Implats - Consolidated Annual Results Audited for the year ended 30 June 2003
Impala Platinum
Holdings Limited
(Incorporated in the Republic of South Africa)
Registration No. 1957/001979/06
Share code: IMP
Issuer Code: IMPO
ISIN: ZAE 000003554
("Implats")
Consolidated Annual Results Audited
for the year ended 30 June 2003
Key Features
* Gross platinum production up by 21%
* Sales revenue decreased by 1%
* Gross margins healthy at 43%
* Net profit down 25% due to rand appreciation
* Impala refined cost per platinum ounce up by 11%
* Safety improved by more than 30%
Income Statement
Year ended Year ended
30 June 30 June
(all amounts in Rand millions) 2003 2002
Sales 11 807.0 11 901.5
On-mine operations (3 251.1) (2 567.5)
Concentrating and smelting operations (801.1) (642.6)
Refining operations (411.5) (354.7)
Amortisation of mining assets (452.4) (248.8)
Metals purchased (1 474.1) (1 883.4)
Other operating expenses (252.6) (203.9)
(Increase)/decrease in metal inventories (133.1) 136.0
Total operating expenses (6 775.9) (5 764.9)
Profit from operations 5 031.1 6 136.6
Net foreign exchange transaction (328.8) 130.8
(losses)/gains
Other expenses (54.7) (98.0)
Finance income - net 285.8 265.5
Share of results of associates before tax 1 039.3 1 102.9
Royalty expense (598.0) (804.4)
Profit before tax 5 374.7 6 733.4
Income tax expense (1 936.4 (2 142.0)
Profit before minority interest 3 438.3 4 591.4
Minority interest (23.2) (9.9)
Net profit 3 415.1 4 581.5
Earnings per share (expressed in cents per
share)
- basic 5 131 6 902
- diluted 5 119 6 881
Headline earnings per share (expressed in
cents per share)
- basic 5 140 6 877
- diluted 5 128 6 865
Dividends paid to group shareholders
- final dividend June 2003/2 per share 1 750 2 600
proposed (cents)
- interim dividend paid December 2002/1 per 900 1 100
share (cents)
2 650 3 700
Balance Sheet
As at As at
30 June 30 June
(all amounts in Rand millions) 2003 2002
ASSETS
Non-current assets
Property, plant and equipment 8 808.9 6 218.4
Investments in associates and joint 2 208.9 2 502.8
ventures
Available-for-sale-investments 229.7 426.3
Held-to-maturity-investment 74.9 60.9
Receivables and prepayments 68.8 115.7
11 391.2 9 324.1
Current assets
Inventories 847.4 920.1
Receivables and prepayments 1 706.2 1 377.9
Cash and cash equivalents 2 324.5 3 150.3
4 878.1 5 448.3
Total assets 16 269.3 14 772.4
SHAREHOLDERS" EQUITY
Ordinary shares 13.3 13.3
Share premium 604.5 589.6
Fair value and other reserves 38.8 545.7
Retained earnings 9 220.8 8 135.4
Total shareholders" equity 9 877.4 9 284.0
Minority interest 418.9 61.6
LIABILITIES
Non-current liabilities
Borrowings 62.7 86.3
Deferred tax liabilities 1 886.7 1 389.6
Retirement benefit obligations 63.5 66.9
Provisions 200.2 140.6
2 213.1 1 683.4
Current liabilities
Trade and other payables 2 844.5 2 458.1
Current tax liabilities 710.7 1 258.5
Borrowings 204.7 26.8
3 759.9 3 743.4
Total liabilities 5 973.0 5 426.8
Total equity and liabilities 16 269.3 14 772.4
These financial statements have been approved for issue by the Board of
Directors on 28 August 2003.
