REVIEWED INTERIM FINANCIAL RESULTS 2013 for the six-month period ended 30 June 2013
Overview#
# Compared to 2H12 * Lost time injury frequency rate expressed per 200 000 man hours worked ** Excluding buy-ins 2
LTIFR* at
0,21 against target of 0,15
Core net operating profit
R1,2 billion up 254%
HEPS of 712 cents up 198%
Interim dividend of 235 cents per share
up 57% on 2012 final dividend
Coal produced
18,8Mt**
down 9%
Revenue from coal
R6,1 billion down 1%
Coal HEPS contribution to group 225 cents up 58%
Tuberculosis
Human capital: safety and health
Fatalities • 1H13 fatality free
Safety • LTIFR of 0,21 • 7 business units LTI* free • Continued focus on safety improvement
through audits, training and workshops
Health • Internal tuberculosis audits at all
business units • HIV/AIDS disclosure initiative • Enrolment treatment up by 24%
* Lost time injury
LTIFR
Reportable fatalities Accepted occupational disease cases
2H12 1H13
Pneumoconiosis Noise induced hearing loss
Target: 0,15
3
Human capital: leadership and people
Transformation • Achieved Mining Charter target in four of the
six HDSA* categories
Training interventions • R68 million for 1H13 • Mayoko in-country skills development
Youth development • A total of 735 young people have been trained
of which 81% were HDSAs
Mpower • R4 million dividends paid in April 2013 • 7 198 employees benefitted from the payout
4
HDSA youth training (n=594)
* Historically disadvantaged South Africans ** Professionals in training
HDSA statistics (%)
Actual Target
* In terms of inter alia the Mineral and Petroleum Resources Development Act, National Water Act, National Environmental Management Act ** Operate under water use permits granted in terms of old Water Act 5
Natural capital
Biodiversity • Wetland plans and ongoing rehabilitation
at all business units Compliance • Environmental authorisations for all
operations in place* • Integrated Water Use Licence for Arnot
and NBC in process**
Carbon and water • Group target to reduce potable water
consumption by 5% per annum
* Grootegeluk Medupi Expansion Project 6
Social capital
Social and labour plans • Transform and leave a legacy in
communities • Implement our commitments Community development • Finalised local economic development
project plans to the value of R300m for 2013-2017
Housing • 740 housing units at GMEP* completed
at R590 million
Portfolio improvement: coal
Strategy • Improve asset portfolio • Realise continuous improvement potential • Increase productivity and efficiency while
achieving targets
Developments • GMEP 96% complete • Agreement in place to bridge period of
Medupi delay • GG backfill phase 1 on track for 3Q13 • Moranbah South environmental impact and
authorisation expected in 2H14 • Thabametsi mine to supply 3,8Mtpa to
600MW IPP base load power station • Contemplating cessation of NCC production
7
Expected project timeline
* Bankable feasibility study # Pre-feasibility study
2H13 • Char 2 BFS* • GG backfill phase 1 completion • Market coke BFS • Thabametsi phase 1 PFS#
• Potential cessation of NCC production
2014 • Belfast BFS • GMEP ramp-up • Thabametsi phase 1 BFS • Tshikondeni closure
2015 • Belfast construction • Moranbah South BFS • Thabametsi small scale mining • Semi coke/Char 2 construction
dependent on market conditions • Inyanda closure • Thabametsi phase 2 PFS
2016 • Char 2 commissioning • Moranbah South construction
* Ultra high dense medium separation ** Republic of Congo 8
Portfolio improvement: ferrous
Strategy • Develop and operate integrated
ferrous business • Review of the alloys business and
beneficiation through application of UHDMS*
Developments Mayoko • 730Mt resource confirmed through
additional exploration • Continued discussion and consultation with
RoC** government to finalise Mining Convention
• Project delay as a result of Mining Convention
AlloyStreamTM • Letaba demonstration facility re-started to
generate input for commercial feasibility study
FerroAlloys • Expansion options continuously assessed
subject to future demand
Mayoko expected project timeline
1H14 • Mining convention approval
2H14 • Ramp-up to 30ktpm
