Details of the final dividend are provided in note 5.5.
Subsequent to 31 December 2019, the following notable events occurred:
During March 2020, all conditions precedent to Exxaro’s acquisition of Khopoli’s 50% interest in Cennergi have been met. The closing date of the transaction shall occur on 1 April 2020 following the completion of all terms and condition precedent to the transaction. Post the conclusion of the agreement, Exxaro now owns 100% of Cennergi. The initial purchase price is R1 550 million, subject to normal working capital adjustments.
Cennergi owns two wind-farms which were originally bid as part of Window 2 of the Department of Energy’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) namely:
The acquisition of Tata Power’s 50% shareholding follows Exxaro’s ambitions of growing its presence in the energy sector. At the time of approving the group and company annual financial statements 2019, Exxaro was still in the process of completing the valuation of the acquired assets and liabilities. This process is expected to be finalised by December 2020.
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.
Subsequent to year end and at the time of finalising the financial statements, the COVID-19 (the virus) pandemic required us to support government protocols and directives to contain the spread of the virus.
We have undertaken to act responsibly in preventing the further spread of the virus.
Therefore, we have implemented our crisis management plan (CMP) and business continuity plan (BCP) across the breadth of our businesses that includes health and safety controls and preventative measures. These measures are necessary to sustain our business to ensure that we continue to serve stakeholders, as well as protect and support our employees and their families.
Additionally, it is important to recognise the impact on the South African economy and the cumulative negative impact of the lockdown period, which commenced on midnight, 26 March 2020 and is foreseen to last longer than anticipated (the lockdown).
Key considerations for this lockdown period include the following business and disease prevention guidelines from the Department of Mineral Resources and Energy (DMRE) Minister, Mr Gwede Mantashe:
We have received the necessary approval to continue with our production activities, albeit at varying reduced levels in terms of volumes and people, as these activities are considered to be essential services and the necessary measures have been taken to prevent possible infections.
Exxaro’s head office, the conneXXion, was closed from 26 March 2020 and most employees have been enabled to work from home. Arrangements are in place for business continuity and the necessary protocols have been activated across all operations and business units, ensuring efficient and safe ways of working. Additional preventative disease transmission protocols have been implemented in all our coal mining operations.
We are closely monitoring all updates and advice from relevant organisations, including the National Department of Health, the Department of Minerals Resources and Energy and Minerals Council South Africa.Additionally, all essential operating teams are working across the organisation and together with key stakeholders to continuously assess the situation. This is a rapidly evolving situation and the Company will keep shareholders updated.
At 31 December 2019, the group’s net debt was R5.8 billion, with R1.8 billion of undrawn, committed debt facilities. In addition the group has access to uncommitted working capital facilities. In light of measures implemented by us to combat the spread of the virus, further downside scenarios have been used to stress test our solvency and liquidity position. As a result, management and our board of directors believe that the group has sufficient liquidity to withstand an interruption to our operations and will remain a going concern for the foreseeable future.