Statement of Changes in Shareholders" Equity
Fair
value
and
(all amounts in Share Share other Retained Total
Rand millions) capital premium reserves earnings
Balance at 30 13.3 562.8 285.1 5 863.2 6 724.4
June 2001
Market value
adjustment of
available-for- 107.8 107.8
sale-investments
Currency and
translation
adjustment on
foreign
investments 152.8 152.8
Net gains not
recognised in
net profit 260.6 260.6
Dividend relating (1 579.1) (1 579.1)
to 2001
Dividend relating (730.2) (730.2)
to 2002
Net profit 4 581.5 4 581.5
Issue of share
capital
- share options - 26.8 26.8
Balance at 30 13.3 589.6 545.7 8 135.4 9 284.0
June 2002
Market value
adjustment of
available-for- (192.8) (192.8)
sale-investments
Currency and
translation
adjustment on (314.1) (314.1)
foreign
investments
Net losses not
recognised in
net profit (506.9) (506.9)
Dividend relating (1 730.4) (1 730.4)
to 2002
Dividend relating (599.3) (599.3)
to 2003
Net profit 3 415.1 3 415.1
Issue of share
capital
- share options - 14.9 14.9
- 14.9 (506.9) 1 085.4 593.4
Balance at 30 13.3 604.5 38.8 9 220.8 9 877.4
June 2003
Cash Flow Statement
Year ended Year
ended
30 June 30 June
(all amounts in Rand millions) 2003 2002
Cash flows from operating activities
Cash generated from operations 4 357.4 5 617.0
Interest paid (20.7) (15.7)
Taxation paid (1 823.5) (1 733.3)
Net cash from operating activities 2 513.2 3 868.0
Cash flows from investing activities
Acquisition of subsidiary and joint
venture,
net of cash acquired (110.4) -
Purchase of property, plant and equipment (1 754.9) (1 256.0)
Proceeds from fixed assets disposed 43.3 10.0
Purchase of investments in associates 425.2 (1 114.0)
Loans repaid 18.5 120.6
Payments made for post-retirement benefits (6.7) (2.2)
Payments made for rehabilitation (15.4) -
Payments made to environmental trust (8.9) (9.0)
Interest received 301.4 287.2
Dividends received 192.4 515.1
Net cash used in investing activities (847.9) (1 448.3)
Cash flows from financing activities
Issue of ordinary shares 14.9 26.8
Repayments/(proceeds) from short-term (152.7) 2.3
borrowings
Repayments of long-term borrowings (23.6) (26.8)
Dividends paid to group shareholders (2 329.7) (2 309.3)
Net cash used in financing activities (2 491.1) (2 307.0)
Net (decrease)/increase in cash and cash (825.8) 112.7
equivalents
Cash and cash equivalents at beginning of 3 150.3 3 037.6
year
Cash and cash equivalents at end of year 2 324.5 3 150.3
Summary of business segments
Year ended Impala Inter
30 June Impala Zimbabwe Refining segment
2003 Platinum Barplats Operations Services adjustment Total
Sales 11 340.7 154.6 696.1 2 913.8 (3 298.2) 11
807.0
Profit 4 436.8 (43.6) 184.4 491.3 (37.8) 5 031.1
from
operations
Notes
The consolidated annual financial statements are prepared on the historical cost
basis. Accounting principles and policies used, comply with South African
Generally Accepted Accounting Practices and International Financial Reporting
Standards and are consistent with the accounting policies applied in the
previous year. Where necessary comparative figures have been adjusted to conform
with changes in presentation in the current year.
The financial statements have been audited by PricewaterhouseCoopers Inc. whose
opinion is available for inspection at the registered office of Implats.
The calculation of Headline Earnings per share is derived from consolidated net
profit of R3 415.1 million (2002: R4 581.5 million) adjusted for any non-
operational gains and losses, divided by the weighted average number of shares
in issue. Adjustments were made for amortisation of goodwill R6.8 million (2002:
R9.2 million), sale of investment in Brandrill Limited R0.6 million (2002:
impairment of Brandrill Limited investment R27.7 million) and profit on sale of
Kroondal shares in 2002 of R53.5 million.
