16th May 2007 07:03
Vedanta Resources PLC16 May 2007 Notes to Preliminary Announcement 1. General information and accounting policies This preliminary results announcement is for the year ended 31 March 2007. Theannouncement, including all comparatives has been prepared using the accountingpolicies consistent with the 2006 and 2007 audited financial statements. Compliance with applicable law and IFRS The financial statements have been prepared in accordance with those parts ofthe Companies Act 1985 applicable to companies reporting under IFRS, Article 4of the IAS Regulation and International Financial Reporting Standards (IFRS) asadopted by the European Union and related interpretations. For Vedanta, there are no differences between IFRS as adopted for use in theEuropean Union and full IFRS as adopted for use by the International AccountingStandards Board. While the financial information contained in this preliminary resultsannouncement has been computed in accordance with IFRS, this announcement doesnot itself contain sufficient information to comply with IFRSs. Thisannouncement does not constitute the Group's statutory accounts for the yearended 31 March 2007 but is derived from those accounts. The statutory accountsfor the year ended 31 March 2007 will be delivered to the Registrar of Companiesfollowing the company's AGM. The auditors have reported on those accounts andtheir reports were unqualified and did not contain statements under sections 237(2) or (3) of Companies Act 1985. The information contained in this announcement for the year ended 31 March 2006does not constitute statutory accounts. A copy of the statutory accounts forthat year has been delivered to the Registrar of Companies. The auditors' reporton those accounts was unqualified and did not contain statements undersection 237(2) of the Companies Act, 1985 (regarding adequacy of accountingrecords and returns) or under section 237(3) (regarding provision of necessaryinformation and explanations). 2. Segment information The Group's primary format for segment reporting is business segments. Thebusiness segments consist of non-ferrous metals i.e. aluminium, copper and zinc,with residual components being reported as "other" (mainly Alumina, Gold andEnergy). Business segment data includes an allocation of corporate costs to eachsector on an appropriate basis. The risks and returns of the Group's operationsare primarily determined by the nature of the different activities in which theGroup is engaged. Inter-segment sales are charged based on prevailing marketprices. The Group's activities are organised on a global basis. Business segments The following tables present revenue and profit information and certain assetand liability information regarding the Group's business segments for the yearsended 31 March 2007 and 2006. Year ended 31 March 2007 Continuing Operations ----------------------------------------------------------------- Total$ million Aluminium Copper Zinc Other Elimination Operations---------------------------------------------------------------------------------------------------------------------RevenueSales to external customers 993.4 3,569.3 1,888.1 51.4 - 6,502.2Inter-segment sales 28.1 - - - (28.1) ----------------------------------------------------------------------------------------------------------------------Segment revenue 1,021.5 3,569.3 1,888.1 51.4 (28.1) 6,502.2---------------------------------------------------------------------------------------------------------------------ResultSegment result before special items 358.8 745.1 1,405.1 0.2 - 2,509.2Special items (0.4) 1.5 (2.3) (0.5) - (1.7)---------------------------------------------------------------------------------------------------------------------Segment result after special items 358.4 746.6 1,402.8 (0.3) - 2,507.5---------------------------------------------------------------------------------------------------------------------Unallocated corporate expenses (1.6)---------------------------------------------------------------------------------------------------------------------Operating profit 2,505.9Net finance costs (20.2)Share of associate's loss (1.3) ----------------Profit before taxation 2,484.4Tax expense (672.7) ----------------Profit for the year from 1,811.7continuing operations ---------------- Assets and liabilitiesSegment assets 1,878.8 2,629.9 2,170.4 1,001.9 - 7,681.0Unallocated assets 390.7 ----------------Total assets 8,071.7 ----------------Segment liabilities (629.8) (1,559.1) (255.9) (185.2) - (2,630.0)Unallocated liabilities (1,290.3) ----------------Total liabilities (3,920.3) ---------------- Other segment informationAdditions to property, plant and equipment 261.8 316.3 245.8 305.0 - 1,128.9Depreciation (56.6) (88.9) (48.9) (1.0) - (195.4)--------------------------------------------------------------------------------------------------------------------- 2. Segmental information Year ended 31 March 2006 Continuing Operations ------------------------------------------------------------------ Total$ million Aluminium Copper Zinc Other Elimination Operations---------------------------------------------------------------------------------------------------------------------RevenueSales to external