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Notice of annual general meeting, change statement and abridged annual financial statements
Exxaro Resources Limited
(Incorporated in the Republic of South Africa)
Registration Number: 2000/011076/06
JSE share code: EXX
ISIN: ZAE000084992
ADR code: EXXAY
(Exxaro or the company)
Notice of annual general meeting, change statement and abridged annual
financial statements
Notice of annual general meeting
Shareholders are hereby advised that the annual integrated report for the
year ended 31 December 2013 (which includes the summarised group annual
financial statements) was distributed today. The annual integrated report
incorporates the notice of the 13th annual general meeting of Exxaro
shareholders to be held at the Exxaro Corporate Centre, Roger Dyason Road,
Pretoria West, South Africa, at 10:00 on Tuesday, 27 May 2014 to consider,
and if deemed fit, pass with or without modification, the resolutions as
set out in the notice.
The audited group annual financial statements for the year ended
31 December 2013 are available on the Exxaro website (www.exxaro.com) from
today.
The board of directors of the company has determined, in accordance with
section 59(1)(a) and (b) of the Companies Act No 71 of 2008, as amended
(Companies Act), that the record date for shareholders to receive notice
of the annual general meeting (the notice record date) was Thursday,
17 April 2014, and the record date for shareholders to be recorded as such in
the shareholders’ register, maintained by the transfer secretaries of the
company, to be able to attend, participate in and vote at the annual
general meeting (the voting record date) is Friday, 16 May 2014. Therefore
the last day to trade in the company’s shares on the JSE to be recorded in
the share register on the voting record date is Friday, 9 May 2014.
Change statement
Shareholders are referred to the release on SENS of Exxaro’s reviewed
condensed group annual financial statements for the year ended
31 December 2013 issued on 06 March 2014 (the provisional results).
The abridged annual financial statements for the year ended 31 December
2013, released on SENS together with this notice today, and the annual
financial statements for the year ended 31 December 2013 contain a change
(adjustment) from the provisional results.
The change relates to the completion of the equity accounting of an
associate (Tronox Limited). The adjustment reflects the exchange rate
impact of translating the net assets of a foreign associate, Tronox
Limited, which has a functional currency of US Dollars, to South African
Rands. As a result of the adjustment, the group’s total equity (foreign
currency translation reserve) and total assets (investment in associate)
increased by R2 220 million, respectively.
There was no change to the reported profit for the year which is presented
in the statement of comprehensive income and there were no changes to the
statement of cash flows. The group’s headline earnings per share and
attributable earnings per share as reported on 06 March 2014 are not
impacted by the adjustment.
PricewaterhouseCoopers Incorporated audited the group annual financial
statements as well as the summarised group annual financial statements and
their unqualified reports are available for inspection at the registered
office of the company.
Summarised group annual financial statements
Audited group statement of comprehensive income for the year ended
31 December
2013 2012
Rm Rm
Revenue 13 568 12 229
Operating expenses (12 719) (10 885)
Other income 1 594 352
Gains on disposal of non-core assets 42
Net operating profit (note 3) 2 443 1 738
Interest income 81 138
Interest expense (367) (325)
Income from investments 12 3
Share of income from equity-accounted investments 3 631 3 602
Profit before tax 5 800 5 156
Income tax expense (645) (537)
Profit for the year from continuing operations 5 155 4 619
Profit for the year from discontinued operations
(note 4) 1 049 5 028
Profit for the year 6 204 9 647
Other comprehensive income/(loss), net of tax 2 640 68
Items that will not be reclassified to profit or
loss: 150 (181)
– Share of comprehensive income/(loss) of equity-
accounted associates and joint ventures 150 (181)
Items that may be subsequently reclassified to
profit or loss: 2 490 249
– Unrealised foreign exchange gains/(losses) on
translating foreign operations 537 (33)
– Revaluation of available-for-sale financial
assets 100
– Cash flow hedges (21)
– Share of comprehensive income of equity-