2015 • Ramp up to 2Mtpa • Phase 2 BFS
2016 • Phase 2 construction
2019 • Ramp up to 10Mt
Portfolio improvement: titanium dioxide
Strategy • Completed the first year of the three year
standstill agreement • Spending time understanding the business
and its market • Decision to potentially increase shareholding
in Tronox still under review whilst we continue to consider our options within current and future markets for pigment
Developments • Dilution of shareholding due to warrants and
options exercised • Continues to be equity-accounted
9
Tronox shareholding
15 June 2012 39,20%
30 June 2012 39,20%
31 December 2012 44,65%
30 June 2013 44,42%
Portfolio improvement: energy
Strategy • Explore and integrate opportunities in energy
markets with a focus on cleaner energy • Decrease carbon footprint Developments Cennergi • Financial closure on Amakhala Emoyeni and the
Tsitsikamma wind farms • Commissioning 2016
Waterberg • GDF SUEZ selected as partner for 600MW IPP* Underground coal gasification
• Partnered with Linc Energy to develop energy solutions in Sub-Saharan Africa
• Joint concept study in progress
10 * Independent Power Producer
Expected project timeline
2H13 • Financial close on 2 wind projects
• Linc Energy development
2014-16 • Cennergi project construction and commissioning
Operational and financial performance
11
Main features
Financial metrics • Revenue of R6,2 billion • Core NOP# at R1,2 billion • Equity income of R2 billion
Owner-controlled operations • Continued volatility in commodity prices and
exchange rates • Three weeks of industrial action decreased
production by 2,2Mt
Non-controlled operations Sishen Iron Ore Company • Dividend received of R914 million Tronox • Post-tax equity loss of R168 million • Dividend received of R243 million Black Mountain • Post-tax equity loss of R81 million • Dividend received of R59 million
Interim dividend • 235 cents per share • 3 times cover***
# Net operating profit * Headline earnings per share ** Cents per share *** Excluding non-core items 12
HEPS* (cps)**
Revenue (Rb)
Dividend (cps)
Financial overview: IFRS*
* International Financial Reporting Standards incorporating International Accounting Standards Including discontinued operations
R million 1H13 2H12
% Change 1H13 vs
2H12 1H12
% Change 1H13 vs
1H12
Revenue 6 245 6 366 (2) 9 756 (36)
Operating expenses (5 328) (5 966) 11 (6 636) 20
Profit/(loss) on sale of subsidiaries/non-core assets (84) 4 121
Net operating profit 917 316 190 7 241 (87)
Operating margin (%) 15 5 200 74 (80)
Post-tax equity-accounted income 2 015 994 103 2 608 (23)
Attributable earnings: owners of parent 2 244 868 159 8 809 (75)
Headline earnings 2 529 843 200 4 115 (39)
Cash retained from operations 602 1 484 (59) 2 485 (76)
Capital expenditure 2 403 2 981 (19) 2 352 2
Average ZAR/USD rate
− Realised 9,19 8,49 8 7,88 17
− Spot 9,20 8,46 9 7,93 16
Attributable earnings (cents per share) 632 246 157 2 488 (75)
Headline earnings (cents per share) 712 239 198 1 162 (39)
Dividend declared 235 150 57 350 (33)
Weighted average number of shares (million) 355 354 354
13
Non-core adjustments
R million 1H13 2H12 1H12
Coal (287) 109 40
– Profit on sale of assets
– Impairment charge
5 109 40
(292)
Mineral sands 99
Base metals 32 (2) 570
Other (15) (126) 3 923
– (Loss)/profit on sale: subsidiaries and other PPE* (2) (126) 3 608
– Dilution of investment in Tronox (13)
– Write down of intercompany loan 315
Impact on net operating profit (270) (19) 4 632
Post-tax equity-accounted income 44 7 467
Tax on headline earnings adjustments 12 (5) (29)
Total non-core adjustment impact on attributable earnings (214) (17) 5 070
14 * Property, plant and equipment
Financial overview: core*
* Non-IFRS numbers 15
R million 1H13 2H12
% Change 1H13 vs
2H12 1H12
% Change 1H13 vs
1H12
Revenue 6 245 6 366 (2) 9 756 (36) Operating expenses (5 058) (6 031) 16 (7 147) 29 Net operating profit 1 187 335 254 2 609 (55) Operating margin (%) 19 5 280 27 (30) Post-tax equity-accounted income 1 971 987 100 2 141 (8) Headline earnings 2 458 885 178 3 739 (34) Capital expenditure 2 403 2 981 (19) 2 352 2 Net debt 3 677 2 199 67 1 288 185
