Exxaro - Reviewed condensed group interim financial statements and unreviewed production and sales volumes information for the six-month period ended 30 June 2019

NOTES TO THE REVIEWED CONDENSED GROUP INTERIM FINANCIAL STATEMENTS

1. CORPORATE BACKGROUND

Exxaro, a public company incorporated in South Africa, is a diversified resources group with interests in the coal (controlled and non-controlled), TiO₂ (non-controlled), ferrous (controlled and non-controlled) and energy (non-controlled) markets. These reviewed condensed group interim financial statements as at and for the six-month period ended 30 June 2019 (interim financial statements) comprise the company and its subsidiaries (together referred to as the group) and the group’s interest in associates and joint ventures.

2. BASIS OF PREPARATION

2.1	Statement of compliance
	The interim financial statements have been prepared in accordance with IFRS (as issued by the IASB), IAS 34 Interim Financial Reporting, the SAICA Financial Reporting Guides (as issued by the Accounting Practices Committee), Financial Reporting Pronouncements (as issued by the Financial Reporting Standards Council), the requirements of the Companies Act of South Africa and the JSE Listings Requirements. The interim financial statements have been prepared under the supervision of Mr PA Koppeschaar CA(SA), SAICA registration number: 00038621. The interim financial statements should be read in conjunction with the group annual financial statements as at and for the year ended 31 December 2018, which have been prepared in accordance with IFRS. The interim financial statements have been prepared on the historical cost basis, except for financial instruments, share-based payments and biological assets, which are measured at fair value. This is the first set of interim financial statements where IFRS 16 Leases (IFRS 16) has been applied. Changes to significant accounting policies are described in note 4. The interim financial statements of the Exxaro group were authorised for issue by the board of directors on 20 August 2019.
2.2	Judgements and estimates
	Management made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. The significant judgements and the key source of estimation uncertainty were similar to those applied to the group annual financial statements as at and for the year ended 31 December 2018, except for new judgements and assumptions related to the adoption of IFRS 16 as described in note 4.3.

3. ACCOUNTING POLICIES

The accounting policies applied in the preparation of the interim financial statements are consistent with those of the group annual financial statements as at and for the year ended 31 December 2018, except for the estimation of income tax and the adoption of new or amended standards as set out below.

3.1	Income tax
	Income tax expense is recognised based on management’s estimate of the weighted average effective annual tax rate expected for the full financial year. As such, the effective tax rate used in the interim financial statements may differ from management’s estimate of the effective tax rate for the group annual financial statements. The estimated weighted average effective annual tax rate used for the six-month period ended 30 June 2019 is 14.9%, compared to 20.1% for the six-month period ended 30 June 2018. The main reconciling items between the standard tax rate of 28% and the effective tax rate result from: Share of income or loss of equity-accounted investments and dividend income (-10.9%) Capital gains (-6.8%) Partly offset by: Prior year adjustments (+2.4%)
3.2	Carbon tax
	The Carbon Tax Bill has been implemented with an effective date of 1 June 2019. The registration forms and payment procedures have not been finalised nor issued yet. The first payment of the carbon tax levy is due 30 June 2020, relating to the period 1 June 2019 to 31 December 2019.
3.3	New or amended standards adopted by the group
	A number of new or amended standards became effective for the current reporting period. The group has adopted IFRS 16 for the first time for the six-month period commencing on 1 January 2019. The adoption of IFRS 16 has resulted in the group changing its accounting policies. The impact of the adoption and the new accounting policies are disclosed in note 4.
3.4	Impact of new, amended or revised standards issued but not yet effective
	New accounting standards, amendments to accounting standards and interpretations issued which are relevant to the group, but not yet effective on 30 June 2019, have not been adopted. The group continuously evaluates the impact of these standards and amendments.

4. CHANGES IN ACCOUNTING POLICIES

This note explains the impact of the adoption of IFRS 16 on the interim financial statements and also discloses the new leases accounting policies that have been applied from 1 January 2019.

Overview of changes resulting from the adoption of IFRS 16

IFRS 16 replaces IAS 17 Leases (IAS 17), IFRIC 4 Determining whether an Arrangement contains a Lease (IFRIC 4), SIC 15 Operating Leases-Incentives and SIC 27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

The standard establishes a new definition and criteria to identify whether a contract is, or contains, a lease as well as principles for the recognition, measurement, presentation and disclosure of leases. For lessee accounting, a single accounting model is introduced that requires lessees to recognise assets and liabilities for all leases. The standard, however, allows an optional exemption to recognise leases with a lease term of less than 12 months (short-term leases) or leases of low value assets in profit or loss on a straight-line basis. For lessor accounting, IFRS 16's approach is substantially unchanged from IAS 17. Lessor's continue to classify leases as either operating leases or finance leases. Subleases are classified with reference to the underlying right-of-use asset of the head lease.

Refer note 4.1 for details of the group's transition to IFRS 16.
Refer note 4.2 for the new accounting policy applied from 1 January 2019.
Refer note 4.3 for the judgements and assumptions made by management in applying the related accounting policies.
Refer note 8, 13 and 19 for the related disclosures of leases.

Leasing activities (as a lessee)

The group leases various land, buildings and equipment as the need arises. Lease contracts are typically made for fixed periods between 18 months to 15 years but may have extension options. Lease contracts are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease contracts do not impose any covenants, but leased assets may not be used as security for borrowing purposes.

Extension and termination options are included in a number of leases across the group. These options are used to maximise operational flexibility in terms of managing lease contracts. The majority of extension and termination options held are exercisable only by the group and not by the respective lessor.

4.1

Transition

4.1.1

Transition method, exemptions and practical expedients applied

As lessor

The group had no adjustments to its lessor accounting.

As lessee

IFRS 16 has been adopted using the cumulative effect method. In terms of this method, comparative information has not been restated. Instead, the cumulative effect of initially applying IFRS 16 has been recognised as an adjustment to the opening balance of retained earnings on date of initial application (being 1 January 2019).

In applying IFRS 16 for the first time, the group has elected the following practical expedients:

(a) In applying the definition of a lease:

The group has elected not to re-assess whether a contract is, or contains, a lease at the date of initial application. Instead, the group has applied this standard, at date of initial application, to all contracts previously identified as leases in terms of IAS 17 and IFRIC 4. Therefore the definition of a lease in terms of IFRS 16 will only be applied to contracts entered into or changed on or after 1 January 2019.

(b) In determining the transition adjustments of leases previously classified as operating leases:

Leases of low value assets were excluded as the group has elected the exemption to not apply
lease accounting to these leases from 1 January 2019
Leases with a lease term of less than 12 months on initial application were excluded and accounted for as short-term leases from 1 January 2019 (recognised through profit or loss on a straight-line basis)
Initial direct costs of leases were excluded from the measurement of the right-of-use assets recognised on 1 January 2019; and
Hindsight was applied to determine the lease term for contracts containing options to extend or terminate the lease.

4.1.2

Impact on retained earnings at 1 January 2019

The impact on retained earnings at 1 January 2019 is summarised as follows:

		Note	Rm
Closing balance at 31 December 2018 (IAS 17)			32 797
Adjustments from the adoption of IFRS 16, net of tax			(13)
Adjustment from Exxaro's adoption of IFRS 16, net of tax			(2)
—	Portion of gross carrying amount of right-of-use assets recognised relating to the present value of lease payments incurred before 1 January 2019¹	4.1.4, 4.1.5	9
—	Accumulated depreciation on right-of-use assets recognised from commencement date of leases to 1 January 2019	4.1.5	(11)
Share of equity-accounted investments’ adjustment from the adoption of IFRS 16			(11)

Opening balance at 1 January 2019 (after IFRS 16 restatement)			32 784

¹	Calculated as the difference between the gross carrying amount of the right-of-use assets recognised of R74 million (refer note 4.1.5) and the lease liabilities recognised of R65 million (refer note 4.1.4), that relate to leases previously classified as operating leases.

4.1.3

Impact on the statement of financial position at 1 January 2019

The table below shows the reclassifications and adjustments recognised on initial application of IFRS 16 for each individual line item as per the statement of financial position.

		At 31 December 2018		At 1 January 2019
Statement of financial position (extract)	Note	Previously presented Rm	IFRS 16 Rm	Restated Rm
ASSETS
Non-current assets		52 226	52	52 278
Property, plant and equipment	4.1.5	28 825	(14)	28 811
Right-of-use assets	4.1.5		77	77
Equity-accounted investments¹		17 046	(11)	17 035
Financial assets		2 634		2 634
Lease receivables		66		66
Deferred tax		523		523
Other assets		3 132		3 132
Current assets		7 641		7 641
Inventories		1 604		1 604
Financial assets		134		134
Trade and other receivables		3 140		3 140
Lease receivables		5		5
Cash and cash equivalents		2 080		2 080
Other assets		678		678
Non-current assets held-for-sale		5 183		5 183
Total assets		65 050	52	65 102

¹	Relates to the group's share of equity-accounted investments’ adjustment from the adoption of IFRS 16.

		At 31 December 2018		At 1 January 2019
Statement of financial position (extract)	Note	Previously presented Rm	IFRS 16 Rm	Restated Rm
EQUITY AND LIABILITIES
Capital and other components of equity
Share capital		1 021		1 021
Other components of equity		8 028		8 028
Retained earnings		32 797	(13)	32 784
Equity attributable to owners of the parent		41 846	(13)	41 833
Non-controlling interests		(701)		(701)
Total equity		41 145	(13)	41 132
Non-current liabilities		15 745	38	15 783
Interest-bearing borrowings		3 843		3 843
Lease liabilities	4.1.4		38	38
Other payables		152		152
Provisions		3 952		3 952
Retirement employee obligations		193		193
Financial liabilities		713		713
Deferred tax		6 874		6 874
Other liabilities		18		18
Current liabilities		6 823	27	6 850
Interest-bearing borrowings		571		571
Lease liabilities	4.1.4	2	27	29
Trade and other payables		2 960		2 960
Provisions		70		70
Financial liabilities		757		757
Overdraft		1 531		1 531
Other liabilities		932		932
Non-current liabilities held-for-sale		1 337		1 337
Total liabilities		23 905	65	23 970
Total equity and liabilities		65 050	52	65 102

4.1.4

Lease liabilities recognised on initial application

Lease liabilities were recognised for leases, previously classified as operating leases under IAS 17, that had commenced prior to 1 January 2019, excluding leases of low-value assets and short-term leases. These liabilities were measured as the present value of the remaining lease payments discounted using the incremental borrowing rate at 1 January 2019 which ranged between 7.85% and 10.42%.

