31 December 2001
IMPALA PLATINUM HOLDINGS LIMITED Registration No. 1957/001979/06
Share code: ("IMP") ISIN code: ZAE 000003554
Interim Results for the six months ended 31 December 2001
Highlights
* Attributable income up 2.4%
despite 35% lower metal prices
* Sales volumes 13% higher
* Total platinum production increased by 3.2%
* Solid operational performance
* Growth projects on track
Consolidated income statement
Six months to Six months to Year to
31-Dec 31-Dec 30-Jun
2001 2000 % 2001
Rand million (Unaudited) (Unaudited) change (Audited)
Turnover 5 300.6 5 383.8 -1.5 11 969.1
Cost of sales 2 719.3 2 335.8 -16.4 5 120.3
On-mine operations 1 251.0 1 142.2 -9.5 2 330.1
Concentrating and smelting
operations 297.4 232.4 -28 492.5
Refining operations 171.9 164.6 -4.4 333.3
Amortisation of mining assets 139.4 91.1 -53 212.2
Metals purchased 1 015.2 1 022.6 0.7 1 968.8
Other costs 77.8 53.8 -44.6 117.1
Increase in metal inventories -233.4 -370.9 -37.1 -333.7
Operating income 2 581.3 3 048.0 -15.3 6 848.8
Other income and expense 231.4 30.7 653.7 94.5
Net financial income 136.2 195.4 -30.3 383.3
Share of pre-taxation income
from associates 606.3 493.5 22.9 1 031.4
Royalty expense -338.1 -447 24.4 -890.3
Income before taxation 3 217.1 3 320.6 -3.1 7 467.7
Taxation 1 019.8 1 181.3 13.7 2 815.2
Income after taxation 2 197.3 2 139.3 2.7 4 652.5
Outside shareholders' 5.5 -0.2 - 5.4
interest
Attributable income 2 191.8 2 139.5 2.4 4 647.1
Earnings per share (cents)
- basic 3 303 3 238 2 7 024
- diluted 3 281 3 205 2.4 6 970
Headline earnings per share (cents)
- basic 3 303 3 238 2 7 024
- diluted 3 281 3 205 2.4 6 970
Cash earnings per share
(cents)
- basic 2 742 4 252 -35.5 10 030
- diluted 2 723 4 209 -35.3 9 953
Weighted average number of
shares in issue (millions) 66.3 66.1 0.4 66.2
Consolidated balance sheet
As at As at As at
31-Dec 31-Dec 30-Jun
2001 2000 2001
Rand million (Unaudited) (Unaudited (Audited)
)
ASSETS
Fixed assets 5 612.4 4 654.2 5 230.6
Investments 2 165.3 1 229.6 1 291.0
Other non-current assets 249.4 78.6 311.8
Current assets 3 541.7 4 801.1 5 162.3
Total assets 11 568.8 10 763.5 11 995.7
EQUITY AND LIABILITIES
Capital and reserves 7 394.1 7 175.9 6 715.6
Outside shareholders' interest 24.7 13.6 19.2
Provision for long-term responsibilities 200 171.8 196
Borrowings 98.3 123.6 113.1
Deferred taxation 1 233.2 988.1 1 156.1
Current liabilities 2 618.5 2 290.5 3 795.7
Total equity and liabilities 11 568.8 10 763.5 11 995.7
Consolidated statement of changes in
equity
Share Share Other Retained
Rand million capital premium reserves earnings Total
Balance previously reported
at 31 December 2000 13.2 542.1 -0.3 6 276.4 6 831.4
Change in accounting policy
in respect of:
adopting IAS 39 344.5 344.5
Restated balance
At 31 December 2000 13.2 542.1 344.2 6 276.4 7 175.9
Dividends declared -2 929.6 -2 929.6
Net profit attributable to
ordinary shareholders 2 507.6 2 507.6
Translation differences on
foreign subsidiary -0.2 -0.2
Revaluation of listed
investments -58.9 -58.9
Issue of share capital 0.1 20.7 20.8
Restated balance
At 30 June 2001 13.3 562.8 285.1 5 854.4 6 715.6
Dividends paid -1 579.1 1 579.1
Net profit attributable to
ordinary shareholders 2 191.8 2 191.8
Revaluation of listed
investments 66.8 66.8
Translation differences on
