IMP
IMPO
IMP - Implats - Consolidated Interim Results For The Six Months Ended 31
December 2008
Impala Platinum Holdings Limited
(Incorporated in the Republic of South Africa)
Registration No. 1957/001979/06
Share code: IMP/IMPO & ISIN: ZAE000083648
LSE: IPLA ADR`s: IMPUY
("Implats" or "the group" or "the company")
CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2008
KEY FEATURES
* Improved safety performance
* Significant falls in PGM prices offset by a weaker exchange rate
* Lower production at Impala Rustenburg
* Cost increases exacerbated by lower volumes
* Capital expenditure at R3.9 billion
* Cash preservation paramount
Statement of financial position
(All amounts in As at As at As at
Rand million 31 December 31 December 30 June
unless otherwise 2008 2007 2008
stated) Notes (Unaudited) (Unaudited) (Audited)
Assets
Non-current assets
Property, plant and 5 24 532 17 894 20 601
equipment
Exploration and 5 4 294 4 318 4 294
evaluation assets
Intangible assets 5 1 018 1 018 1 018
Investments in 1 003 1 528 1 038
associates
Available-for-sale 41 1 678 56
financial assets
Held-to-maturity 47 121 47
financial assets
Other receivables 12 355 12 587 12 551
and prepayments
43 290 39 144 39 605
Current assets
Inventories 4 117 4 700 5 893
Trade and other 7 054 5 504 6 218
receivables
Cash and cash 4 272 2 263 10 393
equivalents
15 443 12 467 22 504
Total assets 58 733 51 611 62 109
Equity and
liabilities
Equity attributable
to owners of the
parent
Share capital 14 039 14 837 14 750
Retained earnings 27 200 17 913 29 024
Other components of 235 729 (356)
equity
41 474 33 479 43 418
Non-controlling 1 935 1 748 1 885
interest
Total equity 43 409 35 227 45 303
Liabilities
Non-current
liabilities
Long-term borrowings 6 1 727 857 1 464
Deferred tax 6 768 5 512 5 247
liability
Long-term provisions 7 705 1 011 1 548
9 200 7 380 8 259
Current liabilities
Trade and other 5 305 5 808 6 914
payables
Current tax payable 638 1 402 1 183
Short-term 6 53 1 614 46
borrowings
Current portion of 7 128 180 404
long-term provisions
6 124 9 004 8 547
Total liabilities 15 324 16 384 16 806
Total equity and 58 733 51 611 62 109
liabilities
Income statement
For the For the For the
Six months Six months year
(All amounts ended ended ended
in Rand million 31 December 31 December 30 June
unless otherwise 2008 2007 2008
stated) Notes (Unaudited) (Unaudited) (Audited)
Revenue 4 16 243 16 323 37 619
Cost of sales 8 (8 817) (8 697) (19 888)
Gross profit 4 7 426 7 626 17 731
Other operating (166) (207) (533)
expenses
Royalty expense (318) (314) (648)
Profit from 6 942 7 105 16 550
operations
Finance income 845 286 689
Finance cost (87) (82) (155)
Net foreign exchange 522 (220) 439
transaction
gains/(losses)
Other expense (90) (34) (215)
Profit on sale of - - 4 831
investments
Share of profit of 64 281 678
associates
Profit before tax 8 196 7 336 22 817
Income tax expense (2 939) (2 646) (5 112)
Profit for the period 5 257 4 690 17 705
from continuing
operations
Profit attributable
to:
Owners of the parent 5 286 4 660 17 596
Non-controlling (29) 30 109
interest
5 257 4 690 17 705
Earnings per share
(expressed in cents
per share - cps)
Basic 877 771 2 910
Diluted 877 770 2 907
Dividends to group
shareholders (cps)
Interim dividend 10 120 300 300
Final dividend 10 1 175
Statement of total comprehensive income
(All amounts in Rand millions unless otherwise stated)
Fair value Translation
adjustments of foreign
of investments subsidiaries Total
For the six months ended
31 December 2007 (Unaudited)
Profit for the period
Other comprehensive income for
the period, net of taxation:
Fair value adjustment 120 120
Deferred tax thereon (17) (17)
Currency translation reserve (87) (87)
Deferred tax thereon 25 25
Total comprehensive income for 103 (62) 41
the period
Attributable to:
Owners of the parent 103 (50) 53
Non-controlling interest (12) (12)
103 (62) 41
For the six months ended
31 December 2008 (Unaudited)
Profit for the period
Other comprehensive income for
the year, net of taxation:
Fair value adjustment (29) (29)
Deferred tax thereon 4 4
Currency translation reserve 970 970
Deferred tax thereon (275) (275)
