Exxaro - Notes To The Group Financial Statement

	Audited group financial results and physical information for the 12-month period ended 31 December 2008

Notes To The Group Financial Statement

Reported Actual Segment Results

Comparable Unaudited Supplementary Results

Unaudited Physical Information ('000 TONNES)

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NOTES TO THE GROUP FINANCIAL STATEMENT

Basis of preparation

The format of the condensed report has been revised to bring it in line with the amendments to International Accounting Standard 34, Interim Financial Reporting. IAS 34 has been amended following the revision of IAS 1, Presentation of Financial Statements and IFRS 8, Operating Segments. These amendments have been early adopted.

This condensed report complies with International Accounting Standard 34, Interim Financial Reporting, and Schedule 4 part iv of the South African Companies Act. The financial statements from which these group financial results have been derived are prepared on the historical basis excluding financial instruments and biological assets, which are fair valued, and conform to International Financial Reporting Standards. The accounting policies adopted are consistent with those applied in the annual financial statements for the year ended 31 December 2007, except for the early adoption of IFRS 8, Operating Segments and IAS 1, Presentation of Financial Statements. The implementation of IFRS 8 has led to differences in the basis of segmentation compared to previous periods. As a result, new operating segments have been identified. IAS 1 and IFRS 8 are disclosure standards and have no other impact on the measurement or recognition of items included in the condensed report and accordingly the adoption thereof has had no effect on the profit or equity for the year.

	Year ended 31 December	2008 Audited Rm	2007 Audited Rm
2.	Profit before taxation is arrived at after
	Depreciation and amortisation of intangible assets	(898)	(763)
	Financing costs	(394)	(311)
	Interest received	153	96
	Net realised foreign currency exchange gains/(losses)	476	(42)
	Net unrealised foreign currency exchange gains/(losses)	39	(32)
	Derivative instruments held for trading (losses)/gains	(69)	61
	Fair value adjustments on financial instruments	(26)	51
	Impairment charges and reversals (note 3)	(20)	(17)
	Net profit on disposal of investments	7
	Net deficit on disposal of property, plant and equipment	(66)	(17)
3.	Impairment charges and reversals
	Impairment of property, plant and equipment	(21)	(23)
	Reversal of impairment of property, plant and equipment	1
	Reversal of impairment of investments		6
	Total impairments and reversals before and after tax	(20)	(17)
4.	Net financing cost
	Interest expense and loan costs	283	153
	Finance leases	63	59
	Interest income	(153)	(96)
	Net interest expense	193	116
	Interest adjustment on non-current provisions	48	99
	Net financing cost as per income statement	241	215
5.	Tax rate reconciliation	%	%
	Taxation as a percentage of profit before taxation	13,1	26,1
	Taxation effect of
	– assessed losses (not provided for)	(0,3)	(0,2)
	– capital profits	0,2	0,5
	– disallowable expenditure	(0,7)	(2,1)
	– reclassification of previously disallowable expenditure	1,1
	– exempt income	1,0	0,3
	– special tax allowances		0,2
	– share of associates’ and joint	11,9	10,8
	– tax rate differences	0,4	(2,1)
	– Secondary Tax on Companies (STC)	(0,1)	(2,9)
	– withholding tax	(0,4)	(0,5)
	– Controlled Foreign Company profits (CFC)	(0,1)	(0,3)
	– foreign exchange differences	(0,1)	(0,1)
	– prior year adjustment	1,7	(0,7)
	– rate change on deferred tax balance	0,3
		28,0	29,0
6.	Investments
	Unlisted investments in associates
	– directors’ valuation	13 162	9 110
	Unlisted investments included in other financial assets
	– directors’ valuation	387	328
7.	Dividends paid
	Cash dividends	957	211
	Cash dividends paid to minorities	27	12
	Total dividends paid	984	223

8.	Acquisition of associate
	On 1 November 2008, the group acquired 26% of the issued share capital of Black Mountain Mining (Pty) Limited, which is included in the other base metals segment results, for R221 million. The acquired business contributed an equity accounted loss of R189 million to the group for the period from 1 November 2008 to 31 December 2008.
9.	Business combinations
	On 11 April 2008, the group acquired 76% of the issued share capital of Exxaro Madencilik Sanayi Ve Ticaret A.S., Turkey (Madencilik), which is included in the other segment results. The acquired business contributed nil revenue and R7 million operating loss to the group for the period from 11 April 2008 to 31 December 2008. On 1 July 2008, the group acquired 100% of the issued share capital of Skyprops 112 (Pty) Limited, which is included in the other segment results. The acquired business contributed neither revenue nor operating profit to the group for the period from 1 July 2008 to 31 December 2008. On 1 October 2008, the group acquired the assets and liabilities of the operations of Namakwa Sands which is included in the Mineral Sands segment results. The acquired business contributed R491 million revenue and R155 million operating profits to the group for the period from 1 October 2008 to 31 December 2008. Details of assets acquired are as follow:
		Madencilik Rm	Skyprops Rm	Namakwa Sands Rm	Total Rm
	– cash paid on acquisition	(30)	(65)	(2 662)	(2 757)
	– purchase consideration outstanding			(121)	(121)
	– fair value of assets acquired	30	65	2 783	2 878
	Goodwill
	Fair value of assets acquired
	– property, plant and equipment		65	2 207	2 272
	– intangible assets	30			30
	– financial assets			16	16
	– inventories			399	399
	– trade and other receivables			371	371
	– trade and other payables			(148)	(148)
	– non-current provisions			(62)	(62)
	Fair value of net assets	30	65	2 783	2 878
	Total purchase consideration	(30)	(65)	(2 783)	(2 878)
	Purchase consideration outstanding			121	121
	Cash outflow on acquisition of subsidiaries and other business operations	(30)	(65)	(2 662)	(2 757)
10.	Net debt
	Net debt is calculated as being interest-bearing borrowings less cash and cash equivalents.
11.	Contingent liabilities
	Includes guarantees in the normal course of business from which it is anticipated that no material liabilities will arise. This includes guarantees to banks and other institutions. The increase in 2008 is mainly attributable to guarantees to the Department of Minerals and Energy in respect of environmental liabilities on immediate closure of mining operations.
12.	Contingent assets
	An outstanding insurance claim of R135 million for the Furnace 2 incident at Exxaro TSA Sands (Pty) Limited for which it is probable that settlement will be received in the second half of 2009. A surrender fee of R57 million in exchange for the exclusive right to prospect, explore, investigate and mine for coal within a designated area in central Queensland and Moranbah, conditional on the grant of a mining lease.
13.	Related-party transactions
	During the period the company and its subsidiaries, in the ordinary course of business, entered into various sale and purchase transactions with associates and joint ventures. These transactions were subject to terms that are no less favourable than those arranged with third parties.
14.	Post-balance sheet event
	The directors are not aware of any matter or circumstance arising after the balance sheet date up to the date of this report, not otherwise dealt with in this report.
15.	JSE Limited Listings Requirements
	The announcement has been prepared in accordance with the listings requirements of JSE Limited Listings Requirements.
16.	Corporate governance
	The group complies in all material respects with the Code of Corporate Practice and Conduct published in the King II Report on Corporate Governance.
17.	Audit opinion
	The auditors, Deloitte & Touche, have issued their opinion on the 31 December 2008. The audit was conducted in accordance with International Standards on Auditing. They have issued an unmodified audit opinion. A copy of their audit report is available for inspection at the office. These summarised financial results have been derived from the group financial statements and are consistent in all material respects with the group annual financial statements.

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