customers 453.0 2,241.3 875.5 132.0 - 3,701.8Inter-segment sales 40.1 - - - (40.1) ----------------------------------------------------------------------------------------------------------------------Segment revenue 493.1 2,241.3 875.5 132.0 (40.1) 3,701.8---------------------------------------------------------------------------------------------------------------------ResultSegment result 102.8 340.3 489.5 12.9 - 945.5Unallocated corporate expenses (1.7)---------------------------------------------------------------------------------------------------------------------Operating profit 943.8Net finance costs (7.7)Share of associate's loss (1.4) -----------Profit before taxation 934.7Tax expense (280.4) -----------Profit for the year from 654.3continuing operations ----------- Assets and liabilitiesSegment assets 1,217.3 2,001.4 1,223.3 808.3 - 5,250.3Interest in associate 1.8Unallocated assets 983.0 -----------Total assets 6,235.1 -----------Segment liabilities (748.9) (1,405.8) (319.5) (611.1) - (3,085.3)Unallocated liabilities (811.0) -----------Total liabilities (3,896.3) ----------- Other segment informationAdditions to property, plant and equipment 540.5 96.6 49.0 - - 686.1Depreciation (32.5) (80.6) (43.5) (1.1) - (157.7)--------------------------------------------------------------------------------------------------------------------- 2. Segmental information (b) EBITDA(1) by segment Year ended Year ended 31 March 2007 31 March 2006 $ million $ million ------------------------------------------------------------------------------Aluminium 415.4 135.3 Copper 833.9 425.3 ------------------------------------------------------------------------------- India/Australia 365.6 219.0 - Zambia 468.3 206.3 ------------------------------------------------------------------------------Zinc 1,453.9 532.9 Other (0.2) 8.0 ------------------------------------------------------------------------------EBITDA 2,703.0 1,101.5 Depreciation (195.4) (157.7) Operating special items (1.7) - ------------------------------------------------------------------------------Group operating profit 2,505.9 943.8 ------------------------------------------------------------------------------ (1) EBITDA represents operating profit before special items, depreciation andamortisation (c) Geographical segmental analysis The Group's operations are located in India, Zambia and Australia. The followingtable provides an analysis of the Group's sales by geographical market,irrespective of the origin of the goods: Year ended Year ended 31 March 2007 31 March 2006 $ million $ million ------------------------------------------------------------------------------Far East 2,056.5 963.8 India 2,670.9 1,762.3 Africa 253.3 136.6 Europe 760.5 353.5 Middle East 647.0 429.5 Other 114.0 56.1 ------------------------------------------------------------------------------Total 6,502.2 3,701.8 ------------------------------------------------------------------------------ The following is an analysis of the carrying amount of segment assets, andadditions to property, plant and equipment, analysed by the geographical area inwhich the assets are located: Carrying amount of segment Additions to property, assets plant and equipment As at As at Year ended Year ended 31 March 2007 31 March 2006 31 March 2007 31 March 2006 $ million $ million $ million $ million ------------------------------------------------------------------------------Australia 229.2 163.1 10.0 3.8 India 6,071.5 3,869.2 844.9 618.6 Zambia 1,090.7 768.4 269.1 63.7 Other 680.3 1,434.4 4.9 - ------------------------------------------------------------------------------Total 8,071.7 6,235.1 1,128.9 686.1 ------------------------------------------------------------------------------ 3. Special items Year ended Year ended 31 March 2007 31 March 2006 $ million $ million ------------------------------------------------------------------------------Provision for guarantees given on behalf of associate (17.3) - Restructuring and redundancies (2.6) - Loss on sale of property, plant and equipment (0.8) - Impairment of investment in associate (0.5) - Profit on disposal of non core assets * 21.8 - Loss on disposal of non core business (note 11c) (2.3) - ------------------------------------------------------------------------------ (1.7) - ------------------------------------------------------------------------------ * Sale of unused property in Mumbai. 4. Investment revenue Note Year ended Year ended 31 March 2007 31 March 2006 $ million $ million ------------------------------------------------------------------------------Interest and other financial income 136.4 67.6 Dividend income from other financial investments 10.7 7.0 Foreign exchange gain on cash and liquid investments 1.1 1.1 Expected return on defined benefit arrangements 1.2 1.1 Capitalisation of foreign exchange differences and interest income (21.9) (25.2) ------------------------------------------------------------------------------ 127.5 51.6 ------------------------------------------------------------------------------ 5. Finance costs Note Year ended Year ended 31 March 2007 31 March 2006 $ million $ million ------------------------------------------------------------------------------Interest on bank loans and