Results presentation 31 December 2006 Poised for growth HIGHLIGHTS - - PowerPoint PPT Presentation

Results presentation – 31 December 2006

Poised for growth

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HIGHLIGHTS – YEAR ON YEAR

• Revenue up 32%
• Operating profit up 36%
• Headline earnings increase 33%
• Production volumes up 1%
• Export volumes down 3%
• Maiden dividend of 80cps

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OPERATIONAL OVERVIEW

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SAFETY (LOST TIME INJURY FREQUENCY RATE)

0,3 0,36 0,29 0,19 0,31 0,92 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 2001 2002 2003 2004 2005 2006

Thabazimbi mine

0,87 0,22 0,29 0,51 0,48 0,85 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 2001 2002 2003 2004 2005 2006

Sishen mine

Highlights

• 5,3 million injury free man-

hours at Sishen mine

• 4 000 fatality free production

shifts at Thabazimbi mine Low points

• One fatality at Sishen mine

1 0,9 0,8 0,7 0,6 0,5 0,4 0,3 0,2 0,1 1 0,9 0,8 0,7 0,6 0,5 0,4 0,3 0,2 0,1

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OPERATIONAL PERFORMANCE – SISHEN

• Sustained production

achieved

• Stripping ratio and

waste mined in line with mine plans

• Pressure on

production costs

(1) Measured as total waste: total ore

56,01 62,43 79,59 Total production cost (Rand / ton) 27,5 28,5 28,7 Total production (Mtpa) 1,7 1,8 1,9 Stripping ratio (1) 54,7 58,6 59,3 Waste mined (Mtpa) 2004 2005 2006

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174,08 198,55 188,02 Total production cost (Rand / ton) 2,5 2,5 2,4 Total production (Mtpa) 11,2 7,5 6,4 Stripping ratio (1) 34,5 25,0 18,6 Waste mined (Mtpa) 2004 2005 2006

OPERATIONAL PERFORMANCE – THABAZIMBI

(1) Measured as total waste: total ore

• Production

impacted by logistical constraints

• Waste mined and

stripping ratio in line with life of mine plan

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20,9 22,1 21,5 Sales export 9,4 9,2 8,3 Sales domestic 30,3 31,3 29,8 Sales total 20,7 22,1 21,5 Export shipments 22,0 24,0 24,3 Saldanha railed 2004 2005 2006 Mtpa

OPERATIONAL PERFORMANCE – LOGISTICS AND SALES

• Exports impacted by

shiploader breakdown in September 2006

• Shiploader 2 back

in operation by August 2007

• Domestic sales

impacted by logistics constraints and lower Mittal demand in 2006

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FINANCIAL OVERVIEW

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FINANCIAL PERFORMANCE

Overview of results

57% 2 727 4 276 376 3 900 Basic earnings 33% 1 596 2 125 262 1 863 Headline earnings 45% 400 580 114 466 HE - attributable to minorities 28% 19% 42% 16% Tax rate 36% 1 996 2 705 376 2 329 Equity holders 6% (1 084) (1 014) (269) (745) Taxation 39% (87%) 36% 32% % Change 3 811 (120) 3 931 6 573 Audited prelisting statement 12-months 2005 5 289 648 4 641 Profit before tax (64) (36) (28) Net finance costs 5 353 684 4 669 Operating profit 8 654 2 171 6 483 Revenue Unaudited 12- month aggregated 2006 Audited 2-month Act 2006 Unaudited 10-month Act 2006 Rand million

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FINANCIAL PERFORMANCE

Minority interest

4 469 573 Attributable profit (314)

• Add back:

20% of profit on disposal (R1 571) 580 114 Minority interest Headline earnings adjustment 894 114 Attributable to minorities – 20% 153 41 153 41 Add back : IFRS3 charge CGT on above profits 4 275 379 Profit for the year Unaudited 12- month aggregated 2006 Audited 2-month Act 2006 Rand million

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FINANCIAL PERFORMANCE

Discussion on once-off charges arising from empowerment transaction

30 19 11 Transaction costs (iii) (1 571) – (1 571) Profit on sale of KIBV (ii) 153 153 – IFRS 2 charge (i) Unaudited 12-month aggregated 2006 Audited 2-month Act 2006 Unaudited 10-month Act 2006 Rand million

(i) Kumba sale of 3% interest in SIOC to SIOC Community Development Trust (ii) Sale of offshore non-iron ore assets to Exxaro (iii) Transaction costs in relation to the Kumba BEE transaction

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FINANCIAL PERFORMANCE

Operating profit variance – unaudited

95 255 1775 328 202 242 584 5 353 3 931

1 000 2 000 3 000 4 000 5 000 6 000 7 000

2005 Act Price Exchange Volume Inflation Cash cost Non-cash cost Other 2006 Act

R million

Other costs include the reversal of the sale of Hope Downs of R1 163 million, the profit

• n disposal of non-iron ore offshore assets to Exxaro of R1 571 million and the IFRS 2

charge of R153 million

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FINANCIAL PERFORMANCE

Cash cost detailed analysis – unaudited

100 200 300 400 500 600 700

Distribution charges Volume Labour costs Petroleum Contract mining Maintenance cost Corporate costs Cost savings Cash costs total

