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PRINCIPAL ACCOUNTING POLICIES
FOR THE YEAR ENDED 31 DECEMBER 2011
PRINCIPAL ACCOUNTING
POLICIES
1. GENERAL INFORMATION
Kumba is the holding company of the Kumba Group. Kumba is a
mining group of companies focusing on the exploration, extraction,
beneficiation, marketing, sale and shipping of iron ore. Kumba
produces iron ore at Sishen and Kolomela mines in the Northern
Kumba is a public company which is listed on the JSE Limited and is
incorporated and domiciled in the Republic of South Africa.
2. BASIS OF PREPARATION
2.1 Accounting framework
The consolidated financial statements are prepared in accordance
with International Financial Reporting Standards (IFRS) and
International Financial Reporting Interpretation Committee (IFRIC)
interpretations of those Standards, the South African Companies
Act No 71 of 2008, as amended, the Listings Requirements of the
JSE Limited, and the AC 500 standards as issued by the Accounting
Practices Board (APB).
The financial statements have been prepared in accordance with the
historical cost convention except for certain financial instruments,
biological assets and share-based payments which are measured
at fair value. The consolidated financial statements are prepared on
the basis that the group will continue to be a going concern. These
accounting policies are consistently applied throughout the group.
The following principal accounting policies and methods of
computation were applied by the company and the group in the
preparation of the consolidated and stand-alone financial statements
for the financial year ended 31 December 2011. Except as disclosed
below, these accounting policies are consistent in all material
respects with those applied for the year ended 31 December 2010.
2.2 Statement of compliance
2.2.1 ADOPTION OF AMENDMENTS TO EXISTING
ACCOUNTING STANDARDS
The following amendments and revisions to issued accounting
standards which are relevant to the group were adopted and are
effective from 1 January 2011:
IAS 24, Related party disclosures (amendment)
This amendment simplifies the definition of a related party, clarifying
its intended meaning and eliminating inconsistencies from the
definition and provides a partial exemption from the disclosure
requirements for government-related entities. This amendment did
not have a significant impact on the reported results for the year
ended 31 December 2011.
Annual Improvements Project 2010
The group adopted the amendments to various issued accounting
standards issued by the International Accounting Standards Board
(IASB) as part of its Annual Improvements Project 2010 that are
effective for reporting periods that commenced on 1 January 2011.
These amendments did not have an effect on the reported results or
the group accounting policies.
Other
A number of other amendments to accounting interpretations issued
by the IASB were applicable for annual periods beginning on or after
1 January 2011 and have consequently been adopted. They have
not had a material impact on the accounting policies, methods of
computation or presentation applied by the group.
2.2.2 NEW ACCOUNTING STANDARDS AND
INTERPRETATIONS NOT YET ADOPTED
At balance sheet date, the following new standards, revisions and
amendments to issued accounting standards and interpretations,
which are relevant to the group but not yet effective, have not been
adopted by the group:
IFRS 9, Financial Instruments: Classification and Measurement
IFRS 9 is the first step in the process to replace IAS 39, ‘Financial
Instruments: Recognition and Measurement’. IFRS 9 introduces new
requirements for classifying and measuring financial assets, financial
liabilities, derecognition and hedge accounting. The standard is not
applicable until 1 January 2013 but is available for early adoption.
IFRS 9 requires all recognised financial assets that are within the
scope of IAS 39 to be subsequently measured at amortised cost
or fair value. With regards to financial liabilities, the accounting for
changes in the fair value of a financial liability that is designated as
at fair value through profit or loss and are attributable to changes
in the credit risk of that liability are recognised in comprehensive
income, unless it creates or enlarges an accounting mismatch in
profit or loss.
It is anticipated that IFRS 9 will be adopted in the group’s
consolidated financial statements for the annual period beginning
1 January 2013. It is not anticipated that the application of the
new standard will have a significant impact on amounts reported
in respect of the group’s financial assets and financial liabilities as
the majority of financial assets and financial liabilities are carried at
amortised cost as disclosed in note 29. However, it is not practicable
to provide a reasonable estimate of that effect until a detailed review
has been completed.
IFRS 10, Consolidated financial statements
This standard builds on existing principles by identifying the concept
of control as the determining factor in whether an entity should be
included within the consolidated financial statements. The standard
provides additional guidance to assist in determining control where
this is difficult to assess. The standard is effective for annual periods
beginning on or after 1 January 2013.
Audited annual financial statements
Annual Financial Statements 2011
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