overdrafts 113.8 75.6 Interest on convertible bonds 36.7 4.0 Interest on other loans 49.2 44.5 Unwinding of discount on provisions 7.3 5.6 Unwinding of discount on KCM deferred consideration 0.7 2.1 Interest on defined benefit arrangements 3.3 4.7 Capitalisation of borrowing costs (63.3) (77.2) ------------------------------------------------------------------------------ 147.7 59.3 ------------------------------------------------------------------------------ 6. Tax------------------------------------------------------------------------------ Note Year ended Year ended 31 March 2007 31 March 2006 $ million $ million ------------------------------------------------------------------------------Current tax: UK Corporation tax - - Foreign tax - India 484.4 177.8 Zambia 2.1 1.1 Australia 29.7 5.4 Other (2.0) 1.7 ------------------------------------------------------------------------------ 514.2 186.0 ------------------------------------------------------------------------------Deferred tax: Current year movement in deferred tax 156.3 94.4 Attributable to decrease in the rate of Indian corporation tax 2.2 - ------------------------------------------------------------------------------ 158.5 94.4 ------------------------------------------------------------------------------Total tax expense 672.7 280.4 ------------------------------------------------------------------------------Effective tax rate 27.1% 30.0% ------------------------------------------------------------------------------ Deferred tax reported in equity is a credit of $3.5m (2006: $13.5m). A reconciliation of income tax expense applicable to accounting profit beforeincome tax at the statutory income tax rate to income tax expense at the Group'seffective income tax rate for the year ended 31 March 2007 is as follows: Year ended Year ended 31 March 2007 31 March 2006 $ million $ million ------------------------------------------------------------------------------Accounting profit before tax 2,484.4 934.7 At Indian statutory income tax rate of 33.66% (2006: 33.66%) 836.3 314.6 Accelerated capital allowances (0.9) (6.0) Utilisation of tax losses (0.3) 0.6 Disallowable expenses 8.8 7.1 Non-taxable income (17.0) (5.0) Impact of tax rate differences (37.5) (14.3) Tax holiday and similar exemptions (126.9) (17.8) Dividend distribution tax on overseas subsidiaries 12.3 2.7 Minimum Alternative Tax 4.8 1.7 Adjustments in respect of previous years (6.9) (3.2) ------------------------------------------------------------------------------At effective income tax rate of 27.1% (2006: 30%) 672.7 280.4 ------------------------------------------------------------------------------ 7. Earnings per share Basic earnings per share amounts are calculated by dividing net profit for theyear attributable to ordinary equity holders of the parent by the weightedaverage number of ordinary shares outstanding during the year. Diluted earnings per share amounts are calculated by dividing the net profitattributable to ordinary shareholders by the weighted average number of ordinaryshares outstanding during the year (adjusted for the effects of dilutiveoptions). The following reflects the income and share data used in the basic and dilutedearnings per share computations: ------------------------------------------------------------------------------ Year ended Year ended 31 March 2007 31 March 2006 $ million $ million ------------------------------------------------------------------------------ Net profit attributable to equity holders of the parent 934.2 373.5 ------------------------------------------------------------------------------ Year ended Year ended 31 March 2007 31 March 2006 million million ------------------------------------------------------------------------------Weighted average number of ordinary shares for basic earnings per share 286.9 286.8 Effect of dilution: Convertible bonds 27.9 3.1 Share options 3.1 3.6 ------------------------------------------------------------------------------Adjusted weighted average number of ordinary shares for diluted earnings per share 317.9 293.5 ------------------------------------------------------------------------------ (a) Earnings per share based on profit for the yearBasic earnings per share on the profit for the Year ended Year ended year 31 March 2007 31 March 2006 ------------------------------------------------------------------------------Profit for the year attributable to equity holders of the parent ($ million) 934.2 373.5 Weighted average number of shares of the Company in issue (million) 286.9 286.8 ------------------------------------------------------------------------------Earnings per share on profit for the year (US cents per share) 325.6 130.2 ------------------------------------------------------------------------------ Diluted earnings per share on the profit for the Year ended Year ended year 31 March 2007 31 March 2006 ------------------------------------------------------------------------------ Profit for the year attributable to equity holders of the parent ($ million) 934.2 373.5 Adjustment in respect of convertible bonds of Vedanta ($ million) 36.7 2.7 ------------------------------------------------------------------------------Profit for the year after dilutive