Slide 1: Interim Financial Results
Interim Financial Results Presentation for the six-month period ended 30 June 2023
Slide 2: 1H23 results | Presentation outline
1H23 results | Presentation outline Welcome and Introduction Nombasa Tsengwa | Chief Executive Officer Macro View and Performance Highlights Nombasa Tsengwa | Chief Executive Officer Coal Operational Performance Kgabi Masia | Managing Director Financial Results Riaan Koppeschaar | Finance Director O
Slide 3: Welcome and Introduction
Welcome and Introduction
Slide 4: Macro View and Performance Highlights
Macro View and Performance Highlights Nombasa Tsengwa | Chief Executive Officer
Slide 5: Macro environment in 1H23 | Dynamic global operating environment
Macro environment in 1H23 | Dynamic global operating environment... 5
Slide 6: Macro environment in 1H23 | Impact on the business
Macro environment in 1H23 | Impact on the business Commodity prices US$/tonne monthly average Steep decline in thermal coal prices cushioned by 400 support for iron ore 350 300 Pressure on profit margins 250 200 150 Cost containment an imperative 100 50 0 Jan-22 May-22 Sep-22 Jan-23 May-23 Changes i
Slide 7: South Africa | A tough place to do business currently
South Africa | A tough place to do business currently RBCT thermal coal exports Million tonnes Logistics challenges compounded by softer 72.2 70.2 pricing environment 51.0 Lower demand from Eskom due to short-term 29.9 28.8 disruptions to offtake 26.4 24.0 23.6 Intensified electricity shortages cont
Slide 8: Highlights | Environment, Social, and Governance
Highlights | Environment, Social, and Governance • Revised scope 1 and 2 emissions targets to 40% by 2026 • Partnerships with Eskom and others to address scope 3 emissions • 0.08 group LTIFR* (Target = 0.05) • Focused social impact strategy to guide investments towards skills development • Meaningfu
Slide 9: Highlights | Operational performance demonstrating resilience
Highlights* | Operational performance demonstrating resilience 20.4Mt Contained at Coal Coal product 4.7% cost 12.8% below coal mining inflation Realisation Delivered Coal Wind price 98% of API4 energy 335GWh 8% 8% * Compared to 2H22 9
Slide 10: Highlights | Financial performance
Highlights* | Financial performance EBITDA HEPS ROCE Interim dividend R7.7bn R24.43 36% R11.43 9% 6% 9% * Compared to 2H22 10
Slide 11: Highlights | Our defense in the face of volatility
Highlights | Our defense in the face of volatility A year of zero fatality across all operations Robust earnings through the cycle from diverse portfolio Our Early Value Strategy and Market to Resource optimisation will continue to drive enhanced price realisation to protect our bottom line Our stre
Slide 12: Coal Operational Performance
Coal Operational Performance Kgabi Masia | Managing Director
Slide 13: Safety, Environment and Social | Committed to our sustainable growth and impact strategy
Safety, Environment and Social | Committed to our sustainable growth and impact strategy Safety Social Value R896m 0.08 LTIFR* Stable performance 60% 0 fatality 20% rehabilitation of land disturbed 117l/t ROM** water intensity Improved performance Improved performance 0 level 2 and 3 (major) inciden
Slide 14: Coal volumes | Operational resilience enabling value
Coal volumes | Operational resilience enabling value Total product Movement 2H22 vs 1H23 Million tonnes 4.7% 7.8% Million tonnes Product Sales 20.9 21.5 21.7 21.4 22.0 Domestic Export 20.4 0.1 0.1 0.1 2.7 3.2 3.1 3.1 3.4 Waterberg (WB) 2.7 4.0 3.6 3.5 3.5 3.5 5.1 Producing in line with Grootegeluk (
Slide 15: Exports | Record price realisation supported by sales mix optimisation