During the period under review, the group acquired additional shareholdings as
follows:
* a further 21% in Zimbabwe Platinum Mines Limited( Zimplats) 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)
* at year end, the ABSA share in Zimplats held through Impala Platinum
Zimbabwe (Proprietary) Limited for R142.0 million. As a result, the previous
equity accounted investment in Makwiro Platinum Mines (Private) Limited was
included in the consolidation of Zimplats
* an additional 15% stake in ZCE Platinum Limited, which owns Mimosa
Platinum, Private Limited, 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).
Borrowings consist of:
* debentures of R85,8 million (2002: R112.6 million) secured by a pledge of
freehold properties, included in mining assets, with a book value of R178
million (2002: 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.
* a loan from ABSA Bank Limited of R181.3 million (2002: nil) secured by
sales from the Ngezi/SMC project and various pledges of shares of subsidiaries
and guarantees from Zimplats and Impala Platinum Holdings Limited (Implats).
Repayable by March 2005.
Capital expenditure approved at 30 June 2003 amounted to R2869.0 million of
which R986.3 million is already committed. This expenditure over a 5 year period
will be funded internally and if necessary from borrowings.
Certain guarantees were in place as at 30 June 2003:
* Implats has provided a guarantee up to 30% of a facility, made available by
ABSA to Makwiro Platinum Mines (Private) Limited. As at 30 June 2003, the
guarantee amounted to R73.0 million (US$9.7 million) (2002: 90.1 million) (US$
8.7 million). The guarantee is set to expire by September 2004.
* Implats 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 (2002: R175 million), of which R175.0 million has been
utilised at 30 June 2003 (2002: R124.8 million).
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 R81.5 million (2002: R111.4 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 30 June 2003 (2002: nil). The guarantee is set to
expire by September 2005.
Operating statistics
for the year ended 30 June %
2003 2002 change
Gross refined production
Platinum ("000 oz) 1 673 1 387 20.6
Palladium ("000 oz) 893 732 22.0
Rhodium ("000 oz) 215 177 21.5
Nickel ("000 t) 14.7 13.0 13.1
Impala refined production
Platinum ("000 oz) 1 040 1 025 1.5
Palladium ("000 oz) 478 489 (2.2)
Rhodium ("000 oz) 134 123 8.9
Nickel ("000 t) 8.0 7.7 3.9
IRS refined production
Platinum ("000 oz) 633 362 74.9
Palladium ("000 oz) 415 243 70.8
Rhodium ("000 oz) 81 54 50.0
Nickel ("000 t) 6.7 5.3 26.4
IRS returned metal (toll
refined)
Platinum ("000 oz) 252 152 65.8
Palladium ("000 oz) 174 102 70.6
Rhodium ("000 oz) 18 16 10.5
Nickel ("000 t) 0.9 0.7 28.6
Group consolidated
statistics
Exchange rate: (R/US$)
Closing rate on 30 June 7.52 10.32 (27.1)
Average rate achieved 9.06 10.16 (10.8)
Free market revenue per
platinum ounce sold ($/oz) 939 934 0.5
Revenue per platinum
ounce sold ($/oz) 935 934 0.1
Prices achieved
Platinum ($/oz) 597 485 23.1
Palladium ($/oz) 264 389 (32.1)
Rhodium ($/oz) 646 1 098 (41.2)
Nickel ($/t) 7 664 5 594 37.0
Sales volumes
Platinum ("000 oz) 1 373 1 251 9.8
Palladium ("000 oz) 688 663 3.8
Rhodium ("000 oz) 193 165 17.0
Nickel ("000 t) 13.9 12.0 15.8
Gross margin achieved (%) 42.6 51.6 (17.4)
Return on equity (%) 36.8 68.2 (46.0)
Return on assets (%) 30.0 49.1 (38.9)
Debt to equity (%) 2.7 1.2 (125.0)
Current ratio 1.3:1 1.5:1 (13.3)
Tonnes milled ex mine ("000 t) 17 483 15 607 12.0
Pgm refined production ("000 oz) 3 162 2 639 19.8
Capital expenditure (Rm) 1 787 1 250 (43.0)
(US$m) 198 123 (61.0)
Impala business segment
Tonnes milled ex mine ("000 t) 15 042 14 850 1.3
Total cost per tonne (R/t) 265 239 (10.9)
milled
($/t) 29.4 23.6 (24.6)
