CURRENTLY VIEWING: INTERIM RESULTS » COMMENTARY

COMMENTARY RESULTS Headline earnings for the six months to 31 December 2010 have increased by 313,2%, to R1 392 million, compared to the same period in the previous financial year, due to the significant increase in the earnings for the period of Assmang Limited (Assmang), together with increased commissions earned on improved sales prices of group products. Assore holds a 50% interest in Assmang, which is proportionately consolidated in accordance with International Financial Reporting Standards (IFRS). Assmang’s headline earnings increased by 317,5% to R2 512 million compared to the same period in the previous financial year. Recovered selling prices for all products, which were depressed for the comparative period, contributed positively following the global recession that set in during the last quarter of 2008. Although market conditions have improved since December 2009, the strong South African Rand/US Dollar exchange rate continued to negatively impact earnings. Assmang’s turnover for the period under review improved significantly in comparison to the same period in the previous financial year with an increase of 76,3% amounting to R8,1 billion from R4,6 billion in 2009. SALES VOLUMES Sales volumes for this period were lower for all commodities, except for chrome. Volumes for iron ore were impacted by derailments and those for manganese alloys by the rebuilding of manganese furnaces. The table below sets out Assmang’s sales volumes for the current period: Half-year ended 31 December   31 December %   Metric tons ’000 2010   2009 change   Iron ore 4 039   4 452 (9)  Manganese ore* 1 456   1 463 (1)  Manganese alloys* 87   120 (28)  Charge chrome 91   75 21   Chrome ore* 213   99 215   * Excluding intra-group sales CAPITAL EXPENDITURE The bulk of the Group’s capital expenditure occurs in Assmang, where more than R2 billion was spent on capital items in the period, mostly in the iron ore and manganese divisions. A total of R1 565 million was spent at Assmang’s Khumani Iron Ore mine, with R1 204 million being spent on the Khumani Expansion Project (KEP), with an additional R156 million on waste development. R60 million was spent at Assmang’s Black Rock Manganese Mine on the construction of a surface plant. The expenditure programme on the KEP is planned to meet the timing of Assmang’s increased export allocation on the Sishen-Saldanha line from 10 to 14 million tons per annum by mid-2012, which remains on schedule. A further R216 million was spent on furnace rebuilds and upgrades across Assmang’s Manganese and Chrome divisions. Additional capital amounting to R13 million was utilised at the Rustenburg Chrome Ore Mine, where the first of two underground shafts commenced commercial production, while the second is expected to be in full production within the next 18 months. OUTLOOK Despite record steel production during 2010 and industry forecasts that production in 2011 will be even higher, driven by the demand from China and other Asian countries, the outlook for the Group’s commodities is mixed. Iron ore demand and prices continue to be robust, however the market for manganese ore and alloys together with charge chrome and chrome ore are reasonably balanced at present and are not expected to change significantly for the remainder of the year. DIVIDENDS The results in the announcement include the final dividend relating to the previous financial year of 240 cents (2009: 200 cents) per share, which was declared on 1 September 2010 and paid to shareholders on 27 September 2010. Based on the increased earnings for the current period, the board has increased the company’s interim dividend, in the amount to 200 cents (2009: 100 cents) per share, which will be paid to shareholders on or about 14 March 2011. In accordance with IFRS, this interim dividend is not included in the results for the period under review as it was declared after 31 December 2010. ACCOUNTING POLICIES AND BASIS OF PREPARATION The financial results for the period under review have been prepared in accordance with IAS 34 – Interim Reporting, on the historical cost basis, except for financial instruments which are fairly valued. The accounting policies applied are consistent with those adopted in the financial year ended 30 June 2010, with the exception of the amendments to: • IFRS 2 – Share-based Payment; and • IAS 32 – Financial Instruments: Presentation. These changes, together with IFRIC 19 – Extinguishing Financial Liabilities with Equity Instruments, and a set of improvements that represent mostly minor changes, published by the International Accounting Standards Board, did not have any impact on the results or disclosures of the Group. The comparatives for earnings and dividends per share, and weighted average number of ordinary shares in issue have been restated for the subdivision of 5 for 1 ordinary shares on 10 September 2010. DECLARATION OF INTERIM DIVIDEND Interim dividend No. 108 of 200 cents per share was declared for the six month period ended 31 December 2010 in the currency of the Republic of South Africa. In accordance with Strate Limited, the following dates apply to the dividend declared: • The last trading date to qualify for the dividend (and for changes of address or dividend instructions) will be Friday, 4 March 2011. • The company’s ordinary shares will commence trading “ex dividend” from the commencement of business on Monday, 7 March 2011. • The record date will be Friday, 11 March 2011. Dividend cheques in payment of this dividend to holders of certificated shares will be posted on or about Monday, 14 March 2011. Electronic payment to holders of certificated shares will be undertaken simultaneously. Holders of dematerialised shares will have their accounts at their Central Securities Depository Participant or broker credited on Monday, 14 March 2011. Share certificates may not be dematerialised or rematerialised between Monday, 7 March 2011 and Friday, 11 March 2011, both days inclusive. On behalf of the board     Desmond Sacco Chairman CJ Cory Chief Executive Officer     Johannesburg 16 February 2011