IMPALA PLATINUM HOLDINGS LIMITED - CONSOLIDATED INTERIM RESULTS FOR THE SIX
MONTHS ENDED 31 DECEMBER 2004
Impala Platinum Holdings Limited
(Incorporated in the Republic of South Africa)
Registration No. 1957/001979/06
Share code: IMP ISIN: ZAE 000003554
Issuer code: IMPO
LSE: IPLA ADR: IMPUY
(`Implats` or `the company`)
Consolidated Interim Results for the six months ended
31 December 2004
Key features:
Improved safety performance
Headline production (excluding once-off Lonplats ounces) up marginally
Impala production remains steady despite industrial action
Sales up 10% to R6.2 billion
Revenue per platinum ounce sold up 23% in dollars and 7% in rands
Margins constant at 33%
Impala unit costs per platinum ounce rise by 7%
Net profit of R3.0 billion inclusive of profit on Lonplats sale (R3.2 billion)
and Marula impairment (R1.5 billion)
Headline earnings maintained at R16.00 per share
Interim dividend unchanged at R5.00 per share
Balance sheet
As at As at As at
(all amounts in Rand 31 December 31 December 30 June
million 2004 2003 2004
unless otherwise stated) (Unaudited) (Unaudited) (Audited)
ASSETS
Property, plant and 8 571.6 9 758.6 9 635.6
equipment
Investments 1 101.9 2 473.5 2 580.0
Other non-current assets 629.5 63.8 132.7
Current assets 7 338.0 3 893.8 4 680.2
Total assets 17 641.0 16 189.7 17 028.5
EQUITY
Capital and reserves 12 120.6 9 680.5 10 684.8
Minority interest 109.5 146.6 128.1
Provision for long-term 274.4 263.7 269.6
responsibilities
Deferred income tax 2 067.4 2 151.6 2 262.5
liabilities
Current liabilities 3 069.1 3 947.3 3 683.5
Total equity and 17 641.0 16 189.7 17 028.5
liabilities
Income statement
(all amounts in Six months to Six months to Year to
Rand million 31 December 31 December 30 June
unless otherwise 2004 2003 % 2004
stated) (Unaudited) (Unaudited) change (Audited)
Sales 6 188.4 5 632.4 9.9 11 809.1
On-mine (2 024.3) (1 692.9) (19.6) (3 667.7)
operations
Concentrating
and smelting
operations (526.3) (490.3) (7.3) (967.4)
Refining (247.2) (228.3) (8.3) (477.2)
operations
Amortisation of (276.4) (258.9) (6.8) (572.3)
mining assets
Metals purchased (1 157.9) (1 302.7) 11.1 (2 259.2)
Increase in 65.4 229.9 (71.6) 394.4
metal
inventories
Cost of sales (4 166.7) (3 743.2) (11.3) (7 549.4)
Gross profit 2 021.7 1 889.2 7.0 4 259.7
Net foreign
exchange
transaction
losses (316.2) (133.0) (137.7) (216.0)
Other operating (141.9) (166.9) 15.0 (241.2)
expenses
Other 73.2 (8.7) 941.4 11.4
income/(expense)
Interest income 106.9 61.3 74.4 138.6
and other gains
Finance costs (37.0) (24.1) (53.5) (67.1)
Share of profit 204.2 160.7 27.1 328.4
of associates
Royalty expense (231.2) (157.9) (46.4) (414.4)
Profit from 3 156.2 - - 322.3
sales of
investments*
Impairment of (1 451.3) - - -
assets
Profit before 3 384.6 1 620.6 108.8 4 121.7
tax
Income tax (358.4) (557.9) 35.8 (1 141.3)
expense
Profit for the 3 026.2 1 062.7 184.8 2 980.4
period
Profit
attributable to:
Equity holders 3 022.2 1 060.8 184.9 2 963.0
of the company
Minority 4.0 1.9 110.5 17.4
interest
3 026.2 1 062.7 184.8 2 980.4
Earnings per
share
(expressed in
cents per share)
- basic 4 548 1 593 185.5 4 450
- diluted 4 543 1 589 185.9 4 442
Headline
earnings per
share
(expressed in
cents per share)
- basic 1 600 1 593 0.4 3 966
- diluted 1 599 1 589 0.6 3 959
Weighted average
number of
shares in issue 66.5 66.6 (0.2) 66.7
(millions)
*Comprising Western Platinum Limited and Eastern Platinum Limited (Lonplats)
(June 2004: Sale of Barplats Investments Limited)
