Ended 30 June (Audited)
IMPALA PLATINUM HOLDINGS LIMITED
Registration No. 1957/001979/06
Share code: IMP
ISIN code : ZAE 000003554
CONSOLIDATED ANNUAL RESULTS FOR THE YEAR ENDED 30 JUNE (AUDITED)
ANOTHER PHENOMENAL YEAR
FOR IMPLATS
KEY FEATURES
FINANCIAL PERFORMANCE
Platinum production up 7% to 1.39Moz
- a new high for Implats
Dollar basket price per platinum ounce down
29% from last year`s record
32% depreciation of rand limits decrease in rand
basket price per platinum ounce to 6%
Attributable income at R4.58 billion (US$462 million)
- second best ever
Dividends for the year of R37 per share
Growth projects on track to deliver 2Moz by 2006
Share re-rating begins as growth projects develop
Year at a glance
%
2002 2001 change
Financial
Revenue (Rm) 11 902 11 969 (1)
Operating income 6 137 6 849 (10)
Income before taxation 6 733 7 468 (10)
Attributable income 4 582 4 647 (1)
Headline earnings per share (cps) 6 863 7 024 (2)
Dividends per share 3 700 6 800* (46)
(proposed basis)
Cash net of short-term debt (Rm) 3 124 3 013 4
Achieved basket price ($/oz) 890 1 254 (29)
Average rate achieved (R/US$) 10,16 7,68 32
* includes special dividend
of 3 000 cps
Production
Total
Refined platinum production (`000 oz) 1 387 1 291 7
PGM production refined 2 639 2 464 7
Impala
Refined platinum production 1 025 1 002 2
PGM production refined 1 895 1 877 1
income statement
for the year ended 30 June (R million) 2002 2001
Revenue 11 901.5 11 969.1
Cost of sales 5 764.9 5 120.3
On-mine operations 2 567.5 2 330.1
Concentrating and smelting operations 642.6 492.5
Refining operations 354.7 333.3
Amortisation of mining assets 248.8 212.2
Metals purchased 1 883.4 1 968.8
Other costs 203.9 117.1
Increase in metal inventories (136.0) (333.7)
Operating income 6 136.6 6 848.8
Other income 32.8 94.5
Net financial income 265.5 383.3
Share of associates` pre-taxation income 1 102.9 1 031.4
Royalty expense (804.4) (890.3)
Income before taxation 6 733.4 7 467.7
Taxation 2 142.0 2 815.2
Income after taxation 4 591.4 4 652.5
Outside shareholders` interest 9.9 5.4
Attributable income 4 581.5 4 647.1
Earnings per share (cents)
- basic 6 902 7 024
- diluted 6 839 6 970
Headline earnings per share (cents)
- basic 6 863 7 024
- diluted 6 800 6 970
Cash earnings per share (cents)
- basic 8 462 10 030
- diluted 8 385 9 953
Dividends proposed and declared
Dividends proposed basis
- interim dividend 2002 per share (cents) 1 100 1 420
- final dividend 2002 per share (cents) 2 600 2 380
- special dividend per share (cents) - 3 000
3 700 6 800
Dividends declared basis
- final dividend 2001 per share (cents) 2 380 1 420
- interim dividend 2002 per share (cents) 1 100 1 420
- special dividend per share (cents) - 3 000
3 480 5 840
BALANCE SHEET
as at 30 June (R million) 2002 2001
ASSETS
Non-current assets 9 324.1 6 833.4
Property, plant and equipment 6 218.4 5 230.6
Investments in associates 2 502.8 791.6
Other investments 487.2 499.4
Receivables 42.0 233.2
Prepayments 73.7 78.6
Current assets 5 448.3 5 162.3
Inventories 920.1 779.3
Receivables 1 377.9 1 345.4
Cash and cash equivalents 3 150.3 3 037.6
Total assets 14 772.4 11 995.7
EQUITY AND LIABILITIES
Capital and reserves 9 284.0 6 715.6
Ordinary shares 13.3 13.3
Share premium 589.6 562.8
Other reserves 545.7 285.1
Retained earnings before proposed final 8 135.4 5 854.4
dividend
Retained earnings after proposed final 6 212.4 4 147.8
dividend and STC
Proposed final dividend 1 730.4 1 579.1
Secondary taxation on companies (STC) 192.6 127.5
Outside shareholders` interest 61.6 19.2
Non-current liabilities 1 683.4 1 465.2
Borrowings 86.3 113.1
Deferred taxation 1 389.6 1 156.1
Pension and other post-retirement 66.9 66.0
