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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010

Notes 1-10 | 11-20 | 21-33

		2010	2009
		R’000	R’000
21.	PROFIT BEFORE TAXATION AND STATE’S SHARE OF PROFITS
	Profit before taxation and State’s share of profits are stated after taking into account the following items of income and expenditure:
	Income
	Foreign exchange gains	140 513	566 220
	– realised	89 506	556 709
	– unrealised	51 007	9 511
	Profit on disposal of property, plant and equipment	8 631	38 450
	Expenditure
	Amortisation of intangible assets	180	180
	Auditors’ remuneration
	– audit fees	5 443	5 148
	– other services	390	–
	Cost of inventories written down (refer note 7)	4 148	131 383
	Depreciation of mining assets (refer note 2)	491 781	406 052
	– Land, buildings and mining properties	25 480	21 248
	– Leased assets capitalised	4 211	6 946
	– Mineral and prospecting rights	19 380	19 813
	– Plant and equipment	273 082	227 672
	– Prospecting, exploration, mine development and decommissioning	30 276	31 545
	– Vehicles, furniture and office equipment	139 352	98 828
	Depreciation of other assets (refer note 2)	8 924	8 569
	– Land and buildings	387	124
	– Plant and equipment	3 724	4 780
	– Township and industrial property	113	1 068
	– Vehicles, furniture and office equipment	4 700	2 597
	Exploration expenditure	480	660
	Foreign exchange losses	19 723	101 614
	– realised	17 419	69 817
	– unrealised	2 304	31 797
	Impairment of non-financial assets (refer note 2)	16 664	59 114
	Loss on disposal and scrapping of property, plant and equipment	5 858	14 251
	Mining royalty taxation	15 211	–
	Operating lease expenses	658	694
	Professional fees	3 393	2 486
	Provision for impairment of receivables and bad debts written off	414	126
	Staff costs, including executive directors’ emoluments (refer note 33)
	– healthcare costs	28 007	23 455
	– pension fund contributions	48 074	39 821
	– salaries and wages	848 271	743 300
	Transfer secretaries’ fees	210	242
22.	TAXATION AND STATE’S SHARE OF PROFITS
	South African normal taxation
	– current year	329 644	1 028 723
	– under/(over)provisions relating to prior years	5 730	(193)
	Capital gains tax	–	2 672
	State’s share of profits	80 442	234 352
	Deferred taxation on temporary differences arising in current year	348 500	482 627
	Secondary tax on companies	51 269	216 332
	Securities transfer taxation	157	–
	Foreign normal taxation	7 221	16 980
		822 963	1 981 493
	The current tax charge is affected by non-taxable investment income, capital redemption allowances and assessed tax losses in certain subsidiary companies and trading losses in other subsidiary companies for which there was no tax relief in the current year.

	Estimated losses available for the reduction of future taxable income arising in certain subsidiary companies at year-end, for which no deferred tax assets have been raised	203 522	236 789

	Estimated unredeemed capital expenditure available for reduction of future taxable income on mining operations in certain joint-venture and subsidiary companies.	22 365	26 036

	The group has unused credits in respect of secondary tax on companies of R176,1 million (2009: R689,6 million). A deferred tax asset has not been raised on these amounts as there is no certainty that the credits will be utilised in the foreseeable future.

	Reconciliation of tax charge as a percentage of profit before taxation and State’s share of profits
	Statutory tax rate	28,00	28,00
	Adjusted for:
	State’s share of profits	3,45	4,46
	Secondary tax on companies	2,20	4,12
	Disallowable expenditure	1,81	1,52
	Impact of calculated tax losses	(0,57)	0,49
	Foreign tax rate differential	(0,27)	0,32
	Capital gains tax	–	0,05
	Dividend and other exempt income	(0,29)	(0,15)
	Underprovisions relating to prior years	0,25	–
	Other	0,67	(1,06)
	Effective tax rate	35,25	37,75

23.	EARNINGS AND HEADLINE EARNINGS PER SHARE
	Earnings per share (cents) (basic and diluted)	6 181	13 669
	Headline earnings per share (cents) (basic and diluted)	6 243	13 772
	The above calculations were determined using the following information:
	Earnings
	Profit attributable to shareholders of the holding company per consolidated
	income statement	1 479 524	3 241 452
	Headline earnings
	Earnings as above	1 479 524	3 241 452
	Adjusted for:
	Profit before taxation on disposal of:
	– property, plant and equipment	(8 631)	(38 450)
	– available-for-sale investments	–	(19 086)
	Loss on disposal and scrapping of property, plant and equipment	5 858	14 251
	Impairment of non-financial assets	16 664	59 114
	Net taxation effect on the above items	790	8 512
	Headline earnings	1 494 205	3 265 793
	Weighted number of ordinary shares in issue for the year (’000), calculated as follows:
	Ordinary shares in issue	27 687	27 658
	Treasury shares (refer note 11)	(3 751)	(3 944)
		23 936	23 714

