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RBP - Royal Bafokeng Platinum Limited - Audited results for the year ended 31
December 2010
Royal Bafokeng Platinum Limited
("RBPlat" or "the Company" or "the Group")
Registration number 2008/015696/06 (Incorporated in South Africa)
Share code: RBP
ISIN: ZAE000149936
AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010
Our successes
- Successful transfer of control of BRPM to RBPlat
- Successful listing of RBPlat on the JSE
- Unit costs maintained at R707 per tonne milled
- Styldrift project on schedule and on budget
- Funding of all capex from operational cash flow of R777.0 million
- 12% increase in tonnes milled (2 407 kt)
- 7% increase in PGM 4E ounces in concentrate (288.1 koz)
- Terms have been agreed for a further value enhancing transaction with
Impala
Our concerns
- Three fatalities despite 15% improvement in LTIFR
- Head grade reduction (4.6%)
Consolidated statement of financial position
as at 31 December 2010
Group
2010 2009
R (million) R (million)
ASSETS
Non-current assets
Property, plant and equipment 7 337.9 3 652.1
Mineral rights 5 722.8 2 925.5
Goodwill 3 037.2 -
Environmental trust deposit 87.5 56.4
Deferred tax asset 15.2 -
16 200.6 6 634.0
Current assets
Inventories 48.4 -
Trade and other receivables 1 046.6 592.2
Held to maturity investments 250.9 -
Current tax receivable 4.8 -
Related party loans - 0.2
Cash and cash equivalents 899.4 51.5
2 250.1 643.9
Total assets 18 450.7 7 277.9
EQUITY AND LIABILITIES
Share capital 1.7 1.4
Share premium 7 759.9 6 817.8
Retained earnings 3 163.4 (2.9)
Other reserves 18.8 -
Non-controlling interest 3 407.4 -
Total equity 14 351.2 6 816.3
Non-current liabilities
Deferred tax liability 3 611.3 323.2
Long-term provisions 73.4 41.8
3 684.7 365.0
Current liabilities
Trade and other payables 414.8 96.6
414.8 96.6
Total liabilities 4 099.5 461.6
Total equity and liabilities 18 450.7 7 277.9
Consolidated statement of comprehensive income
for the year ended 31 December 2010
Group
2010 2009
R (million) R (million)
Revenue 2 106.8 1 155.0
Cost of sales (1 605.9) (939.1)
Gross profit 500.9 215.9
Other income 1.6 0.8
Profit on remeasurement of previously held
interest in BRPM 2 894.8 -
Administration expenses (60.6) (31.8)
Finance income 15.7 6.8
Finance cost (12.5) (309.8)
Profit/(loss) before tax 3 339.9 (118.1)
Income tax expense (171.7) (5.3)
Profit/(loss) for the year 3 168.2 (123.4)
Other comprehensive income
Revaluation of property, plant and equipment - 793.5
Deferred tax raised on revaluation - (222.2)
Total other comprehensive income for the year - 571.3
Total comprehensive income 3 168.2 447.9
Total comprehensive income consists of:
- Profit/(loss) for the year 3 168.2 (123.4)
- Other comprehensive income - 571.3
3 168.2 447.9
Profit for the year attributable to:
Owners of the Company 3 166.3 (123.4)
Non-controlling interest 1.9 -
3 168.2 (123.4)
Total comprehensive income attributable to:
Owners of the Company 3 166.3 447.9
Non-controlling interest 1.9 -
3 168.2 447.9
Basic earnings/(loss) per share (cents) 2 243 (1 072)
Diluted earnings/(loss) per share (cents) 2 241 (1 072)
Dividends per share (cents) - -
Consolidated cash flow statement
for the year ended 31 December 2010
Group
2010 2009
R (million) R (million)
Cash generated by operations 777.0 257.3
Interest paid (9.8) (1.9)
Interest received 15.7 6.8
Tax refund/(paid) 2.4 (21.4)
Net cash flow generated by operating activities 785.3 240.8
Net cash received on acquisition of additional
interest 91.7 11.3
Increase in held to maturity investments (250.9) -
Proceeds from disposal of property, plant
and equipment 0.1 -
Acquisition of property, plant and equipment (718.5) (418.6)
Increase in environmental trust deposit (2.4) (4.8)
Net cash flow utilised by investing activities (880.0) (412.1)
Issue of ordinary shares net of cost 942.4 -
Related party loans received 0.2 42.1
