those question are very easy . just simply search from annual report which i provided and answer the questions. those questions were supposed to be done within 3 hours in the class. but i got this as a homework due to my health conditions. therefore due time is enough for you to answer all questions. for each question you must write the page number(s) the information was found on. No page numbers your grade = ZERO.

Annual Report 2013 / FOCUS ON SHAREHOLDER RETURNS THROUGH THE CYCLE FLEX OPERATIONS IN LINE WITH MARKET DEMAND CONTINUE MARKET DEVELOPMENT MAINTAIN STRONG BALANCE SHEET PRESERVE AND ADVANCE MINERAL SANDS GROWTH OPPORTUNITIES CONTINUE TO EVALUATE/ PURSUE CORPORATE GROWTH OPPORTUNITIES ACT COUNTER-CYCLICALLY WHERE APPROPRIATE / / / / / CREATE AND DELIVER VALUE FOR SHAREHOLDERS ILUKA IS A LEADING MINERAL SANDS COMPANY INVOLVED IN EXPLORATION, PROJECT DEVELOPMENT OPERATIONS AND MARKETING. ILUKA IS THE LARGEST GLOBAL PRODUCER , OF ZIRCON AND HAS A MAJOR POSITION IN THE HIGH GRADE PRODUCTS OF RUTILE AND SYNTHETIC RUTILE. ILUKA ANNUAL REPORT 2013 INVESTMENT PROPOSITION CREATE AND DELIVER VALUE FOR SHAREHOLDERS. SHAREHOLDER VALUE FOCUS Iluka is focussed on shareholder returns through the cycle. As the company has navigated through a low in the mineral sands business cycle, Iluka's approach has been to: n flex asset operation in line with market demand n continue market development n p \u0007 reserve/advance mineral sands growth opportunities n maintain a strong balance sheet n c \u0007 ontinue to evaluate/pursue corporate growth opportunities n act counter-cyclically where appropriate Iluka has a commitment to \"proactivity\" in environmental management and sustainability, seeking to achieve the highest standards in health and safety performance. MINERAL SANDS DEMAND GROWTH Demand for mineral sands products over the medium-to-longer term is linked to three key dynamics: Urbanisation The rapid rate of urbanisation of China, India and other emerging economies increases floor space, creating demand for mineral sands bearing products including tiles, paint and other products. Rising living standards and consumption Rising wealth and living standards in emerging economies, often measured by GDP or income per capita, is linked to increased spending on durable consumer goods, many of which make use of titanium dioxide and zircon. Increasing array of uses Titanium dioxide and zircon are used in an array of new applications. Examples include: catalytic converters, fibre optics, capacitors and motherboards, aerospace, air and water filtration, digital printing, nano coatings and specialised industrial componentry such as those used in offshore gas and desalinisation plants. TECHNICAL AND RESOURCE DIFFERENTIATION Iluka has integrated mining and processing operations located in Australia and the US, allowing it to flex production in light of market conditions. The company has over 60 years' experience in mineral sands with specialist in-house expertise in metallurgy, engineering, exploration and industry analysis. Iluka is focused on high margin products and has a global market presence, including international distribution facilities and in-country presence in key markets, reflecting its commitment to its customers. GROWTH OPPORTUNITIES Growth opportunities available to Iluka shareholders relate to: n a \u0007 dvanced mineral sands projects, the development of which is subject to strict financial return and market dynamics criteria n investment in innovation and technology related to mineral sands n Australian and international exploration programme n continued expansion of the company's international marketing presence The company also evaluates acquisition opportunities. 1 FINANCIAL SUMMARY MINERAL SANDS REVENUE REVENUE MINERAL SANDS EBITDA $763 million GROUP EBITDA $249 million NET PROFIT AFTER TAX $295 million $18.5 million (including Mining Area C) 29% 66% $m $m 61% 1,536.7 60.3% 363.2 28.6% 763.1 305.1 249.0 13.1% 250.2 2011 2012 2013 2009 295.2 99.6 75.6 2010 541.8 748.8 32.6% 576 2009 $m 979.3 726.0 1,069.8 874.4 $m 925.9 67.9% 95% -82.4 2010 2011 2012 2013 2009 2010 2011 2012 2013 36.1 2010 18.5 2011 2012 2013 2009 Lower mineral sands revenues largely reflect lower received prices during 2013 across all major products. Average revenue per tonne of zircon/rutile/synthetic rutile sold for 2013 was US$1,173 per tonne, 41% lower than 2012. Sales volumes were mixed with zircon and rutile sales up (73% and 59% respectively) and synthetic rutile sales down 73%. Iluka's Mining Area C iron ore royalty in Western Australia contributed $87.9 million to Group EBITDA in 2013. Lower EBITDA is primarily due to lower revenue. Production cash costs were reduced during the year as a result of operational changes implemented. Overall production cash costs were $376 million (36% lower than 2012) or $798/tonne of zircon/rutile/synthetic rutile