The table below shows the reconciliation between operating lease commitments (disclosed under IAS 17) at 31 December 2018 and lease liabilities recognised on 1 January 2019:

		Rm
Operating lease commitments at 31 December 2018 (adjusted)¹		1 004
Less: lease commitments relating to leases commencing on or after 1 January 2019		(864)
Less: lease commitments that relate to short-term leases		(13)
Less: lease commitments that relate to leases of low-value assets		(52)
Lease commitments (remaining lease payments) to which initial application of IFRS 16 has been applied		75
Less: discounting impact using the lessee's incremental borrowing rate at 1 January 2019		(10)
Lease liabilities recognised at 1 January 2019		65
— Non-current		38
— Current		27

Operating lease commitments at 31 December 2018, previously disclosed as R876 million, have been adjusted to an amount of R1 004 million, to include an additional R128 million worth of lease commitments (in terms of IAS 17 and IFRIC 4) that was erroneously excluded. This misstatement was considered not material.

For leases previously classified as finance leases, the group recognised the carrying amount of the lease liability immediately before transition as the carrying amount of the lease liability at date of initial application. Therefore no adjustment was required for finance lease liabilities at 1 January 2019. The measurement principles of IFRS 16 have been applied since 1 January 2019.

4.1.5

Right-of-use-assets recognised on initial application

Right-of-use assets were recognised for leases, previously classified as operating leases under IAS 17, that had commenced prior to 1 January 2019, excluding leases of low-value assets and short-term leases. These assets were measured as if IFRS 16 had been applied since the commencement date of the leases, but discounted using the incremental borrowing rate at date of initial application. In other words, the gross carrying amount of the right-of-use assets were determined taking into account the present value of all remaining lease payments at the commencement date of the leases, but discounted at the incremental borrowing rate of 1 January 2019. The accumulated depreciation was measured from the commencement date of the leases until 1 January 2019.

The right-of-use assets recognised at 1 January 2019 were considered for impairment in terms of IAS 36 Impairment of Assets, however, as the recoverable amounts were in excess of the carrying amounts, no impairment adjustments were required.

For assets acquired in terms of finance leases, as previously classified under IAS 17, the group recognised the carrying amount of these assets immediately before transition as the carrying amount of the right-of-use assets at 1 January 2019. Therefore no adjustment was required except that the carrying amount of these assets has been reclassified from property, plant and equipment to right-of-use assets. The measurement principles of IFRS 16 have been applied since 1 January 2019.

The table below shows the right-of-use assets, by class of asset, at 1 January 2019, reconciled to the reclassifications and adjustments made on initial application of IFRS 16:

		Gross carrying amount Rm	Accumulated depreciation Rm	Net carrying amount Rm¹
Land and buildings		1		1
Residential land and buildings		3		3
Buildings and infrastructure		32	(4)	28
Machinery, plant and equipment		54	(9)	45
Total right-of-use assets		90	(13)	77
—	Relating to leases previously classified as operating leases recognised retrospectively on 1 January 2019	74	(11)	63
—	Relating to leases previously classified as finance leases reclassified from property, plant and equipment¹	16	(2)	14

¹	Included in machinery, plant and equipment.

4.2

Accounting policies applied from 1 January 2019

The group has elected as an accounting policy choice not to apply IFRS 16 to leases of intangible assets.

At inception of a contract, the group assesses whether a contract is, or contains, a lease. 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. To assess whether a contract conveys the right to control the use of an identified asset, the group assesses whether:

The contract involves the use of an identified asset, this may be specified explicitly or implicitly, and must be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified
The group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
The group has the right to direct the use of the asset. The group has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where all the decisions about how and for what purpose the asset is used are predetermined, the group has the right to direct the use of the asset if either:
- The group has the right to operate the asset; or
- The group designed the asset in a way that predetermines how and for what purpose it will be used.

The group has applied this definition to contracts entered into or changed on or after 1 January 2019.

At inception, or on reassessment, of a contract that contains a lease component, the group allocates the consideration in the contract to each lease and non-lease component on the basis of their relative standalone prices.

As a lessee

(a) Recognition

Leases are recognised as a lease liability and corresponding right-of-use asset at the commencement date of the leases. Each lease payment is allocated between the settlement of the lease liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the lease liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis, except, when there is a purchase option which is expected to be exercised, in which case it is depreciated over the asset's useful life.

Non-lease components, contained in a lease, are recognised as an expense in profit or loss when incurred.

(b) Measurement

(i) Initial measurement

Right-of-use assets

Lease liabilities

Measured at cost which is:

The amount of the initial measurement of the lease liability plus
Any lease payments made at or before the commencement date
Less any lease incentives received plus
Any initial direct costs; and
Estimated restoration costs.

Useful lives: Land and buildings – 15 years
Residential land and buildings – 10 years
Buildings and infrastructure – three to 10 years
Machinery, plant and equipment – two to five years

Measured at the present value of the following lease payments:

Fixed payments (including in-substance fixed payments), less any lease incentives receivable
Variable lease payments that are based on an index or a rate
Amounts expected to be payable by the group, as a lessee, under residual value guarantees
The exercise price of a purchase option if the group, as a lessee, is reasonably certain to exercise that option; and
Payments of penalties for terminating the lease, if the lease term reflects the group, as a lessee, exercising that option.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, an incremental borrowing rate is applied.

(ii) Subsequent measurement

Right-of-use assets

Lease liabilities

After commencement date of the lease, the group measures the right-of-use asset applying the cost model where a right-of-use asset falls within the scope of IAS 16 Property, Plant and Equipment.

Measured at:

Cost less
Any accumulated depreciation and any accumulated impairment losses; and
Adjusted for any remeasurements or modifications of the lease liability.

Useful lives:

Land and buildings – 15 years
Residential land and buildings – 10 years
Buildings and infrastructure – three to 10 years
Machinery, plant and equipment – two to five years

After commencement date of the lease, the group measures the lease liability by:

After commencement date of the lease, the group measures the lease liability by:
Reducing the carrying amount to reflect the lease payments made, and
Remeasuring the carrying amount to reflect any reassessment or lease modification or to reflect revised in-substance fixed lease payments.

Incremental borrowing rates:

Lease term greater than 12 months but less than
18 months – 7.85%

Lease term greater than 18 months – 10.42%

(c) Short-term leases and leases of low-value assets

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis, over the lease term, as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Leases of low-value assets comprise IT equipment, furniture, fittings and appliances as well as tools and other small equipment used at the plants.

As a lessor

When the group acts as a lessor, it determines at lease inception whether a lease is a finance lease or an operating lease.

To classify a lease, the group makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease. If not, then it is an operating lease. As part of this assessment, the group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the group is an intermediate lessor, it accounts for its interests in the head lease and the sublease separately. It assesses the lease classification of a sublease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the group applies the exemption described above, then it classifies the sublease as an operating lease.

If an arrangement contains lease and non-lease components, the group applies IFRS 15 to allocate the consideration in the contract.

The group recognises lease payments received under operating leases as income on a straight-line basis over the lease term in profit or loss.

4.3

Judgements and assumptions made by management in applying the related accounting policies

(a) Useful lives of right-of-use assets

In determining the useful lives of right-of-use assets, management considers all available information about the lease term as well as the asset's useful life itself. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment.

(b) Incremental borrowing rates

In determining the incremental borrowing rates, management considers the term of the lease, the nature of the asset being leased and the funding strategy and principles applied by the group's treasury department.

(c) Extensions and termination options

In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within the control of the lessee.

5. SEGMENTAL INFORMATION

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker, who is responsible for allocating resources and assessing performance of the reportable operating segments. The chief operating decision maker is the group executive committee. Segments reported are based on the group’s different commodities and operations.

During the first half of 2019, the chief operating decision maker revised the segment in which the remaining NBC assets and liabilities are reported on. These assets and liabilities are reported as part of the coal other operation instead of the coal commercial Mpumalanga operation. The comparative segmental information has been represented to reflect this change.

During the second half of 2018, the chief operating decision maker revised the manner in which the coal operations were reported on. The coal operations were disaggregated based on the nature of the operations (commercial, tied and other) as well as geographical location, between the Waterberg and Mpumalanga regions.

The key changes to the coal reportable operating segment were:

The commercial coal operations were split by region into Waterberg and Mpumalanga
The tied coal operation includes the Matla mine
The coal other operations have been added which include the remaining coal operations not reported on under the commercial or tied coal operations as well as Arnot and Tshikondeni (tied mines in closure).

The export revenue and related export cost items have been allocated between the coal operating segments based on the origin of the initial coal production. The comparative segmental information for 30 June 2018 has been represented to reflect these changes.

The reportable operating segments, as described below, offer different goods and services, and are managed separately based on commodity, location and support function grouping. The group executive committee reviews internal management reports on these operating segments at least quarterly.