Exxaro export sales Exports | Record price realisation supported by sales mix optimisation destinations (%) 10 Export product mix (%) 12 32 ● Record 98% price realisation 7 4 6 4 2 10 7 1H22 1H22 18 8 11 9 14 10 17 29 21 9 ● Continued growth in the high-quality 41 27 29 30 portion of sales mix 17 70
Slide 16: Cost containment | Ongoing cost discipline despite volume challenges
Cost containment | Ongoing cost discipline despite volume challenges ● Cash cost per tonne 12.8% below mining Cash cost per tonne* - Bi-annual (R/t) 15.1% 9.7% inflation Coal mining inflation: Cash cost per tonne* 27.6% 3.1% ● Continued effective inflation absorption ● Effective cost management ensu
Slide 17: Capex | Sustaining our business through disciplined capital expenditure
Capex | Sustaining our business through disciplined capital expenditure ● Total capex in line with previous Capital profile R million guidance 2 632 ● Benefiting from Capital Excellence 1 621 2 398 316 and Early Value Strategy 420 491 ● Focusing on sustaining capital 1 201 guidance 2 316 777 1 907 7
Slide 18: Financial Results
Financial Results Riaan Koppeschaar | Finance Director
Slide 19: Group performance | Lower coal export prices but good cost control
Group performance* | Lower coal export prices but good cost control Revenue (Rm) EBITDA (Rm) 25% 77% 21% 9% 24 039 10 603 22 330 18 943 8 399 7 661 17 627 15 144 6 340 4 331 1H21 2H21 1H22 2H22 1H23 1H21 2H21 1H22 2H22 1H23 Equity income (Rm) HEPS (cents) 53% 10% 6% 0% 6 666 3 426 2 722 2 590 2 443
Slide 20: Group financial highlights | Robust cash generation despite lower prices
Group financial highlights* | Robust cash generation despite lower prices R billion 2H22 9.4 1H23 9% 8.4 38% 7.7 33% 6% 7.2 6.3 6.3 5.9 5.2 3.2 3.2 EBITDA Equity Headline Cash generated Net cash income earnings by operations EBITDA (Rm) 2H22 1H23 Change Equity income (Rm) 2H22 1H23 Change Coal 8 498
Slide 21: Group EBITDA | Lower volumes and export prices partially mitigated by cost control
Group EBITDA | Lower volumes and export prices partially mitigated by cost control R million 8 399 (3 428) 1 337 7 661 1 802 293 (1 807) 1 493 (428) 2H22 Price Volume Inflation Buy-ins Other cost Forex General * 1H23 USD realised price Export volumes Labour: 1.4% Mafube buy-ins at Royalties Weaker a
Slide 22: Coal | Portfolio robust despite lower prices
Coal | Portfolio robust despite lower prices Revenue (Rbn) EBITDA (Rbn) 25% 57% 22% 19% 23.3 10.5 21.7 8.5 18.1 6.3 6.9 16.9 4.4 14.5 1H21 2H21 1H22 2H22 1H23 1H21 2H21 1H22 2H22 1H23 R million 21 692 23 279 18 125 R million 10 525 8 498 6 922 Commercial Waterberg 7 122 6 107 6 452 Commercial Waterb
Slide 23: Cennergi wind operations | Stable performance and improvement in wind conditions
Cennergi wind operations | Stable performance and improvement in wind conditions Electricity generation GWh 761 727 724 671 FY Total 405 377 393 364 2H 1H 356 350 331 307 335 FY19 FY20 FY21 FY22 1H23 Performance Unit 1H22 2H22 1H23 Energy generation GWh 307 364 335 Revenue Rm 523 636 610 Operational
Slide 24: Capital allocation | Strong balance sheet positions us for growth
Capital allocation | Strong balance sheet positions us for growth Economic value distributed 154 R million 2 946 5 154 6 791 128 (788) 2H22 (13) (3 966) Cash generated SIOC from (1 419) operations 3 676 after tax paid Rest 494 of group 4 997 307 (475) (2 547) 7 225 Employees Government Dividends Fin
Slide 25: Dividend declared | Consistent shareholder returns
Dividend declared | Consistent shareholder returns Growing dividend from Capital allocation framework Dividend declared own managed operations Interim Total Final Interim 1H23 FY22 2H22 1H22 Dividend cover - Group adjusted R billion 2.5 2.5 2.5 2.5 earnings* (times) 7.3 Excess Cash cash inflow SIOC
Slide 26: Outlook
Outlook Nombasa Tsengwa | Chief Executive Officer
