Chapter 12Funding

12.1Debt

12.1.1 Accounting policies relating to net financing costs and interest-bearing borrowings

Borrowing costs, finance income and other financing expenses

Fees paid on the establishment of loan facilities are capitalised to the loan as transaction costs to the extent that it is directly related to the establishment of the loan facility. These fees are deferred until the draw down occurs upon which it is amortised over the loan term using the effective interest rate method. To the extent that it is not probable that some or all of the facility will be drawn down (ie such as the revolving credit facility), the fee is capitalised as a prepayment and amortised over the period of the facility to which it relates.

General and specific borrowing costs directly attributable to the acquisition or construction of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Interest income is recognised as it accrues in profit or loss, using the effective interest rate method.

Fees and commission

Fees and commission income and expenses that are integral to the effective interest rate on a financial asset or financial liability are included in the measurement of the effective interest rate. Other fees and commission expenses relate mainly to transaction and service fees and are expensed in operating expense as the services are rendered.

Loans and borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost.

12.1.2 Net financing income/(costs)

		Group		Company
For the year ended 31 December	Note	2024 Rm	2023 Rm	2024 Rm	2023 Rm
Finance income		1 786	1 570	1 502	1 313
Interest income relating to:		1 796	1 579	1 502	1 313
– Financial assets at amortised cost		33	42	19	24
– Cash and cash equivalents		1 699	1 439	1 483	1 288
– Financial assets at FVPL		57	61
– Non-financial assets		2	31		1
– Finance leases		5	6
Reimbursement of interest income on environmental rehabilitation funds		(10)	(9)
Finance costs		(1 216)	(1 252)	(1 633)	(1 543)
Interest expense relating to:		(1 042)	(1 068)	(1 624)	(1 533)
– Interest-bearing borrowings	12.1.3	(974)	(982)	(374)	(439)
– Financial liabilities at amortised cost		(1)	(14)
– Non-financial liabilities		(21)	(24)
– Treasury facilities payable	17.3.2			(1 212)	(1 053)
– Lease liabilities	11.4	(46)	(48)	(38)	(41)
Net fair value gains/(losses) on interest rate swaps designated as cash flow hedges recycled from OCI:		26	20
– Realised fair value loss		(35)	(44)
– Unrealised fair value gain		61	64
Unwinding of discount rate on rehabilitation costs	13.3	(304)	(244)	(5)	(5)
Recovery of unwinding of discount rate on rehabilitation costs		28	28
Amortisation of transaction costs		(5)	(5)	(4)	(5)
Borrowing costs capitalised¹	10.1.3	81	17

Total net financing income/(costs)		570	318	(131)	(230)
¹ Borrowing costs capitalisation rate:		9.73%	9.93%

12.1.3 Interest-bearing borrowings

	Group		Company
At 31 December	2024 Rm	2023 Rm	2024 Rm	2023 Rm
Non-current¹	7 344	7 480	2 499	2 945
Loan facility	2 499	2 945	2 499	2 945
Project financing²	4 845	4 535
Current3	876	1 443	498	1 153
Loan facility	498	507	498	507
Project financing²	378	290
Bonds⁴		646		646

Total interest-bearing borrowings	8 220	8 923	2 997	4 098
Summary of interest-bearing borrowings by period of redemption⁵:
Less than six months	468	1 074	275	930
Six to 12 months	408	369	223	223
Between one and two years	2 951	794	2 499	446
Between two and three years	561	2 948		2 499
Between three and four years	687	556
Between four and five years	813	682
More than five years	2 332	2 500
Total interest-bearing borrowings	8 220	8 923	2 997	4 098
¹ The non-current portion represents:	7 344	7 480	2 499	2 945
– Capital	7 356	7 497	2 500	2 950
– Reduced by transaction costs	(12)	(17)	(1)	(5)
² Interest-bearing borrowings relating to the energy operations.
³ The current portion represents:	876	1 443	498	1 153
– Capital	827	1 379	450	1 093
– Interest capitalised	54	69	52	64
– Reduced by transaction costs	(5)	(5)	(4)	(4)
⁴ The R643 million senior unsecured floating rate note matured in June 2024.
⁵ Refer note 16.3.3.3 for details of the undiscounted contractual cash flow maturities.

	Group		Company
At 31 December	2024 Rm	2023 Rm	2024 Rm	2023 Rm
Analysis of movement in interest-bearing borrowings
At beginning of the year	8 923	9 093	4 098	4 539
Interest-bearing borrowings raised	705	489
Interest-bearing borrowings repaid	(1 397)	(658)	(1 093)	(450)
Interest expense	974	982	374	439
Interest paid	(990)	(975)	(386)	(435)
Capitalisation of transaction costs		(13)
Amortisation of transaction costs	5	5	4	5
At end of the year	8 220	8 923	2 997	4 098

12.1.4 Salient terms and conditions of interest-bearing borrowings


Borrower	Instrument	Security	Interest payment basis	Debt assumed date
Loan facility
Exxaro	Bullet term loan facility	Unsecured	Floating	26 April 2021