Total comprehensive income for (25) 695 670
the period
Attributable to:
Owners of the parent (25) 616 591
Non-controlling interest 79 79
(25) 695 670
Retained
earnings Total
For the six months ended
31 December 2007 (Unaudited)
Profit for the period 4 690 4 690
Other comprehensive income for the
period, net of taxation:
Fair value adjustment 120
Deferred tax thereon (17)
Currency translation reserve (87)
Deferred tax thereon 25
Total comprehensive income for the 4 690 4 731
period
Attributable to:
Owners of the parent 4 660 4 713
Non-controlling interest 30 18
4 690 4 731
For the six months ended
31 December 2008 (Unaudited)
Profit for the period 5 257 5 257
Other comprehensive income for
the year, net of taxation:
Fair value adjustment (29)
Deferred tax thereon 4
Currency translation reserve 970
Deferred tax thereon (275)
Total comprehensive income for the 5 257 5 927
period
Attributable to:
Owners of the parent 5 286 5 877
Non-controlling interest (29) 50
5 257 5 927
Cash flow statement
For the For the For the
Six months Six months year
ended ended ended
31 December 31 December 30 June
(All amounts in Rand million 2008 2007 2008
unless otherwise stated) (Unaudited) (Unaudited) (Audited)
Cash flows from operating
activities
Profit before tax 8 196 7 336 22 817
Adjustments to profit before (2 155) 322 (3 299)
tax
Cash from changes in working 839 (1 980) (3 105)
capital
Finance cost (69) (48) (92)
Income tax paid (2 317) (2 136) (5 080)
Net cash from operating 4 494 3 494 11 241
activities
Cash flows from investing
activities
Purchase of property, plant (3 884) (2 363) (5 291)
and equipment
Proceeds from sale of 33 2 49
property, plant and
equipment
Increase in investments in - (32) (9)
associates
Proceeds from investments - - 5 692
disposed
Purchase of listed (7) - (39)
investments
Payment received from 99 202 235
associate on shareholders
loan
Loan repayments received 28 - -
Realisation of held-to- - - 83
maturity investment
Finance income 628 285 559
Net cash (used in)/from (3 103) (1 906) 1 279
investing activities
Cash flows from financing
activities
Issue of ordinary shares, 12 25 190
net of cost
Purchase of treasury shares (724) - (254)
Lease liability paid (8) (9) (21)
Repayments of borrowings (39) (3) (6)
Proceeds from borrowings 220 1 706 691
Dividends paid to company`s (7 110) (4 230) (6 055)
shareholders
Net cash used in financing (7 649) (2 511) (5 455)
activities
Net (decrease)/increase in (6 258) (923) 7 065
cash and cash equivalents
Cash and cash equivalents at 10 393 3 218 3 218
beginning of year
Effects of exchange rate 137 (32) 110
changes on monetary assets
Cash and cash equivalents at 4 272 2 263 10 393
end of year
The notes are an integral part of this condensed interim financial
information
Statement of changes in equity
Share
capital Other
and compo-
(All amounts in Rand millions share Retained nents
unless otherwise stated) premium earnings of equity
Balance at 30 June 2007 14 809 17 483 676
Change in share capital 28
Total comprehensive income for the 4 660 53
period
Dividends (note 10) (4 230)
Balance at 31 December 2007 14 837 17 913 729
(Unaudited)
Balance at 30 June 2008 14 750 29 024 (356)
Change in share capital (711)
Total comprehensive income for the 5 286 591
period
Dividends (note 10) (7 110)
Balance at 31 December 2008 14 039 27 200 235
(Unaudited)
Attribu-
table
(All amounts in to owners Non
Rand millions of the controlling Total
unless otherwise stated) parent interest equity
Balance at 30 June 2007 32 968 1 730 34 698
Change in share capital 28 28
Total comprehensive income for 4 713 18 4 731
the period
Dividends (note 10) (4 230) (4 230)
Balance at 31 December 2007 33 479 1 748 35 227
(Unaudited)
Balance at 30 June 2008 43 418 1 885 45 303
Change in share capital (711) (711)
Total comprehensive income for 5 877 50 5 927
the period
Dividends (note 10) (7 110) (7 110)
Balance at 31 December 2008 41 474 1 935 43 409
(Unaudited)
Notes
1 General information
The Company is a limited liability company incorporated and domiciled in
South-Africa. The address of its registered office is 2 Fricker Road, Illovo
2196.