24.	DIVIDENDS
	Dividends declared during the year
	Final dividend No 105 of 1 000 cents (2009: 1 000 cents) per share
	– declared on 26 August 2009	275 717	280 000
	Interim dividend No 106 of 500 cents (2009: 1 000 cents) per share
	– declared on 27 March 2010	139 607	275 717
	Less: Dividends attributable to treasury shares	(56 309)	(76 311)
		359 015	479 406
	Per share (cents)	1 500	2 022
	Dividends relating to the activities of the group for the year under review
	Interim dividend No 106 of 500 cents (2009: 1 000 cents) per share
	– declared on 27 March 2010	139 607	275 717
	Final dividend No 107 of 1 200 cents (2009: 1 000 cents) per share
	– declared on 1 September 2010	335 057	275 717
	Less: Dividends attributable to treasury shares	(67 781)	(72 747)
		406 883	478 687
	Per share (cents)	1 700	2 019

25.	NOTES TO THE STATEMENT OF CASH FLOW
	25.1	Cash generated by operations
		Profit before taxation and State’s share of profits	2 334 460	5 248 880
		Adjusted for:	378 894	586 466
		– Dividends received	(17 770)	(20 030)
		– Interest received	(190 827)	(366 720)
		– Profit on disposal of property, plant and equipment	(8 631)	(38 450)
		– Profit on disposal of available-for-sale investments	–	(19 086)
		– Discount on redemption of preference shares	–	(18 000)
		– Net unrealised foreign exchange losses/(gains)	(57 620)	22 286
		– Amortisation of intangibles	180	180
		– Cost of inventories written down	4 148	131 383
		– Depreciation and impairment of property, plant and equipment	517 369	473 735
		– Finance costs	123 633	304 063
		– Environmental provision discount adjustment	4 722	5 409
		– Borrowing costs capitalised	–	(5 915)
		– Movement in foreign currency translation reserve	7	22 231
		– Loss on disposal of property, plant and equipment	5 858	14 251
		– Movements in long-term provisions	3 674	53 692
		– Movements in short-term provisions	(13 625)	28 500
		– Provision for impairment of receivables and bad debts written off	414	126
		– Other non-cash flow items	7 432	(1 189)

			2 713 424	5 835 346

	25.2	Dividend income
		Credited to the income statement	17 770	20 030

	25.3	Movements in working capital	27 885	(647 663)
		Decrease/(increase) in inventories	(830 753)	1 383 043
		(Increase)/decrease in trade and other receivables	357 438	(395 054)
		Increase/(decrease) in trade and other payables	(10 515)	(2 467)
		Payments against short-term provisions	(455 945)	337 859

	25.4	Taxation paid	(429 293)	(966 127)
		Unpaid at beginning of year	(822 963)	(1 981 493)
		Charged to the income statement	348 500	482 627
		Movement in deferred taxation	253 895	429 293
		Unpaid at end of year	(649 861)	(2 035 700)

	25.5	Dividends paid	(95)	(68)
		Unpaid at beginning of year	(415 324)	(555 717)
		Declared during the year	56 309	76 311
		Dividends attributable to treasury shares	245	95
		Unpaid at end of year	(358 865)	(479 379)

	25.6	Cash resources
		The cash resources disclosed in the cash flow statement comprise cash on hand, deposits held on call with banks and highly liquid investments that are readily convertible to known amounts of cash and are subject to insignificant changes in value over time. Bank overdrafts have been separately disclosed in the notes to the financial statements (refer note 18).

26.	FINANCIAL RISK MANAGEMENT
	The group is exposed to various financial risks due to the nature and diversity of its activities and the use of various financial instruments. These risks include:
	– credit risk;
	– liquidity risk; and
	– market risk.

	Details of the group’s exposure to each of the above risks and its objectives, policies and processes for measuring and managing these risks are included specifically in this note and more generally throughout the consolidated financial statements together with information regarding management of capital.

	The boards of directors of all group companies (the boards) have overall responsibility for the establishment and oversight of the group’s risk management framework. These boards have delegated these responsibilities to executive committees, which are responsible for the development and monitoring of risk management policies within the group. These committees meet on an ad hoc basis and regularly report to the respective boards on their activities. The risk management policies are established to identify and analyse the risks faced by the group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the activities of the group.

	The roles and responsibilities of the committees include:
	– approval of all counterparties;
	– approval of new instruments;
	– approval of the group’s foreign exchange transaction policy;
	– approval of the investment policy;
	– approval of the treasury policy; and
	– approval of long-term funding requirements.

	The internal auditors undertake regular and ad hoc reviews of risk management, controls and procedures, the results of which are monitored by the Assore Audit and Risk Committee.

	26.1	Credit risk
		Credit risk arises from possible defaults on payments by customers or, where letters of credit have been issued, by bank counterparties. The group minimises credit risk by the careful evaluation of the ongoing creditworthiness of customers and bank counterparties before transactions are concluded. Customers are generally required to raise letters of credit with banking institutions that have acceptable credit ratings, however, certain customers who have well-established payment histories are allowed to transact on open accounts.

		Overdue amounts are individually assessed and if it is evident that an amount will not be recovered, it is impaired and legal action is instituted to recover the amounts involved.

