CHAPTER 6:Operational performance and working capital

6.1OPERATIONAL 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 Presentation of financial statements, 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 sales)	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 agreedupon delivery point	On delivery (point in time	Range: 15 to 60 days
Biological goods	Delivery of biological goods at a contractuallyagreed 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.

6.1.2Revenue

Revenue is derived from 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 2023	Waterberg Rm	Mpumalanga Rm	Tied Rm	Other Rm	Energy Rm	Alloys Rm	Other Rm	Total Rm
Segmental revenue reconciliation
Segmental revenue¹	22 496	8 666	5 783		1 345	398	10	38 698
Export sales allocated to selling entity²	(4 538)	(6 539)		11 077
Total revenue	17 958	2 127	5 783	11 077	1 345	398	10	38 698
By timing and major type of goods and services
Revenue recognised at a point in time	17 958	2 127	4 729	11 077		392	9	36 292
Coal	17 958	2 127	4 729	11 077				35 891
Ferrosilicon						392		392
Biological goods							9	9
Revenue recognised over time			1 054		1 345	6	1	2 406
Renewable energy					1 345			1 345
Stock yard management services			159					159
Project engineering services			895					895
Transportation services						2		2
Other services						4	1	5

Total revenue	17 958	2 127	5 783	11 077	1 345	398	10	38 698
By major geographic area of customer³
Domestic	17 958	2 127	5 783		1 345	398	8	27 619
Export				11 077			2	11 079
Europe⁴				5 522			1	5 523
Asia⁵				4 600			1	4 601
Other				955				955

Total revenue	17 958	2 127	5 783	11 077	1 345	398	10	38 698
By major customer industries
Public utilities	14 963		5 783	511	1 345			22 602
Merchants	370	1 230		9 826		2		11 428
Steel	1 462	152						1 614
Mining	250	23				351		624
Manufacturing	357					45		402
Food and beverage	233						2	235
Cement	262	70		314				646
Chemicals		646						646
Other	61	6		426			8	501
Total revenue	17 958	2 127	5 783	11 077	1 345	398	10	38 698

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 Germany.
⁵	Relates mainly to Singapore and Japan.

	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 Germany.
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 57% or R22 092 million (2022: 43% or R20 006 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	2023 Rm	2022 Rm
Revenue from contracts with customers:		1 543	1 753
Rendering of services over time: Corporate management services rendered to subsidiaries	17.3.1	1 543	1 753
Dividend revenue:		8 153	11 476
Associates¹		3 386	5 153
Subsidiaries	17.3.1	4 767	6 323
Interest revenue:		463	3 432
Subsidiaries	17.3.1	463	3 432
– Interest-bearing back-to-back loans receivable	17.3.1	443	370
– Interest-bearing acquisition loans receivable	17.3.1	4	6
– Interest-bearing treasury facilities receivable	17.3.1	16	3 056


Total revenue		10 159	16 661

¹	Dividends received from SIOC.

6.1.3Operating expenses

		Group		Company
For the year ended 31 December	Note	2023 Rm	2022 Rm	2023 Rm	2022 Rm
Cost by nature
Operational expense items
Raw materials and consumables		5 332	7 620	11	10
Depreciation and amortisation		2 715	2 681	199	179
Movement in inventories		140	124	7
Staff costs		6 091	5 862	804	945
Other employee-related costs		239	244	70	50
Contract mining		1 494	812
Repairs and maintenance		2 969	2 785	16	8
Railage and transport		3 178	3 019	1	1
Insurance		(138)	465	3	1
Exploration expenditure		8	15
Royalties		1 142	1 821
Water		79	79
Energy		1 027	841	11	5
Information management costs		690	653	147	203
Legal and professional fees		487	387	97	130
Movement in provisions	13.3	70	474	(1)	7
Movement in retirement employee obligations	14.4	11	9
Travel and subsistence		94	86	23	19
Security and office cleaning services		111	85	4	4
Licenses		6	6		1
Stock yard management services		159	125
Project engineering services		895	1 125
Financial gains and losses
Currency exchange differences		(124)	(777)	(5)	(113)
ECLs on financial assets at amortised cost		21	79	328	29
Write-off of trade and other receivables	6.2.3	4	2		3
Write-off of ESD loans		2	2	2	2
Fair value (gains)/losses recognised on financial instruments at FVPL		(588)	228	(3)	(1)
Hedge ineffectiveness on cash flow hedges		18	13
General items and expenses
Loss on disposal of subsidiary	8.3				42
Loss on dilution of investment in associate	9.5		2
Write-off of other current assets		32		5
Net losses on disposal of property, plant and equipment		57	97	36	9
Movement in indemnification asset		5	(5)
Expenses relating to short-term leases		567	342	1	1
Expenses relating to variable lease expenses of right-of-use assets		75	5
Operating lease income		(36)	(36)	(7)	(7)
(Gain)/loss on termination or modification of lease			(3)	2
Loss on termination of right-of-use asset			1
Research and development costs		2	1
Own work capitalised¹		(434)	(396)
General charges		1 671	1 275	151	233
Total operating expenses		28 071	30 148	1 895	1 761