Statement of changes in shareholders` equity
Attributable to equity holders
of the company
(all amounts in Rand
million
unless otherwise Share Other Retained Minority Total
stated) capital reserves earnings interest equity
Balance at 31 617.8 (53.5) 9 116.2 146.6 9 827.1
December 2003
Fair value losses,
net of tax:
Available-for-sale
financial
assets (108.5) (108.5)
Currency translation
differences (111.6) (16.4) (128.0)
Net expense
recognised directly
in equity (220.1) (16.4) (236.5)
Profit for the half 1 902.2 15.5 1 917.7
year
(220.1) 1 902.2 (0.9) 1 681.2
Employee share
option scheme:
Adjustment as a
result of
consolidating share (18.7) (18.7)
trust
Proceeds from shares 26.2 26.2
issued
Interim dividend (332.6) (332.6)
relating to 2004
Disposal of Barplats
Investments Limited (11.4) (11.4)
Business
combinations:
Acquisition equity (339.5) (339.5)
adjustment
Purchase of
additional share in
Zimbabwe Platinum (13.2) (6.2) (19.4)
Mines Ltd
7.5 (352.7) (332.6) (17.6) (695.4)
Balance at 30 June 625.3 (626.3) 10 685.8 128.1 10 812.9
2004
Fair value losses,
net of tax:
Available-for-sale
financial
assets (11.6) (11.6)
Currency translation
differences (112.9) (112.9)
Deferred tax 36.8 36.8
Net expense
recognised directly
in equity (87.7) (87.7)
Profit for the half 3 022.2 4.0 3 026.2
year
(87.7) 3 022.2 4.0 2 938.5
Employee share
option scheme:
Proceeds from shares 7.0 7.0
issued
Purchase of treasury (444.7) (444.7)
shares
Final dividend (1 066.4) (1 066.4)
relating to 2004
Business
combinations:
Purchase of
additional share in
Zimbabwe Platinum 5.4 (22.6) (17.2)
Mines Ltd
(437.7) 5.4 (1 066.4) (22.6) (1 521.3)
Balance at 31 187.6 (708.6) 12 641.6 109.5 12 230.1
December 2004
Cash flow statement
(all amounts in Rand Six months to Six months to Year to
million 31 December 31 December 30 June
unless otherwise 2004 2003 2004
stated) (Unaudited) (Unaudited) (Audited)
Net cash from operating 958.5 574.0 1 812.6
activities
Cash from the sale of 4 919.3 - -
Lonplats
Net cash used in other (1 339.4) (1 203.9) (1 743.7)
investing activities
Net cash used in (2 039.4) (971.6) (1 166.6)
financing activities
Increase/(decrease) in
cash and cash
equivalents 2 499.0 (1 601.5) (1 097.7)
Cash and cash
equivalents at
beginning
of the half year 1 187.0 2 324.5 2 324.5
Effects of exchange
rate changes
on monetary assets (14.5) (19.9) (39.8)
Cash and cash
equivalents at
end of period 3 671.5 703.1 1 187.0
Segment information
Summary of business segments for the half year ended 31 December 2004:
(all amounts in
Rand million Barplats
unless otherwise Impala Marula disposed Zimbabwe
stated) segment segment segment segment
Sales 5 993.0 132.7 476.1
Cost of sales 4 336.4 194.4 362.2
Profit/(loss) 1 656.6 (61.7) 113.9
Summary of
business segments
for the half year
ended 31 December
2003:
Sales 5 300.3 109.4 414.3
Cost of sales 3 932.0 110.7 225.3
Profit/(loss) 1 368.3 (1.3) 189.0
Refining Inter
(all amounts in Rand million services segment
unless otherwise stated) segment adjustment Total
Sales 1 972.1 (2 385.5) 6 188.4
Cost of sales 1 688.8 (2 415.1) 4 166.7
Profit/(loss) 283.3 29.6 2 021.7
Summary of business segments for
the half year ended 31 December
2003:
Sales 1 708.6 (1 900.2) 5 632.4
Cost of sales 1 330.5 (1 855.3) 3 743.2
Profit/(loss) 378.1 (44.9) 1 889.2
Operating Statistics
Six Six
months months
to to
31 31 % Year to
December December 30 June
2004 2003 change 2004
Gross
refined
platinum
production