produced. EBITDA EBITDA Margin 2 NPAT declined significantly in 2013, primarily due to materially lower product prices, and a year-end accounting (non-cash) adjustment of $41.0 million after tax. ILUKA ANNUAL REPORT 2013 NET DEBT (CASH) CASH FLOW $124 million ROC AND ROE ROC 2.2% $207 million 66% 1000 706.2 800 589.6 93% % $m 368.7 400 25.9 -209.8 124.0 -27.5 2010 2011 2012 2013 % 95% 54.9 42.5 21.8 21 382.1 312.6 5.8 0 95.9 206.6 -200 -7 -156.7 2009 2010 2011 23.2 2012 2.2 7 0 0 32.8 14 11.8 200 81.2 35 28 600 2009 1.2% 115% $m 163.6 83.9 60.7 ROE 2013 5.0 -9.6 1.2 3.2 -9.9 2009 2010 2011 2012 2013 Full year free cash outflow was $27.5 million, reflecting weaker revenues and a first half taxation payment of $118 million. $17.0 million free cash flow was generated in the second half. Net debt increased but Iluka retains a strong balance sheet with significant capacity headroom of ~ $835 million of total facilities. Gearing ratio (net debtet debt + equity) of 11.8% at 31 December 2013. Weaker earnings were reflected in a markedly lower return on capital and return on equity. Operating Cash Flow Net Debt Return on Equity Free Cash Flow Gearing % Return on Capital 3 FEATURES OF 2013 2013 was a challenging year for Iluka. The mineral sands industry continued to reflect low cycle conditions, with only a partial and uneven recovery in zircon demand, and with subdued demand for high grade titanium dioxide feedstocks. Prices declined materially year-on-year. In these conditions the company's approach was to flex production, maintain a strong balance sheet and preserve growth options. Given the prevailing market conditions, erosion in financial performance has occurred and will spill over into 2014. However, Iluka remains well placed to capitalise on a demand-led recovery and the favourable medium-to-longer term dynamics in its sector. David Robb, Managing Director 4 ILUKA ANNUAL REPORT 2013 Health and safety Operational flexibility - Continued improvement in safety performance. - \u0007 otal recordable industry frequency rate of 4.6, 56% lower T than 2012. - Lost time injury frequency rate of 0.3, 84% lower than 2012. Significant operational adjustments, reflecting the approach to operate assets in line with market demand. -\u0007Combined 2013 zircon, rutile and synthetic rutile production \u0007 level 60% of 'mid cycle' settings. - Idled remaining synthetic rutile kiln in Western Australia. - Lower utilisation rates at Iluka's three mineral separation \u0007 plants in Australia and the US. - Idling the Tutunup South and Eneabba mining operations \u0007 in Western Australia. Sustainability and social responsibility - \u0007 o major environmental incidents with 79% of incidents level N one (lowest severity). - \u0007 warded South Australian Premier's Award for Excellence A in Social Inclusion. Ore reserves and resources Shareholder returns - \u0007 re Reserves declined by 2.3 million tonnes to 26.6 million O tonnes (including depletions). - \u0007 pproximately 10 years of reserve cover at 2013 depletion A rate. - \u0007 ineral Resources increased by 45% to 178.7 million tonnes, M mainly reflecting resources associated with tenements acquired and granted in Sri Lanka. - \u0007 otal dividends of 9 cents per share fully franked (5 cents T interim dividend and 4 cents final dividend). - Share price declined by 4.3% to 31 December 2013. The S&P/ \u0007 ASX 200 Materials index declined by 5.8% over same period. - 3 year cumulative Iluka total shareholder return of 76% - \u0007 he S&P/ASX 200 Materials Index total return over the T corresponding three-year period to 31 December was negative 22%. Financial performance Projects advanced - Net profit after tax of $18.5 million. - Mineral sands EBITDA margin of 32.6% - Return on capital 2.2% and return on equity 1.2%. - \u0007 egative free cash flow of $(27.5) million N (positive in second half). - \u0007 et debt of $206.6 million (2012: $95.9 million) with available N funding facilities of ~$835 million. - Gearing (net debt/ net debt + equity) of 11.8% Market conditions - Partial and uneven global recovery in zircon demand. - \u0007 ircon sales of 370.2 thousand tonnes (2012: 213.8 thousand Z tonnes). - \u0007 ngoing low demand in high grade titanium feedstock market, O but with precursors for demand recovery evident. - \u0007 ombined rutile and synthetic rutile sales of 214.2 thousand C tonnes (2012: 275.1 thousand tonnes). - \u0007 013 weighted average prices: zircon US$1,160/tonne (2012: 2 US$2,080), rutile US$1,069/tonne (2012: US$2,464), synthetic rutile US$1,150/tonne (2012: US$1,771). - Evaluation of internal mineral sands projects progressed. - \u0007 est Balranald, New South Wales; Cataby, Western Australia W and Aurelian Springs, US advanced to definitive feasibility stage. - Detailed design completed for Hickory, US. - Eucla Basin satellite deposits, South Australia progressed \u0007 to pre-feasibility stage. Exploration - Total exploration expenditure of $23.1 million. - International prospecting programme in Brazil, Africa and \u0007 Asia expanded. 