Notes to the summarised consolidated financial statements

On 7 March 2025, the Board approved the audited consolidated annual financial statements of the Group and the Company for the year ended 31 December 2024.

These summarised consolidated financial statements have been prepared under the supervision of Ditabe Chocho CA(SA) (Financial Director), in accordance with the framework concepts and the measurement and recognition requirements of the IFRS^® Accounting Standards and the Financial Pronouncements as issued by the Financial Reporting Standards Council and SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and containing the information required by IAS 34: Interim Financial Reporting, the JSE Limited Listings Requirements and the Companies Act of South Africa, No. 71 of 2008.

The summarised consolidated financial statements are presented in South African Rand, which is the functional currency of the Group.

The summarised consolidated financial statements are extracted from audited information but is not itself audited and the Board is responsible for the accuracy of the extraction.

The audited consolidated annual financial statements from which the summarised consolidated financial statements were derived have been audited by the Group's auditors, Deloitte & Touche. Their unmodified audit report along with the audited consolidated annual financial statements can be obtained from the Company on written request from Merafe's company secretary, CorpStat Governance Services Proprietary Limited (w.somerville@mweb.co.za) and are available on the Company's website.

Any reference to future financial performance included in these summarised consolidated financial statements has not been audited or reported on by the Company's auditors.

The global environment, the risk of adverse impacts on our revenue, costs and the Group's capital expenditures were all considered in determining the accounting estimates and judgements for the year.

These disclosures are included in the audited consolidated annual financial statements.

Several of the accounting policies and disclosures require the determination of fair value for both financial and non-financial assets and liabilities.

Fair values are determined for measurement and disclosure purposes based on the below methods.

The calculation of headline and diluted HEPS is based on the earnings attributable to ordinary shareholders – as used in the calculation for basic earnings, adjusted in terms of Circular 1/2023, Headline earnings.

Geographical areas of ferrochrome sales to customers

The majority of customers are stainless steel mills located at the following revenue destinations:

Geographical areas of chrome ore sales from customers

Sales to the following customers individually comprise more than 10% of total sales:

Cash flows from operations have been restated to correct for the omission of non-cash movements resulting from the gain on the acquisition of the joint operation of R250 million with adjustments to changes in working capital movements. The changes to working capital included a R0.15 million increase in inventory, R258 million decrease in trade and other receivables and an R8 million decrease in trade and other payables.

Related-party transactions and balances

During the current year, management reviewed its related party relationships in accordance with IAS 24: Related Party Disclosures. The Glencore plc Group was identified as a related party taking into consideration the shareholding and related significant influence coupled with the substance of the relationship. Significant transactions and balances with all entities within the Glencore plc Group are therefore disclosed together with the comparative figures.

All related-party transactions relate to Merafe's attributable 20.5% interest in the Venture. There are no outstanding commitments as at 31 December 2024.

The Group's effective tax rate is 24.72% (2023: 25.50%) for the year ended 31 December 2024.

The Group concluded that the Boshoek smelter should be fully impaired resulting in an impairment write off of R574 million relating thereto at year end. This was in light of grounds pointing to the likely impairment of some of our smelting operations. This conclusion was reached after considering several critical factors which included the state of the ferrochrome market and the level of our operating costs.

An additional impairment of R1 million (2023: Rnil) arose due to a specific asset being damaged. This brings the total impairment loss for the year to R575 million.

During the reporting period, inventory was written down to its net realisable value due to low commodity prices at the reporting date. This resulted in a loss of R79 million (2023: R2 million).

On 16 August 2022, the Group agreed with GOSA to dispose of the mineral rights and land that form part of Boshoek mine. The liability directly associated with Boshoek mine was the environmental rehabilitation obligation, which formed part of the sale. The final regulatory approval was received from the Department of Mineral Resources and Energy on 5 June 2024 and all suspensive conditions of the sale were met on 20 June 2024.

Boshoek mine remained classified as a non-current asset held for sale for the period until the date of sale. Prior to and up to the date of sale, it was on care and maintenance.

During the current period, the environmental rehabilitation provision was reassessed, which resulted in a change in the discount rate. The impact of the change resulted in the reduction of the provision of R0.3 million (2023: R114 million credit). The change in the environmental rehabilitation provision was applied to property, plant and equipment.

There were no changes to share capital during the reporting period.

The Group is subject to direct and indirect tax in the South African jurisdiction. The Group's subsidiary undertakes various cross-border transactions within the Venture, subject to the Group's transfer pricing policies. As a result, significant judgement is required to determine the Group's provisions for income taxes. The income tax and annual assessments are subject to examination within prescribed periods by the South African Revenue Service (SARS).

SARS finalised the audit of the previously reported transfer pricing matter on 30 October 2024 and adjusted (increased) the Group's taxable assessments for the 2016 and 2017 years. Pursuant to the finalisation of the audit, SARS issued additional assessments on 30 October 2024 levying additional income tax, dividends tax, understatement penalties, and interest in the aggregate amount of R406 million against the Group for the 2016 and 2017 years.

The Group disagrees with the additional assessments and will lodge an objection against the additional assessments. The Group has applied for a full suspension of payment of the disputed tax debt, pending its objection and Tax Court appeal process.

Management continues to rely on opinions obtained from external legal and tax advisers to inform and support the significant judgement required in interpreting relevant tax legislation. The matter has been disclosed as a contingent liability as its outcome, due to the dispute, remains uncertain and any potential tax exposure cannot be reliably estimated. Accordingly, the consolidated financial statements have made no adjustment for any effects on the Group.

Dividend

As reported above, on 7 March 2025, the Board resolved to declare a final cash dividend of 8 cents (2023: 22 cents) per share for the 2024 financial year. The total gross cash dividend for the year amounted to 28 cents (2023: 42 cents) per share.

Business review

Post year-end, the Company, via the Venture, initiated a business review process in respect of its ferrochrome smelting business. Details thereof are outlined earlier in this announcement under the business review section.

Contingent liability

Note 14. of this announcement provides details of the pending transfer pricing matter with SARS. While the Group had applied for full suspension of payment, communication was received from SARS post year-end, partially suspending payment. The amount which has not been suspended and therefore payable is R232 million. Pursuant to section 9 of the Tax Administration Act, the Company has requested SARS to reconsider its decision to partially decline the request for suspension of payment.

Update regarding chrome ore operations

The Venture has entered into a mutually beneficial enhancement to its historical agreement with Lonmin plc, as well as a new chrome management agreement with, inter alios, Sibanye Stillwater Limited. Refer to the SENS published on 19 February 2025.

It is anticipated that the new agreement will result in increased feed and improved recoveries, thereby optimising production yields and reducing operational costs across all relevant chrome recovery plants.

Other

The directors of Merafe are unaware of any material events that occurred after the reporting period and up to the date of authorisation of this report that may require adjustment or disclosure in these summarised financial statements.

Notice is hereby given that a gross final cash dividend of 8 cents per share (2023: 22 cents per share) has been declared by the Board on Friday, 7 March 2025, payable to holders of ordinary shares.

The dividend will be paid out of income reserves.

The ordinary dividend will be subject to a local dividend tax rate of 20%. The net local ordinary dividend to those shareholders who are not exempt from paying dividend tax is therefore 6.4 cents per share. Merafe's income tax number is 9550 008 602. The number of ordinary shares issued at the date of the declaration is 2 499 126 870.

The important dates pertaining to the dividend are as follows:

Shareholders will not be permitted to dematerialise or rematerialise their ordinary shares between Wednesday, 2 April 2025 and Friday, 4 April 2025, both days inclusive.