foreign subsidiary -1 -1
Balance at
31-Dec-01 13.3 562.8 350.9 6 467.1 7 394.1
Consolidated cash flow statement
Six months Six months to Year to
to
31-Dec 31-Dec 30-Jun
2001 2000 2001
Rand million (Unaudited) (Unaudited) (Audited)
Net cash from operating activities 414.9 2 020.8 5 682.6
Net cash used in investing -886.9 -1 174.6 -1 878.3
activities
Net cash used in financing -1 591.6 -949.2 -3 873.4
activities
Decrease in cash and cash -2 063.6 -103 -69.1
equivalents
Cash at the beginning of the period 3 037.6 3 106.7 3 106.7
Cash at the end of the period 974 3 003.7 3 037.6
Segment information
Impala Inter
Impala Refining Segmental
Rand million Platinum Barplats* Services Adjustment Total
Summary of business segments for the half year ended 31 December
2001
Sales revenue 5 086.8 124.1 1 014.6 -924.9 5 300.6
Segmental cost of 2 751.8 96.9 794.9 -924.3 2 719.3
sales
Operating income 2 335.0 27.2 219.7 -0.6 2 581.3
Summary of business segments for the half year ended 31 December
2000
Sales revenue 5 157.4 926.8 -700.4 5 383.8
Segmental cost of 2 265.0 771.2 -700.4 2 335.8
sales
Operating income 2 892.4 155.6 0 3 048.0
* Not in production as at 31
December 2000
Statistics
Six months Six months to Year to
to
31-Dec 31-Dec % 30-Jun
2001 2000 change 2001
Gross refined platinum
production
Total ('000 oz) 680 659 3.2 1 291
Impala ('000 oz) 507 516 -1.7 1 002
IRS ('000 oz) 173 143 21 289
Group consolidated statistics
Free market price ($/oz) 827 1 272 -35 1 266
index
Achieved price index ($/oz) 864 1 243 -30.5 1 254
(R/oz) 7 829 9 049 -13.5 9 543
Tons milled ex-mine ('000 tons) 7 970 7 818 1.9 15 184
Pgm refined ('000 oz) 1 292 1 254 3 2 464
production
Capital expenditure (Rm) 528 458 15.4 2 090
Impala business segment
Tons milled ex-mine ('000 tons) 7 519 7 818 -3.8 14 840
Total costs per ton (R/ton) 226 200 -13.2 213
milled
($/ton) 24 27 11 28
Pgm refined ('000 oz) 931 974 -4.4 1 877
production
Cost per pgm ounce
refined (R/oz) 1 824 1 602 -13.9 1 685
($/oz) 197 220 10.4 221
Cost per platinum ounce
refined:
Cash cost (R/oz) 3 350 3 024 -10.8 3 156
($/oz) 360 416 13.4 415
Net of revenue received
from other metals: (R/oz) -515 -1 354 -62 1 879
($/oz) -56 -186 -70.1 -247
Capital expenditure (Rm) 409 422 -3.1 978
Total Impala labour
complement ('000) 27.9 28 0.4 28
Dividend
Six months to Six months Year to
to
31-Dec 31-Dec % 30-Jun
2001 2000 change 2001
Dividends per share declared
(including special dividend for the
Year ended 30 June 2001) 2 380 1 420 67.6 5 840
(cents)
Dividends per share proposed
(including special dividend for the
Year ended 30 June 2001) 1 100 1 420 -22.5 6 800
(cents)
Notes
The interim financial statements have been prepared using accounting
policies consistent with those of the annual financial statements for the
year ended 30 June 2001, as set out below, and conform with IAS 34 on
Interim Financial Reporting. In addition, the group adopted the provisions
of IAS 39 (Financial Instruments: Recognition and Measurement). Under this
statement, listed investments were previously carried at cost and are now
carried at market value. This does not include equity accounted or
consolidated listed investments. The effect of the change has been disclosed
in the consolidated statement of changes in equity.
