relation to forecasted revenue growth, forecasted utilisation rate and discount rate, dividend policy assumptions; and �� the significance of the amount to the financial statements.

Refer to Note 5 Financial Assets of the financial statements for the disclosure on the financial assets at fair value through profit or loss and the fair value information to the financial statements.

The value of the investment at year end is R540 million (2020: R566 million).

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|||
|---|---|
|��|Utilising our valuations expertise, we tested the discount rate|
|used by management’s expert for reasonability by|
|independently recalculating the discount rates, taking into|
|account market obtained data;|
|��|We compared forecasted revenue growth during the|
|remainder of the power purchase agreement to confirm that it|
|is in line with current market indicators, including the price|
|index;|

----- End of picture text -----

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----- Start of picture text -----

|||
|---|---|
|��|Through the evaluation performed by our specialist we have|
|validated the key inputs applied in the financial forecasts,|
|including the power purchase agreements and significant|
|contractual expenses;|

----- End of picture text -----

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|||
|---|---|
|��|We have performed sensitivity analysis disclosed in the|
|financial statements to determine the impact thereon should|
|the key assumptions change and to assess the adequacy of|
|the disclosures as required by IFRS; and|

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• �� We evaluated the adequacy and completeness of disclosures in the financial statements in terms of International Financial Reporting Standards.

OTHER MATTER

The financial statements of Mahube Infrastructure Limited for the year ended 29 February 2020 were audited by another auditor who expressed an unmodified opinion on those statements on 17 September 2020.

OTHER INFORMATION

The Directors are responsible for the other information. The other information comprises the information included in the document titled “Mahube Infrastructure Limited Annual Financial Statements for the year ended 28 February 2021”, which includes the Directors’ Report, the Audit Committee’s Report and the Company Secretary’s Certificate as required by the Companies Act of South Africa, which we obtained prior to the date of this report, and the Integrated Annual Report, which is expected to be made available to us after that date. The other information does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not and will not express an audit opinion or any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

RESPONSIBILITIES OF THE DIRECTORS FOR THE FINANCIAL STATEMENTS

The Directors are responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Company’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

58 Mahube Infrastructure Limited 2021 Integrated Annual Report

INDEPENDENT AUDITOR’S REPORT (CONTINUED)

for the year ended 28 February 2021

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the financial 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 of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material 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 the economic decisions of users taken on the basis of these financial statements.

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

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from 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 audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine 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 such communication.

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 BDO South Africa Incorporated is auditing Mahube Infrastructure Limited for the first time in the current year.

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BDO South Africa Incorporated Registered Auditors

MZ Sadek

Partner

Registered Auditor

30 June 2021

Wanderers Office Park 52 Corlett Drive Illovo, 2196

Mahube Infrastructure Limited 2021 Integrated Annual Report 59

STATEMENT OF FINANCIAL POSITION

for the year ended 28 February 2021

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2021 2020
Notes R R
Assets
Non-current assets
Property, plant and equipment 3 204 406 276 605
Right-of-use assets 4 986 846 1 550 758
Financial assets 5 545 089 756 556 789 636
Deferred tax 6 114 001 89 040
546 395 009 558 706 039
Current assets
Trade and other receivables 7 35 521 805 7 340 063
Tax receivable – 59 480
Cash and cash equivalents 8 6 340 772 29 196 275
41 862 577 36 595 818
Total assets 588 257 586 595 301 857
Equity and liabilities
Equity
Stated capital 9 545 851 762 545 851 762
Retained income 40 135 886 46 360 183
585 987 648 592 211 945
Liabilities
Non-current liabilities
Lease liabilities 4 561 081 1 194 227
Current liabilities
Lease liabilities 4 633 146 512 065
Tax payable 122 270 –
Trade and other payables 10 953 441 1 383 620
1 708 857 1 895 685
Total liabilities 2 269 938 3 089 912
Total equity and liabilities 588 257 586 595 301 857
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60 Mahube Infrastructure Limited 2021 Integrated Annual Report

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

for the year ended 28 February 2021

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----- Start of picture text -----

2021 2020
Notes R R
Dividends received 54 923 679 25 072 710
Net (loss)/gain from financial assets at fair value through profit or loss (11 759 129) 36 239 021
Interest income 1 492 163 1 853 833
Other income 6 384 –
Revenue 11 44 663 097 63 165 564
Other operating expenses 12 (14 344 289) (23 226 152)
ManCo termination fee 18 (18 000 000) –
Operating profit before finance cost and taxation 12 318 808 39 939 412
Finance costs 13 (188 581) (246 634)
Profit before taxation 12 130 227 39 692 778
Taxation 14 (154 692) (183 118)
Profit for the year 11 975 535 39 509 660
Basic and diluted earnings per share (cents) 17 21.71 71.64
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Mahube Infrastructure Limited 2021 Integrated Annual Report 61

STATEMENT OF CHANGES IN EQUITY

for the year ended 28 February 2021

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----- Start of picture text -----

Stated Retained Total
capital income equity
Notes R R R
Balance at 1 March 2019 545 851 762 28 800 623 574 652 385
Profit for the year – 39 509 660 39 509 660
Dividends paid 23 – (21 950 100) (21 950 100)
Balance at 29 February 2020 545 851 762 46 360 183 592 211 945
Profit for the year – 11 975 535 11 975 535
Dividends paid 23 – (18 199 830) (18 199 830)
Balance at 28 February 2021 545 851 762 40 135 886 585 987 648
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62 Mahube Infrastructure Limited 2021 Integrated Annual Report

STATEMENT OF CASH FLOWS

for the year ended 28 February 2021

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----- Start of picture text -----

2021 2020
Notes R R
Cash flows (used in)/generated from operating activities
Cash generated from operations 15 (4 584 718) 43 624 658
Finance costs (used) in/generated 13 (188 581) (246 634)
Tax received/(paid) 16 2 098 (243 226)
Dividends paid (18 199 830) (21 950 100)
Net cash (used in)/from operating activities (22 971 031) 21 184 698
Cash flows used in investing activities
Purchase of property, plant and equipment 3 (44 999) (24 860)
Receipts from loan to Noblesfontein Educational Trust 672 592 284 834
Net cash used in investing activities 627 593 259 974
Cash flows used in financing activities
Payment on lease liabilities (512 065) (408 378)
Net cash used in financing activities 4 (512 065) (408 378)
Total cash movement for the year (22 855 503) 21 036 294
Cash at the beginning of the year 29 196 275 8 159 981
Total cash at the end of the year 8 6 340 772 29 196 275
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Mahube Infrastructure Limited 2021 Integrated Annual Report 63

ACCOUNTING POLICIES

1. SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these Annual Financial Statements are set out below.

1.1 Statement of compliance

The Annual Financial Statements have been prepared on the going concern basis in accordance with, and in compliance with, International Financial Reporting Standards (“IFRS”), International Financial Reporting Interpretations Committee (“IFRIC”) interpretations issued and effective at the time of preparing these Annual Financial Statements, the Companies Act 71 of 2008 of South Africa, as amended and the JSE Listing Requirements.

These Annual Financial Statements comply with the requirements of the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council.

1.2 Basis of preparation

The Annual Financial Statements have been prepared on the historic cost convention, unless otherwise stated in the accounting policies which follow and incorporate the principal accounting policies set out below. They are presented in Rand, which is the Company’s functional and presentation currency. These accounting policies are consistent with the previous period.

1.3 Significant judgements and sources of estimation uncertainty

The preparation of Annual Financial Statements in conformity with IFRS requires management, from time to time, to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. These estimates and associated assumptions are based on experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Significant judgements and sources of estimation uncertainty in applying accounting policies

Management have made significant judgements and estimations in applying accounting policies for the following: [ Fair value measurement]

[ Segment reporting by applying a single reporting segment approach]

[ Investment entity exemption]

1.3.1 Key sources of estimation uncertainty

Fair value measurement

The Company makes assumptions regarding the determination of the fair value of the financial instruments. This is the major source of estimation uncertainty at the end of the reporting period. Information regarding the significant unobservable inputs into the valuation is disclosed in note 5.

The basis of valuation of the Company’s investments is fair value through profit or loss (“FVTPL”). Fair value is determined at the end of each reporting period, in accordance with the valuation policy outlined below.

Basis of valuation and approach

The fair value approach of the investments under management is determined as at the measurement date in accordance with the principles of IFRS 13: Fair Value Measurement . Fair value is defined as the price that would be received for an asset in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that a hypothetical transaction to sell an asset takes place in the principal market or in the absence, the most advantageous market for the asset.

64 Mahube Infrastructure Limited 2021 Integrated Annual Report

ACCOUNTING POLICIES (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

1.3 Significant judgements and sources of estimation uncertainty (CONTINUED)

• 1.3.1 Key sources of estimation uncertainty (CONTINUED)

The primary valuation methodology for the underlying investments under management held through Mahube Capital Fund is the discounted cash flow (“DCF”). Management uses judgement to select the most appropriate valuation method. The DCF method is used to derive the fair value, being the discounting of the expected dividend income from the investments, of an asset using reasonable assumptions on the estimations of expected future post-tax cash flows (dividend income) over the term of the power purchase agreements, i.e. free cash flows to the Company. These cash flows are discounted to the present value by applying the appropriate discount rate that captures the risk inherent to the investment. The Company uses sum of the parts valuation method to measure the fair value of Mahube Capital Fund.

• 1.3.2 Key sources of significant judgement applied

• 1.3.2.1 Segment reporting

Mahube is an investment entity holding most of its investments in operational infrastructure assets on which its revenue is earned. All the investee entities are independent power producers established as part of the South African Renewable Energy Independent Power Producer Procurement Programme (”REIPPPP”) with 20-year power purchase agreements (”PPA”) with Eskom Holdings SOC Ltd (”Eskom”). The PPAs are guaranteed by the South African National Treasury and the expected return is the same for the investment portfolio. Based on this, any operating segment that would be identifiable based on how Mahube is structured and the nature of its asset were aggregated into a single operating segment because the economic characteristics of these investments are similar, and all have the same geographical location. IFRS 8.12 permits aggregation of segments on this basis. The chief operating decision maker makes decision and assesses Mahube’s performance based on the investment portfolio entirely. On this basis Mahube considers itself as a single operating segment, and therefore no entity specific disclosure related to segment reporting were provided.

1.3.2.2 Investment entity exemption

Management applied judgement in terms of IFRS 10 and concluded that Mahube meets the IFRS 10 requirements of an investment entity. Management have reached this conclusion on the basis that Mahube Capital Fund:

• has the purpose of providing investment management services to its investors being Mahube and RMB Investment and Advisory (Pty) Ltd;

• has committed to invest funds solely for the purpose of generating returns from capital appreciation, investment income, or both; and

• evaluates performance of its investments primarily on a fair value basis.

Mahube is an investment entity listed on the JSE that:

• commits to its investors that its business purpose is to invest in operational infrastructure assets in Southern Africa for returns from investment income;

• obtains funds from various equity investors to provide them with investment management services; and

• measures and evaluates the performance of substantially all its investments on a fair value basis.

Mahube meets the definition of an investment entity as per IFRS 10 based on the following:

• the Company has obtained funds from various investors for the purpose of providing them with an operational and appropriately derisked secondary investment opportunity for investment income;

• the Company’s business purpose, which was communicated directly to investors, is investing in infrastructure assets that are operational or near operation, offer low risk with inflationary linked investment returns; and

• the performance of the subsidiary’s investments are measured and evaluated on a fair value basis.

65

Mahube Infrastructure Limited 2021 Integrated Annual Report

ACCOUNTING POLICIES (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

1.3 Significant judgements and sources of estimation uncertainty (CONTINUED)

• 1.3.2 Key sources of significant judgement applied (CONTINUED)

• 1.3.2.2 Investment entity exemption (continued)

  • Mahube Capital Fund also meets the definition of an investment entity as:

  • Mahube Capital Fund has obtained funds for the purpose of providing investors (Mahube as ordinary shareholder and RMB Investment and Advisory (Pty) Ltd as preference shareholder) with an operational and appropriately derisked secondary investment opportunity.

  • Mahube Capital Fund’s business purpose, which was communicated directly to investors, is investing in infrastructure assets that are operational or near operation, offer low risk with inflationary linked investment returns.

  • The performance of Mahube Capital Fund’s investments are measured and evaluated on a fair value basis.

The investments are not held indefinitely as the intention is to hold the investments until the end of the power purchase or concession agreements of the underlying project companies. If not exited earlier Mahube will hold the investments until the end of the power purchase or concession agreements, post which the equity interests will be liquidated or sold in the secondary market.