Headline earnings per share (cents) 692 250 177 1 056 (34) Weighted average number of shares (million) 355 354 354
HEPS contribution
16
Cents* 1H13
% contribution 2H12
% contribution
(Decrease)/ increase in % contribution
1H13 vs 2H12
1H12 %
contribution
(Decrease)/ increase in %
contribution 1H13 vs 1H12
JSE HEPS 712 100 238 100 1 162 100
− Coal 225 32 142 60 (28) 250 22 10 − Ferrous 576 81 378 159 (78) 524 45 36 − TiO2
(47) (7) (109) (46) 39 340 29 (36) − Other (42) (6) (173) (73) 67 48 4 (10)
CORE HEPS 692 100 250 100 1 056 100
− Coal 225 33 142 57 (24) 250 24 9
− Ferrous 557 80 378 151 (71) 524 50 30
− TiO2 (47) (7) (108) (43) 36 342 32 (39)
− Other (43) (6) (162) (65) 59 (60) (6)
* Based on group weighted average number of shares (WANOS) of 355 million (2H12: 354 million; 1H12: 354 million)
Coal financial performance
17
R million 1H13 2H12
% Change 1H13 vs
2H12 1H12
% Change 1H13 vs
1H12
Revenue 6 149 6 239 (1) 5 825 6
– Tied operations 1 782 1 996 (11) 1 453 23
– Commercial operations 4 367 4 243 3 4 372
Net operating profit 1 318 644 105 1 312
– Tied operations 210 206 2 79 166
– Commercial operations 1 108 438 153 1 233 (10)
Operating margin (%) 21 10 110 23 (9)
Post-tax equity-accounted income* 81 79 3 65 25
Capital expenditure 1 485 2 458 (40) 1 767 (16)
Headline earnings contribution to group 798 502 59 885 (10)
HEPS contribution (cents) 225 142 58 250 (10)
Average export price US$/tonne 84 87 (3) 103 (18)
* Mafube and SDCT
Coal production*
18
Thermal coal production (Mt)
Total coal production (Mt) Metallurgical coal production (Mt)
Buy-ins Commercial Tied
* Restated
Tonnes lost due to strikes (kt) GG 880 Inyanda 67 Arnot 162 Leeuwpan 204 Matla 854 Total 2 167
Coal market and sales*
* Restated # US$/t FOB – Source Macquarie
Thermal coal sales (Mt)
Metallurgical coal sales (Mt)
Export Domestic Tied
19
Total coal sales (Mt)
0
200
400
600
0
50
100
150
200
2011 2012 2013 2014FC 2015FC
Steam coal and market coke prices #
Chinese market coke HCC RBCT steam
Core NOP 1H13
Coal contribution
20
Net operating profit contribution (Rb)
Core NOP 2H12
Net operating profit variance analysis (Rm)
Commercial Tied
Revenue contribution (Rb)
0
HEPS contribution to group
Coal capital expenditure
GMEP • 96% complete • Project expenditure to date is R8,9 billion • Capital expenditure forecast at R10,2 billion • 740 housing unit project completed at
R590 million • All costs and revenue to be capitalised until
commissioning
GG backfill • 94% complete • Project expenditure to date is R633 million • Phase 1 capital expenditure forecast of
R946 million • Phase 2 expected in FY14 with capital
expenditure of R650 million
21
GMEP capital and ramp up
Coal capital expenditure (Rb)
Expansion Sustaining
Cumulative capital Ramp-up
Rm Mt
2018
Mayoko capital expenditure
Mayoko phase 1 • 730Mt resource confirmed • Project capital increased from US$320 to US$340 • Total expenditure in 1H13 of R854m:
− Capital expenditure at R650 million
− Exploration cost capitalised at R64 million
− Operational expenditure of R140 million capitalised
• Current impact of delay: Additional nine months and R200 million additional capital
• Ramp-up subject to Mining Convention as well as finalisation of port and rail access requirements expected in 1H14 − First ore in 2H14
− 2Mt in FY15
• Risk mitigation: R1 billion contractual exposure limit • 1 350 ore containers, eight locomotives, 90 rail
wagons, and Phase 1A plant delivered • Value engineering process kicked-off in light of
delay
22
Mayoko capital expenditure (US$m)
Mayoko capital expenditure and ramp-up
Cumulative capital Ramp-up
US$m Mt
2011 2012 2013 2014FC 2015FC
Ferrous: SIOC
23
SIOC dividend received (Rb)
SIOC post-tax equity contribution (Rb)
Iron ore prices#
SIOC HEPS contribution
Fines (62% Fe) Lump (63% Fe) # US$/t FOB – Source Macquarie
0
Titanium dioxide
Shareholding • Dilution from 44,65% to 44,42%
Financial performance • Tronox loss of R168 million • Dividends received of R243 million • Decrease in mineral sands and pigment prices • Increased volumes • Exxaro’s share of purchase price allocation adjustments of R361million