		*Credit exposure and concentrations of credit risk*
		The carrying amount of financial assets represents the maximum credit exposure at the reporting date, and the following table indicates various concentrations of credit risk for all non-derivative financial assets held:

									2010	2009
									R’000	R’000
		Loans and long-term receivables (refer note 6)							31 906	–
		Trade receivables (refer note 8)							1 460 915	585 129
		Local							85 128	32 808
		Foreign							1 375 787	552 321
		Other receivables – local (refer note 8)							20 131	7 958
		Total carrying amount per statement of financial position							1 512 952	593 087

			2010				2009
			Receivables		Impair-		Receivables		Impair-
			not	Receivables	ment	Carrying	not	Receivables	ment	Carrying
			impaired	impaired	amount	value	impaired	impaired	amount	value
			R’000	R’000	R’000	R’000	R’000	R’000	R’000	R’000

		Loans and long-
		term receivables	31 906	–	–	31 906	–	–	–	–
		Aged as follows:
		Trade receivables	1 460 915	–	–	1 460 915	585 129	–	–	585 129
		Not past due, not impaired	1 459 873	–	–	1 459 873	582 252	–	–	582 252
		Not past due, but impaired	–	–	–	–	–	–	–	–
		Past due	1 042	–	–	1 042	2 877	–	–	2 877
		Other receivables	20 131	–	–	20 131	7 958	–	–	7 958
		Not past due, not impaired	20 131	–	–	20 131	7 958	–	–	7 958
		Not past due,
		but impaired	–	–	–	–	–	–	–	–
		Past due	–	–	–	–	–	–	–	–

		As above	1 512 952	–	–	1 512 952	593 087	–	–	593 087

									2010	2009
									R’000	R’000
		Security held over non-derivative financial assets
		Irrevocable letters of credit
		– issued by foreign banks							758 341	214 126

	26.2	Liquidity risk
		The executive committees manage the liquidity structure of the group’s assets, liabilities and commitments so as to ensure that cash flows are sufficiently balanced within the group as a whole. Updated cash flow information and projections of future cash flows are tabled at Executive Committee meetings from the group companies on a regular basis (depending on the type of funding required).

		Surplus funds are deposited in liquid assets (eg liquid money market accounts) (refer note 25.6).

		*Undrawn credit facilities*
		In terms of the Articles of Association of the holding company, the borrowing powers are unlimited. However, based on their respective Articles of Association, restrictions on the following joint-venture and subsidiary companies are in place. External borrowings at year-end amounted to R1 034,4 million (2009: R1 675,4 million):

									2010	2009
									R’000	R’000
		Assmang Limited (joint venture)
		Authorised in terms of the Articles of Association							6 860 259	5 994 297
		Less: External borrowings at year-end
		– Overdrafts and short-term borrowings							(3 612)	(7 404)
		Unutilised borrowing capacity							6 856 647	5 986 893
		*Subsidiary companies*
		Minerais U.S. LLC
		Authorised in terms of the Articles of Association							382 940	386 000
		External borrowings at year-end							(98 032)	(186 438)
		Unutilised borrowing capacity							284 908	199 562

		With the exception of the preference share debt referred to in note 18, the group is cash positive.

		The general banking facilities made available to group companies are unsecured, bear interest at rates linked to prime, have no specific maturity date and are subject to annual review by the banks concerned. The facilities are in place to issue letters of credit, bank guarantees and ensure liquidity.

		*Exposure to liquidity risk*
		The following are the cash flows of the group’s financial assets and liabilities at year-end as determined by contractual maturity date including interest receipts and payments but excluding the impact of any netting agreements with the third parties concerned.

						Total cash	Less than	Between 4 and 12	Between 1 and 5	More than
						flows	4 months	months	years	5 years
						R’000	R’000	R’000	R’000	R’000
		2010
		Financial assets
		Available-for-sale investments				602 851	–	–	–	602 851
		Other investments				73 267	–	–	73 142	125
		Other non-current financial assets				31 906	–	–	–	31 906
		Trade and other receivables				1 481 046	1 481 046	–	–	–
		Cash deposits held by environmental trusts				57 927	57 927	–	–	–
		Cash resources				1 849 982	1 849 982	–	–	–
						4 096 979	3 388 955	–	73 142	634 882
		Financial liabilities
		Interest-bearing borrowings				6 345	–	3 612	2 733	–
		Trade and other payables				1 006 078	1 006 078	–	–	–
		Short-term borrowings and overdrafts				1 028 032	1 028 032	–	–	–
						2 040 455	2 034 110	3 612	2 733	–
		2009
		Financial assets
		Available-for-sale investments				415 066	–	–	–	415 066
		Other investments				42 259	–	–	42 134	125
		Trade and other receivables				593 087	593 087	–	–	–
		Cash deposits held by environmental trusts				47 739	47 739	–	–	–
		Cash resources				3 001 328	3 001 328	–	–	–
						4 099 479	3 642 154	–	42 134	415 191
		Financial liabilities
		Interest-bearing borrowings				13 759	–	7 403	6 356	–
		Preference shares issued				45 200	45 200	–	–	–
		Trade and other payables				648 490	648 490	–	–	–
		Short-term borrowings and overdrafts				1 616 440	1 616 440	–	–	–
						2 323 889	2 310 130	7 403	6 356	–
	26.3	Market risk
		Market risk is defined as the risk that movements in market risk factors, in particular US dollar commodity prices and the US dollar/SA rand exchange rate, will affect the group’s revenue and operational costs as well as the value of its holdings of financial instruments. The objective of the group’s market risk management policy is to manage and control market risk exposures to minimise the impact of adverse market movements with respect to revenue protection and to optimise the funding of the business operations.