The exit strategy with respect to the equity interest in Mahube Capital Fund is to liquidate the entity when all its underlying investments have ceased to generate cash inflows which is linked to the period when the last underlying Power Purchase Agreement is due to expire, currently being 2035; or unbundle the underlying interests to shareholders through a distribution in specie. Management’s intention is to set up any future infrastructure projects in a new structure and not to utilise the existing Mahube Capital Fund.

In light of the above, in terms of IFRS 10.31 Mahube is in compliance with IFRS 10 and meets the requirement for an investment entity exemption and therefore measure its investments at fair value.

An investment entity which acquires an interest in a subsidiary is exempt from consolidation in terms of change IFRS 10 measures an investment in a subsidiary at fair value through profit or loss.

1.4 Property, plant and equipment

• Property, plant and equipment are tangible assets which the Company holds for its own use and which are expected to be used for more than one year.

An item of property, plant and equipment is recognised as an asset when it is probable that future economic benefits associated with the item will flow to the Company, and the cost of the item can be measured reliably.

Property, plant and equipment is initially measured at cost. Cost includes all of the expenditure which is directly attributable to the acquisition of the asset.

Property, plant and equipment is subsequently stated at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation of an asset commences when the asset is available for use as intended by management. Depreciation is charged to write off the asset’s carrying amount over its estimated useful life to its estimated residual value, using a method that best reflects the pattern in which the asset’s economic benefits are consumed by the Company. Leased assets are depreciated in a consistent manner over the shorter of their expected useful lives and the lease term. Depreciation is not charged to an asset if its estimated residual value exceeds or is equal to its carrying amount. Depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale or derecognised.

66 Mahube Infrastructure Limited 2021 Integrated Annual Report

ACCOUNTING POLICIES (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

1.4 Property, plant and equipment (CONTINUED)

The useful lives of items of property, plant and equipment have been assessed as follows:

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Item Depreciation method Average useful life
Leasehold property Straight-line 5 years
Furniture and fixtures Straight-line 5 years
Computer equipment Straight-line 3 years
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The residual value, useful life and depreciation method of each asset are reviewed at the end of each reporting year. The review of residual values, useful lives and depreciation methods did not result in any changes in the current year.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item

is depreciated separately.

The depreciation charge for each year is recognised in profit or loss. Impairment tests are performed on property, plant and equipment when there is an indicator that they may be impaired.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its continued use or disposal. Any gain or loss arising from the derecognition of an item of property, plant and equipment, determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item, is included in profit or loss when the item is derecognised.

1.5 Financial instruments

Financial instruments held by the Company are classified in accordance with the provisions of IFRS 9: Financial Instruments . Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Financial assets at fair value through profit or loss (“FVTPL”)

Financial assets at FVTPL are subsequently measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in profit or loss. The net gain or loss recognised in profit or loss is included in the ”Net gain from financial assets through fair value at profit or loss” line item. Fair value is determined in the manner described in note 5.

Financial assets at amortised cost

Debt instruments that meet the following conditions are subsequently measured at amortised cost:

• the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is adjusted for any loss allowance. Interest income and impairment are recognised in profit or loss. These assets include loans receivable and trade and other receivables. Trade and other receivables refer to operational loans to related parties and dividends receivable from Mahube Capital Fund.

The Company recognises a loss allowance for expected credit losses on investments in debt instruments that are measured at amortised cost and trade receivables. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial asset.

Cash and cash equivalents

Cash and cash equivalents are initially stated at carrying amount and subsequently carried at amortised cost which is deemed to be fair value. Cash and cash equivalents include cash on hand and deposits held at financial institutions.

Mahube Infrastructure Limited 2021 Integrated Annual Report 67

ACCOUNTING POLICIES (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

1.5 Financial instruments (CONTINUED)

Trade and other payables

Classification

Trade and other payables (note 10), are classified as financial liabilities measured at amortised cost.

Recognition and measurement

Trade and other payables are recognised when the Company becomes a party to the contractual provisions, and are measured, at initial recognition, at fair value plus transaction costs, if any.

Trade and other payables are subsequently measured at amortised cost.

1.6 Tax

Current tax assets and liabilities

Current tax for current and prior periods is, to the extent unpaid, recognised as a liability. If the amount already paid in respect of current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset.

Current tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the tax authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the statement of financial position differs from its tax base.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the differences can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantially enacted by the reporting date and are expected to apply when the deferred tax liabilities/ (assets) are settled/ (recovered).

Tax expenses

Current and deferred taxes are recognised as income or an expense and included in profit or loss for the period, except to the extent that the tax arises from:

• a transaction or event which is recognised, in the same or a different period, to other comprehensive income, or

 a business combination.

Current tax and deferred taxes are charged or credited to other comprehensive income if the tax relates to items that are credited or charged, in the same or a different period, to other comprehensive income.

Current tax and deferred taxes are charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly in equity.

1.7 Leases

Until 28 February 2019, leases in which a significant portion of the risks and rewards of ownership were not transferred to the Company as lessee were classified as operating leases. Payments made under operating leases were charged to profit or loss as they occurred.

From 1 March 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Company. The Company assesses whether a contract is, or contains a lease, at the inception of the contract.

68 Mahube Infrastructure Limited 2021 Integrated Annual Report

ACCOUNTING POLICIES (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

1.7 Leases (CONTINUED)

A contract is, or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

In order to assess whether a contract is, or contains a lease, management determines whether the asset under consideration is “identified”, which means that the asset is either explicitly or implicitly specified in the contract and that the supplier does not have a substantial right of substitution throughout the period of use. Once management has concluded that the contract deals with an identified asset, the right to control the use thereof is considered. To this end, control over the use of an identified asset only exists when the Company has the right to substantially all of the economic benefits from the use of the asset as well as the right to direct the use of the asset.

In circumstances where the determination of whether the contract is or contains a lease requires significant judgement, the relevant disclosures are provided in the significant judgements and sources of estimation uncertainty section of these accounting policies.

Company as lessee

A lease liability and corresponding right-of-use asset are recognised at the lease commencement date, for all lease agreements for which the Company is a lessee, except for short-term leases of 12 months or less, or leases of low value assets (assets less than R10 000).

Details of leasing arrangements where the Company is a lessee are presented in note 4: Leases (Company as lessee).

Lease liability

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Company uses its incremental borrowing rate.

Lease payments included in the measurement of the lease liability comprise fixed lease payments, including in-substance fixed payments, less any lease incentives.

The lease liability is presented as a separate line item on the statement of financial position.

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect lease payments made. Interest charged on the lease liability is included in finance costs (note 12).

Right-of-use assets

Right-of-use assets are presented as a separate line item on the statement of financial position.

Lease payments included in the measurement of the lease liability comprise the initial amount of the corresponding lease liability.

Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses.

Right-of-use assets are depreciated over the shorter period of the lease term and useful life of the underlying asset. Depreciation starts at the commencement date of a lease.

The depreciation charge for each year is recognised in profit or loss.

Mahube Infrastructure Limited 2021 Integrated Annual Report 69

ACCOUNTING POLICIES (CONTINUED)

1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

1.8 Stated capital and equity

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

Ordinary shares are classified as equity.

Transaction costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

1.9 Dividends paid to shareholders

• Dividends payable is recognised as a liability in the period in which the dividends are declared. A dividend declared after period-end is not charged against total equity at the reporting date as no liability exists.

1.10 Interest income

Interest income and expense, including interest from non-derivative financial assets at fair value through profit or loss, is recognised, in profit or loss, using the effective interest method.

The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial instrument (or, when appropriate, a shorter period) to the carrying amount of the financial instrument. When calculating the effective interest rate, the Company will estimate future cash flows considering all contractual terms of the financial instrument, but not future credit losses.

Interest received or receivable are recognised in profit or loss as interest income.

1.11 Dividend income

• Dividend income is recognised in profit or loss on the date on which the right to receive payment is established. This is usually the date on which the shareholders approve the payment of a dividend. Dividend income from equity securities designated at fair value through profit or loss is recognised in profit or loss in a separate line item.

1.12 Net gain from financial instruments at fair value through profit or loss

• Net gain from financial instruments at fair value through profit or loss includes all unrealised fair value changes but excludes interest and dividend income.

1.13 Borrowing costs

Borrowing costs are recognised as an expense in the period in which they are incurred.

1.14 Segmental information

The Company has determined its operating segments based on investments held. At year-end, the Company held one investment, the investment in Mahube Capital Fund, for which it has recognised fair value adjustments. Due to Mahube only having one segment, entity-wide disclosure is not relevant. The Company is an investment entity holding most its investments in operational infrastructure assets on which its revenue is earned. Currently all the investee entities are independent power producers established as part of the South African Renewable Energy Independent Power Producer Procurement Programme (“REIPPPP”) with 20-year power purchase agreements (“PPA”) with Eskom Holdings SOC Ltd (“Eskom”). The PPAs are guaranteed by the South African National Treasury and the expected return is the same for the investment portfolio. Based on this, any operating segments that would be identifiable based on how Mahube is structured, the nature of its assets are aggregated into a single operating segment because the economic characteristics of these investments are similar, and all have the same geographical location.

Management and the Board make decisions and assess Mahube’s performance based on the performance of the investment portfolio.

Mahube therefore has only one operating segment in terms of IFRS 8: Operating Segments . The Board evaluates the investment in Mahube Capital Fund based on net asset value and fair value movement (which is considered to represent the measure of the segment result) in this net asset value .

70 Mahube Infrastructure Limited 2021 Integrated Annual Report

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

for the year ended 28 February 2021

2. NEW STANDARDS AND INTERPRETATIONS

2.1 Standards and interpretations not yet effective

The Company has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the Company’s accounting periods beginning on or after 1 March 2021 or later periods:

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Annual periods
Standard/Interpretation Details of amendment beginning on or after
Annual Improvements to In May 2020, the IASB issued minor amendments to 1 January 2022
IFRS: 2018-2020 Cycle IFRS 1: First-time Adoption of International Financial
Reporting Standards , IFRS 9: Financial Instruments ,
IAS 41: Agriculture and the Illustrative Examples
accompanying IFRS 16: Leases .
This amendment will be adopted for the financial year ending
28 February 2023 and is not expected to materially impact
the Company.
IAS 37: Provisions, In May 2020, the IASB issued amendments to IAS 37, which 1 January 2022
Contingent Liabilities and specify the costs a company includes when assessing
Contingent Assets whether a contract will be loss-making and is therefore
recognised as an onerous contract. These amendments are
(Amendment – Onerous
expected to result in more contracts being accounted for as
Contracts – Cost of
onerous contracts because they increase the scope of costs
Fulfilling a Contract )
that are included in the onerous contract assessment.
This amendment will be adopted for the financial year ending
28 February 2023 and is not expected to materially impact
the Company.
IAS 16: Property, Plant and In May 2020, the IASB issued amendments to IAS 16, which 1 January 2022
Equipment prohibit a company from deducting amounts received from
selling items produced while the company is preparing the
(Amendment – Proceeds
asset for its intended use from the cost of property, plant
before Intended Use )
and equipment. Instead, a company will recognise such
sales proceeds and any related costs in profit or loss.
This amendment will be adopted for the financial year ending
28 February 2023 and is not expected to materially impact
the Company.
IAS 1: Presentation of In January 2020, the IASB issued amendments to IAS 1, 1 January 2023
Financial Statements which clarify how an entity classifies liabilities as current or
non-current. The amendments initially had an effective date
(Amendment – Classification
of 1 January 2022, however, in July 2020 this was deferred
of Liabilities as Current or
until 1 January 2023 as a result of the Covid-19 pandemic.
Non-Current )
At the IFRS Interpretations Committee’s December meeting,
the Committee discussed the amendments due to feedback
from stakeholders which indicated that the requirements of
the amendments may be unclear.
This amendment will be adopted for the financial year ending
28 February 2024 and is not expected to materially impact
the Company.
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Mahube Infrastructure Limited 2021 Integrated Annual Report 71

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)

for the year ended 28 February 2021

2. NEW STANDARDS AND INTERPRETATIONS (CONTINUED)

• 2.1 Standards and interpretations not yet effective (continued)