accounted associates and joint ventures 1 853 303
Total comprehensive income for the year 8 844 9 715
Profit/(loss) attributable to:
Owners of the parent 6 217 9 677
– continuing operations 5 168 4 634
– discontinued operations 1 049 5 043
Non-controlling interests (13) (30)
– continuing operations (13) (15)
– discontinued operations (15)
Profit for the year 6 204 9 647
Total comprehensive income/(loss) attributable to:
Owners of the parent 8 854 9 745
– continuing operations 7 805 5 706
– discontinued operations 1 049 4 039
Non-controlling interests (10) (30)
– continuing operations (10) (15)
– discontinued operations (15)
Total comprehensive income for the year 8 844 9 715
Aggregate attributable earnings per share:
aggregate (cents)
– basic 1 751 2 734
– diluted 1 746 2 726
Attributable earnings per share: continuing
operations (cents)
– basic 1 456 1 309
– diluted 1 452 1 305
Attributable earnings per share: discontinued
operations (cents)
– basic 295 1 425
– diluted 294 1 421
Audited reconciliation of group headline earnings for the year ended
31 December
Gross Tax Net
Rm Rm Rm
2013
Profit attributable to owners of the parent 6 217
Adjusted for:
– IFRS 10 Gains on Disposal of Subsidiary (964) (964)
– IAS 16 Net Losses or Gains on Disposal
of Property, Plant and Equipment 9 (4) 5
– IAS 28 Loss on Dilution of Investment in
Associates 12 12
– IAS 28 Share of Associates’ Separate
Identifiable Remeasurements (114) 2 (112)
– IAS 36 Impairment of Property, Plant and
Equipment 292 (11) 281
– IAS 36 Reversal of Impairment of Property,
Plant and Equipment (247) (247)
– IAS 38 Loss on the Scrapping of Intangible
Assets 2 2
Headline earnings (1 010) (13) 5 194
– continuing operations 5 218
– discontinued operations (24)
2012
Profit attributable to owners of the parent 9 677
Adjusted for:
– IFRS 10 Gains on Disposal of Subsidiaries
and Non-core Assets (4 034) (4 034)
– IAS 16 Net Gains and Losses on Disposal
of Property, Plant and Equipment (65) 4 (61)
– IAS 28 Excess of Fair Value Over Cost of
Investment in Associate (470) (470)
– IAS 28 Share of Associates’ Gains or Losses
on Disposal of Property, Plant and Equipment (4) 1 (3)
– IAS 36 Reversal of Impairment of Property,
Plant and Equipment (103) 29 (74)
– IAS 38 Gains on Disposal of Intangible Assets (77) (77)
Headline earnings (4 753) 34 4 958
– continuing operations 3 999
– discontinued operations 959
Headline earnings per share: aggregate (cents)
2013 2012
– basic 1 463 1 401
– diluted 1 459 1 397
Headline earnings per share: continuing operations
(cents)
– basic 1 470 1 130
– diluted 1 466 1 127
Headline (loss)/earnings per share: discontinued
operations (cents)
– basic (7) 271
– diluted (7) 270
Audited group statement of financial position at 31 December
2013 2012
Rm Rm
Assets
Non-current assets 44 681 37 445
Property, plant and equipment 20 342 15 881
Biological assets 72 55
Intangible assets 1 176 962
Investments in associates 19 207 17 154
Investments in joint ventures 861 425
Deferred tax 366 241
Financial assets 2 657 2 727
Current assets 4 483 4 972
Inventories 938 776
Trade and other receivables 2 434 2 642
Current tax receivable 82 190
Cash and cash equivalents 1 029 1 364
Non-current assets held-for-sale 342
Total assets 49 506 42 417
Equity and liabilities
Capital and other components of equity
Share capital 2 396 2 374
Other components of equity 4 234 1 636
Retained earnings 29 668 24 784
Equity attributable to owners of the parent 36 298 28 794
Non-controlling interests (26) 12
Total equity 36 272 28 806
Non-current liabilities 9 157 8 417
Interest-bearing borrowings 3 569 2 761
Non-current provisions 1 863 2 842
Post-retirement employee obligations 149 142
Financial liability 95 106
Deferred tax 3 481 2 566
Current liabilities 3 852 5 194
Trade and other payables 2 867 4 099
Interest-bearing borrowings 31 (9)
Current tax payable 131 172
Current provisions 17 121
Overdraft 806 811
Non-current liabilities held-for-sale 225
Total equity and liabilities 49 506 42 417
Audited group statement of cash flows for the year ended 31 December
2013 2012
Rm Rm
Cash flows from operating activities 422 543
Cash generated by operations 2 159 3 969
Interest paid (262) (345)
Interest received 70 208
Tax paid (158) (277)
Dividends paid (1 387) (3 012)
Cash flows from investing activities (1 480) (2 940)
Property, plant and equipment to maintain operations (1 257) (1 571)
Property, plant and equipment to expand operations (3 507) (3 762)
Proceeds from disposal of property, plant and