24
HEPS contribution
Purchase price adjustments (June YTD)
# Relates to depreciation adjustments and inventory write-downs
IFRS results (Rm) Total Tronox SA Ops UK Equity (loss)/income (168) (664) 365 131
Add back PPA# 363 150 213
– RSA 213 213
– Remainder of Tronox 150 150
Adjusted contribution to group earnings 195 (514) 578 131
Tronox dividend received (Rm)
1H11 2H11 1H12 2H12 1H13
Attributable earnings: core
25
R million 1H13 2H12
% Change 1H13 vs
2H12 1H12
% Change 1H13 vs
1H12
Net operating profit 1 187 335 254 2 609 (55)
Net financing cost (266) (197) (35) (156) (71)
Income from investments 2 1 100 2
Post-tax equity-income/(loss) 1 971 987 100 2 141 (8)
– SIOC 2 044 1 260 62 1 938 5
– Tronox Limited (168) (368) 54 118 (242)
– Mafube 81 79 3 65 25
– Cennergi (38) (40) 5 (25) (52)
– Black Mountain 52 56 (7) 45 16
Tax (441) (253) 74 (875) 50
Profit after tax 2 453 873 181 3 721 (34)
Non-controlling interest 5 12 (58) 18 (72)
Attributable earnings: owners of parent 2 458 885 177 3 739 (34)
Attributable earnings (cents per share) 692 250 177 1 056 (34)
Dividend declared (cents per share) 235 150 57 350 (33)
3 677
2 199 (602)
128 117
546
2 403 55 (1 218)
49
Net debt variance
26
R million
Net debt January
2013
Cash generated
Net financing
costs
Tax Dividends paid
Capex Investing activities
Dividends received
Other Net debt June 2013
Capital funding structure
27
Ratios*: 1H13 2H12 1H12
Net financing cost cover (times): EBITDA 6 3 21
Return on equity: attributable income (%) 8 2 61
Return on equity: headline earnings(%) 9 3 15
Return on capital employed (%) 10 4 40
R million Facilities available
Drawn Undrawn
Interest-bearing borrowings 3 600 4 400
Interest capitalised 38
Capitalised transaction cost (44)
Long-term borrowings 3 594
Short-term borrowings net of cash 83
Net debt 3 677
Net debt/equity ratio (%) 12
Maturity profile of debt
Repayment year
2H14-1H15 167
2H15-1H16 333
2H16-1H17 1 933
After 1H17 1 167
3 600
* Based on IFRS results
Dividend
* Adjusted for non-cash non-core items 28
Interim dividend
30 June 2013
Interim dividend
30 June 2012
Final dividend
31 Dec 2012
Total dividend
31 Dec 2012 Core attributable earnings per share (cents) 692 1 056 250 1 306
Dividend declared per share (cents) 235 350 150 500
Dividend cover* (times) 2,94 3,02 1,67 2,61
Dividend declared (Rm) 841 1 252 537 1 789
– BEE Holdco 438 653 280 933
– Anglo 82 122 52 174
– Public 314 467 200 667
– Mpower 2012 7 10 5 15
Outlook
29
Future outlook: medium term
General • Improve safety performance • Restricted economic outlook • Mining sector concerns • Strategic response:
− Reposition for future − Cost management
Coal • Local markets stable • Sensitivity to global commodity influences • International markets softer • GMEP ramp-up • Cessation of production contemplated
at NCC Ferrous • Establish our footprint through Mayoko • AlloyStream™ demonstration facility
initiation Energy • Cennergi to focus on delivering current
projects following financial closure
30
Opinions expressed herein are by nature subjective to known and unknown risks and uncertainties. Changing information or circumstances may cause the actual results, plans and objectives of Exxaro Resources Limited (the “Company”) to differ materially from those expressed or implied in the forward looking statements. Financial forecasts and data given herein are estimates based on the reports prepared by experts who in turn relied on management estimates. Undue reliance should not be placed on such opinions, forecasts or data. No representation is made as to the completeness or correctness of the opinions, forecasts or data contained herein. Neither the Company, nor any of its affiliates, advisors or representatives accepts any responsibility for any loss arising from the use of any opinion expressed or forecast or data herein. Forward-looking statements apply only as of the date on which they are made and the Company does not undertake any obligation to publicly update or revise any of its opinions or forward looking statements whether to reflect new data or future events or circumstances.
