Audited preliminary summarised consolidated annual results
For the year ended 30 June 2021


Approval of the summarised consolidated financial statements

The directors of Impala Platinum Holdings Limited (“Implats”, “the Company” or “the Group”) are responsible for the maintenance of adequate accounting records and the preparation of the summarised consolidated financial statements and related information in a manner that fairly presents the state of the affairs of the Company. These summarised consolidated financial statements are prepared in accordance with the Listings Requirements of the JSE Limited, the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guidelines as issued by the Accounting Practices Committee, Financial Pronouncements as issued by the Financial Reporting Standards Council, the Companies Act, No 71 of 2008 and the minimum requirements of International Accounting Standards (IAS) 34 Interim Financial Reporting and incorporate full and responsible disclosure in line with the accounting policies of the Group which are supported by prudent judgements and estimates.


Approval of the summarised consolidated financial statements

The directors of Impala Platinum Holdings Limited (“Implats”, “the Company” or “the Group”) are responsible for the maintenance of adequate accounting records and the preparation of the summarised consolidated financial statements and related information in a manner that fairly presents the state of the affairs of the Company. These summarised consolidated financial statements are prepared in accordance with the Listings Requirements of the JSE Limited, the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guidelines as issued by the Accounting Practices Committee, Financial Pronouncements as issued by the Financial Reporting Standards Council, the Companies Act, No 71 of 2008 and the minimum requirements of International Accounting Standards (IAS) 34 Interim Financial Reporting and incorporate full and responsible disclosure in line with the accounting policies of the Group which are supported by prudent judgements and estimates.

The summarised consolidated financial statements and the consolidated financial statements have been prepared under the supervision of the chief financial officer Ms M Kerber, CA(SA).

The directors are also responsible for the maintenance of effective systems of internal control which are based on established organisational structure and procedures. These systems are designed to provide reasonable assurance as to the reliability of the summarised consolidated financial statements, and to prevent and detect material misstatement and loss.

The summarised consolidated financial statements have been prepared on a going-concern basis as the directors believe that the Group will continue to be in operation in the foreseeable future.

The summarised consolidated financial statements have been approved by the board of directors and are signed on their behalf by:

NDB Orleyn
Chairman

NJ Muller
Chief executive officer

Johannesburg
2 September 2021

Independent auditor’s report on the summarised consolidated financial statements

TO THE SHAREHOLDERS OF IMPALA PLATINUM HOLDINGS LIMITED

OPINION

The summarised consolidated financial statements of Impala Platinum Holdings Limited, which comprise the summarised consolidated statement of financial position as at 30 June 2021, the summarised consolidated statement of profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, and related notes, are derived from the audited consolidated financial statements of Impala Platinum Holdings Limited for the year ended 30 June 2021.

In our opinion, the accompanying summarised consolidated financial statements as set out here here are consistent, in all material respects, with the audited consolidated financial statements of Impala Platinum Holdings Limited, in accordance with the requirements of the JSE Limited Listings Requirements for preliminary reports, set out in note 3 to the summarised consolidated financial statements, and the requirements of the Companies Act of South Africa as applicable to summary financial statements.

OTHER MATTER

We have not audited future financial performance and expectations by management included in the accompanying summarised consolidated financial statements and accordingly do not express any opinion thereon.

SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS

The summarised consolidated financial statements do not contain all the disclosures required by the International Financial Reporting Standards and the requirements of the Companies Act of South Africa as applicable to annual financial statements. Reading the summarised consolidated financial statements and the auditor’s report thereon, therefore, is not a substitute for reading the audited consolidated financial statements of Impala Platinum Holdings Limited and the auditor’s report thereon.

THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND OUR REPORT THEREON

We expressed an unmodified audit opinion on the audited consolidated financial statements in our report dated 2 September 2021. That report also includes the communication of key audit matters as reported in the auditor’s report of the audited financial statements.

DIRECTORS’ RESPONSIBILITY FOR THE SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS

The directors are responsible for the preparation of the summarised consolidated financial statements in accordance with the requirements of the JSE Limited Listings Requirements for provisional reports, set out in note 3 to the summarised consolidated financial statements, and the requirements of the Companies Act of South Africa as applicable to summary financial statements.

