Implats - Consolidated Interim Results For The Six Months Ended 31 December 2002
Release Date: 12/02/2003 08:00:25 Code(s): IMP
Implats - Consolidated Interim Results for the six months ended 31 December 2002
Impala Platinum Holdings Limited
(Incorporated in the Republic of South Africa)
Registration No. 1957/001979/06
JSE Alpha Code: IMP
Issuer Code : IMPO
ISIN: ZAE 000003554
("Implats")]
Consolidated Interim Results for the six months ended 31 December 2002
Highlights
- Turnover up 21%
- Operating income up 18%
- On-mine cost well contained
- Platinum production up 14%
- BEE partner for Two Rivers Project
- Growth strategy on track
- Attributable income of R2 billion down 8% due to translation loss
- Interim dividend of R9 per share
Income Statement
Six months Six months Year to
to to
31 December 31 December 30 June
2002 2001 % 2002
Rand million (Unaudited) (Unaudited) change (Audited)
Turnover 6 410.7 5 300.6 20.9 11 901.5
Cost of sales 3 375.9 2 719.3 (24.1) 5 764.9
On-mine operations 1 591.9 1 251.0 (27.3) 2 567.5
Concentrating and 376.6 297.4 (26.6) 642.6
smelting operations
Refining operations 202.1 171.9 (17.6) 354.7
Amortisation of 176.1 139.4 (26.3) 248.8
mining assets
Metals purchased 843.7 1 015.2 16.9 1 883.4
Other costs 140.6 77.8 (80.7) 203.9
Decrease/(increase) 44.9 (233.4) (119.2) (136.0)
in metal
inventories
Operating income 3 034.8 2 581.3 17.6 6 136.6
Exchange rate (210.9) 274.4 (176.9) 130.8
translation
(loss)/gain
Net other expense (25.2) (43.0) 41.4 (98.0)
Net financial 168.7 136.2 23.9 265.5
income
Share of pre- 635.5 606.3 4.8 1 102.9
taxation income
from associates
Royalty expense (394.1) (338.1) (16.6) (804.4)
Income before 3 208.8 3 217.1 (0.3) 6 733.4
taxation
Taxation 1 160.2 1 019.8 (13.8) 2 142.0
Income after 2 048.6 2 197.3 (6.8) 4 591.4
taxation
Outside 37.6 5.5 - 9.9
shareholders`
interest
Attributable income 2 011.0 2 191.8 (8.2) 4 581.5
Earnings per share
(cents)
- basic 3 021 3 303 (8.5) 6 902
- diluted 2 982 3 281 (9.1) 6 839
Headline earnings
per share (cents)
- basic 3 042 3 315 (8.2) 6 877
- diluted 3 002 3 292 (8.8) 6 814
Cash earnings per
share (cents)
- basic 4 207 2 742 53.4 8 462
- diluted 4 151 2 723 52.4 8 385
Weighted average 66.6 66.3 0.3 66.4
number of shares in
issue (millions)
Balance Sheet
As at As at As at
31 December 31 December 30 June
2002 2001 2002
Rand million (Unaudited) (Unaudited) (Audited)
ASSETS
Fixed assets 7 947.8 5 612.4 6 218.4
Investments 2 274.8 2 165.3 2 990.0
Other non-current assets 265.1 249.4 115.7
Current assets 4 650.2 3 541.7 5 448.3
Total assets 15 137.9 11 568.8 14 772.4
EQUITY AND LIABILITIES
Capital and reserves 9 148.2 7 394.1 9 284.0
Outside shareholders` 574.7 24.7 61.6
interest
Provision for long-term 212.3 200.0 207.5
responsibilities
Borrowings 154.1 98.3 86.3
Deferred taxation 1 483.2 1 233.2 1 389.6
Current liabilities 3 565.4 2 618.5 3 743.4
Total equity and liabilities 15 137.9 11 568.8 14 772.4
Segmental Report
Summary of business segments for the half year ended 31 December 2002:
Impala Zimbabwe
Rand million Platinum Barplats Operations
Sales revenue 6 217.4 107.8 270.8
Cost of sales 3 501.2 107.3 165.2
Operating income 2 716.2 0.5 105.6
Summary of business segments for the
half year ended 31 December 2001:
Sales revenue 5 086.8 124.1
Segmental cost of sales 2 751.8 96.9
Operating income 2 335.0 27.2
