Reviewed condensed group financial statements and unreviewed production and sales volumes information for the year ended 31 December 2014

NOTES TO THE REVIEWED CONDENSED GROUP FINANCIAL STATEMENTSfor the year ended 31 December

4.  

Segmental information  

 

Operating segments are reported on in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the reportable operating segments, has been identified as the group executive committee. Operating segments reported are based on the group's different products and operations.  

 

Total operating segment revenue, which excludes Value Added Tax (VAT), represents the gross value of goods and services invoiced and includes operating revenues directly and reasonably allocable to the segments. Export revenue is recorded according to the relevant sales terms, when the risks and rewards of ownership are transferred.  

 

Segment revenue includes sales made between segments. These sales are made on a commercial basis.  

 

Segment operating expenses, assets and liabilities represent direct or reasonably allocable operating expenses, assets and liabilities.  

 

Segment net operating profit equals segment revenue less operating segment expenses, less impairment charges, plus impairment reversals.  

 

The group has four reportable operating segments, as described below, based on the group's strategic divisions. The strategic divisions offer different products and services and are managed separately. For each of the strategic divisions, the group executive committee reviews internal management reports on a monthly basis. The summary below describes the activities and location of each of the group's reportable operating segments:  

 
Coal  
 

The coal operations are mainly situated in the Waterberg and Mpumalanga regions and are split between commercial and tied coal operations as well as a 50% joint venture interest in Mafube Coal Proprietary Limited (Mafube). The operations produce thermal, metallurgical and semi-coking coal.  

 
Ferrous  
 

The ferrous operations include the group's investment in African Iron Ore Limited (AKI) and a 19,98% equity interest in Sishen Iron Ore Company Proprietary Limited (SIOC). Investments in the FerroAlloys and AlloystreamTMoperations are collectively referred to as the Alloys operations.  

 
TiO2  
 

Exxaro holds a 43,98% (2013: 44,40%) equity interest in Tronox Limited (Tronox), a 26% equity interest in each of the South African-based operations, Tronox KZN Sands Proprietary Limited and Tronox Mineral Sands Proprietary Limited (collectively referred to as Tronox SA) as well as a 26% members' interest in Tronox Sands Limited Liability Partnership in the United Kingdom (Tronox UK).  

 
Other  
 

The other operating segment includes the 50% investment in Cennergi Proprietary Limited (Cennergi) (a joint venture with Tata Power), a 26% equity interest in Black Mountain Mining Proprietary Limited (Black Mountain), an effective investment of 11,7% in the Chifeng operations as well as the results of Exxaro Base Metals which was sold during 2013.  

  The following table presents a summary of the group's segmental information:  
    Coal Ferrous TiO2 Other Total
  For the year ended 31 December 2014 (Reviewed)  Tied  
operations  
Rm  
Commercial  
operations  
Rm  
Iron  
ore  
Rm  
Alloys  
Rm  
Other  
Rm  
Rm   Base  
metals  
Rm  
Other  
Rm  
Rm  
  Total revenue   4 577   11 601     159   14       67   16 418  
  Inter-segmental revenue     (2)      (14)      (1)  (17) 
  External revenue   4 577   11 599     159         66   16 401  
  Segment net operating profit/(loss)  319   2 978   (6 100)  (97)  (41)    (1)  (350)  (3 292) 
  External finance income (note 8 4   43             33   80  
  External finance costs (net of borrowing costs capitalised) (note 8 (69)  (112)            (2)  (183) 
  Income tax (expense)/benefit   (53)  (751)  624   23   90       54   (13) 
  Depreciation and amortisation (note 5 (43)  (734)  (8)  (4)  (4)      (96)  (889) 
  Impairment charge of non-current assets (excluding financial assets) (note 7     (5 751)    (9)      (202)  (5 962) 
  Write-off and impairment of trade and other receivables (note 5   (1)  (22)          (17)  (40) 
  Impairment charges of non-current financial assets (note 5     (21)            (21) 
  Cash generated by/(utilised in) operations   95   4 365   (75)  (64)  (109)      (129)  4 083  
  Share of income/(loss) from equity-accounted investments (note 9   268       2 830   (568)  77   (92)  2 515  
  Capital expenditure (note 12   (2 576)  (352)  (42)  (104)      (123)  (3 197) 
  At 31 December 2014 (Reviewed)                   
  Segment assets and liabilities                    
  Deferred tax   4   41   57   123   103       211   539  
  Investments in associates (equity-accounted) (note 14         5 422   12 809   357     18 588  
  Investments in joint ventures (equity-accounted) (note 15   818             148   966  
  External assets1   1 883   22 075   81   124   16     267   2 562   27 008  
  Total assets   1 887   22 934   138   247   5 541   12 809   624   2 921   47 101  
  Non-current assets held-for-sale (note 16   303       25         328  
  Total assets as per statement of financial position   1 887   23 237   138   247   5 566   12 809   624   2 921   47 429  
  External liabilities   1 523   3 723   139   49   73       3 506   9 013  
  Deferred tax   (71)  3 718   57   5         23   3 732  
  Current tax payable   10   5   5           7   27  
  Total liabilities   1 462   7 446   201   54   73       3 536   12 772  
  Non-current liabilities held-for-sale (note 16   232               232  
  Total liabilities as per statement of financial position   1 462   7 678   201   54   73       3 536   13 004  
  1 Excluding deferred tax and investments in equity-accounted associates and joint ventures and non-current assets held-for-sale.  
                     