Net cash flow generated by financing activities 942.6 42.1
Net increase/(decrease) in cash and cash
equivalents 847.9 (129.2)
Cash and cash equivalents at beginning of year 51.5 180.7
Cash and cash equivalent at end of year 899.4 51.5
Consolidated statement of changes in equity
for the year ended 31 December 2010
Number* Ordinary*
of shares shares
issued R (million)
Balance at 31 December 2009 137 057 500 1.4
Transactions with shareholders
Shares issued:
- Contingent consideration for the 17% interest
in BRPM 10 000 000 0.1
- Shares issued on listing of the Company 16 620 299 0.2
- Capitalisation of listing transaction costs - -
163 677 799 1.7
IFRS 2 charge for the year - -
Profit for the year - -
Non-controlling interest on gaining control of BRPM - -
Balance at 31 December 2010 163 677 799 1.7
Balance at 31 December 2008 100 000 -
Transactions with shareholders
Shares issued:
- Acquisition of Royal Bafokeng Resources 102 181 700 1.1
- Acquisition of 17% interest in BRPM 34 775 800 0.3
137 057 500 1.4
Total comprehensive income for the year - -
Reclassification of equity items due to
restructuring of the Group - -
Balance at 31 December 2009 137 057 500 1.4
Share-
based
Share* payment
premium reserve
R (million) R (million)
Balance at 31 December 2009 6 817.8 -
Transactions with shareholders
Shares issued:
- Contingent consideration for the 17% interest
in BRPM (0.1) -
- Shares issued on listing of the Company 1 005.4 -
- Capitalisation of listing transaction costs (63.2) -
7 759.9 -
IFRS 2 charge for the year - 18.8
Profit for the year - -
Non-controlling interest on gaining control of BRPM - -
Balance at 31 December 2010 7 759.9 18.8
Balance at 31 December 2008 - -
Transactions with shareholders
Shares issued:
- Acquisition of Royal Bafokeng Resources 4 997.0 -
- Acquisition of 17% interest in BRPM 1 820.8 -
6 817.8 -
Total comprehensive income for the year - -
Reclassification of equity items due to
restructuring of the Group - -
Balance at 31 December 2009 6 817.8 -
Attribu-
table to
owners
Retained of the
earnings Company
R (million) R (million)
Balance at 31 December 2009 (2.9) 6 816.3
Transactions with shareholders
Shares issued:
- Contingent consideration for the 17% interest in BRPM - -
- Shares issued on listing of the Company - 1 005.6
- Capitalisation of listing transaction costs - (63.2)
(2.9) 7 758.7
IFRS 2 charge for the year - 18.8
Profit for the year 3 166.3 3 166.3
Non-controlling interest on gaining control of BRPM - -
Balance at 31 December 2010 3 163.4 10 943.8
Balance at 31 December 2008 514.0 514.0
Transactions with shareholders
Shares issued:
- Acquisition of Royal Bafokeng Resources - 4 998.1
- Acquisition of 17% interest in BRPM - 1 821.1
514.0 7 333.2
Total comprehensive income for the year (123.4) (123.4)
Reclassification of equity items due to
restructuring of the Group (393.5) (393.5)
Balance at 31 December 2009 (2.9) 6 816.3
Non-
controlling
interest Total
R (million) R (million)
Balance at 31 December 2009 - 6 816.3
Transactions with shareholders
Shares issued:
- Contingent consideration for the 17% interest in BRPM - -
- Shares issued on listing of the Company - 1 005.6
- Capitalisation of listing transaction costs - (63.2)
- 7 758.7
IFRS 2 charge for the year - 18.8
Profit for the year 1.9 3 168.2
Non-controlling interest on gaining control of BRPM 3 405.5 3 405.5
Balance at 31 December 2010 3 407.4 14 351.2
Balance at 31 December 2008 - 514.0
Transactions with shareholders
Shares issued:
- Acquisition of Royal Bafokeng Resources - 4 998.1
- Acquisition of 17% interest in BRPM - 1 821.1
- 7 333.2
Total comprehensive income for the year - (123.4)
Reclassification of equity items due to
restructuring of the Group - (393.5)
Balance at 31 December 2009 - 6 816.3
*The table above excludes the treasury shares, the Company`s management share
incentive scheme and the Mahube Trust as these special-purpose vehicles are
consolidated.