Additional slides
31
Key events
1H13 1H12 2H12
January
Restatement of prior year and revised results due to the early adoption of new accounting standards (IFRS* 10, 11 and 12 as well as IAS27 and 28)
February African Iron acquisition – consolidated subsidiary
March Cennergi JV – equity accounted joint venture
May KZN Sands – partial impairment reversal
June
New Clydesdale Colliery (NCC) impairment Dilution of Tronox shareholding from 44,65% to 44,42%
Sale of Rosh Pinah operations – derecognised subsidiary Sale of mineral sands – derecognised subsidiary Acquisition of shareholding in Tronox Limited – equity accounted associate
September Increased shareholding in Tronox Limited to 44,65%
December Sale of non-core coal prospecting rights
32
Group cash flow
R million 1H13 2H12 1H12
Cash retained from operations 602 1 484 2 485
Net financing cost (128) (57) (80)
– Interest paid (165) (124) (221)
– Interest received 37 67 141
Tax (117) (113) (164)
Dividends paid (546) (1 241) (1 771)
Net cash from operating activities (189) 73 470
Fixed assets (2 403) (2 981) (2 352)
Intangible assets (23) (35) (1)
(Increase)/decrease in non-current financial assets 33 (166) 150
Dividend income from investments 1 218 2 062 1 960
Proceeds from disposal of PPE 11 40 37
Proceeds on disposal of subsidiaries 202 931
Increase in investments in associates and joint ventures (76) (396)
Acquisition of subsidiary (1 421)
Decrease in cash and cash equivalents on disposal of subsidiaries
(1 052)
Other 79 3
Net cash outflow (1 429) (1 122) (1 275)
33
Group depreciation and amortisation: core
R million 1H13 2H12 1H12
Coal 319 310 301
– Tied operations 18 21 18
– Commercial operations 301 289 283
Ferrous 2 4 2
– Mayoko 3 1
– FerroAlloys 1 1 1
– Other 1
Other 93 45 349
– Mineral sands 283
– Base metals 1 27
– Other 93 44 39
Total 414 359 652
34
Group EBITDA: core
R million 1H13 2H12 1H12
Coal 1 637 954 1 613
– Tied operations 228 228 96
– Commercial operations 1 409 726 1 517
Ferrous (42) 61 (87)
– Mayoko (1) 75 (77)
– FerroAlloys (25) (15) (8)
– Other (16) 1 (2)
Other 6 (321) 1 735
– Mineral sands 2 109
– Base metals (12) (106)
– Other 6 (309) (268)
Total EBITDA 1 601 694 3 261
35
Thermal: volumes
'000 tonnes 1H13 1H12 1H11 FY12 FY11
Production 17 704 18 171 18 467 37 641 37 731
– Grootegeluk 7 544 7 642 7 799 15 489 16 369
– Matla 4 805 5 088 5 135 10 948 10 150
– Leeuwpan 1 744 1 864 2 057 3 844 4 029
– NBC 1 505 1 167 963 2 717 2 346
– Inyanda 968 954 904 1 845 1 918
– Arnot 835 1 053 1 235 2 081 2 291
– NCC 303 403 374 717 628
Buy-ins 542 460 868 1 111 1 636
Total production 18 246 18 631 19 335 38 752 39 367
36
Thermal: sales
'000 tonnes 1H13 1H12 1H11 FY12 FY11
Sales to Eskom 14 692 15 125 15 496 31 367 31 681
– Grootegeluk 6 780 6 943 7 014 14 174 14 668
– Matla 4 808 5 083 5 141 10 941 10 152
– Leeuwpan 890 962 1 187 1 922 2 311
– NBC 1 379 1 084 869 2 249 2 209
– Arnot 835 1 053 1 235 2 081 2 291 – NCC 50 50
Other domestic 1 585 1 621 1 581 3 362 3 088
Exports 1 625 1 478 1 893 3 199 4 461
Total sales 17 902 18 224 18 970 37 929 39 230
37
Metallurgical coal: volumes and sales