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Annual periods
Standard/Interpretation Details of amendment beginning on or after
IAS 1: Presentation of Financial The amendments require companies to disclose their 1 January 2023
Statements material accounting policy information rather than their
significant accounting policies, with additional guidance
(Amendment – Disclosure of
added to the Standard to explain how an entity can
Accounting Policies )
identify material accounting policy information with
examples of when accounting policy information is likely
to be material.
This amendment will be adopted for the financial year
ending 28 February 2024 and is not expected to
materially impact the Company.
IAS 8: Accounting Policies, The amendments clarify how companies should 1 January 2023
Changes in Accounting distinguish changes in accounting policies from changes
Estimates and Errors in accounting estimates, by replacing the definition of a
change in accounting estimates with a new definition of
(Amendment – Definition of
accounting estimates. Under the new definition,
Accounting Estimates)
accounting estimates are “monetary amounts in financial
statements that are subject to measurement uncertainty”.
The requirements for recognising the effect of change in
accounting prospectively remain unchanged.
This amendment will be adopted for the financial year
ending 28 February 2024 and is not expected to
materially impact the Company.
IAS 12: Income Taxes The amendment specifies how companies should account 1 January 2023
for deferred tax related to Assets and Liabilities arising
(Amendment – Deferred Tax
from a Single Transaction on transactions such as leases
related to Assets and Liabilities
and decommissioning obligations. In specified
arising from a Single
circumstances, companies are exempt from recognising
Transaction )
deferred tax when they recognise assets or liabilities for
the first time. Previously, there had been some uncertainty
about whether the exemption applied to transactions
such as leases and decommissioning obligations -
transactions for which companies recognise both an asset
and a liability. The amendments clarify that the exemption
does not apply and that companies are required to
recognise deferred tax on such transactions.
This amendment will be adopted for the financial year
ending 28 February 2024 and is not expected to
materially impact the Company.
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72 Mahube Infrastructure Limited 2021 Integrated Annual Report

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)

for the year ended 28 February 2021

3. PROPERTY, PLANT AND EQUIPMENT

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2021 2020
Accumulated Carrying Accumulated Carrying
Cost depreciation value Cost depreciation value
R R R R R R
Furniture and fixtures 234 723 (156 038) 78 685 234 723 (107 343) 127 380
Computer equipment 82 255 (39 091) 43 164 37 257 (17 764) 19 493
Leasehold
improvements 235 876 (153 319) 82 557 235 876 (106 144) 129 732
Total 552 854 (348 448) 204 406 507 856 (231 251) 276 605
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	Opening balance R	Additions R	Depreciation R	Total R
Reconciliation of property, plant and equipment
– 2021
Furniture and fixtures	127 380	–	(48 695)	78 685
Computer equipment	19 493	44 999	(21 327)	43 164
Leasehold improvements	129 732	–	(47 175)	82 557
	276 605	44 999	(117 197)	204 406
Reconciliation of property, plant and equipment
– 2020
Furniture and fixtures	149 604	24 860	(47 084)	127 380
Computer equipment	31 912	–	(12 419)	19 493
Leasehold improvements	176 907	–	(47 175)	129 732
	358 423	24 860	(106 678)	276 605

4.

LEASES

The Company leases an office building. The lease contract expires in November 2022 with no option for renewal. Depreciation is written off over the lease term.

Details pertaining to leasing arrangements, where the Company is a lessee are presented below:

					Opening balance R	IFRS 16 transitional adjustment R	Depreciation R	Total R
Reconciliations	of	leases:	Right-of-use	assets
2021
Buildings					1 550 758	–	(563 912)	986 846
2020
Buildings					–	2 114 670	(563 912)	1 550 758

Mahube Infrastructure Limited 2021 Integrated Annual Report 73

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)

for the year ended 28 February 2021

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4. LEASES (CONTINUED)
2021 2020
R R
Leases: Right-of-use assets
The carrying amounts of right-of-use assets are included in the following line items:
Buildings 986 846 1 550 758
Depreciation recognised on right-of-use assets
Depreciation recognised on each class of right-of-use assets is presented below.
It includes depreciation which has been expensed in the total depreciation charge
in profit or loss (note 12).
Buildings 563 912 563 912
Other disclosures
Interest expense on lease liabilities 188 553 246 405
Payments on lease liabilities (512 065) (408 478)
The Company is not exposed to any other potential cash outflows related to lease
agreements.
Lease liabilities
The maturity analysis of lease liabilities is as follows:
– Within one year 749 661 700 618
– Two to five years 591 256 1 340 917
– Less finance charges component (146 690) (335 243)
1 194 227 1 706 292
Non-current liabilities 561 081 1 194 227
Current liabilities 633 146 512 065
1 194 227 1 706 292
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74 Mahube Infrastructure Limited 2021 Integrated Annual Report

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)

for the year ended 28 February 2021

5. FINANCIAL ASSETS

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2021 2020
R R
Financial assets at fair value through profit or loss
Mahube Capital Fund 539 615 381 551 374 511
The Company owns 100% equity interest in Mahube Capital Fund.
Financial assets at amortised cost
Noblesfontein Educational Trust 5 474 375 5 415 125
The loan shall accrue interest at a rate equal to the aggregate of CPI plus 7% net of taxes
applied as a nominal annual compounded monthly in arrears rate, and calculated on the
loan outstanding principal for that interest period. The loan is secured by a cession of any
shares held by Noblesfontein Educational Trust in Noblesfontein Wind Farm.
The Company extended the loan to the Noblesfontein Educational Trust, having taken it over
from the previous shareholder at an interest rate, and with repayment terms more beneficial
than market rates and terms, in order to benefit the beneficiaries of the trust, being
members of the local Noblesfontein community.
Expected credit losses are deemed immaterial based on management’s expectation of when
amounts due would be received and the payment history of the respective debtors.
545 089 756 556 789 636
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Mahube has adopted an accounting policy of measuring its investments at fair value through profit or loss with fair value movements on its assets under management recognised in the statement of profit or loss. All investments in Mahube Capital Fund are measured at fair value on a stand-alone basis and Mahube uses sum of the parts valuation method to measure fair value at its investment in Mahube Capital Fund.

Fair value information of underlying investments held through Mahube Capital Fund

Mahube Capital Fund interest in Renewable Energy G

Mahube Capital Fund holds a 33% equity interest in Renewable Energy G.

The Company funded the acquisition of its indirect economic interest in Dorper Wind Farm and Intikon Solar Assets (Jasper, Lesedi and Letsatsi Solar PV Farms), through a R501 million loan to Mahube Capital Fund. This loan is interest-free and unsecured, with no fixed repayment terms. Mahube Capital Fund is evaluated as a unit when making any strategic decisions. Acquisition and disposal decisions are made on an aggregate basis rather than by considering the shares and debt separately. The underlying assets and the loan are therefore linked in any decision-making process. Furthermore, the entity will not be able dispose of the assets within the entity without also considering the loan component that financed the relevant investments.

Renewable Energy G holds 30% of the issued share capital in Dorper Wind Farm and 100% in Intikon Solar (Pty) Ltd (“Intikon Solar”) which holds indirect economic interests in the Intikon Solar Assets, being Jasper Solar PV Farm (4.0%), Lesedi Solar PV Farm (5.3%) and Letsatsi Solar PV Farm (5.3%).

Mahube Capital Fund interest in Noblesfontein Wind Farm

On 19 September 2017, Mahube Capital Fund acquired C Preference Shares Mahube Infrastructure Investment for an aggregate subscription price of R130 million and, as a result, acquired an effective economic interest of 13.001% in the combined distributions linked to the ordinary shares and shareholder loan claims against Noblesfontein Wind Farm.

In addition, Mahube Capital Fund entered into funding agreements with SARGE whereby Mahube Capital Fund subscribe for A Preference Shares and B Preference Shares in SARGE for an aggregate subscription price of R57 493 127. As a result of the SARGE Transaction, Mahube Capital Fund acquired a further effective economic interest of 7.03% of the distributions linked to the ordinary shares in the Noblesfontein Wind Farm.

Mahube Capital Fund owns 100% of the issued ordinary shares in Mahube Infrastructure Investment for nominal value of R100.

Mahube Infrastructure Limited 2021 Integrated Annual Report 75

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)

for the year ended 28 February 2021

5. FINANCIAL ASSETS (CONTINUED)

• Mahube Capital Fund obtained funding to facilitate, inter alia, its subscription for the Mahube Infrastructure Investment C Preference Shares; and subscription for the SARGE Preference Shares by way of the issue, by it, of A Preference Shares and B Preference Shares to RMBIA for an aggregate subscription price of approximately R188 million in terms of the Mahube Capital Fund Preference Share Subscription Agreement.

Valuation of underlying renewable investments

For financial assets recognised at fair value, disclosure is required of a fair value hierarchy which reflects the significance of the inputs used to make the measurements.

Level 1 represents those assets which are measured using unadjusted quoted prices for identical assets.

• Level 2 applies inputs other than quoted prices that are observable for the assets either directly (as prices) or indirectly (derived from prices).

• Level 3 applies inputs which are not based on observable market data. This category includes all instruments for which the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments but for which significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

Valuation of underlying renewable investments

The Company engaged an independent valuation expert to assist with performing the valuations for financial reporting purposes. The models used have been developed from recognised valuation models and the experience regarding the valuation of renewable energy projects. Some of the significant inputs into the discounted cash flow model may not be observable in the market and are derived from market prices or rates or are based on assumptions. This valuation model therefore requires a higher degree of management judgement and estimation in determination of fair value. In the valuation for the investments, management’s judgement and estimation is required for:

• Selection of the appropriate valuation model to be used, in this case the discounted cash flow methodology, specifically applying the free cash flow to equity approach;

• Assessment and determination of the expected cash flows (dividend income in the form of equity dividend and preference dividend) from the underlying investments under management; and

• Selection of the appropriate discount rates.

The fair value estimate obtained from the discounted cash flow models will only be adjusted for factors such as liquidity risk and model uncertainty to the extent that the Company believes that a third-party market participant would take them into account in pricing a transaction. No such adjustments were deemed necessary in the valuation of the investments in underlying renewable assets.

The value of the investment in the ordinary shares of Renewable Energy G (Dorper Wind Farm and Intikon Solar) was determined using the discounted cash flow valuation models. Assumptions and inputs used in valuation techniques include CPI and investor premium used in estimating discount rates.

The value of the indirect investment in the preference shares in SARGE and Mahube Infrastructure Investment was also calculated using the discounted cash flow valuation model. The assumptions and inputs used included CPI rate, prime rate, exchange rate depreciation and JIBAR. JIBAR and prime rate are linked, so only prime rate is considered for sensitivity purposes.

The objective of valuation techniques is to arrive at a fair value measurement that reflects the prices that would be received to sell the investments in underlying renewable assets in an orderly transaction between market participants at the measurement date.

The table below analyses financial instruments measured at fair value at the reporting date by the level in the fair value hierarchy into which the fair value measurement is categorised. The amounts are based on the values recognised in the statement of financial position. All fair value measurements below are recurring. Financial assets at fair value through profit or loss are recognised at fair value, which is therefore equal to their carrying amounts.

As at 28 February 2021, the fair value measurement of shares held by the Company in Mahube Capital Fund is categorised into Level 3. The fair value of underlying investments under management in Mahube Capital Fund is are also categorised into Level 3.

76 Mahube Infrastructure Limited 2021 Integrated Annual Report

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)

for the year ended 28 February 2021

5. FINANCIAL ASSETS (CONTINUED)

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Assumptions
Discount rate Solar projects the discount rate The swap curve has been applied as the risk-free rate over the
ranges between 7.3% and 12.8% remaining life of each project.
Wind projects the discount rate
The swap curve has been applied as the risk-free rate over the
ranges between 6.8% and 12.4%
remaining life of each project. Specific risk premiums included:
(2020 discount rate used on all
 The long-term dependence on Eskom has been factored as a
projects was 12.408%)
minor specific risk (0.25%) adding to the discount rate; and
 the low interest rate environment caused by quantitative
easing measures implemented by central banks around the
world is factored through a further 0.25%.
We use the stage of life approach to determine the equity risk
premium for infrastructure assets. Given that the assets have
been in operation for multiple years and have reliably produced
predictable levels of energy, we have used an equity premium
of 3.0% for solar and 3.5% for wind.
Cash flow Expected dividends Investee entities make distributions from profits which are made
up of revenue net operating expenses. Revenue from power
generation is charged at a fixed tariff per the PPA and is subject
to an annual escalation with CPI.
Discount period Remaining term of the 20-year PPA Investment period of the PPA.
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Reconciliation of financial assets at fair value through profit or loss measured at level 3

	Opening balance R	(Losses)/gains in profit or loss R	Total R
2021
Mahube Capital Fund	551 374 511	(11 759 130)	539 615 381
2020
Mahube Capital Fund	515 135 490	36 239 021	551 374 511

The change in gains or losses (net gain) for the period is included in profit or loss for financial assets held at the reporting date. These gains and losses are recognised in profit or loss as a net gain from financial instruments at fair value through profit or loss.