5 GLOBAL OPERATIONS SUMMARY North America US operations Nashville Jacksonville Newcastle Delaware Virginia Operations Assets Mining and processing facility Mine Warehouse and small Sales and Marketing lot distribution facilityplant Mineral separation Warehouse and site lot Proposed mine small Corporate/marketing/ distribution facility exploration office Heavy mineral deposit Corporate/marketing/ exploration office UNITED STATES The US operation includes two mines and a mineral separation plant located in Virginia. The company also has two potential developments, Hickory and Aurelian Springs. Exploration Other assets Iluka tenements Joint venture Other assets tenements EXPLORATION Iluka's exploration programme expanded during 2013, with an increased focus in new international jurisdictions. The company also established an internal resource to evaluate non-mineral sands exploration opportunities. Exploration offices have been established in Brazil and South Africa as a base to evaluate regional opportunities. 6 Rio de Janeiro ILUKA ANNUAL REPORT 2013 MARKETING APPROACH Iluka adopts an international marketing approach which includes strong direct customer relations, worldwide distribution points, in-country presence in key markets, and a commitment to further market development. Netherlands Belgium SRI LANKA In 2013, Iluka re-established a tenement and resource position in Sri Lanka. This large, long life ilmenite resource is being evaluated for potential development. Europe Spain Qingdao China China Shanghai China Xiamen China Dubai Ho Chi Minh City Vietnam Sri Lanka Malaysia Mining Area C Durban Perth Basin Australian operations Perth Eucla Basin Adelaide Murray Melbourne Basin WESTERN AUSTRALIA SOUTH AUSTRALIA VICTORIA/NEW SOUTH WALES Iluka's Perth Basin operations in Western Australia include the Narngulu mineral separation plant (Mid West), four synthetic rutile kilns and multiple mineral sands deposits, including the Tutunup South mine (South West) and the potential development, Cataby. Jacinth-Ambrosia in the Eucla Basin is the largest, highest zircon assemblage mineral sands mine globally. Iluka is evaluating development options for three satellite ilmenite deposits. The Murray Basin contains multiple mineral sands deposits which Iluka is progressively developing. The next planned development is Balranald. Mining is occurring at the Woornack, Rownack and Pirro deposits. Iluka operates a mineral separation plant in Hamilton. 7 PRODUCTION AND SALES SUMMARY Mineral sands production Iluka's approach to operate assets in line with market demand led to lower production across all products. High grade titanium dioxide (rutile and synthetic rutile) production was curtailed given market conditions, with the company operating only one of its four synthetic rutile kilns for part of the year. Zircon production was also constrained for a second year, mainly by lower processing of concentrate into finished goods. Iluka maintains the capacity to increase production rapidly in line with demand recovery and inventory drawdown. Ilmenite production is available either for use as a feedsource for synthetic rutile production, or for direct sale. Lower mining rates and lower processing of concentrate was associated with a reduction in ilmenite production. ZIRCON RUTILE AND SYNTHETIC RUTILE ILMENITE* kt kt kt 838.8 601.5 684.9 661.6 674.1 347.5 285.7 412.9 343.2 263.1 248.3 405.0 285.1 584.5 59.0 141.4 250.1 281.3 220.3 127.0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 * Includes chloride ilmenite and sulphate ilmenite for external sales and for internal synthetic rutile production Rutile Synthetic Rutile Mineral sands sales ZIRCON RUTILE AND SYNTHETIC RUTILE kt kt 478.7 ILMENITE 570.9 514.5 443.2 370.2 222.6 362.5 337.5 257.7 396.7 213.8 376.4 373.7 46.2 169.6 138.7 240.0 265.9 105.5 168.0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Rutile Synthetic Rutile Zircon Rutile and synthetic rutile Ilmenite Zircon sales increased by 73 per cent in 2013 to 370.2 thousand tonnes following low sales in 2012. Sales remain lower than 2010-11 levels, reflecting a partial recovery in demand Weak demand for high grade titanium dioxide feedstocks led to an overall decline in sales from an already low 2012 level. 2013 rutile sales increased by 59 per cent to 168.0 thousand tonnes. Synthetic rutile sales fell by 73 per cent to 46.2 thousand tonnes. Ilmenite sales of 337.5 thousand tonnes were 23.8 per cent lower relative to 2012 levels of 443.2 thousand tonnes. 