Slide 27: Macro environment | Navigating through our key market constraints
Macro environment | Navigating through our key market constraints Business optimised for specific Logistics challenges Softer thermal coal Business production continue to constrain prices and rising iron partnerships with volumes below which access to market ore supply government cost containment wi
Slide 28: We are steadfast in our commitment to grow your business
We are steadfast in our commitment to grow your business and diversifying the portfolio to contribute to the global energy transition. 28
Slide 29: Strategic Outlook | Growing your business
Strategic Outlook ׀Growing your business Fueling growth from the Capital retention to coal business to deliver support business growth value 68MW Lephalale Solar Slow down in global Project reached financial mining M&A activity close Experience and insights Growing capabilities to gained to enabl
Slide 30: Conclusion
Conclusion Logistics solution still a concern but with positive legislative developments “the future is Room for more engagement on our strategy never built in Capital allocation to meet growth needs for both energy and minerals businesses haste” Enable execution through right resources Partnerships
Slide 31: Thank you
Thank you exxaro POWERING POSSIBILITY
Slide 32: Additional Information
Additional Information
Slide 33: Strategic Outlook | Enhancing operational resilience
Strategic Outlook Enhancing Our Early Value Strategy and operational Safety and health of our Market to Resource people remains a key priority optimisation will continue to resilience unlock value Diversity, equity, and Capital excellence program will inclusion are our foundation ensure return on in
Slide 34: Family Code of Conduct | Playing by the rules
FAMILY C O D E O F C O N D U C T PLAYING BY THE RULES Winning teams are like family, and in every family it is expected that everyone (no matter their rank or position) behaves in a way that lives up to the family’s values, culture, standards and expectations. Our Exxaro family is no different. Here’
Slide 35: Family Code of Conduct | Playing by the rules
FAMILY C O D E O F C O N D U C T PLAYING BY THE RULES 5. O R D I N A RY IS N O T A N 6. O U R REPUTATION IS 7. IDEAS HAV E A SHELF-LIFE OPTION EVERYTHING Share th e m , b e f o r e t h e y expire! You a r e h e r e because you a r e t h e b e s t and w e P r o t e c t it. Relentlessly! • E x p e c t
Slide 36: Coal | Product volumes
Coal | Product volumes ‘000 tonnes 1H22 2H22 1H23 2H23* Thermal production 20 640 20 496 18 819 20 560 Grootegeluk 13 905 13 944 12 706 13 724 Matla 3 086 3 071 2 653 3 360 Leeuwpan 1 169 1 476 1 729 1 380 Belfast 1 515 920 1 079 1 422 Mafube Coal (buy-ins from Mafube JV) 965 1 085 652 674 Buy-ins 1
Slide 37: Coal | Sales volumes
Coal | Sales volumes ‘000 tonnes 1H22 2H22 1H23 2H23* Eskom thermal coal sales 15 899 15 650 14 139 16 392 Grootegeluk 12 815 12 577 11 481 13 046 Matla 3 084 3 073 2 658 3 346 Other domestic thermal coal sales 2 282 2 357 2 204 2 119 Grootegeluk 716 692 681 402 Leeuwpan 881 1 073 1 058 870 Belfast
Slide 38: Coal | Sensitivities – 1H23
Coal | Sensitivities – 1H23 Measure Sensitivity Impact (Rm) Environmental rehabilitation discount rate decrease 1% (211) Environmental rehabilitation discount rate increase 1% 187 Domestic sales volumes 1% 186 Royalty cost 1% 181 Production cost 1% 87 Export price per tonne US$1 45 Export sales volu
Slide 39: Financial overview | Group IFRS
Financial overview | Group IFRS R million 1H22 % change 2H22 % change 1H23 Revenue 22 330 8 24 039 (21) 18 943 Operating expenses (13 134) (30) (17 015) 26 (12 626) Net operating profit 9 196 (24) 7 024 (10) 6 317 Net operating profit margin (%) 41 (12) 29 4 33 Post-tax equity-accounted income 4 153
