IMP
IMPO
IMP - Implats - Consolidated Interim Results and Declaration of interim dividend
Impala Platinum Holdings Limited
(Incorporated in the Republic of South Africa)
Registration No. 1957/001979/06
Share code: IMP
ISIN: ZAE000003554
Issuer code: IMPO
LSE: IPLA
ADR: IMPUY
("Implats" or "the company")
Consolidated Interim Results for the six months ended 31 December 2006
- Record earnings of R4.3 billion for six months
- Key features
- Group platinum production up 8.5% to 1.02 million ounces
- Margin improves to 47%
- Headline earnings rise by 135% to R8.24 per share
- Safety unsatisfactory
- Dividend cover lowered to 1.7
- Lower merensky volumes affects unit cost at Impala Platinum
Balance sheet
As at As at As at
31 December 31 December 30 June
(All amounts in rand million 2006 2005 2006
unless otherwise stated) (Unaudited) (Unaudited) (Audited)
ASSETS
Property, plant and 13,213.8 10,564.9 12,270.1
equipment
Investments 2,516.8 1,482.0 2,037.2
Other non-current assets 635.8 625.6 611.3
Current assets 12,766.4 9,393.4 8,386.0
Total assets 29,132.8 22,065.9 23,304.6
EQUITY
Capital and reserves
attributable to the equity
holders of the company
17,127.6 14,886.0 13,850.1
Minority interest 255.2 160.2 214.8
Total equity 17,382.8 15,046.2 14,064.9
Provision for long-term 532.2 341.6 522.9
responsibilities
Borrowings 457.2 14.9 11.3
Deferred income tax 3,141.6 2,546.7 2,922.8
liabilities
Derivative financial - - 38.2
instruments
Current liabilities 7,619.0 4,116.5 5,744.5
Total equity and liabilities 29,132.8 22,065.9 23,304.6
Income statement
Six months Six months Year to
to to 30 June
31 December 31 December 2006
2006 2005 (Audited)
(Unaudited) (Unaudited)
(All amounts in rand million %
unless
otherwise stated) change
Sales 14,860.2 7,920.2 87.6 17,500.2
On-mine operations (2,814.5) (2,313.5) (21.7) (4,722.7)
Concentrating and smelting
operations
(634.6) (566.8) (12.0) (1,129.6)
Refining operations (319.3) (282.4) (13.1) (545.2)
Amortisation of mining (373.4) (334.0) (11.8) (622.5)
assets
Metals purchased (4,865.6) (1,633.6) (197.8) (4,326.2)
Increase in metal 1,138.2 514.8 121.1 1,161.0
inventories
Cost of sales (7,869.2) (4,615.5) (70.5) (10,185.2)
Gross profit 6,991.0 3,304.7 111.5 7,315.0
Net foreign exchange
transaction gains/(losses) 16.9 (76.5) 122.1 177.8
Other operating expenses (219.1) (154.7) (41.6) (340.0)
Other expenses (42.5) (125.1) 66.0 (147.6)
Interest and other gains - 256.4 168.6 52.1 303.8
net
Finance costs (39.6) (10.2) (288.2) (58.5)
Share of profit of 131.6 40.8 222.5 114.8
associates
Royalty expense (825.6) (379.1) (117.8) (851.8)
BEE compensation charge - - - (95.3)
Reversal of impairment of - - - 583.1
assets
Profit before tax 6,269.1 2,768.5 126.4 7,001.3
Income tax expense (1,876.2) (942.8) (99.0) (2,616.2)
Profit for the period 4,392.9 1,825.7 140.6 4,385.1
Profit attributable to:
Equity holders of the 4,347.0 1,814.7 139.5 4,345.4
company
Minority interest 45.9 11.0 317.3 39.7
4,392.9 1,825.7 140.6 4,385.1
Earnings per share
(expressed in cents per
share)
- basic 824 345 138.8 826
- diluted 821 344 138.7 824
Weighted average number of
shares in issue (millions)
527.9 525.3 0.5 526.1
Statement of changes in shareholders` equity
Attributable
to equity
holders of
the company
(All amounts in rand million Share Other Retained
unless otherwise stated) capital reserves earnings
Balance at 31 December 2005
263.5 (506.3) 15,128.8
Fair value gains, net of
tax:
- Available-for-sale
financial investments 314.2
Currency translation
differences, net of tax 210.7
Net income recognised
directly in equity 524.9
Profit for the half year 2,530.7