The Company has its primary listing on the JSE Limited.
The consolidated interim financial information was approved for issue on 19
February 2009.
2 Basis of preparation
The consolidated interim financial information for the six months ended 31
December 2008 has been prepared in accordance with IAS 34, `Interim Financial
Reporting`. The consolidated interim financial information should be read in
conjunction with the annual financial statements for the year ended 30 June
2008, which have been prepared in accordance with IFRS.
3 Accounting policies
The accounting policies applied are consistent with those of the annual
financial statements for the year ended 30 June 2008, 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.
IAS 34 Interim Financial Reporting (latest effective date July 2009) was
early adopted. All consequential amendments have been adopted as from 1 July
2008. The impact on Implats has been on disclosure only.
4 Segment information
The group distinguishes its segments between mining operation and refining
services which include metals purchased and toll refined.
Operating segments have consistently adopted the consolidated basis of
accounting and there are no differences in measurement applied.
Summary of business segments:
(All amounts in Rand million unless otherwise stated)
Six months ended Six months ended Year ended
31 December 2008 31 December 2007 30 June 2008
*Gross *Gross *Gross
Revenue profit Revenue profit Revenue profit
Mining
Impala 9 741 6 107 9 670 5 975 20 889 13 544
Marula 116 213 720 278 1 827 745
Zimplats 369 194 688 373 2 132 964
Mimosa 263 233 387 213 958 541
Total 10 489 6 747 11 465 6 839 25 806 15 794
mining
Refining 6 220 707 6 740 848 15 704 1 883
services
Inter (466) (28) (1 882) (61) (3 891) (54)
segment
adjustment
Total 16 243 7 426 16 323 7 626 37 619 17 731
Capital Capital Capital
expendi- Total expendi- Total expendi- Total
ture assets ture assets ture assets
Mining
Impala 2 704 34 853 1 527 28 701 3 415 38 922
Marula 326 2 639 181 3 040 345 1 970
Afplats 107 7 187 24 6 996 145 7 110
Zimplats 640 5 218 627 3 345 1 319 3 583
Mimosa 101 1 699 44 1 282 144 1 287
Total 3 878 51 596 2 403 43 364 5 368 52 872
mining
Refining 5 816 6 719 8 053
services
Other 1 321 1 528 1 184
Total 3 878 58 733 2 403 51 611 5 368 62 109
* including intercompany adjustments.
5 Property, plant and equipment, exploration and evaluation, and intangible
assets
Selected six months non-current asset movements are presented below:
Exploration
Property, and
(All amounts in Rand million plant and evaluation Intangible
unless otherwise stated) equipment assets assets
Six months ended 31 December
2007
Opening net book amount as at 16 029 4 318 1 020
1 July 2007
Exchange adjustment on (87)
translation
Purchase price adjustment (2)
Additions 2 403
Depreciation, amortisation (443)
and other movements
Disposals (8)
Closing net book amount as at 17 894 4 318 1 018
31 December 2007
Six months ended 31 December
2008
Opening net book amount as at 20 601 4 294 1 018
1 July 2008
Exchange adjustment on 654
translation
Additions 3 878
Depreciation and amortisation (569)
Disposals (32)
Closing net book amount as at 24 532 4 294 1 018
31 December 2008
Non-financial assets that have an indefinite life are not subject to
amortisation, but are tested for impairment annually at 30 June (financial
year end) or when there is any indication of impairment. There was no
impairment for non-financial assets during the period.