Slide 40: Financial overview | Non-core adjustments
Financial overview | Non-core adjustments* R million 1H22 2H22 1H23 Coal (78) (10) (11) Loss on disposal of property, plant and equipment (78) (10) (11) Other (10) (2) Loss on disposal of non-core assets and other (10) (2) Non-core adjustment impact on net operating profit (88) (12) (11) Impairment
Slide 41: Financial overview | Group adjusted
Financial overview | Group adjusted R million 1H22 % change 2H22 % change 1H23 Revenue 22 330 8 24 039 (21) 18 943 Operating expenses (13 046) (30) (17 003) 26 (12 615) Add back: Depreciation 1 319 3 1 363 (2) 1 333 EBITDA 10 603 (21) 8 399 (9) 7 661 EBITDA margin (%) 47 (12) 35 5 40 Post-tax equity
Slide 42: Group | Revenue
Group | Revenue R million 1 176 (4 624) 24 039 24 (4) (740) (1 105) 293 (154) (50) 88 18 943 Price Volume 2H22 Coal Coal Energy Ferrous Coal Coal Energy Ferrous Exchange Matla 1H23 Domestic Export & Other Domestic Export & Other 42
Slide 43: Group | EBITDA
Group | EBITDA R million 8 399 (4 942) 1 337 7 661 910 1 631 - 408 (428) 346 (151) 151 Employee General * Forex Selling and 2H22 Commercial Operational 1H23 Inflation Rehabilitation and buy-ins Royalties distribution movement revenue Stock cost cost Coal 8 498 (5 000) (385) 67 337 (154) 407 1 711 (2
Slide 44: Group | Adjusted earnings
Group | Adjusted earnings* R million 1H22 % change 2H22 % change 1H23 Net operating profit 9 284 (24) 7 036 (10) 6 328 Income from investments 6 Net financing (cost)/income – Exxaro excluding Cennergi (27) 153 101 308 Net financing cost – Cennergi (239) (3) (245) 6 (231) Post-tax equity-accounted in
Slide 45: Financial overview | EBITDA vs. Cash generated by operations
Financial overview | EBITDA vs. Cash generated by operations R million 1H22 2H22 1H23 EBITDA 10 603 8 399 7 661 Adjustments: Expected credit loss adjustments 78 1 5 Write-off of trade and other receivables and ESD loans 2 2 Movement in provisions 43 440 (217) Foreign currency differences (625) 657 (
Slide 46: Group | Capital expenditure
Group | Capital expenditure R million Total 1 297 Expansion 1 174 908 801 348 744 Sustaining 488 13 34 217 949 788 686 710 691 1H21 2H21 1H22 2H22 1H23 2H23 onwards* Sustaining 686 949 710 691 788 Coal 662 902 696 678 777 Average R2.5 billion per annum** Energy 1 Ferrous 1 1 1 Other 24 45 14 12 10 E
Slide 47: Capital funding structure | Exxaro excluding Cennergi
Capital funding structure | Exxaro excluding Cennergi R million Facilities available Undrawn/ Undrawn/ Drawn committed unissued Term loan and revolving facility 3 625 3 250 DMTN* programme 643 4 000 Interest-bearing borrowings 4 268 Interest capitalised 68 Lease liabilities 406 Capitalised transacti
Slide 48: Capital funding structure | Cennergi
Capital funding structure | Cennergi R million Facilities available Undrawn/ Drawn committed Project financing: Wind assets 4 459 421 Interest-bearing borrowings 4 459 Interest capitalised 1 Lease liabilities 58 Maturity profile of debt Total interest-bearing debt 4 518 Repayment period 4 518 Net ca
Slide 49: Group results | Net debt/(cash) 1H23
Group results | Net debt/(cash) 1H23 R million Cennergi Cennergi 4 412 4 363 Rest of Rest of Exxaro Exxaro (9 653) (11 588) (5 241) (7 225) (6 252) 801 (1 794) 3 966 475 (307) 1 255 (128) 31 Dec Cash Net Tax Dividends Capex Dividends Other Eyesizwe 30 Jun 2022 generated fin paid received 2023 income
Slide 50: Performance | Key indicators
Performance | Key indicators Target 1H22 2H22 1H23 Internal key performance indicators EBITDA interest cover* # (times) (6 months) >4 380 Net debt/(cash): equity* (%) <40 (10) (17) (19) Net debt: EBITDA* ## (times) (12 months) <1.5 Return on total capital employed (%) (12 months) >20 39 45 36 Bank c