		Group companies are responsible for the preparation and presentation of market risk information as it affects the relevant entity. Information is submitted to the executive committees where it is monitored and further analysed to be used in the decision-making process. The information submitted includes information on currency, interest rate and commodities and is used by the committee to determine the market risk strategy going forward. In addition, key market risk information is reported to management on a weekly basis and forecasts against budget are prepared for the entire group on a monthly basis.

		Interest rate risk
		Interest rate risk arises due to adverse movements in domestic and foreign interest rates. The group is primarily exposed to downward interest rate movements on oating investments purchased and to upward movements on overdrafts and other banking facilities. There is no other exposure to fair value interest rate risk as all fixed rate financial instruments are measured at amortised cost.

		The boards determine the interest rate risk strategy based on economic expectations and recommendations received from the executive committees. Interest rates are monitored on an ongoing basis and the policy is to maintain short-term cash surpluses adequate to meet the group’s ongoing cash flow requirements at oating rates of interest.

		At the reporting date, the interest rate profile of the group’s interest-bearing financial instruments was as follows:
									2010	2009
									R’000	R’000

		Variable rate instruments
		Liabilities
		Preference shares (included in long-term borrowings; refer note 13)							–	45 200
		Finance leases (refer note 13)							6 345	13 759
		Preference shares (included in short-term borrowings; refer note 18)							930 000	1 430 000
		Overdrafts (refer note 18)							98 032	186 440
		Assets
		Other non-current financial assets (refer note 6)							31 906	–
		Cash deposits held by environmental trusts per statement of financial position							57 927	47 739
		Cash resources per statement of financial position							1 849 982	3 001 328

		Fair value sensitivity analysis for fixed rate instruments
		The group does not account for any fixed rate financial assets and liabilities at fair value through profit and loss, therefore a change in interest rates at the reporting date would not affect profit or loss.

		Cash flow sensitivity analysis for variable rate instruments
		As the group is a net investor, an increase of 50 basis points in interest rates at the reporting date would have decreased profit after tax by the amounts shown below. This assumes that all other variables remain constant. There is no impact on the group’s equity.
		Variable-rate instruments							6 663

		Net effect on profit or loss is equal but opposite for a 50 basis points decrease on the financial instruments listed above.

		*Commodity price and currency risk*
		Commodity price risk arises from the risk of an adverse effect on current or future earnings resulting from fluctuations in metal and mineral prices. The group also has transactional foreign exchange exposures, which arise from sales or purchases by the group in currencies other than the group’s functional currency. The market is predominantly priced in US dollars and to a lesser extent in euros, which exposes the group to the risk that fluctuations in the SA rand exchange rates may have an adverse effect on current or future earnings.

		The group manages its commodity price risk where possible by entering into supply contracts with customers covering periods of between three months and a year, depending on the commodity traded. With respect to its exposure to foreign currency fluctuations, the group constantly reviews the extent to which its foreign currency receivables and payables are covered by forward exchange contracts taking into account changes in operational forecasts and market conditions and the group’s hedging policy. Foreign currency transactions of a speculative nature are not undertaken within the group.

		The group’s exposure to currency risk at year-end was as follows:

							30 June 2010		30 June 2009
							US dollar	Euro	US dollar	Euro
							000	000	000	000
		Assets					16 088	658	67 026	3 920
		Trade receivables					16 088	658	67 026	3 920
		Liabilities					–	–	–	(63)
		Trade payables					–	–	–	(63)
		Gross financial position exposure					16 088	658	67 026	3 857
		Estimated forecast sales					408 009	1 021	192 627	173
		Gross exposure					424 097	1 679	259 653	4 030
		Less: Export sales covered by forward exchange contracts					–	–	(631)	–
		Net exposure					424 097	1 679	259 022	4 030
		A 5% strengthening of the rand against the following currencies at 30 June would have decreased profit by the following amounts upon revaluation of these assets and liabilities:
							R’000	R’000	R’000	R’000
							6 161	377	25 872	2 081
		A 5% weakening of the rand against the above currencies at 30 June would have had an equal but opposite effect on the amounts shown above, on the basis that all other variables remain constant.

		*Forward exchange contracts*
		At year-end, the group did not have any open forward exchange contracts (2009: R4,9 million). A foreign subsidiary had forward commitments with regard to its inventory of ores, alloys and metals, which for accounting purposes are regarded as executory contracts and are therefore not included in the statement of financial position, but can be summarised as follows:

					2010			2009
					Foreign	Functional		Foreign	Functional
					currency	currency		currency	currency
					notional	notional	Fair	notional	notional	Fair
					amount	amount	value	amount	amount	value
					USD’000	R’000	R’000	USD’000	R’000	R’000
		Purchase contracts
		US dollar			4 300	32 933	32 933	1 500	11 580	11 580
		Sales contracts
		US dollar			25 600	196 065	196 065	19 700	152 084	152 084