Impala Inter
Refining Segmental
Rand million Services Adjustment Total
Sales revenue 1 498.5 (1 683.8) 6 410.7
Cost of sales 1 284.3 (1 676.9) 3 375.9
Operating income 214.2 (6.9) 3 034.8
Summary of business segments for the
half year ended 31 December 2001:
Sales revenue 1 014.6 (924.9) 5 300.6
Segmental cost of sales 794.9 (924.3) 2 719.3
Operating income 219.7 (0.6) 2 581.3
Statement of Changes in Equity
Share Share Other Retained
Rand million capital premium reserves earnings Total
Balance at 31 13.3 562.8 350.9 6 467.1 7 394.1
December 2001
Dividends paid (730.2) (730.2)
Net profit 2 398.5 2 398.5
attributable to
ordinary
shareholders
Issue of share - 26.8 26.8
capital
Market value 41.0 41.0
and currency
adjustment of
listed
investments
Currency and 153.8 153.8
translation
adjustment on
foreign
investments and
subsidiaries
Balance at 30 13.3 589.6 545.7 8 135.4 9 284.0
June 2002
Dividends paid (1 730.7) (1 730.7)
Net profit 2 011.0 2 011.0
attributable to
ordinary
shareholders
Issue of share - 0.5 0.5
capital
Market value (122.9) (122.9)
and currency
adjustment of
listed
investments
Currency and (293.7) (293.7)
translation
adjustment on
foreign
investments and
subsidiaries
Balance at 31 13.3 590.1 129.1 8 415.7 9 148.2
December 2002
Cash Flow Statement
Six months to Six months to Year to
31 December 31 December 30 June
2002 2001 2002
Rand million (Unaudited) (Unaudited) (Audited)
Net cash from operating 1 648.2 414.9 4 155.2
activities
Net cash used in (876.4) (886.9) (1 735.5)
investing activities
Net cash used in (1 603.3) (1 591.6) (2 307.0)
financing activities
Decrease in cash and cash (831.5) (2 063.6) 112.7
equivalents
Cash at the beginning of 3 150.3 3 037.6 3 037.6
the period
Cash at the end of the 2 318.8 974.0 3 150.3
period
Statistics
Six months Six months Year to
to to
31 December 31 December % 30 June
2002 2001 change 2001
Gross
refined
platinum
production
Total (`000 oz) 773 680 13.7 1 387
Impala (`000 oz) 545 507 7.5 1 025
IRS (`000 oz) 228 173 31.8 362
Group
consolidated
statistics
Average (R/$) 10.09 9.06 11.4 10.16
exchange
rate
achieved
Closing rate (R/$) 8.56 12.00 (28.7) 10.32
on 31
December/30
June
Revenue per ($/oz) 927 936 (1.0) 934
platinum
ounce sold
(R/oz) 9 353 8 480 10.3 9 489
Tons milled (`000 t) 8 900 7 970 11.7 15 607
ex-mine
Pgm refined (`000 oz) 1 486 1 292 15.0 2 639
production
Capital (Rm) 727 528 37.6 1 250
expenditure
Impala
business
segment
Tons milled (`000 t) 7 897 7 519 5.0 14 850
ex-mine
Total costs (R/t) 253 226 (12.2) 239
per ton
milled
($/t) 25 24 (3.5) 24
Pgm refined (`000 oz) 1 019 931 9.5 1 895
production
Cost per pgm (R/oz) 1 964 1 824 (7.6) 1 872
ounce
refined
($/oz) 196 197 0.6 185
Cost per
platinum
ounce
refined
Cash cost (R/oz) 3 672 3 350 (9.6) 3 459
($/oz) 367 360 (1.8) 341
Net of (R/oz) 183 (515) (135.5) (708)
revenue
received
from other
metals
($/oz) 18 (56) (132.7) (70)
Capital (Rm) 464 409 (13.4) 1 009
expenditure
Total Impala (`000) 28.6 27.9 (2.5) 27.9
labour
complement
Dividend
Six months to Six months to Year to
31 December 31 December % 30 June
2002 2001 Change 2002
Dividends per (cents) 2 600 2 380 9.2 3 480
share declared
and paid
Dividends per (cents) 900 1 100 (18.2) 3 700
share proposed
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 2002 and conform with IAS 34 on Interim Financial Reporting.
