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GROUP – NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 10. PROVISIONS Employee benefits Rand million cash-settled share-based payments Contract for affreightment Environmental rehabilitation Decommis- -sioning Total Non-current provisions 1 – 710 190 901 Current portion of provisions 11 – – – 11 Total provisions 12 – 710 190 912 2011 Balance at beginning of the year 11 – 532 140 683 Notional interest – – 46 13 59 Charged to income statement – – 132 – 132 Capitalised to property, plant and equipment – – – 37 37 Utilised during the year (17) – – – (17) Cash-settled share-based payments 18 – – – 18 Balance at 31 December 2011 12 – 710 190 912 Expected timing of future cash flows Within 1 year 11 – – – 11 5 years – – 192 13 205 More than 5 years 1 – 518 177 696 12 – 710 190 912 Estimated undiscounted obligation 12 – 1,222 369 1,603 2010 Non-current provisions – – 532 140 672 Current portion of provisions 11 – – – 11 Total provisions 11 – 532 140 683 Balance at beginning of the year 10 2 377 83 472 Notional interest – – 35 7 42 (Reversed)/charged to income statement – (2) 120 – 118 Capitalised to property, plant and equipment – – – 50 50 Utilised during the year (10) – – – (10) Cash-settled share-based payments 11 – – – 11 Balance at 31 December 2010 11 – 532 140 683 Expected timing of future cash flows Within 1 year 11 – – – 11 More than 5 years – – 532 140 672 11 – 532 140 683 Estimated undiscounted obligation 11 – 1,082 334 1,427 Cash-settled share-based payments (refer to note 22) At 31 December 2011 the current provision represents amounts payable to deceased beneficiaries on the Envision share scheme. The non-current provision represents amounts payable to beneficiaries of certain conditional share awards under the Bonus share scheme which vests in 2014. Environmental rehabilitation Provision is made for environmental rehabilitation costs where either a legal or constructive obligation is recognised as a result of past events. Estimates are based upon costs that are reviewed regularly and adjusted as appropriate for new circumstances. Decommissioning The decommissioning provision relates to decommissioning of property, plant and equipment where either a legal or constructive obligation is recognised as a result of past events. Estimates are based upon costs that are regularly reviewed and adjusted. Funding of environmental rehabilitation and decommissioning (refer to note 4) Contributions towards the cost of mine closure are also made to the Kumba Iron Ore Rehabilitation Trust and the balance of the trust amounted to R568 million at 31 December 2011 (2010: R372 million). Significant accounting estimates The estimation of the environmental rehabilitation and decommissioning provisions are a key area where management’s judgement is required. A change of 1% in the discount rate used in estimating the environmental rehabilitation and decommissioning provisions would result in an increase of R147.4 million (2010: R43.4 million) or a decrease of R122.3 million (2010: R35.6 million) in the carrying value of the provision. A change of one year in the expected timing of the commencement of environmental rehabilitation and decommissioning would result in an increase of R34.7 million (2010: R26.9 million) or a decrease of R33.4 million (2010: R25.8 million) in the carrying value of the provision. 48 Kumba Iron Ore Limited