	26.4	Fair value of financial assets and liabilities
		The categorisation of each class of financial asset and liability, including their fair values, is included below:
					Available-		Liabilities at	Other	Total
					for-sale	Loans and	amortised	assets and	carrying	Fair
					investments	receivables	cost	liabilities	value	value
				Note	R’000	R’000	R’000	R’000	R’000	R’000
		2010
		Financial assets
		Available-for-sale investments		5	602 851			–	602 851	602 851
		Other investments		5				73 267	73 267	73 267
		Other non-current financial assets		6		31 906		–	31 906	31 906
		Trade and other receivables		8		1 481 046		–	1 481 046	1 481 046
		Cash deposits held by environmental trusts				57 927		–	57 927	57 927
		Cash resources		25.6		1 849 982		–	1 849 982	1 849 982
					602 851	3 420 861		73 267	4 096 979	4 096 979
		Financial liabilities
		Interest-bearing borrowings		13			2 733	–	2 733	2 733
		Trade and other payables		16			1 006 078	–	1 006 078	1 006 078
		Short-term borrowings and overdrafts		18			1 031 644	–	1 031 644	1 031 644
							2 040 455	–	2 040 455	2 040 455
		2009
		Financial assets
		Available-for-sale investments		5	415 066			–	415 066	415 066
		Other investments		5				42 259	42 259	42 259
		Trade and other receivables		8		593 087		–	593 087	593 087
		Cash deposits held by environmental trusts				47 739		–	47 739	47 739
		Cash resources		25.6		3 001 328		–	3 001 328	3 001 328
					415 066	3 642 154		42 259	4 099 479	4 099 479
		Financial liabilities
		Interest-bearing borrowings		13			51 556	–	51 556	51 556
		Trade and other payables		16			648 490	–	648 490	648 490
		Short-term borrowings and overdrafts		18			1 623 843	–	1 623 843	1 623 843
							2 323 889	–	2 323 889	2 323 889
		Determination of fair values
		Quoted market prices at reporting date have been used to determine the fair value of available-for-sale investments. Where quoted market prices were not available, a valuation technique, most commonly discounted cash flows, was used. For trade receivables and payables, the fair value was determined using the discounted cash flow method at market-related interest rate. Carrying amounts approximate fair value for all other financial assets and liabilities.

		Fair value hierarchy
		The group uses the following hierarchy of valuation techniques for determining the fair value of financial instruments measured at fair value:
		Level 1:	quoted prices in active markets for identical assets or liabilities when available.
		Level 2:	other techniques using inputs that are observable, either directly or indirectly.
		Level 3:	techniques using inputs that are not based on observable market data.

									2010	2009
									R'000	R'000
		Available-for-sale investments, measured at Level 1							602 851	415 066

27.	CAPITAL MANAGEMENT
	As the bulk of the group’s sales are for export, the principal risks to which the group is exposed are movements in exchange rates and US dollar prices for the commodities in which it deals, being mainly iron, manganese and chrome ores and to a lesser extent manganese and chrome alloys. All of these markets are priced principally in US dollars and these risks are to a large extent not controllable by the group other than by the use of hedging instruments, which are not utilised.

	The group holds mineral rights over Resources with remaining lives which fluctuate in accordance with current commodity prices and estimated cost of exploitation (refer “Mineral Resources and Reserves”). Decisions to exploit resources would be made at board level and only following the completion of a bankable feasibility study based on the current life of mine and estimated capital cost, operating cost and cost of finance, where required, to ensure that, as far as possible, the deposit can be mined on a sustainable basis to the end of its estimated life.

	The board’s policy is therefore to maintain a strong capital base so as to maintain stakeholder confidence and to sustain future development of the business. The group considers its capital to comprise total equity. The group may adjust its capital structure by way of issuing new shares and is dependent on its shareholders for additional capital as required. The group manages its capital structure in light of changes in economic conditions and the board of directors monitors the capital adequacy, solvency and liquidity of the group on a continuous basis.

	There were no changes in the group’s approach to capital management during the year.

		2010	2009
		R’000	R’000

28.	COMMITMENTS
	Capital
	Expenditure authorised and contracted for	2 678 910	3 346 060
	Expenditure authorised but not contracted for	334 671	310 841
		3 013 581	3 656 901
	Commitments extend over a three-year period and will be financed from operating cash flows, undrawn committed borrowing facilities and project funding. The anticipated cash outflows with regard to the above commitments are as follows:
	2010		1 586 695
	2011	1 594 224	2 070 206
	2012	1 419 357	–
		3 013 581	3 656 901

	Operating lease commitments
	Future minimum rentals payable under non-cancellable operating leases over premises and equipment which are payable as follows:
	Within one year	664	669
	After one year but not more than five years	885	1 561
		1 549	2 230

29.	CONTINGENT LIABILITIES
	Holding company
	Holding company guarantee of US dollar 50 million (2009: US dollar 50 million)
	issued to bankers as security for banking facilities provided to a foreign subsidiary
	company	382 940	386 000
	Performance guarantees issued to customers by subsidiary companies and
	joint-venture entity	85 178	85 185
		468 118	471 185
	Guarantee issued to bankers
	The holding company has also issued guarantees to bankers to secure a short-term export finance agreement facility of R180 million (2009: R180 million) provided to a subsidiary company. The facility is primarily utilised for and on behalf of Assmang in which the group holds a 50% interest and which in turn has provided a back-to-back guarantee to the holding company against any claims made by bankers in terms of this facility. The facility was unused at year-end.

	BEE transactions
	Certain preference shares were issued as part of the BEE transaction entered into in 2006 (refer “Black economic empowerment” report). If an event of default, as defined in the contract, is triggered in relation to the preference shares, the provisions of the relevant put option and call agreements entered into will become operative.