Notes to the financial statements
1. General information
The Company is a limited liability company incorporated and domiciled in South
Africa. The address of its registered office is 1st Floor, Block C, 37 High
Street, Melrose Arch. The consolidated final financial information was approved
by the Board of directors for issue on 3 March 2011.
Royal Bafokeng Platinum (RBPlat) was originally incorporated in July 2008 by
Royal Bafokeng Holdings (RBH), the investment vehicle of the Royal Bafokeng
Nation (RBN), a community of about 300 000 Setswana-speaking people which has
substantial, minerals-rich land holdings in South Africa`s North West province.
Today it is a platinum group metals (PGMs)-focused company listed on the JSE
Limited. RBPlat was created from the restructuring of the Bafokeng Rasimone
Platinum Mine (BRPM) Joint Venture between Royal Bafokeng Holdings and Anglo
Platinum Limited. The restructuring resulted in the ownership and control of the
mining operations of the joint venture vesting in RBN via its subsidiary RBPlat.
RBPlat has a 67% interest in Bafokeng Rasimone Platinum Mine (BRPM). BRPM
consists of the operating Boschkoppie Mine as well as a concentrator and is in
the process of constructing the Styldrift Merensky Phase I Project. These
operations are 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 RBN. The combined operations will
exploit both the Merensky and UG2 reefs. The significant reserves and resources
RBPlat has are capable of sustaining operations for at least the next 60 years.
2. Basis of preparation
The consolidated financial information has been prepared in accordance with
International Financial Reporting Standards (IFRS), IAS 34 and interpretations
of those standards (as adopted by the International Accounting Standards Board)
and applicable legislation (requirements of the South African Companies Act and
the regulations of the JSE Limited).
The financial information is presented in South African Rands, which is the
Company`s functional currency.
3. Accounting policies
The consolidated financial statements have been prepared under the historical
cost convention. 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 as fully described in the annual report available on
the Company`s website. The adoption of these standards had no material impact on
the financial results for this financial year.
4. Audit opinion
The financial statements have been audited by PricewaterhouseCoopers Inc. whose
unqualified opinion is available for inspection at the registered office of
RBPlat.
5. Non-current assets
Property, plant and equipment,
mineral rights and goodwill
Property, plant Mineral
R (million) and equipment rights Goodwilll
Opening balance 3 652.1 2 925.5 -
Additions 724.0 - -
Depreciation and amortisation (347.0) (26.4) -
Carrying amount of 67% previously
held interest in BRPM (3 903.5) (2 907.2) -
Fair value of 100% of BRPM on
business combination 7 212.3 5 730.9 3 037.2
Closing balance 7 337.9 5 722.8 3 037.2
6. Accounting impact of gaining control over BRPM R (million)
Fair value of 67% previously held equity interest 10 002.7
Carrying amount of 67% previously held equity interest (7 107.9)
Profit on remeasurement of previously held interest in BRPM 2 894.8
Purchase price of the business combination 10 002.7
6 965.5
Total assets acquired 14 372.0
Total liabilities acquired (4 001.0)
Non-controlling interest (3 405.5)
Goodwill 3 037.2
7. Capital commitments
2010 2009
R (million) R (million)
Commitments contracted for 960.8 264.6
Approved expenditure not yet contracted 8 262.1 6 443.1
9 222.9 6 707.7
Capital commitments relate to the Styldrift I and BRPM Phase II and III
projects.
