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GROUP – NOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 35. RELATED PARTY TRANSACTIONS During the year the company and its subsidiaries, in the ordinary course of business, entered into various sale and purchase of goods and services with the ultimate holding company, Anglo American plc, its subsidiaries, associates and joint ventures. Certain deposits are also placed with the holding company (refer to note 8). The effect of these transactions is included in the results of the group. These transactions occurred under terms that are no less favourable than those arranged with third parties. Holding company Anglo American plc is the group’s ultimate holding company. The interest in the group is held through a 65.22% holding by Anglo South Africa Capital (Pty) Limited (2010: 65.25%). Subsidiaries Details of investments in and loans to/from subsidiaries are disclosed in annexure 1. Associates and joint ventures Details of investments in associates and joint ventures are disclosed in note 3 of the group financial statements and in annexure 2. Entities with significant influence over SIOC Exxaro is SIOC’s 20% Black Economic Empowerment shareholder. Details of dividends paid to Exxaro as well as its proportionate share of earnings for the year are detailed in note 23 of the group financial statements. Special purpose entities The group has an interest in the following special purpose entities which are consolidated: Entity SIOC Employee Share Participation Scheme (Envision) Kumba Iron Ore Rehabilitation Trust Kumba BSP Trust Kumba Iron Ore Management Share Trust Nature of business Investment vehicle Trust fund for mine closure Share incentive scheme administration Share incentive scheme administration Directors and prescribed officers Details relating to directors’ and the group’s Executive Committee remuneration and shareholdings (including share options) are disclosed in the remuneration report on pages 19 to 26. Shareholders The principal shareholders of the company are detailed under ‘Shareholder analyses’ on page 84. Material related party transactions Rand million 2011 2010 Purchase of goods and services and finance charges Subsidiary of the ultimate holding company – 22 Fellow subsidiaries 259 166 Aircraft services 95 69 Research 59 27 Technical services 21 7 Corporate Operations (including shared services) 67 42 Scaw metals 16 21 Other 1 – Associates and joint ventures – 174 Enitities with significant influence over SIOC 1 58 53 Finance income 317 415 Holding company 2 197 4 Amounts owing to related parties (after eliminating intercompany balances) 197 4 Holding company Derivative financial instruments 14 30 Fellow subsidiaries Trade payables 49 15 63 45 1 Goods were purchased from Exxaro and consisted mainly of ferrosilicon. 2 Interest was earned at an average rate of 5.37% (2010: 5.30%) on cash deposits held with Anglo American SA Finance Ltd. 66 Kumba Iron Ore Limited
35. RELATED PARTY TRANSACTIONS continued Rand million 2011 2010 Amounts owing by related parties (after eliminating intercompany balances) Subsidiaries of ultimate holding company 3,980 1,472 Interest receivable 5 3 Cash and cash equivalents 3,885 1,391 Derivative financial instruments 90 78 Fellow subsidiaries Trade receivables 5 3 Associates and joint ventures Loans 33 29 4,018 1,504 36. SEGMENT REPORTING The Kumba Executive Committee considers the business principally according to the nature of the products and service provided, with the identified segments each representing a strategic business unit. The total reported segment revenue comprises revenue from external customers as the group does not have any inter-segment revenue and is measured in a manner consistent with that disclosed in the income statement. The performance of the operating segments are assessed based on a measure of earnings before interest and tax (EBIT), which is consistent with ‘Operating profit’ in the financial statements. Finance income and finance costs are not allocated to segments, as treasury activity is managed on a central group basis. Total segment assets comprise finished goods inventory only, which is allocated based on the operations of the segment and the physical location of the asset. ‘Other segments’ comprise corporate, administration and other expenditure not allocated to the reported segments. Rand million Sishen mine Thabazimbi mine Kolomela mine* Shipping operations Total 2011 Revenue (from external customers) 44,903 907 32 2,711 48,553 EBIT 32,661 112 (80) 337 33,030 Total segment assets 392 268 133 – 793 2010 Revenue (from external customers) 35,159 666 – 2,879 38,704 EBIT 25,540 (44) – 319 25,815 Total segment assets 682 306 – – 988 * Kolomela mine represents a strategic business unit for Kumba, although it does not yet qualify as a reportable segment in terms of IFRS 8, Operating Segments. Audited annual financial statements Annual Financial Statements 2011 67
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 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: 32. COMMITMENTS Rand million 2011 2
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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