Coal

The coal reportable operating segment is split between commercial (Waterberg and Mpumalanga), tied and other operations. Commercial Mpumalanga operations include a 50% (30 June 2018: 50%; 31 December 2018: 50%) investment in Mafube (a joint venture with Anglo). The 10.36% (30 June 2018: 10.82%; 31 December 2018: 10.82%) effective equity interest in RBCT is included in the other operations. Tumelo continues to be reported as part of the commercial Mpumalanga operations although it is no longer accounted for as a subsidiary, but an associate since 1 January 2019. The coal operations produce thermal coal, metallurgical coal and SSCC.

Ferrous

The ferrous segment mainly comprises the 20.62% (30 June 2018: 20.62%; 31 December 2018: 20.62%) equity interest in SIOC (located in the Northern Cape province) reported within the other ferrous operating segment as well as the FerroAlloys operation (referred to as Alloys). The Alloys operation manufactures ferrosilicon.

TiO₂

The TiO₂ segment comprises a 10.2% (30 June 2018: 23.36%; 31 December 2018: 23.35%) equity interest in Tronox Holdings plc, which was classified as a non-current asset held-for-sale on 30 September 2017 (refer note 17), and a 26% (30 June 2018: 26%; 31 December 2018: 26%) equity interest in Tronox SA (both South African-based operations). The member’s interest in Tronox UK was redeemed on 15 February 2019.

Energy

The energy segment comprises a 50% (30 June 2018: 50%; 31 December 2018: 50%) equity interest in Cennergi (a South African joint venture with Tata Power), which operates two windfarms, and an equity interest of 28.73% (30 June 2018: nil; 31 December 2018: 28.98%) in LightApp, as well as an equity interest of 22% in GAM which was acquired in 2019 (Refer note 14).

Other

The other reportable segment comprises the 26% (30 June 2018: 26%; 31 December 2018: 26%) equity interest in Black Mountain (located in the Northern Cape province), an effective investment of 11.7% (30June 2018: 11.7%; 31 December 2018: 11.7%) in Chifeng (located in the PRC), an equity interest in Curapipe of 15% (30 June 2018: 10.53%; 31 December 2018: 13.7%), an equity interest in Insect Technology of 25.87% (30 June 2018: 26.48%; 31 December 2018: 26.37%), the Ferroland agricultural operation as well as the corporate office which renders services to operations and other customers.

The following table presents a summary of the group’s segmental information:

	Coal				Ferrous
	Commercial					Other
	Waterberg Rm	Mpumalanga Rm	Tied Rm	Other Rm	Alloys Rm	ferrous Rm
6 months ended 30 June 2019 (Reviewed)
External revenue (note 7)	6 726	3 293	1 769	139	27
Segmental net operating profit/(loss)	2 910	(491)	67	(572)	3

— Continuing operations	2 910	(491)	67	(572)	3
— Discontinued operations
External finance income (note 9)	32	10		35
External finance costs (note 9)	(26)	(80)	(1)	(20)
Income tax (expense)/benefit	(873)	86	(29)	202
— Continuing operations	(873)	86	(29)	202
— Discontinued operations
Depreciation and amortisation (note 8)	(676)	(176)	(11)	(1)	(3)
Loss on loss of control of subsidiary		(67)
Cash generated by/(utilised in) operations	2 961	(258)	159	425	43
Share of income/(loss) of equity-accounted investments (note 10)		105		4		2 717
Capital spend (note 12)	(1 230)	(1 311)
At 30 June 2019 (Reviewed)
Segmental assets and liabilities
Deferred tax¹		(5)	(78)	177	8	1
Investments in associates (note 14)				2 070		10 833
Investments in joint ventures (note 15)		1 330
Loans to associates		132
Loans to joint ventures		67
External assets	27 285	9 036	1 141	3 625	239	3 625
Assets	27 285	10 560	1 063	5 872	247	10 859
Non-current assets held-for-sale (note 17)
Total assets per statement of financial position	27 285	10 560	1 063	5 872	247	10 859
External liabilities	1 958	2 484	929	2 759	28	5
Deferred tax¹	6 204	689		36
Current tax payables¹	(15)	71	3	34
Liabilities	8 147	3 244	932	2 829	28	5
Non-current liabilities held-for-sale (note 17)		1 373
Total liabilities per statement of financial position	8 147	4 617	932	2 829	28	5

¹	Offset per legal entity and tax authority.

	Other
	TiO₂ Rm	Energy Rm	Base metals Rm	Other Rm	Total Rm
6 months ended 30 June 2019 (Reviewed)
External revenue (note 7)				7	11 961
Segmental net operating profit/(loss)	2 421			190	4 528

– Continuing operations	270			190	2 377
– Discontinued operations	2 151				2 151
External finance income (note 9)				87	164
External finance costs (note 9)				(28)	(155)
Income tax (expense)/benefit	(87)			(344)	(1 045)
– Continuing operations	(87)			(344)	(958)
– Discontinued operations					(87)
Depreciation and amortisation (note 8)				(46)	(913)
Loss on loss of control of subsidiary					(67)
Cash generated by/(utilised in) operations				(102)	3 228
Share of income/(loss) of equity-accounted investments (note 10)	112	(27)	56	(43)	2 924
Capital spend (note 12)				(157)	(2 698)
At 30 June 2019 (Reviewed)
Segmental assets and liabilities
Deferred tax¹				33	136
Investments in associates (note 14)	2 297	182	876	676	16 934
Investments in joint ventures (note 15)		221			1 551
Loans to associates					132
Loans to joint ventures					67
External assets	94			5 382	46 827
Assets	2 391	403	876	6 091	65 647
Non-current assets held-for-sale (note 17)	1 741				1 741
Total assets per statement of financial position	4 132	403	876	6 091	67 388
External liabilities				5 900	14 063
Deferred tax¹				(35)	6 894
Current tax payables¹				67	160
Liabilities				5 932	21 117
Non-current liabilities held-for-sale (note 17)					1 373
Total liabilities per statement of financial position				5 932	22 490

¹	Offset per legal entity and tax authority.

	Coal
	Commercial
	Waterberg Rm	Mpumalanga Rm	Tied Rm	Other Rm
6 months ended 30 June 2018 (Reviewed) (Re-presented)
External revenue (note 7)	6 548	3 865	1 639	188
Segmental net operating profit/(loss)	3 063	637	186	(499)


– Continuing operations	3 063	637	186	(499)
External finance income (note 9)	24	18		2
External finance costs (note 9)	(23)	(85)		(17)
Income tax (expense)/benefit	(857)	(71)	(49)	238
Depreciation and amortisation (note 8)	(565)	(139)	(6)
Cash generated by/(utilised in) operations	3 609	814	127	(584)
Share of income/(loss) of equity-accounted investments (note 10)		(30)		(18)
Capital spend (note 12)	(1 429)	(553)
At 30 June 2018 (Reviewed) (Re-presented)
Segment assets and liabilities
Deferred tax¹		78	(43)	131
Investments in associates (note 14)				2 176
Investments in joint ventures (note 15)		1 066
Loans to joint ventures		151
External assets	24 226	6 070	993	4 050
Assets	24 226	7 365	950	6 357
Non-current assets held-for-sale (note 17)		344
Total assets as per statement of financial position	24 226	7 709	950	6 357
External liabilities	1 997	1 975	677	2 670
Deferred tax¹	5 791	860		26
Current tax payables¹	63	(7)		9
Liabilities	7 851	2 828	677	2 705
Non-current liabilities held-for-sale (note 17)		1 685
Total liabilities as per statement of financial position	7 851	4 513	677	2 705

¹	Offset per legal entity and tax authority.

	Ferrous			Other
		Alloys Rm	Other ferrous Rm	TiO₂ Rm	Energy Rm	Base metals Rm	Other Rm	Total Rm
6 months ended 30 June 2018 (Reviewed) (Re-presented)
External revenue (note 7)		12					8	12 260
Segmental net operating profit/(loss)		8	(1)				(268)	3 126


– Continuing operations		8	(1)				(268)	3 126
External finance income (note 9)							124	168
External finance costs (note 9							(220)	(345)
Income tax (expense)/benefit		(2)					(68)	(809)
Depreciation and amortisation (note 8)							(34)	(744)
Cash generated by/(utilised in) operations		122	(1)				(146)	3 941
Share of income/(loss) of equity-accounted investments (note 10)			793	224	20	57		1 046
Capital spend (note 12)							(55)	(2 037)
At 30 June 2018 (Reviewed) (Re-presented)
Segment assets and liabilities
Deferred tax¹		12					388	566
Investments in associates (note 14)			8 952	3 701		806	701	16 336
Investments in joint ventures (note 15)					416			1 482
Loans to joint ventures					108			259
External assets		188	25				2 829	38 381
Assets		200	8 977	3 701	524	806	3 918	57 024
Non-current assets held-for-sale (note 17)				3 396				3 740
Total assets as per statement of financial position		200	8 977	7 097	524	806	3 918	60 764
External liabilities		27	5				6 343	13 694
Deferred tax¹			1				(37)	6 641
Current tax payable¹							3	68
Liabilities		27	6				6 309	20 403
Non-current liabilities held-for-sale (note 17)								1 685
Total liabilities as per statement of financial position		27	6				6 309	22 088

	Coal
	Commercial
		Waterberg Rm	Mpumalanga Rm	Tied Rm	Other Rm
12 months ended 31 December 2018 (Audited)(Re-presented)
External revenue (note 7 )		13 289	7 984	3 665	364
Segmental net operating profit/(loss)		5 738	1 429	250	(966)

— Continuing operations		5 738	1 429	250	(966)
External finance income (note 9)		48	33		19
External finance costs (note 9)		(47)	(164)		(47)
Income tax (expense)/benefit		(1 572)	(302)	(48)	378
Depreciation and amortisation (note 8)		(1 204)	(299)	(13)
Gain on disposal of subsidiaries			69
Gain on disposal of operation			102
Cash generated by/(utilised in) operations		6 955	1 490	99	(1 366)
Share of income/(loss) of equity-accounted investments (note 10)			114		(36)
Capital spend (note 12)		(3 890)	(1 832)
At 31 December 2018 (Audited) (Re-presented)
Segmental assets and liabilities
Deferred tax¹			35	(53)	135
Investments in associates (note 14)					2 157
Investments in joint ventures (note 15)			1 237
Loans to joint ventures			259
External assets		26 514	7 709	1 062	4 542
Assets		26 514	9 240	1 009	6 834
Non-current assets held-for-sale (note 17)
Total assets per statement of financial position		26 514	9 240	1 009	6 834
External liabilities		2 463	2 525	757	2 454
Deferred tax¹		6 009	866		39
Current tax payables¹		104	6	(32)	98
Liabilities		8 576	3 397	725	2 591
Non-current liabilities held-for-sale (note 17)			1 337
Total liabilities per statement of financial position		8 576	4 734	725	2 591

¹	Offset per legal entity and tax authority.