obligations
Provision for environmental obligations 140.6 130.0
Current liabilities 3 743.4 3 795.7
Trade and other payables 2 458.1 2 282.3
Current taxation liabilities 1 258.5 1 488.9
Borrowings 26.8 24.5
Total equity and liabilities 14 772.4 11 995.7
CASH FLOW statement
for the year ended 30 June (R million) 2002 2001
Operating activities
Cash generated from operations 5 617.0 6 635.7
Financial income 287.2 400.6
Interest paid (15.7) (14.4)
Taxation paid (1 733.3) (1 339.3)
Net cash from operating activities 4 155.2 5 682.6
Investing activities
Purchase of property, plant and equipment (1 256.0) (2 075.5)
Proceeds from fixed assets disposed 10.0 4.6
Repayment of non-current investments 515.1 542.3
Purchase of investments in associates (1 114.0) -
Purchase of listed investments - (94.1)
Purchase of unlisted investments - (10.1)
Loans repaid by/(made to) related and other 120.6 (233.2)
undertakings
Payments made for post-retirement benefits (2.2) (2.9)
Payments made to environmental trust (9.0) (9.4)
Net cash used in investing activities (1 735.5) (1 878.3)
Financing activities
Issue of ordinary shares 26.8 19.6
Proceeds from/(repayments of) short-term 2.3 (0.8)
borrowings
Repayment of long-term borrowings (26.8) (24.5)
Dividends paid to group shareholders (2 309.3) (3 867.7)
Net cash used in financing activities (2 307.0) (3 873.4)
INCREASE/(DECREASE) IN CASH AND CASH 112.7 (69.1)
EQUIVALENTS
Movement in cash and cash equivalents
At start of year 3 037.6 3 106.7
Increase/(decrease) 112.7 (69.1)
At end of year 3 150.3 3 037.6
STATEMENT OF CHANGES IN EQUITY
for the year
ended 30 June
(R million)
Share Share Other Retained
capital premium reserves earnings Total
Balance at 30 13.2 537.8 (0.4) 5 075.0 5 625.6
June 2000
Change in
accounting policy
in respect of
adopting IAS 39:
Market value 90.8 90.8
adjustment of
listed
investments
Restated balance 13.2 537.8 90.4 5 075.0 5 716.4
at 30 June 2000
Dividends paid (3 867.7) (3 867.7)
Net profit 4 647.1 4 647.1
attributable to
ordinary
shareholders
Issue of share 0.1 25.0 25.1
capital
Change in
accounting policy
in respect of
adopting IAS 39:
Fair value 8.8 8.8
adjustment on
financial
instruments
Market value 194.8 194.8
adjustment of
listed
investments
Currency and (0.1) (0.1)
translation
adjustment on
foreign
investments
Restated balance 13.3 562.8 285.1 5 863.2 6 724.4
at 30 June 2001
Dividends paid (2 309.3) (2 309.3)
Net profit 4 581.5 4 581.5
attributable to
ordinary
shareholders
Issue of share - 26.8 26.8
capital
Market value 107.8 107.8
adjustment of
listed
investments
Currency and 152.8 152.8
translation
adjustment on
foreign
investments
Balance at 30 13.3 589.6 545.7 8 135.4 9 284.0
June 2002
Summary of
Business Segments
Year ended Impala Inter-
30 June 2002 Impala Refining Segmental
(R million) Platinum Barplats Services Adjustment Total
Revenue 11 483.2 265.8 2 296.8 (2 144.3) 11 901.5
Operating Income 5 583.5 72.6 448.7 31.8 6 136.6
NOTES
The annual financial statements have been prepared using accounting policies
consistent with those of the annual financial statements for the year ended 30
June 2001. In addition, the group adopted the provisions of International
Accounting Standard (IAS) 39 (Financial Instruments: Recognition and
Measurement). As a result, the following changes were recorded:
* Listed investments, excluding associates and subsidiaries, were previously
carried at cost and are now carried at market value. This change resulted in an
increase in reserves and a corresponding increase in investments amounting to
R393,4 million. Market value of listed investments as defined (Aquarius Platinum
Limited) at 30 June 2002 was R422.5 million.
