IMPALA PLATINUM HOLDINGS LIMITED - INTERIM RESULTS FOR THE SIX MONTHS ENDED 31
IMPALA PLATINUM HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration No. 1957/001979/06
JSE code: IMP
Issuer Code : IMPO
ISIN: ZAE 000003554
Consolidated interim results for the six months ended 31 December 2003
* Gross platinum production up 39%
* Overall PGM production up 35% - including non-recurring Lonplats material
* Rand basket prices down by 24% in spite of high dollar platinum price
* Margins remain healthy at 31%
* Unit cost increases of 8.4%
* Earnings down largely due to currency appreciation
* Interim dividend of R5 per share declared
* 82% of Zimplats secured
Six months Six months Year to
31 December 31 December 30 June
(all amounts in 2003 2002 % 2003
Rand millions) (Unaudited) (Unaudited) change (Audited)
Sales 5 632.4 6 410.7 (12.1) 11 807.0
On-mine operations (1 692.9) (1 591.9) (6.3) (3 251.1)
Concentrating and (490.3) (376.6) (30.2) (801.1)
Refining operations (228.3) (202.1) (13.0) (411.5)
Amortisation of (258.9) (176.1) (47.0) (452.4)
Metals purchased (1 302.7) (843.7) (54.4) (1 474.1)
Other operating (166.9) (140.6) (18.7) (252.6)
Increase/(decrease) 229.9 (44.9) (612.0) (133.1)
Total operating (3 910.1) (3 375.9) (15.8) (6 775.9)
Profit from 1 722.3 3 034.8 (43.2) 5 031.1
Net foreign (133.0) (210.9) 36.9 (328.8)
Other expenses (8.7) (25.2) 65.5 (54.7)
Finance income - 37.2 168.7 (77.9) 285.8
Share of results of 263.8 635.5 (58.5) 1 039.3
Royalty expense (157.9) (394.1) 59.9 (598.0)
Profit before tax 1 723.7 3 208.8 (46.3) 5 374.7
Income tax expense (661.0) (1 160.2) 43.0 (1 936.4)
Profit before 1 062.7 2 048.6 (48.1) 3 438.3
Minority interest (1.9) (37.6) - (23.2)
Net profit 1 060.8 2 011.0 (47.3) 3 415.1
Earnings per share
(expressed in cents
- basic 1 593 3 021 (47.3) 5 131
- diluted 1 589 3 015 (47.3) 5 119
(expressed in cents
- basic 1 604 3 042 (47.3) 5 140
- diluted 1 600 3 035 (47.3) 5 128
Weighted average 66.6 66.6 - 66.6
number of shares in
As at As at As at
31 December 31 December 30 June
(all amounts in 2003 2002 2003
Rand millions) (Unaudited) (Unaudited) (Audited)
Property, plant and 9 758.6 7 947.8 8 808.9
Investments 2 473.5 2 274.8 2 513.5
Other non-current assets 63.8 265.1 68.8
Current assets 3 893.8 4 650.2 4 878.1
Total assets 16 189.7 15 137.9 16 269.3
Capital and reserves 9 680.5 9 148.2 9 877.4
Minority interest 146.6 574.7 418.9
Provision for long-term 263.7 212.3 263.7
Borrowings - 154.1 62.7
Deferred tax liabilities 2 151.6 1 483.2 1 886.7
Current liabilities 3 947.3 3 565.4 3 759.9
Total equity and liabilities 16 189.7 15 137.9 16 269.3
Summary of business segments for the half year ended 31 December 2003:
(all amounts in Impala Zimbabwe
Rand millions) Platinum Barplats Operations
Sales 5 300.3 109.4 414.3
Segment operating expenses 4 042.6 115.5 272.6
Profit/(loss) from operations 1 257.7 (6.1) 141.7
Summary of business segments for the
half year ended 31 December 2002:
Sales 6 217.4 107.8 270.8
Segment operating expenses 3 501.2 107.3 165.2
Profit/(loss) from operations 2 716.2 0.5 105.6
(all amounts in Refining Segment
Rand millions) Services Adjustment Total
Sales 1 708.6 (1 900.2) 5 632.4
Segment operating expenses 1 334.7 (1 855.3) 3 910.1
Profit/(loss) from operations 373.9 (44.9) 1 722.3
Summary of business segments for the
half year ended 31 December 2002:
Sales 1 498.5 (1 683.8) 6 410.7
Segment operating expenses 1 284.3 (1 682.1) 3 375.9
Profit/(loss) from operations 214.2 (1.7) 3 034.8
