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RBP - RBPlat - Audited Abridged Results for the year ended 31 December 2011

Release Date: 28/02/2012 08:07
Code(s): RBP
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RBP - RBPlat - Audited Abridged Results for the year ended 31 December 2011 Royal Bafokeng Platinum Limited (Incorporated in South Africa) (Registration number: 2008/015696/06) Share code: RBP ISIN: ZAE000149936 ("RBPlat" or the "Company" or the "Group") Audited Abridged Results for the year ended 31 December 2011 Key features - Achievements - Fatality-free year - 1.8 million fatality-free shifts by year-end - Landmark three-year wage agreement - Ungeared balance sheet - Styldrift I declared R323 million savings to date - Immediately stopable reserves (IMS) improved from 4.9 months to 5.5 months - R273.7 million headline earnings (relatively flat) - R326 million cash inflow from settlement of Rustenburg Platinum Mines (RPM) balances - Accelerated Bafokeng Rasimone Platinum Mine (BRPM) Joint Venture capex of R1 164 million (2010: R967 million) Disappointments - Intermittent safety stoppages - Strike by JIC Mining Services contract workers Improvements - Headgrade up from 4.31 to 4.35 g/t (4E) - BRPM concentrator recoveries at 87.83% (a 1.5% improvement) - R1 364 million healthy cash and near cash position Challenges - 4.2% decrease in tonnes milled - 2.2% decrease in 4E ounces - 10.7% increase in cash operating cost per tonne milled to R782/tonne - 8.7% increase in cash operating cost per platinum ounce to R9 863/Pt oz - Reduction in headline earnings per share to R1.67 (2010: R1.91) Condensed consolidated statement of financial position As at 31 December 2011 Group 2011 2010 Restated* Notes R (million) R (million)
Assets Non-current assets Property, plant and equipment 5 7 999.3 7 337.9 Mineral rights 6 700.5 6 756.7 Goodwill 2 275.1 2 275.1 Environmental trust deposit 92.4 87.5 Deferred tax asset 34.2 15.2 17 101.5 16 472.4
Current assets Inventories 31.1 48.4 Trade and other receivables 995.7 1 384.5 Held-to-maturity investments 264.9 250.9 Current tax receivable 0.2 4.8 Cash and equivalents 6 1 099.2 899.4 2 391.1 2 588.0 Total assets 19 492.6 19 060.4 Equity and liabilities Share capital 1.7 1.7 Share premium 7 759.9 7 759.9 Retained earnings 3 435.3 3 161.9 Share-based payment reserve 81.1 18.8 Non-controlling interest 3 859.2 3 721.8 Total equity 15 137.2 14 664.1 Non-current liabilities Deferred tax liability 4 054.1 3 901.4 Long-term provisions 58.1 73.4 4 112.2 3 974.8 Current liabilities Trade and other payables 239.8 421.5 Current tax payable 3.4 - 243.2 421.5 Total liabilities 4 355.4 4 396.3 Total equity and liabilities 19 492.6 19 060.4 * Refer Note 4 for details of restatement Condensed consolidated statement of comprehensive income For the year ended 31 December 2011 Group 2011 2010 Restated* Notes R (million) R (million)
Revenue 8 2 974.9 2 106.8 Cost of sales 9 (2 408.7) (1 608.1) Gross profit 566.2 498.7 Other income 54.8 1.6 Profit on remeasurement of - 2 894.8 previously held interest in BRPM Administration expenses (104.3) (60.6) Finance income 62.6 15.7 Finance cost (4.9) (12.5) Profit before tax 574.4 3 337.7 Income tax expense (163.6) (171.7) Net profit 410.8 3 166.0 Other comprehensive income - - Total comprehensive income 410.8 3 166.0 Total comprehensive income attributable to: Owners of the Company 273.4 3 164.8 Non-controlling interest 137.4 1.2 410.8 3 166.0
Basic earnings (cents per 13 167 2 242 share) Diluted earnings (cents per 13 167 2 240 share) * Refer Note 4 for details of restatement Condensed consolidated statement of changes in equity For the year ended 31 December 2011 Number of Ordinary Share Share-based
shares shares* premium* payment issued* reserve R (million) R (million) R (million) Balance at 31 163 677 779 1.7 7 759.9 18.8 December 2010 (Restated)** Share-based - - - 62.3 payment charge Profit for the - - - - year Balance at 31 163 677 779 1.7 7 759.9 81.1 December 2011 Balance at 31 137 057 500 1.4 6 817.8 - December 2009 Transactions with shareholders Shares issued - Contingent 10 000 000 0.1 (0.1) - consideration for the 17% in BRPM - Shares issued 16 620 299 0.2 1 005.4 - on listing of the Company - Capitalisation - - (63.2) - of listing transaction costs 163 677 799 1.7 7 759.9 - Share-based - - - 18.8 payment charge Profit for the - - - - year Non-controlling - - - - interest on gaining control of BRPM As previously 163 677 799 1.7 7 759.9 18.8 reported Purchase price - - - - adjustment Balance at 31 163 677 779 1.7 7 759.9 18.8 December 2010 (Restated)** Retained Attributable Non- Total earnings to controlling owners of interest