	Amortised term loan facility	Unsecured	Floating	26 April 2021

	Revolving credit facility	Unsecured	Floating	26 April 2021

Project financing
Amakhala SPV	Term loan and reserve facility	Secured¹	Floating	1 April 2020

	Term loan facility	Secured¹	Fixed²	1 April 2020

Tsitsikamma SPV	Term loan and reserve facility	Secured¹	Floating	1 April 2020

LSP SPV	Term loan and reserve facility	Secured¹	Floating	11 July 2023

	Revolving credit facility	Secured¹	Floating	11 July 2023

DMTN Programme (bonds)
Exxaro	R643 million senior unsecured floating rate note	Unsecured	Floating	13 June 2019

¹	Security held over the assets and share capital of Tsitsikamma SPV, Amakhala SPV and LSP SPV respectively.
²	The facility will become a floating rate facility from 30 June 2026.

							Effective rate for transaction costs
Borrower	Maturity date		Carrying value (Rm)	Undrawn portion (Rm)	Interest rate

					Base rate	Margin
Loan facility
Exxaro	26 April 2026	2024	2 540	nil	3-month JIBAR	240 basis points (2.40%)	0.11%
		2023	2 539	nil		240 basis points (2.40%)	0.11%
	26 April 2026	2024	457	nil	3-month JIBAR	230 basis points (2.30%)	0.06%
		2023	913	nil		230 basis points (2.30%)	0.10%
	26 April 2026	2024	nil	3 250	1-month JIBAR	265 basis points (2.65%)	N/A
		2023	nil	3 250		265 basis points (2.65%)	N/A
Project financing
Amakhala SPV	30 June 2031	2024	2 360	273	3-month JIBAR	371 to 681 basis points (3.71% to 6.81%)	N/A
		2023	2 504	273		371 to 683 basis points (3.71% to 6.83%)	N/A
	30 June 2031	2024	127	nil	9.46% up to 30 June 2026, thereafter 3-month JIBAR	360 to 670 basis points (3.60% to 6.70%)	N/A
		2023	135	nil		360 to 670 basis points (3.60% to 6.70%)	N/A
Tsitsikamma SPV	31 December 2030	2024	1 586	148	3-month JIBAR	276 basis points (2.76%)	N/A
		2023	1 709	155		277 basis points (2.77%)	N/A
LSP SPV	31 December 2042	2024	1 122	145	3-month JIBAR	250 to 360 basis points (2.50% to 3.60%)	0.01% were applicable
		2023	463	803		250 to 360 basis points (2.50% to 3.60%)	0.01% were applicable
	31 August 2025	2024	28	21	3-month JIBAR	180 basis points (1.80%)	N/A
		2023	14	36		180 basis points (1.80%)	N/A
DMTN Programme (bonds)
Exxaro	13 June 2024	2024	nil	nil	3-month JIBAR	N/A	N/A
		2023	646	nil		189 basis points (1.89%)	N/A

Financial covenants

Loan facility

There were no financial covenant defaults or breaches in terms of the loan facility during the reporting periods.

The financial covenants in terms of the loan facility are the following:

Ratio of consolidated net debt¹ to equity of the group for any measurement period shall be less than 0.8:1
Ratio of consolidated EBITDA (excluding project financing as well as non-cash BEE credential costs) to net interest expense of the group for any measurement period shall not be less than 4:1
Ratio of consolidated net debt¹ to consolidated EBITDA (excluding project financing and non-cash BEE credential costs, including dividends received from equity-accounted investments) of the group for any measurement period shall be less than 3:1.

¹	For purposes of financial covenants, net debt is adjusted for project financing, pending litigation and other claims as well as other financial guarantees (refer note 13.4.1).

Project financing

There were no financial covenants defaults or breaches in terms of the project financing during the reporting periods.

The financial covenants in terms of the project financing are the following:

Tsitsikamma SPV

Historic debt service cover ratio¹ for the calculation period ending on a calculation date is not less than 1.10:1
Minimum annual forecast debt service cover ratio for the next calculation period is not less than 1.10:1
Loan life cover ratio² is not less than 1.15:1
Project life cover ratio³ is not less than 1.25:1.

¹	The ratio of A to B where, A is the aggregate cash flow available for debt service (CFADS) less taxes and B is the aggregate of the finance costs, in each case for the relevant calculation period.
²	The ratio of A to B where, A is the net present value of forecast CFADS from such calculation date to (and including) the final scheduled repayment date, discounted at the discount rate (as produced by the financial model) and B is the aggregate of the facility outstanding on such calculation date.
³	The ratio of A to B where, A is the net present value of forecast CFADS from such calculation date to the end of the tenor of the power purchase agreement discounted at the discount rate and B is the aggregate of facility outstanding as at such calculation date.

Amakhala SPV

Projected senior debt service cover ratio¹ for the immediately following measurement period is not less than 1.10:1
Historic senior debt service cover ratio¹ for the immediately preceding measurement period is not less than 1.10:1
Senior loan life cover ratio², as at each measurement date, is not less than 1.15:1
Senior project life cover ratio², as at each measurement date, is not less than 1.30:1
Projected total debt service cover ratio³ for the immediately following measurement period is not less than 1.05:1
Historic total debt service cover ratio³ for the immediately preceding measurement period is not less than 1.05:1
Total loan life cover ratio⁴, as at each measurement date, is not less than 1.10:1
Total project life cover ratio⁴, as at each measurement date, is not less than 1.20:1.