Impala (000oz) 547 546 0.2 1 090
IRS (000oz) 333 529 (37.1) 871
Total (000oz) 880 1 075 (18.1) 1 961
Headline
platinum
production (000oz) 880 869 1.3 1 729
IRS metal
returned
(Toll
refined)
Platinum (000oz) 101 317 (68.1) 501
Palladium (000oz) 40 171 (76.6) 314
Rhodium (000oz) 27 48 (43.8) 97
Sales
volumes
Platinum (000oz) 803 765 5.0 1 495
Palladium (000oz) 394 377 4.5 733
Rhodium (000oz) 91 102 (10.8) 179
Nickel (000t) 7.0 7.5 (6.7) 15.8
Prices
achieved
Platinum ($/oz) 829 707 17.3 773
Palladium ($/oz) 221 195 13.3 223
Rhodium ($/oz) 1 001 482 107.7 548
Nickel ($/t) 13 945 9 600 45.3 11 843
Consolidated
statistics
Average rate (R/$) 6.21 7.12 (12.8) 6.88
achieved
Closing rate
for
the period (R/$) 5.63 6.61 (14.8) 6.17
Revenue per
platinum
ounce sold ($/oz) 1 227 997 23.1 1 116
(R/oz) 7 620 7 099 7.3 7 678
tonnes (000t) 9 646 9 482 1.7 19 065
milled
Pgm refined (000oz) 1 677 2 006 (16.4) 3 725
production
Capital (Rm) 771 876 (12.0) 1 822
expenditure
Impala
segment
tonnes (000t) 7 829 7 982 (1.9) 15 639
milled
ex-mine
Total costs (R/t) 297 272 (9.2) 280
per ton
milled
($/t) 48 38 (26.3) 41
Pgm refined (000oz) 1 003 1 005 (0.2) 1 976
production
Cost per
platinum
ounce (R/oz) 4 251 3 980 (6.8) 4 023
refined
($/oz) 685 559 (22.5) 586
net of
revenue
received
from other (R/oz) 1 988 2 224 10.6 2 182
metals
($/oz) 320 312 (2.6) 318
Capital (Rm) 642 541 18.7 1 197
expenditure
($/oz) 103 76 35.5 174
Total labour (000) 27.1 27.6 1.8 27.5
complement
Dividend
(relating to
reporting (cps) 500 500 - 2 100
period
earnings)
Additional statistical information is available on the company`s internet
website.
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 2004 and conform with International Financial Reporting Standards on
Interim Financial Reporting.
Assets are reviewed for impairment whenever changes in circumstances indicate
that the carrying amount may not be recoverable. In terms of the group`s
accounting policy the recoverability of long lived assets is based on estimates
of future discounted cash flows. These estimates are subject to risks and
uncertainties including future metal prices and exchange rates. As a result
during the six months under review exchange rates and finalisation of a viable
future mining plan indicated an impact on discounted cash flows with the result
that the carrying amount of the Marula project might not be recoverable and the
assets are considered to be impaired, resulting in an amount of
R1 451 million (R1 198 million net of tax) written down as an impairment charge.
Capital expenditure approved at 31 December 2004 amounted to
R9 258 million (2003: R3 091 million), of which R1 507 million (2003: R913
million) is already committed. This expenditure, over a period of 5 years, will
be funded internally and, if necessary, from borrowings.
Implats` share in Lonplats was sold for an amount of R4.9 billion (US$763
million). As an integral part of this transaction, an amount of R617.5 million
was made available as loans to various BEE companies. These loans are repayable
within 5 to 7 years and are structured into interest free and interest bearing
portions. The interest bearing loans bear interest in year 3 and 4 at the
Johannesburg Interbank Acceptance Rate (`JIBAR`) plus 1%, in year 5 at JIBAR
plus 2% and thereafter at JIBAR plus 3%. The loans are secured by a guarantee
from Lonplats. In terms of the group`s accounting policy these loans are being
valued using the effective interest rate method.