* Open financial instruments entered into, to reduce risk to foreign currency
and future metal price fluctuations, were previously not recognised in the
financial statements. These are now accounted for in the balance sheet at fair
value. The impact on current years earnings is a loss of R0,7 million.
* Forward commitments were previously recognised at settlement price, with
potential gains or losses accounted for as the contracts matured. These are now
recognised in the balance sheet at fair value. This resulted in a loss of R3.1
million which has been included in current year`s earnings. In addition an R8.8
million prior year adjustment was made.
The financial statements have been audited by PricewaterhouseCoopers Inc. whose
opinion is available for inspection at the registered office of Implats.
During the period under review the group concluded a number of acquisitions
which have been reflected as investments in associates on the balance sheet and
which have been equity accounted:
* A 30% stake in Zimplats` Makwiro Platinum Mines (Private) Limited, which
comprises the Ngezi opencast mine and the Hartley joint venture for R247.0
million (US$30 million).
* A 35% stake in ZCE Platinum Limited which owns Mimosa Mining Company (Private)
Limited for R246.3 million (US$30 million).
* A 45% stake in Two Rivers Platinum project for R263.6 million, which includes
the acquisition price of R247.9 million.
* During the year Aquarius Platinum Limited rationalised its assets and the
businesses of Kroondal Platinum Mines and Aquarius Platinum (South Africa) (Pty)
Limited to form a single operating subsidiary. As a result the group holds a 25%
stake in Aquarius Platinum (South Africa) (Pty) Limited at a cost of R460.2
million.
Capital expenditure approved at 30 June 2002 amounted to R3 566.4 million of
which R711.7 million is already committed. This expenditure will be funded
internally and if necessary from borrowings.
Borrowings consist of debentures secured by a pledge of freehold properties,
included in mining assets, with a book value of R178.0 million (2001: R178.0
million). Half the debentures bear interest at a fixed rate of 18,9% per annum,
with the other half bearing interest at 13,3% per annum. All are repayable by 30
June 2004.
Contingent liabilities at 30 June 2002 amounted to R224.3 million which consist
of the following:
* A guarantee of up to 30% of the facility made available by ABSA to Makwiro
Platinum Mines (Private) Limited. As at 30 June 2002 the guarantee amounted to
R90.1 million (US$8.7 million). The guarantee is set to expire by September
2004.
* A guarantee was given to Investec Bank Limited on behalf of Aquarius Platinum
(South Africa) (Pty) Limited for a loan facility. As at 30 June 2002, the
guarantee totalled R124.8 million. Expiry of the guarantee is contingent on the
project (Marikana) meeting certain completion criteria.
* Collateral security for employee housing amounting to R9.4 million (2001:
R10.1 million).