'000 tonnes 1H13 1H12 1H11 FY12 FY11
Production 1 095 1 274 1 241 2 366 2 161
– Grootegeluk 916 1 125 1 107 2 027 1 862
– Tshikondeni 179 149 134 339 299
Sales 1 142 1 209 1 187 2 326 2 190
– Domestic 866 871 996 1 630 1 753
– Export 276 338 191 696 437
38
Group net operating profit: 2H12 vs 1H13
39
R million
IFRS 2H12
Tronox working capital
adjustment
Base metals
Sale of non core
assets
Core 2H12 Price Volume Exchange Inflation GMEP
shortfall Cost Core 1H13
NCC impair- ment
Base metals
Tronox invest- ment
dilution
Sale of non-core
assets
IFRS 1H13
Coal 753 (109) 644 144 (35) 113 (78) 337 193 1 318 (292) 5 1 031
Ferrous 57 57 2 (5) (98) (44) (44)
Other (494) 95 26 3 (370) (13) 99 (5) 202 (87) 32 (13) (2) (70)
Total 316 95 26 (106) 331 146 (53) 212 (83) 337 297 1 187 (292) 32 (13) 3 917
Group net operating profit: 1H12 vs 1H13
40
R million
IFRS 1H12
Mineral Sands
Base metals
Sale of assets &
subsidiaries
Core 1H12 Price Volume Exchange Inflation GMEP
shortfall Cost Core 1H13
NCC impair ment
Base metals
Tronox invest- ment
dilution
Sale of non-core
assets
IFRS 1H13
Coal 1 352 (40) 1 312 (228) (50) 167 (164) 601 (320) 1 318 (292) 5 1 031
Ferrous (88) (88) 5 3 (2) 38 (44) (44)
Other 5 977 (1 925) (438) (3 923) (309) 39 (16) (32) 231 (87) 32 (13) (2) (70)
Total 7 241 (1 925) (438) (3 963) 915 (223) (8) 151 (198) 601 (51) 1 187 (292) 32 (13) 3 917
Salient dates
Last day to trade cum dividend Friday 6 September 2013
Shares trade ex-dividend Monday 9 September 2013
Record date Friday 13 September 2013
Payment date Monday 16 September 2013
41
Operating margin Net operating profit/loss as a percentage of revenue
Net financing cost cover – EBITDA Net operating profit/loss (before interest, tax, depreciation, amortisation, impairment charges and net deficit/surplus on sale of investments and assets) divided by net financing cost
Return on equity – attributable income Attributable earnings attributable to owners of the parent as a percentage of equity attributable to owners of the parent
Return on capital employed Net operating profit/loss plus income/loss from non-equity-accounted investments plus income/loss from investments in associates as a percentage of average capital employed
Net debt to equity ratio Interest-bearing debt less cash and cash equivalents as a percentage of total equity
Net debt to net debt plus total shareholders’ equity Interest-bearing debt as a percentage of interest-bearing debt plus total shareholders equity
Definitions
42
43
Index
Title Page number Human capital 3; 4 Key events 32 Main features 12 Natural capital 5 Net debt variance 26 Net operating profit 39; 40 Outlook 30 Overview 2 Portfolio improvement 7-10 Production: Coal volumes and sales 36-38 Revenue 13; 20 Salient dates 41 Social capital 6 Strategy 3-10
Title Page number Adjustments – non-core 14 Attributable earnings – core 25 Commodities
Coal 7; 17-21 Energy 10 Ferrous 8; 22, 23 Titanium dioxide 9; 24
Cash flow 33 Capital expenditure 21; 22 Capital funding structure 27 Definitions 42 Depreciation 34 Dividend 28 EBITDA 35 Financial performance
Coal 17 Core 15 IFRS 13 HEPS 16