the Company R (million) R (million) R (million) R (million) Balance at 31 3 161.9 10 942.3 3 721.8 14 664.1 December 2010 (Restated)** Share-based - 62.3 - 62.3 payment charge Profit for the 273.4 273.4 137.4 410.8 year Balance at 31 3 435.3 11 278.0 3 859.2 15 137.2 December 2011 Balance at 31 (2.9) 6 816.3 - 6 816.3 December 2009 Transactions with shareholders Shares issued - - - - - Contingent consideration for the 17% in BRPM - Shares issued - 1 005.6 - 1 005.6 on listing of the Company - Capitalisation - (63.2) - (63.2) of listing transaction costs (2.9) 7 758.7 - 7 758.7 Share-based - 18.8 - 18.8 payment charge Profit for the 3 166.3 3 166.3 1.9 3 168.2 year Non-controlling - - 3 405.5 3 405.5 interest on gaining control of BRPM As previously 3 163.4 10 943.8 3 407.4 14 351.2 reported Purchase price (1.5) (1.5) 314.4 312.9 adjustment Balance at 31 3 161.9 10 942.3 3 721.8 14 664.1 December 2010 (Restated)** * The number of shares is net of treasury shares relating to the Company`s management share incentive scheme and the Mahube Trust as shares held by these special purpose vehicles are eliminated on consolidation ** Refer Note 4 for details of restatement Condensed consolidated cash flow statement For the year ended 31 December 2011 Group
2011 2010 Notes R (million) R (million) Cash generated by operations 998.4 777.0 Interest paid - (9.8) Interest received 48.6 15.7 Tax (paid)/refund (21.9) 2.4 Net cash flow generated by 1 025.1 785.3 operating activities Net cash flow utilised by (1 151.1) (880.0) investing activities Cash impact of the business - 91.7 combination Increase in held-to-maturity - (250.9) investments Proceeds from disposal of 0.3 0.1 property, plant and equipment Acquisitions of property, plant (1 146.5) (718.5) and equipment Increase in environmental trust (4.9) (2.4) deposit Net cash flow generated by 325.8 942.6 financing activities Issue of ordinary shares net of - 942.4 cost Related party loans received - 0.2 Settlement of RPM receivable 325.8 - Net increase in cash and cash 199.8 847.6 equivalents Cash and cash equivalents at 899.4 51.5 beginning of year Cash and cash equivalents at 6 1 099.2 899.4 end of year Notes to the condensed consolidated annual financial statements For the year ended 31 December 2011 1. Principal activities and profile Royal Bafokeng Platinum Limited (RBPlat) was incorporated in July 2008 by Royal Bafokeng Holdings (RBH), the investment arm of the Royal Bafokeng Nation (RBN), and listed on the JSE Limited on 8 November 2010. When Bafokeng Rasimone Platinum Mine (BRPM) Joint Venture between Royal Bafokeng Holdings and Anglo American Platinum Limited was restructured in 2008 control of the mining operations of the joint venture vested in RBN via RBPlat, which is RBN`s platinum mining investment vehicle. RBPlat ultimately operates the BRPM and is developing the Styldrift I Project. These operations, located in the North West province of South Africa, 120 kilometres from Johannesburg, 30 kilometres from Rustenburg and just 17 kilometres from Phokeng - the capital of the RBN, exploit the Merensky and UG2 reefs. RBPlat`s significant reserves and resources can sustain operations for at least the next 60 years. RBPlat currently employs 8 275 people, 3 028 being its own employees and 5 247 being contractors. 2. Basis of preparation and accounting policies The consolidated financial statements have been prepared under the historical cost convention in accordance with International Financial Reporting Standards (IFRS). These condensed consolidated financial statements include the minimum information required by IAS 34, "Interim Financial Reporting". The principal accounting policies used by the Group are consistent with those of the previous year, except for the adoption of various revised and new standards. The adoption of these standards has no material impact on the financial results for the 2011 year. 3. Audit opinion The financial statements have been audited by PricewaterhouseCoopers Inc. whose unqualified opinion is available for inspection at the registered office of RBPlat. 4. Restatement of prior year statement of financial position, statement of comprehensive income and statement of changes in equity In the 2010 financial statements the Group stated that it is still in the process of assessing the fair values allocated to individual components, specifically mineral rights included in the life of mine. During 2011, the assessment of fair values allocated to individual components and the purchase price allocation were finalised, resulting in a revised allocation of the fair values of assets, liabilities and goodwill. In terms of the guidance provided in IFRS 3, Business combinations, the Group has restated its statement of financial position, statement of comprehensive income and statement of changes in equity and accompanying notes, for the 2010 financial year, to reflect the abovementioned changes as if they had occurred at the acquisition date. These changes did not impact the cash flow statement. The 2009 results were not impacted by the restatement. 