Total recognised income
for the half year 524.9 2,530.7
Employee share option
scheme:
- Proceeds from shares
issued 77.7
- Fair value of employee
service 21.4
Interim dividend relating
to 2006
(661.9)
Special dividend (3,624.1)
Share in revaluation reserve
in associate 0.2
BEE compensation charge
from sale of shares in
Marula Platinum (Pty) 95.3
Limited
Transactions with minorities
Purchase of additional
share
in Zimplats Holdings (0.1)
Limited
99.1 95.4 (4,286.0)
Balance at 30 June 2006 362.6 114.0 13,373.5
Fair value gains, net of
tax:
- Available-for-sale
financial investments 303.8
Currency translation
differences, net of tax (34.9)
Net income recognised
directly in equity 268.9
Profit for the half year 4,347.0
Total recognised income
for the half year 268.9 4,347.0
Employee share option
scheme:
- Proceeds from shares 17.8
issued
- Fair value of employee
service
95.5
Final dividend relating to (1,451.7)
2006
113.3 (1,451.7)
Balance at 31 December 2006 475.9 382.9 16,268.8
Statement of changes in shareholders` equity
(All amounts in rand million Minority Total
unless otherwise stated) Total interest equity
Balance at 31 December 2005 14,886.0 160.2 15,046.2
Fair value gains, net of
tax:
- Available-for-sale
financial investments 314.2 314.2
Currency translation
differences, net of tax 210.7 25.8 236.5
Net income recognised
directly in equity 524.9 25.8 550.7
Profit for the half year 2,530.7 28.7 2,559.4
Total recognised income
for the half year 3,055.6 54.5 3,110.1
Employee share option
scheme:
- Proceeds from shares
issued 77.7 77.7
- Fair value of employee
service 21.4 21.4
Interim dividend relating
to 2006 (661.9) (661.9)
Special dividend (3,624.1) (3,624.1)
Share in revaluation reserve
in associate 0.2 0.2
BEE compensation charge
from sale of shares in
Marula Platinum (Pty) 95.3 95.3
Limited
Transactions with minorities
Purchase of additional
share
in Zimplats Holdings (0.1) 0.1 -
Limited
(4,091.5) 0.1 (4,091.4)
Balance at 30 June 2006 13,850.1 214.8 14,064.9
Fair value gains, net of
tax:
- Available-for-sale
financial investments 303.8 303.8
Currency translation
differences, net of tax (34.9) (5.5) (40.4)
Net income recognised
directly in equity 268.9 (5.5) 263.4
Profit for the half year 4,347.0 45.9 4,392.9
Total recognised income
for the half year 4,615.9 40.4 4,656.3
Employee share option
scheme:
- Proceeds from shares
issued 17.8 17.8
- Fair value of employee
service 95.5 95.5
Final dividend relating to (1,451.7) (1,451.7)
2006
(1,338.4) (1,338.4)
Balance at
31 December 2006 17,127.6 255.2 17,382.8
Cash flow statement
Six months Six months Year to
to to 30 June
31 December 31 December 2006
2006 2005 (Audited)
(Unaudited) (Unaudited)
(All amounts in rand million
unless otherwise
stated)
Net cash from operating 4,413.9 2,398.7 4,902.7
activities
Net cash used in investing (1,121.5) (845.1) (1,824.5)
activities
Net cash used in financing (999.3) (1,028.3) (5,236.9)
activities
Increase/(decrease) in cash
and cash
equivalents 2,293.1 525.3 (2,158.7)
Cash and cash equivalents at 1,864.4 3,984.3 3,984.3
beginning of the period
Effects of exchange rate
changes on monetary
assets (15.2) (10.9) 38.8
Cash and cash equivalents
at end of period 4,142.3 4,498.7 1,864.4
Segment information
Summary of business segments for the half year ended 31 December 2006:
Mining segment
(All amounts in rand million unless Impala Marula Zimplats Mimosa
otherwise stated)
Sales 14,115.4 583.3 765.3 403.8
Segment operating expenses 8,626.6 309.2 362.0 108.3
Profit/(loss) from operations 5,488.8 274.1 403.3 295.5
Profit for the half year 3,114.3 216.1 353.1 245.7