adjustment ($ million) 970.9 376.2 ------------------------------------------------------------------------------Adjusted weighted average number of shares of the Company in issue (million) 317.9 293.5 ------------------------------------------------------------------------------Diluted earnings per share on profit for the year (US cents per share) 305.4 128.2 ------------------------------------------------------------------------------ During the year ended 31 March 2007, 791,011 options issued under the Long TermIncentive Plan were converted to equity shares pursuant to vesting and exerciseof the options. Also during the year ended 31 March 2007, 7,746 shares wereissued on conversion of the convertible bond. The issue of these shares has beenincluded in determining the 2007 weighted average number of shares. Profit for the year would be diluted if holders of the convertible bonds inVedanta exercised their right to convert their bond holdings into Vedantaequity. The impact on profit for the year of this conversion would be theinterest payable on the convertible bond. The conversion options of the convertible bonds and the outstanding awards underthe LTIP are reflected in the diluted EPS figure through an increased number ofweighted average shares. There have been no other transactions involving ordinary shares or potentialordinary shares since the reporting date and before the completion of thesefinancial statements. (b) Earnings per share based on Underlying Profit for the year The Group's Underlying Profit is the profit for the year after adding backspecial items and their resultant tax and minority interest effects, as shown inthe table below:------------------------------------------------------------------------------ Year ended Year ended 31 March 2007 31 March 2006 $ million $ million ------------------------------------------------------------------------------Profit for the year attributable to equity holders of the parent 934.2 373.5 Administrative expenses - special items (note 4) 1.7 - Tax effect of special items 3.7 - Minority interest effect of special items (1.5) - ------------------------------------------------------------------------------Underlying Profit for the year 938.1 373.5 ------------------------------------------------------------------------------ Basic earnings per share on Underlying Profit for Year ended Year ended the year 31 March 2007 31 March 2006 ------------------------------------------------------------------------------Underlying profit for the year ($ million) 938.1 373.5 Weighted average number of shares of the Company in issue (million) 286.9 286.8 ------------------------------------------------------------------------------Earnings per share on Underlying Profit for the year (US cents per share) 327.0 130.2 ------------------------------------------------------------------------------ Diluted earnings per share on Underlying Profit Year ended Year ended for the year 31 March 2007 31 March 2006 ------------------------------------------------------------------------------Underlying profit for the year ($ million) 938.1 373.5 Adjustment in respect of convertible bonds of Vedanta ($ million) 36.7 2.7 ------------------------------------------------------------------------------Underlying profit for the year after dilutive adjustment ($ million) 974.8 376.2 ------------------------------------------------------------------------------Adjusted weighted average number of shares of the Company in issue (million) 317.9 293.5 ------------------------------------------------------------------------------Diluted earnings per share on Underlying Profit for the year (US cents per share) 306.6 128.2 ------------------------------------------------------------------------------ 8. Dividends Year ended Year ended 31 March 2007 31 March 2006 $ million $ million ----------------------------------------------------------------------------Amounts recognised as distributions to equity holders: Equity dividends on ordinary shares: Final dividend for 2005-06: 14.3 US cents per share (2004-05 : 11.55 US cents per share) 41.1 33.1 Interim dividend paid during the year : 15 US cents per share (2005-06 : 5.7 US cents per share) 43.2 16.3 ---------------------------------------------------------------------------- 84.3 49.4 ----------------------------------------------------------------------------Proposed for approval at AGM Equity dividends on ordinary shares: Final dividend for 2006-07: 20 US cents per share (2005-06: 14.3 US cents per share) 57.5 41.1 9. Borrowings As at As at 31 March 2007 31 March 2006 $ million $ million ------------------------------------------------------------------------------ Bank loans 491.2 700.7 Bonds 581.2 567.6 Other loans 56.0 207.5 ------------------------------------------------------------------------------ Total 1,128.4 1,475.8 Borrowings are repayable as: On demand within one year (shown as current liabilities) 249.1 239.8 In the second year 76.2 257.9 In two to five years 769.7 949.6 After five years 33.4 28.5 ------------------------------------------------------------------------------ Total borrowings 1,128.4 1,475.8 Less: payable within one year (249.1) (239.8) ------------------------------------------------------------------------------ Medium and long term borrowings 879.3 1,236.0 ------------------------------------------------------------------------------ At 31 March 2007, the Group had available US$1,011.4 million (fund and non fundbased) (2006: $443.7 million- fund based) of undrawn committed borrowingfacilities in respect of which all conditions precedent had been met. 10. Movement in Net (Debt) / Cash (1) Debt due within one year Debt due after one year ------------------------------- ---------------------------US$ million Cash and Debt carrying Debt related Debt carrying Debt related Liquid Total Net cash value derivatives(2) value derivatives investments (Debt) / equivalents (2) US$ million Cash ------------------------------------------------------------------------------------------------------------------------At 1 April 2005 1,186.6 (213.0) (15.1) (1,287.7) (17.5) 262.0 (84.7) Cash flow 688.4 (28.4) (698.8) - (12.8) (51.6) Other non-cash changes (1.0) (2.0) 17.9 135.2 (12.7) - 137.4 Foreign exchange differences (26.7) 3.6 - 14.9 - (4.8) (13.0) ------------------------------------------------------------------------------------------------------------------------At 1 April 2006 1,847.3 (239.8) 2.8 (1,836.4) (30.2) 244.4 (11.9) Cash flow (311.2) (25.0) - 324.8 - 345.1 333.7 Disposal of non core business - 23.1 - - - - 23.1 Other non-cash changes - 9.1 (9.9) 68.3 11.6 3.5 82.6 Foreign exchange differences 48.7 (16.5) - (34.4) - 7.4 5.2 ------------------------------------------------------------------------------------------------------------------------At 31 March 2007 1,584.8 (249.1) (7.1) (1,477.7) (18.6) 600.4 432.7 ------------------------------------------------------------------------------------------------------------------------ (1) Net (Debt) / (Cash) being total debt after fair value adjustments under IAS32 and 39 as reduced by cash and cash equivalents and liquid investments. (2) Debt related derivatives exclude commodity related derivative financialassets and liabilities. 11. Business Combinations Sterlite Gold The Group acquired the following companies during the year ended 31 March 2007:--------------------------------------------------------------------------------Names of company Principal Date of Proportion of Cost of acquired activity acquisition shares acquisition acquired ($ million) Welter Trading Investment 22 May 2006 100.0% - Limited holding company Twin Star International Investment 23 August 100.0% 33.7 * Limited holding company 2006-------------------------------------------------------------------------------- * $2.9 million of acquisition expenses were additionally incurred in theacquisition of Twinstar International Limited and its subsidiaries. Vedanta acquired 100% of Welter Trading Limited, a company incorporated inCyprus, on 22 May 2006. On 23 August 2006, Welter Trading Limited acquired 100%of Twin Star International Limited ('TSI'), a company incorporated in Mauritiusand 100% owned by Volcan Investments ('Volcan'). Volcan holds 54% of the equityof Vedanta. TSI held 55.09% of Sterlite Gold Limited ('Sterlite Gold'), a companyincorporated in Canada and listed on the Toronto Stock Exchange. By virtue ofWelter Trading Limited acquiring 100% of TSI, Sterlite Gold became a subsidiaryof Vedanta with an effective date of 23 August 2006, being the date at whichcontrol passed to Vedanta. As a result, the financial information of TSI andSterlite Gold has been consolidated from 23 August 2006. From 23 August 2006 to 31 March 2007, the Group acquired a further 28.6%interest in the equity of Sterlite Gold for $17.7million through an open offerto minority shareholders. The Group's total holding in Sterlite Gold as at 31March 2007 was 83.7%. From the date of acquisition, Sterlite Gold held 100% interests in the followingcompanies: • First Dynasty Mines (USA) LLC • First Dynasty Mines Armenia Limited • AGRC Services Limited • First Dynasty Mines Holding Company Limited • Myanmar First Dynasty Mines Limited (since liquidated) • Ararat Gold Recovery Company LLC ('AGRC') AGRC is a company involved in gold mining activities and is incorporated inArmenia. All other companies listed above are non-operating. The consolidated net assets of TSI acquired at the first acquisition aredetailed in the table below. There was no material change in the fair value ofassets and liabilities acquired at the following acquisitions. $ million Book value Fair value Fair value adjustments ----------------------------------------------------------------------------Assets Non-current assets Property, plant and equipment 11.4 71.7 83.1 Financial asset investments 4.7 - 4.7 ---------------------------------------------------------------------------- 16.1 71.7 87.8 Current assets Inventories 2.7 - 2.7 Trade and other receivables 2.7 - 2.7 Cash and cash equivalents 0.8 - 0.8 ---------------------------------------------------------------------------- 6.2 - 6.2 Liabilities Current liabilities Trade and other payables (2.9) - (2.9) ---------------------------------------------------------------------------- (2.9) - (2.9) Non-current liabilities Borrowings from Vedanta Resources plc (10.2) - (10.2) Deferred tax liabilities - (14.3) (14.3) Provisions (1.8) - (1.8) ---------------------------------------------------------------------------- (12.0) (14.3) (26.3) Net assets 7.4 57.4 64.8 Less: minority interests recognised on first acquisition (29.1) Add: reduction in minority interests on following acquisitions 18.9 ---------------------------------------------------------------------------- 54.6 Satisfied by: Cash consideration on first acquisition 33.7 Cash consideration on following acquisitions 17.7 Acquisition expenses 2.9 ---------------------------------------------------------------------------- 54.3 Gain on following acquisition recognised in retained earnings 0.3 ---------------------------------------------------------------------------- 54.6 ---------------------------------------------------------------------------- Since the date of acquisition, Sterlite Gold has contributed $2.9 million to therevenue and $(4.1) million to the net profit of the Group for the year ended 31March 2007. If TSI Group had been acquired at the beginning of the period, therevenues of the Group would have been $6,506.7 million and the profit attributedto equity holders of the parent of the Group would have been $1,811.5 million. (b) Acquisition of Sterlite Energy During the year ended 31 March 2007, Sterlite acquired 100 % of the equity ofSterlite Energy, a related party previously controlled by Volcan. The cost ofacquisition was $0.1 million. (c) Disposal of Non Core Business The Board of Sterlite passed a resolution on 21 August 2006 to divest its noncore aluminium conductor business, a reporting unit classified in the Group's'Other' segment. The Group sold the business to SOTL, a company owned andcontrolled by Volcan, a related party, for $32.3 million. The loss on this salewas $2.3 million. The carrying value of the assets and liabilities disposed ofwere as follows: ---------------------------------------------------------------------------- $ million Property, plant and equipment 18.6 Current assets 83.4 Total assets 102.0 Debt 23.1 Current liabilities 44.3 Total liabilities 67.4 Net assets disposed 34.6 Less: consideration received (32.3) Loss on disposal (note 3) 2.3 ---------------------------------------------------------------------------- Glossary and Definitions 5SA Japanese concept laying emphasis on housekeeping and occupational safety in asequential series of steps as Sort (Seiri); Set in Order (Seiton); Shine(Selso); Standardise (Seiketsu); and Sustain (Shitsuke) Adapted Comparator GroupThe new comparator group of companies used for the purpose of comparing TSRperformance in relation to the LTIP, adopted by the Remuneration Committee on 1February 2006 and replacing the previous comparator group comprising companiesconstituting the FTSE Worldwide Mining Index (excluding precious metals) AGM or Annual General MeetingThe annual general meeting of the Company which is scheduled to be held onWednesday 2 August 2006 at 3.00pm, UK time, at the Mayfair Conference Centre, 17Connaught Place, London W2 2EL AEAnode effects AIDSAcquired immune deficiency syndrome Aluminium BusinessThe aluminium business of the Group, comprising its fully-integrated bauxitemining, alumina refining and aluminium smelting operations in India, and tradingthrough the Bharat Aluminium Company Limited and The Madras Aluminium CompanyLimited, companies incorporated in India Articles of AssociationThe articles of association of Vedanta Resources plc Attributable ProfitProfit for the financial year before dividends attributable to the equityshareholders of Vedanta Resources plc BALCOBharat Aluminium Company Limited, a company incorporated in India Board or Vedanta BoardThe board of directors of the Company Board CommitteesThe committees reporting to the Board: Audit, Remuneration, Nominations andHealth, Safety and Environment, each with its own terms of reference BusinessesThe Aluminium Business, the Copper Business and the Zinc Business together Capital EmployedNet assets before Net (Debt)/Cash CapexCapital expenditure Cash Tax RateCurrent taxation as a percentage of profit before taxation CEOChief executive officer CIIConfederation of Indian Industries CLZSChanderiya lead and zinc smelter CO2Carbon dioxide CMTCopper Mines of Tasmania Pty Limited, a company incorporated in Australia Combined Code or the CodeThe Combined Code on Corporate Governance published by the Financial ReportingCouncil in July 2003 and applying to listed companies for reporting yearsbeginning on or after 1 November 2003 Company or VedantaVedanta Resources plc Convertible Bonds $725 million 4.60% guaranteed convertible bonds due 2026, issued by awholly-owned subsidiary of the Company, Vedanta Finance (Jersey) Limited('VFJL'), and guaranteed by the Company, the proceeds of which are to be appliedtowards re-financing subsidiary indebtedness, the Company's capital expenditureprogramme including the Jharasaguda aluminium smelter project and other generalcorporate purposes. Copper Business The copper business of the Group, comprising: • a copper smelter, two refineries and two copper rod plants in India, trading through Sterlite Industries (India) Limited), a company incorporated in India; • one copper mine in Australia, trading through Copper Mines of Tasmania Pty Limited, a company incorporated in Australia; and • an integrated