The 2010 capital commitments reflect 100% of the BRPM project commitments.
Effectively RBPlat 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 of the BRPM JV agreement.
8. Contingencies (including guarantees)
2010 2009
R (million) R (million)
Environmental rehabilitation guarantees - provided by
Royal Bafokeng Management Services (Pty) Limited,
a fellow subsidiary 47.5 47.5
Eskom guarantees 17.1 -
47.5
During January 2011 RBPlat issued a guarantee to the Depatment of Mineral
Resources to the value of R44.7 million. This relates to the Company`s 67% share
for the rehabilitation of land disturbed by mining and replaces the guarantees
issued by Royal Bafokeng Management Services (Pty) Limited on its behalf.
9. Financing facilities in place
RBPlat had cash and near cash investments on hand at year-end of R1.15 billion.
The Company has an intra-month funding working capital requirement which is met
through a R250 million working capital facility of which R17 million had been
utilised for guarantees at year-end. It also has an unutilised revolving credit
facility of R500 million.
10. Basic and headline earnings
The reconciliation between basic and headline earnings is shown below:
2010 2009
Basic earnings - profit/(loss) attributable to
owners of the Company R (million) 3 166.3 (123.4)
Adjustments net of tax:
Profit on remeasurement of previously held interest
in BRPM R (million) (2 894.8) -
Loss on disposal of property, plant and equipment
R (million) 0.2 -
Headline earnings/(loss) R (million) 271.7 (123.4)
Weighted average number of ordinary shares in issue
for basic and headline earnings per share 141 132 832 11 513 125
Basic earnings/(loss) per share (cents/share) 2 243 (1 072)
Headline earnings/(loss) per share (cents/share) 192 (1 072)
Financial overview
The financial performance of the Company was satisfactory for 2010. Net revenue
increased by 82%, mainly as a result of the change in control and basis of
accounting during 2010 (53%) and an actual increase in revenue of 29% at BRPM.
The actual increase of 29% in business revenue resulted from metal prices and
higher production volumes, partially reduced by a stronger Rand/US Dollar
exchange rate.
Gross profit improved by 132%, mainly as a result of the change in control and
basis of accounting during 2010 (83%) and an actual 49% increase at the BRPM
operational level. The actual increase of 49% in business gross profit resulted
from higher revenues while the majority of costs are fixed, ensuring that the
major portion of the revenue benefit filtered straight down to the profit line.
Gross profit percentage improved 5.1% from 18.7% in 2009 to 23.8% in 2010.
Earnings before tax, interest, depreciation and amortisation (EBITDA), as a
percentage of revenue, improved from 28.6% in 2009 to 38.7% in 2010.
Historically, BRPM has delivered strong margins from its operations as a result
of a favourable prill split and a good quality resource located at shallow
depths. For the year ended 31 December 2009 BRPM`s average unit costs were
R703.62 per tonne milled, with cash operating costs of R8 629 per platinum ounce
produced. For the year ended 31 December 2010, BRPM`s average unit costs
remained essentially flat at R706.55 per tonne milled. At R9 076 per platinum
ounce produced, our cash operating costs increased R447 Pt oz or 5.2%. This
increase was mainly the result of a 4.6% reduction in head grade. From a
structural point of view, our Styldrift I plans should more than double our
production to 420 000 tonnes per month or 611 000 PGM 4E ounces per year by the
end of 2017 and this increase is expected to contribute towards reducing unit
costs and improving margins as our fixed costs per ounce of production should
decline with increased volumes.
Capex expenditure, including stay-in-business, replacement and expansion capital
expenditure at BRPM for the year, amounted to R967.0 million from R754.0 million
in 2009. The total capital expenditure has been funded from cash flows generated
by the operations.
Operating review
Our initial operational objective of a steady transition with no disruption to
the ongoing operations and capital projects was successfully achieved.
Our first value of Safety and People First drives our uncompromising commitment
to the safety of our people, which is of the utmost importance to us. Sadly, we
did not achieve our goal of zero harm. There were three fatalities at BRPM this
year. Mr Mzingisi Mduduma and Mr George Khoza lost their lives in our current
operations, while Mr Mojalefa Lekoro, lost his life on the Styldrift I project.