4. Restatement of prior year statement of financial position, statement of comprehensive income and statement of changes in equity (continued) The revised details of net assets acquired and goodwill are as follows: R (million) Restated 8 November 2010* Previously reported Fair value of 67% interest assumed as 10 002.7 10 002.7 the purchase price Purchase consideration allocated to 11 448.2 10 371.0 identifiable net assets: - Property, plant and equipment 7 212.3 7 212.3 - Mineral rights 6 767.0 5 730.9 - Environmental trust deposit 87.0 87.0 - Inventories 61.3 61.3 - Trade and other receivables 999.5 995.7 - Amounts receivable from RPM 341.0 6.9 - Cash and cash equivalents 277.9 277.9 - Deferred tax liability (3 860.7) (3 570.6) - Long-term provisions (67.8) (67.8) - Trade and other payables (369.3) (362.6) Less: Non-controlling interest (3 720.6) (3 405.5) Goodwill 2 275.1 3 037.2 * Date of listing of RBPlat A multi-period excess earnings model was used to finalise the fair value of mineral rights included in the life of mine resulting in an increase in the value of mineral rights of R1 billion. Uncertainty relating to the amounts receivable from RPM were resolved with a final settlement. The revised details of comprehensive income are as follows: 2010 2010 Restated Previously reported
For the year ended 31 December 2010 R (million) Amortisation of mineral rights 28.6 26.4 Profit for the year attributable to: Owners of the Company 3 164.5 3 166.3 Non-controlling interest 1.5 1.9 Total comprehensive income 3 166.0 3 168.2 Basic earnings (cents per share) 2 242 2 243 Diluted earnings (cents per share) 2 240 2 241 5. Property, plant and equipment Buildings Furniture Mining Capital and assets work in
fittings progress and computer ware
R R R R (million) (million) (million) (million) 2011 At 1 January 2011 72.3 36.2 3 889.9 2 128.9 Additions - 4.9 - 1 111.9 Disposals and - (0.6) - - scrapping Change in - - (21.9) - estimates of decommissioning asset Depreciation (4.4) (13.9) (328.5) - Transfers 1.6 11.2 1 140.3 (1 208.6) At 31 December 69.5 37.8 4 679.8 2 032.2 2011 Cost 74.8 54.0 5 087.4 2 032.2 Accumulated (5.3) (16.2) (407.6) - depreciation At 31 December 69.5 37.8 4 679.8 2 032.2 2011 2010 At 1 January 2010 64.6 13.7 2 004.2 975.3 Additions 22.0 24.8 14.7 398.7 Disposals - - - - Depreciation (3.8) (7.9) (185.3) - Transfers 13.6 0.1 - (93.6) At 8 November 96.4 30.7 1 833.6 1 280.6 Carrying amount (96.4) (30.0) (1 833.6) (1 280.6) of previously held 67% interest in BRPM Fair value of 72.9 33.6 3 967.1 1 911.3 100% of BRPM on business combination Additions from 8 0.3 4.2 1.9 217.6 November Depreciation from (0.9) (2.3) (79.1) - 8 November At 31 December 72.3 36.2 3 889.9 2 128.9 2010 Restated Cost 73.2 38.5 3 969.0 2 128.9 Accumulated (0.9) (2.3) (79.1) - depreciation At 31 December 72.3 36.2 3 889.9 2 128.9 2010 Restated Plant Vehicles Total and and
machinery equipment R R R (million) (million) (million) 2011 At 1 January 2011 1 193.3 17.3 7 337.9 Additions 29.7 - 1 146.5 Disposals and - - (0.6) scrapping Change in estimates - - (21.9) of decommissioning asset Depreciation (109.1) (6.7) (462.6) Transfers 52.7 2.8 - At 31 December 2011 1 166.6 13.4 7 999.3 Cost 1 292.8 21.1 8 562.3 Accumulated (126.2) (7.7) (563.0) depreciation At 31 December 2011 1 166.6 13.4 7 999.3 2010 At 1 January 2010 586.9 7.4 3 652.1 Additions 36.7 1.9 499.0 Disposals - (0.3) (0.3) Depreciation (47.8) (1.8) (246.6) Transfers 79.4 0.5 - At 8 November 655.2 7.7 3 904.2 Carrying amount of (655.2) (7.7) (3 903.5) previously held 67% interest in BRPM Fair value of 100% 1 209.1 18.3 7 212.3 of BRPM on business combination Additions from 8 1.3 - 225.3 November Depreciation from 8 (17.1) (1.0) (100.4) November At 31 December 2010 1 193.3 17.3 7 337.9 Restated Cost 1 210.4 18.3 7 438.3 Accumulated (17.1) (1.0) (100.4) depreciation At 31 December 2010 1 193.3 17.3 7 337.9 Restated The Company has the life of mine right to use, but not ownership of assets with a carrying amount of R1 383 275 089 (2010: R1 536 112 129) which is included in balances above. Group 2011 2010 R (million) R
(million) 6. Cash and cash equivalents Cash at bank and on hand 524.0 447.9 Short-term bank deposits 575.2 451.5 Closing balance at 31 December 1 099.2 899.4 Facilities Royal Bafokeng Resources (RBR), a wholly-owned subsidiary of RBPlat, entered into a R500 million revolving credit facility (RCF) with Nedbank Capital on 8 January 2010 repayable in full on 31 December 2013. To date, nothing is drawn from the R500 million RCF. In addition, the RBPlat Group entered into R250 million, R3 million and R5 million working capital facilities with Nedbank Capital in September 2010 which are repayable in December 2013. The working capital facilities will share in the same security as the R500 million RCF with the same restrictions. At year-end RBR utilised R149.9 million of its working capital facility for guarantees and RBP MS utilised R0.4 million for guarantees. Refer Note 7.1 for further details. Group 2011 2010