The Listings Requirements require provisional reports to be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council, and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on whether the summarised consolidated financial statements are consistent, in all material respects, with the consolidated audited financial statements based on our procedures, which were conducted in accordance with International Standard on Auditing (ISA) 810 (Revised), Engagements to Report on Summary Financial Statements.

Deloitte & Touche
Registered Auditors
Per: Sphiwe Stemela
Partner
2 September 2021

The Ridge
6 Marina Road
Portswood District
V&A Waterfront
Cape Town, 8000

Summarised consolidated statement of profit or loss and other comprehensive income

for the year ended 30 June 2021

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  Notes   2021
Rm
  2020
Rm
Revenue  6   129 575   69 851
Cost of sales 7   (76 120)   (46 580)
Gross profit     53 455   23 271
Reversal of impairment 8   14 728  
Other income  9   214   471
Other expenses 10   (2 175)   (1 963)
Finance income     768   538
Finance cost     (946)   (1 155)
Net foreign exchange transaction (losses)/gains     (1 336)   786
Share of profit of equity-accounted entities 12   3 212   1 082
Profit before tax     67 920   23 030
Income tax expense     (20 065)   (6 546)
Profit for the year     47 855   16 484
Other comprehensive (loss)/income, comprising items that may subsequently be reclassified to profit or loss:          
Exchange differences on translating foreign equity-accounted entities     (739)   587
    Deferred tax thereon     74   (59)
Exchange differences on translating foreign operations     (4 019)   3 499
    Deferred tax thereon     15   57
Other comprehensive income/(loss), comprising items that will not be subsequently reclassified to profit or loss:          
Financial assets at fair value through other comprehensive income     31   28
    Deferred tax thereon       (1)
Actuarial loss on post-employment medical benefit     (3)   (1)
    Deferred tax thereon     1  
Total other comprehensive (loss)/income     (4 640)   4 110
Total comprehensive income     43 215   20 594
Profit attributable to:          
Owners of the Company     47 032   16 055
Non-controlling interest     823   429
      47 855   16 484
Total comprehensive income attributable to:          
Owners of the Company     42 860   19 768
Non-controlling interest     355   826
      43 215   20 594
Earnings per share (cents)          
Basic     5 996   2 066
Diluted     5 957   1 911

The notes are an integral part of these summarised consolidated financial statements.

Summarised consolidated statement of financial position

as at 30 June 2021

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  Notes   2021
Rm
  2020   
Rm   
(Restated)1
ASSETS          
Non-current assets          
Property, plant and equipment 11   57 709   50 885
Investment property     90   90
Investment in equity-accounted entities 12   7 748   5 462
Financial assets at fair value through other comprehensive income     425   394
Other financial assets     84   83
Prepayments 13   3 747  
      69 803   56 914
Current assets          
Inventories 14   22 711   19 451
Trade and other receivables     7 308   5 128
Current tax receivable 15   1 064   348
Other financial assets     1 006   3
Prepayments 13   1 109   680
Cash and cash equivalents     23 474   13 331
      56 672   38 941
Total assets     126 475   95 855
EQUITY AND LIABILITIES          
Equity          
Share capital1 16   21 189   22 387
Retained earnings     59 661   28 854
Foreign currency translation reserve     4 917   8 967
Share-based payment reserve1     1 799   2 094
Other components of equity     263   (425)
Equity attributable to owners of the Company     87 829   61 877
Non-controlling interests     2 847   2 669
Total equity     90 676   64 546
LIABILITIES          
Non-current liabilities          
Provisions     2 239   1 812
Deferred tax 15   14 405   10 503
Borrowings 17   1 087   6 233
Other financial liabilities     24   35
Other liabilities     251   226
      18 006   18 809
Current liabilities          
Provisions     100   192
Trade and other payables     16 190   9 220
Current tax payable 15   653   188
Borrowings 17   241   2 625
Other financial liabilities     28   16
Other liabilities     581   133
Bank overdraft       126
      17 793   12 500
Total liabilities     35 799   31 309
Total equity and liabilities     126 475   95 855
1 The comparative numbers have been restated to present the share capital and share-based payment reserve, previously presented as a single line item, as separate line items. This was done to improve comparability in the industry and improve capital disclosure. Refer note 16.

The notes are an integral part of these summarised consolidated financial statements.