operation in Zambia consisting of three mines, a leaching plant and a smelter, trading through Konkola Copper Mines PLC, a company incorporated in Zambia. CREPCorporate responsibility for environmental protection cents/lbUS cents per pound CRRICentral Road Research Institute CSRCorporate social responsibility CTCCost to company, the basic remuneration of executives in India, which representsan aggregate figure encompassing basic pay, pension contributions and allowances Deferred SharesDeferred shares of £1.00 each in the Company DGMSDirector General of Mine Safety in the Government of India DirectorsThe directors of the Company Dollar or $United States dollars, the currency of the United States of America DRsDepositary receipts of 10 US cents, issuable in relation to the $725 million4.6% guaranteed convertible bonds due 2026. EBITDAEarnings before interest, taxation, depreciation, goodwill amortisation/impairment and special items EBITDA MarginEBITDA as a percentage of turnover Economic Holdings or Economic InterestThe economic holdings/interest are derived by combining the Group's direct andindirect shareholdings in the operating companies. The Group's Economic Holdings/Interest is the basis on which the Attributable Profit and net assets aredetermined in the consolidated accounts E&OHSASEnvironment and occupational health and safety assessment standards E&OHSMSEnvironment and occupational health and safety management system EPSEarnings per Ordinary Share ESOPEmployee share option plan ESPElectrostatic precipitator Executive CommitteeThe executive committee to whom the Board delegates operational management andcomprising the Executive Directors and the senior management within the Group Executive DirectorsThe executive directors of the Company Expansion Capital ExpenditureCapital expenditure that increases the Group's operating capacity Financial Statements or Group financial statementsThe consolidated financial statements for the Company and the Group for the yearended 31 March 2006 as defined in the Independent Auditors' Report to themembers of Vedanta Resources plc on page 67 Free Cash FlowCash flow arising from EBITDA after net interest, taxation, Sustaining CapitalExpenditure and working capital movements GAAP, including UK GAAP and Indian GAAPGenerally Accepted Accounting Principles, the common set of accountingprinciples, standards and procedures that companies use to compile theirfinancial statements in their respective local territories GDPGross domestic product GearingNet Debt as a percentage of Capital Employed GJGiga joules Government or Indian GovernmentThe Government of the Republic of India GratuityA defined contribution pension arrangement providing pension benefits consistentwith Indian market practices GroupThe Company and its subsidiary undertakings and, where appropriate, itsassociate undertaking HSEHealth, safety and environment HZLHindustan Zinc Limited, a company incorporated in India IASInternational Accounting Standards ICMMInternational Council on Mining and Metals IFLIndia Foils Limited, a company incorporated in India IFRICInternational Financial Reporting Interpretations Committee IFRSInternational Financial Reporting Standards INRIndian Rupees Interest CoverEBITDA divided by finance costs ISO 9001An international quality management system standard published by theInternational Organisation for Standardisation ISO 14001An international environmental management system standard published by theInternational Organisation for Standardisation KCM or Konkola Copper MinesKonkola Copper Mines PLC, a company incorporated in Zambia KDMPKonkola deep mining project Key Result Areas or KRAsFor the purpose of the remuneration report, specific personal targets set as anincentive to achieve short-term goals for the purpose of awarding bonuses,thereby linking individual performance to corporate performance KLDKilo litres per day KPIsKey performance indicators KwhKilo-watt hour Kwh/dKilo-watt hour per day LIBORLondon inter bank offered rate Listing or IPO (Initial Public Offering)The listing of the Company's Ordinary Shares on the London Stock Exchange on 10December 2003 Listing ParticularsThe listing particulars dated 5 December 2003 issued by the Company inconnection with its Listing Listing RulesThe listing rules of the Financial Services Authority, with which companies withsecurities that are listed in the UK must comply LMELondon Metals Exchange London Stock ExchangeLondon Stock Exchange plc Lost time injuryAn accident/injury forcing the employee/contractor to remain away from his/herwork beyond the day of the accident LTIFRLost time injury frequency rate: the number of lost time injuries per millionman hours worked LTIPThe Vedanta Resources Long Term Incentive Plan or Long Term Incentive Plan MALCOThe Madras Aluminium Company Limited, a company incorporated in India Management Assurance ServicesThe function through which the Group's internal audit activities are managed MATMinimum alternative tax MISManagement information system MOEFThe Ministry of Environment & Forests of the Government of the Republic of India mt or tonnesMetric tonnes MWMegawatts of electrical power NCCBMNational Council of Cement and Building Materials Net (Debt)/CashTotal debt after