174 22 15 64 259 37 53 40 584 R million

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FINANCIAL PERFORMANCE

Profit margins – unaudited

Group EBIT as percentage of gross turnover

21% 19% 42% 46%

0% 10% 20% 30% 40% 50% 2003 2004 2005 2006

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42 129 256 38 273 4 277 2 594 1 121 1 462 1 041 2 559 2 192

500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 4 500 2004 2005 2006 2007

Cash retained in operations SIB capital Expansion capital Cash available after capex Capital expenditure range

FINANCIAL PERFORMANCE

Cash flow analysis – unaudited

95% compound growth in cash retained in

• perations

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FINANCIAL PERFORMANCE

Cash flow variance – unaudited

1 000 2 000 3 000 4 000 5 000 6 000

2005 Opening balance 2006 Cash generated Tax Dividends Capital expenditure Proceeds

• n

disposals Translation Interest- bearing debt raised 2006 Closing balance

4 277 1 198 591 1 534 1 718 1 571 44 939 1 094 R million

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FINANCIAL PERFORMANCE*

Sensitivities on EBIT of a 1% change in

• 77
• 76
• 50
• 22
• 17
• 100
• 80
• 60
• 40
• 20

20 40 60 80 100 Rand / US$ Iron ore prices Export volumes Operating costs Capital

R’m * Unaudited

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FINANCIAL PERFORMANCE

• Firm iron ore prices
• EBIT margin of 46%, up 10% year on year
• Robust cash flows
• Cost containment programmes in place
• Maiden dividend of 80cps
• Dividend cover of 1,05 times

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PROJECTS

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Current pipeline includes 11 projects, ranging from implementation to potential study phase, representing incremental production capacity of some 78 Mtpa (excluding Faleme) to in excess of 90 Mtpa (including Faleme).

Healthy project pipeline

GROWTH STRATEGY

Potential Pre- feasibility Ideas Optimisation Technical review Approved Implement Feasibility MRM Mining Plant Customer Decision Decision

SEP 13 Mt Faleme in excess

• f 12 Mt

Sishen South 9 Mt Phoenix 3 Mt SEP 2 10 Mt to 20 Mt Pellets 1,5 Mt

Short term initiatives 0,5 – 1,0 Mt

SEP 3 C-Material +20 Mt ZRP 1,5 Mt Sishen South Expansion 6 Mt Sishen DMS Expansion 2 Mt

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GROWTH POTENTIAL

Kumba is targeting 70 Mtpa by 2015

2015 Growth prospects Sishen Sishen South Phoenix SEP 2 Phase 1 Pellets Faleme 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 90,0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2016 Mtpa SEP Thabazimbi

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• On track to deliver first

production in Q3 2007

• Project to be delivered

within the R5 100 million budget

• Outstanding safety

performance

• Strong market support

for the product

SEP – PROGRESS

13 Mtpa brownfields expansion, utilising jigging technology to beneficiate medium grade ores previously considered waste

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SISHEN SOUTH – UPDATE

• On track for investment decisions by mid-2007

– Mine feasibility to be completed by March 2007 – Transnet export channel expansion feasibility progressing well

• Capex in order of R3 billion
• Ore qualities similar to that of Sishen

Greenfields project of up to 9 Mtpa direct shipping ore, 70 km south of Sishen near Postmasburg

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PROJECT PHOENIX – UPDATE

• Mittal informed Kumba in December 2006

that it does not wish to participate in Phoenix

• Feasibility study to be completed
• Kumba is currently considering alternatives

to ensure maximum resource utilisation

• The existing commercial arrangements with Mittal

are unaffected

Project Phoenix considers an extension of 20 years to the LOM through the utilisation of the banded iron ore formation in combination with hematite

• re from the old underground operations

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FALEME – UPDATE

• Engagement with the Government of

Senegal continues

• Exploration drilling commenced again with

permission of the Minister of Mines

• Presence increased: Country manager

and branch office

Greenfields project in excess of 12 Mtpa, potential utilising both hematite and magnatite resources, 747km south east of Dakar. Requires infrastructure and export harbour facilities.

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TRANSFORMATION

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TRANSFORMATION

• Fully compliant on the 26% HDSA ownership

criteria for 2014

• HDSA in management at 33%
• Women in mining at 13%
• BEE procurement 26,8% of discretionary spend
• All applications for conversions submitted and

accepted by DME

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MARKET

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IRON ORE MARKET

• The iron ore industry remains fundamentally attractive

– Global seaborne iron ore volumes are expected to grow by more than 9% to 730 Mt in 2007 – Steady growth in demand forecast until at least 2020 (25% growth from today’s levels) – Demand (particularly seaborne) growing due to Chinese demand and reduced steel scrap availability – Greenfield incentive pricing is expected until at least 2015 and Brownfield incentive pricing until 2025 – Some iron ore producers and steel producers have reached settlement on a 9,5% benchmark iron ore price increase for 2007

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KUMBA – POISED FOR GROWTH

Successful debut on the JSE Fully empowered Solid financial results Major projects under evaluation SEP on track to commence production in Q3 2007 Strong cash flow generation Maiden dividend of 80 cents per share

Questions and answers