The diagram represents the order of our capital allocation framework. In applying it, we aim for a gearing ratio of below 1.5 times net debt (excluding ring-fenced project financing) to EBITDA. The framework aligns with our commitment to sustainably returning cash to shareholders through the cycle while retaining a strong financial position.

During 2024, we had cash inflows of R12.3 billion (2023: R16 billion), comprising R7.8 billion from our operations net of tax paid (2023: R10.7 billion), dividend income received from our equity-accounted investments of R3.9 billion (2023: R4.9 billion) as well as net interest received of R0.6 billion (2023: R0.4 billion).

In terms of our capital allocation framework, we then utilised this cash to mainly:

• Sustain our operations with capital expenditure of R2.15 billion (2023: R2.46 billion)
• Expand our operations with further capital expenditure of R302 million (2023: R244 million)
• Pay dividends to external shareholders of R7.7 billion (2023: R7.4 billion)

Exxaro remains in a strong liquidity position with a net cash balance of R12.0 billion as at 31 December 2024 (2023: R10.5 billion) and undrawn borrowing facilities and maturities as set out below. Excluding the energy net debt, the net cash position at 31 December 2024 was R16.3 billion (2023: R14.8 billion).

Refer below to our capital funding structure for Exxaro (excluding energy) as well as energy on a standalone basis:

Capital funding structure

Exxaro (excluding energy)

	Facilities available
	Drawn Rm	Undrawn/ committed Rm	Uncommitted Rm
Term loan and revolving facility	2 950	3 250	2 0001
Domestic medium-term note programme			5 0002
Interest-bearing borrowings	2 950
Interest capitalised	52
Lease liabilities	348		Maturity profile of debt
Capitalised transaction costs	(5)				Rm
Total interest-bearing debt	3 345		Repayment period		3 345
Current	586		Less than 6 months		319
Non-current	2 759		6 to 12 months		267
Net cash and cash equivalents	(19 654)		1 to 2 years		2 585
Net cash	(16 309)		2 to 3 years		83
			3 to 4 years		73
			4 to 5 years		18

1	Uncommitted Accordion facility
2	Uncommitted but available on market take up

Energy

	Facilities available
	Drawn Rm	Undrawn/ committed Rm
Project financing	5 233	587
Interest-bearing borrowings	5 233
Interest capitalised	2
Lease liabilities	82		Maturity profile of debt
Capitalised transaction costs	(12)			Rm
Total interest-bearing debt	5 305		Repayment period	5 305
Current	386		Less than 6 months	197
Non-current	4 919		6 to 12 months	189
Net cash and cash equivalents	(976)		1 to 2 years	458
Net cash	4 329		2 to 3 years	568
			3 to 4 years	693
			4 to 5 years	818
			More than 5 years	2 382

Economic value distribution

We distribute the value we generate to our stakeholders as follows:

• Employees receive salaries or wages, share-based payments as well as bonuses (where certain performance conditions are met)
• Employees'tax that is deducted from the employees'remuneration and paid to the South African Revenue Service
• The governments of the countries where Exxaro has operations and investments receive various taxes and royalty payments
• Cost of financing are payments to providers of finance, who receive a return through interest and other loan costs
• Shareholders receive a return on their investment through dividends and capital growth in the share price
• Communities surrounding the operations of Exxaro benefit through CSI initiatives
• In terms of Exxaro's GreenShare employee scheme, employees received a further distribution of profits through dividends

All stakeholders benefit from continuous reinvestment into the group to ensure sustainability and expansion.