Sensitivity of fair value measurement to changes in unobservable inputs

Although management believes that its estimates of fair value are appropriate, the use of different methodologies or assumptions could lead to different measurements of fair value. For fair value measurements in level 3, changing one or more of the assumptions used to reasonably reflect possible alternative assumptions would have the following effects on net assets.

Mahube Infrastructure Limited 2021 Integrated Annual Report 77

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)

for the year ended 28 February 2021

5. FINANCIAL ASSETS (CONTINUED)

Mahube Infrastructure Investment

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Discount rate Discount rate CPI CPI
+ 1% - 1% + 1% - 1%
Investments SARGE A pref 133 219 619 133 219 619 129 894 267 121 095 103
SARGE A1 pref 121 108 744 121 108 744 118 085 698 110 086 457
SARGE B pref 4 595 772 5 118 402 30 397 315 9 265 004
258 924 135 259 446 765 278 377 279 240 446 565
Financial liabilities A pref 133 429 307 133 429 307 133 902 605 132 756 905
B pref 14 332 481 16 904 754 17 183 470 13 034 382
C pref 127 928 704 150 975 515 153 537 798 116 196 001
275 690 492 301 309 577 304 623 873 261 987 288
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Mahube Capital Fund

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Discount rate Discount rate CPI CPI
+ 1% - 1% + 1% - 1%
Investments Renewable Energy G 498 679 180 561 386 108 565 265 039 494 468 881
A pref SARGE 51 733 328 57 284 751 54 422 777 54 373 014
B pref SARGE 24 725 246 29 257 618 31 282 250 22 782 695
C pref Mahube Infrastructure
Investment 127 928 704 150 975 515 153 537 798 116 196 001
703 066 458 798 903 992 804 507 863 687 820 591
Financial liabilities A pref 185 463 177 185 463 177 185 463 177 185 463 177
B pref 26 732 502 30 647 163 30 871 031 25 541 483
212 195 679 216 110 340 216 334 208 211 004 660
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Significant observable/unobservable inputs are developed as follows:

Discount rate

Represents the rate used to discount projected levered or unlevered forecast cash flows for an asset to determine their present values. Their discounted present value cash flows are determined as their fair value at reporting date. To value these assets, we have used the free cash flow to equity (“FCFE”) as the primary valuation methodology, discounted by a cost of equity rate that is determined with reference to the swap curve, equity risk premium (stage of life) and specific risk premia. We use the stage of life approach to determine the equity risk premium for infrastructure assets. Given that the assets have been in operation for multiple years and have reliably produced predictable levels of energy, we have used an equity premium of 3.0% for solar and 3.5% for wind.

CPI rate

The CPI forecast curve was derived from the South African bond curve and Real curve, to which a lower end (3.2%) and upper cap (5.75%) has been applied. The lower end cap is based on the prevailing inflation rate at the valuation date and the upper end cap is based on the projection that the South African Reserve Bank is expected to maintain its policy of managing inflation within its stated range of 3% to 6%. The Euro and USD inflation projections were utilised for foreign currency expenditure and based on data presented by Oxford Economics.

Exchange rate forecast

The exchange rates utilised in the various components of the project models were projected utilising the five-year forward forex curves reported by forecast presented by Reuters. The Euro and USD inflation projections were utilised for foreign currency expenditure related to the various projects. The long-term forecast was calculated through an interpolation of the difference between the Rand swap curve and its counterpart Euro, USD and GBP curves.

78 Mahube Infrastructure Limited 2021 Integrated Annual Report

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)

for the year ended 28 February 2021

5. FINANCIAL ASSETS (CONTINUED)

Annual depreciation of Rand

The long-term depreciation of the Rand against the projected currencies was capped at 6%, which is in line with the historical depreciation experience in recent history. The cap at 6% in the long term after the five-year specific forecast period, is informed by the long-term experience of depreciation of the Rand against the currencies. The quantum is supported by the inflation differential of the Rand against the hard currencies, plus the country risk premium differential.

6. DEFERRED TAX

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2021 2020
R R
Deferred tax asset
Property, plant and equipment 9 888 1 054
Accrual for audit fees 46 046 44 436
Company as lessee 58 067 –
– 43 550
Total deferred tax asset 114 001 89 040
Reconciliation of deferred tax asset
At the beginning of the year 89 040 62 267
(Deductible)/taxable difference movement on property, plant and equipment 8 834 (3 195)
Deductible/(taxable) difference on accruals 1 610 (13 582)
Deductible difference on leases 14 517 43 550
114 001 89 040
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7. TRADE AND OTHER RECEIVABLES

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2021 2020
R R
Other receivables – related parties (refer to note 18) 130 688 402 673
Other receivables – dividend receivable 35 391 117 6 937 390
Total trade and other receivables 35 521 805 7 340 063
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The fair value of trade and other receivables approximates their carrying amounts.

The loss allowance is calculated using an expected credit loss model. The Company uses a provision matrix to calculate expected credit losses, with amounts more than 90 days past due viewed as default events.

The exposure to credit risk on trade receivables is limited by establishing a maximum payment period of 30 to 90 days.

ECLs are deemed immaterial based on management’s expectation of when amounts due would be received and the payment history of the respective debtors.

Dividends receivable relates to dividends declared by the Mahube Capital Fund. Dividends declared flow subsequent to funds received from the underlying project companies. Therefore the risk of the dividend not being paid is minimal and based on history there was not a default previously.

Mahube Infrastructure Limited 2021 Integrated Annual Report 79

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)

for the year ended 28 February 2021

8. CASH AND CASH EQUIVALENTS

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2021 2020
R R
Cash and cash equivalents consist of:
Bank balances 3 560 194 1 571 796
Money market funds 2 780 578 27 624 479
6 340 772 29 196 275
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The fair value of cash and cash equivalents approximates their carrying amounts.

9. STATED CAPITAL

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2021 2020
R R
Authorised
6 000 000 000 ordinary no par value shares
Issued and fully paid
55 151 000 no par value shares, net of share issue cost 545 851 762 545 851 762
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There was no repurchase of shares issued for cash during the period under review.

The following shareholders hold more than 5% of Mahube’s issued share capital:

• Government Employees Pension Fund 23 601 296 shares 42.79%; and

• Specialised Listed Infrastructure Equity En Commandite Partnership 19 247 699 shares 34.90%.

10. TRADE AND OTHER PAYABLES

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2021 2020
R R
Financial instruments
Trade payables 788 991 1 224 920
Accrued expenses – audit 164 450 158 700
953 441 1 383 620
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The fair value of trade and other payables approximates their carrying amounts.

11. REVENUE

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2021 2020
R R
Disaggregation of revenue by nature
Interest received – Noblesfontein Educational Trust 731 842 764 492
Interest received – cash and cash equivalents 760 321 1 089 341
Dividends received – financial assets 54 923 679 25 000 000
Dividends received – cash and cash equivalents – 72 710
Net (loss)/ gain from financial assets at fair value through profit or loss (11 759 129) 36 239 021
Other income 6 384 –
44 663 097 63 165 564
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80 Mahube Infrastructure Limited 2021 Integrated Annual Report

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)

for the year ended 28 February 2021

12. OTHER OPERATING EXPENSES

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2021 2020
R R
Total operating expenses consist of the following:
Accounting fees 162 592 228 628
Audit fees 163 645 139 156
Circulars and publications 640 369 515 789
Depreciation 681 110 670 590
Directors’ fees 1 302 895 1 412 212
Employee costs 5 090 686 4 572 085
Insurance 350 609 394 370
JSE annual fees 119 080 300 212
Management fee 1 105 543 4 568 144
Market and financial data 204 122 184 585
Other expenses 426 657 442 974
Professional fees 3 622 214 573 561
Secretarial fees 430 525 486 332
Transaction cost – 8 639 260
Travel and accommodation 44 242 98 254
14 344 289 23 226 152
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* Due diligence costs incurred in the exploration of infrastructure investment opportunities in accordance with the investment strategy.

13. FINANCE COSTS

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2021 2020
R R
Lease liabilities 188 553 246 405
Bank 28 229
Total finance costs 188 581 246 634
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14. TAXATION

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2021 2020
R R
Major components of the tax expense
Current
Local income tax – current period 179 653 209 891
Deferred
Deferred tax (24 961) (26 773)
154 692 183 118
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Mahube Infrastructure Limited 2021 Integrated Annual Report 81

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)

for the year ended 28 February 2021

14. TAXATION (CONTINUED)

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2021 2020
R R
Reconciliation of the tax expense
Reconciliation between accounting profit and tax expense:
Accounting profit 16 706 341 39 692 778
Tax at the applicable tax rate of 28% (2019: 28%) 4 677 775 11 113 978
Tax effect of adjustments on taxable income
Exempt income – local dividends received (15 378 630) (7 020 359)
Non-deductible expenses attributable to exempt income 8 844 303 3 817 432
Non-deductible expenses of capital nature – 2 418 993
Fair value adjustment on financial assets 2 011 244 (10 146 926)
154 692 183 118
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* No deferred tax was recognised on the investment in Mahube Capital Fund due to the intention of Mahube to recover the investment through receipt of dividends which would not be taxable. The tax base of the asset is therefore equal to the carrying amount, resulting in no deferred tax being recognised. Although the asset might be sold in the future, this is not the intention of the Company.

The Company’s main source of revenue is dividend income which is exempt income for tax purposes implying a significant portion of expenses is apportioned to the exempt income.

15. CASH GENERATED FROM OPERATIONS

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2021 2020
R R
Profit before taxation 12 130 227 39 692 778
Adjustments for:
Depreciation 681 110 670 590
Interest income (731 842) (764 492)
Finance costs 188 581 246 634
Fair value adjustments 11 759 129 (36 239 021)
Changes in working capital:
Trade and other receivables (28 181 743) 40 428 877
Trade and other payables (430 181) (410 708)
(4 584 718) 43 624 658
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16. TAX RECEIVED/(PAID)

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2021 2020
R R
Balance at the beginning of the year (59 480) 26 145
Current tax for the year recognised in profit or loss 179 653 (209 891)
Balance at the end of the year 122 270 (59 480)
2 098 (243 226)
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82 Mahube Infrastructure Limited 2021 Integrated Annual Report

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)

for the year ended 28 February 2021

17. EARNINGS – AND NET ASSET VALUE PER SHARE

17.1 Earnings per share

The Company presents basic, headline, diluted and diluted headline earnings per shares data for its ordinary shares.

Basic earnings per share

Basic earnings per share is determined by dividing profit or loss attributable to the ordinary equity holders by the weighted average number of ordinary shares outstanding during the period. Profit or loss attributable to the ordinary equity holders is determined as profit or loss after adjusting for the tax effect.

Headline earnings per share

Headline earnings per share is calculated by dividing the profit or loss attributable to its equity holders adjusted for separately identifiable remeasurement items, by the weighted average number of ordinary shares outstanding during the year, as required by Circular 1/2019 issued by the South African Institute of Chartered Accountants. Headline earnings and diluted headline earnings are presented after tax.

Diluted earnings per share

In the determination of diluted earnings per share, profit or loss attributable to the equity holders and the weighted average number of ordinary shares are adjusted for the effects of all dilutive potential ordinary shares.

Diluted headline earnings per share

Diluted headline earnings per share is determined by adjusting the profit or loss attributable to the equity holders and the weighted average number of ordinary shares outstanding for the effects of all potential diluted ordinary shares. The profit or loss attributable to ordinary shareholders of the Company is also adjusted for remeasurements as required by Circular 1/2019 issued by the South African Institute of Chartered Accountants.

Potential ordinary shares are antidilutive when their conversion to ordinary shares would increase earnings per share or decrease loss per share from continuing operations. The calculation of diluted earnings per share does not assume conversion, exercise, or other issue of potential ordinary shares that would have an antidilutive effect on earnings per share.

In determining whether potential ordinary shares are dilutive or antidilutive, each issue or series of potential ordinary shares is considered separately rather than in aggregate. The sequence in which potential ordinary shares are considered may affect whether they are dilutive.

Therefore, to maximise the dilution of basic earnings per share, each issue or series of potential ordinary shares is considered in sequence from the most dilutive to the least dilutive, i.e. dilutive potential ordinary shares with the lowest “earnings per incremental share” are included in the diluted earnings per share calculation before those with a higher earnings per incremental share. Options and warrants are generally included first because they do not affect the numerator of the calculation.

of the calculation.
	2021	2020
Basic earnings per share (cents per share)	21.71	71.64

Basic earnings per share was based on earnings of R11 975 535 (2020: R39 509 660) and weighted average number of ordinary shares of 55 151 000 (2020: 55 151 000).