Summary of business segments for
the half year ended
31 December 2005:
Sales 7,606.9 201.9 451.7 204.3
Segment operating expenses 4,925.7 203.3 297.8 104.7
Profit/(loss) from operations 2,681.2 (1.4) 153.9 99.6
Profit for the half year 1,592.7 (8.9) 87.3 75.4
Summary of business segments for the half year ended 31 December 2006:
(All amounts in rand Total Refining Investment Inter
million unless otherwise mining services and other segment
stated) segment segment segment adjustment
Total
Sales 15,867.8 5,789.9 (6,797.5) 14,860.2
Segment operating 9,406.1 5,164.0 (6,700.9) 7,869.2
expenses
Profit/(loss) from 6,461.7 625.9 (96.6) 6,991.0
operations
Profit for the half year 3,929.2 484.6 75.7 (96.6) 4,392.9
Summary of business
segments for the half
year ended 31 December
2005:
Sales 8,464.8 2,571.3 (3,115.9) 7,920.2
Segment operating 5,531.5 2,179.6 (3,095.6) 4,615.5
expenses
Profit/(loss) from 2,933.3 391.7 (20.3) 3,304.7
operations
Profit for the half year 1,746.5 223.6 (123.0) (21.4) 1,825.7
Operating Statistics
Six months Six months % Year to
to to change 30 June
31 December 31 2006
2006 December
2005
Gross refined platinum
production
Impala (000oz) 545 591 (7.8) 1,125
IRS (000oz) 473 347 36.3 721
Total (000oz) 1,018 938 8.5 1,846
IRS metal returned (toll
refined)
Platinum (000oz) 93 145 (35.9) 246
Palladium (000oz) 81 104 (22.1) 190
Rhodium (000oz) 18 23 (21.7) 42
Sales volumes
Platinum (000oz) 909 833 9.1 1,582
Palladium (000oz) 422 440 (4.1) 896
Rhodium (000oz) 108 93 16.1 193
Nickel (000t) 8.6 6.7 28.4 14.8
Prices achieved
Platinum ($/oz) 1,164 911 27.8 988
Palladium ($/oz) 320 207 54.6 258
Rhodium ($/oz) 4,664 2,260 106.4 3,015
Nickel ($/t) 28,526 14,218 100.6 15,343
Consolidated statistics
Average rate achieved (R/$) 7.25 6.49 11.7 6.37
Closing rate (R/$) 7.04 6.31 11.6 7.16
Revenue per platinum
ounce sold ($/oz) 2,234 1,452 53.9 1,721
(R/oz) 16,197 9,423 71.9 10,963
Tonnes milled ex-mine (000t) 10,714 10,394 3.1 20,197
PGM refined production (000oz) 1,915 1,773 8.0 3,490
Capital expenditure (Rm) 1,356 948 43.0 2,248
Group unit cost per
platinum
ounce:
Excluding share based
remuneration ($/oz) 781 722 (8.2) 769
(R/oz) 5,647 4,690 (20.4) 4,912
Including share based
remuneration ($/oz) 823 732 (12.4) 788
(R/oz) 5,954 4,749 (25.4) 5,032
Dividend (relating to
reporting period
earnings):
Ordinary (cps) 275 125 120.0 400
Special (cps) 688 688
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 as described in the annual financial statements for the
year ended 30 June 2006 with the exception of those listed below and have been
prepared in accordance with IAS 34 Interim Financial Reporting. This interim
financial report should be read in conjunction with the annual financial
statements for the year ended 30 June 2006.
The following standards, amendments to standards and interpretations were
adopted as from 1 July 2006:
- IAS 19 Employee Benefits (revised January 2006). The adoption of this
accounting statement had no material impact on the results of the group.
- IFRIC 10 Interim Financial Reporting and Impairment. The implementation of
this interpretation had no material impact on the results of the group.
- IFRIC 11 Group and Treasury Share Transactions. The implementation of this
interpretation had no material impact on the results of the group.
The following new standards, amendments to standards and interpretations have
been issued but are not effective for 2006 and have not been early adopted:
IFRS 7, `Financial Instruments: Disclosures` and IAS 1, `Amendments to Capital
Disclosures`, effective for annual periods beginning on or after 1 January 2007.
