Purchase of the Company’s Own Shares
At the end of the year, the Directors had authority, under a shareholders’ resolution dated 27 July 2011, to make market purchases of up to approximately 10% of the Company’s ordinary shares.
The authority expires at the conclusion of the Annual General Meeting of the Company in 2012 or on 1 October 2012, whichever is the earlier. A resolution to obtain a further authority will be proposed at the 2012 Annual General Meeting.
Significant Agreements: Change of Control
There are a number of agreements that take effect, alter or terminate upon a change of control of the Company such as commercial contracts, bank loan agreements, and capital market borrowing. The following are considered to be significant in terms of their likely impact on the business of the Group as a whole:
1. The US$1.25 billion 5.50% guaranteed convertible bonds issued in July 2009 and the US$883 million 4.0% guaranteed convertible bonds issued in March 2010, where a change of control gives investors the option to require the issuer to redeem their bonds at the principal amount, together with any accrued and unpaid interest, or convert their bonds at an adjusted exchange price for a certain period following the relevant event.
2. The US$500 million 8.75% bonds due 2014 and US$750 million 9.5% bonds due 2018, where a change of control requires the Company to make an offer to purchase all of the outstanding bonds at 101% of the principal amount together with any accrued and unpaid interest with a rating decline.
3. The US$1 billion and US$373 million syndicated loan and US$200 million loan from ICICI Bank UK plc, where a change of control gives the majority lenders the right to declare the loans immediately payable.
4. In Cairn Financing where a change of control gives the majority lenders the right to declare the loans immediately payable.
All of the Company’s share plans contain provisions relating to a change of control. Outstanding awards and options would normally vest and become exercisable on a change of control, subject to the satisfaction of any performance conditions.
There is no contract between the Company and its Directors or employees that provide for compensation for loss of office or employment that occurs because of a takeover bid.
Disclosure of Information to Auditors
In accordance with section 418 of the Companies Act 2006, each Director who held office at the date of approval of this Directors’ Report confirms that:
> so far as they are aware, there is no relevant audit information of which the Company’s auditors are unaware; and
> they have taken all the steps that he ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.
Reappointment of Auditors
A resolution to reappoint the auditors, Deloitte LLP, will be proposed at the forthcoming Annual General Meeting. The reappointment of Deloitte LLP has been approved by the Audit Committee, which will also be responsible for determining the auditors’ remuneration on behalf of the Board, subject to the approval of shareholders at the forthcoming Annual General Meeting.
Policy on Derivatives and Financial Instruments An explanation of the Group’s financial management objectives and policies together with details of the Group’s exposure to price risk, credit risk, liquidity risk and foreign currency risk appears in Note 27 to the financial statements.
Going Concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Business Review on pages 6 to 57.
The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Finance Review on pages 32 to 37. In addition Note 27 to the financial statements includes the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial
instruments and hedging activities; and its exposures to credit risk and liquidity risk.
The Group requires funds both for short-term operational needs as well as for long-term investment programmes mainly in growth projects. The Group generates sufficient cash flows from its current operations which, together with the available cash and cash equivalents and liquid financial asset investments, provide liquidity both in the short term as well as in the long-term. Anticipated future cash flows and undrawn committed facilities of US$2,897 million, together with cash and liquid investments of US$6,885 million as at 31 March 2012, are expected to be sufficient to meet the ongoing capital investment programme and liquidity requirement of the Group in the foreseeable future.
During the year the Company did not purchase any shares under its previously announced share buyback programme.
As at 31 March 2012 the Company held a total of
24,206,816 ordinary shares in treasury equal to 8.15% of the issued share capital.
The Group has a strong Balance Sheet that gives sufficient headroom to raise further debt should the need arise. The Group’s current ratings from Standard & Poor’s, Moody’s and Fitch are BB, Ba1 and BB+ respectively. These ratings support the necessary financial leverage and access to debt or equity markets at competitive terms, taking into consideration current market conditions. The Group generally maintains a healthy gearing ratio and retains flexibility in the financing structure to alter the ratio when the need arises. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook.
After making enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Annual Report and Accounts.
Annual General Meeting
The ninth Annual General Meeting of the Company will be held on 28 August 2012 at 3pm. The Notice convening the Annual General Meeting accompanies this Annual Report and sets out details of the business to be considered.
Signed on behalf of the Board
Deepak Kumar Company Secretary 16 May 2012
Vedanta Resources plc 2nd Floor, Vintners Place 68 Upper Thames Street London EC4V 3BJ
Registered in England Number 4740415
The Directors’ Report continued
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare such financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards (‘IFRSs’) as adopted by the European Union and Article 4 of the IAS Regulation and have also chosen to prepare the parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and Applicable Law). Under company law the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the company for that period. In preparing these financial statements, International Accounting Standard 1 requires that Directors:
> properly select and apply accounting policies;
> present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
> provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance; and
> make an assessment of the Company’s ability to continue as a going concern.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Directors’ Responsibility Statement
We confirm that to the best of our knowledge:
1. the financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
2. the management report, which is incorporated into the Directors’ report, includes a fair review of the
development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
By order of the Board
MS Mehta
Chief Executive Officer
DD Jalan
Chief Financial Officer 16 May 2012
We have audited the financial statements of Vedanta Resources plc for the year ended 31 March 2012 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Cash Flow Statement, the Consolidated Statement of Changes in Equity and the related notes 1 to 42. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective Responsibilities of Directors and Auditor As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation of the group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the group financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the Audit of the Financial Statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error.
This includes an assessment of: whether the accounting policies are appropriate to the group’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on Financial Statements
In our opinion the group financial statements:
> give a true and fair view of the state of the Group’s affairs as at 31 March 2012 and of its profit for the year then ended;
> have been properly prepared in accordance with IFRSs as adopted by the European Union; and
> have been prepared in accordance with the requirements of the Companies Act 2006 and Article 4 of the IAS Regulation.
Opinion on Other Matter Prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report for the financial year for which the group financial statements are prepared is consistent with the group financial statements.
Matters on Which we are Required to Report by Exception We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
> certain disclosures of Directors’ remuneration specified by law are not made; or
> we have not received all the information and explanations we require for our audit.
Under the Listing Rules we are required to review:
> the Directors’ statement, contained within the Director’s Report, in relation to going concern;
> the part of the Corporate Governance Statement relating to the Company’s compliance with the nine provisions of the UK Corporate Governance Code specified for our review;
> certain elements of the report to shareholders by the Board and on Directors’ remuneration.
Other Matter
We have reported separately on the parent company financial statements of Vedanta Resources plc for the year ended 31 March 2012 and on the information in the Directors’
Remuneration Report that is described as having been audited.
Andrew Kelly (Senior statutory auditor) for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor London, United Kingdom
16 May 2012