CHAPTER 6:Operational performance and working capital

6.1 OPERATIONAL PERFORMANCE

6.1.1Accounting policies relating to operational performance

6.1.1.1 Revenue

For group, revenue is derived from contracts with customers for the supply of goods and rendering of services.

For company, as an investment holding and services company, revenue is derived from dividend income and interest income received from subsidiaries, associates and JVs (investment holdings), as well as from its revenue from contracts with customers for the rendering of services. In applying IAS 1, management concluded that the ordinary activities of the company do not include income from financial assets that do not relate to subsidiaries, joint ventures and associates, which are the company's primary investment holding activities. Instead, any income earned on other financial assets is considered incidental in nature.

Revenue from contracts with customers

Timing of recognition

Revenue is recognised when (or as) a performance obligation is satisfied by transferring a promised good or service to a customer. A promised good or service is transferred when (or as) the customer obtains control of that promised good or service.

Measurement on recognition

The amount of revenue recognised is the amount of the transaction price that is allocated to a satisfied performance obligation. The amount is determined on a gross basis, when acting as a principal, or on a net basis when acting as an agent.

The total transaction price in a customer contract is allocated to the performance obligations identified in the contract based on their standalone selling prices. The standalone selling prices are determined based on listed prices at which those goods or services are sold in separate transactions. The customer contracts generally contain only one performance obligation and therefore the contract consideration generally reflects the standalone selling price of the performance obligation.

As a permitted practical expedient, no adjustment is made to the transaction price for the effects of the time value of money as the period of time between the delivery of goods or rendering of services and contract payment terms generally do not exceed 60 days, which is considered not to result in a significant financing component.

Nature of goods and services

Below is a summary of the different types of revenue depicting the standard terms and performance obligations for each type:

Revenue type	Performance obligation	Timing of when performance obligation is satisfied	Payment terms
Coal (domestic supply)	Delivery of coal at a contractually agreed-upon delivery point	On delivery (point in time)	Range: 0 to 60 days
Coal (FOB export supply)	Delivery of coal at a contractually agreed-upon delivery point	On delivery (point in time)	Range: 15 to 60 days
Renewable energy (electricity sale)	Delivery of electricity over time at a contractually agreed-upon metering point (output method)	As consumed and measured at the metering point (over time)	Within 60 days
Ferrosilicon	Delivery of ferrosilicon at a contractually agreed-upon delivery point	On delivery (point in time)	Range: 15 to 60 days
Biological goods	Delivery of biological goods at a contractually-agreed-upon delivery point	On delivery (point in time)	Range: 15 to 60 days
Stock yard management services	Rendering of stock yard management services over time	As services are performed (over time)	Within 30 days
Project engineering services	Rendering of project engineering services over time	As services are performed (over time)	Within 30 days
Other mine management services	Rendering of other mine management services over time	As services are performed (over time)	Within 30 days
Transportation services	Rendering of freight or other transportation services over time (Including CFR basis for exports, if any, and special transportation arrangements for customers)	As services are performed (over time)	Range: 0 to 60 days
Corporate management services (company)	Rendering of corporate services over time	As services are performed (over time)	Within 30 days
Other services	Mainly rendering of storage services over time	As services are performed (over time)	Within 30 days

Dividend revenue

For company, dividend revenue from subsidiaries, associates and JVs is recognised when the right to receive payment is established.

Interest revenue

For company, interest revenue from subsidiaries is recognised as it accrues in profit or loss, using the effective interest rate method.

6.1.1.2 Discontinued operations

Discontinued operations are significant, distinguishable components of an operation that have been sold, abandoned or are the subject of formal plans for disposal or discontinuance. The profit or loss on the sale or abandonment of a discontinued operation is determined from the formalised discontinuance date and accounted for in profit or loss.

Management applies judgement on a case-by-case basis to determine whether an operation meets the criteria to be classified as a discontinued operation (disposal group). Refer note 6.1.4.

6.1.2Revenue

The group derive revenue from its 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.