equipment 17 77
Proceeds from disposal of subsidiaries 87 81
Proceeds from disposal of intangible assets 77
Proceeds from disposal of financial assets
designated at fair value through profit or loss 5
Investment in intangible assets (201) (36)
Dividends from equity-accounted investments 3 229 4 019
Decrease/(increase) in other non-current assets 222 (16)
Acquisition of subsidiaries (1 421)
Investment in associates and joint ventures (82) (396)
Income from investments 12 3
Cash flows from financing activities 715 (1 291)
Proceeds from issuance of share capital 14 15
Consideration paid to non-controlling interests (96) (1 181)
Interest-bearing borrowings raised 800 5 800
Interest-bearing borrowings repaid (5 925)
Other financing activities (3)
Net decrease in cash and cash equivalents (343) (3 688)
Cash and cash equivalents at beginning of the year 553 4 118
Translation difference on movement in cash and
cash equivalents 13 123
Cash and cash equivalents end of the year 223 553
– Cash and cash equivalents 1 029 1 364
– Overdraft (806) (811)
Audited group statement of changes in equity for the year ended
31 December
Other components of equity
Foreign Financial
Share currency instruments
capital translations revaluation
Rm Rm Rm
At 1 January 2012 2 359 1 585 196
Profit/(loss) for the year
Other comprehensive loss (33) (21)
Share of comprehensive
income/(loss) of equity-accounted
investments1 118 (17)
Issue of share capital2 15
Share-based payments movements
Acquisition of subsidiaries
Acquisition of non-controlling
interest
Dividends paid
Disposal of subsidiaries (459) (137)
At 31 December 2012 2 374 1 211 21
Profit/(loss) for the year
Other comprehensive income 534
Share of comprehensive 1 401 289
income/(loss) of equity-accounted
investments1
Issue of share capital3 22
Share-based payments movement
Dividends paid
Acquisition of non-controlling
interest
At 31 December 2013 2 396 3 146 310
Other components of equity
Retirement Available-
Equity- benefit for-sale
settled obligation revaluations
Rm Rm Rm
At 1 January 2012 1 412 1
Profit/(loss) for the year
Other comprehensive loss
Share of comprehensive income/(loss)
of equity-accounted investments1 94 (164)
Issue of share capital2
Share-based payments movements (183)
Acquisition of subsidiaries
Acquisition of non-controlling interest
Dividends paid
Disposal of subsidiaries (23)
At 31 December 2012 1 300 (163)
Profit/(loss) for the year
Other comprehensive income 100
Share of comprehensive income/(loss)
of equity-accounted investments1 110 150
Issue of share capital3
Share-based payments movement 83
Dividends paid
Acquisition of non-controlling
interest
At 31 December 2013 1 493 (13) 100
Other
components Attributable
of equity to owners
Retained of the
Other earnings parent
Rm Rm Rm
At 1 January 2012 8 18 027 23 588
Profit/(loss) for the year 9 677 9 677
Other comprehensive loss (54)
Share of comprehensive income/(loss)
of equity-accounted investments1 (1) 92 122
Issue of share capital2 15
Share-based payments movements (183)
Acquisition of subsidiaries
Acquisition of non-controlling
interest (740) (740)
Dividends paid (3 012) (3 012)
Disposal of subsidiaries (619)
At 31 December 2012 (733) 24 784 28 794
Profit/(loss) for the year 6 217 6 217
Other comprehensive income 634
Share of comprehensive income/(loss)
of equity-accounted investments1 (1) 54 2 003
Issue of share capital3 22
Share-based payments movement 83
Dividends paid (1 387) (1 387)
Acquisition of non-controlling
interest (68) (68)
At 31 December 2013 (802) 29 668 36 298
Non-
controlling Total
interests equity
Rm Rm
At 1 January 2012 20 23 608
Profit/(loss) for the year (30) 9 647
Other comprehensive loss (54)
Share of comprehensive income/(loss) of equity-
accounted investments1 122
Issue of share capital2 15
Share-based payments movements (183)
Acquisition of subsidiaries 468 468
Acquisition of non-controlling interest (441) (1 181)
Dividends paid (3 012)
Disposal of subsidiaries (5) (624)
At 31 December 2012 12 28 806
Profit/(loss) for the year (13) 6 204
Other comprehensive income 3 637
Share of comprehensive income/(loss) of equity-
accounted investments1 2 003
Issue of share capital3 22
Share-based payments movement 83
Dividends paid (1 387)
Acquisition of non-controlling interest (28) (96)
At 31 December 2013 (26) 36 272
1 Included in the foreign currency translation amount is R1 287 million
(2012: R79 million) relating to the tronox investments.
2 Issued to the Kumba Resources Management Share Trust due to options
exercised (R15 million).