6 Long-term borrowings
Borrowings from Standard Bank Limited:
loans obtained by Black Economic Empowerment (BEE) partners for purchasing a
27% (June 2008: 27%) share in Marula Platinum (Proprietary) Limited amounting
to R717 million (June 2008: R755 million). The loans consist of a term loan
which carries interest at the Johannesburg Interbank Acceptance Rate (JIBAR)
plus 90 basis points and a revolving credit facility amounting to R56 million
(June 2008: R57 million), which carries interest at JIBAR plus 100 basis
points. The loans will be repaid by financial year 2020.
The BEE partnership in Marula is consolidated as the loans are guaranteed by
Implats.
a loan facility of R750 million (US$80 million) (June 2008: R635 million
(US$80 million)) was obtained to finance partially the Ngezi Phase One
expansion at Zimplats. An amount of R710 million (US$76 million) (June 2008:
R404 million (US$51 million)) of this facility was drawn at the end of the
period. The loan carries interest at London Interbank Offering Rate (LIBOR)
plus 700 basis points. It is repayable in 12 equal quarterly instalments
starting December 2009 and will be repaid by December 2012. This loan is
secured by sessions over cash, debtors and revenues of Zimplats Mines (Pvt)
Limited.
7 Long-term provisions
The decrease in long-term provisions is attributable to the reduction in the
cash-settled share based payment provision as it is based on the company`s
share price.
8 Cost of sales
Six months Six months Year
ended ended ended
(All amounts in Rand millions 31 December 31 December 30 June
unless otherwise stated) 2008 2007 2008
On mine operations 3 068 3 395 7 303
Concentrating and smelting 978 722 1 478
operations
Refining operations 252 315 670
Amortisation of operating 569 451 1 013
assets (note 5)
Metals purchased 1 939 4 458 11 012
Decrease/(increase) in metal 2 011 (644) (1 588)
inventories
8 817 8 697 19 888
9 Headline earnings
Headline earnings per share is disclosed as required by the JSE Limited.
Earnings attributable to equity holders of the company arises from operations
as follows:
Six months Six months Year
ended ended ended
(All amounts in Rand millions 31 December 31 December 30 June
unless otherwise stated) 2008 2007 2008
The calculation for headline
earnings per share is based
on the earnings per share
calculation adjusted for the
following items:
Profit attributable to owners 5 286 4 660 17 596
of the parent
Adjustments net of tax:
Profit on disposal of (1) (4)
property, plant and equipment
Impairment of Zimplats BMR 74
Profit on sale of investments (5 181)
5 285 4 660 12 485
Headline earnings per share
(cents)
Basic 877 771 2 065
Diluted 876 770 2 062
The issued share capital of
the holding company
is as follows (millions):
Number of shares issued 631.58 630.90 631.58
Treasury shares (16.23) (9.85) (10.67)
Morokotso Trust (15.56) (16.43) (15.61)
Implats Share Incentive Trust (0.20) (0.16) (0.27)
Number of shares issued 599.59 604.46 605.03
outside the group
Adjusted for weighted shares 3.01 (0.24) (0.38)
issued during the year
Weighted average number of 602.60 604.22 604.65
ordinary shares in issue
Adjustment for share option 0.45 1.01 0.59
scheme
Weighted average number of 603.05 605.23 605.24
ordinary shares for diluted
earnings per share
10 Dividends per share
At the board meeting on 19 February 2009, an interim cash dividend in respect
of 2009 of 120 cents per share amounting to R720 million was declared.
The final dividend of R7 110 million (2007: R4 230 million) was paid during
the period.
11 Guarantees
As at December 2008 the group had contingent liabilities in respect of bank
and other guarantees and other matters arising in the ordinary course of
business from which it is anticipated that no material liabilities will
arise. Total guarantees decreased by R25 million during the six months to an
amount of R504 million (June 2008: R529 million).