	Ferrous				Other
	Alloys Rm	Other ferrous Rm	TiO₂ Rm	Energy Rm	Base metals Rm	Other Rm	Total Rm
12 months ended 31 December 2018 (Audited)(Re-presented)
External revenue (note 7)	169					20	25 491
Segmental net operating profit/(loss)	17	(3)				(762)	5 703

– Continuing operations	17	(3)				(762)	5 703
External finance income (note 9)						183	283
External finance costs (note 9)						(347)	(605)
Income tax (expense)/benefit	(4)					(105)	(1 653)
Depreciation and amortisation (note 8)						(66)	(1 582)
Gain on disposal of subsidiaries							69
Gain on disposal of operation							102
Cash generated by/(utilised in) operations	60	(2)				(212)	7 024
Share of income/(loss) of equity-accounted investments (note 10)		2 592	492	61	70	(34)	3 259
Capital spend (note 12)						(68)	(5 790)
At 31 December 2018 (Audited) (Re-presented)
Segmental assets and liabilities
Deferred tax¹	8	1				397	523
Investments in associates (note 14)		9 511	2 185	141	818	665	15 477
Investments in joint ventures (note 15)				332			1 569
Loans to joint ventures							259
External assets	265	25				1 922	42 039
Assets	273	9 537	2 185	473	818	2 984	59 867
Non-current assets held-for-sale (note 17)			5 183				5 183
Total assets per statement of financial position	273	9 537	7 368	473	818	2 984	65 050
External liabilities	23	5				7 258	15 485
Deferred tax¹						(40)	6 874
Current tax payables¹						33	209
Liabilities	23	5				7 251	22 568
Non-current liabilities held-for-sale (note 17)							1 337
Total liabilities per statement of financial position	23	5				7 251	23 905

6. DISCONTINUED OPERATION

On 30 September 2017, Exxaro classified the Tronox Limited investment as a non-current asset held-for-sale (refer note 17). During March 2019, Tronox Limited redomiciled from Australia to the UK by “top-hatting” Tronox Limited with a new holding company incorporated under the laws of England and Wales called Tronox Holdings plc. Each Tronox Limited shareholder received one share in the newly incorporated company in exchange for each share held in the Australian-incorporated Tronox Limited, which shares are listed on the New York Stock Exchange. On 9 May 2019, Tronox Holdings plc repurchased 14 000 000 shares from Exxaro. The remaining investment in Tronox Holdings plc is still classified as a non-current asset held-for-sale.

It was concluded that the related performance and cash flow information be presented as a discontinued operation as the Tronox Holdings plc investment represents a major geographical area of operation as well as the majority of the TiO₂ reportable operating segment.

Financial information relating to the discontinued operation is set out below:

		6 months ended 30 June 2019 Reviewed Rm	6 months ended 30 June 2018 Reviewed Rm	12 months ended 31 December 2018 Audited Rm
Financial performance
Losses on financial instruments revaluations recycled to profit or loss		(1)
Net gains on translation differences recycled to profit or loss on partial disposal of investment in foreign associate		832
Indemnification asset movement¹		86
Operating profit		917
Gain on partial disposal of associate²		1 234
Net operating profit		2 151
Dividend income received from non-current assets held-for-sale		28	31	69
Profit before tax		2 179	31	69
Income tax expense		(87)
Profit for the period from discontinued operations		2 092	31	69
Other comprehensive income, net of tax
Items that have subsequently been reclassified to profit or loss:		(831)
—	Share of recycling of other comprehensive income of equity-accounted investments	(831)

Total comprehensive income for the period		1 261	31	69
Cash flow information
Cash flow attributable to investing activities
—	Dividend income received from non-current assets held-for-sale	18	31	69
—	Proceeds from partial disposal of associate classified as non-current assets held-for-sale	2 889
Cash flow attributable to discontinued operations		2 907	31	69

¹	The indemnification asset movement arose on the repurchase of the Tronox Holdings plc ordinary shares as Tronox Holdings plc has indemnified Exxaro from any tax obligation which may arise on the disposal of any of the Tronox Holdings plc ordinary shares held by Exxaro since the redomicile.
²	Comprises proceeds of R2 889 million and carrying value of R1 655 million.

7. REVENUE

Revenue is derived from contracts with customers. Revenue has been disaggregated based on timing of revenue recognition, major type of goods and services, major geographic area and major customer industries.

	Coal				Ferrous	Other
	Commercial
6 months ended 30 June 2019 (Reviewed)	Waterberg Rm	Mpumalanga Rm	Tied Rm	Other Rm	Alloys Rm	Other Rm	Total Rm
Segmental revenue reconciliation
Segmental revenue based on origin of coal production	6 726	3 293	1 769	139	27	7	11 961
Export sales allocated to selling entity	(811)	(2 471)		3 282
Total revenue from contracts with customers	5 915	822	1 769	3 421	27	7	11 961
By timing and major type of goods and services
Sale of goods at a point in time	5 915	822	1 531	3 254	23	6	11 551
Coal	5 915	822	1 531	3 254			11 522
Ferrosilicon					23		23
Biological goods						6	6
Rendering of services over time			238	167	4	1	410
Stock yard management services			62				62
Project engineering services			176				176
Other mine management services				138			138
Transportation services¹				29	1		30
Other services					3	1	4

Total revenue from contracts with customers	5 915	822	1 769	3 421	27	7	11 961
By major geographic area of customer²
Domestic	5 915	822	1 769	139	27	7	8 679
Export				3 282			3 282
Europe				1 848			1 848
Asia				1 371			1 371
Other				63			63

Total revenue from contracts with customers	5 915	822	1 769	3 421	27	7	11 961
By major customer industries
Public utilities	4 832	420	1 769	186			7 207
Merchants	96	181		2 814			3 091
Steel	632	46		16			694
Mining	26	88		195	15		324
Manufacturing	139				9		148
Cement	81						81
Other	109	87		210	3	7	416
Total revenue from contracts with customers	5 915	822	1 769	3 421	27	7	11 961

¹	Relates mainly to the rendering of export freight services over time, on certain transactions in terms of incoterm CFR.
²	Determined based on the customer supplied by Exxaro.

	Coal				Ferrous	Other
	Commercial
6 months ended 30 June 2018 (Reviewed) (Re-presented)^1,2	Waterberg Rm	Mpumalanga Rm	Tied Rm	Other Rm	Alloys Rm	Other Rm	Total Rm
Segmental revenue reconciliation
Segmental revenue based on origin of coal production	6 548	3 865	1 639	188	12	8	12 260
Export sales allocated to selling entity	(914)	(2 912)		3 826
Total revenue from contracts with customers	5 634	953	1 639	4 014	12	8	12 260
By timing and major type of goods and services
Sale of goods at a point in time	5 634	953	1 477	3 827	12	7	11 910
Coal²	5 634	953	1 477	3 827			11 891
Ferrosilicon					12		12
Biological goods						7	7
Rendering of services over time			162	187		1	350
Stock yard management services			101				101
Project engineering services²			61				61
Other mine management services				187			187
Other services						1	1

Total revenue from contracts with customers	5 634	953	1 639	4 014	12	8	12 260
By major geographic area of customer³
Domestic	5 634	953	1 639	188	12	8	8 434
Export				3 826			3 826
Europe				2 384			2 384
Asia				1 043			1 043
Other				399			399

Total revenue from contracts with customers	5 634	953	1 639	4 014	12	8	12 260
By major customer industries
Public utilities	4 518	210	1 639	401			6 768
Merchants	57	388		2 444			2 889
Steel	727	73		23			823
Mining	36	48		516	12		612
Manufacturing	163	53		94			310
Cement	71	100					171
Other	62	81		536		8	687
Total revenue from contracts with customers	5 634	953	1 639	4 014	12	8	12 260

¹	Represented in alignment with the change in segmental reporting.
²	Represented for the separation of project engineering services from coal revenue. Project engineering services are recognised as the services are rendered over time.
³	Determined based on the customer supplied by Exxaro.

	Coal				Ferrous	Other
	Commercial
12 months ended 31 December 2018 (Audited) (Re-presented)¹	Waterberg Rm	Mpumalanga Rm	Tied Rm	Other Rm	Alloys Rm	Other Rm	Total Rm
Segmental revenue reconciliation
Segmental revenue based on origin of coal production	13 289	7 984	3 665	364	169	20	25 491
Export sales allocated to selling entity	(1 796)	(6 254)		8 050
Total revenue from contracts with customers	11 493	1 730	3 665	8 414	169	20	25 491
By timing and major type of goods and services
Sale of goods at a point in time	11 493	1 730	3 145	8 050	163	16	24 597
Coal¹	11 493	1 730	3 145	8 050			24 418
Ferrosilicon					163		163
Biological goods						16	16
Rendering of services over time			520	364	6	4	894
Stock yard management services			224				224
Project engineering services¹			296				296
Other mine management services				364			364
Other services					6	4	10

Total revenue from contracts with customers	11 493	1 730	3 665	8 414	169	20	25 491
By major geographic area of customer²
Domestic	11 493	1 730	3 665	364	169	15	17 436
Export				8 050		5	8 055
Europe				4 920		2	4 922
Asia				2 455		3	2 458
Other				675			675

Total revenue from contracts with customers	11 493	1 730	3 665	8 414	169	20	25 491
By major customer industries
Public utilities	9 101	301	3 665	701			13 768
Merchants	141	835		6 458			7 434
Steel	1 557	165		36			1 758
Mining	88	43		747	144		1 022
Manufacturing	291	33		101	22		447
Cement	156	202					358
Other	159	151		371	3	20	704
Total revenue from contracts with customers	11 493	1 730	3 665	8 414	169	20	25 491

¹	Represented for the separation of project engineering services from coal revenue. Project engineering services are recognised as the services are rendered over time.
²	Determined based on the customer supplied by Exxaro.