R R (million) (million) 7. Contingencies and commitments 7.1 Guarantees issued Royal Bafokeng Resources (Pty) Ltd, a wholly-owned subsidiary of RBPlat, granted the following guarantees: Eskom to secure power supply for 17.1 17.1 Styldrift project development (financial guarantee 30823102) Eskom early termination guarantee for 17.5 - Styldrift (financial guarantee 31160603) Eskom connection charges guarantee for 40.0 - Styldrift (financial guarantee 31173918) Anglo American Platinum for the 75.3 - rehabilitation of land disturbed by mining activities at BRPM Royal Bafokeng Platinum Management Services (Pty) Ltd, a wholly-owned subsidiary of RBPlat, granted the following guarantees: Tsogo Sun guarantee arising from lease 0.3 - agreement (financial guarantee 31101003) Tsogo Sun guarantee arising from lease 0.1 - agreement (financial guarantee 31100309) Royal Bafokeng Management Services (Pty) Ltd, a fellow subsidiary, granted the following guarantees on behalf of RBR for the rehabilitation of land disturbed by mining: Department of Mineral Resources - 39.9 (financial guarantee 36790800258) Department of Mineral Resources - 7.6 (financial guarantee 36790901881) Total guarantees issued at 31 December 150.3 64.6 Guarantees received from Anglo American Platinum For Anglo American Platinum`s 33% of the (5.6) - Eskom guarantee to secure power supply for Styldrift project development (financial guarantee M523084) For Anglo American Platinum`s 33% of (5.8) - Eskom early termination guarantee for Styldrift (financial guarantee M529349) For Anglo American Platinum`s 33% of the (13.2) - Eskom connection charges guarantee for Styldrift (financial guarantee M529350) Total guarantees received at 31 December (24.6) - 7.2 Capital commitment in respect of property, plant and equipment Commitments contracted for 771.9 960.8 Approved expenditure not yet contracted 8 737.9 8 262.1 for Total 9 509.8 9 229.9 7. Contingencies and commitments (continued) 7.2 Capital commitment in respect of property, plant and equipment (continued) The commitments reflect 100% of the BRPM JV project commitments. Effectively RBR must fund 67% thereof and RPM the remaining 33%. Should either party elect not to fund their share, the interest will be diluted according to the terms reflected in the BRPM JV agreement. 7.3 Operating lease commitments The Group leases offices for its corporate office in Johannesburg and for BRPM`s finance function in Rustenburg under operating lease agreements. The corporate office lease term is five years and it is renewable at the end of the lease period at market rate. The finance office lease in Rustenburg is renewable year-on-year at market rate. The future aggregate lease payments under these operating leases are as follows: No later than one year 1.7 0.6 Later than one year and no later than 6.5 - five years Total 8.2 0.6 Group 2011 2010 R R
(million) (million) 8. Revenue Revenue from concentrate sales - 2 846.6 2 094.7 production from BRPM concentrator Revenue from UG2 toll concentrate 128.3 - Revenue from management fee - 12.1 Total revenue 2 974.9 2 106.8 Group
2011 2010 Restated R R (million) (million)
9. Cost of sales On-mine costs: - Labour 673.9 489.5 - Utilities 144.5 87.6 - Contractor costs 377.0 264.1 - Movement in inventories 23.3 (15.0) - Materials and other mining costs 614.8 401.5 - Elimination of intergroup management (31.5) (23.9) fee State royalties 14.1 8.4 Depreciation - Property, plant and 462.1 347.0 equipment Amortisation - Mineral rights 56.2 28.6 Share-based payment expenses 33.1 7.2 Social and labour plan expenditure 35.8 7.6 Other 5.4 5.5 Total cost of sales 2 408.7 1 608.1 10. Related party transactions The Group is controlled by Royal Bafokeng Platinum Holdings (Pty) Ltd (incorporated in South Africa), which owns 57.1% of RBPlat`s shares. Rustenburg Platinum Mines Limited (RPM) owns 12.6% of RBPlat`s shares and the remaining 30.3% of the shares are widely held. RPM also holds the remaining 33% participation interest in BRPM. The Group`s ultimate parent is Royal Bafokeng Holdings (Pty) Ltd (incorporated in South Africa) (RBH). RBH is an investment holding company with a large number of subsidiaries. At present, RBR sells its 67% share of the concentrate produced by the BRPM JV to RPM for further processing by RPM. Investments in subsidiaries and the BRPM Joint Venture and the degree of control exercised by the Company are: Issued capital amount Interest in capital R % Name 2011 2010 2011 2010 Direct investment Royal Bafokeng 1 000 1 000 100% 100% Platinum Management Services (Pty) Ltd Royal Bafokeng 320 320 100% 100% Resources (Pty) Ltd Indirect investment via Royal Bafokeng Resources (Pty) Ltd Bafokeng Rasimone 1 000 1 000 100% 100%* Management Services (Pty) Ltd BRPM - participation - - 67% 67% interest * Interest acquired on date of listing of the Company (8 November 2010) Transactions between the Company, its subsidiaries and joint venture are eliminated on consolidation. Refer Note 7.1 for related party guarantees. The following transactions were carried out with related parties: Group 2011 2010