There were no headline adjustments required or potential dilutive shares in issue, therefore headline earnings per share, diluted earnings per share and diluted headline earnings per share were equal to basic earnings per share.

Mahube Infrastructure Limited 2021 Integrated Annual Report 83

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)

for the year ended 28 February 2021

17. EARNINGS – AND NET ASSET VALUE PER SHARE (CONTINUED)

17.2 Net asset value per share

Net asset value is the value of an entity’s assets minus the value of its liabilities.

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2021 2020
R R
Net asset value per share
Net asset value per share (Rands) 10.63 10.74
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Net asset value per share was based on net asset value of R585 987 648 (2020: R592 211 945) and weighted average number of ordinary shares of 55 151 000 (2020: 55 151 000).

18. RELATED PARTIES

RELATED PARTIES
Relationships
Subsidiary	Mahube Capital Fund
Subsidiary of Mahube Capital Fund	Mahube Infrastructure Investment
Mahube Capital Fund holds 33% interest	Renewable Energy G
Subsidiary (currently dormant)	Mahube Asset Managment (Pty) Ltd

GAIA Infrastructure Partners (Pty) Ltd has been acting as Management Company (“ManCo”) of the Company for a period of the financial year. On 15 April 2020, the Company and GAIA Infrastructure Partners (Pty) Ltd (”ManCo”) (collectively “the Parties”) agreed terms to amend the termination fee payable and terminate the management services agreement dated 27 October 2015 concluded between the Parties, in consideration for payment by the Company of a reduced termination fee of R18 million (“the Transaction”). The Transaction was approved by the Company’s shareholders on 10 June 2020.

A management fee calculated as 0.8% of the enterprise value was paid to ManCo in quarterly instalments.

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2021 2020
R R
Related party balances
Financial assets at fair value through profit or loss
Mahube Capital Fund 539 615 381 551 374 511
Amounts included in trade and other receivables regarding related parties
Mahube Capital Fund 35 391 117 6 937 390
Mahube Infrastructure Investment 130 689 402 673
Related party transactions
Management fees paid to related parties
GAIA Infrastructure Partners (Pty) Ltd 1 105 543 4 568 144
Termination fee paid
GAIA Infrastructure Partners (Pty) Ltd 18 000 000 –
Dividends received from related parties
Mahube Capital Fund 54 923 679 25 000 000
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All related party trade and other receivables relate to operational loans, except * which relates to dividends receivable, and all are unsecured, interest-free and repayable within the next 12 months.

For compensation to Directors refer to note 19.

84 Mahube Infrastructure Limited 2021 Integrated Annual Report

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)

for the year ended 28 February 2021

19. DIRECTORS’ EMOLUMENTS

DIRECTORS’ EMOLUMENTS
	Remuneration Directors’ fees Total
2021
Executive
Gontse Samuel Moseneke (Appointed: 01 July 2020)	2 016 190 – 2 016 190
Petro Lewis (Appointed: 01 July 2020)	1 129 590 – 1 129 590
Kuby Prudence Lebina (CEO) (Resigned: 26 June 2020)**	1 157 520 – 1 157 520
Non-executive
Khalipha Eddie Mbalo*	– 408 043 408 043
Sisanda Tuku	– 304 236 304 236
Thembani Bukula	– 320 048 320 048
Karén Breytenbach (Appointed: 26 February 2020)*	– 270 568 270 568
	4 303 300 1 302 895 5 606 195

* These Directors are paid indirectly through their separate legal entities, unrelated to Mahube.

** Inclusive of an acting allowance of R192 920 for fulfilling the role of Financial Director on an interim basis.

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Directors’
Remuneration fees Total
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	Remuneration	Directors’ fees	Total
2020
Executive
Kuby Prudence Lebina (CEO) (Resigned: 26 June 2020)***	4 051 320	–	4 051 320
Matthys Michiel Nieuwoudt (CIO) (Resigned: 11 December 2019)**	1 980 000	–	1 980 000
Non-executive
Khalipha Eddie Mbalo*	–	323 781	323 781
Leon de Wit (Resigned: 11 December 2019)*	–	77 528	77 528
Nathiera Kimber (Resigned: 31 January 2020)	–	167 777	167 777
Clive Ferreira (Resigned: 11 December 2019)*	–	94 753	94 753
Philip Botha Schabort (Resigned: 11 December 2019)*	–	64 607	64 607
Sisanda Tuku	–	295 996	295 996
Lumkile Patriarch Mondi (Resigned: 28 August 2019)	–	174 158	174 158
Thembani Bukula	–	213 612	213 612
Karén Breytenbach (Appointed: 26 February 2020)	–	–	–
	6 031 320	1 412 212	7 443 532

* These Directors are paid indirectly through their separate legal entities, unrelated to Mahube.

** MM Nieuwoudt is employed and remunerated by ManCo.

*** Inclusive of an acting allowance of R1 157 520 for fulfilling the role of Financial Director on an interim basis.

No other payments were made to the Directors, including bonuses, performance-related payments, pension scheme contributions, commission, share options or expense allowances.

Mahube Infrastructure Limited 2021 Integrated Annual Report 85

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)

for the year ended 28 February 2021

20. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

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Fair value
through profit
or loss – Amortised
Note(s) mandatory cost Total
Categories of financial instruments
Categories of financial assets
2021
Financial assets 5 539 615 381 5 474 375 545 089 756
Trade and other receivables 7 – 35 521 805 35 521 805
Cash and cash equivalents 8 – 6 340 772 6 340 772
539 615 381 47 336 952 586 952 333
2020
Financial assets 5 551 374 511 5 415 125 556 789 636
Trade and other receivables 7 – 7 340 063 7 340 063
Cash and cash equivalents 8 – 29 196 275 29 196 275
551 374 511 41 951 463 593 325 974
Amortised
Note(s) cost Leases Total
Categories of financial liabilities
2021
Trade and other payables 10 953 441 – 953 441
Lease liabilities 4 – 1 194 227 1 194 227
953 441 1 194 227 2 147 668
2020
Trade and other payables 10 1 383 620 – 1 383 620
Lease liabilities 4 – 1 706 292 1 706 292
1 383 620 1 706 292 3 089 912
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Capital risk management

The Company’s objective when managing capital (which includes stated capital, borrowings, working capital and cash and cash equivalents) is to maintain a flexible capital structure that reduces the cost of capital to an acceptable level of risk and to safeguard the Company’s ability to continue as a going concern while taking advantage of strategic opportunities in order to maximise stakeholder returns sustainably.

The Company manages capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain the capital structure, the Company may adjust the amount of dividends paid to the shareholders, return capital to the shareholders, issue new shares or sell assets to reduce debt.

There are no externally imposed capital requirements.

There have been no changes to what the entity manages as capital, the strategy for capital maintenance or externally imposed capital requirements from the previous year.

86 Mahube Infrastructure Limited 2021 Integrated Annual Report

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)

for the year ended 28 February 2021

20. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)

Financial risk management

The Company considered the following risks from its use of financial instruments:

• [ Credit risk; ]

• [ Liquidity risk;]

• [ Market risk;]

• [ Foreign currency risk; and]

• [ Interest rate risk.]

The Board has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board has established the Audit and Risk Committee, which is responsible for developing and monitoring the Company’s risk management policies.

The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities.

Credit risk

“Credit risk” is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered with the Company, resulting in a financial loss to the Company.

Credit risk consists mainly of cash deposits, cash equivalents and loans receivable. The Company only deposits cash with major banks with high quality credit standing and limits exposure to any one counter party.

No credit limits were exceeded during the reporting period, and management does not expect any losses from non-performance by these counterparties.

Credit risk strategy

Trade receivables

The exposure to credit risk on trade receivables is limited by establishing a maximum payment period of 30 to 120 days and performance creditworthiness evaluation of the counterparties is done before transactions are entered into.

Dividend receivables

Payment on dividend receivables occurs within four months from when the dividends are declared. There has been no history of default as such, the exposure to credit risk on the dividend receivables is limited to the maximum payment period of four months.

Noblesfontein Educational Trust (“NET”) loan

The loan granted to NET was for the refinancing of their vendor loan with Gestamp as Gestamp was divesting from the Noblesfontein REIPPPP project. The loan is secured by a cession and pledge of any shares held by NET in Noblesfontein Wind Farm. Therefore, the value of the shares is sufficient to settle the loan amount should NET default.

Financial assets exposed to credit risk at year-end were as follows:

			Note(s)	Gross carrying amount	Credit loss allowance	Fair value
2021
Trade	and	other receivables	7	35 521 805	–	35 521 805
Cash	and	cash equivalents	8	6 340 772	–	6 340 772
				41 862 577	–	41 862 577
2020
Trade	and	other receivables	7	7 340 063	–	7 340 063
Cash	and	cash equivalents	8	29 196 275	–	29 196 275
				36 536 338	–	36 536 338

Mahube Infrastructure Limited 2021 Integrated Annual Report 87

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)

for the year ended 28 February 2021

20. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)

Credit quality of cash at bank and short-term deposits, excluding cash on hand

The credit quality of cash at bank and short-term deposits, excluding cash on hand is assessed by reference to external credit ratings (if available) or historical information about counterparty default rates:

P3: Indicates that the capacity for timely payment on issues with this designation is acceptable, relative to other South African obligors.

A bank guarantee issued to Melrose Arch in December 2017 to the value of R200 000 is in place for the deposit on the lease. The lease is in place for five years and will terminate in November 2022.

Liquidity risk

“Liquidity risk” is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset.

The Company manages liquidity risk through an ongoing review of future commitments and expenses compared to available cash to meet those commitments. Cash flow forecasts are prepared and presented to the Board for approval.

The table below analyses the Company’s financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

	Note(s)	Less than 1 year	1 to 2 years	2 to 5 years	Total	Carrying amount
2021
Non-current liabilities
Lease liabilities	4	–	633 146	–	633 146	633 146
Current liabilities		–	–	–	–	–
Trade and other payables	10	953 441	–	–	953 441	953 441
Lease liabilities	4	561 081	–	–	561 081	561 081
		1 514 522	633 146	–	2 147 668	2 147 668
	Note(s)	Less than 1 year	1 to 2 years	2 to 5 years	Total	Carrying amount
2020
Non-current liabilities
Lease liabilities	4	–	749 661	591 256	1 340 917	1 194 227
Current liabilities		–	–	–	–	–
Trade and other payables	10	1 383 620	–	–	1 383 620	1 383 620
Lease liabilities	4	700 617	–	–	700 617	512 065
		2 084 237	749 661)	591 256	3 425 154	3 089 912

Market risk

The Company is not exposed to any market risk, including price risk as the investee entities have entered into a 20-year PPA with Eskom under the South African REIPPPP, with the PPA guaranteed by the South African National Treasury. Under this agreement the price for the electricity generated (electricity tariff) by the investee entities is agreed upfront on signature of the PPA and escalates annually by inflation for the duration of the agreement.

Foreign currency and interest rate risk

The Company is indirectly exposed to foreign currency and interest rate risk. Although exchange and interest rates are considered in the various components of the project models for the valuation of financial assets through profit or loss, the actual risk lies with the underlying investment entities and not with Mahube. It will however, have an indirect impact through the valuation.

88 Mahube Infrastructure Limited 2021 Integrated Annual Report

NOTES TO THE ANNUAL FINANCIAL STATEMENTS (CONTINUED)

for the year ended 28 February 2021

21. GOING CONCERN

The Annual Financial Statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

The second wave of Covid-19 in the second half of 2020 hit South Africa harder than expected, bringing with it a new variant with higher infection rates and greater severity of symptoms. This led to the imposition of further lockdown measures in order to slow down the spread of the disease and ease pressure on the healthcare system. All this has had a devastating effect on millions of South Africans with lives and livelihoods being lost, household finances decimated and many going hungry in large parts of the country. The pandemic has led to the worst unemployment crisis in modern times and consequently, as lives are inevitably linked to livelihoods, a humanitarian disaster. Managing within this crisis continues to be Mahube’s biggest priority. Mahube’s focus is on the factors within its control, the health and well-being of its people, ensuring that its investments have the most robust financial positions to support business continuity. Whilst the pandemic and lockdown measures have had a widespread impact worldwide, Mahube’s portfolio has shown resilience and has given it confidence that it is well positioned to weather this storm and overcome the unique challenges that this crisis presents. Mahube will monitor the impact of the pandemic on our underlying investee companies, our shareholders and employees closely. Mahube remains confident about the prospects and our ability as well as our underlying investee companies, and as a result to continue to operate as a going concern.

