Wrap Text
IMP - Impala Platinum Holdings Limited - Consolidated interim results (reviewed)
for the six months ended 31 December 2011
Impala Platinum Holdings Limited
(Incorporated in the Republic of South Africa)
Registration No. 1957/001979/06
Share codes: JSE: IMP; ISIN: ZAE000083648; LSE: IPLA; ADRs: IMPUY
("Implats" or "the Company" or "the Group")
Consolidated interim results (reviewed) for the six months ended 31 December
2011
Safety
Safety performance remains unsatisfactory
Operational
Good operational performance in a difficult operating environment
Production
Mine-to-market production unchanged
Revenue
Revenue marginally higher at R15.4 billion
Costs
Unit cost per platinum ounce up 9.9% due to higher than inflation wage and
utility increases
Headline earnings
Improved by 67.8% to R3.47 billion
Dividend
Dividend of 135 cents per share
COMMENTARY
The period under review has seen a reversal of global economic conditions driven
primarily by the worsening Eurozone crisis. The downward pressure this has
exerted on prices has been somewhat ameliorated by the weakening of the rand
resulting in gross margins decreasing only marginally. The major projects
currently being undertaken, namely the development of the three new shafts at
Rustenburg and the Phase 2 expansion at Zimplats remain on track. Empowerment
discussions with the Government of Zimbabwe are ongoing regarding that country`s
Indigenisation law.
SAFETY
Safety performance remained unsatisfactory with six fatalities during the half
year ended December 2011. All the incidents occurred at Impala Rustenburg. Three
were due to falls of ground, two due to equipment handling incidents and the
other resulted from an explosives incident. The Board, Management and all of the
Implats team extend their sincere condolences to the family and friends of our
late colleagues who lost their lives during the period under review.
The Group Lost-Time Injury Frequency Rate also remains a concern given the 18.4%
deterioration to 5.85 per million man-hours worked. Impala and Marula
deteriorated by 23.7% to 6.69 and 27.9% to 11.75 respectively, whilst Zimplats
improved by 70.7% to a record of 0.22. Mimosa deteriorated to 1.29. Total Injury
Frequency Rate improved 6.7% to 12.56.
The Implats safety strategy continues to focus on changing the safety culture of
the organisation and closing the supervision gap in order to ultimately achieve
our vision of zero harm. In the current financial year, the main areas being
targeted are: changing the culture, increasing supervision, visible leadership,
measurement and reporting of leading safety indicators, and safety rule
compliance.
MARKET OVERVIEW
If ever any doubt existed about fundamentals being the only drivers of PGM
markets, then 2011 provided ample evidence that the actions of the investment
community proved more influential to our metals` fortune than demand alone.
Platinum
Platinum prices started the year in the mid $1 700`s, and after briefly touching
a high of $1 900 in late August, succumbed to a bout of investor selling as the
world`s economic woes, especially in the Eurozone countries, led a flight of
capital out of commodities into the relative safety of the US dollar and gold -
resulting in a $400 drop in September alone. Prices ended the year at around $1
400, having tested the mid $1 300`s in late December, and averaged $1 720 for
the year. The market reverted to a small surplus for the year, driven by an
improvement in North American primary supply and increased recycling, offsetting
a relatively stable demand environment, with increased industrial demand
overshadowing a reduction in investment demand.
Automotive demand increased by just over 5% for the year, despite the woes of
Europe - platinum`s main automotive market, as its diesel share increased and
the fitment of emission control systems to heavy duty diesels globally gathered
momentum. Furthermore, the lower price environment, where prices dropped below
that of gold for the first time in nearly a decade, resulted in an increase in
platinum jewellery sales in China, with total jewellery demand growing by some
7%.
Palladium
From a palladium point of view, bullish fundamentals were swept aside as
investors unwound positions in the latter part of the year. Having started the
year near $800, the second half saw significant selling which forced prices down
to the $560`s, averaging $733 for the year but still nearly 40% higher than 2010
levels. The low levels experienced during October triggered substantial forward
buying and physical purchases which pushed prices back towards $565 at the year
end.
Automotive demand grew close to 10% for the year, but the combination of a half
a million ounces net redemption of metal from Exchange Traded Funds (ETFs),
together with the re-emergence of Russian destocking left the market in a
significant surplus.
Rhodium
Despite the launch of a rhodium ETF during the year, average prices reduced by
15% from 2010 levels as the market continued to be adequately supplied.
Increases in automotive demand were well matched by growth in SA supplies via
the ever increasing UG2 mix as well as aggressive selling from secondary
refiners / recyclers.
OPERATIONAL REVIEW
Mine-to-market production remained virtually unchanged at 738 000 ounces of
platinum, however a 47.6% decrease in third party and toll treatment volumes
over which the Group has no control, resulted in an 11.1% decline in gross
platinum production to 846 000 ounces. Unit cost increased by 9.9% to R11 283
per platinum ounce (12.8% to R11 589 per platinum ounce excluding the change in
estimate of off-reef development as described in the Financial review). This is
reflective of the recent wage agreements and power tariff increases in both
South Africa and Zimbabwe.