R (million) R (million) Joint venture balances at 31 December: Amount owing by RPM for concentrate sales 941.8 1 008.5 Amount owing to RPM for contribution to 37.5 69.7 BRPM (working capital nature) There were no balances with other related parties. Joint venture transactions: Concentrate sales to RPM (Refer Note 8) 2 974.9 2 094.8 Fellow subsidiary transactions: Royal Bafokeng Platinum Management - 12.1 Services (Pty) Ltd management fee charged to BRPM prior to 8 November 2010 Transactions with Fraser Alexander for 15.6 5.6 rental of mining equipment, maintenance of tailings dam and operation of sewerage plant (a subsidiary of RBH) Royal Bafokeng Management Services (Pty) - 0.8 Ltd fees of administrative nature (a subsidiary of RBH) Royal Marang Hotel for accommodation and 0.5 0.1 conferences (a subsidiary of RBH) Geoserve Exploration Drilling Company for 15.5 - exploration drilling on Boschkoppie and Styldrift (a subsidiary of RBH) Tarsus Technologies for electronic 0.8 0.1 equipment purchases (a subsidiary of RBH) Zurich Insurance Company of SA for 0.7 0.8 underwriting a portion of BRPM insurance (an associate of RBH) Impala Platinum Ltd for royalties 24.9 - received (an associate of RBH) 11. Dividends No dividends have been declared or proposed in the current year (2010: nil). 12. Segmental reporting The Group is currently operating one mine with two decline shafts and the Styldrift I Project. The BRPM operation is treated as one operating segment. The Executive Committee of the Company is regarded as the Chief Operating Decision Maker. BRPM
2011 2010 R R (million) (million) Concentrate sales 2 974.9 2 914.4 Cash cost of sales (1 802.4) (1 700.4) Depreciation (357.1) (285.7) Other operating income 29.0 1.8 Other operating expenditure (101.7) (40.2) Net finance income 5.2 4.6 Segmental profit before tax 747.9 894.5 Additional depreciation on purchase price (161.2) (140.7) allocation (PPA) adjustment and amortisation Overheads of corporate office (104.3) (60.6) Consolidation adjustments 10.0 244.5 Other income 29.6 2 894.8 Finance income 52.4 4.0 Finance cost - (9.8) Profit before tax per the statement of 574.4 3 337.7 comprehensive income Taxation (163.6) (171.7) Non-controlling interest (137.4) (1.2) Contribution to basic earnings 273.4 3 164.8 Contribution to headline earnings 273.7 270.2 Segment assets 6 626.8 5 915.3 PPA adjustment to carrying amount of PPE 9 407.1 9 491.3 (includes mineral rights) Corporate assets and consolidation 3 458.7 3 653.8 adjustments (includes goodwill) Total assets per the statement of financial 19 492.6 19 060.4 position Segment liabilities 245.1 269.7 Corporate liabilities and consolidation 52.8 225.2 adjustments Unallocated liabilities (tax and deferred 4 057.5 3 901.4 tax) Total liabilities per the statement of 4 355.4 4 396.3 financial position Cash inflow from operating activities 1 025.1 785.3 Cash flow utilised by investing activities (1 151.1) (880.0) Cash inflow from financing activities 325.8 942.6 Capital expenditure 1 146.5 718.5 13. Basic and diluted earnings per share The weighted average number of ordinary shares in issue outside the Group for the purposes of basic earnings per share and the weighted average number of ordinary shares for diluted earnings per share are calculated as follows: Group 2011 2010 Restated
Number Number Number of shares issued 165 123 164 792 082 561 Mahube Trust (563 914) (563 914) Management incentive scheme (881 369) (550 848) Number of shares issued outside the Group 163 677 163 677 799 799 Adjusted for weighted shares issued during the - (22 544 year 967) Weighted average number of ordinary shares in 163 677 141 132 issue for earnings per share 799 832 Management incentive scheme 462 537 152 700 Weighted average number of ordinary shares in 164 140 141 285 issue for diluted earnings per share 336 532 Profit attributable to owners of the Company R 273.4 3 164.8 (million) Basic earnings per share (cents/share) 167 2 242 Basic earnings per share is calculated by dividing the profit attributable to owners of the Company for the year by the weighted average number of ordinary shares in issue for diluted earnings per share. Diluted earnings per share (cents/share) 167 2 240 Diluted earnings per share is calculated by dividing the profit attributable to owners of the Company for the year by the weighted average number of ordinary shares in issue for diluted earnings per share. Headline earnings Profit attributable to owners of the Company is adjusted as follows: Profit attributable to owners of the Company R 273.4 3 164.8 (million) Adjustment net of tax: Profit on remeasurement of previously held - (2 894.8) interest in BRPM R (million) Loss on disposal of property, plant and 0.3 0.2 equipment R (million) Headline earnings R (million) 273.7 270.2 Basic headline earnings per share 167 