Statement of financial position

		2024 Rm	2023 Rm
Assets
Non-current assets		66 799	66 153
Property, plant and equipment		37 292	37 226
Intangible assets		2 598	2 790
Right-of-use assets		281	308
Equity-accounted investments		20 596	20 278
Financial assets		5 266	4 616
Deferred tax		197	206
Other assets		569	729
Current assets		27 917	26 701
Inventories		2 427	2 270
Financial assets		159	210
Trade and other receivables		4 230	3 877
Cash and cash equivalents		20 630	19 859
Current tax receivables		15	3
Other assets		456	482
Total assets		94 716	92 854
Equity and liabilities
Capital and other components of equity
Share capital		983	983
Other components of equity		1 119	1 341
Retained earnings		51 885	49 923
Equity attributable to owners of the parent		53 987	52 247
Non-controlling interests		14 563	14 160
Total equity		68 550	66 407
Non-current liabilities		20 351	20 226
Interest-bearing borrowings		7 344	7 480
Lease liabilities		334	400
Other payables		40	42
Provisions		3 359	2 963
Retirement employee obligations		181	176
Financial liabilities		129	127
Deferred tax		8 926	9 003
Other liabilities		38	35
Current liabilities		5 815	6 221
Interest-bearing borrowings		876	1 443
Lease liabilities		96	51
Trade and other payables		3 351	3 356
Provisions		282	222
Financial liabilities		22	14
Current tax payables		214	348
Other liabilities		974	787
Total liabilities
Total equity and liabilities		94 716	92 854

Property, plant, and equipment increased by R66 million compared to the corresponding period last year, including R2 146 million spent on sustaining capex (stay-in-business capex) and R302 million on expansion capex, offset by depreciation charges of R2 512 million. The net movement further included borrowing costs capitalised.

The graph below summarises key movements in the net cash balance for the year ended 31 December 2024.

Key financial performance indicators

	Target		2024	2023
Internal key performance indicators
EBITDA interest cover*# (times)	>4
Net debt/(cash): equity* (%)	<40		(25)	(23)
Net debt: EBITDA*## (times)	<1.5
Return on total capital employed* (%)	>20		26	39
Return on total capital employed (%)	>20		23	35
Bank covenants**
Net debt/(cash): equity (%)	<80		(23)	(22)
EBITDA interest cover# (times)	>4
Net debt: EBITDA## (times)	<3

*	Performance indicators exclude energy segment.
**	Including dividends received from associates and contingent liabilities, except DMRE guarantees and excluding project financing entities.
#	Exxaro is in a net finance income position.
##	Exxaro is in a net cash position.

Despite the operational challenges experienced in 2024, all internal KPIs are well within target, indicating a healthy balance sheet and strong cash flow generation. The impact of various coal sensitivity measures and the key financial risk factors can be used to stress test our current headroom.

The group has complied with all the bank covenants for the year ended 31 December 2024.

For more details, refer to note 12.1.4 of the group and companyannual financial statements for the year ended 31 December 2024.

Coal sensitivity analysis

The following diagram indicates key sensitivities on the coal net operating profit.

	Sensitivity		Net operating profit impact Rm
Environmental rehabilitation discount rate decrease	1%		(237)
Environmental rehabilitation discount rate increase	1%		217
Royalty cost	1%		391
Domestic sales volumes	1%		278
Production cost	1%		174
Export price per tonne	US$1		128
Exchange rate	10 cents		59
Logistics	1%		46
Export sales volumes	1%		42
Labour	1%		37
Fuel	1%		17
Energy	1%		9

Key financial risk factors affecting our performance

The group's strategic treasury function predominantly provides financial risk management services to the business, coordinates access to domestic and international financial markets, and monitors and manages the financial risks relating to the operations of the group through internal risk reports which analyse exposure by degree and magnitude of risks. These risks include market risk (including foreign currency risk, interest rate risk and price risk), credit risk and liquidity risk.

In managing its capital, the group focuses on a prudent gearing position, return on shareholders'equity (or return on capital employed) and the level of dividends to shareholders. The group's policy is to cover its annual net funding requirements through long-term loan facilities with maturities spread over time. Neither the company nor any of its subsidiaries are subject to externally imposed capital requirements.

Market risk management

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect profit or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposure within acceptable parameters, while optimising the return on risk.