OPERATING STATISTICS
for the year ended 30 2002 2001 % change
June
Gross refined production
Platinum (`000 oz) 1 387 1 291 7.4
Palladium (`000 oz) 732 681 7.5
Rhodium (`000 oz) 177 164 7.9
Nickel (`000 t) 13.0 14.0 (7.1)
Impala refined production
Platinum (`000 oz) 1 025 1 002 2.3
Palladium (`000 oz) 489 481 1.7
Rhodium (`000 oz) 123 128 (4.1)
Nickel (`000 t) 7.7 7.0 10.0
IRS refined production
Platinum (`000 oz) 362 289 25.2
Palladium (`000 oz) 243 200 21.2
Rhodium (`000 oz) 54 36 49.9
Nickel (`000 t) 5.3 7.0 (24.3)
IRS metal returned to
customers
Platinum (`000 oz) 152 164 (7.5)
Palladium (`000 oz) 102 116 (12.2)
Rhodium (`000 oz) 16 21 (23.7)
Consolidated statistics
Exchange rate: (R/US$)
Closing rate on 30 June 10.32 8.06 28.0
Average rate achieved 10.16 7.68 32.3
Free market price index ($/oz) 891 1 266 (29.6)
Achieved price index ($/oz) 890 1 254 (29.0)
Prices achieved
Platinum ($/oz) 485 586 (17.2)
Palladium ($/oz) 389 773 (49.7)
Rhodium ($/oz) 1 098 2 001 (45.1)
Nickel ($/t) 5 594 6 951 (19.5)
Sales volume
Platinum (`000 oz) 1 251 1 177 6.3
Palladium (`000 oz) 663 543 22.1
Rhodium (`000 oz) 165 145 13.8
Nickel (`000 t) 12.0 14.1 (14.9)
Gross margin achieved (%) 51.6 57.2 (9.8)
Return on equity (%) 68.2 81.3 (16.1)
Return on assets (%) 49.1 68.0 (27.8)
Debt to equity (%) 1.2 2.0
Current ratio 1.5:1 1.4:1
Tonnes milled ex mine (`000 t) 15 607 15 184 2.8
PGM refined production (`000 oz) 2 639 2 464 7.1
Capital expenditure (Rm) 1 250 2 090 40.2
(US$m) 123 275 55.3
Impala business segment
Tonnes milled ex mine (`000 t) 14 850 14 840 0.1
Total cost per tonne (R/t) 239 213 (12.2)
milled1
($/t) 24 28 14.3
Pgm refined production (`000 oz) 1 895 1 877 0.9
Cost per PGM ounce (R/oz) 1 872 1 685 (11.1)
refined1
($/oz) 185 221 16.3
Cost per platinum ounce
refined1
Total cost of operations (R/oz) 3 459 3 156 (9.6)
($/oz) 341 415 17.8
Net of revenue received (R/oz) (708) (1 879) (62.3)
for other metals
($/oz) (70) (247) (71.7)
Capital expenditure (Rm) 1 009 978 (3.2)
(US$m) 100 129 22.5
Total Impala labour (`000) 27.9 28.0 0.4
complement
1. The cost of mining, concentrating, smelting, refining, marketing, head office
and insurance claim is expressed per unit
Chairman`s letter to shareholders
It is a pleasure to present this report on another remarkable year for Implats,
based on a robust operational, financial and growth performance. This occurred
in markets that came off the dizzy heights of the previous year, but were, in
aggregate, sufficient to produce returns to shareholders only slightly less than
the records of last year, and still double the previous year`s record of the
time.
Consumer confidence has held up better than anticipated, particularly in the US,
and is driving the recovery in the absence of any resumption of investment.
Investor confidence is fragile and causing volatility in the markets. Currencies
are also finding new levels of relative value. These factors all hold great
significance for our company`s future performance.
Inevitably the palladium panic of last year was followed by a shift by the
automobile companies back towards platinum in their catalyst coatings. While
there has been a corresponding retreat from the stratospheric prices in the
palladium market, this move will certainly benefit the platinum-dominant South
African producers and reverses a 10-year process, which cost us dearly in the
1990s. The abilities of the automobile companies to mix and match their catalyst
coatings according to metal price trends, while not simple and certainly not
instantaneous, should result in less volatility in the prices of all three of
the main platinum group metals (PGMs), and a continuing degree of robustness in
the platinum price in particular.
The pullback from the extraordinarily high dollar metal prices of last year, by
an average of 29%, was not unexpected and was the basis for the conservative
forecast in last year`s report. What was unexpected was the collapse of the rand
at the end of the 2001 calendar year. While it has now recovered to more
rational levels, the decline considerably cushioned the impact of weakening
dollar metal prices, with the rand income per platinum ounce only 6% lower than
last year.