The increase in amortisation is as a result of higher production volumes and
commencement of production from capacity extension projects.
Higher secondary taxation on companies (STC) for the period ended 31 December
2002, due to lower dividend income and higher dividend payments, contributed to
increased taxation.
During the period under review, the group acquired additional shareholdings as
follows:
- a further 21% in Zimbabwe Platinum Mines Limited for R209.2 million (AU
$35.3 million). Consequently the company`s results were consolidated from
September 2002 (whereas previously results had been equity accounted), and
- an additional 15% stake in ZCE Platinum Limited, which owns Mimosa, for
R130.4 million (GBP 8.0 million) which increased the holding to 50% and
consequently the company`s results were proportionally consolidated from July
2002 (whereas previously results had been equity accounted).
The impact of the increased shareholdings resulted in the following changes to
the group`s balance sheet:
- Fixed assets increased by approximately R1 billion.
- Long-term loans increased by R68 million.
- Outside shareholders` interest in these companies amounts to R513 million.
Investments are both listed and unlisted. The directors have valued the unlisted
investments at book value (R1 975 million) and the listed investments are valued
at market value (R300 million), by reference to stock exchange quoted prices and
the closing exchange rate.
Accounting convention dictates that the group`s investment in Lonplats is
carried on the balance sheet at a book value of R1 171 million. By using the
market capitalisation of its holding company (Lonmin Plc), and applying the same
references as above, the Implats 27.1% holding reflects a value of approximately
R5.9 billion.
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 15.4% per annum. All are repayable on 30 June 2004.
Capital expenditure approved at 31 December 2002 amounted to R3 642 million, of
which R1 194 million is already committed. This expenditure, over a period of 5
years, will be funded internally and, if necessary, from borrowings.
Contingent liabilities at 31 December 2002, arising mainly from collateral
security for employee housing, amounted to R8.4 million.
Certain guarantees were in place as at 31 December 2002:
- The company has provided a guarantee up to 30% of a facility, made
available by ABSA to Makwiro Platinum Mines (Private) Limited. As at 31 December
2002, the guarantee amounted to R82.9 million (US$9.7 million). The guarantee is
set to expire by September 2004.
- The company has provided a guarantee to Investec Bank Limited on behalf of
Aquarius Platinum (South Africa) (Proprietary) Limited for a loan facility
granted of R175.0 million, of which R124.8 million has been utilised at 31
December 2002. This guarantee is set to expire upon completion of certain
project completion tests, relating to the Marikana project, which is expected to
be no later than the end of calendar year 2004.
- A loan facility of R92.8 million has been guaranteed in favour of banking
institutions, available for utilisation by Lonplats (comprising Western Platinum
Limited and Eastern Platinum Limited). The full amount has been utilised at 31
December 2002. The guarantee is set to expire by September 2005.
Currency and translation reserves were adjusted primarily as a result of the
stronger Rand as at 31 December 2002.
The market value and currency adjustment of listed investments relates primarily
to a currency adjustment with respect to the group`s holding in Aquarius
Platinum Limited.
The calculation of headline earnings per share has been changed to conform with
the JSE Securities Exchange South Africa requirements. Headline earnings per
share reflects an adjustment for the amortisation of goodwill which amounts to
R13.5 million (2001: R7.4 million).
Interim dividend no. 70 of 900 cents per share, amounting to R599.1 million, was
approved by the board of directors on 11 February 2003; STC on this dividend
will amount to R64.7 million.
The Market
Sales held up well, despite the global economic malaise. Platinum prices rose
23% in dollar terms and by 32% in rand terms compared to the corresponding
period under review. However, the dollar revenue per platinum ounce sold was
down 1%.
The strength of the market was particularly marked for platinum, where robust
automotive sales - which were incentive-driven in the US - belied poor economic
conditions in first world markets. The threat of war and escalating oil prices,
as well as the delays in Anglo Platinum`s expansion program has assisted in
supporting the price further.
Chinese jewellery consumption grew by nearly 20% in 2002. Should prices remain
at the current high levels, this trend could be reversed.