Statement of Changes in Shareholders" Equity
(all amounts in Share Share other Retained
Rand millions) capital premium reserves earnings Total
Balance at 31 13.3 590.1 129.1 8 415.7 9 148.2
Market value (69.9) (69.9)
Currency and (20.4) (20.4)
Net losses not (90.3) (90.3)
Dividend (599.3) (599.3)
Net profit 1 404.4 1 404.4
Issue of share - 14.4 14.4
capital - share
Balance at 30 13.3 604.5 38.8 9 220.8 9 877.4
Market value 50.5 50.5
Currency and (142.8) (142.8)
Net losses not (92.3) (92.3)
Dividend (1 165.4) (1 165.4)
Net profit 1 060.8 1 060.8
Balance at 31 13.3 604.5 (53.5) 9 116.2 9 680.5
Cash Flow Statement
Six months to Six months to Year to
31 December 31 December 30 June
2003 2002 2003
(all amounts in Rand (Unaudited) (Unaudited) (Audited)
Net cash from operating 574.0 1 648.2 2 513.2
Net cash used in (1 203.9) (876.4) (847.9)
Net cash used in (971.6) (1 603.3) (2 491.1)
Effects of exchange rate (19.9) - -
changes on monetary
Decrease in cash and (1 621.4) (831.5) (825.8)
Cash and cash 2 324.5 3 150.3 3 150.3
equivalents at the
beginning of the period
Cash and cash 703.1 2 318.8 2 324.5
equivalents at the end
of the period
The interim financial statements have been prepared using accounting policies
consistent with those of the annual financial statements for the year ended 30
June 2003, and conform with IFRS on Interim Financial Reporting.
The increase in amortisation results from higher production volumes and
commencement of production from capacity extension projects.
The calculation of headline earnings per share conforms to the JSE Securities
Exchange SA requirements. Headline earnings per share reflects an adjustment for
the amortisation of goodwill, which amounts to R7.4 million (2002: R13.5
During the period under review, the group acquired an additional shareholding in
Zimbabwe Platinum Mines Limited of approximately 32% for R612.7 million (AU
$128.5 million), taking the group"s holdings to over 82%.
Accounting convention dictates that the group"s investment in Lonplats is
carried on the balance sheet at a book value of R1 312 million. By using the
market capitalisation of its holding company (Lonmin Plc), the Implats 27.1%
holding reflects a value of approximately R5 700 million.
The market value and currency adjustment of listed investments relates primarily
to a currency adjustment with respect to the group"s holding in Aquarius
Capital expenditure approved at 31 December 2003 amounted to R3 091 million, of
which R913 million is already committed. This expenditure, over a period of 5
years, will be funded internally and, if necessary, from borrowings.
Contingent liabilities at 31 December 2003 were as follows:
* Impala Platinum Holdings Limited has provided a guarantee up to 30% of a
facility made available by ABSA to Makwiro Platinum Mines (Private) Limited. As
at 31 December 2003, the guarantee amounted to R31.0 million (US$ 4.7 million).
The guarantee is set to expire by September 2004.
* A guarantee has been provided to Investec Bank Limited on behalf of
Aquarius Platinum (South Africa) (Proprietary) Limited for a loan facility
granted of R175.0 million, of which R175.0 million has been utilised at 31
December 2003. This guarantee is set to expire upon satisfactory completion of
certain project tests, relating to the Marikana project.
* A loan facility of R71.6 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 2003. The guarantee is set to expire by September 2005.
* Collateral security for employee housing amounted to R7.2 million.
