Annual Report 2006
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Notes to the annual financial statements

for the year ended 31 December 2006
   
« Note 30 (financial instruments) Note 32 (segment reporting) » 
   

31.

RELATED PARTY TRANSACTIONS
  During the year the company and its subsidiaries, in the ordinary course of business, entered into various sale and purchase transactions with associates and joint ventures. These transactions occurred under terms that are no less favourable than those arranged with third parties.
 

Associates and joint ventures
Details of investments in associates and joint ventures are disclosed in note 17 and annexure 2 whilst income is disclosed in note 17. Interest income from joint ventures of Rnil million (2005: R3 million) is included in net financing costs (note 5).

The group purchased goods and services to the value of R78 million (2005: R81 million)1 from, and sold goods to the value of R7 million (2005: Rnil million) to associates and joint ventures.

The outstanding balances at year-end are as follows:
 
  • Included in trade and other receivables (note 21) R11 million (2005: R364 million)1
  • Included in trade and other payables (note 27) R32 million (2005: Rnil million)
  • Included in cash and cash equivalents R394 million (2005: R347 million)2
  • Included in the carrying value of associates and joint ventures (note 17) are long-term loans of Rnil million (2005: R2 million)
  • Included in long-term receivables Rnil million (2005: Rnil million) (note 19)
  • Included in financial assets R20 million (2005: Rnil million) (note 19)

1 2005 adjusted to include Trans Orient Ore Supplies (Pty) Limited and RoshSkor Township.
2 2005 adjusted to include Tiwest.
   
 
Subsidiaries
    
Details of income from, and investments in subsidiaries are disclosed in notes 6 and
18 respectively, and annexure 3.    
     
Corporate service fee from subsidiaries
    
The following corporate service fees were received by Exxaro Resources Limited for essential
services rendered:    
 

2006

2005
 

Restated
 

Rm

Rm
Sishen Iron Ore Company (Pty) Limited
58
170
Exxaro Coal (Pty) Limited
57
55
Exxaro Base Metals (Pty) Limited
17
19
Exxaro Sands (Pty) Limited
15
 
147
244
   
 
Completion guarantees
Exxaro Resources Limited provides completion guarantees on behalf of Exxaro TSA Sands (Pty) Limited (previously Ticor South Africa (Pty) Limited) and Exxaro Sands (Pty) Limited (previously Ticor South Africa KZN (Pty) Limited) to an amount of Rnil million (2005: R869 million). On consolidation the guarantees are eliminated as the liabilities of Exxaro TSA Sands and Exxaro Sands are consolidated onto the group balance sheet.
 
Special purpose entities
The group has an interest in the following special purpose entities which are consolidated unless otherwise indicated:
 
   
Entity
Nature of business
Ferrosure (South Africa) Insurance Company Limited Insurance captive
Kumba Environmental Rehabilitation Trust Fund Trust fund for mine closure
Merrill Lynch Insurance PCC Limited Offshore insurance captive
Minco Leasing Limited1 Financing company
Oreco Leasing Limited2 Financing company
Vulcan Leasing Limited1 Financing company
Kumba Resources Management Share Trust Management share incentive trust
Exxaro Employee Empowerment Participation Employee share incentive trust
Scheme Trust  
 
1 Consolidated for 10 months, unbundled to iron ore business.
2 Consolidated 100% for 10 months and 25% for 2 months.
   
 
Directors
Details relating to directors’ emoluments and shareholdings (including options) in the company are disclosed in the report of the directors.
 
Senior employees
Details relating to option and share transactions are disclosed in note 33.
 
Key management personnel
For Exxaro Resources Limited other than the executive and non-executive directors, no other key management personnel were identified. Refer to page 71 for details on directors’ remuneration.

For the group, the directors of the major subsidiaries have been identified as being key management personnel. The major subsidiaries are considered to be the following:
Sishen Iron Ore Company (Pty) Limited1
Exxaro Coal (Pty) Limited
Exxaro TSA Sands (Pty) Limited
Exxaro Sands (Pty) Limited
Exxaro Australia Sands Pty Limited
Exxaro Base Metals (Pty) Limited
Kumba International BV1
Exxaro International BV
   

2006  

2005  
   

Rm  

Rm  
  Short-term employee benefits 43   36  
  Termination benefits 5   1  
  Share-based payments – related expense 23   5  
  Total compensation paid to key management personnel 71   42  
  1       Major subsidiary until 31 October 2006.    
   
 
Anglo group
For the period until 31 October 2006 Kumba Resources’s majority shareholder and parent was Anglo American Capital Limited, with the ultimate controlling party being Anglo American plc. The Kumba Resources group purchased goods and services to the value of R295 million (2005: R190 million) from, and sold goods to the value of R52 million (2005: R152 million) to fellow subsidiaries of the Anglo group.

From 1 November 2006 Anglo American Capital Limited and its subsidiaries, are no longer considered to be a related party.

The outstanding balances at year-end are as follows:
– Included in trade and other receivables (note 21) Rnil million (2005: R14 million).
– Included in trade and other payables (note 27) Rnil million (2005: R29 million).
– Doubtful debts of Rnil million (2005: R4 million) have been provided for.

Shareholders
The principal shareholders of the company at 31 December 2006 are detailed in the “Analysis of Shareholders” schedule on page 203 of the annual report.
 
Contingent liabilities
Details are disclosed in note 34.

 



 

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