Chapter 6: Operational performance and working capital

6.1.1 Accounting 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, associates and JVs, 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:

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.

6.1.2 Revenue

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.

1 Coal segmental revenue is based on the origin of coal production.

2 Relates to product sold to tied mine customer.

3 Relates to product sold by export distribution entity.

4 Determined based on the customer supplied by Exxaro.

5 Relates mainly to Switzerland.

6 Relates mainly to Singapore.

1 Re-presented as a result of the change in segments for FerroAlloys (refer note 3.3).

2 Coal segmental revenue is based on the origin of coal production.

3 Relates to product sold to tied mine customer.

4 Relates to product sold by export distribution entity.

5 Determined based on the customer supplied by Exxaro.

6 Relates mainly to Switzerland.

7 Relates mainly to Singapore.

The group derives revenue from an external customer which accounts for at least 10% or more of the group’s revenues, being 65% or R27 068 million (2024: 59% or R24 085 million).

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

1 Dividends received from SIOC.

2 Includes R275 million (2024: R374 million) received in cash and R16 453 million (2024: R4 746 million) as a dividend in specie.

6.1.3 Operating expenses

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:

1 Mainly relates to voluntary severance packages offered to employees at Leeuwpan as part of the Leeuwpan turnaround project.

2 Disclosed as part of legal and professional fees.