3 Issued to the Kumba Resources Management Share Trust due to options
exercised (R14 million) and vesting of Mpower 2012 shares to good leavers
(R8 million).
Final dividend paid per share (cents) in respect of the 2012
financial year 150
Dividend paid per share (cents) in respect of the 2013 interim
period 235
Final dividend payable per share (cents) in respect of 2013
financial year 315
Foreign currency translation
The foreign currency translation reserve comprises all foreign exchange
differences arising from the translation of the financial statements of
foreign entities within the group.
Financial instruments revaluation
The financial instruments revaluation reserve comprises the effective
portion of the cumulative net change in the fair value of cash flow
hedging instruments where the hedged transaction has not yet occurred.
Equity-settled
The equity-settled reserve represents the fair value of services received
and settled by equity instruments granted.
Post-retirement benefit obligation
Comprises mainly remeasurements on the post-retirement obligation.
Available-for-sale revaluations
Comprises of the fair value adjustments based on latest fair value
calculations performed, on the investments in Richards Bay Coal Terminal
(RBCT) (R54 million) and Chifeng Kumba Hongye Zinc Corporation Limited
(Chifeng) (R46 million).
Other
Comprises transactions with non-controlling interests.
Notes to the summarised group annual financial statements for the year
ended 31 December
1. Basis of preparation
The summarised group annual financial statements for the year ended
31 December 2013 have been derived from the audited group annual
financial statements of Exxaro Resources Limited, which are available on
Exxaro’s website at www.exxaro.com. These summarised group annual
financial statements do not contain sufficient information to allow for
a complete understanding of the financial results and state of affairs of
the group, which is provided by the detailed audited group annual
financial statements. The summarised group annual financial statements do
not include all the disclosure required for a complete set of annual
financial statements prepared in accordance with International Financial
Reporting Standards (IFRS). Selected summarised notes have been included
in this integrated report for a better understanding of the significant
transactions during the year.
The summarised group annual financial statements for the year ended
31 December 2013 have been prepared under the supervision of the Finance
Director, WA de Klerk (CA)SA, in accordance with the JSE Limited Listings
Requirements for abridged reports and the requirements of the Companies
Act No 71 of 2008, as amended. The Listings Requirements require abridged
reports to be prepared in accordance with the conceptual framework and
the measurement and recognition requirements of IFRS and the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee
and Financial Pronouncements as issued by the Financial Reporting Standards
Council and to also, as a minimum, contain the information required by
IAS 34 Interim Financial Reporting.
The summarised group annual financial statements have been prepared on the
historical cost basis, excluding financial instruments and biological assets,
which are fairly valued, and conform, in this regard, to IFRS as issued by
the International Accounting Standards Board (IASB).
The preparation and presentation of the summarised group annual financial
statements included in this integrated report is the responsibility of
Exxaro’s directors. The directors take full responsibility that the
financial information has been correctly extracted from the underlying
audited group annual financial statements.
The integrated report does not include the directors’ report, which forms
part of the full group annual financial statements.
2. Significant accounting policies
The accounting policies applied in the preparation of the summarised group
annual financial statements are in terms of IFRS and are consistent with
those applied in the previous group annual financial statements, except as
disclosed below.
During the 2013 the following pronouncements became effective:
Effective date
• IAS 1 Financial Statement Presentation (as amended) 1 July 2012
• IAS 19 Employee Benefits (revised) 1 July 2012*
• IAS 27 Separate Financial Statements (revised) 1 January 2013*
• IAS 28 Investments in Associates and Joint Ventures
(revised) 1 January 2013*
• IFRS 10 Consolidated Financial Statements (as amended) 1 January 2013*
• IFRS 11 Joint Arrangements (as amended) 1 January 2013*
• IFRS 12 Disclosure of Interest in Other Entities (as
amended) 1 January 2013*
• IFRS 13 Fair Value Measurement 1 January 2013
• IFRIC 20 Stripping Costs in the Production Phase of a
Surface Mine 1 January 2013
•Annual Improvements to IFRS 2009 – 2011 cycle 1 January 2013
* Early adopted in 2012.
The accounting standards and amendments issued to accounting standards and
interpretations which are relevant to the group, but not yet effective at
31 December 2013, have not been adopted. It is expected that where
applicable, these standards and amendments will be adopted on each
respective effective date, except where specifically identified.
The group continuously evaluates the impact of these standards and
amendments.
During 2012, Exxaro early adopted the suite of consolidation standards,
including IFRS 10, 11 and 12 and IAS 27 and 28, effective 1 January 2013
as well as IAS 19. The impact of this early adoption has been disclosed in
the group annual financial statements at 31 December 2012.