				Group
	Coal					Ferrous	Other
	Commercial
For the year ended 31 December 2022	Waterberg Rm	Mpumalanga Rm	Tied Rm	Other Rm	Energy Rm	Alloys Rm	Other Rm	Total Rm
Segmental revenue reconciliation
Segmental revenue¹	23 613	15 797	5 561		1 159	224	15	46 369
Export sales allocated to selling entity²	(7 621)	(13 769)		21 390
Total revenue	15 992	2 028	5 561	21 390	1 159	224	15	46 369
By timing and major type of goods and services
Revenue recognised at a point in time	15 992	2 028	4 311	21 390		220	13	43 954
Coal	15 992	2 028	4 311	21 390				43 721
Ferrosilicon						220		220
Biological goods							13	13
Revenue recognised over time			1 250		1 159	4	2	2 415
Renewable energy					1 159			1 159
Stock yard management services			125					125
Project engineering services			1 125					1 125
Transportation services						2		2
Other services						2	2	4

Total revenue	15 992	2 028	5 561	21 390	1 159	224	15	46 369
By major geographic area of customer³
Domestic	15 992	2 028	5 561		1 159	224	14	24 978
Export				21 390			1	21 391
Europe⁴				16 984				16 984
Asia⁵				3 899			1	3 900
Other				507				507

Total revenue	15 992	2 028	5 561	21 390	1 159	224	15	46 369
By major customer industries
Public utilities	13 287		5 561	940	1 159			20 947
Merchants	315	1 363		19 840				21 518
Steel	1 317	125						1 442
Mining	242	44				180		466
Manufacturing	407	6		213		44		670
Food and beverage	145						1	146
Cement	223			158				381
Chemicals		481						481
Other	56	9		239			14	318
Total revenue	15 992	2 028	5 561	21 390	1 159	224	15	46 369

¹	Coal segmental revenue is based on the origin of coal production.
²	Relates to revenue sold by export distribution entity.
³	Determined based on the customer supplied by Exxaro.
⁴	Relates mainly to Switzerland and the UK.
⁵	Relates mainly to Singapore and Japan.

	Group
	Coal					Ferrous	Other
	Commercial
For the year ended 31 December 2021	Waterberg Rm	Mpumalanga Rm	Tied Rm	Other Rm	Energy Rm	Alloys Rm	Other Rm	Total Rm
Segmental revenue reconciliation
Segmental revenue¹	16 852	9 439	5 089	15	1 193	168	15	32 771
Export sales allocated to selling entity²	(2 495)	(8 328)		10 823
Total revenue	14 357	1 111	5 089	10 838	1 193	168	15	32 771
By timing and major type of goods and services
Revenue recognised at a point in time	14 357	1 111	3 953	10 823		162	14	30 420
Coal	14 357	1 111	3 953	10 823				30 244
Ferrosilicon						162		162
Biological goods							14	14
Revenue recognised over time			1 136	15	1 193	6	1	2 351
Renewable energy					1 193			1 193
Stock yard management services			177					177
Project engineering services			959					959
Other mine management services				15				15
Transportation services						2		2
Other services						4	1	5

Total revenue	14 357	1 111	5 089	10 838	1 193	168	15	32 771
By major geographic area of customer³
Domestic	14 357	1 111	5 089	15	1 193	168	14	21 947
Export				10 823			1	10 824
Europe⁴				7 092			1	7 093
Asia⁵				2 955				2 955
Other				776				776

Total revenue	14 357	1 111	5 089	10 838	1 193	168	15	32 771
By major customer industries
Public utilities	12 031		5 089		1 193			18 313
Merchants	235	752		10 449				11 436
Steel	1 147	119		15				1 281
Mining	165	153		52		134		504
Manufacturing	364					34		398
Food and beverage	197						5	202
Cement	175	3						178
Chemicals		80						80
Other	43	4		322			10	379
Total revenue	14 357	1 111	5 089	10 838	1 193	168	15	32 771

¹	Coal segmental revenue is based on the origin of coal production.
²	Relates to revenue sold by export distribution entity.
³	Determined based on the customer supplied by Exxaro.
⁴	Relates mainly to Switzerland and the UK.
⁵	Relates mainly to Singapore and Japan.

The group derives revenue from an external customer which accounts for at least 10% or more of the group's revenues, being 43% or R20 006 million (2021: 56% or R18 312 million).

