ANNUAL FINANCIAL RESULTS PRESENTATION for the year ended 31 December 2017 Disclaimer The operational and financial information on which any outlook or forecast statements are based has not been reviewed nor reported on by the external auditors. These forward-looking statements are based on management’s current beliefs and expectations and are subject to uncertainty and changes in circumstances. The forward-looking statements involve risks that may affect the group’s operational and financial information. Exxaro undertakes no obligation to update or reverse any forward-looking statements, whether as a result of new information or future developments. Where relevant, comments exclude transactions which make the results not comparable. These exclusions are the responsibility of the group's board of directors and have been presented to illustrate the impact of these transactions on the core operations’ performance and hence may not fairly present the group’s financial position, changes in equity, results of operations or cash flows. These exclusions have not been reviewed nor reported on by the group’s external auditors. 2 Presentation outline 1 2 Delivering on our strategy Mxolisi Mgojo, Chief Executive Officer Operational performance Nombasa Tsengwa, Executive Head - Coal Operations Riaan Koppeschaar, Finance Director 3 Financial results 4 Outlook Mxolisi Mgojo, Chief Executive Officer 3 DELIVERING ON OUR STRATEGY Mxolisi Mgojo Market conditions | FY17 • Solid year for commodity markets % change in market price • Globally, supply-side reforms supported thermal coal price • World crude steel production growth was significant • The titanium dioxide pigment market – continued stable, improving and strong market fundamentals Average ZAR/US$ FY16: 14,68 FY17: 13,30 1H17: 13,20 2H17: 13,40 17 16 15 14 13 12 FY17 vs FY16 2H17 vs 1H17 Coal (API4) 31 13 Iron ore (62% Fe CFR China US$/t) (8) 2 TiO2 pigment (US$/t CIF US) Zinc (LME cash US$/t) 22 26 12 15 38 • Recovery in world real GDP, however, South Africa lagging • Strong and steady business sentiment in developed world, less so in emerging world • Optimism as South Africa’s political sentiment improved towards end of 2017 6 1 - n a J 6 1 - r a M 6 1 - y a M 6 1 - l u J 6 1 - p e S 6 1 - v o N 7 1 - n a J 7 1 - r a M 7 1 - y a M 7 1 - l u J 7 1 - p e S 7 1 - v o N 5 Performance overview | FY17 SAFETY OPERATIONAL PERFORMANCE CORE FINANCIAL PERFORMANCE • 1 fatality at Matla in 1H17 • LTIFR: 0,12 • Coal tonnes produced: • Coal tonnes sold: • ZAR export price realised: 5% 2% • NOP: 18% • Equity income: 24% 25% • HEPS: 38% TRANSFORMATION PORTFOLIO OPTIMISATION SHAREHOLDER RETURN • BEE replacement transaction • Tronox first tranche • 1H17 dividend: 300 cps • Community and employee empowerment to be finalised • NBC sales agreement signed • 2H17 dividend: 400 cps • Special dividend:1 255 cps 6 Technology & Excellence drives performance Digitalisation & Innovation • Challenge thinking and shift mindsets • Relentless focus on efficiency, effectiveness and experience • Aligning operations and functions towards realising our strategy • Bolstered technology foundation • Innovation and Digitalisation programme • Programme Office managing and delivering initiatives utilising an agile methodology Business Excellence 7 Value distribution | FY17 OUR PEOPLE INVESTORS GOVERNMENT COMMUNITY R3 029m Salaries & wages R223m Mpower distribution R231m Training & bursaries R2 214m Dividends R854m Direct tax & levies R51m Investment & volunteerism R434m VAT R133m Royalties 