191 (cents/share) Diluted headline earnings per share 166 191 (cents/share) 14. Complete set of financial statements These abridged financial statements should be read with the complete set of financial statements available at www.bafokengplatinum.co.za. Commentary The year under review RBPlat made good progress against its strategies in 2011, despite a challenging year during which, internationally, continuing global economic uncertainty had a negative impact on market conditions and locally, extensive safety stoppages in the first and fourth quarters, in particular, made it difficult for the platinum industry to achieve production targets. Despite these safety stoppages, our safety performance has been excellent with no fatal injuries in 2011, a 10% improvement in the lost time injury frequency rate and a 12.1% improvement in the serious injury frequency rate year-on-year. By year-end, we had achieved 1.8 million fatality-free shifts and it was with great sadness that, post year-end, we reported a fatal fall of ground accident at BRPM. We remain committed to our goal of zero harm and will work closely with the Department of Mineral Resources (DMR) to continue improving our safety performance. We also recognise that the DMR`s uncompromising approach to safety and health has elevated the focus on safety to shareholder level, thereby raising investor expectations of management in this critical area of the operating environment. While our business is the mining of platinum group metals (PGMs), our activities exist within a greater societal context and our objective remains to achieve sustainable financial returns through the safe, profitable production of PGMs by maximising the development of our manufactured and human capital. The landmark three-year wage agreement concluded with our fulltime employees is providing our business and its partners with stability and an aligned growth focus. The agreement contains aspects of remuneration that are being linked to agreed performance and efficiency targets. Operational review The total tonnages we delivered to the concentrator were marginally lower year-on-year at 2 284 000 tonnes. Significantly, the UG2 tonnages we delivered increased by more than 232% year-on-year to 258 000 tonnes, in line with our aim of optimally exploiting the UG2 Reef and taking advantage of an opportunity to improve our operational flexibility. The safety stoppages we experienced, the nine-day strike by employees of our major contractor (JIC Mining Services), the failure of the North shaft Phase II decline conveyor in the third quarter, along with unusually high labour turnover, all contributed to lower tonnages mined and the 2.2% reduction in 4E concentrate we produced to 281 598 ounces. Our lower volumes and rising net costs contributed to a 10.7% and 8.4% increase in cash costs to R782 per tonne and R6 399 per 4E ounce respectively. The key contributors to the R75.50 increase in our cost per tonne from R707/t in 2010 to R782/t in 2011 were mainly increases in labour, power and general inflation, together amounting to an increase of R60.10/t. The reduction in mining volumes due to the JIC strike, mining skills turnover, Section 54 stoppages and the North shaft belt failure contributed R23.50/t to the overall increase, with an additional increase of R8.20/t attributable to our business optimisation Project Kgolo and other miscellaneous costs. The overall increase was offset, however, by savings of R16.30/t accrued from Project Kgolo-related initiatives, the World Class Concentrator Project, revision of rehabilitation provisions and explosive rebates. While we achieved a number of significant improvements through Project Kgolo, we did not achieve the bottom line impact we expected to achieve. In line with our operational strategy, cost reduction will continue to be a key focus area in 2012. On the positive side we achieved improvements in the recovery levels in the concentrator at a weighted average recovery of 87.47%, an 11.6% increase in efficiencies in the fulltime employee stoping teams reaching 310 square metres per crew per month, as well as a 3% increase in the run-of-mine Merensky grade to 4.44g/t (4E), which allowed us to increase our 4E built-up headgrade from 4.31 to 4.35g/t. Good progress was also made with the Phase II and III replacement projects at BRPM, with both projects on schedule and below budget. The Styldrift I Project remains on course to save R1 billion on completion with declared savings to date of R323 million. Significant improvements were realised on the shaft sinking rates which had a slow start when we converted from pre-sink to main sink and by year-end we had achieved the anticipated shaft advance rates with the main shaft reaching a depth of 219 metres and the service shaft 152 metres. Financial overview Our 2011 financial results bear testimony to a challenging year, marked by global uncertainty and challenges, both