22. EVENTS AFTER THE REPORTING PERIOD

No material facts or circumstances have arisen between the reporting date and the date of this report which affect the financial position of the Company as reflected in these Annual Financial Statements.

23. DIVIDENDS PAID

Further to the interim cash dividend of 18.00 cents per share (R9.9 million) for the six months ended 31 August 2020, which was paid on 28 December 2020, the Board has declared a final gross cash dividend of 32.0 cents per ordinary share for the year ended 28 February 2021. The total dividend relating to the 2021 financial year is 50.00 cents per share compared to 40.00 cents per share declared and paid in the 2020 financial year.

• [ The dividend has been declared from income reserves.]

• [ The dividend withholding tax rate is 20%, and a net dividend of 25.60 cents (February 2020: 12.00 cents) per share is paid to ] those shareholders who are not exempt from dividend withholding tax.

• [ The Company’s income tax number is 9473/844/17/4.]

• [ The issued share capital at the declaration date is 55 151 000 ordinary shares.]

The payment date for the dividend is Monday, 26 July 2021.

Mahube Infrastructure Limited 2021 Integrated Annual Report 89

6

SHAREHOLDERS’ INFORMATION

Shareholder analysis 91 Notice of Annual General Meeting 92 Form of proxy 101 General information 105

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SHAREHOLDER ANALYSIS

for the year ended 28 February 2021

Company: Mahube Infrastructure Limited Register date: 26 February 2021 Issued stated capital: 55 151 000

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||||||
|---|---|---|---|---|
|Number of|Number of|
|Shareholder spread|shareholdings|%|shares|%|
|1 – 1 000 shares|528|67.09|103 243|0.19|
|1 001 – 10 000 shares|154|19.57|642 717|1.17|
|10 001 – 100 000 shares|77|9.78|2 520 161|4.57|
|100 001 – 1 000 000 shares|24|3.05|7 755 789|14.06|
|1 000 001 shares and over|4|0.51|44 129 090|80.02|
|Total|787|100.00|55 151 000|100.00|
|Distribution of shareholders|
|Banks/brokers|3|0.38|779 574|1.41|
|Close corporations|7|0.89|63 764|0.12|
|Endowment funds|3|0.38|74 219|0.13|
|Government|1|0.13|111 293|0.20|
|Individuals|674|85.64|1 903 671|3.45|
|Insurance companies|3|0.38|946 147|1.72|
|Medical schemes|1|0.13|89 068|0.16|
|Mutual funds|8|1.02|1 203 878|2.18|
|Other corporations|6|0.76|100 697|0.18|
|Private companies|22|2.80|3 786 492|6.87|
|Private equity|1|0.13|19 247 699|34.90|
|Public company|1|0.13|879 261|1.59|
|Retirement funds|22|2.80|24 913 509|45.17|
|Trusts|35|4.45|1 051 728|1.91|
|Total|787|100.00|55 151 000|100.00|
|Public/non-public shareholders|
|Non-public shareholders|3|0.38|42 848 995|77.69|
|Directors and associates|1|0.13|330 544|0.60|
|Strategic holders more than 10%|3|0.38|42 848 995|77.69|
|Public shareholders|783|99.49|11 971 461|21.71|
|Total|787|100.00|55 151 000|100.00|

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||||
|---|---|---|
|Number of|
|Beneficial shareholders holding 3% or more|shares|%|
|Government Employees Pension Fund|23 601 296|42.79|
|Specialised Listed Infrastructure Equity En Commandite Partnership|19 247 699|34.90|
|Satyrium Properties (Pty) Ltd|1 280 095|2.32|
|Total|44 129 090|80.02|

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Mahube Infrastructure Limited 2021 Integrated Annual Report 91

NOTICE OF ANNUAL GENERAL MEETING

for the year ended 28 February 2021

Mahube Infrastructure Limited

(formerly GAIA Infrastructure Capital Limited) (Incorporated in the Republic of South Africa) (Registration number: 2015/115237/06) Share code: MHB: ISIN: ZAE000290763 (“ Mahube ” or “ the Company ”)

In terms of section 62(3)(a) of the Companies Act 71 of 2008, as amended (“the Companies Act”), notice is hereby given to the shareholders of Mahube that the Annual General Meeting (“AGM”) of shareholders of Mahube will be held at 10:00 on Tuesday, 31 August 2021 at Marriott Hotel Melrose Arch (42 The High Street, Melrose Arch, Johannesburg, 2076, for the purpose of considering and, if deemed fit, passing, with or without modification, the ordinary and special resolutions set out in this notice of AGM (“notice”), as well as such other matters as may be required to be dealt with at the AGM in terms of the Companies Act.

COVID-19 PANDEMIC DEVELOPMENTS

One of Mahube’s top priorities is to protect the health and safety of all our stakeholders and with this in mind we will continue to closely monitor developments around Covid-19 (coronavirus).

Although the intention is to hold the AGM as scheduled on Tuesday, 31 August 2021 at the set venue, Mahube strongly encourages its shareholders not to attend in person but to exercise their voting rights by way of electronic or written proxy and to submit their questions relating to the 2021 AGM agenda in advance by email to the Company Secretary melinda@fusioncorp.co.za or andrea@fusioncorp.co.za.

Shareholders will also be able to follow the AGM remotely via a live audio webcast to be provided on our website www.mahube.africa.

Mahube reserves the right to make further changes, such as limiting the number of attendees to enable social distancing, changing the venue, providing live voting facilities, or even prohibiting physical attendance, should same be required.

Shareholders should regularly check the release of SENS announcements on the JSE Limited’s platform and on the Mahube website for any further updates.

Mahube will continue to evaluate the implications of regulations announced by the South African government, as well as any potential future measures that may be imposed by the government or recommended by the World Health Organisation.

SALIENT DATES

SALIENT DATES
Record date to be registered in the shareholders register in order to receive the notice of AGM	Friday, 18 June 2021
Date of posting the notice of AGM	Wednesday, 30 June 2021
Last date to trade to be eligible to attend, participate in and vote at the AGM	Tuesday, 17 August 2021
Record date to be eligible to attend the AGM	Friday, 20 August 2021
Forms of proxy to be lodged preferably by 10:00	Friday, 27 August 2021
AGM at 10:00 on	Tuesday, 31 August 2021

ACTION BY SHAREHOLDERS

Certificated shareholders or “own-name” registered dematerialised shareholders are entitled to attend, participate and vote at the AGM or any adjournment thereof or may appoint one or more proxies to attend, speak and vote thereat in their stead. A proxy need not be a member of the Board. Completion of a form of proxy will not preclude such shareholder from attending and voting (in preference to that shareholder’s proxy) at the AGM or any adjournment thereof.

Dematerialised shareholders (not with “own-name” registration) must notify their Central Securities Depository Participant (“CSDP”) or broker of their intention to attend the AGM in order for such CSDP or broker to be able to issue them with the necessary authorisation letter to enable them to attend the AGM, or, alternatively, should the dematerialised shareholder not wish to attend the AGM, they should provide their CSDP or broker with their voting instructions.

92 Mahube Infrastructure Limited 2021 Integrated Annual Report

NOTICE OF ANNUAL GENERAL MEETING (CONTINUED)

for the year ended 28 February 2021

ACTION BY SHAREHOLDERS (CONTINUED)

For administrative purposes only, we request that forms of proxy be delivered to Mahube’s transfer secretaries situated at Computershare Investor Services Proprietary Limited, Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196 or be posted to Private Bag X9000, Saxonwold, 2132, South Africa, to be received by them by no later than 10:00 on Friday, 27 August 2021 (or 48 hours before any adjournments of the AGM, which date, if necessary, will be notified on SENS). Thereafter, forms of proxy may be delivered to the Chairperson of the AGM, at the AGM, before voting on a particular resolution commences.

At the AGM, each shareholder will have voting rights determined in terms of the voting rights attaching to the shares held by such shareholder as set out in the memorandum of incorporation of the Company (“MOI”).

AGM participants may be required to provide identification to the reasonable satisfaction of the Chairperson of the AGM. An official identification document issued by the South African Department of Home Affairs, a driver’s licence or a valid passport will be accepted as sufficient identification.

Shareholders who have any doubt as to the action they are required to take in respect of the following resolutions should consult their CSDP, broker, banker, attorney, accountant, or other professional adviser immediately.

PURPOSE

The purpose of the AGM is for the following business to be transacted:

• (a) The Board will present the audited Annual Financial Statements of Mahube for the financial year ended 28 February 2021 (as approved by the Board as required in terms of section 30(3)(c) of the Companies Act) (2021 AFS), including the reports of the independent auditors, the Directors, the Social and Ethics Committee and the Audit and Risk Committee to shareholders;

• (b) The shareholders will consider and, if deemed fit, pass, with or without modification, the ordinary and special resolutions (“resolutions”) set out in this notice (which are to be proposed at the AGM) in accordance with the requirements of the MOI, the Companies Act, the JSE Listings Requirements (“Listings Requirements”) and to the extent applicable, in accordance with the principles and recommended practices set out in the King IV[TM] Report on Corporate Governance for South Africa, 2016 (“King IV[TM] ”); and

• (c) Consider any matters as may lawfully be dealt with at the AGM, in terms of the Companies Act.

AGENDA

Presentation of the 2021 AFS

The Integrated Annual Report of Mahube for 2021, incorporating, inter alia, the Directors’ report, the 2021 AFS, the report of the independent auditors, the report of the Social and Ethics Committee and the report of the Audit and Risk Committee found in the Integrated Annual Report of Mahube for 2021 was made available to shareholders on 30 June 2021.

The 2021 AFS, the report of the independent auditors, the report of the Social and Ethics Committee and the report of the Audit and Risk Committee will be presented to the shareholders at the AGM as required in terms of the Companies Act, read with the Companies Regulations, 2011.

Report on the Social and Ethics Committee

The Company’s Social and Ethics Committee report, included in the Integrated Annual Report, will serve as the Social and Ethics Committee’s report to the Company’s shareholders on the matters within its mandate at the AGM. Any specific questions to the Committee may be sent to the Company Secretary prior to the AGM.

Ordinary resolutions

To consider and, if deemed fit, to pass, with or without modification, the ordinary resolutions relating to the business set out below. Same as contemplated below, the minimum percentage of voting rights required for each of the ordinary resolutions set out below to be adopted is more than 50% (fifty percent) of the voting rights exercised on each of the resolutions by shareholders present or represented by proxy and entitled to vote at the AGM.

Mahube Infrastructure Limited 2021 Integrated Annual Report 93

NOTICE OF ANNUAL GENERAL MEETING (CONTINUED)

for the year ended 28 February 2021

1. RETIREMENT AND RE-ELECTION OF DIRECTOR

1.1 Ordinary resolution number 1

“Resolved that Ms S Tuku who retires by rotation in terms of Article 28 of the MOI and, being eligible, offers herself for re-election, be and is hereby re-elected as an Independent Non-Executive Director.”

An abbreviated curriculum vitae of Ms S Tuku appears on page 27 of the Integrated Annual Report.

In accordance with the MOI, one-third of all Directors are required to retire at the AGM. Accordingly, Ms S Tuku will retire and, being eligible, offers herself for re-election to serve as a Director of Mahube. The Nomination Committee reviewed the composition of the Board against corporate governance, individual performance and diversity requirements and has recommended the re-election of Ms S Tuku.

Following such review, the Board recommends to shareholders the re-election of Ms S Tuku as Director, as required under section 68(2) of the Companies Act.

2. APPOINTMENT AND REAPPOINTMENT OF THE MEMBERS OF THE AUDIT AND RISK COMMITTEE OF THE COMPANY

Note:

For avoidance of doubt, all references to the Audit and Risk Committee of the Company is a reference to the Audit Committee as contemplated in the Companies Act.

“Resolved to individually elect and/or re-elect the following Directors (ordinary resolutions 2 to 4 to be voted on and adopted as separate resolutions) of Mahube as the Chairperson and members of the Audit and Risk Committee until the conclusion of the next AGM of Mahube. The Board recommends the appointment of these members.”

2.1 Ordinary resolution number 2

“Resolved that, subject to the passing of Ordinary Resolution number 1.1, Ms S Tuku, being eligible, be and is reappointed as a member of the Audit and Risk Committee of the Company, until the conclusion of the next AGM of the Company.”