Pgm refined production ("000 oz) 1 924 1 895 1.5
Cost per Pgm ounce refined (R/oz) 2 072 1 872 (10.7)
($/oz) 230 185 (24.3)
Cost per pt oz refined
Total cost of operations (R/oz) 3 832 3 459 (10.8)
($/oz) 425 341 (24.6)
Net of revenue received
for other metals (R/oz) 899 (708) (227.0)
($/oz) 100 (70) (242.9)
Capital expenditure (Rm) 1 079 1 009 (6.9)
(US$m) 120 100 (20.0)
Total Impala labour ("000) 28.4 27.9 (1.3)
complement
M2 per stoping employee (m2/empl) 40.7 40.2 1.2
Extracts from the Annual Report
Operationally and financially in the year under review, your company has shown
considerable resilience in the face of a range of challenges, with net profit of
R3.4 billion and headline earnings of 5 140 cents per share. As a result, the
Board has declared a final dividend of 1 750 cents per share, bringing the total
dividend for the year to 2 650 cents per share. Attention to the bottom line has
not prevented solid progress towards growth, both in South Africa and beyond.
The strengthening of the rand against the US dollar has militated against our
operational efforts, even though platinum production reached record levels.
While the platinum price in US dollar terms remained strong throughout FY2003,
palladium and rhodium prices declined and, combined with the stronger rand, this
helped to drive the average basket price down 11% in rand terms. Consequently
this led to a decrease in earnings.
Seen in context, though, your company has continued to deliver a superior market
performance, for which it was recognised - for the second consecutive year - by
the Financial Mail as the top performing company on the JSE Securities Exchange
based on returns to shareholders over a five-year period. Significantly, the
total return to shareholders (combining appreciation in share price and
dividends paid) reflects a compounded average growth of 64% a year over the last
five years.
FY2003 was not without its challenges, both from factors internal and external
to the company. Our results reflect this:
* Gross platinum production rose by 21% to a record 1.67 million ounces.
* Dollar platinum prices held up well. The average price received for the year
was $597 per platinum ounce, up 23% on the previous year. On the flip side, the
average prices for palladium and rhodium declined by 32% and 41% to $264 and
$646 per ounce respectively.
* The continued strong performance of the rand meant that while average dollar
revenue per platinum ounce sold was maintained, average rand revenue received
per platinum ounce decreased by 11%.
* Net profit declined by 25% to R3.4 billion.
* Cash operating cost per ounce of refined platinum rose by 10.8% to R3 832. The
steep rise in steel prices and additional support costs impacted negatively, as
did the 10-day work stoppage experienced in March.
* Despite significant pressures, the overall margin for the year was maintained
above 40%.
* A final dividend of 1 750 cents per share has been proposed, bringing the
dividend for the year to 2 650 cents per share. This represents a dividend yield
of 4.6%.
It is gratifying to note significant improvements in our group"s safety
performance. We deeply regret, however, that eight employees died at work during
the year. In expressing my sympathy to the families and friends of those who
have died, we are reminded that we simply cannot afford complacency on matters
of safety at any level in our organisation.
Two events served to increase the liquidity of the company"s shares during the
year. First, an upgraded Level 1, sponsored ADR programme initiated in January
2003 has contributed towards the satisfactory increase in the offshore
shareholder base. Second, the unbundling of Gencor"s 46.3% holding in your
company has also served to improve the liquidity of our shares.