8. SIGNIFICANT ITEMS INCLUDED IN OPERATING EXPENSES

	6 months ended 30 June 2019 Reviewed Rm	6 months ended 30 June 2018 Reviewed Rm	12 months ended 31 December 2018 Audited Rm
Raw materials and consumables	(1 893)	(1 340)	(3 175)
Staff costs	(2 266)	(2 308)	(4 622)
Royalties	(274)	(172)	(427)
Contract mining	(1 090)	(841)	(1 818)
Repairs and maintenance	(1 072)	(942)	(2 213)
Railage and transport	(1 037)	(794)	(1 787)
Movement in provisions	(481)	143	175
Depreciation and amortisation	(913)	(744)	(1 582)
— Depreciation of property, plant and equipment	(886)	(742)	(1 579)
— Depreciation of right-of-use assets	(25)
— Amortisation of intangible assets	(2)	(2)	(3)
Fair value adjustments on contingent consideration¹	232	(188)	(357)
Legal and professional fees	(402)	(273)	(776)
Net gains on disposal of property, plant and equipment	14	118	122
Loss on loss of control of subsidiary²	(67)
Loss on dilution of investments in associates	(43)
Gain on disposal of associate³	270
Expected credit losses⁴	(104)	(9)	(64)
Expenses relating to short-term leases	(80)
Expenses relating to leases of low value assets	(5)
Gain on termination of lease	1
Operating lease income	14	20	37
Operating lease rental expense		(117)	(232)

¹	Relates to the ECC acquisition.
²	On 1 January 2019 Exxaro lost control over the management function of Tumelo. This resulted in Tumelo being accounted for as an associate at an initial carrying value of nil.
³	Relates to the redemption of membership interest in Tronox UK.
⁴	Mainly relates to ECLs recognised for non-performing other receivables and the loan to Tumelo.

9. NET FINANCING INCOME/(COSTS)

	6 months ended 30 June 2019 Reviewed Rm	6 months ended 30 June 2018 Reviewed Rm	12 months ended 31 December 2018 Audited Rm
Finance income	164	168	283
Interest income	132	161	256
Finance lease interest income	5	5	10
Commitment fee income	3	1	1
Interest income from loan to joint venture	24	1	16
Finance costs	(155)	(345)	(605)
Interest expense	(233)	(272)	(514)
Unwinding of discount rate on rehabilitation costs	(206)	(198)	(408)
Recovery of unwinding of discount rate on rehabilitation costs	80	72	158
Interest expense on lease liabilities	(10)		(1)
Amortisation of transaction costs	(7)	(4)	(27)
Borrowing costs capitalised¹	221	57	187

Total net financing income/(costs)	9	(177)	(322)
¹ Borrowing costs capitalisation rate:	10.21%	10.08%	10.13%

10. SHARE OF INCOME/(LOSS) OF EQUITY-ACCOUNTED INVESTMENTS

	6 months ended 30 June 2019 Reviewed Rm	6 months ended 30 June 2018 Reviewed Rm	12 months ended 31 December 2018 Audited Rm
Unlisted investments
Associates	2 831	1 056	3 079
SIOC	2 717	793	2 592
Tronox SA	112	166	382
Tronox UK¹		58	110
RBCT	4	(18)	(36)
Black Mountain	56	57	70
Insect Technology	(43)		(31)
LightApp	(15)		(5)
Curapipe			(3)
Joint ventures	93	(10)	180
Mafube	105	(30)	114
Cennergi	(12)	20	66

Share of income of equity-accounted investments	2 924	1 046	3 259

¹	Application of the equity method ceased on 30 November 2018 when the investment was classified as a non-current asset held-for-sale.

11. DIVIDEND DISTRIBUTION

Total dividends paid in 2018 amounted to R5 483 million. This amount was made up of:

A special dividend of 1 255 cents per share (R3 149 million to external shareholders) paid in March 2018, following the partial disposal of the shareholding in Tronox Limited
A final dividend relating to the 2017 financial year of 400 cents per share (R1 004 million to external shareholders) paid in April 2018
An interim dividend of 530 cents per share (R1 330 million to external shareholders) paid in September 2018.

An interim cash dividend, number 33, for 2019 of 864 cents per share, was approved by the board of directors on 20 August 2019. The dividend is payable on 14 October 2019 to shareholders who will be on the register on 11 October 2019. This interim dividend, amounting to approximately R2 168 million to external shareholders, has not been recognised as a liability in these interim financial statements. It will be recognised in shareholders’ equity for the year ending 31 December 2019.

The interim dividend declared will be subject to a dividend withholding tax of 20% for all shareholders who are not exempt from or do not qualify for a reduced rate of dividend withholding tax. The net local dividend payable to shareholders, subject to dividend withholding tax at a rate of 20% amounts to 691.2 cents per share.

Following the partial disposal of Exxaro’s shareholding in Tronox Holdings plc, and the redemption of the membership interest in Tronox UK, a special dividend of 897 cents per share was approved by the board of directors on 20 August 2019. The dividend is payable on 14 October 2019 to shareholders who will be on the register on 11 October 2019. This special dividend, amounting to approximately R2 251 million to external shareholders, has not been recognised as a liability in these interim financial statements. It will be recognised in shareholders’ equity for the year ending 31 December 2019.

The special dividend declared will be subject to a dividend withholding tax of 20% for all shareholders who are not exempt from or do not qualify for a reduced rate of dividend withholding tax. The net local dividend payable to shareholders, subject to dividend withholding tax at a rate of 20% amounts to 717.6 cents per share.

The number of ordinary shares in issue at the date of these declarations was 358 706 754. Exxaro company’s tax reference number is 9218/098/14/4.

	At 30 June 2019 Reviewed	At 30 June 2018 Reviewed	At 31 December 2018 Audited
Issued share capital (number of shares)	358 706 754	358 706 754	358 706 754
Ordinary shares (million)
— Weighted average number of shares	251	251	251
— Diluted weighted average number of shares	330	322	326

12. CAPITAL SPEND AND CAPITAL COMMITMENTS

	At 30 June 2019 Reviewed Rm	At 30 June 2018 Reviewed Rm	At 31 December 2018 Audited Rm
Capital spend
To maintain operations	1 115	1 177	2 847
To expand operations	1 583	860	2 943
Total capital spend	2 698	2 037	5 790
Capital commitments
Contracted	2 328	5 211	4 508
Contracted for the group (owner-controlled)	2 089	3 760	3 533
Share of capital commitments of equity-accounted investments	239	1 451	975
Authorised, but not contracted	1 662	3 387	2 914

13. RIGHT-OF-USE ASSETS

At 30 June 2019	Land and buildings Rm	Residential land and buildings Rm	Buildings and infrastructure Rm	Machinery, plant and equipment Rm	Total Rm
Gross carrying amount
Transfer from property, plant and equipment¹				16	16
Recognised on initial application of IFRS 16	1	3	32	38	74
Balance at 1 January 2019	1	3	32	54	90
Additions			457		457
Remeasurement adjustments²			4		4
Lease cancellations				(11)	(11)
Transfer to property, plant and
equipment³				(16)	(16)
At end of the period	1	3	493	27	524
Accumulated depreciation
Transfer from property, plant and equipment¹				(2)	(2)
Recognised on initial application of IFRS 16			(4)	(7)	(11)
Balance at 1 January 2019			(4)	(9)	(13)
Charges for the period		(1)	(16)	(8)	(25)
Lease cancellations				4	4
Transfer to property, plant and equipment²				1	1
At end of the period		(1)	(20)	(12)	(33)
Net carrying amount at end of the period	1	2	473	15	491

¹	Assets acquired in terms of finance leases transferred from property, plant and equipment on adoption of IFRS 16.
²	Relates to remeasurements arising from changes in CPI.
³	Transfer to property, plant and equipment as there was a transfer in legal ownership of the underlying asset.

14. INVESTMENTS IN ASSOCIATES

	At 30 June 2019 Reviewed Rm	At 30 June 2018 Reviewed Rm	At 31 December 2018 Audited Rm
Unlisted investments
SIOC	10 833	8 952	9 511
Tronox SA	2 297	1 966	2 185
Tronox UK¹		1 735
RBCT	2 070	2 176	2 157
Black Mountain	876	806	818
Curapipe	44	27	22
Insect Technology	632	674	643
LightApp	124		141
GAM²	58
Total carrying value of investments in associates	16 934	16 336	15 477

¹	The investment in Tronox UK was classified as a non-current asset held-for-sale on 30 November 2018 and was redeemed on 15 February 2019.
²	A 22% equity interest in GAM was acquired in exchange for settlement of the Lebonix debt.