12 Capital commitments and derivative exposure
Capital expenditure approved at 31 December 2008 amounted to R17.8 billion
(June 2008: R20.6 billion), of which R3.8 billion (June 2008: R3.7 billion)
is already committed. This expenditure will be funded internally and if
necessary, from borrowings.
With regard to derivative instruments, the group, from time to time, sells
refined metal, held on behalf of third parties, into the market with a
commitment to repurchase the metal at a later date. The fair value of the
commitment as at 31 December 2008 amounts to R247 million (June 2008: R318
million).
13 Net asset value
Net asset value based on the number of ordinary shares issued outside the
group is 6 917 cps (June 2008: 7 177 cps).
Operating Statistics
Six months Six months Year
ended ended ended
31 December 31 December % 30 June
2008 2007 change 2008
Gross
refined
production
Platinum (000oz) 878 1 031 (14.8) 1 907
Palladium (000oz) 474 573 (17.3) 1 044
Rhodium (000oz) 128 133 (3.8) 261
Nickel (000t) 7.3 8.3 (12.1) 14.8
IRS metal
returned
(toll
refined)
Platinum (000oz) 93 112 (16.9) 208
Palladium (000oz) 85 103 (17.5) 199
Rhodium (000oz) 17 23 (26.1) 42
Nickel (000t) 1.1 1.3 (15.4) 2.1
Sales
volumes
Platinum (000oz) 806 896 (10.0) 1 739
Palladium (000oz) 427 466 (8.4) 885
Rhodium (000oz) 89 106 (16.0) 197
Nickel (000t) 5.3 6.5 (18.5) 12.5
Prices
achieved
Platinum ($/oz) 1 369 1 352 1.3 1 598
Palladium ($/oz) 310 355 (12.7) 390
Rhodium ($/oz) 5 890 6 063 (2.9) 6 963
Nickel ($/t) 16 589 32 228 (48.5) 30 253
Consolidated
statistics
Average rate (R/$) 8.31 6.91 20.3 7.32
achieved
Closing rate (R/$) 9.37 6.79 37.9 7.93
for the
period
Revenue per ($/oz) 2 408 2 622 (8.2) 2 941
platinum
ounce sold
(R/oz) 20 010 18 118 10.4 21 528
Tonnes (000t) 10 503 10 855 (3.2) 20 380
milled ex-
mine
PGM refined (000oz) 1 717 1 979 (13.2) 3 644
production
Capital (Rm) 3 878 2 403 61.4 5 368
expenditure
Group unit
cost per
platinum
ounce
Excluding ($/oz) 983 914 (7.5) 954
share based
cost
(R/oz) 8 681 6 340 (36.9) 6 930
Including ($/oz) 791 970 18.5 1 067
share based
cost
(R/oz) 6 986 6 722 (3.9) 7 750
Additional statistical information is available on the company`s internet
website.
Introduction
Given the current market environment and the short-term outlook, cash
preservation is paramount. This has involved reviewing our project pipeline,
capital expenditure and operating costs. Given the current market demand, it
was deemed prudent to defer long lead projects resulting in a lower outlay of
approximately R10 billion on our previous announced programme of R30 billion.
Capital expenditure has been closely scrutinised and the decision taken to
continue with 16, 17 and 20 shafts at the Impala Platinum operations, as well
as Zimplats Phase 1 expansion. Operating expenditure is being cut on an
ongoing basis in order to ensure all ounces remain profitable.
Market Overview
2008 can only be characterised as a year of two halves, with the first half
dominated by supply concerns, driven in part by the Eskom crisis, whilst the
second half was victim of the credit crisis and massive deleveraging of
commodities by consumers and hedge funds. What was initially expected to be a
very tight year in the platinum market, turned around dramatically as demand,
which shrunk on the back of lower vehicle sales, was offset by lower
supplies, despite an increase in recycled metal from the Japanese jewellery
industry. South African supply disappointed once again with a 13.1% drop from
2007.
Demand from all major sectors was lower during the year with the exception we
believe, of the Chinese jewellery market, which has taken advantage of
significantly lower prices. Having reached over $2 200/oz during March 2008,
prices plunged to below $800/oz during October, but have managed to recoup
some of these losses to end the year just below $900/oz.