2.2 Ordinary resolution number 3

“Resolved that Mr T Bukula, being eligible, be and is hereby reappointed as a member of the Audit and Risk Committee of the Company, until the conclusion of the next AGM of the Company.”

2.3 Ordinary resolution number 4

“Resolved that Mrs K Breytenbach, being eligible, be and is hereby reappointed as a member of the Audit and Risk Committee of the Company, until the conclusion of the next AGM of the Company.”

In terms of section 94(2) of the Companies Act, an audit committee comprising at least three members must be elected by shareholders at each annual general meeting of a public company. Further, in terms of regulation 42 of the Companies Regulations, 2011, at least one-third of the members of a public company’s audit committee members must have appropriate academic qualifications or experience in economics, law, corporate governance, finance, accounting, commerce, industry, public affairs, or human resource management.

Having reviewed the composition of the Audit and Risk Committee and the qualifications, experience, expertise, and independence of each of the members of the Audit and Risk Committee, the Nomination Committee satisfied itself that the members of the Audit and Risk Committee continue to meet the requirements of the Companies Act and King IV[TM] .

The Nomination Committee accordingly unanimously recommends and supports the re-election of Ms S Tuku, Mrs K Breytenbach and Mr T Bukula to the Audit and Risk Committee.

A brief curriculum vitae of each of the Directors up for election to the Audit and Risk Committee appears in the Integrated Annual Report.

94 Mahube Infrastructure Limited 2021 Integrated Annual Report

NOTICE OF ANNUAL GENERAL MEETING (CONTINUED)

for the year ended 28 February 2021

3. APPOINTMENT OF INDEPENDENT AUDITOR AND DESIGNATED AUDIT PARTNER

3.1 Ordinary resolution number 5

“Resolved that BDO South Africa Incorporated, with the designated audit partner being Mohamed Zakaria Sadek, be and is hereby appointed as the independent external auditor of the Company until the conclusion of the next AGM of the Company on the recommendation of the Audit and Risk Committee be and is hereby authorised to determine the auditor’s remuneration.”

The Audit and Risk Committee assessed the performance and accreditation of the proposed independent auditor and the proposed individual registered auditor (i.e., the designated auditor) in terms of the applicable regulations and legislation and is satisfied with their independence, accreditation and performance. The Audit and Risk Committee is also satisfied that the audit firm is accredited to appear on the JSE List of Accredited Auditors and that the individual registered auditor of the Company does not appear on the JSE List of Disqualified Auditors.

4. NON-BINDING ENDORSEMENT OF MAHUBE INFRASTRUCTURE LIMITED’S REMUNERATION POLICY AND IMPLEMENTATION REPORT

4.1 Non-binding advisory resolution number 1

“Resolved that the Company’s remuneration policy as set out in the Integrated Annual Report, be and is hereby endorsed by way of a non-binding advisory vote.”

4.2 Non-binding advisory resolution number 2

“ Resolved that the Company’s remuneration implementation report in regard to its remuneration policy, as contained in the Integrated Annual Report, be and is hereby endorsed by way of a non-binding advisory vote.”

The reason for non-binding advisory resolution numbers 1 and 2 is that King IV[TM] and the Listings Requirements recommend that the remuneration policy and implementation report of the Company be endorsed through a non-binding advisory vote by shareholders at each AGM of the Company.

The non-binding advisory vote enables shareholders to express their views on the remuneration policies adopted and on the manner in which the Company implements the remuneration policy. Non-binding advisory resolution numbers 1 and 2 are of an advisory nature only and failure to pass these resolutions will therefore not have any legal consequences relating to existing remuneration arrangements.

However, the Board will engage with dissenting shareholders in good faith in the event that a vote of 25% or more is recorded against either non-binding advisory resolution number 1 or non-binding advisory resolution number 2, to ascertain with best reasonable effort the reasons for the dissenting votes, and to address legitimate and reasonable objections.

Shareholder engagements were held in relation to the previous AGM and Mahube has taken steps to address shareholders’ concerns. The Board will take the outcome of the vote, and any subsequent engagement with dissenting shareholders, into consideration when considering amendments to the Company’s remuneration policy and appropriate action may be taken to address issues raised as envisaged in the King IV[TM] and the JSE Listings Requirements.

5. REMUNERATION OF NON-EXECUTIVE DIRECTORS

Special resolutions

To consider and, if deemed fit, to pass, with or without modification, all of the special resolutions relating to the business set out below. At least 75% (seventy-five percent) of the voting rights exercised on each resolution must be exercised in favour of such resolution in order for it to be validly adopted.

5.1 Special resolution number 1

“Resolved that the Company be and is hereby authorised to remunerate its Non-Executive Directors for their services as Directors on the basis set out below (exclusive of value-added tax), in terms of section 66(9) of the Companies Act.

Mahube Infrastructure Limited 2021 Integrated Annual Report 95

NOTICE OF ANNUAL GENERAL MEETING (CONTINUED)

for the year ended 28 February 2021

5. REMUNERATION OF NON-EXECUTIVE DIRECTORS (CONTINUED)

5.1 Special resolution number 1 (CONTINUED)

==> picture [447 x 253] intentionally omitted <==

----- Start of picture text -----

2021/2022 2020/2021
R R
Retainer
Chairperson 74 680 71 124
Non-Executive Director 74 680 71 124
Attendance fees per meeting
Board Chairperson 22 716 21 634
Board Non-Executive Director 12 447 11 854
Audit and Risk Committee Chairperson 16 592 15 802
Audit and Risk Committee Member 12 447 11 854
Nomination Committee Chairperson 16 592 15 802
Nomination Committee Member 12 447 11 854
Social and Ethics Committee Chairperson 16 592 15 802
Social and Ethics Committee Member 12 447 11 854
Remuneration Committee Chairperson 16 592 15 802
Remuneration Committee Member 12 447 11 854
Special/Ad Hoc Committee Chairperson 16 592 15 802
Special/Ad Hoc Committee Member 12 447 11 854”
----- End of picture text -----

The reason for special resolution number 1 is for the Company to obtain the approval of shareholders, by way of a special resolution, for the payment of remuneration to its Non-Executive Directors in accordance with the requirements of the Companies Act.

The effect of special resolution number 1 is that the Company will be able to pay its Non-Executive Directors for the services they render to the Company as Directors without requiring further shareholder approval until the next AGM of the Company.

For this resolution to be adopted, at least 75% of the shareholders present in person or by proxy and entitled to vote on this resolution at the AGM must cast their vote in favour of this resolution.

6. INTER-COMPANY FINANCIAL ASSISTANCE

6.1 Special resolution number 2

“Resolved, to the extent required in terms of, and subject to the provisions of, section 45 of the Companies Act and the requirements (if applicable) of the MOI and the Listings Requirements, as a general approval, that the Board be and is hereby authorised to approve that the Company provides any direct or indirect financial assistance (whether by way of loan, guarantee, the provision of security or otherwise) that the Board may deem fit to any present or future related or inter-related company or corporation (wheresoever incorporated) to the Company, on the terms and conditions and for amounts that the Board may determine, provided that the aforementioned approval shall be valid until the date of the next AGM of the Company.”

The reason for and effect of special resolution number 2 is to grant the Board of the Company the authority, until the next AGM, to provide direct or indirect financial assistance to any company or corporation which is related or inter-related to the Company. This means that the Company is authorised to grant loans to its subsidiaries and to guarantee the debt of its subsidiaries.

For this resolution to be adopted, at least 75% of the shareholders present in person or by proxy and entitled to vote on this resolution at the AGM must cast their vote in favour of this resolution.

96 Mahube Infrastructure Limited 2021 Integrated Annual Report

NOTICE OF ANNUAL GENERAL MEETING (CONTINUED)

for the year ended 28 February 2021

6. INTER-COMPANY FINANCIAL ASSISTANCE (CONTINUED)

• 6.2 Special resolution number 3

“Resolved, to the extent required in terms of, and subject to the provisions of, section 44 of the Companies Act and the requirements (if applicable) of the MOI and the Listings Requirements, as a general approval, that the Board be and is hereby authorised to approve that the Company provides any direct or indirect financial assistance (whether by way of loan, guarantee, the provision of security or otherwise) that the Board of the Company may deem fit to any company or corporation (wheresoever incorporated) that is related or inter-related to the Company and/or to any financier who provides funding by subscribing for preference shares or other securities in the Company or any company or corporation (wheresoever incorporated) that is related or inter-related to the Company, on the terms and conditions and for amounts that the Board may determine for the purpose of, or in connection with the subscription of any option, or any shares or other securities, issued or to be issued by the Company or a related or inter-related company or corporation (wheresoever incorporated), or for the purchase of any shares or securities of the Company or a related or inter-related company or corporation (wheresoever incorporated), provided that the aforementioned approval shall be valid until the date of the next AGM of the Company.”

The reason for and effect of special resolution number 3 is to grant the Directors the authority, until the next AGM of the Company, to provide financial assistance to any company or corporation which is related or inter-related to the Company and/or to any financier for the purpose of or in connection with the subscription or purchase of options, shares or other securities in the Company or any related or inter-related company or corporation. A typical example of where the Company may rely on this authority is where a subsidiary raised funds by way of issuing preference shares and the third-party funder requires the Company to furnish security, by way of a guarantee or otherwise, for the obligations of its subsidiary to the third-party funder arising from the issue of the preference shares. The Company has no immediate plans to use this authority and is simply obtaining same in the interests of prudence and good corporate governance should the unforeseen need arise to use the authority.

For this resolution to be adopted, at least 75% of the shareholders present in person or by proxy and entitled to vote on this resolution at the AGM must cast their vote in favour of this resolution.

In terms of and pursuant to the provisions of sections 44 and 45 of the Companies Act, the Board confirms that it will satisfy itself, after considering all reasonably foreseeable financial circumstances of the Company, that immediately after providing any financial assistance as contemplated in special resolution numbers 2 and 3 above:

• the assets of the Company (fairly valued) will equal or exceed the liabilities of the Company (fairly valued) (taking into consideration the reasonably foreseeable contingent assets and liabilities of the Company);

• the Company will be able to pay its debts as they become due in the ordinary course of business for a period of 12 months;

• the terms under which any financial assistance is proposed to be provided, will be fair and reasonable to the Company; and

• all relevant conditions and restrictions (if any) relating to the granting of financial assistance by the Company as contained in the Company’s MOI have been met.

7. OTHER BUSINESS

• To transact such other business as may be transacted at an AGM or raised by shareholders with or without advance notice to the Company.

• The Directors, whose names appear in the Integrated Annual Report of which this notice forms part, collectively and individually accept full responsibility for the accuracy of the information given in special resolution number 4 and certify that to the best of their knowledge and belief there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that this notice of AGM contains all information required by the Listings Requirements.

• Special resolutions numbers 2, 3 and 4 are renewals of resolutions taken at the previous AGM held on 16 October 2020.

Mahube Infrastructure Limited 2021 Integrated Annual Report 97

NOTICE OF ANNUAL GENERAL MEETING (CONTINUED)

for the year ended 28 February 2021

7. OTHER BUSINESS (CONTINUED)

Electronic participation

In terms of section 61(10) of the Companies Act, every shareholders’ meeting of a public company must be reasonably accessible within South Africa for electronic participation by shareholders. Therefore, shareholders or their proxies may participate in (but not vote at) a meeting by way of a teleconference call if they wish to do so. In this event:

• [ written notice to participate via electronic communication must be sent to Mahube’s Company Secretary, Fusion Corporate ] Secretarial Services Proprietary Limited, to melinda@fusioncorp.co.za to be received by no later than 10:00 on 27 August 2021;

• [ a pin number and dial-in details for the conference call will be provided;]

• [ shareholders will be billed separately by their own telephone service providers for the teleconference call to participate in the ] AGM; and

• [ valid identification will be required: ]

• if the shareholder is an individual, a certified copy of their identity document and/or passport;

• if the shareholder is not an individual, a certified copy of a resolution by the relevant entity and a certified copy of the identity documents and/or passports of the persons who passed the relevant resolution, specifying the name of the individual that is authorised to represent the relevant entity at the AGM by way of teleconference call; and

• a valid email address and/or facsimile number.

• Shareholders participating in this manner and who may wish to vote will still have to appoint a proxy to vote on their behalf at the AGM.

VOTING

1. The Directors have determined that the record date on which shareholders must be recorded as such in the share register maintained by the transfer secretaries of the Company (“the share register”) for purposes of being entitled to receive this notice is 18 June 2021.