fair value adjustments under IAS 32 and 39, cash and cashequivalents and liquid investments NGONon-governmental organisation NIHLNoise induced hearing loss Non-executive DirectorsThe non-executive directors of the Company OHSAS 18001Occupational Health and Safety Assessment Series (standards for occupationalhealth and safety management systems) Ordinary SharesOrdinary shares of 10 US cents each in the Company PBTProfit before tax PFCPer fluorocarbons PHCPrimary health centre PPEPersonal protective equipment Provident FundA defined contribution pension arrangement providing pension benefits consistentwith Indian market practices Recycled waterWater released during mining or processing and then used in operationalactivities Relationship AgreementThe agreement dated 5 December 2003 between the Company, Volcan InvestmentsLimited and members of the Agarwal family that regulates the ongoingrelationship between them, the principal purpose of which is to ensure that theGroup is capable of carrying on business independently of Volcan, the Agarwalfamily and their associates Return on Capital Employed or ROCEProfit before interest, taxation, special items, tax effected at the Group'seffective tax rate as a percentage of Capital Employed The Reward PlanThe Vedanta Resources Share Reward Plan, a closed plan approved by shareholderson Listing in December 2003 and adopted for the purpose of rewarding employeeswho contributed to the Company's development and growth over the period leadingup to Listing in December 2003 ROReverse osmosis SA 8000Standard for Social Accountability based on international workplace norms in theInternational Labour Organisation ('ILO') conventions and the UN's UniversalDeclaration of Human Rights and the Convention on Rights of the Child Senior Management GroupFor the purpose of the remuneration report, the key operational and functionalheads within the Group Sesa GoaSesa Goa Limited, a company incorporated in India SEWTSterlite Employee Welfare Trust, a long-term investment plan for Sterlite seniormanagement The Share Option PlanThe Vedanta Resources Share Option Plan, a closed plan approved by shareholderson Listing in December 2003 and adopted to provide maximum flexibility in thedesign of incentive arrangements over the long term SHGsSelf helf groups SIDSenior Independent Director SO2Sulphur dioxide SBUStrategic Business Unit SOTLSterlite Optical Technologies Limited, a company incorporated in India SOVLSterlite Opportunities and Ventures Limited, a company incorporated in India Special itemsItems which derive from events and transactions that need to be disclosedseparately by virtue of their size or nature SPMSuspended particulate matter. Fine dust particles suspended in air Sterling, GBP or £The currency of the United Kingdom SterliteSterlite Industries (India) Limited, a company incorporated in India SGLSterlite Gold Ltd., a company listed on the Toronto Stock Exchange Superannuation FundA defined contribution pension arrangement providing pension benefits consistentwith Indian market practices Sustaining Capital ExpenditureCapital expenditure to maintain the Group's operating capacity TCMThalanga Copper Mines Pty Limited, a company incorporated in Australia TC/RCTreatment charge/refining charge being the terms used to set the smelting andrefining costs TGSTail gas scrubber TGTTail gas treatment tpaMetric tonnes per annum TPMTonne per month TSRTotal shareholder return, being the movement in the Company's share price plusreinvested dividends Turnbull GuidanceThe revised guidance on internal control for directors on the Combined Codeissued by the Turnbull Review Group in October 2005 Twin StarTwin Star Holdings Limited, a company incorporated in Mauritius Twin Star Holdings GroupTwin Star and its subsidiaries and associated undertaking UITFUrgent Issues Task Force Underlying EPSUnderlying earnings per Ordinary Share Underlying ProfitProfit for the year after adding back special items and their resultant tax andminority interest effects US centsUnited States cents VALVedanta Alumina Limited, a company incorporated in India VFDVariable frequency drive VFJLVedanta Finance (Jersey) Limited, a company incorporated in Jersey VFLVisible felt leadership VolcanVolcan Investments Limited, a company incorporated in the Bahamas VRCLVedanta Resources Cyprus Limited, a company incorporated in Cyprus VRFLVedanta Resources Finance Limited, a company incorporated in the United Kingdom VRHLVedanta Resources Holdings Limited, a company incorporated in the United Kingdom VSSVertical Stud Soderberg Water used for Primary ActivitiesTotal new or make-up water entering the operation and used for the operation'sprimary activities; primary activities are those in which the operation engagesto produce its product WBCSDWorld Business Council for Sustainable Development ZCIZambia Copper Investment Limited, a company incorporated in Bermuda ZCCMZCCM Investments Holdings plc, a company incorporated in Zambia Zinc BusinessThe zinc-lead business of the Group, comprising its fully-integrated zinc-leadmining and smelting operations in India, and trading through the Hindustan ZincLimited, a company incorporated in India This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Vedanta Resources