As with platinum, palladium demand was also down on a fundamental basis, and
only purchases by the Exchange Traded Funds kept the market from further
falls. As the US, European and Japanese auto markets suffered double digit
declines, growth in "other" areas of the world was insufficient to cushion
the impact of these declines. Further destocking of palladium by the Russians
ensured the high price of $580/oz in February 2008 was not sustainable and
the price retreated to below $200/oz by year end.
Rhodium was perhaps the biggest victim of its own rise as the move above $10
000/oz saw significant thrifting and subsequent destocking by the car
companies in a move to generate cash, leaving the metal some 90% below its
all time high.
Safety
Ensuring a safe and healthy working environment at Implats is a key strategic
objective for the company. We fully support the Department of Minerals and
Energy`s (DME) focus on safety and we are working with the DME`s inspectors
to ensure that there is better compliance and understanding in order to
improve our safety performance and to limit the unnecessary section 54
closures which have occurred in the past six months.
Despite an improvement in our safety performance with the lost time injury
frequency rate (LTIFR) down by 2.4% from the previous financial year to 2.85
sadly six people lost their lives during the course of work in the six months
to December 2008. The board and management extend their sincere condolences
to the family and friends of our colleagues.
Falls of ground accounted for two fatalities but the most common root cause
of all fatalities has been our failure as a company to ensure all our
employees, including our supervisors and managers, adhere to codes of
practice and procedures. The company has robust safety programmes and
excellent codes of practice and procedures in place which will contribute to
improvements in safety, but our compliance with these remains a problem.
We have, in conjunction with our health and safety representatives, been
gaining a better understanding of the impact of a risk taking culture and
this understanding is forming new strategies and initiatives to change that
mindset.
Operational Review
Production and cost performance have been extremely disappointing in the
first half. Gross platinum production for the group declined by 14.8% to 878
000 ounces impacted by decreased production from Impala Platinum and IRS, the
latter due to reduced deliveries from third parties. The lower throughput
when combined with ongoing high inflationary pressures resulted in unit costs
increasing by 36.9% to R8 681 per platinum ounce excluding share based
payments (R6 986 per platinum ounce including share based payments, a 3.9%
increase from the six month period ending 31 December 2007).
The shortage of supervisory skills continues to affect our business, although
there has been a slowing in turnover as the global economic crisis has
tempered demand. We continue with various retention strategies specifically
focusing on miners, artisans, shift supervisors and engineers.
IMPALA PLATINUM
Although the LTIFR improved by 3.2% the safety performance at Impala Platinum
was disappointing with six fatalities during the period. The main issues are
insufficient supervisory intervention and the lack of employee compliance
with standards and procedures.
Platinum production at Impala was down 10.5% to 515 500 ounces due to a lack
of focus on on-reef development at third generation shafts. To address this
and other mining issues a new mining management structure was implemented in
December 2008. Development contractors are being replaced with our own
employees to drive improvement in this area. Safety stoppages resulted in a
loss of around 10 000 ounces of platinum during the period.
Tonnes milled were down 4.8% to 8 134 million as a result of under delivery.
Lack of on-reef development was the main contributor to the poor performance.
Headgrade deteriorated 5.4% from 3.90 g/t to 3.69 g/t due to limited Merensky
face availability and poor efficiencies due to the failure to complete the
mining cycle. The issue is being closely monitored and an action plan to
address the problem has been implemented. Results are expected to take 18 to
24 months.
The refining operation was influenced by the decrease in deliveries and gross
refined PGM production declined 13% from the previous reporting period.
The unit cost per platinum ounce rose by 36.4% to R8 078 per platinum ounce
excluding share based payments. The increase was due to lower production and
the ongoing impact of high inflationary increases which continued to feed
through this period.
Capital expenditure rose by 77.3% to R2.7 billion. Sinking operations
commenced at 17 shaft while 16 and 20 shafts remained under development.
MARULA
While safety from a fatality perspective was excellent during the period, the
LTIFR deteriorated from 1.52 to 2.01.