8 OPERATIONAL PERFORMANCE Nombasa Tsengwa SHEC performance varied Safety and health • One fatality in March at Matla LTIFR • 0,12 LTIFR* is above the target of 0,11 • OHIFR ** of 0,34, 10% above target of 0,31 Integrated environmental management • Climate change strategy revision being finalised • Carbon emission intensity 5,9%, lower against target of 5% improvement on 2016 • Overall water intensity performance is 35% above the target of 0,2193kl/ton Community Development • Delivery on SLP# projects 15% behind schedule • Social spend primarily in Mpumalanga and Limpopo • ESD## forum established 0,19 0,19 +33% 0,17 Target 0,15 Target 0,11 0,12 0,09 FY13 FY14 FY15 FY16 FY17 SLP spending per region (Rm) 14,3 0,6 2,1 KZN 8,1 National Gauteng Limpopo Mpumalanga 13,8 Fatality * Lost Time Injury Frequency Rate ** Occupational Health Injury Frequency Rate # Social and labour plan ## Enterprise and Supply Development 10 Coal production and sales volumes improved Tonnage movements (Mt) Total coal production (Mt) FY17 vs FY16 Production Sales Medupi ramp up 2,8 2,2 Matla Mine 3 (shortwall stopped) (0,5) (0,5) Leeuwpan (nearing end of LOM) (0,4) (0,5) Exports Other Total (0,3) (0,3) 0,6 0,2 2,1 Commercial Tied Buy-ins +5% 1,2 9,3 0,6 7,9 33,7 34,9 0,5 7,4 37,6 7,1 7,1 40,8 40,9 FY15 FY16 FY17 FY18* FY19* Total coal sales (Mt) Export Tied Domestic +2% 6,2 9,3 7,9 7,9 7,6 7,4 28,0 28,0 29,4 8,0 7,1 33,1 10,9 7,1 29,9 FY15 FY16 FY17 FY18* FY19* * Based on latest internal forecast Additional information on slides 34 to 37 11 Coal export volumes stable • Exports only 3% lower despite mid year Export product mix (%) congestion at RBCT • Lower buy-ins and production at Leeuwpan also impacted lower exports • Migration of markets from west to east continues • Product portfolio is quite diversified • Discounts on subgrades tend to widen as API4 price increases RB1 RB3 Power station coal 6 94 17 16 13 24 67 63 19 17 50 50 31 33 10 33 57 FY13 FY14 FY15 FY16 FY17 FY22* Export sales destinations (%) Average realised prices** Europe India Other Asia Africa Other 27 73 8 10 14 33 35 2 24 8 32 34 11 11 65 9 21 61 FY13 FY14 FY15 13 FY16 9 FY17 $ 90 80 70 60 50 40 Average R/US$ rate Average API4 Exxaro average export price 80 80 72 65 84 69 67 61 64 50 57 50 R/$ 16 14 12 10 8 FY13 FY14 FY15 FY16 FY17 FY22* * Based on latest internal forecast ** FY22 prices in FY18 real US$ terms Additional information on slide 38 12 Operational excellence (OE) delivering value • Focus continues on OE to reduce cost and Coal cash cost (Rm indexed) achieve productivity and efficiency improvements across all BU’s • Geological challenges experienced at Leeuwpan and Mafube due to mining in end of LOM areas • Digitalisation and innovation projects progressing well 4,3 (1,8) (1,2) 108,1 5,8 1,0 100,0 Labour unit cost (%) Grootegeluk cash cost (R/ton indexed) FY16 Inflation Variable volume Variable cost Fixed cost Arnot/ Inyanda FY17 Labour inflation at 7,11% ECC 0,3% NBC Matla 2,9% 3,5% GG 2,5% Mafube 50% Leeuwpan 21,5% 22,5% 6,0 (4,5) 3,8 (0,6) 104,7 100,0 0% 5% 10% 15% 20% 25% FY16 Inflation Labour Services General FY17 13 Coal projects driving growth Waterberg Mpumalanga GG6 Expansion Belfast • Capex: R4,8bn • Product: Minimum 1,7Mtpa of semi-soft coking coal • In construction • 1st production: FY20 Thabametsi Phase 1 • Capex: R3,2bn • Product: 3,9Mtpa of thermal coal • 1st production: FY21 • Capex: R3,3bn • Product: 2,7Mtpa of thermal coal • In construction • 1st production: 1H20 Matla Mine 1 Relocation • Capex: R1,8bn • Construction