The group assessed the impact of IFRS 7 and the amendment to IAS 1 and concluded
that the main additional disclosures will be the sensitivity analysis to market
risk and capital disclosures required by the amendment of IAS 1. The group will
apply IFRS 7 and the amendment to IAS 1 from the financial year beginning 1 July
2007.
Six months Six months Year to
to to
31 December 31 December 30 June
2006 2005 2006
(Unaudited) (Unaudited) (Audited)
1. Headline earnings per
share
- basic (expressed in cents 824 351 751
per share)
- diluted (expressed in cents 821 350 749
per share)
Headline earnings per share
is calculated on profit
attributable to equity
holders of the company
without adjustments (2005:
profit adjusted for: profit
on sale of Spitzkop
prospecting right of
R94.9 million, profit on the
sale of the investment in
Teba of R4.7 million and a
write off of the investment
in Ambatovy of R127.1
million.)
2. Capital expenditure
(R million):
Opening net book amount 12,270 10,035 10,035
Additions 1,356 948 2,248
Disposals (11) (17) (106)
Exchange adjustment on
translation of foreign
subsidiaries and joint (35) (69) 129
venture
Depreciation, amortisation,
impairment and other
movements (366) (332) (36)
Closing net book amount 13,214 10,565 12,270
Capital expenditure approved at 31 December 2006 amounted to
R11.51 billion (2005: R10.9 billion), of which R2.58 billion
(2005: R2.23 billion) is already committed. This expenditure will
be funded internally and if necessary, from borrowings.
3. Contingent liabilities and
guarantees
(R million):
Contingencies in respect of the South African Revenue Services and
BTX Mining, as reported in the financial statements ending 30 June
2006, still remain.
Certain guarantees and contingent liabilities were in place as at
31 December 2006 in respect of bank and other guarantees and
contingencies arising in the ordinary course of business from
which it is anticipated that no material liabilities will arise:
Guarantees
On behalf of Two Rivers
Platinum (Proprietary)
Limited (related party) 331 99 211
Collateral security for 2 3 3
employee housing and loans
Department of Minerals and 297 288 297
Energy
Eskom 17 17 17
Registrar of Medical Aids 5 5 5
Total guarantees 652 412 533
4. Related party transactions
(R million):
The following transactions
were carried out
with related parties:
Sales of goods and services 14 6 0
to associates
Purchases of goods and
services from
associates 3,166 1,412 2,541
Payables arising from
sales/purchases
of goods/services 1,837 581 689
Loans to related parties 549 203 107
Key management compensation 54 26 63
A subdivision of shares was approved at the annual general meeting held on 12
October 2006.
The ordinary shares of the company were subdivided whereby each ordinary share
of 20 cents was subdivided into eight ordinary shares of 2.5 cents each. The
subdivided shares commenced trading on the JSE Limited on 6 November 2006.
The earnings and dividends per share reported for the previous financial years
were recalculated, using the subdivided number of shares, to enable comparison
with the current reporting period.
The authorised share capital of the holding company after the subdivision is as
follows:
Rand million
800,000,000 ordinary shares of 2.5 cents each 20.0
44,008,000 "A" ordinary shares of 2.5 cent each 1.1
21.1
During the period under review 16.4 million shares (2.1 million shares pre
subdivision) were issued in terms of an approved Employee Share Ownership
Programme. The associated share based payment costs for the half year under
review amounted to R67.4 million which is included in cost of sales.
Borrowings consist of a term loan from Standard Bank Limited amounting to R401.2
million, which carries interest at the Johannesburg Interbank Acceptance Rate
(JIBAR) plus 90 basis points and a revolving credit facility amounting to R56.0
million, which carries interest at JIBAR plus 100 basis points. The loans are
repayable over 8.5 years.
Interim dividend no. 78 of 275 cents per share, amounting to R1.66 billion based
on shares in issue as at 31 December 2006, inclusive of shares to be issued in
terms of the RBN transaction, was approved by the board of directors on 15
February 2007; Secondary Tax on Companies on this dividend will amount to R207.4
million.