at home and abroad. While the basket price for our PGMs improved by 4.7% in nominal terms, we faced above inflationary labour and energy cost increases combined with numerous production interruptions. This meant that in real terms our PGM basket price, as well as our margins, have contracted during 2011. The Group`s headline earnings of R273.7 million for 2011 remained relatively flat compared to R270.2 million for 2010. The 2011 headline earnings per share of 167 cents are 12.6% lower than the 191 cents per share reported in 2010 mainly due to the increase in the weighted average number of shares used for the calculation from 141 132 832 in 2010 to 163 677 799 in 2011. The 2011 results reflect a full consolidation of the BRPM results compared to the 12 months ended 31 December 2010 which reflect a proportionate consolidation of 67% of BRPM up to 8 November 2010 and full consolidation of BRPM for the remainder of 2010. Our revenue increased by 41.2% compared to 2010, mainly as a result of the change in control and basis of accounting during 2010 which contributed 39.1% of this increase and an actual increase in revenue of BRPM which contributed the remaining 2.1% of the overall increase in RBPlat revenue. The actual increase in BRPM`s revenue of 2.1% is a combination of a reduction in revenue of 2.6% due to lower production volumes and an increase in the rand basket price received of 4.7%. Notwithstanding the challenges mentioned above, the Group delivered an EBITDA margin of 34.8% from our operations as a result of a favourable prill split and a good quality resource located at shallow depths. For the year ended 31 December 2010 BRPM`s average unit cash cost was R707 per tonne milled with cash operating cost of R9 076 per platinum ounce produced. For the year ended 31 December 2011 BRPM`s average unit cash cost increased to R782 per tonne milled with cash operating cost increasing to R9 863 per platinum ounce produced. This increase in operating unit cash cost is mainly as a result of a 2.2% reduction in the production of 4E ounces, combined with above inflation mining cost escalations. Our other income increased from R1.6 million in 2010 to R54.8 million in 2011 mainly due to R28.9 million net income received from the settlement of the RPM receivable and the first time inclusion of the 6 and 8 shaft Impala royalty of R24.9 million. Our finance income increased from R15.7 million in 2010 to R62.6 million in 2011, mainly due to interest earned on funds we raised from the 2010 listing which are invested in interest bearing deposits and R14.0 million in dividends we received on our Nedbank preference share investment. Our current income tax charge increased from R0.4 million in 2010 to R29.9 million due to income tax payable on interest income and the Impala royalty. RBPlat will not be liable for mining income tax in 2011 as it had an unredeemed capital expenditure balance of R281.5 million at 31 December 2011. The Group was able to fund all capital expenditure (including stay-in- business, replacement and expansion capital) amounting to R1 163.6 million from cash flows generated by its operations and a cash injection of R326 million from the settlement of the RPM receivable. The Group had cash and near cash investments on hand at 31 December 2011 of R1 364 million. In addition, we have an intra-month funding working capital requirement, which is met through a R250 million working capital facility of which R150.3 million has been utilised for guarantees. The Group also has an unutilised revolving credit facility of R500 million available until 31 December 2013. Market review It was a year of two quite different halves for PGMs. Early in 2011 there was the devastating earthquake and tsunami in Japan. During this period, platinum prices traded relatively high at up to US$1 850/oz. This encouraged the recycling of around 300 000 ounces of platinum jewellery, which capped any further price appreciation. In the second half of the year the intensification of the euro crisis disrupted the recovery of the platinum market from a forecast deficit to a narrow surplus, as motor vehicle sales weakened. Europe accounts for approximately 50% of automotive platinum demand and as a result their fortunes are inextricably linked. As the region once again entered recession the platinum price, which had temporarily lifted to almost US$1 900/oz at the end of August 2011, settled at just below US$1 400/oz by year-end. Throughout 2011 palladium prices, which largely followed in the wake of platinum prices, were trading below US$650/oz by year-end. Rhodium underperformed the major PGMs in 2011, and declined 40% from over US$2 400/oz at the beginning of the year to US$1 400/oz by year-end. Appointments As previously communicated in our interim results announcement, Ms Matsotso Vuso was appointed to the Board of directors on 11 April 2011 as an independent non-executive director. She is a member