start pending Eskom approval Grootegeluk Rapid Load Out Station Leeuwpan Lifex* • Capex: R1,3bn • Load capacity: 12Mtpa • In construction • Commissioning: 1H19 Grootegeluk Discard Inpit Phase 2 • Capex: R0,6bn • Commissioning • Capex: R0,6bn • Product: 2,7Mtpa of thermal coal • In construction • 1st production: 2H18 Orange text: Changes from August guidance Green text: Current status of the project * Life Expansion Additional information on slide 32 14 Capex adequately provided R million Expansion capital profile Sustaining capital profile 4 000 3 000 2 000 1 000 0 4 000 3 000 2 000 1 000 0 FY16 FY17 FY18* FY19* FY20* FY21* FY22* FY16 FY17 FY18* FY19* FY20* FY21* FY22* 312 440 2 821 2 108 2 009 851 148 Waterberg 1 940 2 687 2 430 1 783 1 534 1 665 1 113 55 161 1 035 1 495 505 5 Mpumalanga 440 516 1 244 924 860 684 540 367 601 3 856 3 603 2 514 856 148 Total 2 380 3 203 3 711 2 745 2 415 2 370 1 676 Other 37 38 21 21 23 762 3 592 4 100 2 402 483 Previous guidance** 3 345 3 202 2 200 2 187 2 136 1 771 * Based on latest internal forecast ** FY17 based on FD pre-close, other years based on August guidance Additional information on slide 33 15 FINANCIAL RESULTS Riaan Koppeschaar Financial overview | core group results 9% 18% 24% 38% 17% Revenue R million NOP R million Equity income R million HEPS Cents per share EBITDA R million FY17 FY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17 FY16 2H 12 077 11 135 2 741 2 960 1 559 2 192 1 108 1 150 3 459 3 594 1H 10 736 9 762 3 073 1 981 1 129 (26) 903 307 3 748 2 545 FY 22 813 20 897 5 814 4 941 2 688 2 166 2 011 1 457 7 207 6 139 17 Financial overview | non-core adjustments R million Coal Disposal of assets Loss on disposal of other non-core assets and VSPs* Ferrous Impairment charges VSPs* TiO2 Loss on dilution of investment in Tronox Partial disposal of investment in Tronox Limited Other ECC contingent consideration adjustment BEE replacement transaction Mayoko iron ore project Loss on disposal of other non-core assets, VSPs* and other Non-core adjustment impact on net operating profit Net financing cost - BEE replacement transaction Tax on items with impact on net operating profit Post-tax equity-accounted income Total non-core adjustment impact on attributable earnings * Voluntary severance packages FY17 (59) (59) 5 085 (106) 5 191 (4 780) (354) (4 339) (27) (60) 246 (11) 17 (565) (313) FY16 248 303 (55) (101) (100) (1) (36) (36) 148 (445) 670 (77) 259 40 207 506 2H17 (35) 1H17 (24) (35) (24) 5 160 (31) 5 191 (4 716) (317) (4 339) (60) 409 (11) 11 (561) (75) (75) (64) (37) (27) (163) 6 (4) (152) (161) 18 Net operating profit | core – FY16 vs FY17 R million 422 (1 003) 2 262 246 6 060 5 814 5 200 (259) 4 941 (536) (260) (12) IFRS FY16 Non-core Core FY16 Inflation Forex Rehab Price Volume Cost Core FY17 Non-core IFRS FY17 Coal 5 166 (248) 4 918 (505) (230) (14) 2 242 446 (789) 6 068 (59) 6 009 Ferrous (47) 101 Other* 81 (112) 54 (31) (10) (21) 2 20 14 (27) 53 (30) (38) (187) (307) TOTAL 5 200 (259) 4 941 (536) (260) (12) 2 262 422 (1 003) 5 814 * Consists of both TiO2 and Other segment results 53 (2) 6 060 305 246 19 Equity income | core – FY16 vs FY17 R million 126 2 688 (565) 374 11 6 (1) 6 2 373 (207) 2 166 IFRS FY16 Non-core Core FY16 SIOC RBCT Mafube Cennergi Tronox Black Mountain 2 416 (192) 2 224 374 SIOC RBCT Mafube Cennergi 238 3 (35) 15 (35) 253 3 11 6 (1) 2 123 Core FY17 2 598 (24) 259 2 Non-core IFRS FY17 705 3 303 (24) 259 2 Tronox* (384) 5 (379) Black Mountain 100 100 TOTAL 2 373 (207) 2 166 374 11 6 (1) 6 6 (373) (1 