Review of operations
Safety remains of paramount importance to the group. Despite the lost time
injury frequency rate (LTIFR) having improved by 4% compared to the financial
year ended 30 June 2006, there were regrettably seven fatal accidents throughout
the group of which 6 occurred at the Impala Platinum operation. The Implats
Board and management extend their condolences to the families and colleagues of
the deceased, and remain committed to eliminate fatalities at work.
The increase in fatal injuries is primarily as a result of falls of ground. In
addition to the ongoing Tsibogo safety training campaign, a Major Hazard Action
Plan consisting of various projects was implemented during the period.
Production by the Implats group was up 8.5% period on period for the six months
ended December 2006 to a near record 1.02 million ounces of platinum due to a
combination of higher production at IRS and the group`s operating units other
than Impala Platinum which more than offset lower production at the Impala
Platinum operation.
Impala Platinum Limited (Impala Platinum) - 100%
Platinum production was down 7.8% to 545,000 ounces as a result of a reduction
in ore and grade mined from the Merensky Reef which was partially offset by
lower yield opencast UG2 ore. Tonnes milled were virtually the same as in the
comparable financial period.
The action plan communicated to the market in October 2006 to address the issue
of the decline in headgrade focused on a back-to-basics mining plan to reduce
mining dilution parameters. The key elements in mining contributing to the
reduction have been identified and are being addressed. A new bonus scheme for
the panel teams focusing on efficiencies, face advance and sweepings was
implemented in November 2006, which yielded some positive results in the last
month of this reporting period. In addition UG2 grade has shown an improvement
as a result of these interventions.
The refining operation continued to excel and gross refined platinum production
increased by 8.5% to 1.02 million ounces with PGM production up by 8.0% to 1.92
million ounces.
The unit cost per platinum ounce was 22.1% (28.2% inclusive of share-based
payment cost) higher at R5,369. This increase is mainly due to the lower
platinum production aggravated by inflationary increases, safety initiatives (EZ
stopers), and more expensive opencast tonnes.
Sinking at the two major capital projects, namely 16 and 20 shafts, remained on
schedule. The capital approved for these projects is R6.65 billion of which
R1.21 billion has been spent to date. At the end of December 2006 sinking of 16
and 20 shafts had reached depths of 714 and 933 metres respectively and both are
currently ahead of schedule and below budget. A feasibility study for a third
fourth generation shaft is currently in progress.
Marula Platinum (Proprietary) Limited (Marula) - 77.5%
Marula achieved one million fatality free shifts on 11 October 2006 and
continues to maintain this safety record. Two lost time injuries occurred during
the first half of the financial year.
Tonnes milled improved by 59.6% to 739,000, with platinum in concentrate up
75.7% to 33,200 ounces. Unit costs decreased by 10.1% to R8,452 per platinum
ounce, period on period, despite the harmonisation of wages within the South
African operations and the build up of their labour complement.
The implementation of the new mining plan continues to exceed expectations and
is currently ahead of schedule and under budget. Plans remain on schedule to
achieve full production of 136,000 ounces of platinum in concentrate per annum
by the end of the 2009 financial year.
Zimbabwe Platinum Mines Limited (Zimplats) - 86.9%
The safety performance remained excellent with one lost time injury during the
reporting period.
Tonnes milled increased by 3.7% to 1.03 million with recovery rates improving to
84.4%. Production rose to 46,100 ounces of platinum in matte.
Unit costs per platinum ounce in matte increased by 4.3% in rand terms mainly
due to the weakening of the rand against the US dollar.
The Portal 2 underground project was completed well within budget and the
operation now accounts for approximately 50% of Zimplats` production at a much
lower cost than at the opencast mine.
The expansion project commenced during the period and work on the two new
underground mines, Portals 1 and 4, is progressing satisfactorily. The project
is expected to increase production from the current 90,000 ounces to 160,000
ounces of platinum per annum by 2010. Capital expenditure totalled R270.7
million for the six months, an increase of 271.7%, largely due to feasibility
studies and expansion projects being expedited.
Security of tenure over mining claims required for Zimplats` long term expansion
programme was enhanced when the Government of Zimbabwe approved the extension of
the Special Mining Lease to cover all of Zimplats` remaining mining claims in
terms of the Release of Ground Agreement signed between Zimplats and the
Government of Zimbabwe which took effect during the accounting period.
