Engen Botswana : INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF ENGEN BOTSWANA LIMITED

IMPORTANT NOTE TO USERS:

The audit opinion reproduced here as a standalone document has been extracted from the Engen Botswana Limited Consolidated and Separate Financial Statements for the year ended 31 December 2023 (the "AFS"). The AFS include the consolidated and separate financial statements to which this audit opinion refers. Accordingly, this audit opinion should be read together with the AFS, which are available from Engen Botswana Limited's registered office.

Independent auditor's report

To the Shareholders of Engen Botswana Limited

Our opinion

In our opinion, the consolidated and separate financial statements give a true and fair view of the consolidated and separate financial position of Engen Botswana Limited (the "Company") and its subsidiary (together the "Group") as at 31 December 2023, and of its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with IFRS Accounting Standards.

What we have audited

Engen Botswana Limited's consolidated and separate financial statements set out on pages 9 to 60 comprise:

• ● the consolidated and separate statements of financial position as at 31 December 2023;

• ● the consolidated and separate statements of profit or loss and other comprehensive income for the year then ended;

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

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

• ● the notes to the financial statements, including material accounting policy information.

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 the consolidated and separate financial statements section of our report.

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

Independence

We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) ("IESBA Code") issued by the International Ethics Standards Board for Accountants and other independence requirements applicable to performing audits of financial statements in Botswana. We have fulfilled our other ethical responsibilities in accordance with the IESBA Code and other ethical requirements applicable to performing audits of financial statements in Botswana.

PricewaterhouseCoopers, Plot 64289, Tlokweng Road, Gaborone, P O Box 294, Gaborone, Botswana T: [phone],www.pwc.com/bw

Country Senior Partner: R Binedell

Partners: A S Edirisinghe, I D Molebatsi, S K K Wijesena

Our audit approach

Overview

Overall group materiality

• ● Overall group materiality: BWP9,694,000, which represents 5% of the consolidated profit before tax.

Group audit scope

• ● The Group consists of the Company, one subsidiary and two joint ventures. We performed full scope audits on the subsidiary and the Company, and analytical review procedures on the joint ventures.

Key Audit Matters

• ● Provision for Dismantling, restoration and removal costs (the "DRR provision")

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

Materiality

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

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

Overall group	BWP9,694,000
materiality
How we determined it	5% of the consolidated profit before tax.
Rationale for the	We chose consolidated profit before tax as the benchmark because, in
materiality benchmark	our view, it is the benchmark against which the performance of the
applied	Group is most commonly measured by users and is a generally accepted
benchmark. We chose 5% which is consistent with quantitative
materiality thresholds used for profit-oriented companies in this sector.
4

How we tailored our group audit scope

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates. The Group consists of the Company, one subsidiary and two joint ventures. The Group audit scope has been determined based on indicators such as contribution to consolidated profit/loss before tax and consolidated revenue from each component. We performed full scope audits on the Company and the subsidiary. Analytical review procedures were performed on the joint ventures. All audit work was performed by the group engagement team and did not require involvement of component auditors. This, together with additional procedures performed at the Group level, including testing of consolidation journals and intercompany eliminations, provided us the audit evidence we needed for our opinion on the consolidated financial statements as a whole.

Key audit matters

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

We have determined that there are no key audit matters to communicate in our report in respect of the separate financial statements.

Key audit matter

How our audit addressed the key audit matter

Provision for Dismantling, restoration and removal costs (the "DRR provision")

At 31 December 2023, the Group recognised a DRR provision to be incurred upon the future dismantling and removal of infrastructure developed on petrochemical sites operated by the Group's subsidiary in the amount of BWP49,896,000 (2022:BWP35,559,000). The Group develops detailed cost estimates for such restoration costs at each of its sites based on its understanding of relevant contractual and legislative obligations. Estimating the future costs of these obligations is complex and requires management to make estimates and judgments regarding future cash flows and discount rates because most of the obligations will only be fulfilled in the future. Changing technologies, political, environmental, safety, business and statutory considerations, could also influence the resulting provisions. Significant judgement is required by management in determining the DRR provision, including:

Using our internal expertise on Sustainability and Environmental Rehabilitation, we gained an understanding of the Group's processes for the identification and quantification of dismantling, restoration and removal obligations; and compared these with industry practice. We did not identify any matters of significant concern. We assessed the completeness of the inclusion of infrastructure in the DRR provision calculation by comparing the details of assets to the Group's listing of lease obligations and found no exceptions.

We compared the unit cost rates for specific restoration activities to costs typically incurred by other market participants in the Group's industry in both Botswana and South Africa. These procedures identified that the Group's estimates were within a reasonable range of typical costs.

We compared for each restoration location, the discount period utilised in the DRR provision

• ● Determining the estimated costs of decommissioning and restoration and the relevant future value factor;

• ● Determining the discount period with regards to the DRR provision, which is based on the estimated useful life of the related asset;

• ● Determining an appropriate discount rate to calculate the present value of future costs.

We considered the DRR provision to be a matter of most significance to the current year audit due to the significant judgements and assumptions applied in determining the value of the provision, and because amounts and balances historically reported with respect to the DRR provision were materially misstated. Related disclosures in the consolidated financial statements:

• ● Note 1 Summary of significant accounting policies (Decommissioning and rehabilitation of assets)

• ● Note 1 Summary of significant accounting policies (Significant accounting judgements and estimates - Asset retirement and removal obligations);

• ● Note 3.4 Finance Cost (Unwinding of dismantling, restoration and removal provision);

• ● Note 7 Property, plant and equipment (Dismantling, restoration and removal costs);

• ● Note 15 Provisions (Dismantling, restoration and removal costs).

Other information

How our audit addressed the key audit matter calculation to the underlying lease period and found no exceptions.

Using our internal valuation expertise, of 31 December 2023 we:

• ● compared the future value factor utilised by management in the DRR calculation to publicly available forecasts of future cost increases; and

• ● developed an independent expectation of a reasonable range of appropriate discount rates.

We found management's estimates to be reasonable.

We tested the mathematical accuracy of management's DRR provision calculations and agreed these to the balances disclosed in the consolidated financial statements with no material exceptions.

The directors are responsible for the other information. The other information comprises the information included in the document titled "Engen Botswana Limited Annual Consolidated and Separate Financial Statements for the Year Ended 31 December 2023", which we obtained prior to the date of this auditor's report, and the other sections of the document titled "Engen Botswana Limited Integrated Annual Report 2023", which is expected to be made available to us after that date. The other information does not include the consolidated or the separate financial statements and our auditor's report thereon.

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

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

If, based on the work we have performed, 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 consolidated and separate financial statements

The directors are responsible for the preparation of the consolidated and separate financial statements that give a true and fair view in accordance with IFRS Accounting Standards and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated and separate financial statements, the directors are responsible for assessing the Group 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 Group and/or the Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the consolidated and separate financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated and separate 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 consolidated and separate 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 consolidated and separate 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 Group's and 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 Group's and 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 consolidated and separate 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 Group and/or Company to cease to continue as a going concern.

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

• ● Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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 consolidated and separate 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.

PricewaterhouseCoopers Firm of Certified Auditors

28 March 2024 Gaborone

Practicing Member: Rudi Binedell (CAP003 2024)