Maintain a leading position in our sustainability performance

• Safety is a key performance measure of our sustainability as a mining company
• In addition, our performance in terms of environmental stewardship, social impact and governance provides a profile of our sustainable development practices and responding to key societal challenges and opportunities

• LTIFR = 0.12 compared to a target of 0.11 and prior-year performance of 0.12
• ESG score = 3.7 vs industry average of 2.5

• We maintained our performance in 2018, which is an improvement of 37% since 2014. We continue to strive for zero harm through visible felt leadership and ongoing safety awareness to achieve our target
• While the individual scores of our environmental (3.5), social (3.3) and governance (4.6) performance were better than our industry peers, we can still improve, particularly in social impact and some aspects of environmental stewardship, particularly target disclosure

Portfolio optimisation

Selling non-core coal assets and optimising our investment portfolio (Tronox, Black Mountain Mine), and realising a return above our cost of capital on these investments

• We sold Manyeka and certain assets and liabilities of our NBC operations for a gain of R171 million
• We sold an initial interest in Tronox in late 2017. This transaction was executed in the market at a premium of about 2%

• We continue to hold our interest in Black Mountain Mining while we explore viable opportunities to sell
• We remain intent on selling our remaining interests and exiting the Tronox investment. Proceeds will be returned to shareholders, considering the capital allocation framework shown on Finance director's review
• We are exploring options to exchange our shareholding in SIOC for a shareholding at the listed Kumba Iron Ore level
• We have maintained our principle of not executing these transactions as a 'fire sale'

Operational excellence

Our coal business remains the primary driver of Exxaro's revenue. Continuous improvement in terms of production increases, cost reduction and operational efficiencies is key for the sustainability of the business, given headwinds against coal

• Volumes in 2018 reached a record 47.8Mt, including record export volumes of 8Mt (up 5% and 5.3% on 2017, respectively)
• Revenue increased 12% to a record R25.4 billion

• The 2018 operational performance reflects the quality of resources and capability of people in our operations
• Our innovation and digitalisation programme enabled us to close a production gap that had emerged in the first half of the year while increasing production beyond our expectations We have initiated a systematic and organisation-wide digitalisation programme. In FY18, this introduced a visualisation capability of our production value chain – a cultural change in how we operate – and we expect further benefits as we roll out the digitalisation programme
• Our capital programme supports our target of 60Mt of production in 2023 with a higher-value product mix for export markets while maintaining consistent, reliable and cost-effective supply to Eskom and the rest of the domestic market
• We also expect to expedite our coal development programme (ie advancing the phase 2 coal projects) to maximise the value of our coal business and take advantage of the positive outlook on higher prices for higher quality coal

Capital allocation priorities

• We delivered against our capital allocation programme shared with you in 2017
• Despite moving from a net cash position to net debt, we are well within our debt covenants and the balance sheet remains strong
• We were able to finance our sustaining capital to ensure safe and productive assets as well as the ongoing R20 billion five-year expansion programme
• At the same time, we returned cash to shareholders via a special dividend from the proceeds of selling 20% of our Tronox interest as well as a normal dividend totalling 1 085cps (555cps final, 55% increase on 2017)
• We continued to invest opportunistically in our business of tomorrow, specifically energy, water and agri-business

• Our net debt:equity ratio is a conservative 9%
• We are well below our targeted net debt/EBITDA ratio of under 1.5 times
• We received a dividend of R57 million from Cennergi - proving our investment in clean energy is bearing fruit
• Coal capex - sustaining capital was R2.8 billion and expansion capital was R2.9 billion
• Total dividends paid of R7.8 billion comprised special dividends of R4.5 billion and normal dividend of R3.3 billion at a cover ratio of 3.3
• R263 million was invested in energy, water and agri-business

• We are pleased with the outcome of our capital allocation programme We will maintain a disciplined approach, particularly in delivering on the capex growth programme for our projects and maintaining balance strength
• Our perspective on M&A remains conservative, with a focus on value-accretive transactions across multiple matrixes, including ESG measures
• As we proceed with the sale of non-core assets, we will adhere to our capital allocation decision process and be mindful of shareholder expectations for cash distributions and an improving cover ratio
• Our balance sheet strength is a priority, and we do not want our net debt/EBITDA ratio to exceed 1.5 times