During the period under review, the group acquired an additional shareholding in
Zimbabwe Platinum Mines Limited of approximately 1% for R17.2 million (AU$3.7
million), taking the group`s holding to 84.5%.
As a result of the recent Aquarius Platinum (South Africa) (Proprietary)
Limited`s BEE transaction, Implats` shareholding reduced from 25% to below 20%.
As a result the group acquired an additional stake amounting to R71.5 million.
This transaction ensured the investment was maintained at 20% after the BEE
transaction.
The group acquired 893 022 (1.3%) of its own shares, in terms of an approved
share buy-back scheme, through purchases on the JSE Securities Exchange South
Africa (`JSE`) during the period under review for an amount of R444.7 million
(2003: nil). The shares are held as `treasury shares` which reduce shareholders`
equity. The group has the right to reissue these shares subject to the JSE
listing requirements.
The estimated effect of the early adoption of IFRS 2 (Share-based Payment) would
have reduced the half year earnings by R12.4 million. Basic and diluted earnings
per share would have decreased by 18.7 cents per share.
Headline earnings per share reflects an after tax adjustment for impairment of
assets of R1 198 million (2003: nil) and profit on disposal of an associate of
R3 156 million (2003: nil).
Interim dividend no. 74 of 500 cents per share, amounting to R329.1 million, was
approved by the board of directors on 17 February 2005; STC on this dividend
will amount to R34.7 million.
Contingent liabilities at 31 December 2004, arising mainly from collateral
security for employee housing, amounted to R6.7 million (2003: R7.2 million).
Certain guarantees were in place as at 31 December 2004 from which it is
anticipated that no material liabilities will arise:
* The group has provided a guarantee for a facility, made available by ABSA
to Makwiro Platinum Mines (Private) Limited. As at 31 December 2004, the
guarantee amounted to R2.8 million (2003: R102.5 million) ((US$ 0.5 million)
(2003: US$15.5 million)). The guarantee is set to expire by September 2005.
* A guarantee has been provided to Investec Bank Limited on behalf of
Aquarius Platinum (South Africa) (Proprietary) Limited for R164.1 million (2003:
R175 million). This guarantee is set to expire upon finalisation of certain
project completion tests, relating to the Marikana project, or repayment of the
loan, whichever occurs first.
* At the half year the group had contingent liabilities in respect of the
Department of Minerals and Energy for R103.7 million (2003: R103.7 million).
Additional guarantees of approximately R180 million are required by the
Department.
Review of operations
Safety
The emphasis on safety continued across the group with further improvement in
the rates of both lost-time injuries and fatalities, to record low levels of
3.47 and 0.079 per million man hours. Regrettably, however, there were four
fatalities during the period : two at Impala, one at Marula and one at Zimplats.
The Implats board and management extend their condolences to the families and
colleagues of the deceased, and remain committed to eliminating fatalities at
work.
Impala Platinum Limited (Impala)
Production at Impala, Implats` largest operating division, was marginally up at
547 400 ounces of platinum as compared to the 2004 interim period, despite the
strike in October 2004. This industrial action, which related to wage
negotiations, resulted in 10 days of lost production. Implats is satisfied that
the settlement level of 8%, which was in line with the industry average, was
satisfactory and fair. Implats is also pleased that one of the key agreements
reached in the negotiations was union co-operation on the implementation of
drill jigs. This initiative should result in material improvements in safety and
productivity.
The roll-out of the drill jigs (dynamic drilling technology) has begun and 150
Merensky panels will be equipped during the current financial year, doubling to
300 Merensky panels by the end of 2006.
Tonnes milled declined by 1.9% to 7.8 million tonnes, with the average grade
mined marginally down to 4.82g/tonne as a result of dilution related to
mechanisation. However, recovery rates improved at Mineral Processes, rising to
83.5%, from 82.9%, largely as a result of the increased contribution for the
full six months of the tails scavenging plant.