8 8 ILUKA ANNUAL REPORT 2013 Contents Business Review Page Chairman's and Managing Director's Review 10 Ore Reserves and Mineral Resources 16 Operational Review 18 Market Conditions 20 Growth 22 Sustainable Development 30 Five Year Group Physical and Financial Summary 42 Operating Mines Physical Data 44 Statutory Information Directors' Report 46 Directors' Profiles 58 Executive Team Profiles 60 Remuneration Report 63 Corporate Governance Statement 85 Financial Report 90 Directors' Declaration 130 Independent Auditor's Report to the Members 131 Ore Reserves and Mineral Resources Statement 133 Sustainability Performance Data 136 Shareholder Information 138 Corporate Information 140 Board and Executive Team 141 The Iluka Annual Report 2013 provides shareholders with an overview of Iluka's 2013 financial year. The Business Review contains an overview of the main factors affecting the business, while the Statutory Information section has been structured in accordance with the Corporations Act 2001. Australian currency is shown in this document unless otherwise specified. kt refers to thousand ('000) metric tonnes. 9 CHAIRMAN'S REVIEW Greg Martin, Chairman I am pleased to write to shareholders for the first time as Chairman of your company, having joined the Board in January 2013. In December 2013 I succeeded John Pizzey, after John retired following eight years of service as a Director and three and a half years as Chairman. The key focus for my fellow Directors and I is to support management to profitably grow your company and, thereby, to create and deliver value for shareholders. And crucially, for this to be done in a safe, responsible and sustainable manner which, I am pleased to observe, has been the case throughout the year. Management and the Board have overseen and, in some cases influenced, a major transformation in industry dynamics. In the process, this has generated significant value for shareholders, as well as demonstrating a capital discipline, which has also been translated into capital-efficient decisions and a track record of returning to shareholders funds, in excess of investment requirements, in the form of fully franked dividends. As evidenced by the company's financial performance in 2013, this has been a challenging year as the mineral sands industry has experienced a cyclical low in business conditions. Your Directors believe that the company has navigated the challenges well: preserving solid margin structures; maintaining a strong balance sheet; keeping potential mineral sands projects on track and continuing to invest in other areas, such as exploration, marketing and innovation, which will underpin the future growth of the company. Clearly, the level of cyclicality in business performance has been more extreme than your Directors would like to see shareholders experience in the future. Much of the cyclicality is due to an industry which has evolved rapidly over recent years. Recent industry settings, including multi-tiered pricing arrangements and residual industry contracting terms, combined with the abrupt reduction in demand across both the main product suites of zircon and titanium dioxide feedstocks, have exacerbated the volatility in earnings and cash flow. However, I believe there are steps the company can take to moderate the adverse impact of volatility in future. 10 In addressing growth and the evolution of the financial characteristics of Iluka, your Directors will continue to support various options. Clearly, optimising the company's resource base, as well as growing it, is of paramount importance. Quality reserves and the potential to progressively convert resources to reserves are the lifeblood of any minerals commodities company. In this regard, I believe, there are opportunities arising from technological innovation, partnering and astute investment where value can be added to the company's resources and where new applications and markets can be developed. Considerable work has been initiated in this area, as evident by the greater commitment to innovation, research and development and to facilitating an industry association for zircon. Most recently, the investment made in the private United Kingdom based Metalysis Limited, a technology company seeking to commercialise a patented process for the production of high value metals, including titanium powder, at a materially lower cost than existing technology, provides Iluka with an investment in a potential breakthrough technology which may have significant implications for growing demand, or adding value, to one part of the company's resource base. It is also noteworthy that recent changes in executive management responsibility facilitate a greater focus on resources development, strategic partnerships and alliances, as well as innovation. All are a hallmark of an approach the Board will support and encourage. To grow, Iluka must be more creative, innovative and prepared to adopt risks in pursuing investment options in areas allied or adjacent to its core business. Such pursuits can create new options and with that the potential to evolve the company; broaden its franchise