Change in accounting estimates

The provisions for environmental rehabilitation and decommissioning are calculated using management’s best estimate of the costs to be incurred based on the group’s environmental policy taking into account current technological, environmental and regulatory requirements discounted to a present value. Estimates are based upon costs that are regularly reviewed, by internal and external experts, and adjusted as appropriate for new circumstances. Actual costs incurred in future periods could differ from the estimates. Additionally, future changes to environmental laws and regulations, life of mine estimates and discount rates used could affect the carrying amount of this provision. As a result the liabilities that we report can vary if our assessment of the expected expenditures changes.

At 31 December 2009 management revised the estimate of the amount and timing of the closure cost of Sishen and Thabazimbi mines. The effect of these changes is detailed below:

The change in estimate in the environmental rehabilitation provision resulted in a decrease in attributable profit for 2009 of R43 million (effect on earnings per share 13.4 cents per share) after taking into account taxation of R21 million and minority interest of R11 million. The change in estimate in the decommissioning provision has been capitalised to the related property, plant and equipment.