The company derives the following revenue from its ordinary activities as an investment holding company and services company:

		Company
For the year ended 31 December	Note	2022 Rm	2021 Rm
Revenue from contracts with customers		1 753	1 669
Rendering of services over time: Corporate management services rendered to subsidiaries	17.3.1	1 753	1 669
Dividend revenues		11 476	19 556
Associates and JVs	9.3	5 153	9 991
Subsidiaries	17.3.1	6 323	9 565
Interest revenues		3 432	2 389
Subsidiaries	17.3.1	3 432	2 389
– Interest-bearing back-to-back loans receivable	17.3.1	370	360
– Interest-bearing acquisition loans receivable	17.3.1	6	8
– Interest-bearing treasury facilities receivable	17.3.1	3 056	2 021


Total revenue		16 661	23 614

6.1.3 Operating expenses

		Group		Company
For the year ended 31 December	Note	2022 Rm	2021 Rm	2022 Rm	2021 Rm
Cost by nature
Operational expense items
Raw materials and consumables		7 620	4 339	10	14
Depreciation and amortisation		2 681	2 677	179	192
Movement in inventories		124	311
Staff costs		5 862	5 583	945	900
Other employee-related costs		244	204	50	29
Contract mining		812	1 675
Repairs and maintenance		2 785	2 628	8	10
Railage and transport		3 019	2 175	1	1
Insurance		465	352	1	2
Exploration expenditure		15	22
Royalties		1 821	970
Water		79	146
Energy		841	787	5	4
Information management costs		653	608	203	198
Legal and professional fees		387	491	130	242
Movement in provisions	13.3	474	4	7	(1)
Movement in retirement employee obligations	14.4	9	12
Travel and subsistence		86	66	19	9
Security and office cleaning services		85	106	4	3
Licences		6	6	1
Stock yard management services		125	177
Project engineering services		1 125	959
Financial gains and losses
Currency exchange differences		(777)	(546)	(113)	128
Write-off of trade and other receivables	6.2.3	2	80	3	79
Write-off of ESD loans		2	12	2	12
ECLs on financial assets at amortised cost		79	(57)	29	(18)
Fair value losses/(gains) recognised on financial assets at FVPL		223	(186)	(1)	(71)
Fair value losses recognised on financial liabilities at FVPL		5	43
Hedge ineffectiveness on cash flow hedges		13	10
General items and expenses
Gain on derecognition of financial asset at FVOCI¹			(175)
Loss on disposal of subsidiaries	8.3			42	(2)
Loss on dilution of investment in associate	9.5	2
Net losses on disposal of property, plant and equipment		97	46	9	25
Movement in indemnification asset		(5)
Expenses relating to short-term leases		342	166	1	1
Expenses relating to leases of low value assets			9		2
Expenses relating to variable lease expenses of right-of-use assets		5	6
Operating lease income		(36)	(36)	(7)	(7)
Gain on termination of lease		(3)
Loss on termination of right-of-use asset		1
Research and development costs		1	2
Own work capitalised²		(396)	(524)
General charges		1 275	1 207	233	149
Total operating expenses		30 148	24 343	1 761	1 901

2021: The four Chifeng refinery companies embarked on a process to consolidate the separate companies into one consolidated entity. The investments in the separate companies for certain of the phases were derecognised and the investment in the consolidated entity, which includes all phases of the Chifeng refinery, was recognised on the consolidation date. Exxaro holds an 8.81% shareholding in Chifeng.

Relates to operating expenses incurred that are capitalised to projects where qualifying criteria are met.

Group

Company

For the year ended 31 December

Note

2022
Rm

2021
Rm

2022
Rm

2021
Rm

Further disaggregation of certain operating expense items:

Staff costs

5 862

5 583

945

900

– Salaries and wages

5 104

4 851

744

699

– Share-based payment expense

207

246

129

155

– Termination benefits¹

– Pension and medical costs

505

468

Consultancy fees²

265

365

176

Auditor's remuneration²

– Audit fees

– Other services

Depreciation and amortisation

2 681

2 677

179

192

– Depreciation of property, plant and equipment

10.1.3

2 457

2 445

125

134

– Depreciation of right-of-use assets

11.3

– Amortisation of intangible assets

10.2.3

166

167

ECLs on financial assets at amortised cost (impairment losses/(reversal of impairment losses)):

(57)

(18)

Non-current

Other financial assets at amortised cost

(2)

– Performing

(2)

ESD Loans

(2)

– Performing

– Non-performing

(3)

Lease receivables

(1)

– Performing

(1)

Vendor finance loan

(7)