Unit costs at Impala rose by 6.6% to R4 251 per platinum ounce, despite the wage
increase of 8%. Cost per ton milled was up by 9.2% to R297, compared to an
inflation (CPIX) rate of 4.3% for the period.
Capital expenditure of R6.6 billion for 16 and 20 shafts was approved by the
Board in September 2004. The initial work for these shafts has begun with 20
shaft scheduled to come into production in 2009 and 16 shaft in 2012. At full
production, these shafts will together produce 355 000 ounces of platinum
annually, thus ensuring that production at Impala is maintained at a minimum of
1.1 million ounces a year.
At Refineries, gross platinum production declined by 18% to 880 300 ounces and
PGM production by 16% to 1.677 million ounces. This decline, in line with
expectations, was largely due to the once-off processing of Lonplats material
(totalling 206 000 ounces) in the comparable period. The lower volumes resulted
in an increase in unit costs of 33%. However, this follows several years of
controlled costs with Refineries establishing a reputation for being among the
most efficient in the world.
Marula Platinum (Proprietary) Limited (Marula)
For the six months to December 2004, 457 000 tonnes were milled yielding 17 300
ounces of platinum in concentrate. Total costs amounted to R174 million with a
unit cost of R10 104 per platinum ounce. The original plan to mine the UG2 reef
using a mechanised bord and pillar mining method has failed to achieve the
expected results, essentially because the reef dips steeply in the shallow area
and undulates more than expected. A new mining method as conventionally used at
Impala Rustenburg will be adopted for Marula and the main declines will be
developed in the footwall (and therefore at a constant dip) which is more suited
to the geological conditions in the area. Furthermore, the mining will
henceforth be undertaken by the owner and the contractor has already
demobilised.
The financial and operating assumptions on which the previous estimates were
based have deviated materially to the extent that an impairment charge of R1.45
billion is necessary. Exchange rate appreciation has continued to harm the
project economics with a negative impact of close to R1 billion when coupled to
changes in US dollar metal prices. Higher capital requirements in order to
support a viable mining method as well as a slower production build-up account
for the balance of the impairment charge. Preliminary work for the development
of the footwall infrastructure has commenced. Further development at a cost of
approximately R830 million was approved by the board on 15 February 2005.
Zimbabwe Platinum Mines Limited (Zimplats)
Production at Zimplats remains on track. Despite a breakdown at the crusher, ore
milled was 4% higher, although ore production was below expectations. Recovery
rates were maintained at 81.7%, and production of platinum ounces in matte rose
2% to 42 300 ounces. The contract with the opencast operator was renewed, albeit
at an increase in contractor costs of 31%. It has thus been decided to
substitute opencast tonnes with lower-cost underground ore, which has the added
benefit of being of a slightly higher grade. The first phase of this plan is to
double the tonnes mined from underground.
In addition to the huge increase in contractor costs, dollar costs per platinum
ounce are also being placed under pressure by the increased stripping ratio,
fixed exchange rate and excessive local inflation.
While the board has approved the expansion to 145 000 ounces in principle, this
will not begin until clarity has been given on various issues : security of
tenure over claims; indigenisation; special mining licences; foreign currency
accounts and execution of the bilateral accord between South Africa and
Zimbabwe. Discussions on these issues with various government representatives
and departments continue. However, the company has proceeded with certain
infrastructural developments at a cost of US$20 million (the bulk of the money
has been spent from internally generated funds) - in readiness for the proposed
expansion including the provision of power, water and general infrastructure.
The corporate tax rate in Zimbabwe has been reduced to 15% from 20%, backdated
to January 2004.
Mimosa Platinum (Private) Limited (Mimosa)
Production remains on track but Mimosa like Zimplats, is faced by similar cost
constraints, particularly the impact of a managed exchange rate. Cash operating
margins remain at a satisfactory 28%. The expansion to 80 000 ounces of platinum
has been delayed pending the outcome of discussions regarding the domicile of
foreign currency accounts.
Impala Refining Services Limited (IRS)
Platinum production at IRS fell by 37% to 333 000 ounces, period-on-period.