	The group has also provided a guarantee to secure the banking facility extended to Mampa (refer “Black economic empowerment” report) which at year-end amounted to R3,5 million (2009: R5,6 million). The group in turn holds a back-to-back pledge over Mampa’s interest in RMDC in the event that the guarantee is called up.

30.	INVESTMENT IN JOINT-VENTURE ENTITY
	50% (2009: 50%) interest in Assmang Limited (Assmang), which is controlled jointly in terms of a shareholders’ agreement with African Rainbow Minerals Limited (ARM).

	The group financial statements include the following amounts relating to Assmang, which were proportionately consolidated:

	Income statement
	Turnover	6 434 857	7 631 802
	Cost of sales	(4 177 798)	(2 893 166)
	Gross profit	2 257 059	4 738 636
	Other operating income	170 057	441 098
	Other operating expenses	(227 907)	(419 523)
	Income from investments	86 249	219 999
	Finance costs	(7 175)	(35 944)
	Profit before taxation and State’s share of profits	2 278 283	4 944 266

	Statement of financial position
	Property, plant, equipment and intangibles	6 035 177	4 866 388
	Other investments	45 107	42 135
	Other non-current financial assets	31 906	—
	Current assets	3 828 680	3 774 192
	Elimination of investment in joint-venture entity	(468 153)	(468 153)
	Current liabilities – interest bearing	3 612	7 404
	– non-interest bearing	1 048 138	996 839
	Long-term borrowings – interest bearing	2 733	6 356
	Deferred taxation	1 648 598	1 299 498
	Long-term provisions	194 534	182 853
	Distributable reserves	6 575 100	5 721 612

	Cash flows
	Cash retained from operating activities	763 043	1 882 817
	Cash utilised in investing activities	(1 443 045)	(1 387 748)
	Cash generated by/(utilised in) financing activities	1 444	(262 872)
	Cash resources	943 933	1 654 398
	Commitments
	Future capital expenditure:
	– contracted for	2 602 186	3 276 865
	– not contracted for	334 671	310 841
		2 936 857	3 587 706

	Contingent liabilities
	Contingent liabilities relating to the group’s interest in the joint venture are referred to in note 29.

31. SEGMENTAL INFORMATION

The following segments are separately monitored by management and form the group’s reportable segments:

Joint-venture mining and beneficiation

Assore’s principal investment is its 50% share in Assmang Limited (Assmang).

Assmang’s operations are managed by commodity mined, and, where applicable, beneficiated at various works operations. Accordingly, this segment is further analysed as follows:

Iron ore (Iron Ore Division).
Manganese ore and alloys (Manganese Division).
Chrome and charge chrome (Chrome Division).

For purposes of presenting segmental information, disclosure is made of the entire value of the information pertaining to Assmang, with the portion attributable to the other joint-venture partner (50%) shown as part of the consolidation adjustments.

Marketing and shipping

In terms of the joint-venture arrangement with African Rainbow Minerals Limited, Assore and certain of its subsidiaries are responsible for the marketing and shipping of Assmang’s product. In addition, another subsidiary provides consulting and engineering expertise to Assmang and other group companies.

Other mining and beneficiation

This segment contains the chrome operations managed by Rustenburg Minerals Development Company (Proprietary) Limited and Zeerust Chrome Mines Limited, as well as the pyrophyllite and ceramic operations by Wonderstone Limited.

Joint-venture mining and beneficiation

Marketing

Other

Adjustments

Iron Ore

Manganese

Chrome

and

mining and

arising on

R’000

Division

Subtotal

shipping

beneficiation

consolidation^*

Total

Year to 30 June 2010

Revenues

Third party

5 002 654

6 253 174

1 789 643

13 045 471

642 336

189 986

(6 312 211)

7 565 582

Intersegment

–

422 223

2 240

(424 463)

–

Total revenues

5 002 654

6 253 174

1 789 643

13 045 471

1 064 559

192 226

(6 736 674)

7 565 582

Contribution to profit

1 436 649

1 480 222

(184 650)

2 732 221

163 318

(37 431)

(1 378 584)

1 479 524

Contribution to headline earnings

1 435 759

1 477 505

(184 649)

2 728 615

162 596

(20 225)

(1 376 781)

1 494 205

Statement of financial position

Consolidated total assets

8 729 631

8 921 510

1 920 523

19 571 664

5 623 226

5 245 084

(18 089 975)

12 349 999

Other information

Finance income

8 425

163 057

1 016

172 498

100 863

3 715

(86 249)

190 827

Finance costs

461

7 782

6 107

14 350

107 567

8 891

(7 175)

123 633

Depreciation, amortisation and impairment charges

544 301

250 073

142 071

936 445

2 876

28 946

(450 898)

517 369

Taxation

575 229

914 259

(59 962)

1 429 526

106 316

1 884

(714 763)

822 963

Capital expenditure

2 304 067

743 498

288 571

3 336 136

33 596

59 425

(1 668 068)

1 761 089

Year to 30 June 2009

Revenues

Third party

5 026 714

8 897 515

1 812 333

15 736 562

1 120 715

305 623

(7 635 231)

9 527 669

Intersegment

–

513 336

4 592

(517 928)