and customer base; and in turn enhance and contribute to a greater resilience in the financial characteristics of the company over time. Iluka has numerous opportunities within its current portfolio through focused efforts in: new project development; international exploration and other resource development activities; advancement of its global marketing and sales capabilities; technical development and innovation. Clearly, the company will also consider and where appropriate progress growth opportunities which lie outside of its existing portfolio. Board and management have a willingness to act in a countercyclical manner in accordance with defined acquisition criteria. Of course, the successful execution of strategy - and ability to attenuate risk - is delivered by and through Iluka's people. The company is fortunate to have a skilled and capable workforce who seek to provide Iluka's customers with a quality product that satisfies their needs and, in turn, those of their customers. ILUKA ANNUAL REPORT 2013 In doing so, they recognise that any extractive industry's licence to operate is a function of its ability to engage meaningfully and constructively with the communities in which it operates. The integrity and mutual respect of Iluka's interactions with its stakeholders is, ultimately, of paramount importance to the sustainability and viability of the company's activities. By way of example, Iluka's track record of land rehabilitation over many years, as well as its commitment to genuine engagement with the communities where it conducts its business activities, has underpinned the company's licence to operate. The challenge, as always, is that this right must continually be re-earned if it is to be maintained. For a company with an objective to create and deliver shareholder value, and of Iluka's size, there must be a balance between the use of cash to fund growth opportunities and provide returns to shareholders through dividend payments. The ideal outcome is to have the ability to do both. In the Board's view, it remains appropriate for the company to return the maximum practicable amount of free cash flow to shareholders after allowing for value-adding decisions in relation to investment growth - whether organic or inorganic in nature. In this regard, magnified by the low cycle business conditions, free cash flow has been variable leading to some variability in the level of dividend payments over recent periods. In relation to the 2013 year, after declaring a 2012 full year dividend of 10 cents per share, fully franked, the interim 2014 dividend was lower at 5 cents, fully franked. The lower interim dividend, as well as the lower dividend compared with prior corresponding periods, reflected the fact that free cash flow was not generated in the first half of 2013, in large part due to a $118.4 million taxation payment in respect of 2012 earnings. Directors determined to pay a smaller interim dividend on the expectation that free cash flow would be generated in the second half, a situation which occurred, although on a full year basis positive cash flow was not generated. Notwithstanding this, Directors determined to declare a final dividend for 2013 of 4 cents per share, fully franked, representing 100 per cent of the free cash flow generated in the second half of the year. This decision was taken on the basis of free cash flow generated in the second half not being required for investing or balance sheet purposes. In February 2014 I announced the appointment of new nonexecutive Director, Marcelo Bastos, to the Board. Marcelo brings extensive minerals operational and technical experience, including in the development and operation of major projects in numerous international jurisdictions. I am confident his experience will complement and extend the current skills base of the Iluka Board. In closing, and on behalf of my fellow Directors, I would like to pass on my sincere thanks to John Pizzey for his contribution as a Director and, subsequently, Chairman of Iluka. John served shareholder interests with distinction during a transformative period in the mineral sands industry. His deep international resource and minerals processing industry experience together with his judgment, insight and guidance have been invaluable to Board deliberations. We wish him well for the future. I would also like to acknowledge the efforts and dedication of all Iluka employees, as well as contractors, in tough circumstances. It is at the bottom of the cycle that the calibre and mettle of a company's human capital comes to the fore. This has been most evident to the Board in the area of health and safety with the commitment and performance of Iluka's people approaching global industry best practice levels. During a difficult period the Board considers your interests as shareholders have been well served. Greg Martin Chairman Share price and