Impala
Impala Rustenburg was severely impacted by the issuance of a significant number
of high impact Section 54 notices which commenced in September and continued
through to the end of the reporting period. In excess of 510 000 tonnes were
lost as a result and a loss of some 33 000 platinum ounces can be attributed to
these interventions. Tonnes milled (underground and opencast) decreased by 12.3%
to 6.85 million. This was mitigated by the treatment of approximately 680 000
tonnes of additional surface material and processing pipeline adjustments, which
resulted in refined platinum production of 490 000 ounces.
Unit costs per platinum ounce refined excluding share based payments rose by
8.2% to R10 994 (11.6% to R11 339 before change in capitalisation estimate). The
increase was due to the ongoing impact of the high inflationary environment and
lower production.
The focus at Rustenburg remains on the development of the three new major
shafts. At 20 Shaft the decision at the end of June 2011 to delay production
ramp-up by 12 months to allow focus on the development of the incline and
decline was vindicated as this development has achieved its targeted rate and
production is scheduled to commence in FY2013. At 16 Shaft sinking has been
completed and shaft equipping is in progress with production remaining on
schedule for FY2014. Sinking at the 17 Shaft complex remains on target. The
development of the first two horizontal levels have commenced. First production
is still expected in FY2017. Capital expenditure increased by 63.6% to R3.0
billion.
Zimplats
Tonnes milled increased by 4.4% to 2.17 million resulting in a corresponding
increase in platinum production in matte to 92 000 ounces. Unit costs per
platinum ounce in matte increased by 16.8% to $1 322 in dollar terms and by
23.8% in rand terms to R10 010. This was due to a combination of the award of a
statutory 20% salary increase backdated to January 2011 and a provision for the
59% tariff increase proposed by Zimbabwe Electricity Supply Authority (ZESA) in
September.
The Phase 2 expansion which will increase production by 90 000 to 270 000 ounces
of platinum in FY2014 remains on schedule. The declines at Portal 3 are
progressing well and are now approximately 100 metres below surface while work
on the concentrator and other infrastructure continues.
The company announced in October that it would establish a 10% community share
ownership scheme as part of its indigenisation plan which was submitted in late
November. The Trust has since been registered, but the transaction has yet not
been implemented as discussions remain ongoing with the Government of Zimbabwe
on the overall indigenisation plan.
Mimosa*
Mill throughput increased by 0.8% to 1.15 million tonnes and platinum production
in concentrate increased 2.3% to 52 400 ounces due to improved grade and
recoveries. Unit costs per platinum ounce in concentrate rose by 21.1% to $1 502
in dollar terms and rose by 28.5% to R11 374 in rand terms due to the same
inflationary pressures experienced by its sister Zimbabwean mine.
In December the company announced that it had established a community share
ownership trust that would hold 10% of the company as an integral part of its
indigenisation plan. This transaction has also not been effected due to ongoing
discussions with the Government of Zimbabwe.
Marula
Tonnes milled decreased by 9.1% to 0.81 million and second quarter tonnes milled
were in line with the new production target. Platinum production in concentrate
was on plan at 36 000 ounces. The forecast for the year remains 70 000 ounces of
platinum.
Total cash cost and platinum in concentrate production decreased by 5.9% and
12.4% respectively in line with the right-sizing of the operation. Unit cost per
platinum ounce in concentrate, excluding share-based compensation, increased by
2.8% to R15 056 (7.4% to R15 752, before taking into account the change in
capitalisation estimate).
Two Rivers*
Tonnes milled increased by 5.1% to 1.56 million which resulted in a
corresponding increase in platinum production in concentrate to 77 000 ounces.
Unit costs per platinum ounce in concentrate rose by 8.1% to R10 239.
Impala Refining Services (IRS)
Refined platinum production declined by 21.1% to 356 000 ounces due to a 47.6%
decrease in third party and toll treatment volumes to 108 000 ounces. This was
primarily due to the once-off toll treatment for Lonmin in the corresponding
period a year ago coupled with operational challenges at Crocodile River and the
closure of Blue Ridge.
Mineral Resources and Mineral Reserves
There has been no material change to the technical information relating to the
Group`s mineral reserves and resources, or legal title to its mining and
exploration activities, as disclosed in the Integrated Annual Report for the
financial year ended 30 June 2011.
*Comprises 100% of operational performance.
FINANCIAL REVIEW
Basic headline earnings improved by 66% to 573 cents per share from 345 cents.
The weaker closing exchange rate of R8.09 at the end of December 2011 compared
to the R6.77 at the end of June 2011 resulted in exchange gains of R608 million
for the review period compared to a loss of R551 million for the comparable
period. The revaluation of metal purchase creditors as a result of the decline
in metal prices at half year end contributed R473 million.
Revenue was marginally higher at R15.4 billion. Sales volumes were down due to
an inventory build up at Impala Platinum giving rise to a negative volume
variance of R1.3 billion. Achieved dollar metal prices were higher, platinum at
$1 673 per ounce up 4.8%, palladium 28.0% higher with rhodium 20.8% and nickel
6.3% lower. The impact was a positive price variance of R663 million. The
average rand/dollar exchange rate achieved during the period under review
weakened from R7.16 to R7.55 which resulted in higher revenue of R732 million.
Cost of sales increased by 3.0% compared to the previous review period. This was
positively impacted by a reduction in the share-based payment provision of R130
million (as a result of a lower share price at the end of December 2011)
compared to an increase in the provision in the comparable period of R542
million. Metal purchases increased by R419 million mainly as a result of higher
metal prices. Depreciation increased by R114 million as a result of a higher
asset base and the change in accounting estimate (see below).