A good production and cost control performance from Impala-owned and managed
operations, coupled with further dramatic growth by Impala Refining Services
(IRS), flowed through to deliver income before taxation of R6.73 billion (US$674
million), 10% lower than last year, and a marginal decline in attributable
income to R4.58 billion (US$462 million).
A number of new safety initiatives, including a peer review by a Health and
Safety audit group from Rio Tinto and participation in Du Pont`s interactive
auditing programme, has seen an encouraging reduction in the key performance
indicator of the Lost Time Injury Frequency Rate (LTIFR) during the past six
months to below the Ontario industry benchmark of 7. Against this trend the
regrettable fact is that we have made little improvement in the number of fatal
accidents on our mines. It is my sad duty to report the deaths of 12 of our
number, one fewer than last year, and to express my condolences to their
families and friends. The resultant fatality frequency rate of 0.15 per million
man hours is a long way off the lows of 1998 and 1999.
The Health and Safety Audit Committee of the Board has reviewed these
conflicting trends and resolved to take heart from the positive results thus far
from the new initiatives. The potential of these projects to improve practice,
behaviour and performance across the board, and to reduce the number of unsafe
acts and the resultant number and severity of injuries, is keenly recognised and
will be pursued vigorously.
Company initiatives among our workforce and in surrounding communities have
considerably ameliorated the incidence of HIV and AIDS among employees relative
to nationwide figures. Prevalence seems to have stabilised at about 17% of our
workforce, which is still a significant figure. The taxing questions are: what
more can be done to reduce new infection levels, and to improve the social care
and medical treatment of those affected, and to reduce the impact on the
company. The first two subjects are in the hands of as skilled and dedicated a
group of professionals as we could wish to have. The most obvious impacts on the
company are those of safety, efficiency and training, all unfortunate but all
manageable.
Efforts by the company to break free from past perceptions of being growth and
resource constrained are bearing fruit. There has been a substantial re-rating
of the share price over the year as the three-pronged strategy of developing new
resources of our own, developing relationships with and interests in other
producers, and sourcing in concentrate from third parties, is seen to be
succeeding and adding real value and real future potential. Significant
contributions to revenue via IRS were made through our investments in Barplats,
Zimplats, ZCE Platinum (Mimosa) and Aquarius. The major new mines in the eastern
Bushveld, Marula and Two Rivers, are also scheduled to commence production
within the next two years.
For some years we have classified our relationship with Lonmin plc and its
Western Platinum and Eastern Platinum subsidiaries (in which we hold a 27%
interest) as unfinished business. While we believe there is considerable
unrealised potential in this association, we are not critical of the current
arrangement as it is hard to imagine a better return on investment. Further
development of the relationship is probably hampered most by our own
shareholding structure.
One aspect of that shareholding structure currently in focus relates to recent
statements by Gencor confirming market perceptions that it intends to distribute
its 46% holding in Implats to its shareholders. The extent to which this
distribution represents an overhang in the market or, alternatively, whether
almost all of Gencor`s current shareholders are willing recipients of Implats`
stock, is about to be tested. The creation of a broad shareholder base, the
absence of any dominant shareholder and the removal of any overhang uncertainty
are all to be welcomed, even should it result in some short-term churning. With
this in mind, we have put into place the necessary systems, approvals and funds
to enable the company to buy back up to 10% of its own shares to take advantage
of any temporary weakness in the stock price. This is an expression of faith by
the company in itself, its future and its valuation, and I thank shareholders
for the overwhelming support given to this plan at the General Meeting held for
this purpose on 15 July 2002.