Interim dividend no 72 of 500 cents per share, amounting to R333.0 million, was
approved by the board of directors on 12 February 2004; STC on this dividend
will amount to R16.2 million.
months to months to
31 31 % Year to
December December 30 June
2003 2002 change 2003
Impala (000oz) 546 545 0.2 1 040
IRS (000oz) 529 228 132.0 633
Total (000oz) 1 075 773 39.1 1 673
Platinum (000oz) 317 86 268.6 252
Palladium (000oz) 171 51 235.3 174
Rhodium (000oz) 48 7 585.7 18
Nickel (000t) 0.7 0.4 75.0 0.9
Platinum (000oz) 765 677 13.0 1 373
Palladium (000oz) 377 344 9.6 688
Rhodium (000oz) 102 99 3.0 193
Nickel (000t) 7.5 6.6 13.6 13.9
Platinum ($/oz) 707 553 27.8 597
Palladium ($/oz) 195 312 (37.5) 264
Rhodium ($/oz) 482 757 (36.3) 646
Nickel ($/t) 9 600 7 057 36.0 7 664
Average rate (R/$) 7.12 10.09 (29.4) 9.06
Closing rate (R/$) 6.61 8.56 (22.8) 7.52
Revenue per ($/oz) 997 927 7.6 935
(R/oz) 7 099 9 353 (24.1) 8 471
Tons milled (000t) 9 482 8 900 6.5 17 483
Pgm refined (000oz) 2 006 1 486 35.0 3 162
Capital (Rm) 876 727 20.5 1 787
Tons milled (000t) 7 982 7 897 1.1 15 042
Total costs (R/t) 272 253 (7.5) 265
($/t) 38 25 (52.0) 29
Pgm refined (000oz) 1 005 1 019 (1.4) 1 924
Cost per (R/oz) 3 980 3 672 (8.4) 3 832
($/oz) 559 367 (52.3) 425
net of (R/oz) 2 224 183 (1 115.3) 899
($/oz) 312 18 (1 633.3) 100
Capital (Rm) 541 464 16.6 1 079
(US$m) 76 46 65.2 120
Total Impala (000) 27.6 28.6 3.5 28.4
Dividend (cps) 500 900 (44,4) 2 650
Implats" has two major areas of activity, namely, the mining operations, which
includes Impala Platinum, Marula Platinum, Zimplats, Mimosa and Impala Refining
Services (IRS), which houses Implats" offtake and toll refining services.
The focus on safety continued and there was an improvement in both the lost time
injury rate and the reportable injury rate. Regrettably however, four people
lost their lives during the course of work in the six months to December 2003.
The board and management extend their condolences to the families and colleagues
of the deceased. The fall of ground safety campaign and ground control district
programme continued and although these contributed in some measure to the
increase in costs, owing to the additional support which is being installed at
the face, this expense is justified given the contributions these programmes
make to ensuring that the working environment on our mines is safer.
Production at Impala Platinum remained steady and on target. This is in line
with the planned production strategy. Both production from the decline levels
and the mechanised mining programme are on schedule. Shaft sinking at the 12
North decline is on schedule and will be completed in February 2004. Capital
expenditure on these mining operations was R366 million for the period.
The processing and refining operations continued to maintain their high
performance levels. Tonnes milled and recoveries at the concentrator rose while
gross production refined increased by 39%. Refineries continued to outperform
with the gross platinum unit cost decreasing by 18%.
Capital expenditure at the smelter and concentrator amounted to R77 million and
at the refineries to R75 million during the 2004 interim period.
The hot commissioning of the plant began on 19 January 2004 and is proceeding
satisfactorily. The mine continues to produce and stockpile ore. Once
commissioned, the plant will begin processing the 445 000-tonne stockpile that
has been built up. Although the on-reef decline development is behind schedule,
productivity has improved in recent weeks. The mining production schedule is
Following on its offer to minority shareholders in Zimplats, Implats increased
its holding in that company to just over 82%. Negotiations are underway
regarding the sale of a stake in the company to the Needgate consortium (a BEE
entity) and further announcements will be made in this regard in due course.
Smelting problems early in the period and pull forward of the mill reline had a
negative effect on production. Both the smelter and mill are now operating
normally and the backlog of concentrator stocks has been eliminated. A
feasibility study on further expansion is nearing completion.
The business continues to perform satisfactorily despite the current political
and economic situation prevailing in Zimbabwe.