The group unit cost per platinum ounce produced, excluding share based payment
costs, escalated by 9.9% to R11 283 per platinum ounce from the comparable
period. The bulk of this increase was inflation related with wages escalating by
10.0%, consumables 7.4% and electricity by 25.8%. Zimplats` rand inflation at
23.8% was aggravated by the weakening of the rand/dollar exchange rate. As
indicated in the Integrated Annual Report for the financial year ended 30 June
2011, a change in accounting estimate for development costs resulted in certain
development costs being capitalised and depreciated over the estimated useful
life. For the year to date an amount of R196 million was capitalised. The impact
of this was to reduce unit cost per platinum ounce from 12.8% to 9.9% as
indicated above.
The above resulted in the gross margin decreasing marginally to 31.2%.
Capital expenditure for the half year totalled R4.3 billion, compared to R2.4
billion in the previous half year to December 2010. Of this, R3.0 billion was
incurred at Impala. The forecast capital expenditure for the financial year 2012
will amount to approximately R7.7 billion, and is estimated to be R27 billion
over the next four years. This will be managed in line with the Group`s
profitability and cash flow.
Borrowings increased by R859 million from June 2011 mainly as a result of a R768
million property sale and leaseback transaction.
Cash from operating activities for the interim period totalled R3.0 billion
(December 2010: R2.0 billion). Cash net of debt amounted to R633 million
(December 2010: R 115 million).
Notwithstanding the ongoing uncertainty regarding the full financial impact of
the current illegal strike, the Board has resolved to limit the interim dividend
to 135 cents per share.
PROSPECTS
The past six months would suggest that any sustained rally in the PGM markets is
likely to be driven by an embryonic recovery in the US and a renewed growth
focus in China, and would be balanced by the potential for a disorderly default
in some EU countries. As a result we expect continued volatility in the
commodity markets until a more definite growth environment can be established.
Subsequent to half year-end the majority of the Impala Rustenburg mining
employees embarked on an illegal strike, resulting in the dismissal of
approximately 17 000 employees. The impact of this business interruption is a
loss of some 3 000 ounces of platinum production per day.
As at the 14th of February 2012 this had resulted in a loss of production of 60
000 ounces of platinum.
DECLARATION OF INTERIM CASH DIVIDEND
An interim cash dividend of 135 cents per share has been declared in respect of
the half year ended 31 December 2011. The last day to trade ("cum" the dividend)
in order to participate in the dividend will be Friday, 02 March 2012. The share
will commence trading "ex" the dividend from the commencement of business on
Monday, 05 March 2012 and the record date will be Friday, 09 March 2012.
The dividend is declared in the currency of the Republic of South Africa.
Payments from the United Kingdom transfer office will be made in United Kingdom
currency at the rate of exchange ruling on Thursday, 08 March 2012, or on the
first day thereafter on which a rate of exchange is available.
A further announcement stating the Rand/GBP conversion rate will be released
through the relevant South African and UK news services on Friday, 09 March
2012.
The dividend will be paid on Monday, 12 March 2012. Share certificates may not
be dematerialised/rematerialised during the period Monday, 05 March 2012 to
Friday, 09 March 2012, both dates inclusive.
By order of the Board
A Parboosing
Group Company Secretary
Johannesburg, 16 February 2012
APPROVAL OF THE INTERIM FINANCIAL STATEMENTS
The directors of the Company are responsible for the maintenance of adequate
accounting records and the preparation of the interim financial statements and
related information in a manner that fairly presents the state of the affairs of
the Company. These interim financial statements are prepared in accordance with
International Financial Reporting Standards and incorporate full and responsible
disclosure in line with the accounting policies of the Group which are supported
by prudent judgements and estimates.
The interim financial statements have been prepared under the supervision of the
Chief Financial Officer Ms B Berlin, CA(SA).
The directors are also responsible for the maintenance of effective systems of
internal control which are based on established organisational structure and
procedures. These systems are designed to provide reasonable assurance as to the
reliability of the interim financial statements, and to prevent and detect
material misstatement and loss.
The interim financial statements have therefore been prepared on a going-concern
basis and the directors believe that the Company and the Group will continue to
be in operation in the foreseeable future.