Mimosa Platinum (Private) Limited (Mimosa) - 50%
One fatal accident occurred during the reporting period due to a fall of ground.
The LTIFR at 2.33 was disappointing.
Tonnes milled were up 9.0% to 833,000 tonnes, resulting in an increase of 5.2%
in platinum production to 38,400 ounces of platinum in concentrate. Unit costs
per platinum ounce in concentrate increased by 4.2% in rand terms mainly as a
result of the weakening of the rand against the US dollar.
The R168.0 million Wedza Phase V expansion project commenced and will result in
concentrator capacity increasing from 150,000 to 175,000 tonnes per month. As a
result production will increase to 100,000 ounces of platinum in concentrate per
annum by July 2007. Capital expenditure for the period amounted to R60.3
million.
Two Rivers Platinum (Proprietary) Limited (Two Rivers) - 45%
The joint venture between Implats and African Rainbow Minerals Limited is
currently in ramp up phase. Full production of 120,000 ounces of platinum in
concentrate is still expected to be reached by the end of 2007 despite strike
action and delays in commissioning the plant. The plant is processing ore from
the underground buildup and the surface stockpile. Capital expenditure amounted
to R193 million.
Impala Refining Services Limited (IRS) - 100%
Production at IRS improved to 472,500 ounces of platinum resulting in a net
profit of R484.6 million, a 116.5% improvement on the comparable reporting
period and representing an 11.2% contribution to group net profit. Higher metal
prices boosted net profit for this entity.
Aquarius Platinum (South Africa) (Proprietary) Limited (AQPSA) - 20%
AQPSA contributed R132.2 million to earnings for the period under review
compared to R40.9 million for the comparable period. Both the Kroondal and
Marikana operations performed well.
Market Review
Growth in overall platinum demand of around 5%, driven essentially by diesel
automotive emission legislation, was met by a similar growth in supply, leaving
the market balanced. Notwithstanding this, and a reduction of 40% of the net
long position held by funds over the year, the price moved up by 10% during the
course of calendar year 2006. Positive sentiment towards commodities in general,
and platinum, in particular, contributed towards this price increase.
The palladium market recorded another year of significant surplus.
The automotive sector continued to benefit from a combination of rapidly growing
sales in countries outside of North America, Europe and Japan, and tightening
legislation. Jewellery sales declined in 2006 as inventories were depleated and
recycling increased. Notwithstanding the large inventory overhang, prices
benefited from the improved sentiment in commodities and strengthened 20% over
the year.
The rhodium market moved further into deficit in 2006 as the new emission
standards for NOx being phased in world-wide required increased loadings on
gasoline vechicles. Glass production continued to drive industrial usage due to
the strong ongoing consumer demand for LCD and other flat panel devices. The
combined impact on this highly illiquid market was a near doubling of the price
over the year.
Corporate matters
BEE transaction
During the interim period Implats and Royal Bafokeng Holdings (Pty) Limited
(RBH), wholly-owned by the Royal Bafokeng Nation (RBN), received shareholder
approval for a black economic empowerment (BEE) transaction, which replaces the
previously announced IRS transaction.
In terms of the new transaction known as the "royalty transaction", Impala will
pay to RBH an amount of R10.6 billion, being all royalties due to the RBN from 1
July 2007 onwards in terms of the notarial mineral lease between Impala Platinum
and the RBN. This amount will be used by the RBN to subscribe for 75.1 million
shares (9.4 million pre share split) in Implats which together with the RBN`s
existing holding of 8 million shares (1 million pre share split), will result in
a holding of 13.4% in Implats. The previously announced IRS transaction has been
allowed to lapse.
The new agreement followed discussions with the Department of National Treasury
who indicated that Impala Platinum would probably not be able to offset any
existing royalties payable to the RBN against royalties payable to the State
under the new Royalty Bill. Should the final Royalty Act allow for an offset,
Impala Platinum will be entitled to claim such offset. An amendment to the
Income Tax Act, 1962, to permit the tax deductibility of the payment of
royalties in advance is expected to be promulgated in February 2007. This
amendment will allow Impala to deduct R10.6 billion in respect of the royalties
in equal amounts over 31 years.