    Coal Ferrous TiO2 Other Total
  For the year ended 31 December 2013 (Audited)  Tied  
operations  
Rm  
Commercial  
operations  
Rm  
Iron  
Ore  
Rm  
Alloys  
Rm  
Other  
Rm  
Rm   Base  
metals  
Rm  
Other  
Rm  
Rm  
  Total revenue   3 917   9 445     120   21       86   13 589  
  Inter-segmental revenue           (21)        (21) 
  External revenue   3 917   9 445     120         86   13 568  
  Segment net operating profit/(loss)  215   2 554   (27)  (61)  (53)    145   793   3 566  
  Net operating profit/(loss) from continuing operations   215   2 554   (27)  (61)  (53)    (14)  (171)  2 443  
  Net operating profit from discontinued operations               159   964   1 123  
  External finance income (note 8 4   66             11   81  
  External finance costs (net of borrowing costs capitalised) (note 8 (165)  (200)          (74)  (2)  (441) 
  Income tax (expense)/benefit   (9)  (745)  4   17   12     4   72   (645) 
  Depreciation and amortisation (note 5 (41)  (624)  (8)  (3)  (5)      (175)  (856) 
  Impairment (charges)/reversals of non-current assets (excluding financial assets) (note 7   (143)          98     (45) 
  Impairment charges of trade and other receivables (note 5   (23)            (2)  (25) 
  Cash generated by/(utilised in) operations   75   2 072   (7)  (60)  (44)    26   111   2 173  
  Share of income/(loss) from equity-accounted investments (note 9   129       4 166   (638)  77   (103)  3 631  
  Capital expenditure (note 12   (2 996)  (1 453)  (17)  (160)    (1)  (137)  (4 764) 
  At 31 December 2013 (Audited)                   
  Segment assets and liabilities                    
  Deferred tax   (36)  80   5   95   53       169   366  
  Investments in associates (equity-accounted) (note 14         5 523   13 325   359     19 207  
  Investments in joint ventures (equity-accounted) (note 15   528             333   861  
  External assets1   1 579   19 893   5 109   94   216     252   1 587   28 730  
  Total assets   1 543   20 501   5 114   189   5 792   13 325   611   2 089   49 164  
  Non-current assets held-for-sale (note 16   342               342  
  Total assets as per statement of financial position   1 543   20 843   5 114   189   5 792   13 325   611   2 089   49 506  
  External liabilities   1 387   3 046   128   32   12       4 792   9 397  
  Deferred tax   4   2 872   600     40       (35)  3 481  
  Current tax payable     18   1   1         111   131  
  Total liabilities   1 391   5 936   729   33   52       4 868   13 009  
  Non-current liabilities held-for-sale (note 16   225               225  
  Total liabilities as per statement of financial position   1 391   6 161   729   33   52       4 868   13 234  
  1 Excluding deferred tax and investments in equity-accounted associates and joint ventures and non-current assets held-for-sale.