The group's activities expose it primarily to the financial risks of changes in the environmental rehabilitation funds, portfolio investment and deposit facilities quoted prices, foreign currency exchange rates and interest rates. The group enters into a variety of derivative financial instruments to manage its exposure to foreign currency risk and interest rate risks, including:

• Currency forward exchange contracts, currency options and currency swap agreements to manage the exchange rate risk arising on the export of coal and import of capital expenditure
• Interest rate swaps and forwards to manage interest rate risk on the interest-earning borrowings

Price risk management

The group's exposure to equity price risk arises from investments held by and classified as at fair value through other comprehensive income or at fair value through profit or loss. The group's exposure to price risk in relation to quoted prices of the environmental rehabilitation funds, portfolio investments and deposit facilities is not considered a significant risk as the funds are invested with reputable financial institutions in accordance with a strict mandate to ensure capital preservation and growth. The funds are held for strategic purposes rather than trading purposes.

Foreign currency risk management

Certain transactions are denominated in foreign currencies, hence exposures to exchange rate fluctuations arise. The currency in which transactions are entered into is mainly denominated in US dollar, euro, and Australian dollar. Exchange rate exposures are managed within approved policy parameters utilising FECs, currency options and currency swap agreements.

The group maintains a fully covered exchange rate position in respect of foreign balances (if any) and imported capital equipment resulting in these exposures being fully converted to rand. Trade-related import exposures are managed through the use of economic hedges arising from export revenue as well as through FECs. Trade-related export exposures are hedged using FECs and currency options with specific focus on short-term receivables. Any open exposure to foreign currency risk on these balances is insignificant as the turnaround time is generally less than 30 days. Foreign denominated capital purchases funded by ZAR denominated project financing arrangements are hedged using FECs.

Monetary items have been translated at the closing rate at the last day of the reporting period.

The FECs which are used to hedge foreign currency exposure mostly have a maturity of less than one year from the reporting date. When necessary, FECs are rolled over at maturity.

For more details, refer to note 16.3.3.2.2 of the group and company annual financial statementsfor the year ended 31 December 2024.

Interest rate risk management

The group is exposed to interest rate risk as it borrows and deposits funds at floating interest rates on the money market and extended bank borrowings. The group's main interest rate risk arises from long-term borrowings with floating rates, which expose the group to cash flow interest rate risk. The risk is managed by undertaking controlled management of the interest structures of the investments and borrowings, maintaining an appropriate mix between fixed and floating interest rate facilities in line with the interest rate expectations. The group also uses interest rate swaps and interest rate forwards to manage the interest rate risk exposure.

When the contractual terms of the borrowings and covenants thereof require the use of hedging instruments to mitigate the risk of fluctuations of the underlying interest rate risk cash flow exposure and the impact on profit or loss of specific projects being financed, the group looks to apply hedge accounting where an effective hedge relationship is expected and to the extent that such exposure poses a real risk to the achievement of the loan covenants.

The financial institutions chosen are subject to compliance with the relevant regulatory bodies.

Loan facility and bonds

For details on loan facility and bonds, refer to note note 16.3.3.2.2 of the group and company annual financial statementsfor the year ended 31 December 2024.

Project financing (energy)

The group is exposed to the risk of variability in future interest payments on the project financing, attributable to fluctuations in the three-month Johannesburg Interbank Average Rate (JIBAR) during the operations phase and the one-month JIBAR during the construction phase. The designated hedged item is the group of expected floating interest rate cash flows arising from the project financing, up to the notional amount of each interest rate swap, over the term of the hedging relationship. The notional amounts per interest rate swap match up to the designated exposure being hedged.

Where all relevant criteria are met, hedge accounting is applied to remove the accounting mismatch between the hedging instrument and the hedged item. This will effectively result in recognising interest expense at a fixed interest rate for the hedged project financing.

For details on project financing, refer to note note 16.3.3.2.2 of the group and company annual financial statementsfor the year ended 31 December 2024.

Liquidity risk management

Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under normal and stressed conditions, without incurring unacceptable losses or risking damage to the group's reputation.

The ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate liquidity risk management framework for the management of the group's short, medium, and long-term funding and liquidity management requirements.

The group manages liquidity risk by monitoring forecast cash flows in compliance with loan covenants and ensuring that adequate unutilised borrowing facilities are maintained.

Borrowing capacity is determined by the board of directors, from time to time.