270) (1 643) 226 226 2 688 (565) 2 123 126 126 * Investment in Tronox Limited classified as held-for-sale on 30 September 2017, upon which equity-accounting has ceased 20 Attributable earnings | core R million Revenue Operating expenses Net operating profit Income from investments Net financing cost Post-tax equity-accounted income SIOC Tronox Mafube Cennergi Black Mountain RBCT Tax Non-controlling interest Attributable earnings Attributable earnings (cents)* FY17 FY16 22 813 20 897 (16 999) (15 956) 5 814 4 941 2 (600) 2 688 2 598 (373) 259 2 226 (24) (628) 2 166 2 224 (379) 253 3 100 (35) (1 559) (1 294) (50) 6 295 2 011 (12) 5 173 1 457 % change 9 (7) 18 4 24 17 2 2 (33) 126 31 (20) 22 38 2H17 1H17 12 077 10 736 (9 336) (7 663) 2 741 3 073 % change 12 (22) (11) 2 (149) 1 559 1 366 (78) 141 13 127 (10) (692) (19) 3 442 1 108 (451) 1 129 1 232 (295) 118 (11) 99 (14) (867) (31) 2 853 903 67 38 11 74 19 28 29 20 39 21 23 * Based on weighted average number of shares (excl. NewBEECo shareholding) in FY17 of 313 million (FY16: 355 million) 21 Group EBITDA | core R million Coal FY17 FY16 % change 2H17 1H17 % change 7 376 6 002 23 3 709 3 667 1 Tied operations 145 238 (39) (10) 155 (106) Commercial operations 7 231 5 764 25 3 719 3 512 6 Ferrous Alloys Other Other 53 54 (1) (222) 60 32 28 77 (12) 69 (104) 53 54 (1) (303) 81 Total EBITDA 7 207 6 139 17 3 459 3 748 (8) 22 Net debt/(cash) | FY17 R million 1 322 (6 826) 31 Dec 2016 3 921 (1 500) (6 525) Dividends received 2 695 (4 969) (2 562) 2 478 (84) 31 Dec 2017 2 227 Capex 3 524 2 478 790 Tax Dividends paid 409 Net fin cost Cash generated (108) Tronox disposal Other Share repurchase Replacement BEE Transaction Net cash before NewBEECo debt NewBEECo debt and transactions costs 23 Capital allocation Source of cash Capital allocation Financial targets • Cash generated by • Debt service operations • Dividends from investments • Portfolio optimisation – Coal asset disposals – Investment disposals • Sustaining capital • Expansion capital • Dividends to shareholders • Growth opportunities • Excess cash returned to shareholders • Net debt : EBITDA 1,0 – 1,5 times range • Return: 1,5 x WACC* on mining projects • Return: 15% on equity on energy projects • Dividend policy: 2,5 – 3,5 core attributable earnings * Weighted average cost of capital 24 Dividend declared | FY17 Special 1Q18 Total FY17 Final Interim 2H17 1H17 Attributable earnings per share* (cents) Dividend declared per share (cents) 1 255 Dividend cover* (times) 2 011 1 108 700 2,9 400 2,7 Dividend declared (Rm) 4 502 2 378 1 435 Main Street 333 NewBEECo Public 1 350 3 152 355 430 430 1 593 1 005 588 903 300 3,0 943 355 * Adjusted for non-cash non-core items 25 Tronox Limited First tranche • Carrying value of interest sold • Proceeds on disposal of 22,4 million shares (US$474 million) Gain on disposal • FCTR* recycled as result of disposal • Loss on financial instruments revaluation recycled to profit or loss Total gain recognised through profit or loss Remaining Tronox Limited divestment Staged monetisation in order to focus on core business: • Fund future capital programme and growth opportunities • Manage debt profile • Return capital to shareholders Tronox Limited acquisition of Cristal • Longstop date extended awaiting necessary regulatory approval Rm (2 665) 6 525 3 860 1 332 (1) 5 191 * Foreign currency translation reserve 26 OUTLOOK Mxolisi Mgojo Outlook GLOBAL SOUTH AFRICA • Strong economic growth momentum • Favourable global environment and high levels of investor and business