However, if the effect of the once-off processing of 206 000 ounces from
Lonplats in the first half of 2004 is excluded, production at IRS continued to
grow with increasing volumes, negating to some extent the negative impact of the
strong rand. Rand strength had an adverse effect on gross profit which was 25%
lower at R283 million. The continued strength of the rand resulted in a
transaction loss (relating to dollar advances made to customers) of R124
million.
Prospects for growth remain good with at least one new major project likely to
come on stream in the next 12 months, increased volumes from Marula Platinum and
continued growth in the recycling of autocatalysts.
Aquarius Platinum (South Africa) (Proprietary) Limited (AQPSA)
AQPSA`s (in which Implats has a 20% stake) primary operation Kroondal has
achieved record output. Although Marikana continues to underperform which
detracked from the financial results, increased production and recoveries were
reported towards the end of the period. Work on the Everest project began in
October 2004. This is being funded by the R860 million received by AQPSA from
black economic empowerment entity, Savannah Resources, for its 29.6% stake in
the company.
Two Rivers Platinum (Proprietary) Limited (Two Rivers)
At Two Rivers, the joint venture with African Rainbow Minerals, the decision to
proceed is imminent but is dependent on a satisfactory financing arrangement.
Corporate matters
The sale of Implats` interest in Lonplats was completed in September 2004 and
Implats received $763 million on the finalisation of this transaction, of which
$95 million was made available in the form of vendor finance to various BEE
companies and will only be fully repaid by 2011.
Good progress has been made on compliance with the Mining Charter and Implats
has applied for conversion to new order mining rights for Marula Platinum and is
well placed to progress its application in respect of Impala Platinum.
Publication of the Royalties Bill continues to be delayed with Implats having
made both submissions to, and engaged in dialogue with, the relevant
authorities.
Directorate
Changes to the board included the retirement of Mr Peter Joubert and the
appointment in October 2004 of Dr Fred Roux as chairman in his place. In
addition, Mr Mike Pleming also retired as a non-executive director and Mr Sifiso
Dabengwa resigned because he moved to Nigeria.
Market review
Fundamental demand for platinum remained firm in both the jewellery and
automotive sectors in the second half of 2004, despite the platinum price
remaining at levels well in excess of $850/ounce. The 2004 calendar year was the
sixth consecutive year of supply deficits in the platinum markets and the free
market platinum price averaged $845/oz for the six months to December 2004
compared to $732/oz for the comparable six months in 2003, an increase of 15%.
However, the market is expected to move into balance from this year (with a
surplus or deficit fluctuating around 100 000 ounces a year) for the next four
to five years.
The palladium market remains in surplus with the free market price averaging
$214/oz, 9% up on the 2003 interim period. The current low levels of the
palladium price could lead to a resurgence in the use of this metal in diesel
catalysts. In the Chinese jewellery market, fabricators have begun the sale of
palladium jewellery, which is both lighter and cheaper than platinum jewellery.
This has occurred mainly outside of the major centres. The risk in the palladium
market, however, remains the stockpiles held by manufacturers, banks and
speculators which should limit any increase in the price.
The Rhodium market has tightened of late due to stronger demand and reduced mine
supplies, resulting in firmer prices.
Financial review
The 2005 interim results for Implats reflect a solid operating performance which
was offset by rand strength. The gross operating margin for the group was 32.7%,
slightly lower than the 33.5% for the previous half-year. Headline profit of
R1.06 billion was on par with that of December 2003. The 185% increase in net
profit of R3.03 billion includes the profit from the sale of the investment in
Lonplats of R3.16 billion and the R1.45 billion for impairment less deferred tax
reversal of R253 million of the Marula assets.
Results for the half-year: Sales increased by 10% in rand terms to R6.19
billion, and in US$ terms by 26% from US$0.79 billion to US$1.00 billion. Of the
major earnings drivers, volumes and metal prices resulted in positive variances,
while the exchange rate had a significant negative variance effect on sales:
* Volumes: Platinum and palladium sales rose 5% for the six months to
December 2004 while rhodium and nickel sales volumes were 11% and 7% lower
respectively, the net result was a positive variance of R20 million.