The interim financial statements have been approved by the Board of directors
and are signed on their behalf by:
KDK Mokhele DH Brown
Chairman Chief Executive Officer
Johannesburg, 16 February 2012
OPERATING STATISTICS
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2011 2010 2011
Gross refined production
Platinum (000oz) 846 952 1 836
Palladium (000oz) 529 623 1 192
Rhodium (000oz) 118 129 262
Nickel (000t) 7.8 8.4 16.3
IRS metal returned
Platinum (000oz) 57 124 941
Palladium (000oz) 74 123 511
Rhodium (000oz) 12 25 127
Nickel (000t) 1.6 1.9 5.5
Sales volumes
Platinum (000oz) 766 801 1 665
Palladium (000oz) 431 477 1 011
Rhodium (000oz) 97 109 221
Nickel (000t) 6.3 8.4 15.5
Prices achieved
Platinum ($/oz) 1 673 1 596 1 691
Palladium ($/oz) 709 554 670
Rhodium ($/oz) 1 784 2 253 2 275
Nickel ($/t) 20 426 21 795 23 965
Consolidated statistics
Average rate achieved (R/$) 7.55 7.16 7.03
Closing rate for the (R/$) 8.09 6.62 6.77
period
Revenue per platinum ($/oz) 2 650 2 624 2 799
ounce sold
(R/oz) 20 008 18 788 19 677
Tonnes milled ex-mine (000t) 10 396 11 341 20 974
PGM refined production (000oz) 1 715 1 946 3 772
Capital expenditure (Rm) 4 268 2 420 5 540
Group unit cost per
platinum ounce
Excluding share-based ($/oz) 1 531 1 439 1 545
cost
before capitalisation (R/oz) 11 589 10 271 10 867
Excluding share-based ($/oz) 1 490 1 439 1 545
cost
after capitalisation (R/oz) 11 283 10 271 10 867
Including share-based ($/oz) 1 464 1 571 1 539
cost
after capitalisation (R/oz) 11 082 11 212 10 824
Group unit cost per PGM
ounce
Excluding share-based ($/oz) 770 732 761
cost
before capitalisation (R/oz) 5 829 5 228 5 350
Excluding share-based ($/oz) 750 732 761
cost
after capitalisation (R/oz) 5 675 5 228 5 350
Including share-based ($/oz) 736 780 754
cost
after capitalisation (R/oz) 5 573 5 569 5 304
Additional statistical information is available on the Company`s
internet website.
STATEMENT OF FINANCIAL POSITION
As at As at As at
31 December 31 December 30 June
2011 2010 2011
R millions Notes (Reviewed) (Reviewed) (Audited)
Assets
Non-current assets
Property, plant and 5 37 114 30 647 33 137
equipment
Exploration and 4 294 4 294 4 294
evaluation assets
Intangible assets 1 018 1 018 1 018
Investment in associates 956 883 904
Available-for-sale 15 13 15
financial assets
Held-to-maturity 64 59 61
financial assets
Receivables and 13 349 13 651 13 379
prepayments
56 810 50 565 52 808
Current assets
Inventories 6 275 6 265 5 471
Trade and other 4 971 4 154 4 783
receivables
Cash and cash 3 334 1 720 4 542
equivalents
14 580 12 139 14 796
Total assets 71 390 62 704 67 604
Equity and liabilities
Equity attributable to
owners of the Company
Share capital 15 172 14 201 14 228
Retained earnings 35 072 30 465 34 136
Other components of (22) (862) (801)
equity
50 222 43 804 47 563
Non-controlling interest 2 255 1 944 2 047
Total equity 52 477 45 748 49 610
Liabilities
Non-current liabilities
Deferred tax liability 9 353 7 843 8 337
Long-term borrowings 6 2 624 1 292 1 698
Long-term liabilities 999 869 831
Long-term provisions 681 676 614
13 657 10 680 11 480
Current liabilities
Trade and other payables 4 663 4 966 5 656
Current tax payable 196 98 226
Short-term borrowings 6 77 313 144
Short-term liabilities 320 899 488
5 256 6 276 6 514
Total liabilities 18 913 16 956 17 994
Total equity and 71 390 62 704 67 604
liabilities
STATEMENT OF COMPREHENSIVE INCOME
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2011 2010 2011
R millions Notes (Reviewed) (Reviewed) (Audited)
Revenue 15 412 15 315 33 132
Cost of sales 7 (10 606) (10 294) (21 490)
Gross profit 4 806 5 021 11 642
Other operating expenses (343) (381) (645)
Royalty expense (464) (417) (804)
Profit from operations 3 999 4 223 10 193
Finance income 182 189 343
Finance cost (131) (154) (530)
Net foreign exchange 608 (551) (448)
gains/(losses)
Other income/(expenses) 408 (568) (235)
Share of profit of 60 67 238
associates
Profit before tax 5 126 3 206 9 561
Income tax expense (1 567) (1 054) (2 751)
Profit for the period 3 559 2 152 6 810
Other comprehensive
income, comprising of
items subsequently
reclassified to profit
or loss:
Available-for-sale (2) 3 6
financial assets
Deferred tax thereon 0 0 0
Exchange differences on 1 267 (790) (692)
translating foreign
operations
Deferred tax thereon (355) 222 195
Total comprehensive 4 469 1 587 6 319
income
Profit attributable to:
Owners of the Company 3 482 2 070 6 638
Non-controlling interest 77 82 172
3 559 2 152 6 810
Total comprehensive
income attributable to:
Owners of the Company 4 261 1 584 6 213
Non-controlling interest 208 3 106
4 469 1 587 6 319
Earnings per share
(cents per share)
Basic 575 345 1 105
Diluted 575 344 1 104
For headline earnings per share and dividend per share refer note 8 and 10.
STATEMENT OF CHANGES IN EQUITY
Number Share
of shares based Total
issued Ordinary Share payment share
R millions (million)* shares premium reserve capital
Balance at 30 June 2011 600.99 15 12 223 1 990 14 228
Shares issued:
Share option scheme 0.08 0 5 5
Employee Share
Ownership
Programme (note 9) 5.37 1 855 83 939
Total comprehensive
income
Dividends (note 10)
Balance at 31 December 606.44 16 13 083 2 073 15 172
2011 (Reviewed)
Balance at 30 June 2010 600.44 15 12 146 1 990 14 151
Shares issued:
Share option scheme 0.10 0 7 7
Employee Share
Ownership
Programme (note 9) 0.27 0 43 43
Total comprehensive
income
Dividends (note 10)
Balance at 31 December 600.81 15 12 196 1 990 14 201
2010 (Reviewed)
Balance at 30 June 2010 600.44 15 12 146 1 990 14 151
Shares issued:
Share option scheme 0.11 0 7 7
Employee Share
Ownership
Programme (note 9) 0.44 0 70 70
Total comprehensive
income
Dividends (note 10)
Balance at 30 June 2011 600.99 15 12 223 1 990 14 228
(Audited)
* Refer note 8. The table above excludes the treasury shares, Morokotso Trust
and the Implats share incentive scheme as these special purpose vehicles are
consolidated.