confidence • Stable international coal markets: China domestic coal policy will continue driving markets • Strong Chinese steel production to partly offset additional iron ore supply and positive foreign international sentiment expected to support South Africa’s growth prospects • Stable thermal coal trading conditions anticipated • Encouraging political developments: a downgrade of local currency to sub-investment grade by Moody’s unlikely • Momentum in the titanium dioxide pigment market to continue • Volatile rand exchange rate 28 Our future beyond coal • Coal remains our primary business • New businesses explored: – Smart renewable energy – Water – Food • Business of Tomorrow (BoT) is exploring global and international opportunities • Returns only expected in the longer term 29 THANK YOU ADDITIONAL INFORMATION Coal | Major projects 1H18 • GG6 Expansion construction continues • Belfast construction commenced during 4Q17 • Thabametsi Mine Phase 1 - Notice to proceed for full construction expected by 1H18 • Matla Mine 1 Relocation awaiting Eskom funding approval • GG Rapid Load Out Station construction continues • Leeuwpan Life Expansion construction continues 2H18 • GG6 Expansion construction continues with first GG2 Plant shut planned for 3Q18 • Belfast construction continues • Thabametsi Mine Phase 1 construction commences pending notice to proceed • GG Rapid Load Out Station construction continues • Leeuwpan Life Expansion first coal expected 2H18 FY19 • GG6 Expansion construction continues • Belfast construction continues with start of cold commissioning • Thabametsi Mine Phase 1 construction continues • GG Rapid Load Out Station project close expected 2H19 • Leeuwpan Life Expansion project close expected 1H19 FY20 • GG6 Expansion construction and commissioning concludes • Belfast commissioning concludes • Thabametsi Mine Phase 1 construction continues GG6 Expansion • Capex: R4,8bn • Product: 1,7 – 2,7 Mtpa of semi-soft coking coal • • 1st production: FY20 In construction Belfast • Capex: R3,3bn • Product: 2,7Mtpa of thermal coal • • 1st production: 1H20 In construction Thabametsi Phase 1 • Capex: R3,2bn • Product: 3,9Mtpa of thermal coal • 1st production: FY21 Matla Mine 1 Relocation • Capex: R1,8bn • Construction start pending Eskom funding approval Grootegeluk Rapid Load Out Station • Capex: R1,3bn • Load capacity: 12Mtpa • • Commissioning: 1H19 In construction Grootegeluk Discard Inpit Phase 2 • Capex: R0,6bn • Project in close out phase Leeuwpan Lifex • Capex: R0,6bn • Product: 2,7Mtpa of thermal coal • • 1st production: 2H18 In construction Orange text: Changes from August guidance 32 Coal | Capital expenditure R million Sustaining GG load out station GG trucks, shovels and stacker reclaimers GG discard and backfill GG other Leeuwpan OI reserve ECC Other Expansion GG6 Phase 2 Other GG Thabametsi Phase 1 Belfast Total coal capital expenditure Waterberg Mpumalanga Other Previous guidance Actual FY16 2 380 76 596 400 868 86 200 154 367 125 184 3 55 FY17 3 203 311 781 358 1 237 37 268 211 601 388 52 161 Forecast* FY18 3 711 FY19 2 745 FY20 2 415 FY21 2 370 FY22 1 676 684 602 162 982 346 445 490 3 856 2 206 386 229 249 479 160 895 135 538 289 3 603 1 190 690 334 510 5 522 354 2 514 882 100 918 1 027 1 035 1 495 505 394 226 493 320 243 148 148 831 335 499 369 336 856 100 751 5 2 747 2 252 495 3 804 3 127 677 7 567 5 251 2 279 37 6 348 3 891 2 419 38 4 929 3 543 1 365 21 3 226 2 516 689 21 1 824 1 481 320 23 4 107 6 794 6 300 4 589 2 619 1 771 * Based on latest internal