3.Significant items included in net operating profit
Year ended 31 December
2013 2012
Rm Rm
Depreciation and amortisation (856) (701)
Net realised foreign currency exchange gains 56 60
Net unrealised foreign currency exchange losses (20) (79)
Losses on derivative instruments held-for-trading (81) (1)
Impairment (charges)/reversals of trade and other
receivables (25) 6
Royalties1 (8) (124)
(Loss)/profit on disposal of property, plant and
equipment (23) 139
Loss on dilution of investment in associate (12)
Other income2 1 594 352
1 The amount paid for royalties includes an adjustment to the prior year
based on final calculations done for returns filed to South African
Revenue Services (SARS) (R41 million).
2 Other income relates to shortfall income received from customers (mainly
Eskom) as a result of delays in agreed upon production offtake plans.
4. Discontinued operations
All the conditions precedent to the sale of Exxaro’s 100% shareholding
in Exxaro Base Metals Proprietary Limited to Lebonix Proprietary Limited
were met on 2 December 2013. The subsidiary, which included the Zincor
operations, was disposed for a total consideration of R183 million. This
process completes the Zincor divestment process, which commenced with
the cessation of the production of zinc metal at Zincor in 2011
and follow on the sale of the Rosh Pinah mine during 2012.
During 2012 the mineral sands and Rosh Pinah operations were sold.
Financial information relating to the discontinued operations for the
year to the date of disposal is set out below:
Year ended 31 December
2013 2012
The financial performance and cash flow information Rm Rm
Revenue 3 893
Operating income/(expenses) 159 (2 069)
Net operating profit 159 1 824
Profit on sale of subsidiaries 964 3 995
Interest income 75
Interest expense (74) (241)
Profit before tax 1 049 5 653
Income tax expense (625)
Profit for the year from discontinued operations 1 049 5 028
Cash flows attributable to operating activities 26 1 036
Cash flows attributable to investing activities 98 (1 358)
Cash flows attributable to financing activities (37) (2 778)
Cash flow attributable to discontinued operations 87 (3 100)
5. Segment report
The corporate transactions during 2012 necessitated a change in the
operating segment reporting structures and the manner in which operating
results are reported to the chief operating decision maker. Reported
operating segments are based on the group’s different products and
operations.
5.1 Changes/amendments to reported operating segments
The following operating segments were impacted as a result of the changes
in the organisational structure:
Base metals
Up to and including 31 December 2012, the reportable operating segments
included an operating segment for base metals, which consisted of Zincor,
Rosh Pinah and other base metals.
Exxaro’s 50,04% interest in the Rosh Pinah operations was sold to a
subsidiary of Glencore International plc on 1 June 2012. This sale formed
part of Exxaro’s strategic plan to divest from the group’s zinc assets.
The remaining Base metals entities no longer met the quantitative or
qualitative thresholds described in IFRS 8 Operating Segments. These
were aggregated in the remaining Base metals entities within the “Other”
reportable operating segment.
Mineral sands/titanium dioxide
The previously reported Mineral sands operating segment included KZN
Sands, Namakwa Sands and Australia Sands.
The Mineral sands operations sale and acquisition of a shareholding in
Tronox Limited in 2012 resulted in Exxaro holding 44,40% (2012: 44,65%) of
the shares in Tronox Limited and 26% directly in each of the South
African-based KZN Sands and Namakwa Sands operations. Exxaro currently
equity-accounts for the interest in Tronox Limited and the South African
Mineral sands operations. The investment value in these associated
companies is seen as significant and will be reported as a separate
operating segment.
The Mineral sands operating segment was restructured to include both
Mineral sands and Titanium dioxide (TiO2) which is in line with the core
business of the Tronox operations and renamed TiO2.
Ferrous
In line with the group’s strategy to establish an Exxaro controlled
ferrous business, Exxaro acquired African Iron Limited (AKI) in February
2012. AKI is an iron ore development company involved in the exploration
and evaluation of the Mayoko Iron Ore and Ngoubou-Ngoubou projects,
located in the Republic of the Congo in Central West Africa.
The AlloyStreamTM and FerroAlloys operations as well as Exxaro’s 19,98%
interest in Sishen Iron Ore Company (SIOC) Proprietary Limited were
previously reported within the “Other” operating segment of Exxaro.
These investments are now reported within the Ferrous operating segment,
based on the similar commodity suite of these operations.
Following the change in the composition of the group’s reportable
operating segments, the prior years’ reportable operating segment
information has been re-presented (restated) to reflect these changes.