African Platinum plc (Afplats)
A binding agreement was signed with Afplats in terms of which Implats will
acquire 29.9% of Afplats` South African assets. Funding acquired from the
transaction will be used to develop the Leeuwkop Project in its initial phase
and will allow the remaining project funding to be secured at a lower cost once
the project has been significantly de-risked and mining has commenced. Implats`
operational technical expertise will ensure that the project is successfully
developed.
Exploration
Exploration activities continue in Canada, Botswana, Madagascar and China.
Drilling in the Highbank Lake layered instrusive in Canada have not identified
any significant mineralisation. In Madagascar three boreholes have been
completed on the Ambodilafa anomaly. Assay results are outstanding. In Botswana
the airborne EM survey identified certain anomalies which require ground follow
up.
Financial Review
The interim period of the 2007 financial year was characterised by continued
strong growth in headline earnings, principally as a result of higher US dollar
metal prices coupled with increases in sales volumes and a weaker rand.
Consequently, dollar revenue per platinum ounce sold was 53.9% higher and the
corresponding rand revenue was 71.9% up.
Margins improved across the group with the gross margin increasing by 12.7% to
47.0%. Headline earnings per share, on a recalculated basis using the post share
split number of shares, rose by 134.8% and basic earnings per share by 138.8% to
824 cents.
Sales for the period ending December 2006 increased by 87.6% to R14.86 billion
(US$2.05 billion) for the half-year from R7.92 billion (US$1.22 billion) for the
six month period ending December 2005. The variance analysis of the sales
increase was as follows:
- volumes up by 11.0%, resulting in a positive sales variance of R871 million;
- metal prices of platinum, palladium, rhodium and nickel strengthened in both
rand and dollar terms, exceeding expectations; with PGM prices and that of
platinum especially reaching record levels, overall dollar prices improved by
57.1% contributing to a positive sales variance of R4.53 billion;
- the rand/dollar exchange rate weakened during the period and closed on 31
December 2006 at R7.04/$ compared to a close of R6.31/$ on 31 December 2005; the
average exchange rate for the period under review was R7.25/$ versus R6.49/$ for
the comparable period a year ago; this contributed 19.5% to increased sales,
equivalent to R1.54 billion.
Cost of sales were up by 70.5% to R7.87 billion largely as a result of an
increase in metals purchased and a rise in sales volumes. The group unit cost
per platinum ounce produced was 20.4% higher at R5,647 per platinum ounce
(excluding share-based payments).
Earnings contributions
As in previous years, Implats` income continued to be derived from three sources
with the bulk coming from the mine-to-market operations (85.8%). The other two
sources of income are IRS and equity income from investments.
Contribution to headline earnings (R million)
Six months % Six months %
to to
Entity 31 Dec 2006 Contribution 31 Dec 2005 Contribution
Impala 3 080 70.8 1 501 81.5
Marula 85 2.0 (9) (0.5)
Zimplats 299 6.9 74 4.0
Mimosa 267 6.1 79 4.3
IRS 485 11.2 224 12.2
Aquarius 132 3.0 41 2.2
Two Rivers (1) - - -
Ambatovy - - (68) (3.7)
Headline earnings 4 347 100.0 1 842 100.0
- Mine-to-market operations: The mine-to-market operations owned by the Implats
group are Impala Platinum, Marula Platinum in South Africa and Zimplats and
Mimosa in Zimbabwe, which together contributed R3.73 billion (85.8%) to group
headline profit. Gross profit at Impala Platinum rose by 107.9% to R5.51 billion
with operating margins improving to 63.2% from 50.2%, raising the group`s
overall margin by 12.7% to 47.0%. Marula reported a positive contribution of
R85.0 million which was a substantial improvement on the previously reported
loss of R9.0 million. The Zimbabwe operations reported increases in margins due
to higher US dollar receipts.
Operating margins (%)
Six months to Six months to
Entity 31 Dec 2006 31 Dec 2005
Impala 63.2 50.2
Marula 47.0 (0.7)
Zimplats 52.7 34.1
Mimosa 73.2 48.8
IRS 10.8 15.2
Implats group 47.0 41.7
- IRS, the accounting entity housing Implats` third-party refining services,
contributed R484.6 million to group headline profit, an increase of 116.5%.