15. INVESTMENTS IN JOINT VENTURES

	At 30 June 2019 Reviewed Rm	At 30 June 2018 Reviewed Rm	At 31 December 2018 Audited Rm
Unlisted investments
Mafube	1 330	1 066	1 237
Cennergi	221	416	332
Total carrying value of investments in joint ventures	1 551	1 482	1 569

16. OTHER ASSETS

	At 30 June 2019 Reviewed Rm	At 30 June 2018 Reviewed Rm	At 31 December 2018 Audited Rm
Non-current
Reimbursements¹	2 059	1 669	1 723
Indemnification asset – Total S.A.²	1 373	1 302	1 337
Indemnification asset – Tronox Holdings plc³	86
Biological assets	29	34	30
Intangible assets	15	15	15
Other non-current assets	37	13	27
Total non-current other assets	3 599	3 033	3 132
Current
VAT	366	337	480
Royalties	46	39	46
Prepayments	39	33	110
Current tax receivables	26	29	23
Other current assets	61	31	19
Total current other assets	538	469	678
Total other assets	4 137	3 502	3 810

¹	Amounts recoverable from Eskom in respect of the rehabilitation, environmental expenditure and retirement employee obligations of the Matla and Arnot mines at the end of life of these mines.
²	Upon the acquisition of ECC in 2015, Total S.A. indemnified Exxaro from any obligations relating to the EMJV.
³	Indemnification asset which arose on the repurchase of the Tronox Holdings plc ordinary shares as Tronox Holdings plc has indemnified Exxaro from any tax obligation which may arise on the disposal of any of the Tronox Holdings plc ordinary shares held by Exxaro subsequent to the redomicile.

17. NON-CURRENT ASSETS AND LIABILITIES HELD-FOR-SALE

Tronox Holdings plc

In September 2017, the directors of Exxaro formally decided to dispose of the investment in Tronox Limited. As part of this decision, Tronox Limited was required to publish an automatic shelf registration statement of securities of well-known seasoned issuers which allowed for the conversion of Exxaro’s Class B Tronox Limited ordinary shares to Class A Tronox Limited ordinary shares. From this point, it was concluded that the Tronox Limited investment should be classified as a non-current asset held-for-sale as all the requirements in terms of IFRS 5 Non-current assets held-for-sale and Discontinued Operations (IFRS 5) were met. As of 30 September 2017, the Tronox Limited investment, totalling 42.66% of Tronox Limited’s total outstanding voting shares, was classified as a non-current asset held-for-sale and the application of the equity method ceased.

Subsequently, Exxaro sold 22 425 000 Class A Tronox Limited ordinary shares during October 2017. During May 2019, Tronox Holdings plc repurchased 14 000 000 Tronox Holdings plc ordinary shares from Exxaro after Tronox Limited had redomiciled to the UK. On 30 June 2019, management concluded that the remaining investment in Tronox Holdings plc continues to meet the criteria to be classified as a non-current asset held-for-sale in terms of IFRS 5. Exxaro continues to assess market conditions for further possible sell downs of the remaining 14 729 280 Tronox Holdings plc ordinary shares.

The Tronox Holdings plc investment is presented within the total assets of the TiO₂ reportable operating segment and is presented as a discontinued operation (refer note 6).

EMJV

As part of the ECC acquisition in 2015, Exxaro acquired non-current liabilities held-for-sale relating to the EMJV. The sale of the EMJV business is conditional on section 43 consent required in terms of the MPRDA for transfer of the environmental liabilities and rehabilitation obligations of the EMJV to Scinta Energy Proprietary Limited. These liabilities remain classified as non-current liabilities held-for-sale for the Exxaro group on 30 June 2019, as the required approvals are still pending. The EMJV does not meet the criteria to be classified as a discontinued operation since it does not represent a separate major line of business, nor does it represent a major geographical area of operation.

	At 30 June 2019 Reviewed Rm	At 30 June 2018 Reviewed Rm	At 31 December 2018 Audited Rm
Assets
Property, plant and equipment		153
Investments in associates	1 741	3 396	5 183
Deferred tax		11
Inventories		105
Trade receivables		30
Current tax receivable		28
Cash and cash equivalents		10
Other current assets		7
Non-current assets held-for-sale	1 741	3 740	5 183
Liabilities
Non-current provisions	(1 356)	(1 558)	(1 320)
Retirement employee obligations	(17)	(22)	(17)
Trade and other payables		(69)
Shareholder loans		(18)
Other current liabilities		(18)
Non-current liabilities held-for-sale	(1 373)	(1 685)	(1 337)
Net non-current assets held-for-sale	368	2 055	3 846

18. INTEREST-BEARING BORROWINGS

	At 30 June 2019 Reviewed Rm	At 30 June 2018 Reviewed Rm	At 31 December 2018 Audited Rm
Non-current¹	4 424	4 479	3 843
Loan facility	3 237	3 478	3 233
Bonds²	1 000
Preference share liability³	187	1 001	610
Current⁴	50	571	571
Loan facility	47	51	47
Bonds	4	525	525
Preference share liability	(1)	(5)	(1)

Total interest-bearing borrowings	4 474	5 050	4 414
Summary of interest-bearing borrowings by period of redemption:
— Less than six months	55	58	576
— Six to 12 months	(5)	513	(5)
— Between one and two years	(9)	(13)	(10)
— Between two and three years	3 246	(13)	3 242
— Between three and four years	544	3 305	611
— Between four and five years	643	1 139
— Over five years		61
Total interest-bearing borrowing	4 474	5 050	4 414
¹ Includes transaction costs of:	14	38	20
² New bonds issued during May 2019.
³ Capital redemption on preference share liability of:	415	1 489	1 889
⁴ The current portion represents:	50	571	571
— Capital repayments		520	520
— Interest capitalised	61	65	61
— Reduced by the amortisation of transaction costs	(11)	(14)	(10)

Overdraft
Bank overdraft	4	49	1 531

The bank overdraft is repayable on demand and interest payable is based on current South African money market rates.

There were no defaults or breaches in terms of interest-bearing borrowings during the reporting periods.

Below is a summary of the salient terms and conditions of the facilities:

		Loan facility
		Bullet term loan	Amortised loan	Revolving facility	Preference share liability
Aggregate	30 June 2019	3 250	1 750	2 750	2 491
nominal amount (Rm)	30 June 2018	3 250	2 000	2 750	2 491
	31 December 2018	3 250	1 750	2 750	2 491
Issue date or draw date		29 July 2016	29 July 2016	29 July 2016	11 December 2017
Maturity date		29 July 2021	29 July 2023	29 July 2021	9 December 2022
Capital payments		The total outstanding amount is payable on final maturity date	Four consecutive semi-annual instalments commencing on the date occurring 18 months prior to the final maturity date	The total outstanding amount is payable on final maturity date	The total outstanding amount is payable on final maturity date
Duration (months)		60	84	60	60
Secured or unsecured		Unsecured	Unsecured	Unsecured	Secured
Undrawn	30 June 2019	nil	1 750	2 750	nil
portion (Rm)	30 June 2018	nil	1 750	2 750	nil
	31 December 2018	nil	1 750	2 750	nil
Interest
Interest-payment basis		Floating rate	Floating rate	Floating rate	Floating rate
Interest-payment period		Three months	Three months	Monthly	Dependent on Eyesizwe receiving a dividend from Exxaro
Interest rate		JIBAR plus a margin of 325 basis points (3.25%)	JIBAR plus a margin of 360 basis points (3.60%)	JIBAR plus a margin of 325 basis points (3.25%)	80% of Prime Rate
Effective	30 June 2019	0.17%	N/A	N/A	0.20%
interest rates	30 June 2018	0.17%	1.17%	N/A	0.20%
for transaction costs	31 December 2018	0.17%	1.17%	N/A	0.20%
Rate of interest	30 June 2019	10.40%	nil	10.16%	8.20%
per period	30 June 2018	10.27%	10.62%	nil	8.00%
	31 December 2018	10.26%	10.60%	nil	8.20%

		DMTN Programme (bonds)
		R357 million senior unsecured floating rate note	R643 million senior unsecured floating rate note
Aggregate nominal amount (Rm)	30 June 2019	357	643
Issue date or draw date		13 June 2019	13 June 2019
Maturity date		13 June 2022	13 June 2024
Capital payments		No fixed or determinable payments, the total outstanding amount is payable on final maturity date	No fixed or determinable payments, the total outstanding amount is payable on final maturity date
Duration (months)		36	60
Secured or unsecured		Unsecured	Unsecured
Interest
Interest-payment basis		Floating rate	Floating rate
Interest-payment period		Three months	Three months
Interest rate		JIBAR plus a margin of 165 basis points (1.65%)	JIBAR plus a margin of 189 basis points (1.89%)
Rate of interest per period	30 June 2019	8.71%	8.95%

19. LEASE LIABILITIES

	At 30 June 2019 Reviewed Rm	At 30 June 2018 Reviewed Rm	At 31 December 2018 Audited Rm
Non-current	470	1
Current	29	10	2
Total lease liabilities	499	11	2
Summary of lease liabilities by period of redemption:
— Less than six months	14	10	2
— Six to 12 months	15
— Between one and two years	27	1
— Between two and three years	32
— Between three and four years	29
— Between four and five years	38
— Over five years	344
Total lease liabilities	499	11	2
Analysis of movement in lease liabilities:
At beginning of the period – IAS 17	2
Recognised on initial application of IFRS 16	65
Adjusted balance at 1 January 2019	67
New leases	456
Lease cancellations	(8)
Lease remeasurement adjustments	4
Capital repayments	(20)
— Lease payments	(30)
— Interest charges	10

At end of the period	499

The lease liabilities relate to the right-of-use assets disclosed under note 13. Interest is based on incremental borrowing rates ranging between 7.85% and 10.42%.