No changes were incurred in the coal operating segment.
5.2 Reportable operating segment performance
The group’s reportable operating segments for the year ended 31 December
2013 were therefore coal, ferrous, titanium dioxide and other.
Profit or loss (Rm)
Net operating
Revenue profit (NOP)
2013 2012 2013 2012
Year ended 31 December Restated Restated
Coal 13 362 12 064 2 769 2 105
– Tied1 3 917 3 449 215 285
– Commercial2 9 445 8 615 2 554 1 820
Ferrous 120 107 (141) (31)
– Iron ore (27) (9)
– Alloys 120 107 (61) (25)
– Other3 (53) 3
TiO24 3 594 1 925
Other 86 357 938 3 558
– Base metals5 299 145 422
– Other6 86 58 793 3 136
Total external revenue and net
operating profit 13 568 16 122 3 566 7 557
1 Tied operations refer to mines that supply their entire production to
either Eskom or ArcelorMittal South Africa (AMSA) in terms of contractual
agreements.
2 NOP includes the net impairment on NCC of R143 million in 2013.
3 Mainly made up of Ferrous head office costs not directly attributable to
the operation at Mayoko and as such could not be capitalised with the
development of the project.
4 Includes a partial impairment reversal of R103 million in 2012 of the
carrying value of property, plant and equipment at KZN Sands.
5 Includes the profit on sale of the Rosh Pinah operation of R544 million
in 2012 and R98 million impairment reversal of Zincor in 2013. This
business was previously reported as a separate base metals segment prior
to the Rosh Pinah sale transaction in 2012.
6 Includes the profit on sale of the mineral sands operations of R3 451
million in 2012.
Assets and liabilities (Rm)
Assets Liabilities
2013 2012 2013 2012
At 31 December Restated Restated
Coal 22 386 19 717 7 552 8 001
Tied 1 543 1 719 1 391 1 596
Commercial 20 843 17 998 6 161 6 405
Ferrous 11 095 7 015 814 615
Iron ore 5 114 3 045 729 572
Alloys 189 158 33 43
Other 5 792 3 812 52
TiO2 13 325 13 037 4 868 4 995
Other 2 700 2 648
Base metals 611 552 867
Other 2 089 2 096 4 868 4 128
Total 49 506 42 417 13 234 13 611
The numbers above include both the continuing and discontinued operations.
6. Financial instruments
(a) Carrying amounts and fair values
The fair values of financial assets and financial liabilities, together
with the carrying amounts in the condensed group statement of financial
position, are as follows:
Carrying Fair
amount value
At 31 December 2013 Rm Rm
Assets
Non-current assets
Financial assets, consisting of1: 2 657 2 657
– Exxaro Environmental Rehabilitation Trust asset 618 618
– Loans to associates and joint ventures 255 254
– Richards bay coal terminal (rbct) 551 551
– Kumba iron ore limited 40 40
– New age exploration limited 1 1
– Chifeng 253 253
– Non-current receivables 939 940
Current assets2 2 875 2 875
Trade and other receivables 1 845 1 845
Derivative financial instruments 1 1
Cash and cash equivalents 1 029 1 029
Non-current assets held-for-sale 67 67
Total assets 5 599 5 599
Liabilities
Non-current liabilities 3 569 3 569
Interest-bearing borrowings1 3 569 3 569
Current liabilities2 2 907 2 907
Trade and other payables 2 056 2 056
Derivative financial instruments 14 14
Interest-bearing borrowings 31 31
Overdraft 806 806
Non-current liabilities held-for-sale 36 36
Total liabilities 6 512 6 512
1 Carried at fair value in terms of IAS 39 Financial Instruments:
Recognition and Measurement.
2 Carrying amounts approximate the fair values due to the short-term
maturities of these financial assets and liabilities.
(b) Fair value hierarchy
The table below analyses recurring fair value measurements for financial
assets and financial liabilities. These fair value measurements are
categorised into different levels in the fair value hierarchy based on the
inputs used in the valuation techniques. The different levels are defined
as follows:
Level 1 — quoted prices (unadjusted) in active markets for identical
assets or liabilities that the group can access at the measurement date.
Level 2 — inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly or
indirectly.
Level 3 — unobservable inputs for the asset and liability.