* Metal prices: An increase in dollar prices of all major metals saw a 23%
increase in the basket price (average dollar revenue per platinum ounce sold) to
$1 227 per ounce compared to $997 for the corresponding six months. This
resulted in a positive variance of R1 434 million.
* Exchange rate: The stronger rand caused a negative exchange rate variance
of R898 million. The strength of the rand has been the single most challenging
feature of the period. The average rate achieved during the period was R6.21/$
compared to an average of R7.12/$ for the first half of 2004.
Cost of sales: Total cost of sales increased by 11.3% to R4.17 billion compared
to R3.74 billion for the previous six months due to a 2% rise in tonnes milled,
annual wage adjustments of 8% and higher operating costs at the Zimbabwean
operations. The group unit cost per platinum ounce rose to R4 543, up 10% from
the R4 132 for the 2004 financial year. The Impala unit cost per platinum ounce,
which represents the majority of the business, rose by 6,8%.
The exchange rate transaction loss for the period amounted to R316 million
versus R133 million the previous six months. The applicable exchange rate for
the translation of debtors/advances at 31 December 2004 was R5.63 per dollar
compared to R6.17 on 30 June 2004, a strengthening of 9%. Included in the
exchange rate transactional losses is an unrealised amount of R119 million,
based on the remainder of the funds from the sale of Lonplats which are still to
be repatriated.
Contributions to earnings: Implats` income is derived from three distinct
sources - mine-to-market operations, IRS and equity income from investments.
* Mine-to-market operations: Revenue is generated by operations owned and
managed by Implats, namely: Impala Platinum, Marula Platinum, Zimplats and
Mimosa. Gross margins for the six months for the Impala segment were 40%, up
from 38%, for 2004. The margins for both Zimbabwean operations were down as a
result of operating cost increases. Margins at Marula, which is still in a ramp-
up phase, cannot be compared.
* IRS: Income is generated by the processing of concentrate or matte
purchased and toll treatment. Margins are substantially lower than in the mine-
to-market operations reflecting the reduced risks and lower capital intensity.
Margins recorded during the six months to December 2004 of 14% were lower than
during the previous year due to lower toll income.
* Operating margins:
31 December 31 December
Entity Source 2004 2003
Impala Mine to market 40.0 37.9
Zimplats Mine to matte 22.3 36.3
Mimosa Mine to concentrate 27.7 62.8
IRS Matte/concentrate to market 14.4 22.1
Implats 32.7 33.5
* Equity income: Income is generated by those companies in which Implats has,
or had equity accountable interests. This includes Lonplats, Aquarius Platinum
and Two Rivers. For the six months to December 2004 equity accounted income
amounted to R204 million.
Impala Platinum`s mining operations for the period under review continued to be
the major contributor to earnings, accounting for 83% of group profit. Following
a 37% decline in platinum production through IRS for the six months as well as a
forex loss of R124 million, profit from IRS is down by 62% to R77 million. This
represents 7% of group profit, compared to 19% last year.
The contribution from Zimplats/Mimosa operations increased substantially as a
result of lower unrealised profit in group inventories.
Earnings from Implats` investment in Lonplats made a final contribution to group
income. Attributable income rose by 41% to R207 million and the contribution to
group earnings increased to 20% from 14% compared to the first half of 2004.
Dividends received from this investment for the period under review totalled R35
million.
The contribution to the group from AQPSA for the six months to December 2004 was
a negative R3 million, compared to a positive contribution of R14 million for
the six months to December 2003. This was a result of the operating loss
recorded by the Marikana mine and the pooling and sharing arrangement at the
Kroondal mine.