forecast 33 Coal | Production volumes '000 tonnes Thermal Production Grootegeluk Matla ECC Leeuwpan NBC Mafube (50%) Arnot Inyanda Belfast Buy-ins FY15 FY16 FY17 FY18* FY19* 41 100 40 811 42 843 45 403 45 277 21 637 20 616 23 405 26 672 27 083 7 900 3 904 3 774 2 857 1 760 7 400 4 060 3 355 2 963 1 660 7 091 3 860 4 099 2 489 1 192 7 859 1 365 3 786 2 870 1 147 1 401 1 035 1 222 606 504 7 098 3 893 5 322 1 552 329 Total thermal production (including buy-ins) 42 322 41 417 43 347 45 403 45 277 Total metallurgical production - Grootegeluk 1 856 1 985 2 132 2 453 2 738 * Based on latest internal forecast 34 Coal | Production challenges ‘000 tonnes 4 821 45 479 43 402 (165) (84) (943) (122) (74) (710) (622) (24) FY16 NBC LOM MAF LOM MAT Mine 3 MAT Fatal LP Strike wall GG Strike GG Stacker All gains FY17 LP Contractor notice & change 35 Coal | Actual production vs Previous guidance ‘000 tonnes 48 151 (511) (1 278) 113 46 475 24 (1 306) 286 45 479 Drivers • LP & MAF End of LOM • Matla M3 wall • Strike action Drivers • GG stacker incident • GG late delivery of trucks • LP End of LOM Aug guidance Tied Commercial Buy-ins FD Pre-close Nov Tied Commercial Buy-ins FY17 36 Coal | Sales volumes '000 tonnes Sales to Eskom Grootegeluk Matla NBC Leeuwpan Arnot FY15 FY16 FY17 FY18* FY19* 33 377 29 922 31 054 34 725 32 203 19 521 18 914 21 144 25 122 25 122 7 869 7 893 7 403 7 074 7 081 2 732 2 699 2 507 2 529 416 1 854 1 401 Other domestic thermal coal sales 2 587 4 709 4 592 4 015 3 422 Exports 6 182 7 858 7 612 7 975 10 917 Total thermal coal sales 42 146 42 489 43 258 46 715 46 542 Total domestic metallurgical coal sales 1 341 1 298 1 190 1 463 1 363 * Based on latest internal forecast 37 Coal | Export market volumes per mine Million tonnes 0,6 1,2 1,6 0,6 0,5 1,1 1,3 1,3 0,8 0,8 1,4 1,1 1,0 1,5 0,4 0,8 0,7 1,6 3,5 1,1 1,0 0,5 1,6 3,4 1,2 0,9 0,5 1,2 3,4 1,0 1,9 0,7 1,6 3,6 1,4 3,6 FY13 FY14 FY15 FY16 FY17 FY18* FY19* Leeuwpan Grootegeluk ECC Inyanda Mafube Other** * Based on latest internal forecast ** Buy-ins and inventory 38 Coal | Domestic market volumes per mine Million tonnes 0,7 2,6 3,3 1,6 10,1 0,5 2,5 3,2 1,4 10,4 0,1 2,8 2,9 1,4 7,8 0,5 2,9 2,8 7,9 0,7 2,8 2,3 7,4 17,3 18,2 22,3 21,8 23,6 0,4 2,6 2,2 7,1 0,2 1,7 7,1 27,9 28,0 FY13 FY14 FY15 FY16 FY17 FY18* FY19* Grootegeluk Matla Arnot Leeuwpan NBC Other** * Based on latest internal forecast ** Consists of Inyanda (FY15) and ECC 39 Grootegeluk Medupi production and sales profile | Addendum 9 settlement Matimba (Mt) Medupi (Mt) Total (Mt) Take-or-pay (Mt) Premium (Rm) Shortfall (Rm) 2013 2014 2015 2016 2017 1H17 2H17 2018*# 2019 onwards** 14,5 12,5 11,0 12,7 12,2 6,3 5,9 12,7 12,7 14,5 15,3 19,5 19,5 21,1 10,3 10,8 25,2 25,2 2,8 8,5 6.8 8,9 4,0 4,9 12,5 12,5 1 594 1 466 3,2 2,3 6,9 3,0 1,9 1,1 677 646 1 237 1 093 728 365 Highlighted text indicates changes from August guidance * Based on latest internal forecast ** Depending on Eskom requirement, opportunity remains to increase Medupi to max 14,6Mt and Matimba to max 15,3Mt # Addendum 9 ended December 2017. Normal commercial arrangements effective going forward . 