– Performing

(7)

Current

Trade and other receivables

(72)

(1)

(82)

Trade receivables

(74)

– Performing

– Non-performing

(80)

Other receivables

(3)

– Non-performing

(3)

Indebtedness by subsidiaries

(1)

(79)

– Performing

(1)

(79)

Non-interest-bearing loans to subsidiaries

(12)

– Performing

– Non-performing

(16)

Other financial assets at amortised cost

(3)

– Performing

(3)

Loans to associates

(29)

– Under-performing

(29)

ESD loans

– Performing

– Non-performing

Vendor finance loan

– Performing

Treasury facilities with subsidiaries at amortised cost

(31)

– Performing

(31)

Fair value losses/(gains) recognised on financial assets at FVPL

223

(186)

(1)

(71)

– Derivative financial assets

224

(4)

(67)

– Debt investments: environmental rehabilitation funds

(6)

(182)

(1)

(4)

– Debt investments: portfolio investments

Fair value losses recognised on financial liabilities at FVPL

– Derivative financial liabilities

Currency exchange differences

(777)

(546)

(113)

128

– Net realised (gains)/losses

(809)

(37)

(125)

156

– Net gains on translation differences recycled to profit or loss³

(482)

– Net unrealised losses/(gains)

(27)

(28)

¹	Includes the following amounts for the TVPs:

²	Disclosed as part of legal and professional fees.
³	2021: Relates to the recycling of FCTR on deregistration of Exxaro International BV (Gain of R518 million) and the deregistration of Exxaro Base Metals International BV (Loss of R36 million).

6.1.4Discontinued operations

The discontinued operations related to Tronox SA and Tronox Holdings plc.

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

		Group
For the year ended 31 December 2021		Rm
Financial performance
Net gains on translation differences recycled to profit or loss on disposal of investment in foreign associate		876
Gains on financial instruments revaluations recycled to profit or loss		2
Operating profit		878
Net gains on disposal of associates		1 339
– Total disposal consideration		7 781
– Carrying value of investments sold		(6 442)

Net operating profit		2 217
Share of income of equity-accounted investment		54
Profit before tax		2 271
Income tax expense		(379)
Profit for the year from discontinued operations		1 892
Other comprehensive loss, net of tax		(878)
Items that have subsequently been reclassified to profit or loss:		(878)
– Recycling of share of OCI of equity-accounted investments		(878)


Total comprehensive income for the year		1 014
Cash flow information
Cash flow attributable to investing activities
– Proceeds from disposal of associate		5 763
Cash flow attributable to discontinued operations		5 763

		Group
For the year ended 31 December 2021	Tronox SA Rm	Tronox Holdings plc Rm	Total Rm
Consideration:
– Cash		5 763	5 763
– Tronox Holdings plc Ordinary Shares	2 018		2 018
Total disposal consideration	2 018	5 763	7 781
Carrying amount of net assets sold	(2 682)	(3 760)	(6 442)
– Investments in associates	(2 682)	(3 760)	(6 442)

(Loss)/gain on disposal of associates	(664)	2 003	1 339
Tax effect	(379)		(379)

	Company
For the year ended 31 December 2021	Rm
Financial performance
Net gains on disposal of associates	1 449
– Total disposal consideration	7 781
– Carrying value of investments sold	(6 332)

Profit before tax	1 449
Income tax expense	(379)
Profit for the year from discontinued operations	1 070
Cash flow information
Cash flow attributable to investing activities
– Proceeds from disposal of associate	5 763
Cash flow attributable to discontinued operations	5 763

		Company
For the year ended 31 December 2021	Tronox SA Rm	Tronox Holdings plc Rm	Total Rm
– Cash received		5 763	5 763
– Tronox Holdings plc Ordinary Shares	2 018		2 018
Total disposal consideration	2 018	5 763	7 781
Carrying amount of net assets sold	(1 181)	(5 151)	(6 332)
– Investments in associates	(1 181)	(5 151)	(6 332)

Gain on disposal of associates	837	612	1 449
Tax effect	(379)		(379)

CHAPTER 6:Operational performance and working capital

6.1.1.1 Revenue

Revenue from contracts with customers

Timing of recognition

Measurement on recognition

Nature of goods and services

Dividend revenue

Interest revenue

6.1.1.2 Discontinued operations

Generate your own report