Contribution to net profit from the various companies are listed below (R
million):
31 December % 31 December %
2004 Contribution 2003 Contribution
Impala 885 83.2 643 60.6
Platinum
Limited
Impala 77 7.2 200 18.9
Refining
Services
Limited
Gazelle (171) (16.1) 3 0.2
Platinum
Limited -
Other
Gazelle 207 19.5 147 13.9
Platinum
Limited -
Lonplats
Mimosa 51 4.8 75 7.1
Investments
Limited
Aquarius
Platinum
(South
Africa )
(Proprietary) (3) (0.3) 14 1.3
Limited
Barplats - - (9) (0.8)
Investments
Limited
Marula (34) (3.2) - -
Platinum
(Pty) Ltd
Zimbabwe 52 4.9 (12) (1.2)
Platinum
Mines
Limited**
Headline 1 064 100 1 061 100
earnings
Profit from 3 156 -
sale of
Lonplats
Impairment of (1 198) -
assets
Attributable 3 022 1 061
earnings
**Including Makwiro Platinum Mines (Private) Limited
Earnings: Headline earnings for the six months increased slightly to 1 600 cents
per share compared to 1 593 cents in December 2003.
Balance sheet, structure and cash flow: A strong balance sheet has been
maintained in order to provide funding for the bulk of the group`s future
capital projects. The group generated cash from operating activities of R959
million during the six months to December 2004 and net cash from investing
activities of R3 580 million. After funding the group`s capital expenditure
programmes, dividends and investments at the end of December 2004, the net
closing cash position was R3.7 billion compared to R636 million at the end of
June 2004. The group acquired 893 022 of its own shares in terms of an approved
share buy-back scheme for an amount of R444.7 million.
Capital expenditure: Group capital expenditure amounted to R771 million for the
six months to December 2004. Capital expenditure at the Impala segment was R642
million compared to R541 million in the previous period. This was largely
accounted for by expenditure on the decline projects. An amount of R46 million
was spent on Marula and R83 million on Zimbabwean operations.
Prospects
Market
The fundamentals for platinum demand remain firm on the back of a solid and
growing automotive sector, which is being enhanced by the growing popularity of
diesel vehicles in Europe. Despite this, the market registered its first surplus
in 6 years due to growing supplies and a decline in the jewellery market.
Production
Our strategy is to maintain production from the Impala segment at 1.1 million
platinum ounces for the next 30 years and the capital expenditure programme to
achieve this was set in motion by the approval of number 16 and 20 shafts. The
potential to grow production to 2.3 million platinum ounces over the next four
years remains subject only to the Zimbabwean expansion.
Costs
This is a key focus of operations along with productivity and efficiency
improvements.
Earnings
The recent strength of the South African Rand against the US dollar has had a
major impact on earnings. The outlook for the group remains sound. If current
rand exchange rates and metal prices prevail, headline earnings for the second
half of the year are expected to be similar to the first half results.
FJP Roux K C Rumble Johannesburg
Chairman Chief Executive Officer 17 February 2005
Declaration of Interim Dividend
An interim dividend of 500 cents per share has been declared in respect of the
half-year ended 31 December 2004. The last day to trade (`cum` the dividend) in
order to participate in the dividend will be Friday, 4 March 2005. The share
will commence trading `ex` the dividend from the commencement of business on
Monday, 7 March 2005 and the record date will be Friday, 11 March 2005.
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 Thursday 10 March 2005 or on the first day
thereafter on which a rate of exchange is available.
The dividend will be paid on Monday, 14 March 2005. Share certificates may not
be lodged with the transfer secretaries for dematerialisation/rematerialisation
during the period Monday 7 March 2005 to Friday 11 March 2005, both dates
inclusive.
By order of the board
R Mahadevey Johannesburg
Group Secretary 17 February 2005
Issued by sponsor: Deutsche Securities (SA) (Proprietary) Limited
A copy of this Report is available on the Internet web site:
http://www.implats.co.za
Alternatively please contact the Company 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
corporate information
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 Investor Services 2004 (Proprietary) Limited, 70
Marshall Street, Johannesburg, 2001, (P.O. Box 61051, Marshalltown, 2107)
Facsimile +27 11 836-0792 Telephone +27 11 370-7700
United Kingdom: Lloyds TSB Registrars
The Causeway, Worthing, West Sussex, BN99 6DA
Directors
FJP Roux (Chairman), KC Rumble (Chief Executive Officer),
DH Brown, CE Markus, JM McMahon*, MV Mennell, TV Mokgatlha,
K Mokhele, DM O`Connor, NDB Orleyn, LJ Paton, JV Roberts,
LC van Vught
*British
Date: 17/02/2005 08:00:24 AM
Produced by the JSE SENS Department |