18.1.1 STATEMENT OF COMPLIANCE
The group and company annual financial statements as at and for the year ended 31 December 2018 have been prepared under the supervision of Mr PA Koppeschaar CA(SA), SAICA registration number: 00038621. The principal accounting policies of Exxaro Resources Limited company and group of companies (the group) as well as the disclosures made in these annual financial statements comply with IFRS and IFRIC interpretations, effective for the financial year, as well as the SAICA Financial Reporting Guidelines (as issued by the Accounting Practices Committee), the Financial Reporting Pronouncements (as issued by the Financial Reporting Standards Council), the Companies Act (applicable to companies reporting under IFRS) and the Listings Requirements.
18.1.2 BASIS OF MEASUREMENT
The annual financial statements are prepared on the historical cost basis, except for the revaluation to fair value of financial instruments, share-based payments and biological assets. The annual financial statements are prepared on the going-concern basis.
The annual financial statements are presented in South African rand, which is the company’s functional and presentation currency. However, the group measures the transactions of each of its material operations using the functional currency determined for that specific entity, which, in most instances, is the currency of the primary economic environment in which the operation conducts its business.
Management considers key financial metrics and loan covenant compliance in its approved medium-term budgets, together with its existing term facilities, to conclude that the going concern assumption used in compiling the annual financial statements is relevant.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the group and company annual financial statements, are disclosed within the relevant chapters.
The accounting policies applied for 2018 are consistent with those applied in 2017, except for the adoption of new or amended standards as set out below.
18.1.3 BASIS OF CONSOLIDATION
The group annual financial statements present the consolidated financial position and changes therein, operating results and cash flow information of the company and its subsidiaries as those of a single entity.
18.1.4 JUDGEMENTS MADE BY MANAGEMENT
Judgements, apart from those involving estimates, have been made by management in the process of applying the accounting policies. Details of these judgements have been included within the relevant chapters.
18.1.5 KEY ASSUMPTIONS MADE BY MANAGEMENT IN APPLYING ACCOUNTING POLICIES
Key assumptions concerning the future, and other key sources of estimation uncertainty at the financial year end, may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year if the assumption or estimation changes significantly. The financial information on which some of the assumptions are based has not been reviewed nor reported on by the independent external auditors. Details of key assumptions and key sources of estimation uncertainty have been included within the relevant chapters.
18.2.1 NEW, AMENDED AND REVISED STANDARDS ADOPTED DURING 2018
Exxaro has adopted the following new standards for the first time for the year commencing on 1 January 2018:
The adoption of these standards has resulted in Exxaro changing its respective accounting policies. The impact of the adoption of the new accounting policies are disclosed in chapter 5.6.
18.2.2 NEW, AMENDED AND REVISED STANDARDS NOT YET ADOPTED
Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2018 reporting periods which have not been early adopted. The assessment of the impact of these new standards and interpretations is set out below.
|Standard||Nature of change||Impact||Mandatory application date|
|IFRS 16 Leases||
IFRS 16 will result in almost all leases being recognised on the statement of financial position, as the distinction between operating and finance leases is removed, for lessee accounting.
A lessee recognises a right-of-use asset (representing its right to use the underlying asset) and a lease liability (representing its obligation to make lease payments). There are optional exemptions for short-term leases and leases of low value items.
Lessor accounting remains similar to the current standard.
Exxaro has assessed all leasing arrangements that have not reached the end of their respective lease terms as at 31 December 2018. It has been decided to apply IFRS 16 retrospectively using the cumulative effect method and make use of the practical expedients available in this standard.
The expected impact at adoption (after application of the below assumptions) has been assessed as follows:
The impact assessment shown above excludes the tax effect thereon.
|1 January 2019|
There are no other standards that are not yet effective and that would be expected to have a material impact on Exxaro in the current or future reporting periods and on foreseeable future transactions. It is expected that, where applicable, these standards and amendments will be adopted on each respective effective date.
Details of the final dividend are provided in note 6.5.
Exxaro entered into the following transactions subsequent to 31 December 2018:
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.