The planned ramp up in production has fallen behind schedule due to a
combination of safety stoppages and illegal industrial action in the current
period. This is reflected in tonnes milled, only improving by 2.6% to 781 000
which resulted in a corresponding increase in platinum production in
concentrate to 36 400 ounces.
Unit cost per platinum ounce climbed 31.3% to R11 841 driven by the high
inflationary environment and lower than planned production which was 13.1%
below budget. The ramp up to full production will be achieved in FY2011.
ZIMPLATS
Despite an extremely challenging operating environment Zimplats continued to
deliver outstanding performances in all areas of operation. The LTIFR was
maintained at 0.62. Tonnes milled were essentially unchanged half year on
half year. Platinum in matte production rose 15.0% from 40 800 ounces in the
six months to December 2007 to 46 900 ounces due to the planned maintenance
to the furnace in the previous period. Unit cost per platinum ounce increased
by 5.1% in dollar terms to $1 350 influenced by impact of more expensive
opencast operation, transportation and higher proportion of dollar
denominated costs.
Work on the Phase 1 expansion is ongoing. The concentrator will be
commissioned in April 2009 and full production of 180 000 ounces of platinum
per annum remains on schedule for FY2010.
MIMOSA
Mimosa also maintained an excellent safety performance. Tonnes milled rose by
13.3% to 1 014 000 and platinum production increased by 11.1% to 44 000
ounces in concentrate. Exchange rate variances had the major impact on costs
and the unit cost per platinum ounce escalated by 18.0% in dollar terms to
$955.
TWO RIVERS
The operation which produced 58 000 ounces of refined platinum, has completed
its mining ramp-up to full production of 120 000 ounces of platinum per
annum.
IMPALA REFINING SERVICES
Production at IRS declined by 20.4% to 363 000 ounces of platinum. The lower
volumes resulted from reduced deliveries from Aquarius Platinum ("AQP")
primarily due to the cessation of the offtake agreement with their Kroondal
mine coupled with lower deliveries from Everest, Marikana and autocatalyst
material.
Financial Review
Revenue for the period ending December 2008 reduced by 0.5% to R16.2 billion
(US$1.96 billion) from R16.3 billion (US$2.36 billion) for the comparative
period ending December 2007. The variance analysis of the sales differential
is as follows:
Sales volumes: a 11.2% decline in sales volumes resulted in a negative
volume variance of R1.8 billion.
Dollar revenues per platinum ounce decreased by 8.2% to $2 408/oz. Overall
PGM prices were 5.8% lower and contributed to a negative price variance of
R947 million;
The average exchange rate achieved for the six months was R8.31/$ (2007:
R6.91/$) resulting in a positive exchange rate variance of R2.7 billion.
Cost of sales rose marginally by 1.4% to R8.82 billion. The main changes in
the cost of sales were as follows:
The two-year wage agreement at the South African operations allowed for CPIX
plus 1% increase, resulting in a group wage hike of 12.6%. Costs were further
impacted by retention strategies implemented during the previous financial
year.
There was a decrease in metal purchases on the back of lower rand metal
prices.
The reduction in metal inventory largely due to the change in rand metal
prices.
A fall in the share price resulted in an amount of R995 million credited to
cost of sales (December 2007: R263 million expense) due to the release from
the share based payment provision in line with the price moving from
R309/share in June 2008 to close at R135/share on 31 December 2008.
Amortisation cost higher at R569 million (2007: R451 million) as a result of
the capital expenditure programme, as well as the conversion of our
Zimbabwean operations at a weaker R/$ exchange rate.
The group unit cost per platinum ounce produced, including share based
payments escalated by 3.9% to R6 986 Pt/oz (2007: R6 722 Pt/oz). If share
based payments are excluded from the unit cost calculation, the unit cost
per platinum ounce that relates to operating costs was 36.9% more at R8 681
Pt/oz (2007: R6 340 Pt/oz).
The group`s operating margins remained stable at 45.7% (2007: 46.7%), despite
operating and economic difficulties experienced.
Impala contributed the bulk (82.2%) of the group`s gross profit (2007:
78.4%).