Full production at an annualised capacity of 65 000 ounces of platinum has been
reached and a pre-feasibility study to assess the potential for further
expansion is currently in progress and should be completed in March 2004. A full
feasibility study is expected to be completed by December 2004.
Crocodile River Mine
Implats holds 83% of Barplats, whose wholly-owned operation is the Crocodile
River mine. Following the problems being encountered at Crocodile River, it was
announced on 24 November 2003 that operations at the mine would be suspended.
The geological problems which had hampered mining operations were exacerbated by
the continued strength of the rand and the depressed prices of palladium and
rhodium. These combined to have a significant effect on the profitability and
viability of the operation. The mine was placed on care-and-maintenance and
negotiations on the sale of Barplats are presently continuing.
The carrying value of assets as reflected in the group"s balance sheet continue
to reflect fair value.
IRS"s exceptional performance continued with platinum production rising by 132%
and overall PGM production up 115%, period-on-period. This increase is mainly as
a result of a once-off contract to process 206 000 ounces of platinum from
Lonplats and an increase in supplies of spent autocatalysts for recycling.
Profit from operations rose by 75% to R374 million, however, the stronger rand
resulted in transaction exchange losses of R98 million which had a major impact
on net profit. This transaction loss relates to dollar advances made to
Ongoing solid fundamentals in the platinum market together with renewed investor
interest pushed prices to 23-year highs. The 2003 calendar year was the fifth
consecutive year of supply deficits in the platinum market.
While the strength in the platinum price affected jewellery demand for the year,
the resilience of this market, given the impact of the SARS epidemic as well as
global economic uncertainty, has been remarkable. Once again, ever-stricter
emission legislation and the growth in the popularity of European diesels have
been very supportive of platinum demand.
The average dollar price for the six months to end December 2003 was 28% higher
than for the corresponding period in 2002. Unit sales of platinum rose by 13%
during the period. In contrast, the palladium and rhodium markets continued to
be adequately supplied and the dollar prices received for both these metals
declined by around 38% and 36% respectively.
As with platinum, speculative interest in palladium resurfaced towards the end
of the year, which would appear to belie the short-term fundamentals.
Nickel prices were boosted by strong Asian demand which led to a 36% increase in
US dollar revenues derived from nickel sales.
Whereas the basket price per platinum ounce sold was 8% higher in dollar terms,
the rand basket was 24% lower than the corresponding period.
Salient features of the 2004 interim period compared to that of 2003:
* As noted in the trading statement and cautionary issued on 2 December 2003,
earnings for the period were substantially affected by:
* The 29% increase in the value of the rand in terms of the US dollar. This
resulted in the rand revenue per platinum ounce sold declining by 24%.
* Substantially weaker palladium and rhodium prices. The fall in palladium and
rhodium prices resulted in dollar revenue per platinum ounce sold rising by only
8%, despite an increase of 28% in the dollar price of platinum.
* Sales revenues declined by 12% to R5 632 million, as a consequence of the
lower rand prices in spite of growth in both sales volumes of platinum,
palladium and nickel and price rises for platinum and nickel.
* Operating expenses rose by 16% compared to 24% for the previous interim
period. The major contributors to the higher costs for the latest interim period
was a combination of a 39% rise in platinum ounces produced and above inflation
increases in certain inputs (mill balls, liners and explosives) and wages. Unit
costs per platinum ounce produced only rose by 8.4%. Nevertheless, lower sales
combined with increased operating expenses resulted in a 43% decline in profit
from operations. Consequently royalties and taxation were also markedly reduced.
* Finance income dropped by 78% to R37 million as a result of lower cash
* The contibution from Lonplats declined by 58% to R264 million due to lower
rand metal prices and higher costs.
* The contributions made by other associates were similarly adversely affected
by the strength in the rand and the weaker palladium and rhodium prices.
* The exchange rate transaction loss for the period amounted to R133 million as
compared to R211 million in the previous interim period. The rand dollar
exchange rate on 31 December 2003, the date of valuation of the
debtors/advances, was R6.61/$ as compared to R8.56/$ on 31 December 2002.
* The net effect of the above was that net profit and earnings per share were
down by 47% for this interim period.