¹	The ratio of CFADS to senior debt service for that period.
²	The ratio of the applicable total present value amount, as at that measurement date to the sum of (i) the senior facility outstanding and (ii) all the IFC facility outstandings, as calculated and produced by the financial model, as part of the forecast for that measurement date.
³	The ratio of CFADS to total senior debt service for that period.
⁴	The ratio of the applicable total present value amount, as at that measurement date to total facility outstanding, as calculated and produced by the financial model, as part of the forecast for that measurement date.

LSP SPV

There are no financial covenants to be reported on at 31 December 2024 and 31 December 2023 as the LSP project is in the construction phase. Financial covenants will become effective on the Commercial Operations Date.

12.1.5 Net cash

	Group		Company
At 31 December	2024 Rm	2023 Rm	2024 Rm	2023 Rm
Net cash is presented by the following items on the statement of financial position:
Non-current interest-bearing debt	(7 678)	(7 880)	(2 755)	(3 281)
Interest-bearing borrowings	(7 344)	(7 480)	(2 499)	(2 945)
Lease liabilities	(334)	(400)	(256)	(336)
Current interest-bearing debt	(972)	(1 494)	(584)	(1 200)
Interest-bearing borrowings	(876)	(1 443)	(498)	(1 153)
Lease liabilities	(96)	(51)	(86)	(47)
Cash and cash equivalents	20 630	19 859	17 300	17 151
Cash and cash equivalents	20 630	19 859	17 300	17 151

Total net cash	11 980	10 485	13 961	12 670

12.1.6 Notes to the statements of cash flows relating to net financing costs received/(paid)

Group

Company

For the year ended 31 December

Note

2024
Rm

2023
Rm

2024
Rm

2023
Rm

Interest received

1 720

1 525

1 502

1 315

Finance income

12.1.2

1 786

1 570

1 502

1 313

Non-cash flow items

– Interest income accrued not yet received

(71)

(48)

– Reimbursement of interest income on environmental rehabilitation funds

12.1.2

– Finance lease interest income adjustment

12.1.2

(5)

(6)

Interest paid

(1 095)

(1 100)

(1 637)

(1 529)

Finance costs

12.1.2

(1 216)

(1 252)

(1 633)

(1 543)

Non-cash flow items

– Unwinding of discount rate on rehabilitation costs

12.1.2

304

244

– Recovery of unwinding of discount rate on rehabilitation costs

12.1.2

(28)

– Amortisation of transaction costs

12.1.2

– Borrowing costs capitalised

12.1.2

(81)

(17)

–	Unrealised fair value gain on interest rate swaps designated as cash flow hedges recycled from OCI

12.1.2

(61)

(64)

–	Finance costs capitalised to loans less finance costs paid and interest accrued not yet paid

(18)

(13)

Net financing costs received/(paid)

625

425

(135)

(214)

12.1.7 Financial liabilities composition

		Group		Company
At 31 December	Note	2024 Rm	2023 Rm	2024 Rm	2023 Rm
Non-current
Derivative financial liabilities designated as hedging instruments		129	127
– Cash flow hedge derivatives: interest rate swaps¹		129	127

Total non-current financial liabilities per statement of financial position	16.3	129	127
Current
Financial liabilities at FVPL		22
– Derivative financial liabilities		22
Derivative financial liabilities designated as hedging instruments			14
– Cash flow hedge derivatives: FECs²			14
Financial liabilities at amortised cost				15 028	15 606
– Non-interest-bearing loans from subsidiaries³	17.5			92	769
– Treasury facilities with subsidiaries⁴	17.5			14 936	14 837

Total current financial liabilities per statement of financial position	16.3	22	14	15 028	15 606
Total financial liabilities per statement of financial position		151	141	15 028	15 606

¹	Relates to interest rate swaps designated in a hedging relationship to hedge interest rate risk exposure resulting from interest payments on the project financing. Refer note 16.3.3.2.3.2.
²	Relates to FECs designated in a hedging relationship to hedge foreign exchange risk exposure on the purchase of US dollar foreign denominated capital purchases funded by ZAR denominated project financing. The FECs portion of the hedges have been settled. Refer note 16.3.3.2.2.
³	Loans granted by subsidiary companies which are interest-free, unsecured and repayable on demand.
⁴	Treasury facilities with subsidiary companies have no fixed repayment terms and are repayable on demand. Interest is charged at money market rates.

12.1.8 Other liabilities composition

	Group		Company
At 31 December	2024 Rm	2023 Rm	2024 Rm	2023 Rm
Non-current
Long-term incentives	13	10
Income received in advance	25	25
Total non-current other liabilities	38	35
Current
Leave pay	274	250	29	26
Bonuses	380	280	134	73
VAT	171	99
Royalties		40
Carbon tax	3	3
Customer advance payments	38	4
Other	108	111	16	15
Total current other liabilities	974	787	179	114
Total other liabilities	1 012	822	179	114