Given the lower risks and capital requirements of IRS, margins at this entity
are lower than at other operations within the group. Margins for the 2007
interim period were 10.8% compared to the 15.2% of the previous period mainly
due to the purchase of material previously toll refined at current high metal
prices. Sales for the period rose by 125.2% to R5.79 billion with a 36.0%
increase in platinum production through IRS to 472,500 ounces.
- Equity income from investments came from Implats` holding in Aquarius
Platinum. This increased to R132.2 million largely due to higher rand metal
prices.
Earnings attributable to the equityholders of the company rose by 139.5% to
R4.35 billion mainly as a result of higher rand metal prices.
Balance sheet, structure and cash flow
The emphasis on maintaining a strong balance sheet continues so as to ensure
that there is sufficient funding for the group`s planned future capital
expenditure over the next five years. Cash from operating activities during the
interim period totalled R4.41 billion and the net increase after accounting for
investing and financing activities was R2.29 billion. After funding the capital
expenditure programmes, dividends and investments to 31 December 2006, the net
closing cash position was R4.14 billion.
The dividend cover for the group has been adjusted to 1.7 times (previously 1.9
times) earnings. The rationale for this adjustment to the dividend policy is the
cash savings from the RBN transaction which will see the elimination in future
of the royalty payment and the anticipated improved cash generating ability of
the group.
Capital expenditure
Group capital expenditure for the 2007 interim period totalled R1.36 billion
compared to R948.0 million in the previous interim period. The bulk of this
capital expenditure, R903 million, was spent at Impala Platinum on the
development of 16 and 20 shafts. The Zimbabwean operations accounted for capital
expenditure of R301 million, and Marula, R152 million.
Prospects
The fundamentals for platinum remain firm due to tightening automotive emission
legislation which now incorporates heavy duty vehicles and continuing growth in
diesel market share in Europe. While the outlook for palladium continues to
improve, Russian stock sales will determine price levels. The rhodium market is
forecast to remain extremely tight in the medium term due to the adoption of
stricter NOx emission legislation. Sustainability of the current nickel price is
unlikely.
Implats` growth plan to reach 2.3 million ounces of platinum by 2010 remains on
track. The group is investigating further expansion plans to increase
production to 2.8 million ounces of platinum.
FJP Roux D H Brown Johannesburg
Chairman Chief Executive Officer 15 February 2007
Declaration of interim dividend
An interim dividend of 275 cents per share has been declared in respect of the
half year ended 31 December 2006. The last day to trade ("cum" the dividend) in
order to participate in the dividend will be Friday, 9 March 2007. The share
will commence trading "ex" the dividend from the commencement of business on
Monday, 12 March 2007 and the record date will be Friday, 16 March 2007.
The dividend is declared in the currency of the Republic of South Africa.
Payment from the London transfer office will be made in United Kingdom currency
at the rate of exchange ruling on 14 March 2007 or on the first day thereafter
on which a rate of exchange is available.
The dividend will be paid on Monday, 19 March 2007. Share certificates may not
be dematerialised/rematerialised during the period Monday, 12 March 2007 to
Friday, 16 March 2007, both dates inclusive.
By order of the board
R Mahadevey
Johannesburg
Group Secretary
15 February
2007
Corporate information
Impala Platinum Holdings Limited
(Incorporated in the Republic of South Africa)
Registration No. 1957/001979/06
Share code: IMP ISIN: ZAE000003554
Issuer code: IMPO
LSE: IPLA ADR: IMPUY
("Implats" or "the company")
Registered Office
2 Fricker Road, Illovo 2196
Private Bag X18, Northlands 2116
Transfer Secretaries
South Africa: Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street, Johannesburg, 2001(P.O. Box 61051, Marshalltown, 2107)
Facsimile +27 11 688-5200
Telephone +27 11 370-5000
United Kingdom: Computershare Investor Services plc
The Pavilons, Bridgewater Road, Bristol, BS13 8AE
Directors
FJP Roux (Chairman), DH Brown (Chief Executive Officer), S Bessit, CE Markus, JM
McMahon*, MV Mennell, TV Mokgatlha, K Mokhele, NDB Orleyn, LJ Paton, JV Roberts,
LC van Vught
*British
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 Private Bag X18, Northlands 2116,
South Africa. Telephone: 011 731 9000
Date: 15/02/2007 08:00:02 Produced by the JSE SENS Department. |