exxaro - Notes to the reviewed financial statements

Basis of preparation
The format of the condensed interim report has been revised to bring it in line with the amendments to contracted capital International Accounting Standard (IAS) 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 were early adopted in 2008.

This condensed interim report complies with IAS 34, Interim Financial Reporting, and Schedule 4 Part iv of the South African Companies Act. The group financial results have been prepared on the historical cost 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 2008. During 2009 the following accounting pronouncements became effective: Amended IFRS 2 Share-based Payments, Revised IAS 23 Borrowing Costs, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Constructions of Real Estate, IFRIC 16 Hedges of Net Investments in a Foreign Operation, Improvements to Financial Reporting Standards 2008 (amendments to 35 various standards). These pronouncements had no material impact on the accounting of transactions or the disclosure thereof.

		6 months ended 30 June 2009 Reviewed Rm	6 months ended 30 June 2008 Reviewed Rm	12 months ended 31 Dec 2008 Audited Rm
2.	Profit before tax is arrived at after including:
	Depreciation, and amortisation of intangible assets	(531)	(415)	(898)
	Financing costs	(328)	(141)	(394)
	Interest received	86	54	153
	Net realised foreign currency exchange (losses)/gains	(434)	107	476
	Net unrealised foreign exchange (losses)/gains	(76)	(17)	39
	Derivative instruments held for trading gains/(losses)	335	25	(69)
	Fair value adjustment on financial instruments gains/(losses)	11	(7)	(26)
	Impairment charges (note 3)		(6)	(20)
	Net surplus on disposal of investments			7
	Net deficit on disposal of property, plant and equipment	(22)	(58)	(66)

3.	Impairment charges
	Impairment of property, plant and equipment	(7)	(21)
	Reversal of impairment of property, plant and equipment	1	1
	Total impairments before and after tax	(6)	(20)

4.	Net financing costs
	Interest expense and loan costs	245	67	283
	Finance leases	33	31	63
	Interest income	(86)	(54)	(153)
	Net interest expense	192	44	193
	Interest adjustment on non-current provisions	50	43	48
	Net financing cost as per income statement	242	87	241

5.	Investments
	Unlisted investments in associates
	– directors’ valuation	14,001	14,338	13,162
	Unlisted investments included in other financial assets – directors’ valuation	413	360	387

6.	Net debt/cash Net debt/cash is calculated as being interest-bearing borrowings less cash and cash equivalents.

Contingent liabilities
Include 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 and 2009 is mainly attributable to guarantees to the Department of Minerals and Energy in respect of environmental liabilities on immediate closure of mining operations.

Contingent assets
An outstanding insurance claim of R237 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 R56 million in exchange for the exclusive right to prospect, explore, investigate and mine for coal within a designated area in central Queensland and Moranbah, Australia, conditional on the grant of a mining lease.

9.	Related party transactions 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.

10.

JSE Limited Listings Requirements
The interim announcement has been prepared in accordance with the JSE Limited Listings Requirements.

11.

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.

12.

Auditors review
The interim results have been reviewed by the company’s auditors, Deloitte & Touche. Their unmodified review opinion is available for inspection at the company’s registered office.