dividends In 2013 Iluka's share price declined by 4.3 per cent over the year. In comparison, the S&P ASX 200 Materials Sector index declined by 5.8 per cent. Total shareholder return (share price and dividends received) for 2013 declined by 3.3 per cent. The S&P ASX 200 Materials Sector index (total return) declined by 3.0 per cent. The company's dividend framework is to return a minimum of 40 per cent of free cash flow not required for investing or balance sheet activity. Since the reintroduction of dividends at the end of 2010, the company has returned 76 per cent of free cash flow to shareholders in the form of dividends. Over the period 31 December 2010 to 31 December 2013 net debt has also reduced from $313 million to $207 million. 11 MANAGING DIRECTOR'S REVIEW Adjusting production in line with demand is, I believe, the right approach for this company in this industry. Despite significantly lower prices realised in 2013, pricing levels for all of Iluka's main products in 2013 remain above the levels achieved in the last year of reduced demand, 2009. We have protected unit margins to the extent practicable in a competitive industry and are well leveraged, in both profit and cash flow terms, to returning demand and growing volumes. Mineral sands market conditions David Robb, Managing Director Iluka's principal objective is to create and deliver value for shareholders. We aim to achieve this objective while at all times staying true to our values of commitment, integrity and responsibility. In line with both our objective and values we are focused on environment, health and safety performance. And we know that to succeed in the long term the company must continue to attract high quality people, provide development opportunities for existing employees and maintain a commitment to diversity and sustainability principles. Our objective, values and principles are enduring and are not diminished by either favourable or unfavourable business cycles. Mineral sands market conditions were again challenging in 2013. We believe these conditions reflect a cyclical low in business conditions within our industry, impacting both zircon and titanium dioxide markets and influenced by factors which have been referred to by the company previously: macro-economic conditions and global political uncertainties; fragile business and customer confidence levels; inventory drawdown dynamics; competition between suppliers in a sustained low demand environment and also the final evolution of titanium dioxide markets away from low priced legacy contract arrangements. Despite production cutbacks by Iluka and others, these factors led to a marked fall in zircon and titanium feedstock prices in 2013, as reflected in the table shown on page 21. As we entered 2014, some further minor erosion of prices occurred but it is Iluka's view that \"volumes lead prices\" and so as demand returns and volumes recover, prices will stabilise and then, potentially, could increase again. 12 Zircon demand recovered in 2013, albeit the nature of the demand recovery was uneven across markets and end use sectors and was, in aggregate, somewhat inconsistent quarter to quarter throughout the course of 2013. Iluka sold 73 per cent more zircon volume in 2013 (refer chart on page 8) than 2012, although price competitiveness meant that the weighted average selling price for 2013 was approximately half 2012 levels. China, as the major global zircon consumer, imported higher volumes in 2013 than in each of the preceding three years and so, even allowing for varying levels of inventories typically held by producers and downstream customers in China, it appears that China's underlying demand characteristics did not deteriorate structurally in 2013 as some hypothesised would occur. Demand in other parts of the world, notably Europe and the European ceramic exports markets in the Middle East and North Africa; in India, Japan and parts of South-East Asia, was generally subdued. North American demand was supported by industrial applications such as in precision casting, as well as a strengthening of the US economy and a recovery in the US housing market. Factors influencing demand in other markets varied. In India, for example, which had been a fast growing zircon market for Iluka in 2011, the depreciation of the domestic currency made imports more expensive while a protracted strike in a major ceramics producing province in the country, depressed demand in this important, emerging market. South East Asian demand was patchy and below usual levels reflecting weaker economic conditions. ILUKA ANNUAL REPORT 2013 In high grade titanium dioxide markets, typically encompassing Iluka's products of rutile and synthetic rutile, the major end use remained chloride pigment production. A focus by major western pigment producers on reducing pigment inventories in 2012 led to historically low pigment plant operating