The comparitives have been further adjusted to take into account the
adoption of IAS 10 (revised) (Events after the balance sheet date). The
effect of this adoption on the December 2000 income statement was a R105.6
million increase in the secondary taxation on companies (STC) charge, as the
STC charge is only being recorded in the period in which the dividend is
declared and relates to the June 2000 final dividend.
Other income includes an amount of R274 million for exchange adjustments.
During the period under review, the company paid for a number of
acquisitions which have been reflected as investments in the balance sheet:
* the payment of a 30% stake in Zimplats' Makwiro Platinum Mines (Private)
Limited, which comprises the Ngezi open-cast mine and the Hartley joint
venture for R247.0 million (US $30 million),
* the payment of a 35% stake in ZCE Platinum Limited which owns Mimosa for
R246.3 million (US $30 million) and
* the purchase of a 45% stake in the Two Rivers Platinum project for R247.5
million.
Investments are both listed and unlisted. The directors have valued the
unlisted investments at book value (R1 690 million) and the listed
investments are valued at market value, by reference to stock exchange
quoted prices and closing exchange rates.
Borrowings consist of debentures secured by a pledge of freehold properties,
included in mining assets, with a book value of R178 million. Half of the
debentures bear interest at a fixed rate of 18.9% per annum, with the other
half bearing current interest at 11.6% per annum. All are repayable before
30 June 2004.
Capital expenditure approved at 31 December 2001 amounted to R2 937 million,
of which R671 million is already committed. This expenditure, over a period
of five years, will be funded internally and, if necessary, from borrowings.
Contingent liabilities at 31 December 2001, arising mainly from collateral
security for employee housing, amounted to R10 million.
Certain guarantees were in place as at 31 December 2001:
* A guarantee of up to 30% of the facility made available by ABSA to
Makwiro Platinum Mines (Private) Limited. As at 31 December 2001, the
guarantee was R68.9 million (US $5.7 million). The guarantee is set to
expire by September 2004.
* A guarantee was given to Investec Bank Limited on behalf of Aquarius
Platinum (South Africa) (Pty) Limited for a loan facility. As at 31 December
2001, the guarantee was R553.4 million. It was previously stated that this
guarantee would expire by 31 December 2001. Aquarius Platinum Limited is in
the process of finalising a refinancing package to repay the loan. It is
expected that this will be completed and the guarantee will now expire prior
to the financial year end.
Interim dividend no 68 of 1 100 cents per share, amounting to R729.8
million, was approved by the board of directors on 5 February 2002; STC on
this dividend will amount to R81.0 million.
REVIEW
Compared to the corresponding period last year:
* Attributable income and headline earnings per share for the six months to
December 2001 increased by 2% to R2 191.8 million and 3 303 cps
respectively.
* Turnover decreased by only 1.5% to R5.3 billion despite substantially
lower dollar metal prices.
* Cash operating cost per ounce of platinum ex-mine rose by 10.8% due mainly
to above inflation wage settlements, exceptional higher insurances and
dollar expenses relating to promotional (marketing) expenditure.
* Impala Refining Services' contribution to operating income up 41% to a
high of R220 million.
* Implats' 27% shareholding in Lonplats contributed R606 million equity-
accounted pre-tax income, including a dividend of R325 million (2000: R244
million) was received. Higher Rand prices and production contributed to
Lonplats' improved results for the six month period ended September 2001.
* Capital expenditure amounted to R528 million, mainly on mining decline
projects and processing capacity increases.
* The cash position net of short-term debt decreased to R947 million as a
result of the payment of various acquisitions and taxation related to
previous years. Increased working capital requirements resulted in lower
cash earnings per share.
MINING AND REFINING ACTIVITIES
Impala operations
* Despite an improvement in safety, four of our employees tragically lost
their lives in work-related accidents. Three of these accidents were related
to falls of ground. Several internal and external safety reviews have led to
the decision to utilise DuPont, who are leaders in industrial safety, to
assist Impala in implementing a Behavioural Safety Management Programme.
The HIV prevalence rate on Impala is estimated at 17% which, although well
below the rates reported in other mining companies, is cause for concern and
our continued attention. The rate does however support our HIV impact models
which show that the financial effect can be managed.