STATEMENT OF CHANGES IN EQUITY (CONTINUED)
Foreign Total
Fair currency other
Retained value translation components
R millions earnings reserve reserve of equity
Balance at 30 June 2011 34 136 (9) (792) (801)
Shares issued:
Share option scheme
Employee Share Ownership
Programme (note 9)
Total comprehensive income 3 482 (2) 781 779
Dividends (note 10) (2 546)
Balance at 31 December 35 072 (11) (11) (22)
2011 (Reviewed)
Balance at 30 June 2010 30 017 (15) (361) (376)
Shares issued:
Share option scheme
Employee Share Ownership
Programme (note 9)
Total comprehensive income 2 070 5 (491) (486)
Dividends (note 10) (1 622)
Balance at 31 December 30 465 (10) (852) (862)
2010 (Reviewed)
Balance at 30 June 2010 30 017 (15) (361) (376)
Shares issued:
Share option scheme
Employee Share Ownership
Programme (note 9)
Total comprehensive income 6 638 6 (431) (425)
Dividends (note 10) (2 519)
Balance at 30 June 2011 34 136 (9) (792) (801)
(Audited)
STATEMENT OF CHANGES IN EQUITY (CONTINUED)
Attributable to:
Owners Non-
of the controlling Total
R millions Company interest equity
Balance at 30 June 2011 47 563 2 047 49 610
Shares issued:
Share option scheme 5 5
Employee Share Ownership
Programme (note 9) 939 939
Total comprehensive income 4 261 208 4 469
Dividends (note 10) (2 546) (2 546)
Balance at 31 December 2011 50 222 2 255 52 477
(Reviewed)
Balance at 30 June 2010 43 792 1 941 45 733
Shares issued:
Share option scheme 7 7
Employee Share Ownership
Programme (note 9) 43 43
Total comprehensive income 1 584 3 1 587
Dividends (note 10) (1 622) (1 622)
Balance at 31 December 2010 43 804 1 944 45 748
(Reviewed)
Balance at 30 June 2010 43 792 1 941 45 733
Shares issued:
Share option scheme 7 7
Employee Share Ownership
Programme (note 9) 70 70
Total comprehensive income 6 213 106 6 319
Dividends (note 10) (2 519) (2 519)
Balance at 30 June 2011 (Audited) 47 563 2 047 49 610
CASH FLOW STATEMENT
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2011 2010 2011
R millions (Reviewed) (Reviewed) (Audited)
Cash flows from operating
activities
Profit before tax 5 126 3 206 9 561
Adjustments to profit before tax 437 1 166 1 123
Cash from changes in working (1 307) (1 478) (371)
capital
Exploration costs (32) (10) (44)
Finance cost (70) (108) (179)
Income tax paid (1 104) (780) (1 805)
Net cash from operating 3 050 1 996 8 285
activities
Cash flows from investing
activities
Purchase of property, plant and (3 479) (2 358) (5 293)
equipment
Proceeds from sale of property, 7 5 4
plant and equipment
Proceeds from investments - 1 -
disposed
Purchase of investment in - - (55)
associate
Payment received from associate 23 112 272
on shareholders` loan
Loan repayments received 476 127 394
Advances granted (15) - (33)
Finance income 110 120 234
Dividends received 4 - 5
Net cash used in investing (2 874) (1 993) (4 472)
activities
Cash flows from financing
activities
Issue of ordinary shares 861 50 77
Lease liability repaid (12) (9) (19)
Repayments of borrowings (172) (464) (836)
Proceeds from borrowings 374 - 253
Dividends paid to Company`s (2 546) (1 622) (2 519)
shareholders
Net cash used in financing (1 495) (2 045) (3 044)
activities
Net (decrease)/increase in cash (1 319) (2 042) 769
and cash equivalents
Cash and cash equivalents at 4 542 3 858 3 858
beginning of year
Effect of exchange rate changes 111 (96) (85)
on cash and cash equivalents
held in foreign currencies
Cash and cash equivalents at end 3 334 1 720 4 542
of year
SEGMENT INFORMATION
The Group distinguishes its segments between mining operations, refining
services (which include metals purchased and toll refined) and other.
Management has determined the operating segments based on the business
activities and management structure within the Group. Operating segments have
consistently applied the consolidated basis of accounting and there are no
differences in measurement applied.
Capital expenditure comprises additions to property, plant and equipment (note
5), including additions resulting from acquisitions through business
combinations.
Sales to the two largest customers in the Impala mining segment comprised 9.6%
and 11.0% (December 2010: 10.8% and 10.9%) (June 2011: 10% each) of total sales.
The statement of comprehensive income shows the movement from gross profit to
total profit before tax.