–

Total revenues

5 026 714

8 897 515

1 812 333

15 736 562

1 634 051

310 215

(8 153 159)

9 527 669

Contribution to profit

2 170 428

3 955 584

193 146

6 319 158

193 942

(73 660)

(3 172 053)

3 267 387

Contribution to headline earnings

2 159 878

3 926 926

213 344

6 300 148

183 645

(55 452)

(3 162 548)

3 265 793

Statement of financial position

Consolidated total assets

6 504 050

8 348 952

2 038 210

16 891 212

4 660 165

2 184 242

(12 574 371)

11 161 248

Other information

Finance income

6 440

432 360

1 200

440 000

135 065

11 655

(220 000)

366 720

Finance costs

54 200

13 059

4 629

71 888

255 118

7 086

(35 944)

298 148

Depreciation, amortisation and impairment charges

408 878

235 242

127 314

771 434

2 176

68 697

(368 392)

473 915

Taxation

781 509

2 662 848

159 667

3 604 024

153 599

33 432

(1 809 562)

1 981 493

Capital expenditure

1 529 176

853 983

396 616

2 779 775

2 491

83 590

(1 389 888)

1 475 968

^*	Adjustments arising on consolidation mainly represent the 50% share in Assmang attributable to the other joint-venture party

Geographical information

Revenues are derived from the following geographical regions:

2010

2009

R’000

R’000

Far East

8 147 495

8 820 502

Europe

2 649 638

3 596 742

USA

1 169 836

1 829 060

South Africa

903 112

1 572 285

Other – foreign

1 322 247

1 577 361

Subtotal¹

14 192 328

17 395 950

Eliminated on proportionate consolidation²

(6 535 796)

(7 868 281)

7 565 532

9 527 669

Notes
1.	Only revenue received from one customer of R2 304 million (2009: R2 551 million) amounted to more than 10% of gross revenue received for the year.
2.	The revenue of Assmang, which is proportionately consolidated (refer note 30), is reflected at 100%, with 50% eliminated upon its proportionate consolidation.

Geographical segmental analysis has not been provided with regard to capital expenditure as 99,99% of the carrying amount of the group’s property, plant and equipment is located in the Republic of South Africa.

32. RELATED-PARTY TRANSACTIONS

Transactions with related parties are concluded at arm’s length and under terms and conditions that are no less favourable than those arranged with third parties.

The following significant related-party transactions occurred during the year:

2010

2009

R'000

R'000

Joint-venture partner

African Rainbow Minerals Limited

– commissions paid by subsidiary company

73 139

121 429

Joint-venture company

Assmang Limited (refer note 30)

– gross commissions received

439 907

531 742

– amounts payable to related parties at year-end

61 088

33 277

– amounts receivable from related parties at year-end

42 347

6 412

Subsidiary companies

Key management personnel of the group

107 147

112 012

Foreign subsidiary

Minerais U.S. LLC

– commissions received

17 683

24 518

– amounts receivable from related-party transactions at year-end

46 359

5 997

The group holds a 51% share in Minerais U.S. LLC (Minerais) which is a limited-liability company registered in the state of New Jersey in the United States of America (USA). Minerais is responsible for marketing and sales administration of the group’s products in the USA, and trades in various commodities related to the steelmaking industry.

Refer note 29 for details of security and guarantees provided on behalf of related parties.

33.	RETIREMENT BENEFIT INFORMATION
	33.1	Pensions
		All subsidiary companies provide retirement benefits through either a defined benefit pension fund or a defined contribution pension fund and Assmang has made provision for pension plans covering all employees which comprise a defined contribution pension fund and two defined contribution provident funds administered by employee organisations within the industries in which members are employed.

		*Defined benefit – Assore Pension Fund*
		In terms of the Pension Funds Act, the Assore Pension Fund is actuarially valued every three years. The most recently completed statutory actuarial valuation of the fund was performed as at 1 July 2008 and revealed a 100,3% funding level. The next actuarial valuation will be completed, effective 1 July 2011. An interim funding check was performed for funding purposes as at 30 June 2010 which revealed a 93,9% funding level (2009: 89,2%). The financial positions at the various dates are set out below.
			2010	2009
			R'000	R'000
		Change in defined benefit obligation
		Benefit obligation at beginning of year	249 886	224 319
		Current service cost	13 643	13 307
		Interest cost on obligation for the year	23 239	23 919
		Actuarial loss due to experience	2 432	6 104
		Actuarial gain due to assumptions	(10 042)	(5 575)
		Benefits paid	(10 184)	(12 188)
		Benefit obligation at end of year	268 974	249 886
		Change in plan assets
		Fair value of plan assets at beginning of year	222 851	234 495
		Expected return on plan assets	20 430	26 146
		Actuarial gain/(loss) on plan assets	5 104	(37 285)
		Employer contributions received	9 664	7 803
		Employees’ contributions received	4 832	3 880
		Benefits paid	(10 184)	(12 188)
		Fair value of plan assets at end of year	252 697	222 851
		Net unfunded position	(16 277)	(27 035)
		Unrecognised actuarial losses	24 447	37 814
		Net pension fund asset – no asset recognised	8 170	10 779
		Components of periodic expense
		Current service cost	13 643	13 307
		Interest cost	23 239	23 919
		Expected return on plan assets	(20 430)	(26 146)
		Amortisation of actuarial loss	653	–
		Net pension cost	17 105	11 080

