Integrated Report 2021
Exxaro Resources Limited
Annual Financial Statements 2021
The group and company annual financial statements as at and for the year ended 31 December 2021 have been prepared under the supervision of Mr PA Koppeschaar CA(SA), SAICA registration number: 00038621. The principal accounting policies of Exxaro Resources Limited (the 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.
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 covenants compliance in its approved medium-term budgets, together with its existing borrowing 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, are disclosed within the relevant chapters.
The accounting policies applied for 2021 are consistent with those applied in 2020, except for the company accounting policy on revenue (refer note 19.2).
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.
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.
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. Details of key assumptions and key sources of estimation uncertainty have been included within the relevant chapters.
The financial reporting impacts of the COVID-19 pandemic have been assessed by management. Its impacts, though not material, have been factored in as a routine consideration in making relevant estimates, assumptions and contractual evaluations (in particular revenue recognition, inventory valuations, impairment assessments and assumptions applied when determining allowances for ECLs).
In addition, the impact of the COVID-19 pandemic has been considered as part of the solvency and liquidity evaluations of the group which included stress testing of our financial position. These evaluations did not indicate any risk of the group breaching its debt covenants, but rather that the group has sufficient liquidity to withstand an interruption to operations and remain a going concern for the foreseeable future.
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