The overall outlook for platinum remains positive as the fundamentals remain
sound.
Palladium`s woes continued with ample supply outstripping demand as consumer
destocking continued and the full effects of substitution were felt. A swing
back to palladium in the automotive industry in the long term has become a
reality, as users are encouraged by lower prices and abundant supply.
Producer selling continued to put pressure on the rhodium price, although demand
continued to hold firm. This trend is likely to continue as rhodium demand
remains underpinned by the automotive industry.
Financial Review
Compared to the corresponding period last year which now includes the results of
the Zimbabwe operations:
- Turnover rose by close on 21% to R6 410.7 million on the back of a 13%
increase in sales volumes and higher rand metal prices.
- Cost of sales increased by 24% to R3 375.9 million as a result of a 15%
rise in PGM production and inflation-related increases.
However, unit costs for the Impala Lease Area more truly represent the
underlying performance of the company, rising by only 9.6% overall - this was
lower than the CPIX which was 12.4% for the same period.
- The exchange rate translation loss for the period amounted to R211 million
versus a gain of R274 million the previous six months. The net variance was R485
million. At the date of the previous valuation of debtors/advances on 31
December 2001, the rand dollar exchange rate was 12.00 This compares with a
corresponding rate of 8.56 on 31 December 2002.
- The cash position net of short-term debt decreased to R2.2 billion from
R3.1 billion as at 30 June 2002.
- Capital expenditure for the period was R727 million (2001: R528 million),
and is anticipated to be R1.2 billion in the second half of the year.
Contributions to attributable income from the various Rm
companies are listed below:
Impala Platinum Limited 1 544
Lonplats (comprising Western Platinum Limited and Eastern 368
Platinum Limited)
Aquarius Platinum (South Africa) (Proprietary) Limited 34
Zimbabwe Platinum Mines Limited/Makwiro Platinum Mines 30
(Private) Limited
Impala Refining Services Limited 17
ZCE Platinum Limited (Mimosa) 11
Barplats Investments Limited 7
2 011
Mining and refining activities
Implats` business is managed in two core areas of activity, namely mining
operations and Impala Refining Services (IRS), which undertakes life of mine
offtake refining and toll refining services.
Contributions to attributable platinum production from the various companies are
listed below (`000 oz):
31 December 31 December
2002 2001
Impala 545 507
IRS 228 173
Barplats 16 21
Zimplats/Makwiro 35 1
Mimosa 8 8
Aquarius 66 55
Other 103 88
Lonplats (27%) 114 112
Total ounces in which Implats group has 887 792
an economic interest
Less: Lonplats (114) (112)
Gross Implats production 773 680
Less: Returned metal for IRS toll (86) (83)
contracts
Retained for sale by Implats group 687 597
Impala Platinum
Safety efforts continued during the year with some degree of success as key
safety indicators continued in a downward trend. Particularly notable was the
success of the Fall of Ground safety campaign which was launched during the past
year, and which has resulted in a dramatic improvement. The incidence of large
falls of ground has decreased by almost 95%. This vindicates the drastic steps
taken by Impala in May 2002 when the company voluntarily closed 11 shaft to
undertake stringent safety audits.
Sadly and despite the increased emphasis on safety which resulted in a 40%
reduction in the lost-time injury frequency rate, three employees lost their
lives during the period due to mining-related accidents. The Board and
management of Implats extend their condolences to the families and colleagues of
the deceased.
On an operational front, mining operations on the Impala Lease Area progressed
well with tonnes mined up by some 9.6%.
Tonnes milled rose by some 5%, with platinum production reaching 545 000oz for
the half-year. On-mine unit costs were well-contained, rising by 9.6% per
platinum ounce and 7.6% per PGM ounce.
On the growth front, the decline projects remain on track and within budget.
Capital expenditure totalled R464 million on the lease area for the period.
Impala`s processing and refining assets continued to deliver a superior
performance. Not only were recoveries commendable, but unit costs increased by
only 4% as gross throughput (which includes throughput through IRS) rose by 14%.
A R200 million capital expenditure programme is underway at the refineries to
cater for Implats longer term growth ambitions.