Level 1 Level 2 Level 3
At 31 December 2013 Rm Rm Rm
Financial assets held-for-trading at fair
value through profit or loss
– Current derivatives financial assets 1
Financial assets designated at fair value
through profit or loss
– Exxaro Environmental Rehabilitation Trust 618
– Exxaro Environmental Rehabilitation Trust
held-for-sale 67
– Kumba Iron Ore Limited 40
Available-for-sale financial assets
– Chifeng 253
– New Age Exploration Limited 1
– RBCT 551
Financial liabilities held-for-trading at
fair value through profit or loss
– Current derivatives financial liabilities (14)
– Current derivatives financial liabilities
held-for-sale (9)
Net financial assets/(liabilities) carried
at fair value 726 (22) 804
Level 2 fair values for over-the-counter derivative financial instruments
are based on market quotes. These quotes are tested for reasonability by
discounting estimated future cash flows using the market rate for similar
instruments at measurement date.
The fair value computations of the investments are performed by the
group’s corporate finance department, reporting to the Finance Director,
on a six-monthly basis. The valuation reports are discussed with the audit
committee in accordance with the group’s reporting governance.
The group recognises transfers between levels of the fair value hierarchy
as at the end of the reporting period during which the
transfer has occurred. There were no transfers between level 1 and level
2 of the fair value hierarchy for the year ended 31 December 2013.
There were no transfers between level 2 and level 3.
(c) Level 3 fair values
Chifeng RBCT
Rm Rm
At 1 January 2013 174 467
Movement during the year
Total gains recognised in other comprehensive income 46 82
Settlements 2
Exchange gains or losses for the period recognised in
other comprehensive income 33
At 31 December 2013 253 551
Chifeng
Chifeng is classified within a level 3 as there is no quoted market price
or observable price available for this investment. This unlisted
investment is valued as the present value of the estimated future cash
flows, using a discounted cash flow model.
The significant observable and unobservable inputs used in the fair
value measurement of the investment in Chifeng are rand/Chinese renminbi
(RMB) exchange rate, RMB/US$ exchange rate, Zinc London Metal Exchange
price, production volumes, operational costs and the discount rate.
Significant increases/(decreases) in any of those inputs in isolation
would result in a significantly lower/(higher) fair value measurement.
Sensitivity of inputs
Observable inputs Range of inputs and fair value measurement1
Rand/RMB exchange rate R1,72 Strengthening of the rand
RMB1 to the RMB
RMB/US$ exchange rate RMB6,02 to Strengthening of the RMB
RMB5,95/US$1 to the US$
Zinc LME price 2 039 – 2 027 Increase in price of
(US$ per tonne in real terms) US$/tonne zinc concentrate
Unobservable inputs
Production volumes 208 750 tonne Increase in production
volumes
Operational costs 74 – 88 Decrease in operational costs
(US$ million per annum
in real terms)
Discount rate 10% Decrease in discount rate
1 Change in observable/unobservable input, which will result in an
increase in the fair value measurement.
Inter-relationships
Any inter-relationships between unobservable inputs is not considered to
have a significant impact within the range of reasonably possible
alternative assumptions.
RBCT
RBCT is classified within a level 3 as there is no quoted market price
or observable price available for this investment. This unlisted
investment is valued as the present value of the estimated future cash
flows, using a discounted cash flow model. It is not anticipated that the
RBCT investment will be disposed of in the near future.
The significant observable and unobservable inputs used in the fair value
measurement of the investment in RBCT are rand/US$ exchange rate, API4
export price, Transnet Market Demand Strategy, annual utilisation factor
and the discount rate. Significant increases/(decreases) in any of those
inputs in isolation would result in a significantly lower/(higher) fair
value measurement.
Sensitivity of inputs and
Observable inputs Range of inputs fair value measurement1
Rand/US$ exchange rate R9,85 to R10,15/US$1 Strengthening of the rand
to the US$
API4 export price per US$75,50 to US$97 Increase in API4 export
tonne (steam coal A- per tonne price per tonne
grade price in real terms)
Unobservable inputs
Transnet Market Demand 70Mtpa to 91Mtpa Acceleration of Transnet
Strategy for the terminal Freight Rail performance,
(million tonnes per ie reach full capacity sooner
annum – Mtpa)
Discount rate 13% – 17% Decrease in discount rate
Annual utilisation
factor (safety and rail
delay factor) 90% Increase in annual
utilisation factor
1 Change in observable/unobservable input, which will result in an
increase in the fair value measurement.
Inter-relationships
Any inter-relationships between unobservable inputs is not considered to
have a significant impact within the range of reasonably possible
alternative assumptions.
7. Share capital
Authorised
500 000 000 ordinary shares of R0,01 each.