2. The Directors have determined that the record date on which shareholders must be recorded in the share register for purposes of being entitled to attend and vote at this AGM is 20 August 2021, with the last day to trade being 17 August 2021.

3. Meeting participants will be required to provide proof of identification to the reasonable satisfaction of the Chairperson of the AGM that the person is either a shareholder or a proxy for a shareholder and must accordingly bring a copy of their identity document, passport, or driver’s licence to the AGM. If in doubt as to whether any document will be regarded as satisfactory proof of identification, meeting participants should contact the transfer secretaries for guidance.

4. Shareholders entitled to attend and vote at the AGM may appoint one or more proxies to attend, speak and vote thereat in their stead. A proxy need not be a shareholder of the Company. A form of proxy, which sets out the relevant instructions for its completion, is enclosed for use by a certificated shareholder or own-name registered dematerialised shareholder who wishes to be represented at the AGM. Completion of a form of proxy will not preclude such shareholders from attending and voting (in preference to that shareholder’s proxy) at the AGM.

5. The instrument appointing a proxy and the authority (if any) under which it is signed must reach the transfer secretaries of the Company at the address given below by not later than 10:00 on 27 August 2021 (for administrative purposes only), provided that any form of proxy not delivered to the transfer secretary by this time may be handed to the Chairperson of the AGM at any time prior to the commencement of the AGM.

6. Dematerialised shareholders, other than own-name registered dematerialised shareholders, who wish to attend the AGM in person, will need to request their Central Securities Depository Participant (“CSDP”) or broker to provide them with the necessary authority in terms of the custody agreement entered into between such shareholders and the CSDP or broker.

7. Dematerialised shareholders, other than own-name registered dematerialised shareholders, who are unable to attend the AGM and who wish to be represented thereat, must provide their CSDP or broker with their voting instructions in terms of the custody agreement entered into between themselves and the CSDP or broker in the manner and time stipulated therein.

98 Mahube Infrastructure Limited 2021 Integrated Annual Report

NOTICE OF ANNUAL GENERAL MEETING (CONTINUED)

for the year ended 28 February 2021

VOTING (CONTINUED)

1. Shareholders present in person, by proxy or by authorised representative shall, on a show of hands, have one vote each and, on a poll, will have one vote in respect of each share held.

2. Equity securities held by a share trust or scheme, and unlisted securities will not have their votes taken into account at the AGM for the purposes of resolutions proposed in terms of the Listings Requirements .

By order of the Board

==> picture [78 x 24] intentionally omitted <==

Fusion Corporate Secretarial Services (Pty) Limited

Registration number 2007/008376/07

Company Secretary

30 June 2021

Registered office

Suite E014, Midlands Office Park East Mount Quray Street Midlands Estate Midstream

PO Box 68528 Highveld 0169

Transfer secretaries

Computershare Investor Services (Pty) Limited Registration number 2004/003647/07

Rosebank Towers 15 Biermann Avenue Rosebank, 2196

Private Bag X9000 Saxonwold 2132 South Africa

Mahube Infrastructure Limited 2021 Integrated Annual Report 99

NOTES

100

Mahube Infrastructure Limited 2021 Integrated Annual Report

FORM OF PROXY

MAHUBE INFRASTRUCTURE LIMITED

(formerly GAIA Infrastructure Capital Limited) (Incorporated in the Republic of South Africa) Registration number: 2015/115237/06 JSE share code: MHB ISIN: ZAE000290763 (“ Mahube ” or “ the Company ”)

TO BE COMPLETED BY CERTIFICATED SHAREHOLDERS AND DEMATERIALISED SHAREHOLDERS WHO HOLD ORDINARY SHARES THROUGH A CENTRAL SECURITIES DEPOSITORY PARTICIPANT (“CSDP”) OR BROKER WHO HAVE SELECTED “OWN-NAME” REGISTRATION ONLY.

If you are a shareholder referred to above, and entitled to attend and vote at the Annual General Meeting, you can appoint a proxy or proxies to attend, vote, and speak in your stead at the Annual General Meeting of Mahube Infrastructure Limited unable to attend the AGM of shareholders of the Company to be held at 10:00 on Tuesday, 31 August 2021 at Marriott Hotel Melrose Arch (42 The High Street, Melrose Arch, Johannesburg, 2076 or at any adjournment or postponement of that meeting. A proxy need not be a shareholder of the Company.

If you are an ordinary shareholder and have dematerialised your ordinary shares through a CSDP (and have not selected “own-name” registration in the sub-register maintained by a CSDP), do not complete this form of proxy but instruct your CSDP to issue you with the necessary authority to attend the Annual General Meeting, or if you do not wish to attend, provide your CSDP with your voting instructions in terms of your custody agreement entered into with it.

I/We (please print names in full)

I/We(pleaseprint names in full)
of(address)	(contact number)
beingthe holder/s of		shares in
the Company, do herebyappoint:
1. or, failinghim/her
2. or, failinghim/her

1. the Chairperson of the AGM, as my/our proxy to attend, participate in, speak and, on a poll, vote on my/our behalf at the AGM of shareholders to be held at 10:00 on Tuesday, 31 August 2021 at Marriott Hotel Melrose Arch (42 The High Street, Melrose Arch, Johannesburg, 2076 or at any adjournment or postponement of that meeting, and to vote or abstain from voting as follows on the ordinary and special resolutions to be proposed at such meeting:

Please indicate with an “x” in the appropriate spaces provided below how you wish your vote to be cast.

For Against Abstain	For Against Abstain	For Against Abstain	For Against Abstain
1. Retirement and re-election of Director
1.1 Ordinary resolution number 1: Re-election of Ms S Tuku who retires by rotation
2. Reappointment of the members of the Audit and Risk Committee of the Company
2.1 Ordinary resolution number 2:Reappointment of Ms Tuku as member of the Audit and Risk Committee
2.2 Ordinary resolution number 3:Reappointment of Mr T Bukula as member of the Audit and Risk Committee
2.3 Ordinary resolution number 4:Reappointment of Mrs K Breytenbach as member of the Audit and Risk Committee
3. Appointment of independent auditor and designated audit partner
3.1 Ordinary resolution number 5:Appointment of BDO South Africa Incorporated
4. Non-binding endorsement of Mahube Infrastructure Limited’s remuneration policy and implementation report
4.1 Non-binding advisory resolution number 1:Non-binding endorsement of Mahube Infrastructure Limited’s remuneration policy
4.2 Non-binding advisory resolution number 2:Non-binding endorsement of Mahube Infrastructure Limited’s implementation report
5. Remuneration of Non-Executive Directors
5.1 Special resolution number 1:Remuneration of Non-Executive Directors
6. Inter-company fnancial assistance
6.1 Special resolution number 2:Inter-company fnancial assistance
6.2 Special resolution number 3:Financial assistance for the subscription/or acquisition of shares in the Company or a related or inter-related company
If no indication is given, the proxy may vote or abstain as he/she sees fit. Signed at this dayof 2021
Signature
Assisted byme, where applicable(name and signature)
Please read the notes overleaf.

101

Mahube Infrastructure Limited 2021 Integrated Annual Report

NOTES TO THE FORM OF PROXY

(which include, inter alia, a summary of the rights established by section 58 of the Companies Act, as amended (“Companies Act”))

1. A Mahube shareholder may insert the name of a proxy or the names of two alternative proxies of the shareholder’s choice in the space(s) provided, with or without deleting “the Chairperson of the AGM”. The person whose name appears first on the form of proxy and who is present at the meeting will be entitled to act as proxy to the exclusion of those whose names follow.

2. A Mahube shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of shares to be voted on behalf of that shareholder in the appropriate box provided. Failure to comply with the above will be deemed to authorise the Chairperson of the AGM, if he/she is the authorised proxy, to vote in favour of the resolutions at the meeting, or any other proxy to vote or to abstain from voting at the meeting as he/she deems fit, in respect of all the shares concerned. A shareholder or his/her proxy is not obliged to use all the votes exercisable by the shareholder or his/her proxy, but the total of the votes cast and in respect whereof abstentions are recorded may not exceed the total of the votes exercisable by the shareholder or his/her proxy.

3. When there are joint registered holders of any shares, any one of such persons may vote at the meeting in respect of such shares as if he/she was solely entitled thereto, but, if more than one of such joint holders be present or represented at any meeting, that one of the said persons whose name stands first in the register in respect of such shares or his/her proxy, as the case may be, shall alone be entitled to vote in respect thereof. Several executors or administrators of a deceased member, in whose name any shares stand, shall be deemed joint holders thereof.

4. It is recommended that the proxy forms should be lodged with the transfer secretaries of the Company, Computershare Investor Services (Pty) Limited, Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196 or posted to the transfer secretaries at Private Bag X9000, Saxonwold, 2132, South Africa, to be received by them not later than Friday, 27 August 2021 at 10:00 (for administrative purposes only) provided that any form of proxy not delivered to the transfer secretary by this time may be handed to the Chairperson of the AGM/General Meeting prior to the commencement of the AGM/General Meeting, at any time before the appointed proxy exercises any shareholder rights at the Annual General Meeting. The form may also be emailed to proxy@computershare.co.za

5. Any alteration or correction made to this form of proxy must be initialled by the signatory(ies).

6. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy unless previously recorded by the Company’s transfer secretaries or waived by the Chairperson of the AGM.

7. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the AGM and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such shareholder wish to do so.

SUMMARY OF RIGHTS CONTAINED IN SECTION 58 OF THE COMPANIES ACT

In terms of section 58 of the Companies Act:

• [ a shareholder of a company may, at any time and in accordance with the provisions of section 58 of the Companies Act, appoint any ] individual (including an individual who is not a shareholder) as a proxy to participate in, and speak and vote at, a shareholders’ meeting on behalf of such shareholder

• [ a proxy may delegate her or his authority to act on behalf of a shareholder to another person, subject to any restriction set out in the ] instrument appointing such proxy

• [ irrespective of the form of instrument used to appoint a proxy, the appointment of a proxy is suspended at any time and to the extent ] that the relevant shareholder chooses to act directly and in person in the exercise of any of such shareholder’s rights as a shareholder

• [ any appointment by a shareholder of a proxy is revocable, unless the form of instrument used to appoint such proxy states otherwise ]

• [ if an appointment of a proxy is revocable, a shareholder may revoke the proxy appointment by: (i) cancelling it in writing, or making a ] later inconsistent appointment of a proxy; and (ii) delivering a copy of the revocation instrument to the proxy and to the relevant company

• [ a proxy appointed by a shareholder is entitled to exercise, or abstain from exercising, any voting right of such shareholder without ] direction, except to the extent that the relevant company’s Memorandum of Incorporation (“MOI”), or the instrument appointing the proxy, provides otherwise

• [ if the instrument appointing a proxy or proxies has been delivered by a shareholder to a company, then, for so long as that appointment ] remains in effect, any notice that is required in terms of the Companies Act or such company’s MOI to be delivered to a shareholder must be delivered by such company to:

• the relevant shareholder; or

• the proxy or proxies, if the relevant shareholder has:

• (i) directed such company to do so, in writing; and

• (ii) paid any reasonable fee charged by such company for doing so.

102 Mahube Infrastructure Limited 2021 Integrated Annual Report

NOTES

NOTES

104

Mahube Infrastructure Limited 2021 Integrated Annual Report

GENERAL INFORMATION

Country of incorporation and domicile

South Africa

Directors

GS Moseneke (CEO) P Lewis (FD) KE Mbalo (Chairperson) S Tuku T Bukula K Breytenbach

Bankers

FirstRand Bank Ltd

Auditors

BDO South Africa Incorporated

Company Secretary

Fusion Corporate Secretarial Services (Pty) Ltd

Company registration number

2015/115237/06

* Independent Non-Executive

Tax reference number

Registered office

Penthouse 5 4 The High Street Melrose Arch Johannesburg 2196

Business address

3rd Floor Penthouse 5 4 The High Street Melrose Arch Johannesburg 2196

Postal address

Postnet Suite 43 Private Bag X1 Melrose Arch Gauteng 2076

9473/844/17/4

Level of assurance

These Annual Financial Statements have been audited in compliance with the applicable requirements of the Companies Act 71 of 2008.

Preparer

The Annual Financial Statements were compiled by Petro Lewis, CA(SA)

Issued

30 June 2021

MAHUBE INFRASTRUCTURE LTD

Registered address

3rd Floor, Penthouse 5, 4 The High Street Melrose Arch, 2196 Tel: +27 11 684 1230 Email: info@mahube.africa Website: www.mahube.africa

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www.mahube.africa

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