Summary of business segments:
Six months ended
31 December 2011
(Reviewed)
R millions Revenue Gross profit
Mining
Impala 15 131 3 139
Mining 7 904 3 136
Metal purchases 7 227 3
Zimplats 1 746 826
Marula 600 (2)
Mimosa 597 275
Afplats - -
Inter-segment adjustment (2 809) 204
External parties 15 265 4 442
Refining services 7 365 398
Inter-segment adjustment (7 218) (34)
External parties 147 364
Total external parties 15 412 4 806
Six months ended
31 December 2010
(Reviewed)
R millions Revenue Gross profit
Mining
Impala 14 733 2 896
Mining 8 303 2 927
Metal purchases 6 430 (31)
Zimplats 1 784 1 018
Marula 748 29
Mimosa 558 303
Afplats - -
Inter-segment adjustment (2 955) 39
External parties 14 868 4 285
Refining services 6 876 767
Inter-segment adjustment (6 429) (31)
External parties 447 736
Total external parties 15 315 5 021
Year ended
30 June 2011
(Audited)
R millions Revenue Gross profit
Mining
Impala 32 030 7 511
Mining 18 441 7 486
Metal purchases 13 589 25
Zimplats 3 709 2 133
Marula 1 300 (41)
Mimosa 1 284 717
Afplats - (1)
Inter-segment adjustment (5 975) (34)
External parties 32 348 10 285
Refining services 14 273 1 419
Inter-segment adjustment (13 489) (62)
External parties 784 1 357
Total external parties 33 132 11 642
Six months ended
31 December 2011
(Reviewed)
Capital
R millions expenditure Total assets
Mining
Impala 3 016 45 193
Zimplats 904 7 549
Marula 124 3 379
Mimosa 120 1 934
Afplats 104 7 333
Total mining 4 268 65 388
Refining services 4 920
Other 1 082
Total 4 268 71 390
Six months ended
31 December 2010
(Reviewed)
Capital
R millions expenditure Total assets
Mining
Impala 1 843 39 194
Zimplats 365 5 149
Marula 88 3 204
Mimosa 123 1 452
Afplats 1 7 224
Total mining 2 420 56 223
Refining services 5 420
Other 1 061
Total 2 420 62 704
Year ended
30 June 2011
(Audited)
Capital
R millions expenditure Total assets
Mining
Impala 4 240 43 649
Zimplats 840 5 568
Marula 242 3 313
Mimosa 186 1 593
Afplats 32 7 264
Total mining 5 540 61 387
Refining services 5 185
Other 1 032
Total 5 540 67 604
NOTES TO THE INTERIM FINANCIAL INFORMATION
1. General information
Impala Platinum Holdings Limited (Implats) is a leading producer of
platinum and associated platinum group metals (PGMs). The Group has
operations on the Bushveld Complex in South Africa and the Great Dyke in
Zimbabwe, the two most significant PGM-bearing ore bodies globally.
The Company has its primary listing on the Johannesburg Stock Exchange and
a secondary listing on the London Stock Exchange.
The condensed consolidated interim financial information was approved for
issue on 16 February 2012 by the Board of directors.
2. Independent review by the auditors
The consolidated statement of financial position at 31 December 2011 and
the related consolidated statement of comprehensive income, statement of
changes in equity and cash flow statement for the six months then ended was
reviewed by the Group`s auditors, PricewaterhouseCoopers Inc. The
individual auditor assigned to perform the review is Mr J-P van Staden.
Their unqualified review opinion is available for inspection at the
Company`s registered office.
3. Basis of preparation
The consolidated interim financial information for the six months ended 31
December 2011 has been prepared in accordance with International Financial
Reporting Standards (IFRS) of the International Accounting Standards Board
(in particular IAS 34, `Interim financial reporting`), the AC 500 standards
as issued by the Accounting Practices Board or its successor, requirements
of the South African Companies Act, 2008 and the Listings Requirements of
the JSE Limited.
The condensed consolidated interim financial information should be read in
conjunction with the annual financial statements for the year ended 30 June
2011, which have been prepared in accordance with IFRS.
The consolidated interim financial information has been prepared under the
historical cost convention except for certain financial assets, financial
liabilities and derivative financial instruments which are measured at fair
value and liabilities for cash-settled share-based payment arrangements
which are measured with a binomial option model.
The consolidated interim financial information is presented in South
African rands, which is the Company`s functional currency.
4. Accounting policies
Except as described below, the accounting policies applied are consistent
with those of the annual financial statements for the year ended 30 June
2011, as described in those annual financial statements.
Taxes on income in the interim periods are accrued using the tax rate that
would be applicable to expected total annual earnings.
The following new standards, amendments to standards and interpretations
have been adopted by the Group as from 1 July 2011:
- IAS 1 (amendment) Presentation of Financial Statements (effective 1 July
2012). Amendment requiring items of other comprehensive income being
grouped into those that will subsequently not be reclassified to profit and
loss and those that will. This amendment required disclosure in the
statement of comprehensive income indicating that all items will
subsequently be reclassified to profit and loss.
- IAS 19 (amendment) Employee Benefits (effective 1 January 2013). This
amendment has no impact on the results of the Group.
- IAS 34 (amendment) Interim Financial Reporting (effective 1 January 2013).
Consequential amendment from IFRS 13 requiring disclosure for Financial
Instruments as disclosed in note 13.