Issued
358 115 505 (2012: 357 787 785) ordinary shares of R0,01 each. The
increase can be summarised as follows:
Date of issue Number of shares
Opening balance 357 787 785
Issued in terms of the Kumba Resources
Management Share Option Scheme due to 19 March 2013
options exercised at prices ranging to
from R138,53 to R166,00 3 September 2013 327 720
Closing balance 358 115 505
8. Net debt
Year ended
31 December
2013 2012
Rm Rm
Net debt (3 377) (2 199)
Presented by the following items on the face
of the statement of financial position:
– cash and cash equivalents 1 029 1 364
– non-current interest-bearing borrowings (3 569) (2 761)
– current interest-bearing borrowings (31) 9
– overdraft (806) (811)
Calculation of movement in net debt
Cash outflow (1 058) (2 397)
Add:
– shares issued 14 15
– share-based payments (3)
– non-cash flow movement for interest accrued
not yet paid (40)
– non-cash flow for amortisation of
transaction costs (9)
– net debt of subsidiaries disposed 820
– consideration paid to non-controlling
interests (96) (1 181)
– non-cash flow movements in net debt
applicable to currency translation differences
of transactions denominated in
foreign currency (669) (70)
– non-cash flow movements in net debt applicable
to currency translation differences of net debt
items of foreign entities 683 268
Increase in net debt (1 178) (2 545)
9. Contingent liabilities
Contingent liabilities 2 066 1 055
– Grootegeluk Medupi Expansion Project 50
– DMC Iron Congo SA 84
– pending litigation claims1 328 243
– other contingent liabilities2 927 536
– share of contingent liabilities of
associates and joint ventures 677 276
1 Pending litigation claims consist of legal cases where Exxaro is the
defendant. These claims are at the stage where the outcome is uncertain
and the amount of possible legal obligations is estimated at this stage.
2 Other contingent liabilities include operational guarantees to banks
and other institutions in the normal course of business from which
it is anticipated that no material liabilities will arise.
The timing and occurrence of any possible outflows of the contingent
liabilities above are uncertain. Due to the Mineral and Petroleum
Resources Development Act of 2002, currently not specifying how to
financially provide for water liabilities and water treatment at
post mine closure, Exxaro is currently developing a specific policy around
such provisions. An estimate of this amount is currently not available,
however, a liability may arise in the future.
10. Related party transactions
During the year the company and its subsidiaries, in the ordinary course
of business, entered into various sale and purchase transactions with
associates and joint ventures. These transactions were subject to terms
that are no less, nor more favourable than those arranged with third
parties.
11. Going concern
Taking into account the group’s liquidity position as well as internal
budgets for the short to medium term, it is expected that the group will
continue to trade as a going concern within the next 12 months.
12. Events after the reporting period
Details of the final dividend proposed are given in note 14.
The following non-adjusting events occurred after the reporting date and
are disclosed for information purposes:
• On 31 January 2014, Exxaro concluded a sale of asset agreement relating
to its NCC operation with Universal Coal Development VIII Proprietary
Limited. Once all conditions precedent to the transaction have been
fulfilled, an agreed cash amount will be paid to Exxaro. Exxaro has
subsequently placed the mine on care and maintenance until fulfilment of
all conditions precedent makes the transaction unconditional and the
operation is handed over to the new owners
• The mining convention, Port Autonome de Pointe Noire (PAPN) memorandum
of understanding as well as the rail framework agreements with Chemin de
fer Congo-Ocean (CFCO) relating to the Mayoko project in the Republic of
the Congo, were signed in Brazzaville on 29 January 2014.
The directors are not aware of any other significant matter or
circumstance arising after the reporting period up to the date of this
report, not otherwise dealt with in this report.
13. Independent external audit conclusion
These summarised group annual financial statements for the year ended
31 December 2013 (from page 93 to 106) have been audited by the external
auditors, PricewaterhouseCoopers Inc, who expressed an unmodified audit
opinion thereon. The auditor also expressed an unmodified opinion on the
group annual financial statements from which these summarised group annual
financial statements were derived. The individual auditor
assigned to the audit is Mr TD Shango.
The full auditors’ report is included in the group annual financial
statements on the website www.exxaro.com.
Both copies of the auditor’s audit reports are available for inspection at
the company’s registered office, together with the audited group annual
financial statements which have been summarised in this report.
14. Final dividend
The final dividend, number 22, was paid on Monday 14 April 2014 to shareholders
recorded on the register on Friday 11 April 2014, in the manner detailed in the
provisional results announcement released on SENS on 06 March 2014.
CH Wessels
Group company secretary
Pretoria
25 April 2014
Sponsor
Deutsche Securities (SA) Proprietary Limited
Date: 25/04/2014 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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