20. NET DEBT

	At 30 June 2019 Reviewed Rm	(Re-presented) At 30 June 2018 Reviewed Rm	At 31 December 2018 Audited Rm
Net debt is presented by the following items on the statement of financial position:
Non-current interest-bearing debt	(4 894)	(4 480)	(3 843)
Interest-bearing borrowings	(4 424)	(4 479)	(3 843)
Lease liabilities	(470)	(1)
Current interest-bearing debt	(79)	(581)	(573)
Interest-bearing borrowings	(50)	(571)	(571)
Lease liabilities	(29)	(10)	(2)
Net cash and cash equivalents	4 215	2 557	549
Cash and cash equivalents	4 219	2 596	2 080
Cash and cash equivalents classified as non-current assets held-for-sale		10
Overdraft	(4)	(49)	(1 531)

Total net debt	(758)	(2 504)	(3 867)

Analysis of movement in net (debt)/cash:

			Liabilities arising from financing activities
		Cash and cash equivalents/ (overdraft) Rm	Non-current interest- bearing debt Rm	Current interest- bearing debt Rm	Total Rm
Net cash at 31 December 2017 (Re-presented)		6 617	(6 480)	(68)	69
Cash flows		(4 100)	1 489	7	(2 604)
Operating activities		(1 225)			(1 225)
Investing activities		(810)			(810)
Financing activities		(2 065)	1 489	7	(569)
—	Interest-bearing borrowings repaid	(1 496)	1 489	7
—	Shares acquired in the market to settle share-based payments	(422)			(422)
—	Dividends paid to BEE Parties	(147)			(147)

Non-cash movements		40	511	(520)	31
Amortisation of transaction costs				(7)	(7)
Preference dividend accrued			(4)		(4)
Interest accrued				2	2
Transfers between non-current and current liabilities			515	(515)
Translation difference on movement in cash and cash equivalents		40			40

Net debt at 30 June 2018 (Re-presented)		2 557	(4 480)	581	2 504
Net debt at 30 June 2018 (Re-presented)		2 557	(4 480)	(581)	(2 504)
Cash flows		(2 010)	650	1	(1 359)
Operating activities		1 171			1 171
Investing activities		(2 385)			(2 385)
Financing activities		(796)	650	1	(145)
—	Interest-bearing borrowings raised	14		(14)
—	Interest-bearing borrowings repaid	(665)	650	15
—	Shares acquired in the market to settle share-based payments	(45)			(45)
—	Dividends paid to BEE Parties	(100)			(100)

Non-cash movements		2	(13)	7	(4)
Amortisation of transaction costs				(20)	(20)
Preference dividend accrued			3		3
Interest accrued				3	3
Lease liabilities cancelled			5	3	8
Transfers between non-current and current liabilities			(21)	21
Translation difference on movement in cash and cash equivalents		2			2

Net debt at 31 December 2018		549	(3 843)	(573)	(3 867)
Net debt at 31 December 2018		549	(3 843)	(573)	(3 867)
Cash flows		3 665	(585)	540	3 620
Operating activities		701			701
Investing activities		3 692			3 692
Financing activities		(728)	(585)	540	(773)
—	Interest-bearing borrowings raised	1 500	(1 000)	(500)
—	Interest-bearing borrowings repaid	(1 435)	415	1 020
—	Lease liabilities paid	(20)		20
—	Shares acquired in the market to settle share-based payments	(661)			(661)
—	Dividends paid to BEE Parties	(112)			(112)

Non-cash movements		1	(466)	(46)	(511)
Amortisation of transaction costs				(7)	(7)
Preference dividend accrued			11		11
Interest accrued				1	1
Lease remeasurements				(4)	(4)
New leases				(521)	(521)
Lease liability cancelled				8	8
Transfers between non-current and current liabilities				48	(48)
Translation difference on movement in cash and cash equivalents		1			1

Net debt at 30 June 2019		4 215	(4 894)	(79)	(758)

21. OTHER LIABILITIES

	At 30 June 2019 Reviewed Rm	At 30 June 2018 Reviewed Rm	At 31 December 2018 Audited Rm
Non-current
Income received in advance	23	9	18
Total non-current other liabilities	23	9	18
Current
Leave pay	190	168	171
VAT	10	118	86
Royalties	2	29	50
Bonuses	182	201	305
Current tax payables	160	68	209
Other current liabilities	181	114	111
Total current other liabilities	725	698	932
Total other liabilities	748	707	950

22. FINANCIAL INSTRUMENTS

The group holds the following financial instruments:

	At 30 June 2019 Reviewed Rm	At 30 June 2018 Reviewed Rm	At 31 December 2018 Audited Rm
Non-current
Financial assets
*Financial assets at fair value through other comprehensive income*	248	221	185
Equity: unlisted — Chifeng	248	221	185
*Financial assets at fair value through profit or loss*	1 929	1 426	1 432
Equity: listed — KIO¹		26
Debt: unlisted — environmental rehabilitation funds	1 929	1 400	1 432
*Financial assets at amortised cost*	417	954	1 017
Loans to associates and joint ventures		258	250
Joint ventures		258	250
— Cennergi²		108
— Mafube³		150	250

ESD loans⁴	112		80
Other financial assets at amortised cost	305	696	687
— Environmental rehabilitation funds		320	351
— Deferred pricing receivable⁵	309	363	336
— Deferred consideration receivable⁶		15
— Impairment allowances	(4)	(2)

Financial liabilities
*Financial liabilities at amortised cost*	(4 618)	(4 730)	(4 220)
Interest-bearing borrowings	(4 424)	(4 479)	(3 843)
Other payables	(81)	(92)	(152)
Deferred consideration payable⁷	(113)	(159)	(225)
*Financial liabilities at fair value through profit or loss*		(337)	(488)
Contingent consideration		(337)	(488)
Current
Financial assets
*Financial assets at amortised cost*	6 588	5 365	5 354
Loans to associates and joint ventures	199	1	9
Associates	132
— Tumelo⁸	164
— Impairment allowances	(32)
Joint ventures	67	1	9
— Mafube³	67	1	9

ESD loans⁴	52		45
— Gross	53		45
— Impairment allowances	(1)
Other financial assets at amortised cost	72	81	80
— Deferred pricing receivable⁵	54	51	52
— Deferred consideration receivable⁶	17	29	29
— Commitment fee receivable		1
— Employee receivables	5	6	4
— Impairment allowances	(4)	(6)	(5)
Trade and other receivables	2 046	2 687	3 140
Trade receivables	1 832	2 405	2 971
— Gross	1 921	2 481	3 052
— Impairment allowances	(89)	(76)	(81)
Other receivables	214	282	169
— Gross	328	282	223
— Impairment allowances	(114)		(54)

Cash and cash equivalents	4 219	2 596	2 080
*Financial assets at fair value through profit or loss*	23
Derivative financial assets	18
Debt: unlisted — ESD funds	5
Financial liabilities
*Financial liabilities at amortised cost*	(3 275)	(3 460)	(5 457)
Interest-bearing borrowings	(50)	(571)	(571)
Deferred consideration payable⁷	(347)	(285)	(395)
Trade and other payables	(2 874)	(2 555)	(2 960)
— Trade payables	(1 590)	(1 226)	(1 456)
— Other payables	(1 284)	(1 329)	(1 504)
Overdraft	(4)	(49)	(1 531)
*Financial liabilities at fair value through profit or loss*	(248)	(351)	(362)
Derivative financial liabilities		(41)	(1)
Contingent consideration	(248)	(310)	(361)

¹	During 2018, the KIO shares were sold.
²	Loan granted to Cennergi in 2016 and settled in 2018. The loan was interest free, unsecured and repayable on termination date in 2026, unless otherwise agreed by the parties.
³	Loan granted to Mafube in 2018. The loan bears interest at JIBAR plus a margin of 4%, is unsecured and repayable within five years (ending 2023), unless otherwise agreed by the parties.
⁴	Interest-free loans advanced to successful applicants in terms of the Exxaro ESD programme.
⁵	Relates to a deferred pricing adjustment which arose during 2017. The amount receivable will be settled over seven years (ending 2024) and bears interest at Prime Rate less 2%.
⁶	Relates to deferred consideration receivable which arose on the disposal of a mining right.
⁷	Deferred consideration payable in relation to the acquisition of the investment in Insect Technology and LightApp.
⁸	Loan granted to Tumelo. The loan is interest free, unsecured and repayable on demand, unless otherwise agreed by the parties.

The group has granted the following loan commitments:

	At 30 June 2019 Reviewed Rm	At 30 June 2018 Reviewed Rm	At 31 December 2018 Audited Rm
Total loan commitment	1 209	1 186	1 221
Mafube¹	500	500	500
Insect Technology²	709	686	721
Undrawn loan commitment	1 159	1 036	971
Mafube	450	350	250
Insect Technology	709	686	721

¹	Revolving credit facility available for five years, ending 2023.
²	A US$50 million term loan facility available from 2020 to 2025.

22.1

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 to the valuation techniques used. 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 1 —	inputs other than quoted prices included in Level 1 that are either directly or indirectly observable.
Level 1 —	inputs that are not based on observable market data (unobservable inputs).