* Cash on hand, net of short term debt, at the end of December 2003 was R278
million as compared to a balance of R2 325 million as at 30 June 2003. This
reduced level of cash on hand was a consequence of the amount spent on
increasing Implats" holding in Zimplats and lower operating cash receipts.
* Capital expenditure for the period totalled R876 million - major contributors
were as follows:
Impala Platinum - R541 million
Marula Platinum - R280 million
Zimbabwe operations - R51 million
* Capital expenditure is anticipated to be R900 million in the second half of
Contributions to net profit (R million):
31 December 31 December
Impala Platinum Limited 643 1 544
Impala Refining Services Limited 200 17
Lonplats* 150 368
Mimosa Investments Limited (previously 75 11
ZCE Platinum Limited)
Aquarius Platinum (South Africa) (Pty) 14 34
Barplats Investments Limited (9) 7
Zimbabwe Platinum Mines Limited** (12) 30
Total R1 061 R2 011
* Comprises Western Platinum Limited and Eastern Platinum Limited
** Including Makwiro Platinum Mines (Private) Limited
Implats" strategic interests continue to play an important role in providing
access to additional resources and ongoing business for IRS.
Negotiations on the sale of Implats" 27% stake in Lonmin"s platinum interests
and the establishing of Incwala, a BEE vehicle, continue with the target date of
27 February for finalisation.
Aquarius Platinum continues to deliver concentrate in accordance with our
existing contracts. Aquarius announced a BEE transaction that provides for 26%
of the operating company to be held by a consortium led by Savannah Resources.
* Market: Demand for platinum is likely to continue at current levels while
supply is somewhat constrained and a sixth year of supply deficit is possible in
2004. The current level at which the platinum price is trading is cause for some
concern regarding the effect this could have on the demand for platinum
jewellery, particularly in China.
* Production: Planned production is on track to produce approximatley 2 million
platinum ounces by 2006 as indicated in the platinum production graph shown in
this report. An integral aspect of our strategy is to maintain production from
the Impala lease area at 1 million platinum ounces for the next 30 years and a
cost-effective capital expenditure programme is being devised to achieve this.
* Costs: These will remain a key focus of operations along with productivity
improvements and mechanised mining.
* Earnings: The recent strength in the local currency has had a major impact on
earnings, but it appears that the rate of appreciation of the currency has now
slowed. The outlook for the group remains sound and earnings for the second half
of the year are expected to be similar to these results provided that the rand
basket remains at current levels.
P G Joubert K C Rumble
Chairman Chief Executive Officer
12 February 2004
Declaration of Interim Dividend
An interim dividend of 500 cents per share has been declared in respect of the
half-year ended 31 December 2003. The last day to trade ("cum" the dividend) in
order to participate in the dividend will be Friday, 5 March 2004. The share
will commence trading "ex" the dividend from the commencement of business on
Monday, 8 March 2004 and the record date will be Friday, 12 March 2004.
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 11 March 2004 or on the first day thereafter
on which a rate of exchange is available.
The dividend will be paid on Monday, 15 March 2004. Share certificates may not
be lodged with the transfer secretaries for dematerialisation/rematerialisation
during the period 8 March 2004 to 12 March 2004, both dates inclusive.
By order of the board
A M Snashall Johannesburg
Group Secretary 12 February 2004
3rd Floor, Old Trafford 4, Isle of Houghton
Boundary Road, Houghton 2198
(P.O. Box 61386, Marshalltown 2107)
South Africa: Computershare Limited
70 Marshall Street
(P.O. Box 61051, Marshalltown 2107)
United Kingdom: Lloyds TSB Registrars
The Causeway, Worthing
West Sussex, BN99 6DA
PG Joubert (Chairman), KC Rumble (Chief Executive Officer), DH Brown, CE
Markus, RSN Dabengwa, JM McMahon*, MV Mennell, TV Mokgatlha, DM O"Connor, LJ
Paton, MF Pleming, JV Roberts, LC van Vught
A copy of this Report is available on the Internet web site:
Alternatively please contact the Group Secretary, via e-mail at
firstname.lastname@example.org or by post at
P.O. Box 61386, Marshalltown 2107, South Africa. Telephone: (011) 481 3900
Date: 12/02/2004 08:00:16 AM Produced by the JSE SENS Department