- IFRS 13 Fair Value Measurement (effective 1 January 2013). This new
standard has no impact on the results of the Group.
- IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
(effective 1 January 2013). This new interpretation has no impact on the
results of the Group.
5. Property, plant and equipment
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2011 2010 2011
R millions (Reviewed) (Reviewed) (Audited)
Opening net book amount 33 137 29 646 29 646
Additions 4 255 2 420 5 539
Interest capitalised 13 - 1
Disposals (557) (7) (54)
Depreciation (note 7) (804) (690) (1 372)
Exchange adjustment on 1 070 (722) (623)
translation
Closing net book amount 37 114 30 647 33 137
Capital commitments
Capital expenditure approved at 31 December 2011 amounted to R25.6 billion
(December 2010: R23.7 billion) (June 2011: R25.5 billion), of which R4.8 billion
(December 2010: R3.8 billion)(June 2011: R 2.0 billion) is already committed.
This expenditure will be funded internally and, if necessary, from borrowings.
6. Borrowings
Borrowings from Standard Bank Limited:
- Loans were obtained by BEE partners for purchasing a 27% share in Marula
Platinum (Proprietary) Limited amounting to R771 million (June 2011: R771
million). The BEE partnership in Marula is consolidated as the loans are
guaranteed by Implats. The loans carry interest at the Johannesburg
Interbank Acceptance Rate (JIBAR) plus 130 (June 2011: 130) basis points.
Revolving credit facilities amounting to R111 million (June 2011: R114
million), carries interest at JIBAR plus 145 (June 2011: 145) basis points.
The loans expire in 2020.
- Two loan facilities from Standard Bank of South Africa Limited to finance
expansion at Zimplats remain outstanding. These loans are secured by
cessions over cash, debtors and revenue of Zimbabwe Platinum Mines (Pvt)
Limited:
Loan 1 - a R20 million (June 2011: R102 million) US$ denominated loan bears
interest at London Interbank Offering Rate (LIBOR) plus 700 (June 2011:
700) basis points. At the end of the period the outstanding US$ balance
amounted to US$2.5 million (June 2011: US$15 million). Repayments of 12
quarterly instalments commenced in December 2009 and will be fully settled
by December 2012.
Loan 2 - a US$ denominated revolving credit facility of R596 million (US$88
million) bears interest at LIBOR plus 700 (June 2011: 700) basis points.
The loan amortises over four years as per the relevant commitments with a
final maturity date in December 2014. At the end of the period the
outstanding balance amounted to R404 million (US$50 million) (June 2011:
R244 million (US$36 million)).
The total undrawn facilities at the end of the period were R3.7 billion
(June 2011: R3.9 billion), of which R808 million (June 2011: R3.9 billion)
were committed.
7. Cost of sales
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2011 2010 2011
R millions (Reviewed) (Reviewed) (Audited)
Included in cost of sales:
On-mine operations 5 074 5 439 9 862
Wages and salaries 2 836 2 734 5 590
Share-based compensation* (125) 490 (90)
Materials and other costs 1 987 1 918 3 781
Utilities 376 297 581
Concentrating and smelting 1 474 1 309 2 601
operations
Wages and salaries 278 247 517
Materials and other costs 698 682 1 355
Utilities 498 380 729
Refining operations 437 458 833
Wages and salaries 192 174 358
Share-based compensation (5) 52 8
Materials and other costs 198 190 383
Utilities 52 42 84
Depreciation of operating 804 690 1 372
assets (note 5)
Metal purchases 3 438 3 241 6 835
Change in metal inventories (621) (843) (13)
10 606 10 294 21 490
The following disclosure
items are included in cost of
sales:
Repairs and maintenance 550 455 1 038
expenditure on property,
plant and equipment
Operating lease rentals 27 19 28
*Includes concentrating and smelting
8. Headline earnings
Headline earnings attributable to equity holders of the Company arises from
operations as follows:
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2011 2010 2011
R millions (Reviewed) (Reviewed) (Audited)
Profit attributable to owners 3 482 2 070 6 638
of the Company
Adjustments:
Profit on disposal of property, (13) 0 (1)
plant and equipment
Loss on disposal of investment - - 3
Total tax effects of 4 - (1)
adjustments
Headline earnings 3 473 2 070 6 639
The issued share capital of the
holding Company is as follows
(millions):
Number of shares issued 631.99 631.71 631.71
Treasury shares (16.23) (16.23) (16.23)
Morokotso Trust (9.10) (14.64) (14.47)
Implats Share Incentive Trust (0.22) (0.03) (0.02)
Number of shares issued outside 606.44 600.81 600.99
the Group
Adjusted for weighted average (0.55) (0.22) (0.23)
number of shares issued during
the year
Weighted average number of 605.89 600.59 600.76
shares in issue for basic
earnings per share
Adjustment for share 0.14 0.34 0.34
appreciation scheme
Weighted average number of 606.03 600.93 601.10
shares for diluted earnings per
share
Headline earnings per share
(cents)
Basic 573 345 1 105
Diluted 573 344 1 104
9. Employee Share Ownership Programme
During the six months ended 31 December 2011, 40% of the share options vested in
terms of the rules of the Employee Share Ownership Programme. Approximately 88%
of these vested options were exercised by employees. The table below explains
the movement in the statement of changes in equity, resulting from the sale of
Implats shares held by the Morokotso Trust.