Equity income from investments of R64 million was from Implats` holding in
Two Rivers. A significant decline from the comparative period was as a result
of the sale of the group`s stake in AQP and AQP (SA).
The group acquired, through a subsidiary, 5 562 545 of its own shares in this
financial period in terms of an approved share buy-back scheme. This was
executed through purchases on the stock exchange for an amount of R724
million. The buy back arrangement was however suspended on the back of
Implats` cash preservation programme that was announced.
Profit for the period attributable to owners of the parent increased by 13.4%
to R5.3 billion.
Cash from operating activities during the interim period totalled R4.5
billion, after funding the capital expenditure of R3.9 billion and dividend
payment of R7.1 billion; the closing cash position was R4.3 billion.
Group capital expenditure for the 2009 interim period totalled R3.9 billion
compared to the R2.4 billion in the previous interim period. The bulk of this
capital expenditure was spent at Impala on the development of 16, 17 and 20
shafts. Zimplats and Marula spent R640 million and R326 million respectively.
After taking into account the significant volatility reflected in current
markets, as well as the strong financial position of Implats an interim
dividend of R1.20 per share has been declared. The total cash outlay will be
R790 million (including STC). Although the dividend cover has not been
formally modified, the interim dividend was based on the total quantum of
cash payable rather than on a cover basis. The final dividend will also be
carefully reviewed and as in the case of this interim dividend, will reflect
then market conditions and our view of the short term outlook.
Prospects
With world economies and their financial systems still on life support, it is
increasingly difficult to forecast the outcome for 2009. Suffice to say we do
not expect any major recovery in automotive demand. In this environment, and
with reduced metal availability from South Africa, Russia and perhaps more
significantly the recycle market (both automotive and jewellery), we expect
the market to register a small surplus for 2009.
In summary, the dire economic circumstances belie the more positive
fundamentals for PGM`s that we have often articulated. However we believe the
confidence needed to restore the health of this market may prove elusive
during the bulk of the year.
Fred Roux David Brown Johannesburg
Chairman Chief Executive Officer 19 February 2009
Declaration of Interim Dividend
An interim cash dividend of 120 cents per share has been declared in respect
of the half-year ended 31 December 2008. The last day to trade ("cum" the
dividend) in order to participate in the dividend will be Friday, 6 March
2009. The share will commence trading "ex" the dividend from the commencement
of business on Monday, 09 March 2009 and the record date will be Friday, 13
March 2009.
The dividend is declared in the currency of the Republic of South Africa.
Payments from the London transfer office will be made in United Kingdom
currency at the rate of exchange ruling on Thursday, 12 March 2009, or on the
first day thereafter on which a rate of exchange is available.
The dividend will be paid on Monday, 16 March 2009. Share certificates may
not be dematerialised/rematerialised during the period Monday, 09 March 2009
to Friday, 13 March 2009, both dates inclusive.
By order of the Board
A Parboosing Johannesburg
Group Company Secretary 19 February 2009
Registered Office
2 Fricker Road, Illovo 2196
(Private Bag X18, Northlands 2116)
Transfer Secretaries
South Africa: Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001, (P.O. Box 61051, Marshalltown, 2107)
United Kingdom: Computershare Investor Services plc
The Pavilons, Bridgwater Road, Bristol, BS13 8AE
Directors
FJP Roux (Chairman), DH Brown (Chief Executive Officer), S Bessit, D Earp, F
Jakoet, JM McMahon*, MV Mennell, TV Mokgatlha, K Mokhele, NDB Orleyn, LJ
Paton, DS Phiri, LC van Vught *British
A copy of the interim report is available on the company`s website:
http://www.implats.co.za
Alternatively please contact the Group Company Secretary, via e-mail at
avanthi.parboosing@implats.co.za or by post at Private Bag X18, Northlands
2116, South Africa. Telephone: (+2711) 731 9000
Johannesburg
19 February 2009
Sponsor to Implats:
Deutsche Securities (SA)(Proprietary) Limited
Date: 19/02/2009 08:00:10 Produced by the JSE SENS Department.
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