Audit committee report

The Companies Act No 71 of 2008 (the Act), which came into effect on 1 May 2011, requires companies to establish an audit committee and prescribes the composition and functions of such a committee.

The audit committee has been established by the board of directors to attend to its statutory duties as set out in the Act, assist the board in discharging its duties relating to safeguarding assets, monitoring the operation of an adequate system of internal controls and control processes and ensure the preparation of accurate financial reporting and statements in compliance with all applicable legal requirements, corporate governance and accounting standards. The committee is also required to oversee the combined assurance model, as envisaged in King III, in ensuring that significant risks facing Harmony are adequately addressed.

In addition, the committee supports the board in its responsibility for the governance of risk through formal processes.

• John Wetton (chairman)
• Fikile De Buck (lead independent non-executive)
• Simo Lushaba (independent non-executive)
• Modise Motloba (independent non-executive).

The proposed individuals satisfy the requirements to serve as members of an audit committee as provided for in the Act and ensures that the committee comprises people with adequate and relevant knowledge and experience to equip the committee to perform its functions.

• Reviewed the annual financial statements for the year ended 30 June 2011 to ensure these present a true, balanced and understandable assessment of the financial position and performance of Harmony
• Reviewed and recommended the integrated annual report in accordance with King III, the Act and the listings requirements of the JSE for approval by the board
• Evaluated Harmony’s risks, measures taken to mitigate those risks and treatment of the residual risk
• Monitored the internal control environment within Harmony and found it to be effective
• Nominated the external auditor, PricewaterhouseCoopers Incorporated (PwC) for appointment as the registered independent auditor in terms of the Act
• Ensured the appointment of PwC complied with the provisions of the Act and any other legislation relating to the appointment of auditors
• Determined the external audit fees and terms of engagement
• Evaluated the independence and effectiveness of the internal and external auditors
• Evaluated and coordinated the internal and external audit processes
• Received and considered reports from the internal auditors
• Reviewed and approved internal and external audit plans
• Considered and pre-approved non-audit services provided by the external auditors
• Considered the appropriateness and expertise of the financial director, Hannes Meyer, as well as that of the finance function and found these to be appropriate.

Accordingly, the audit committee recommended the annual financial statements for the year ended 30 June 2011 to the board for approval. The board has subsequently approved the annual financial statements which will be open for discussion at the forthcoming annual general meeting.

The committee has satisfied itself through enquiry that the external audit firm, PwC, was independent from the company.

In addition to the integrated report, the committee reviewed the annual report on Form 20-F for recommendation to the board and subsequent submission to the United States Securities and Exchange Commission (SEC). The board approved the Form 20-F for submission to the SEC.

Cedric Savage retires from the board and the audit committee at the AGM after serving seven years on this committee. He will be replaced as chairman of the committee by John Wetton.

Signed

Cedric Savage Audit committee chairman

24 October 2011

Please note that this page does not form part of the audited information.