		2024 Rm Rm	2023 Rm
Amount approved		67 484	65 309
Total borrowings		(8 220)	(8 923)
Unutilised borrowing capacity		59 264	56 386

The group's capital base and the borrowing powers of the company and the group were set at 125% of shareholders'funds (equity attributable to owners of the parent) for both the 2024 and 2023 financial years.

To avoid incurring interest on late payments, financial risk management policies and procedures are entrenched to ensure the timeous matching of orders placed with goods received notes or services acceptances and invoices.

Credit risk management

Credit risk relates to potential default by counterparties on cash and cash equivalents, loans, investments, trade receivables and other receivables.

The group limits its counterparty exposure arising from money market and derivative instruments by only dealing with well-established financial institutions of high credit standing. The group's exposure and the credit ratings of its counterparties are continuously monitored. The aggregate value of transactions concluded is spread among approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the audit committee annually.

Trade receivables consist of a number of customers with whom Exxaro has long standing relationships. A high portion of term supply arrangements exists with such customers resulting in limited credit exposure which exposure is limited by performing customer creditworthiness or country risk assessment.

The group strives to enter into sales contracts with customers which stipulate the required payment terms. It is expected of each customer that these payment terms are adhered to. Where trade receivable balances become past due, the normal recovery procedures are followed to recover the debt, where applicable new payment terms may be arranged to ensure that the debt is fully recovered.

Exxaro has concentration risk as a result of its exposure to one major customer. This is, however, not considered significant as the customer adheres to the stipulated payment terms.

Exxaro establishes an allowance for non-recoverability or impairment that represent its estimate of expected credit losses in respect of trade receivables, other receivables, loans, cash and cash equivalents and investments.

For Exxaro's exposure to credit risk, refer to note note 16.3.3.4.1 of the group and company annual financial statementsfor the year ended 31 December 2024.

Outlook first half 2025

Economic context

As we move into 2025, the global economic landscape remains uncertain, with geopolitical tensions and policy shifts continuing to evolve. While these international developments will undoubtedly have an impact on our business, our focus remains firmly on the factors within our control.

The formation of the Government of National Unity has improved sentiment, fostering a sense of cautious optimism for economic growth. We are seeing positive developments, such as increased private investment in renewables, Eskom's progress on maintenance and transmission upgrades, and accelerated reforms in ports and rails.

Furthermore, the new two-pot retirement system was expected to ease household debt and boost consumer spend from late 2024 into 2025. In 2024, South Africa's real GDP grew 0.6%, driven by a strong fourth quarter after downward pressures faced in earlier quarters. We are hopeful that the momentum will continue into 2025.

Commodity markets and price

The seaborne thermal coal demand is expected to be influenced by geopolitical factors and energy security needs. Domestically, any improvement in the local economic environment is likely to boost coal demand from local end users, particularly as Eskom works to address its operational challenges. Infrastructure challenges remain, as evidenced by the recent railway breakdown on the RBCT Waterberg line due to heavy rainfall. We will continue to actively explore all available routes to market to meet customer demand and unlock value.

This continuous rise in iron ore supply and exports remains the key limiting factor for seaborne iron ore prices, affecting the performance of Exxaro's SIOC investment. While major miners'supply is increasing, overall Chinese demand remains relatively flat. However, towards the end of 2024, there was a rise in steel and iron ore demand from non-property sectors. Early signs indicate that the Chinese government's interventions are beginning to yield results, evidenced by the manufacturing and services sectors moving into expansionary territory, assisted by improved steel mill margins.

Operational performance

Our business is still impacted by commodity prices, domestic structural challenges and developments, coal offtake, and the global and domestic geopolitical environment. We provide the following guidance for the 2025 financial year:

• Coal production and sales to be within the range of 39.5Mt to 43.7Mt
• Exports sales to be between 6.65Mt and 7.35Mt
• We have kept our coal sustaining capex guidance unchanged between R2.5 billion and R3 billion
• The anticipated commissioning of our LSP increases our energy generation guidance, and we expect it to be within the range of 780GWh to 810GWh, comprising full-year wind generation and half-year solar generation guidance