40 Coal | Sensitivities Measure Sensitivity Impact on NOP (Rm) Environmental rehabilitation discount rate 1% (252) 223 Sales volumes 1% Price per tonne US$1 (105) (101) 105 101 Exchange rate 10 cents (40) 40 Labour Railage Fuel Electricity 1% 1% 1% 1% (20) (20) 20 20 (8) 8 (4) 4 41 Financial overview | Group IFRS R million Revenue Operating expenses Net operating profit Net operating profit margin (%) Post-tax equity-accounted income Attributable earnings: owners of parent Headline earnings* Cash generated from operations Capital expenditure Net (cash)/debt* Attributable earnings per share (cents)** Headline earnings per share (cents)** Average R/US$ rate Realised Spot FY17 FY16 2H17 1H17 22 813 20 897 12 077 10 736 (16 753) (15 697) (8 927) (7 826) 6 060 5 200 3 150 2 910 27 2 123 5 982 1 560 6 826 3 921 (84) 1 923 502 25 2 373 5 679 4 621 5 549 2 780 1 322 1 600 1 302 26 998 3 290 (1 227) 3 166 2 607 (84) 1 071 (380) 27 1 125 2 692 2 787 3 660 1 314 4 349 852 882 13,49 13,30 14,54 14,69 13,51 13,40 13,42 13,20 * Non-IFRS number ** Weighted average number of shares of 311 million (FY16: 355 million) 42 Financial overview | Group core* R million Revenue Operating expenses Net operating profit FY17 FY16 2H17 1H17 22 813 20 897 12 077 10 736 (16 999) (15 956) (9 336) (7 663) 5 814 4 941 2 741 3 073 Net operating profit margin (%) 25 24 23 Post-tax equity-accounted income 2 688 2 166 1 559 Headline earnings 6 295 5 173 3 441 Headline earnings per share (cents) 2 011 1 457 1 108 Weighted average number of shares 313 355 311 29 1 129 2 853 903 316 EBITDA 7 207 6 139 3 459 3 748 Average API4 export price (US$/tonne) 84 64 90 79 Average coal export price realised US$/tonne R/tonne * Non-IFRS 69 922 50 738 73 972 65 860 43 Group net operating profit | core - 1H17 vs 2H17 R million 456 (633) 163 3 073 (149) 96 2 910 144 409 3 150 (246) 2 741 Coal Ferrous Other* IFRS 1H17 3 014 (104) 2 910 Non-core Core 1H17 Inflation Forex Price Volume Cost Rehab Core 2H17 Non-core IFRS 2H17 24 3 038 (134) 161 139 163 35 3 073 (15) (149) (65) 96 119 25 144 340 54 62 456 (248) (26) (359) (633) (246) 3 030 (35) 2 995 53 (342) 2 741 53 102 3 150 444 409 (246) * Consists of both TiO2 and Other segment results 44 BEE transaction | IFRS financial impact R million Statement of comprehensive income Revenue Operating expenses Net operating profit Net finance costs Income from financial assets Share of income of equity-accounted investments Profit before tax Income tax expense Profit for the year Group statement of financial position Non-current assets Current assets Non-current assets held-for-sale Total assets Equity Non-current liabilities Current liabilities Non-current liabilities held-for-sale Total equity and liabilities WANOS (million) FY17 before BEE transaction Second repurchase Specific issue FY17 after BEE transaction 22 813 (12 414) 10 399 (600) 2 2 123 11 924 (1 542) 10 382 47 706 6 289 3 910 (4 339) (4 339) (11) (4 350) (4 350) (2 695) 7 342 57 905 (2 695) (2 695) 37 196 14 926 4 132 1 651 7 342 4 864 2 483 (5) 57 905 (2 695) 7 342 316 22 813 (16 753) 6 060 (611) 2 2 123 7 574 (1 542) 6 032 47 706 10 936 3 910 62 552 39 365 17 409 4 127 1 651 62 552 311 45 Cash generated vs EBITDA R million IFRS net operating profit Non-core adjustments Core net operating profit Depreciation and amortisation Core EBITDA Non-cash adjustments: Unrealised foreign exchange and other fair value movements Provisions (reversed)/raised Impairment or write-down of receivables Indemnification asset movement Share-based payment expense Transaction cost amortised VSPs* BEE transaction costs Cost recovery of tied mines not yet received and other Cash generated before working capital movements * Voluntary severance packages FY17 FY16 2H17 1H17 6 060 (246) 5 814 1 393 7 207 (144) (242) 34 (168) 260 5 (94) 232 7 090 5 200 (259) 4 941 1 198 6 139 (19) 899 39 (56) 269 5 (98) (896) 6 282 3 150 (409) 2 741 718 2 910 163 3 073 675 3 459 3 748 (75) (50) 11 (138) 123 (94) 