10. PROVISIONS continued Change in accounting estimate mines. The effect of these changes are detailed below: Rand million Environmental rehabilitation Decommissioning Total Amount of the closure cost 64 18 82 Expected timing of future cash flows 67 20 87 131 38 169 The change in estimate in the environmental rehabilitation provision resulted in a decrease in attributable profit for 2011 of R72 million (effect on earnings per share R0.22 per share) after taking into account taxation of R37 million and minority interest of R22 million. The change in estimate in the decommissioning provision has been capitalised to the related property, plant and equipment (refer to note 1). 11. DEFERRED TAX Rand million 2011 2010 Deferred tax assets Reconciliation Balance at beginning of year 472 129 Foreign exchange translation differences 130 (37) Current year charge per the income statement 56 380 Balance at end of year 658 472 Expected timing Deferred tax assets to be recovered after 12 months 504 327 Deferred tax assets to be recovered within 12 months 154 145 Balance at end of year 658 472 Deferred tax assets attributable to the following temporary differences Estimated tax losses 639 459 Other 19 13 Total deferred tax assets 658 472 There was no unused tax losses for which a deferred tax asset was recognised at 31 December 2011 (2010: R681 million). Rand million 2011 2010 Deferred tax liabilities Reconciliation Balance at beginning of year 2,272 2,282 Prior year adjustment – 9 Current year charge/(credit) per the income statement 2,670 (19) Balance at end of year 4,942 2,272 Expected timing Deferred tax liabilities to be recovered after 12 months 4,495 2,064 Deferred tax liabilities to be recovered within 12 months 447 208 4,942 2,272 Audited annual financial statements Deferred tax liabilities attributable to the following temporary differences Property, plant and equipment 5,061 2,460 Environmental rehabilitation provision (199) (149) Decommissioning provision (20) (16) Environmental rehabilitation trust asset 159 104 Leave pay accrual (46) (40) Other (13) (87) Total deferred tax liabilities 4,942 2,272 Annual Financial Statements 2011 49
Page 1 and 2: KUMBA IRON ORE ANNUAL FINANCIAL STA
Page 3 and 4: KUMBA AT A GLANCE BROAD AND MEANING
Page 5 and 6: INTEGRATED REPORTING THE INTEGRATED
Page 7 and 8: OPERATING PROFIT (R billion) CAGR:5
Page 9 and 10: 17 13 OPERATING EXPENDITURE Rand mi
Page 11 and 12: Net debt Kumba’s net cash positio
Page 13 and 14: productivity improvement project,
Page 15 and 16: CERTIFICATE OF THE COMPANY SECRETAR
Page 17 and 18: DIRECTORS’ REPORT FOR THE YEAR EN
Page 19 and 20: SEGMENT RESULTS Refer to note 36,
Page 21 and 22: REPORT OF THE AUDIT COMMITTEE FOR T
Page 23 and 24: REMUNERATION REPORT FOR THE YEAR EN
Page 25 and 26: Both fixed and variable components
Page 27 and 28: Executive directors’ short-term i
Page 29 and 30: Long-term incentive schemes: intere
Page 31 and 32: PRINCIPAL ACCOUNTING POLICIES FOR T
Page 33 and 34: On disposal of part or all of the i
Page 35 and 36: The average LOM stripping ratio is
Page 37 and 38: The group’s criteria for a deriva
Page 39 and 40: The group recognises termination be
Page 41 and 42: 5.2 Waste stripping costs The rate
Page 43 and 44: GROUP INCOME STATEMENT/ STATEMENT O
Page 45 and 46: GROUP CASH FLOW STATEMENT FOR THE Y
Page 47 and 48: 1. PROPERTY, PLANT AND EQUIPMENT co
Page 49 and 50: 4. INVESTMENTS HELD BY ENVIRONMENTA
Page 51: 9. INTEREST-BEARING BORROWINGS Rand
Page 55 and 56: 15. OPERATING EXPENSES Rand million
Page 57 and 58: 19. TAXATION Rand million 2011 2010
Page 59 and 60: 22. EQUITY-SETTLED SHARE-BASED PAYM
Page 61 and 62: 23. NON-CONTROLLING INTEREST Rand m
Page 63 and 64: 29. FINANCIAL INSTRUMENTS The group
Page 65 and 66: 29. FINANCIAL INSTRUMENTS continued
Page 67 and 68: 29. FINANCIAL INSTRUMENTS continued
Page 69 and 70: 32. COMMITMENTS Rand million 2011 2
Page 71 and 72: 35. RELATED PARTY TRANSACTIONS cont
Page 73 and 74: COMPANY BALANCE SHEET AS AT 31 DECE
Page 75 and 76: COMPANY CASH FLOW STATEMENT FOR THE
Page 77 and 78: 4. SHARE CAPITAL AND SHARE PREMIUM
Page 79 and 80: 11. RELATED PARTY TRANSACTIONS Duri
Page 81 and 82: ANNEXURE 2: INVESTMENTS IN ASSOCIAT
Page 83 and 84: LONG-TERM INCENTIVE PLAN continued
Page 85 and 86: MANAGEMENT SHARE OPTION SCHEME cont
Page 87 and 88: ANNEXURE 5: INCOME STATEMENT - US D
Page 89 and 90: BREAKDOWN OF NON-PUBLIC HOLDINGS BR
Page 91 and 92: NOTES Annual Financial Statements 2
Page 93: 4771/11

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