* Total platinum production of 680 000 ounces, which includes metal sourced
from concentrates purchased from third parties increased by 3.2%. Platinum
production from the Impala lease area decreased slightly by 1.7% to 507 000
ounces (931 000 ounces pgm) primarily as a result of the commissioning
problems at the UG2 plant upgrade experienced in the first half of the
period under review.
* Stoping productivity remained at 42m2 per employee, the same as in the
corresponding period last year.
* The Refineries' performance for the period has been excellent. First pass
yields on the primary metals are arguably the best in the industry.
* The UG2 plant upgrade was completed and the additional 30% throughput is
being achieved although the expected improvement in recoveries of 3% has not
materialised and may require further process enhancements.
* Processing of the surface stockpile commenced when the UG2 plant achieved
steady state after the upgrade. After peaking at over 700 000 tons, the
stockpile has been reduced to
570 000 tons.
* Tons milled were 3.8% less than last year, offset by a corresponding 3.0%
improvement in the headgrade.
Crocodile River Mine
* Tons milled from the open-cast mining operation were on target at 450 000
tons for the six months.
* Concentrator recoveries from open-cast mining have steadily improved to
above 70%.
* Work to establish the portals for the underground declines has commenced
and the first underground ore will be delivered to the concentrator by April
2002.
THE MARKET
* The impact of slowing world economies compounded by the attacks on the
USA in September 2001, has, to a great extent, been countered by resilience
in Chinese jewellery and US and European car markets.
* Notwithstanding in excess of half a million ounce liquidation on Tocom,
platinum demand have been supported by the continued growth of diesel
vehicles in Europe, and a strong demand for platinum jewellery in China,
both factors ameliorating the price decline for the metal.
* Palladium has suffered from substitution in the auto and electronics
markets, substantial de-stocking following the correction in the IT
industry, and Russian deliveries into an oversold market. This has resulted
in a price plunge some 60% from highs recorded in January 2001. Rhodium
prices have also been volatile following erratic selling by those holding
large inventories.
* Considering the prevailing circumstances, the markets have performed
satisfactorily, and it is our opinion that the fundamentals for platinum in
the medium to long term remain good, whilst palladium's future hinges in the
short term on Russia's attitude to price and deliveries.
PROSPECTS
* Given the general malaise in the world economy, the market for pgm's has
held up better than may have been anticipated and the outlook for platinum,
in particular, still looks fundamentally sound.
* The company has benefited from the recent weakness of the local currency
but this has not fully compensated for the lower metal prices. As a result,
attributable earnings are expected to be lower than the exceptional earnings
of 2001 but significantly higher than in 2000.
* Implat's volume growth strategy of 5 to 10% per annum is on track. The
development of a new mine in the Eastern Bushveld is progressing well and
material sourced from our strategic partners (Aquarius, Zimplats, Mimosa,
Messina etc) through Impala Refining Services are growing as expected. It is
still anticipated that Implats will have an economic interest in over 2
million ounces of platinum per annum by 2006.
* A strong balance sheet and robust cash earnings will allow the company to
fund the anticipated expansions and acquisitions. The interim dividend
declared is in line with a dividend cover of 1.9 on attributable earnings
and consistent with a policy of declaring around one-third of the
anticipated full year dividend.
On behalf of the board
J M McMahon Directors
K C Rumble 6 February 2002
DECLARATION OF INTERIM DIVIDEND
An interim dividend of 1 100 cents per share has been declared in respect of
the half-year ended 31 December 2001. The last day to trade ("cum" the
dividend) in order to participate in the dividend will be Wednesday 27 March
2002. The share will commence trading "ex" the dividend from the
commencement of business on Thursday 28 March 2002 and the record date will
be Friday 5 April 2002.
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 28 March 2002 or on the first day
thereafter on which a rate of exchange is available.
The dividend will be paid on Monday 8 April 2002.
Share certificates may not be lodged with the transfer secretaries for
dematerialisation/ rematerialisation during the period 20 March 2002 to 5
April 2002, both days inclusive.
By order of the board.
A M SNASHALL Johannesburg
Group Secretary 6 February 2002
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