yields, which continued through the first half of 2013. In this context, a preference for lower grade titanium dioxide feedstocks and/or those available under lower priced legacy contracts meant that demand for Iluka's higher grade feedstocks remained subdued in late 2012 and 2013. Iluka sold 20 per cent less rutile and synthetic rutile combined in 2013 compared with 2012, and 2013 sales were at a level less than half the 2011 combined sales volumes of these products. With very low volumes required, price declines followed - price makers can become price takers in such conditions. Weighted average rutile and synthetic rutile prices in 2013 were approximately 45 per cent of 2012 weighted average pricing outcomes. Iluka's production response Iluka's view is that the lower demand we have seen recently is mainly a result of global economic and cyclical industry business conditions. Our belief is also that the lower demand environment was primarily a cyclical issue, not a structural issue, for our industry. Most industries investigate and adopt over time more efficient production methods and cheaper inputs where possible. Mineral sands is no different, but the effect in this area, in my view is often overstated. For example zircon loadings (\"intensity of use\") in ceramic tiles have been reducing for around thirty years, despite which global demand has grown consistently - so what some have referred to in recent times as thrifting and substitution is not a new phenomenon. In fact, a positive turning point may be upon us given the recent detailed ceramics tile analysis the company conducted suggests that zircon loadings across varying types of tile types in different geographies have increased year-on-year and that new technologies such as digital printing may be a positive, not negative, factor in future demand. With a focus on medium and long term supply/demand outlooks, Iluka's approach is to exercise what we term production flexibility. Simply put, the company seeks to match production to demand in low demand environments rather than seek to displace others. This approach entailed a build of inventory in 2012 as initial production adjustments were made. Entering 2013 further measures to reduce both production and capital expenditure were implemented in a manner designed to maximise cash flow but protect the company's capacity to benefit from future volume recovery and growth opportunities. Iluka's zircon production was 52 per cent lower than 2011 levels, while rutile and synthetic rutile production was 67 per cent lower than 2011 levels. This major operational response to a cyclical low in market demand was seen as appropriate to progressively draw down finished goods inventory, conserve cash through lowering overall production costs, while maintaining the capacity to respond quickly to market demand recovery. Iluka's 2013 cash cost of production of $376 million, excluding one-off restructuring costs of $69 million, was a 40 per cent reduction from 2011 cash production costs. On a unit of production basis, some inefficiencies have flowed from markedly lower utilisation levels, reflected by higher unit production costs in 2013 than in previous periods. Iluka's production response measures are conveyed later in this Report, and have entailed idling the last operating synthetic rutile kiln, and running mineral processing capacity in Australia at reduced capacity. Regrettably, the major reconfiguration in operations resulted in approximately 250 people being made redundant during 2013. It is likely that production settings in 2014 will remain similar to 2013, including no planned synthetic rutile kiln operation being envisaged at this stage. Iluka has idled one of its mining operations, Concord, in Virginia and will operate the remaining mine, Brink, with lower mineral separation plant utilisation. The company's approach should enable a further draw down in finished goods inventory levels in 2014, and a likely stabilisation and then reduction in concentrate inventories. Iluka retains the ability to rapidly re-activate production capacity, as required, including synthetic rutile production. 13 MANAGING DIRECTOR'S REVIEW Market outlook Sustainability Recent industry volatility makes forecasting difficult, particularly the nature and timing of clear inflection points in demand or, indeed, supply. Hindsight is perhaps the only really accurate 'sight' available at such times. It is apparent, though, that at the time of writing many factors typically indicative of, or precursors to, demand recovery are in place. These include: A core aspect of what we refer to internally as \"Iluka's Game Plan\" is a commitment to sustainability. In 2013, areas of progress included: n \u0007 enerally more positive expectations for global economic g growth (and the indicators that flow from this), including continued strengthening in the US economy, China