We wish to extend our condolences to their families and colleagues.
We did, however, achieve a 15% improvement in our lost time injury frequency
rate (LTIFR) over BRPM`s 2009 performance.
Our operational strategy for the year was based on optimising throughput and
revenue and identifying and addressing cost reduction opportunities. Significant
improvements realised in areas such as BRPM employed stoping crew efficiency,
ore transport capacity and concentrator plant performance, contributed to a 9%
year-on-year increase in ore from mining operations from 2 177 kt to 2 366 kt
and a 7% increase in PGMs 4E in concentrate from 269.9 koz to 288.1 koz. While
the primary focus of our production is currently on the shallower Merensky reef,
and will remain as such for the foreseeable future, key to improving throughput
and enhancing operational flexibility was the star t of early UG2 extraction and
the conclusion of an offtake agreement with Anglo Platinum for the concentrating
and further processing of this ore.
A key area of concern is the 4.6% reduction in head grade from 2009.
Contributing factors included a reduction in geological block grades, increased
ratio of on-reef development compared to stoping and stoping width control. We
are reviewing all key factors with the aim of optimising the grade of ore we
deliver to concentrators during 2011.
Overall, we are pleased to have established a robust operating platform in 2010
that will support our strategic objective of business growth through operational
excellence.
New order mining rights for Boschkoppie and Styldrift have been registered as
well as a new order prospecting right for Frischgewaagd.
We are excited about the challenges of the new year and are confident about
further improvement opportunities.
Directorate
The Company`s Board of Directors currently consists of three executive directors
and six non-executive directors, five of whom are independent (including the
chairman).
Prospects
2011 will be a year of consolidation for RBPlat. We will be focusing on business
improvement and achieving operational excellence, with a particular emphasis on
initiatives that will help us achieve our target of zero harm and delivering on
all our strategies. RBPlat`s healthy financial position combined with the
renewed vigour and focus on operational excellence and organic growth at our
quality cash-generative operations should position the Company favourably in a
forecasted deficit PGM market environment.
Posting of annual report and annual general meeting
Shareholders are advised that the annual financial statements will be
distributed on the 8th March 2011. Notice is hereby given that the 2nd annual
general meeting of RBPlat shareholders will be held in the meeting room, 2nd
Floor, Block C, 37 High Street, Melrose Arch, Johannesburg on Tuesday 5 April
2011 at 10h00.
Conclusion
We would like to thank all our stakeholders, including our shareholders,
employees, the trade unions and government for the immeasurable support they
gave us during a challenging year.
Steve Phiri Kgomotso Moroka
Chief Executive Officer Chairman
DIRECTORATE
Non-executive Directors: *Adv KD Moroka SC (Chairman), *Prof Linda de Beer,
*Mr RG Mills, *Mr DC Noko, *Prof FW Petersen, Mr MH Rogers
Executive Directors: Mr SD Phiri (CEO), Mr MJL Prinsloo (CFO),
Mr NJ Muller (COO)
*Independent directors
REGISTERED OFFICE
1st Floor, Block C, 37 High Street
Melrose Arch, Johannesburg
PO Box 55669, Melrose Arch, South Africa
COMPANY SECRETARY
LC Jooste (ACIS)
Email: lester@bafokengplatinum.co.za
Telephone: +27 11 530 8058
Telefax: +27 086 572 8047
INDEPENDENT EXTERNAL AUDITORS
PricewaterhouseCoopers Inc
2 Eglin Road, Sunninghill, Johannesburg, 2157, South Africa
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, PO Box 61051, Marshalltown, 2107, South Africa
Telephone: +27 11 370 5000, Fax: +27 11 688 5200
SPONSOR
Rand Merchant Bank (a division of FirstRand Bank Limited)
1 Merchant Place, Rivonia Road, Sandton, 2196, South Africa
8 March 2011
www.bafokengplatinum.co.za
Date: 08/03/2011 07:56:40 Supplied by www.sharenet.co.za
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