At 30 June 2019 (Reviewed)	Fair value Rm	Level 1 Rm	Level 2 Rm	Level 3 Rm
Financial assets at fair value through other comprehensive income	248			248
Equity — unlisted: Chifeng	248			248
Financial assets at fair value through profit or loss	1 934		1 934
Non-current debt — unlisted: environmental rehabilitation funds	1 929		1 929
Current debt — unlisted: ESD funds	5		5
Derivative financial assets	18		18
Financial liabilities at fair value through profit or loss	(248)			(248)
Current contingent consideration	(248)			(248)

Net financial assets held at fair value	1 952		1 952

At 30 June 2018 (Reviewed)	Fair value Rm	Level 1 Rm	Level 2 Rm	Level 3 Rm
Financial assets at fair value through other comprehensive income	221			221
Equity — unlisted: Chifeng	221			221
Financial assets at fair value through profit or loss	1 426	26	1 400
Equity — listed: KIO	26	26
Non-current debt — unlisted: environmental rehabilitation funds	1 400		1 400
Financial liabilities at fair value through profit or loss	(647)			(647)
Non-current contingent consideration	(337)			(337)
Current contingent consideration	(310)			(310)
Derivative financial liabilities	(41)		(41)
Net financial assets/(liabilities) held at fair value	959	26	1 359	(426)

At 31 December 2018 (Audited)	Fair value Rm	Level 1 Rm	Level 2 Rm	Level 3 Rm
Financial assets at fair value through other comprehensive income	185			185
Equity — unlisted: Chifeng	185			185
Financial assets at fair value through profit or loss	1 432		1 432
Non-current debt — unlisted: environmental rehabilitation funds	1 432		1 432
Financial liabilities at fair value through profit or loss	(849)			(849)
Non-current contingent consideration	(488)			(488)
Current contingent consideration	(361)			(361)
Derivative financial liabilities	(1)		(1)
Net financial assets/(liabilities) held at fair value	767		1 431	(664)

Reconciliation of financial assets and financial liabilities within Level 3 of the hierarchy:

	Contingent consideration Rm	Chifeng Rm	Total Rm
At 31 December 2017 (Audited)	(723)	152	(571)
Movement during the period
Gains recognised in other comprehensive income (pre-tax effect)¹		69	69
Losses recognised in profit or loss	(188)		(188)
Settlements	299		299
Exchange losses recognised in profit or loss	(35)		(35)
At 30 June 2018 (Reviewed)	(647)	221	(426)
Movement during the period
Losses recognised in other comprehensive income (pre-tax effect)¹		(36)	(36)
Losses recognised in profit or loss	(169)		(169)
Exchange losses recognised in profit or loss	(33)		(33)
At 31 December 2018 (Audited)	(849)	185	(664)
Movement during the period
Gains recognised in other comprehensive income (pre-tax effect)¹		63	63
Gains recognised in profit or loss	232		232
Settlements	344		344
Exchange gains recognised in profit or loss	25		25
At 30 June 2019 (Reviewed)	(248)	248

¹	Tax on Chifeng amounts to nil (30 June 2018: R12 million; 31 December 2018: R12 million).

Transfers

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 nor between Level 2 and Level 3 of the fair value hierarchy during the periods ended 30 June 2019, 30 June 2018 and 31 December 2018.

Valuation process applied

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 chief operating decision maker and the audit committee in accordance with the group’s reporting governance.

Current derivative financial instruments

Level 2 fair values for simple over-the-counter derivative financial instruments are based on market quotes. These quotes are assessed for reasonability by discounting estimated future cash flows using the market rate for similar instruments at measurement date.

Environmental rehabilitation funds and ESD funds

Level 2 fair values for debt instruments held in the environmental rehabilitation funds and ESD funds are based on quotes provided by the financial institutions at which the funds are invested at measurement date. These financial institutions invest in instruments which are listed.

22.2

Valuation techniques used in the determination of fair values within Level 3 of the hierarchy, as well as significant inputs used in the valuation models

Contingent consideration

The potential undiscounted amount of the remaining future payments that the group could be required to make under the ECC acquisition is between nil and US$35 million. The amount of future payments is dependent on the API4 coal price.

At 30 June 2019, there was a decrease of US$16.4 million (R232 million) (30 June 2018: an increase of US$13.7 million (R188 million); 31 December 2018: an increase of US$25.4 million (R357 million)) recognised in profit or loss for the contingent consideration arrangement.

	API4 coal price range (US$/tonne)		Future payment
Reference year	Minimum	Maximum	US$ million
2015	60	80	10
2016	60	80	25
2017	60	80	25
2018	60	90	25
2019	60	90	35

The amount to be paid in each of the five years is determined as follows:

If the average API4 price in the reference year is below the minimum API4 price of the agreed range, then no payment will be made
If the average API4 price falls within the range, then the amount to be paid is determined based on a formula contained in the agreement
If the average API4 price is above the maximum API4 price of the range, then Exxaro is liable for the full amount due for that reference year.

An additional payment to Total S.A. amounting to R344 million was required for the 2018 reference year, R299 million was required for the 2017 reference year and R74 million was required for the 2016 reference year as the API4 price was within the agreed range. No additional payment to Total S.A. was required for the 2015 reference year as the API4 price was below the range.

The contingent consideration is classified within Level 3 of the fair value hierarchy as there is no quoted market price or observable price available for this financial instrument. This financial instrument 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 this financial instrument are rand/US$ exchange rate, API4 export price and the discount rate.

	Inputs	Sensitivity of inputs and fair value measurement¹	Sensitivity analysis of a 10% increase in the inputs is demonstrated below² Rm
At 30 June 2019 (Reviewed)
Observable inputs
Rand/US$ exchange rate	R14.17	Strengthening of the rand to the US$	25
API4 export price (per tonne)	US$75.50	Increase in API4 export price per tonne	121
Unobservable inputs
Discount rate	3.44%	Decrease in the discount rate	(8)
At 30 June 2018 (Reviewed)
Observable inputs
Rand/US$ exchange rate	R13.72	Strengthening of the rand to the US$	65
API4 export price (per tonne)	US$82.50 to US$88.06	Increase in API4 export price per tonne	134
Unobservable inputs
Discount rate	3.44%	Decrease in the discount rate	(31)
At 31 December 2018 (Audited)
Observable inputs
Rand/US$ exchange rate	R14.43	Strengthening of the rand to the US$	85
API4 export price (per tonne)³	US$90.00 to US$98.10	Increase in API4 export price per tonne
Unobservable inputs
Discount rate	3.44%	Decrease in the discount rate	(16)

¹	Change in observable or unobservable input which will result in an increase in the fair value measurement.
²	A 10% decrease in the respective inputs would have an equal but opposite effect on the above, except for the API4 export price which resulted in a decrease of R221 million for 30 June 2018 and R167 million for 31 December 2018, on the basis that all other variables remain constant.
³	A 10% increase in the API4 export price would not have an impact on the fair value of the contingent consideration as the API4 export price is in excess of the maximum API4 coal price range.

Inter-relationships

Any inter-relationships between unobservable inputs are not considered to have a significant impact within the range of reasonably possible alternative assumptions for all reporting periods.

23. CONTINGENT LIABILITIES

	At 30 June 2019 Reviewed Rm	At 30 June 2018 Reviewed Rm	At 31 December 2018 Audited Rm
Pending litigation and other claims¹	1 024	1 030	1 155
Operational guarantees²	3 424	3 168	3 062
— Financial guarantees ceded to the DMR	2 968	2 918	2 971
— Other financial guarantees	456	250	91

Total contingent liabilities	4 448	4 198	4 217

¹	Consists of legal cases as well as tax disputes with Exxaro as defendant.
²	Includes guarantees to banks and other institutions in the normal course of business from which it is anticipated that no material liabilities will arise.

SARS

On 18 January 2016, Exxaro received a letter of audit findings from SARS following an international income tax audit for the years of assessment 2009 to 2013. According to the letter, SARS proposed that certain international Exxaro companies would be subject to South African income tax under section 9D of the Income Tax Act. Assessments to the amount of R442 million (R199 million tax payable, R91 million interest and R152 million penalties) were issued on 30 March 2016 and Exxaro formally objected against these assessments. These assessments were subsequently reduced by SARS to R246 million (including interest and penalties). A resolution hearing with SARS was held on 18 July 2017 but the parties could not settle the matter. Notice was given to refer the matter to the Tax Court and a court date of 4 March 2019 was allocated to Exxaro. The court hearing could however not proceed which resulted in settlement discussions being held between both parties. A settlement basis of 50:50 with no penalties or interest was agreed upon by both parties. SARS is in the process of obtaining approval from the National Appeal Committee to enter into a settlement agreement with Exxaro. Exxaro is currently awaiting this decision.

The total cost to Exxaro has been agreed to be as follows:

2009 to 2013 years of assessment: R43 million
50% reduction in assessed losses: R17 million.

Exxaro has however already paid R67 million due to the pay now, argue later principle.

Share of equity-accounted investments' contingent liabilities

	At 30 June 2019 Reviewed Rm		At 30 June 2018 Reviewed Rm	At 31 December 2018 Audited Rm
Share of contingent liabilities of equityaccounted investments¹	957		909	726

¹	Mainly operational guarantees issued by financial institutions relating to environmental rehabilitation and closure costs.

24. RELATED PARTY TRANSACTIONS

The group entered into various sale and purchase transactions with associates and joint ventures during the ordinary course of business. These transactions were subject to terms that are no less, nor more favourable than those arranged with independent third parties.

25. GOING CONCERN

Based on the latest results for the six-month period ended 30 June 2019, the latest board approved budget for 2019, as well as the available banking facilities and cash generating capability, Exxaro satisfies the criteria of a going concern.

26. EVENTS AFTER THE REPORTING PERIOD

Details of the final dividend are provided in note 11.

Subsequent to 30 June 2019, the Competition Commission approval for the transfer of the Arnot operation to the Arnot OpCo Proprietary Limited consortium has been granted.

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.

27. EXTERNAL AUDITOR'S REVIEW CONCLUSION

These reviewed condensed group interim financial statements for the six-month period ended 30 June 2019, as set out on Condensed group statement of comprehensive income to Notes to the reviewed condensed group annual financial statements, have been reviewed by the company’s external auditors, PricewaterhouseCoopers Inc., who expressed an unmodified review conclusion. A copy of the auditor’s review report on the condensed group interim financial statements is available for inspection at Exxaro’s registered office, together with the financial statements identified in the external auditor’s report.

28. KEY MEASURES¹

	At 30 June 2019	At 30 June 2018	At 31 December 2018
Closing share price (rand per share)	171.99	125.70	137.87
Market capitalisation (Rbn)	61.69	45.09	49.45
verage rand/US$ exchange rate (for the period ended)	14.19	12.30	13.24
Closing rand/US$ spot exchange rate	14.17	13.72	14.43

¹	Non-IFRS numbers.