growth continuing at recent levels and the beginnings of a modest recovery in the Eurozone; n \u0007he rehabilitation of over 950 hectares of land during the t year (compared with a prior four year average of 425 hectares per annum); n \u0007 stablishment of a major research partnership with the e University of Western Australia in the area of Vegetation Science and Biogeography with significant research goals towards conservation and restoration of biodiversity; n \u0007 nequivocally u n \u0007urther f n \u0007ncreases in China floor space starts, tile production, real i n \u0007 more diverse workforce as assessed against the four a positive trends in the United States housing sector, including housing starts, housing pricing and remodelling activity, all of which are important lead indicators for paint, pigment and high grade titanium dioxide markets. When combined with pigment producer commentary of a draw down in pigment inventories to more usual levels, these collectively can be seen as very positive indicators; and focus areas in Iluka: age distribution, opportunities for people with disabilities, gender diversity and indigenous employment. Progress is being made with, for example, females comprising over 40 per cent of all new employees recruited in 2013, across the full spectrum of operational, professional and functional roles; and estate lending and housing sales - all of which can be expected to a have flow on to ceramic and zircon demand in the context, in Iluka's assessment, of low inventories of zircon raw material being held by Iluka's direct customers in China. Medium term demand fundamentals for mineral sands remain favourable: the trends of urbanisation; increased per capita income and consumption levels in developing economies; and the increasing array of end applications for mineral sands products, underpin a favourable outlook. While on the supply-side, a limited amount of new production may become evident in the short term, the medium term outlook remains one of few new, credible, high quality sources of supply, especially of zircon or high grade titanium dioxide products. In addition, existing major producers, including Iluka, have decisions to make about replacing or sustaining existing operations and hence committing fresh capital to an industry with volatile returns, at least recently. Iluka, for one, remains focussed on generating acceptable returns for shareholders and views its own decisions in this context. 14 improvement in health and safety performance. As an example, the total recordable injury frequency rate declined, recorded at 4.6 per million hours, while the lost time injury frequency rate (the number of days lost per million days worked) was 0.3. Both figures represent a very pleasing improvement towards best practice levels of performance and reflect a company-wide safety production leadership programme; n \u0007ontinued c commitment to productive stakeholder engagement across Iluka operations as recognised by the award of the South Australian Premier's Award for Excellence for Social Inclusion for the company's activities at Jacinth-Ambrosia. Iluka approach to sustainability goals and the means to achieve them will continue to evolve but will be centred on an approach to environmental management and stakeholder engagement we term \"proactivity\For each question write the page number(s) the information was found on. No page numbers your grade = ZERO. a) How many pages do the financial statements occupy, what is the balance date of the financial statements and in what currency(s) are the financial statements prepared? (1 Mark). b) What is the company's net profit (loss) for the current year and the previous year? Did the directors explain the profit (loss) for the current year, what did they say? What do the director's say about profits in the future? (2 Marks) c) What is the company's debt position? Calculate the company's debt ratio for the current year and the previous year using formula [Total Tangible Assets/Total Debt]. Comment on the company's debt position and their ability to repay. (2 Marks) d) How did the company fund its activities during the year? Did the company generate its own cash flows from business activities or did it rely on funds raised from shareholders, debt financing or asset sales? Provide full details of amounts. (2 Marks) e) Find ONE example of voluntary social or environmental disclosure. Can you think of a reason the company may have voluntarily disclosed this information. Find ONE example of mandatory environmental disclosure. Take a screen print of the page in the annual report, cut and paste into you answer and crop/resize neatly into your document. (2 Marks) f) Do you think the company has good corporate governance systems in place? Provide clear reasons with examples from disclosure in the annual report you have been allocated as to why you agree or disagree