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GROUP – NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 20. PER SHARE INFORMATION continued Rand million 2011 Gross adjustment 2011 Net attributable 2010 Gross adjustment 2010 Net attributable Profit attributable to equity holders of Kumba 17,042 17,042 14,323 14,323 Net loss on disposal or scrapping of property, plant and equipment 10 6 5 3 Net loss on disposal of investment – – 2 2 17,052 17,048 14,330 14,328 Taxation effect of adjustments (3) (1) Minority interest in adjustments (1) (1) Headline earnings 17,048 17,048 14,328 14,328 Rand million 2011 2010 Attributable earnings per share Basic 53.11 44.66 Diluted 52.97 44.52 Headline earnings per share Basic 53.13 44.67 Diluted 52.99 44.54 Dividend per share 44.20 34.50 Interim 21.70 13.50 Final 22.50 21.00 21. SHARE CAPITAL AND SHARE PREMIUM (including treasury shares) Number of shares 2011 2010 Authorised Ordinary shares of R0.01 each 500,000,000 500,000,000 Issued Ordinary shares of R0.01 each 322,058,624 321,911,721 Reconciliation of issued shares Number of shares at beginning of year 321,911,721 320,415,081 Number of ordinary shares issued 5,377,770 1,496,640 Number of ordinary shares repurchased and cancelled (5,230,867) – Number of shares at end of year 322,058,624 321,911,721 Shares held in reserve reconciliation Authorised shares at the beginning of year not issued 178,088,279 179,584,919 Shares issued (140,000) (1,342,852) Shares held by the Kumba Iron Ore Management Share Trust (6,903) (153,788) Unissued shares 177,941,376 178,088,279 The unissued shares are under the control of the directors of Kumba until the next AGM. Rand million 2011 2010 Reconciliation of share capital and premium Balance at beginning of year 153 208 Total shares issued for cash consideration 16 74 Shares issued – share premium 16 80 Net movement in shares held by Kumba Iron Ore Management Share Trust – (6) Net movement in treasury shares under employee share incentive schemes (139) (129) Purchase of treasury shares employee share incentive schemes (278) (191) Shares issued to employees under employee share incentive schemes 139 62 Share capital and premium at end of year 30 153 Consists of: Share capital 3 3 Share premium 27 150 54 Kumba Iron Ore Limited
22. EQUITY-SETTLED SHARE-BASED PAYMENTS RESERVE Unrecognised share-based payment expense at 31 December Recognised share-based payment expense Rand million 2011 2010 2011 2010 Balance at beginning of year 487 466 Equity-settled share-based payments expense Employee share incentive schemes 2,327 200 352 195 – Envision Phase 1 – 119 168 123 – Envision Phase 2 2,227 – 104 – – Bonus Share Plan (BSP) 94 69 71 39 – Long-term Incentive Plan (LTIP) 6 11 8 24 – Share Appreciation Rights Scheme (SARS) – 1 1 7 – Deferred Bonus Plan (2011 and 2010: < R1 million) – – – – – Management Share Option Scheme – – – 2 Vesting of shares under employee share incentive schemes (445) (166) Change in effective ownership of SIOC (refer to note 23) – (16) Non-controlling interest (87) 8 Balance at end of year 307 487 Employee share incentive schemes Employees of the group participate in the following share incentive schemes. Refer to annexure 3: share-based payments for details of each share scheme. Bonus Share Plan The BSP for executive directors and senior employees was implemented during 2009. The adoption and implementation of the scheme was approved by shareholders at the AGM on 20 March 2009. The BSP is offered to senior managers and key executives who have the opportunity and the responsibility to contribute towards the Kumba’s overall strategic objectives. The BSP has two components: – a payment of an annual cash bonus; and – a forfeitable award of shares linked to the participant’s annual cash bonus award known as Bonus Shares. The number of Bonus Shares awarded is determined with reference to the amount of the annual cash bonus an employee receives which is directly linked to the employee’s personal performance and potential. The shares are held by an escrow agent and released to the employee three years after the award date (subject to continuous employment). During the three-year period, the employee is entitled to all rights attaching to the Bonus Shares including dividend entitlements and voting rights. Long-term Incentive Plan Senior employees receive annual grants of conditional awards of Kumba shares. The conditional award will vest after the performance period of three years, and to the extent that specific performance conditions have been satisfied. No retesting of the performance conditions is allowed. The performance conditions for the LTIP awards made to date are subject to the achievement of stretching performance targets relating to total shareholder return (TSR) and to an operating measure, currently return on capital employed (ROCE), over a fixed three-year period. Audited annual financial statements The performance conditions will determine if, and to what extent, the conditional award will vest. Upon vesting the employee will be entitled to shares in Kumba to settle the value of the vested portion of the conditional award. The conditional awards which do not vest at the end of the three-year period will lapse. Upon retrenchment, ill-health, disability, retirement or death a proportion of unvested conditional awards shall vest on the date of cessation of employment. The proportion of awards that vest under the LTIP would reflect the number of months’ service and in the opinion of the Remuneration Committee the extent to which the performance conditions have been met. On resignation or termination of employment all unexercised (vested and unvested) conditional awards will lapse on the date of cessation of employment. The main intention of the LTIP is to settle the benefits by delivering shares in Kumba to employees. The aggregate number of shares which may be allocated under the LTIP when added to the total number of unvested conditional awards, unexercised SARS and share options allocated to employees under any other managerial share scheme, may not exceed 10% of the number of issued ordinary shares of Kumba. Share Appreciation Rights Scheme During 2007 and 2008 senior employees received annual grants of share appreciation rights, which are rights to receive Kumba shares equal to the value of the difference between the market value of a Kumba share on the day immediately preceding the date of exercise (exercise price) of the right and market value of the Kumba share on the day immediately preceding the date of grant of the right (grant price). No new grants have been made as the SARS was replaced with the BSP. Annual Financial Statements 2011 55
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 and 52: 9. INTEREST-BEARING BORROWINGS Rand
Page 53 and 54: 10. PROVISIONS continued Change in
Page 55 and 56: 15. OPERATING EXPENSES Rand million
Page 57: 19. TAXATION Rand million 2011 2010
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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