			2010	2009
			%	%
		The allocation of plan assets is as follows:
		Equity securities	63	69
		Debt securities	32	27
		Other (cash, cash awaiting investment, bank account)	5	4
		Total	100	100

			R’000	R’000
		Expected benefit payment next year	11 000	13 000
		Experience adjustments gain/(loss) on plan assets and liabilities
		– plan assets	25 804	(11 139)
		– plan liabilities	(2 432)	(6 104)
			%	%
		The principal actuarial assumption for the valuations includes:
		Expected return on assets	9,50	9,40
		Post-retirement interest rate	4,60	4,40
		Price inflation rate	6,50	6,58
		Salary inflation rate	7,50	7,70
		Pension increases	4,85	4,94
		*Other assumptions*
		Active mortality – Nil.

		Pensioner mortality PA (90) – Ultimate table, adjusted for two years’ additional longevity since the previous year-end.

		Merit salary increases as per sliding scale depending on age starting at 5% per annum below age 25, and reducing to zero above age 50.

		Spouse’s benefits for active members – on average, husbands are assumed to be two years older than their wives, and married at date of retirement.

		For current pensioners, their actual marital status and, where applicable, the exact age of their spouse have been taken into account.

		*Defined contribution funds – subsidiary companies*
		Certain employees are members of a defined contribution fund, and funds are contributed on an agreed basis between the employer and employees at a rate of 15% of payroll. Contributions expensed in the year amounted to R1,4 million (2009: R1,0 million).

		*Assmang pension and provident funds*
		Assmang has made provision for pension plans covering all employees which comprise a defined contribution pension fund and two defined contribution provident funds administered by employee organisations within the industries in which members are employed.

		Reviews of the plans are carried out by independent actuaries at regular intervals. Contributions to the funds are 15,0% of payroll, split on an agreed basis between members and the employer.

		The amount expensed in this regard in the current year was R34,8 million (2009: R28,2 million).

	33.2	Medical aid
		*Subsidiary companies*
		Subsidiary companies within the group had obligations to fund the medical aid costs of certain employees and pensioners. Agreement has been reached with the pensioners and applicable members of staff in terms of which these obligations have been converted to either purchased annuities or a series of lump sum payments or the payment of periodic actuarially determined benefit amounts into the defined benefit pension fund on their behalf. The payments or premiums concerned were calculated by an independent actuary and have resulted in the liabilities arising from these obligations being settled.

		Medical aid contributions paid on behalf of current members of staff and pensioners by subsidiary companies amounted to R3,8 million (2009: R3,4 million).

		*Joint-venture entity*
		The joint-venture entity, Assmang, has obligations to fund a portion of certain retiring employees’ medical aid contributions based on the cost of benefits. The anticipated liabilities arising from these obligations have been actuarially determined using the projected unit credit method, and a corresponding liability has been raised.

		The following table summarises the components of the net benefit expense recognised in the income statement of the joint-venture entity:

			2010	2009
			R’000	R’000
		Current service cost	498	737
		Interest cost on benefit obligation	1 886	1 638
		Benefits paid	(709)	(664)
		Net actuarial (gain)/loss recognised during the year	(1 776)	1 064
		Net (decrease)/increase in benefit movement for the year	(101)	2 775
		The liability is assessed periodically by independent actuarial survey based on the following principal actuarial assumptions, which are consistent with the previous year:

		– A net discount rate of 1,00% per annum.
		– An increase in healthcare costs at a rate of 7,90% per annum.

		The liabilities raised are based on the present value of the post-retirement benefits. The most recent actuarial valuation was conducted at 30 June 2007 for the year ended 30 June 2007.

		The provisions raised in respect of post-retirement healthcare benefits amounted to R21,2 million (2009: R21,3 million) at the end of the year. The decrease of R0,1 million was credited in the income statement in the current year (2009: R2,8 million charged against income).

		Medical aid contributions paid on behalf of current members of staff and pensioners by the joint-venture entity during the year amounted to R48,5 million (2009: R40,1 million).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2010

21.

PROFIT BEFORE TAXATION AND STATE’S SHARE OF PROFITS

22.

TAXATION AND STATE’S SHARE OF PROFITS

23.

EARNINGS AND HEADLINE EARNINGS PER SHARE

24.

DIVIDENDS

25.

NOTES TO THE STATEMENT OF CASH FLOW

25.1

Cash generated by operations

25.2

Dividend income

25.3

Movements in working capital

25.4

Taxation paid

25.5

Dividends paid

25.6

Cash resources

26.

FINANCIAL RISK MANAGEMENT

26.1

Credit risk

26.2

Liquidity risk

2010

2009

26.3

Market risk

26.4

Fair value of financial assets and liabilities

2010

2009

27.

CAPITAL MANAGEMENT

28.

COMMITMENTS

29.

CONTINGENT LIABILITIES

30.

INVESTMENT IN JOINT-VENTURE ENTITY

31.

SEGMENTAL INFORMATION

32.

RELATED-PARTY TRANSACTIONS

33.

RETIREMENT BENEFIT INFORMATION

33.1

Pensions

33.2

Medical aid

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010