of the Audit and Risk Committee. Post year-end, Mr Velile Nhlapo was appointed General Manager at the Styldrift I Project, effective from 1 February 2012. Mr Nhlapo began his career at Gold Fields Limited in February 1996 as a Learner Official and reached the level of Unit Manager and Mine Overseer before joining Anglo American Platinum Limited in January 2005 where he joined as a Mine Section Manager before being appointed General Manager of the Dishaba Mine. He was later appointed Head of Business Improvement. He left Anglo American Platinum Limited in February 2011 and joined Pretoria Portland Cement Company Ltd (PPC) where he was appointed Executive for Business Development. Outlook We expect that conditions going forward for 2012 will continue to be challenging, from both a market and operational perspective. We have already seen a recovery in the platinum price at the start of 2012 with prices breaching US$1 600/oz and, despite the downgrading of demand growth, the lack of supply could result in the market ending 2012 in deficit. Medium-term demand fundamentals remain overwhelmingly in favour of palladium owing to emerging market consumption growth favouring palladium-rich gasoline cars, the ongoing recovery in the USA and the substitution of more expensive platinum in diesel passenger car catalysts. Rhodium prices look unlikely to recover significantly in the near term as automotive demand was particularly badly hit by the earthquake in Japan, a region of relatively high rhodium loadings, while the fallout from excessively high prices of 2008 has led to some thrifting in three-way auto catalysts. Reducing operating costs remains an important hurdle in our journey towards operational excellence and will be a core focus for us in 2012. We remain confident about our Styldrift I Project with our focus remaining on further improving shaft sinking rates and developing our operational readiness. Our major milestone on Styldrift I will be the intersection of the Merensky Reef at a depth of 594 metres below surface which we plan to reach by September 2012. Based on our current global outlook and specifically metal price and exchange rate assumptions for 2012, we foresee that conditions will remain challenging and that 2012 will be the first time we will have to utilise some of our surplus cash resources in addition to the cashflows generated by our operations to fund our Styldrift I Project expenditure. Posting of annual report and annual general meeting We advise our shareholders that the annual financial statements will be distributed on 28 February 2012. Notice is hereby given that the third annual general meeting of RBPlat`s shareholders will be held on Tuesday, 3 April 2012 at 10:00 in the Castello room at the Palazzo Hotel, Monte Casino Boulevard, Fourways. Conclusion We would like to thank all our stakeholders, including our shareholders, employees, the trade unions, business partners and government for the support they have given us during a challenging year. Steve Phiri Chief Executive Officer Kgomotso Moroka Chairman Johannesburg 16 February 2012 JSE Sponsor Macquarie First South Capital (Pty) Limited Administration Company registered office Royal Bafokeng Platinum Limited Registration number: 2008/015696/06 Share code: RBP ISIN: ZAE000149936 The Pivot No. 1 Monte Casino Boulevard Block C 4th Floor Fourways Johannesburg 2021 PO Box 2283 Fourways 2055 South Africa Board of directors Non-executive directors Kgomotso Moroka (independent Chairman) Linda de Beer (independent) Robin Mills (independent) David Noko (independent Francis Petersen (independent) Mike Rogers Executive directors Steve Phiri (Chief Executive Officer) Martin Prinsloo (Chief Financial Officer) Nico Muller (Chief Operating Officer) Company Secretary Lester Jooste (ACIS) Email: lester@bafokengplatinum.co.za Telephone: +27 10 590 4519 Telefax: +27 086 572 8047 Investor relations Lindiwe Montshiwagae Email: lindiwe@bafokengplatinum.co.za Telephone: +27 10 590 4517 Telefax: +27 086 219 5131 Public Officer Martin Prinsloo Email: martin@bafokengplatinum.co.za Independent external auditors PricewaterhouseCoopers Inc 2 Eglin Road Sunninghill Johannesburg 2157 South Africa Transfer Secretaries Computershare Investor Services (Pty) Ltd 70 Marshall Street Johannesburg PO Box 61051 Marshalltown 2107 South Africa Telephone: +27 11 370 5000 Telefax: +27 11 688 5200 Sponsor Macquarie First South Capital (Pty) Ltd The Place 1 Sandton Drive South Wing Sandton Johannesburg 2196 South Africa Bankers Nedbank Limited 135 Rivonia Road Sandton 2196 South Africa The Pivot, No 1 Monte Casino Boulevard Block C, Floor 4, Fourways Johannesburg, 2021 PO Box 2283 Fourways, 2055 South Africa Telephone: +27 (0)10 590 4510 Telefax: +27 086 572 8047 www.bafokengplatinum.co.za 27 February 2012 Date: 28/02/2012 08:07:12 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. 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