¹	Relates to operating expenses incurred that are capitalised to projects where qualifying criteria are met.

The following operating expense items have been further disaggregated:

		Group		Company
For the year ended 31 December	Note	2023 Rm	2022 Rm	2023 Rm	2022 Rm
Staff costs		6 091	5 862	804	945
– Salaries and wages		5 312	5 104	629	744
– Share-based payment expense		212	207	129	129
– Termination benefits		23	46	4	30
– Pension and medical costs		544	505	42	42
Consultancy fees¹		284	265	64	80
Auditor's remuneration¹		33	29	14	11
– Audit fees		30	27	11	11
– Other services		3	2	3
Depreciation and amortisation		2 715	2 681	199	179
– Depreciation of property, plant and equipment	10.1.3	2 483	2 457	137	125
– Depreciation of right-of-use assets	11.3	57	58	52	52
– Amortisation of intangible assets	10.2.3	175	166	10	2
Fair value (gains)/losses recognised on financial instruments at FVPL		(588)	228	(3)	(1)
– Derivative financial instruments		(278)	229
– Debt investments: environmental rehabilitation funds		(216)	(6)	(3)	(1)
– Debt investments: portfolio investments		(4)	5
– Debt investments: deposit facilities		(90)
Currency exchange differences		(124)	(777)	(5)	(113)
– Net realised gains		(78)	(809)	(21)	(125)
– Net unrealised (gains)/losses		(46)	32	16	12

¹	Disclosed as part of legal and professional fees.

¹	Disclosed as part of legal and professional fees.

	Group		Company
For the year ended 31 December	2023 Rm	2022 Rm	2023 Rm	2022 Rm
ECLs on financial assets at amortised cost (impairment loss/(reversal of impairment loss)):	21	79	328	29
Non-current
Other financial assets at amortised cost	(3)	(2)
– Performing	(3)	(2)
ESD Loans	44	(2)	44	(2)
– Performing		1		1
– Non-performing	44	(3)	44	(3)
Lease receivables		(1)
– Performing		(1)
Vendor finance loan		(7)		(7)
– Performing		(7)		(7)
Current
Trade and other receivables	(45)	26	(1)	(1)
Trade receivables	(5)	5
– Performing	(6)	5
– Non-performing	1
Other receivables	(40)	21
– Non-performing	(40)	21

Indebtedness by subsidiaries			(1)	(1)
– Performing			(1)	(1)

Non-interest bearing loans to subsidiaries			(5)	5
– Performing			(9)	5
– Non-performing			4
Other financial assets at amortised cost	(2)	(3)	(2)	(3)
– Performing	(2)	(3)	(2)	(3)
ESD loans	28	66	28	66
– Performing	(1)		(1)
– Non-performing	29	66	29	66
Vendor finance loan	(1)	2	(1)	2
– Performing	(1)	2	(1)	2
Treasury facilities with subsidiaries at amortised cost			265	(31)
– Performing			(2)	(31)
– Non-performing			267