224 (69) (192) 23 (30) 137 5 8 3 460 3 630 46 HEPS contribution to group JSE HEPS* Coal Ferrous TiO2 Energy Other Core HEPS** Coal Ferrous TiO2 Energy Other FY17 cents Contribution % FY16 cents Contribution % 502 1 299 400 (127) 1 100 259 80 (25) 1 302 927 630 (109) 100 71 48 (8) % change FY17 vs FY16 188 32 (17) (1 071) (214) (146) (11) (203) 2 011 1 293 398 (126) 1 445 100 64 20 (6) 22 1 457 931 630 (110) 6 100 64 43 (8) 1 (23) 2 21 * Weighted average number of shares including shareholding relating to BEE transaction in FY17 of 311 million (FY16: 355 million) ** Weighted average number of shares excluding shareholding relating to BEE deal in FY17 of 313 million 47 Debt and key performance indicators Bank covenants* Net debt: equity (%) EBITDA interest cover (times) Net debt: EBITDA (times) Internal key performance indicators EBITDA interest cover (times) Return on equity: headline earnings (%) Return on capital employed** (%) Net debt: equity (%) Net debt: EBITDA (times) Target FY17 FY16 <80 >4 <3 >4 >20 <40 <2 3 15 6 4 25 11 11 1 9 13 24 4 0,2 * Including contingent liabilities except DMR guarantees, as well as dividends received from associates ** Excluding impairments 48 Capital funding structure R million Facilities available Drawn Undrawn/ committed Undrawn/ unissued Term loan and revolving facility* 3 500 4 500 DMTN** programme Interest bearing borrowings NewBEECo preference share liability Finance lease liabilities Capitalised transaction costs 520 4 020 2 501 19 (58) 4 480 Maturity profile of debt Total interest bearing borrowings 6 482 Repayment year 6 482 Current Non-current Net cash and cash equivalents Net cash 2 6 480 (6 566) (84) Less than 6 months 6 – 12 months 1 – 2 years 2 – 3 years 3 – 4 years 4 – 5 years > 5 years 1 1 509 (13) 3 239 2 620 125 * Excludes additional R2bn accordion option ** Domestic medium-term note 49 ECC contingent consideration API4 coal price range (US$/tonne) Minimum Maximum 60 60 60 80 90 90 Year FY17 FY18 FY19 Total Deferred payments (US$m) Expected coal price (US$/tonne)* Discount factor of 3% Fair value adjustment (US$m) 84,35 82,00 74,41 1,00 0,97 0,93 25,00 18,33 16,81 25 25 35 85 Total ZAR** Paid January 2018 Payable beyond 2018 Net present value of the fair value adjustment (US$m) 25,00 17,72 15,71 58,43 723 309 414 * Based on latest internal forecast ** Assuming closing US$ exchange rate of R12,37 at 31 December 2017 50 Tronox | US GAAP reconciliation to IFRS FY17 FY16 2H17 9 months 12 months 3 months 1H17 6 months US$m Rm US$m Rm US$m Rm US$m Rm US GAAP loss after tax as reported by Tronox (274) IFRS adjustments Reversal of amortisation on intangible asset PPA step-up adjustments Translation differences and other adjustments Tax adjustment Prior year adjustment* IFRS loss after tax Non-core adjustments** (Loss)/profit after tax Remainder of Tronox SA & UK operations (36) 16 (29) (28) 12 (7) (310) 226 (84) (128) 44 (58) 12 21 4 (4) (9) (46) 1 (45) (46) 1 (241) (13) 5 (8) (10) (254) 226 (28) (52) 24 (33) (23) 11 (21) (18) 12 (7) (56) (56) (76) 20 Exxaro's share of (loss)/profit after tax – 12 months (29) (373) (20) (379) (8) (78) (21) (295) Remainder of Tronox# SA & UK operations## (55) (743) (21) (394) (22) (296) (33) (447) 26 370 1 15 14 218 12 152 * Exxaro included this adjustment in the current year ** As defined by Exxaro # FY17: Relates to Exxaro’s share of losses for only nine months ## FY17: US$ amount relates to Exxaro’s share of losses for only nine months and Rand amount relates to Exxaro’s share of losses for 12 months 51