Marula Platinum
At Marula Platinum, development is progressing well with commissioning
proceeding on time and within budget. Stockpiles are currently being built up in
anticipation of plant commissioning in September 2003, with the first stoping
activities scheduled for October 2003.
Crocodile River Mine
Crocodile River Mine, part of the Barplats group, which is 83% held by Implats,
turned in a disappointing performance for the period. Shareholders are referred
to a separate, fuller announcement made by Barplats in this regard. Tonnes
milled decreased significantly as the mining operation encountered difficult
geological conditions causing a decrease in volumes mined. Platinum ounces in
concentrate fell by 25% to 16 290oz, with a resultant loss in attributable
income of R17 million. The impact on Implats is minimal.
Impala Refining Services (IRS)
IRS produced another sterling performance for the year, with platinum production
increasing by 32%. Accordingly, revenue rose to R1 500 million. However,
translation exchange rate losses of R148 million for the six months ended 31
December 2002 (2001: R212 million gain), relating to dollar advances to
customers, had a major impact on attributable income.
Strategic interests and alliances
Implats` relationships with and interests in strategic alliance partners remain
an important element in the company`s operating and growth strategy.
Particularly good earnings continue to be made by Lonplats with a net
contribution of R368 million. The group`s interests in Zimbabwe continue to show
good growth and operations are proceeding as planned. An issue of concern is the
foreign exchange situation in Zimbabwe at present, which is being addressed by
the Zimbabwe government. These investments remain of strategic importance in the
longer term.
Corporate issues/activity
A number of additional issues have had an impact on or have formed a part of the
company`s strategy during the period under review.
- Progress in the Gencor unbundling will have a major and positive impact on
the group.
- Implats has made good progress with the implementation and measurement of
its Black Economic Empowerment policy and scorecard. The company`s BEE policy is
founded on five key elements, namely equity ownership, employment equity,
training and development, affirmative procurement and enterprise development.
Another BEE initiative announced during the period was the agreement to sell up
to 25% of the Two Rivers project to a BEE company, Tiso Capital. With this, and
other initiatives in place or planned, Implats is well-placed to measure up to
the BEE scorecard.
- On the issue of HIV/AIDS, Impala provides a comprehensive programme
including the provision of anti-retroviral therapy (ART) to employees.
- Implats upgraded to a sponsored ADR programme in the US to enhance further
the tradeability of its share in the largest global equity market.
Prospects
- Implats anticipates that the platinum market will remain firmly underpinned
by continued fundamental demand.
- The group`s growth strategy is on track to deliver 2 million ounces of
platinum by 2006 and is a high margin, cash generating business and remains well
placed to continue to deliver shareholders` value.
- Ongoing cost control, is a critical focus for the group.
- Given the current strength of the South African currency, the group
anticipates earnings significantly down on 2002 levels.
P G Joubert
Chairman
K C Rumble
Chief Executive Officer
Johannesburg
12 February 2003
Declaration of Interim Dividend
An interim dividend of 900 cents per share has been declared in respect of the
half-year ended 31 December 2002. The last day to trade ("cum" the dividend) in
order to participate in the dividend will be Friday 7 March 2003. The share will
commence trading "ex" the dividend from the commencement of business on Monday
10 March 2003 and the record date will be Friday 14 March 2003.
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 12 March 2003 or on the first day thereafter
on which a rate of exchange is available.
The dividend will be paid on Monday 17 March 2003. Share certificates may not be
lodged with the transfer secretaries for dematerialisation/rematerialisation, no
may transfers between registers take place during the period Monday, 10 March
2003 to Friday, 14 March 2003, both dates inclusive.
By order of the board
A M SNASHALL
Group Secretary
Johannesburg
12 February 2003
Registered Office
3rd Floor, Old Trafford 4, Isle of Houghton
Boundary Road, Houghton 2198
(P.O. Box 61386, Marshalltown 2107)
Transfer Secretaries
South Africa:
Computershare United Kingdom: Lloyds TSB
Investor Services Limited Registrars
70 Marshall Street The Causeway, Worthing
Johannesburg 2001 West Sussex
(P.O. Box 10651, BN99 6DA
Johannesburg
2000)
A copy of this 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
Date: 12/02/2003 08:00:00 AM Produced by the JSE SENS Department
|