The Minerals & Petroleum Resources Development Bill was passed by Parliament in
June of this year and awaits signature by the President of South Africa. Implats
made considerable input at several stages of its development, and may well have
contributed to the final version being less threatening to current mining
companies than earlier drafts. While other companies are considerably more at
risk than we are, the details of how the industry is to be regulated through the
Bill`s regulations and industry charter is very unclear and will only be seen
over time. Hopefully, government will be sensitive, not only to the emotions
driving those changes, but also to the fragility of investor confidence. Implats
has for some time been anticipating the new legislation and is well advanced to
meet its reasonable empowerment provisions and social requirements.
Board membership did not change during the year. Following the announcement of
his retirement as Executive Chairman of Gencor at the end of May, Michael
McMahon stood down as Chairman of the company at the Board meeting of 5 June
2002. He has agreed, at the request of the Board, to continue as a director in
his personal capacity.
Michael was brought into the company in May 1990 as Managing Director, with a
brief to modernise the company and restore its competitive position. Where we
stand today speaks volumes for his success. He was Chairman and Chief Executive
from 1993 until 1998, handing over the CEO function to Steve Kearney then and
becoming non-executive Chairman.
As a long-standing fellow director of Implats, I am delighted to succeed Michael
as Chairman and, on behalf of the Board, I thank him for his 12-year
contribution. Michael stood down in the very month that the Financial Mail`s
Special Survey of Top Companies declared our company to be the top performing
company of the last five years, describing it as "a company that has walked a
careful path of reinvention to unlock the huge potential in the business".
The foundation of the company is its robust production base and its exciting
growth prospects. These are in safe hands. The variables are metal prices and
exchange rates. Everything points to good, but not dramatic metal prices and a
resilient rand. In this scenario it would be reasonable to expect another good
year for the company, but with somewhat lower returns than we have just posted.
On the basis of the results achieved, and bearing in mind future expectations,
your Board has elected to continue the practice of recent years and declare a
final dividend towards the more generous end of our policy. Accordingly, a total
dividend for the year of
3 700 cents per share (2001: 3 800 cents excluding special dividend) was
declared with the final dividend of 2 600 cents per share payable on 7 October
2002.
PROSPECTS
Platinum use in the automotive industry is forecast to grow strongly and
jewellery demand should continue to be strong at prices below US$600/oz. The
switch away from palladium in autocatalysts should continue to exert downward
pressure on palladium prices.
Prospects for Implats therefore remain good both in the short- and medium-term,
based on solid operational performance and delivery on growth plans, underpinned
by solid fundamental demand for platinum. 2003 should be another good year
albeit with slightly lower returns than this year.
P G Joubert KC Rumble Johannesburg
Chairman Chief Executive Officer 22 August 2002
DECLARATION OF FINAL DIVIDEND
A final dividend of 2 600 cents per share has been declared in respect of the
year ended 30 June 2002. The last date to trade ("cum" the dividend) in order to
participate in the dividend will be Friday 27 September 2002. The share will
commence trading "ex" the dividend from the commencement of business on Monday
30 September 2002 and the record date will be Friday 4 October 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 1 October 2002 or on the first day
thereafter on which a rate of exchange is available.
The dividend will be paid on Monday 7 October 2002.
Share certificates may not be dematerialised or rematerialised during the period
between 30 September 2002 to 4 October 2002, both days inclusive.
By order of the board.
A M Snashall Johannesburg
Group Secretary 22 August 2002
A copy of the Annual Report is available on the Internet web site:
http://www.implats.co.za
Alternatively please contact the Group Secretary, via e-mail at
alan.snashall@implats.co.za or by post at
P.O. Box 61386, Marshalltown 2107, South Africa. Telephone: (011) 481 3900
Registered Office
3rd Floor, Old Trafford 4, Isle of Houghton
Boundary Road, Houghton 2198
(P.O. Box 61386, Marshalltown 2170)
Transfer Secretaries
South Africa: Computershare Investor Services Limited
8th Floor, 11 Diagonal Street
Johannesburg 2001
(P.O. Box 1053, Johannesburg 2000)
United Kingdom: Lloyds TSB Registrars
The Causeway, Worthing
West Sussex
BN99 6DA
Date: 22/08/2002 09:00:00 AM Produced by the JSE SENS Department
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