Number
of shares Share-based
issued Ordinary Share payment
R millions (million) shares premium reserve
Balance at 30 June 2011 14.47 0 2 303 -
Shares issued
- Good leavers* (0.30) 0 (48) -
- Options exercised (5.07) 0 (807) (83)
Balance at 31 December 9.10 0 1 448 (83)
2011 (Reviewed)
Balance at 30 June 2010 14.91 0 2 373 -
Shares issued - Good (0.27) 0 (43) -
leavers*
Balance at 31 December 14.64 0 2 330 -
2010 (Reviewed)
Balance at 30 June 2010 14.91 0 2 373 -
Shares issued - Good (0.44) 0 (70) -
leavers*
Balance at 30 June 2011 14.47 0 2 303 -
(Audited)
*Beneficiary resulting from retirement, retrenchment, incapacity or death.
10. Dividends
On 16 February 2012, a sub-committee of the Board declared an interim cash
dividend in respect of 2012 of 135 cents per share amounting to R819
million. Secondary Tax on Companies on the dividend will amount to R82
million.
These financial statements do not reflect this dividend and related STC
payable. The dividend will be accounted for in shareholders` equity as an
appropriation of retained earnings in the year ending 30 June 2012.
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2011 2010 2011
R millions (Reviewed) (Reviewed) (Audited)
Dividends paid
Final dividend No. 87 for 2011 2 546 1 622 1 622
of 420 (2010: 270) cents per
share
Interim dividend No. 86 for - - 897
2011 of 150 cents per share
2 546 1 622 2 519
11. Contingent liabilities and guarantees
The Group has a contingent liability of US$36 million for Additional
Profits Tax (APT) raised by ZIMRA (Zimbabwe Revenue Authority) consisting
of an additional assessment of US$27 million in respect of the tax period
2007 to 2009 and a current APT amount of US$9 million based on the
assumption that this amount would be payable should the Zimplats appeal
against the ZIMRA interpretation of the APT provisions fail in the Special
Court of Tax Appeals. Management, supported by the opinions of its tax
advisors, strongly disagrees with the ZIMRA interpretation of the
provisions.
As at the end of December 2011 the Group had bank and other guarantees of
R558 million (June 2011: R606 million) from which it is anticipated that no
material liabilities will arise.
12. Related party transactions
The Group entered into purchase transactions of R1.1 billion (December
2010: R1.1 billion) (June 2011: R2.3 billion) resulting in an amount
payable of R605 million (December 2010: R667 million) (June 2011: R652
million) with Two Rivers Platinum, an associate company. It also received
refining fees and interest to the value of R10 million (December 2010: R18
million) (June 2011: R30 million). After capital repayment received during
the period the shareholders loan amounted to R48 million (December 2010:
R232 million) (June 2011: R71 million). These transactions are entered into
on an arm`s length basis at prevailing market rates.
Key management compensation (fixed and variable):
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2011 2010 2011
R 000 (Reviewed) (Reviewed) (Audited)
Non-executive directors 3 642 2 792 6 201
remuneration
Executive directors 16 448 19 699 28 320
remuneration
Prescribed officers 5 830 2 168 11 708
Senior executives and Group 15 206 22 273 30 512
secretary
Total 41 126 46 932 76 741
13. Financial instruments (R millions)
Financial assets - carrying
amount
Loans and receivables 9 084 7 043 10 092
Financial instruments at fair 17 72 33
value through profit and loss2
Held-to-maturity financial 64 59 61
assets
Available-for-sale financial 15 13 15
assets1
9 180 7 187 10 201
Financial liabilities -
carrying amount
Financial liabilities at 7 034 6 227 7 255
amortised cost
Financial instruments at fair 17 72 33
value through profit and loss2
7 051 6 299 7 288
The carrying amounts of financial assets and financial liabilities approximate
their fair values.
1Level 1 of the fair value hierarchy - Quoted prices in active markets for the
same instrument
2Level 2 of the fair value hierarchy - Valuation techniques for which
significant inputs are based on observable market data.
Corporate information
Registered Office: 2 Fricker Road, Illovo 2196, (Private Bag X18, Northlands
2116)
Transfer Secretaries
South Africa: Computershare Investor Services (Pty) Ltd, 70 Marshall Street,
Johannesburg, 2001. (PO Box 61051, Marshalltown, 2107)
United Kingdom: Computershare Investor Services plc, The Pavilions, Bridgwater
Road, Bristol, BS13 8AE
JSE Sponsor: Deutsche Securities SA (Pty) Limited
Directors: Dr KDK Mokhele (Chairman), DH Brown (Chief Executive Officer), B
Berlin, HC Cameron, NDJ Caroll#, PA Dunne, MSV Gantsho,
TP Goodlace, JM McMahon*, AA Maule, TV Mokgatlha, B Ngonyama,
NDB Orleyn, OM Pooe.
*British #Alternate to TV Mokgatlha.
Note:
MV Mennell retired as an independent non-executive director on 26 October 2011.
AA Maule was appointed as an independent non-executive director on 1 November
2011.
Please contact the Company Secretary on (011) 731 9000 or via e-mail at
avanthi.parboosing@implats.co.za or by post at Private Bag X18, Northlands 2116,
South Africa, for further information, if required.
www.implats.co.za
Date: 16/02/2012 08:01:13 Supplied by www.sharenet.co.za
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