In its drive to meet a production target of two million ounces of platinum by
2006, your company has progressed the Marula Platinum mine and has started
underground development and integrated production is expected to be both on time
and within budget, by the end of calendar year 2003. Further, we became the
controlling shareholder of Zimbabwe Platinum Mines Limited (Zimplats), owner of
Makwiro Platinum Mines (Pvt) Limited which comprises the Ngezi Mine and Selous
Metallurgical Complex. An offer to minority shareholders, recommended by the
independent Zimplats directors, will close on 29 August 2003. The offer, while
generous, was intended to achieve for your company greater access to the world"s
second largest PGM deposit at a cost equivalent to US$1.35 per platinum ounce.
At the same time, discussions have progressed with Lonmin as the opportunity to
examine this investment arose out of Lonplats" need to empower their business.
The Zimplats" acquisition and the Lonplats" discussions have unleashed expansion
opportunities for assets directly under management, while allowing the
opportunity to rationalise Implats" structure.
Ongoing legislative change in South Africa"s mining sector continues to pre-
occupy both producers and investors. We are confident of your company"s ability
to meet the Black Economic Empowerment requirements of both the Minerals and
Petroleum Resources Development Act and the Broad-Based Socio-Economic Charter
for the Mining Industry.
The draft Royalty Bill has raised new, entirely legitimate investor concerns.
Broadly interpreted, its actions seemingly fly in the face of the developmental
imperatives of both the Act and the Charter. Again, we have actively voiced our
concerns and are optimistic these will be heard and acted upon.
Towards year-end, we announced the resignation of Kgosi Leruo Molotlegi as the
Royal Bafokeng Nation"s nominee to the Board and the appointment in his stead of
his alternate, Mr Thabo Mokgatlha. Kgosi Molotlegi has played an important and
constructive role in the evolving relationship between your company and the
Royal Bafokeng Nation, for which we are grateful. We wish him well as he takes
up the exciting new challenges presented by his enthronement in August.
The prospects for Implats remain good both in the short and medium term, as
existing operations continue to perform well and new projects come on stream,
with the fundamental demand for our primary products remaining strong.
Predicting the performance of the rand is not something we profess to be expert
at. Although we believe that further strengthening of the rand in the year ahead
is unlikely, the anticipated exchange rate for the forthcoming year is still
expected to be stronger than the average rate of R9.06/$ achieved last year.
Shareholders should note that the average exchange rate prevailing for the
second half of the year was R8.08/$.
Consequently, in the absence of a sudden and unexpected weakening of the
currency, earnings for the coming year are likely to be lower than the results
we have reported.
P G Joubert K C Rumble
Chairman Chief Executive Officer
28 August 2003
Declaration of Final Dividend
A final dividend of 1 750 cents per share has been declared in respect of the
year ended 30 June 2003. The last day to trade ("cum" the dividend) in order to
participate in the dividend will be Thursday, 18 September 2003. The share will
commence trading "ex" the dividend from the commencement of business on Friday,
19 September 2003 and the record date will be Friday, 26 September 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 25 September 2003 or on the first day
thereafter on which a rate of exchange is available.
The dividend will be paid on Monday, 29 September 2003. Share certificates may
not be lodged with the transfer secretaries for
dematerialisation/rematerialisation during the period Friday, 19 September 2003
to Friday, 26 September 2003, both dates inclusive.
By order of the board
A M Snashall
Group Secretary
Johannesburg
28 August 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
Limited
70 Marshall Street
Johannesburg 2001
(P.O. Box 61051, Marshall Town
2107)
United Kingdom: Lloyds TSB Registrars
The Causeway, Worthing
West Sussex
BN99 6DA
Date: 28/08/2003 08:00:16 AM
Produced by the JSE SENS Department
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