Summarised consolidated statement of changes in equity

for the year ended 30 June 2021

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      Share  
capital1
Rm  
Retained
earnings
Rm
Foreign
currency
translation
reserve
Rm
Share-based
payment
reserve
Rm
Balance at 30 June 2019   17 893 13 773 4 668 2 643
Conversion of US$ bonds   4 810
Shares purchased – Long-term Incentive Plan   (1 222)
Transfer of reserves   906 612 (906)
Share-based compensation expense   357
Total comprehensive income   16 054 3 687
  Profit for the year   16 055
  Other comprehensive (loss)/income   (1) 3 687
Dividends paid   (973)
Balance at 30 June 2020   22 387 28 854 8 967 2 094
Conversion of ZAR bonds (net of tax)   1 605
Repurchase of ZAR bonds   (7 141)
Shares purchased – Long-term Incentive Plan   (1 613)
Shares purchased – Odd-lot offer   (178)
Transfer of reserves2   6 129 (5 182) 151 (1 755)
Share-based compensation expense   408
Share-based compensation scheme modification   (462)
Marula IFRS 2 BEE charge   1 514
Total comprehensive income/(loss)   47 030 (4 201)
  Profit for the year   47 032
  Other comprehensive (loss)/income   (2) (4 201)
Dividends paid   (11 041)
Balance at 30 June 2021   21 189 59 661 4 917 1 799

The table above excludes the treasury shares.

        Attributable to:  
      Other
components
of equity
Rm
Owners
of the
Company
Rm
Non-
controlling
interest
Rm
Total
equity
Rm
Balance at 30 June 2019 160 39 137 1 943 41 080
Conversion of US$ bonds 4 810 4 810
Shares purchased – Long-term Incentive Plan (1 222) (1 222)
Transfer of reserves (612)
Share-based compensation expense 357 357
Total comprehensive income 27 19 768 826 20 594
  Profit for the year   16 055 429 16 484
  Other comprehensive (loss)/income   27 3 713 397 4 110
Dividends paid (973) (100) (1 073)
Balance at 30 June 2020 (425) 61 877 2 669 64 546
Conversion of ZAR bonds (net of tax) 1 605 1 605
Repurchase of ZAR bonds (7 141) (7 141)
Shares purchased – Long-term Incentive Plan (1 613) (1 613)
Shares purchased – Odd-lot offer (178) (178)
Transfer of reserves2 657
Share-based compensation expense 408 408
Share-based compensation scheme modification (462) (462)
Marula IFRS 2 BEE charge 1 514 1 514
Total comprehensive income/(loss) 31 42 860 355 43 215
  Profit for the year   47 032 823 47 855
  Other comprehensive (loss)/income   31 (4 172) (468) (4 640)
Dividends paid (11 041) (177) (11 218)
Balance at 30 June 2021 263 87 829 2 847 90 676

The table above excludes the treasury shares.

1 The share capital and share premium columns have been combined into a single item, share capital, to improve comparability in the industry and improve capital disclosure. The subtotal comprising share capital and share-based payment reserve has been removed. Refer note 16.
2 The transfer of reserves relates mainly to the associated repurchase of the ZAR bonds.

The notes are an integral part of these summarised consolidated financial statements.

Summarised consolidated statement of cash flows

for the year ended 30 June 2021

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  Note   2021
Rm
  2020
Rm
CASH FLOWS FROM OPERATING ACTIVITIES          
Cash generated from operations 18   56 852   19 760
Finance cost paid     (505)   (932)
Income tax paid     (14 513)   (1 706)
Net cash inflow from operating activities     41 834   17 122
CASH FLOWS FROM INVESTING ACTIVITIES          
Purchase of property, plant and equipment     (6 265)   (4 248)
Proceeds from sale of property, plant and equipment     148   80
Acquisition of interest in joint venture     (232)  
Investment in financial instruments at fair value through profit and loss     (1 000)  
Net cash paid for the acquisition of North American Palladium       (9 431)
    Acquisition of North American Palladium       (10 859)
    Cash acquired through the acquisition       1 428
Finance income received     766   532
Dividends received     1 822   628
Proceeds from equity instruments held at fair value through other comprehensive income       193
Proceeds from long-term debt instruments       87
Other     8   (4)
Net cash outflow from investing activities     (4 753)   (12 163)
CASH FLOWS FROM FINANCING ACTIVITIES          
Purchase of shares for the Long-term Incentive Plan     (1 613)   (1 222)
Purchase of shares for the odd-lot offer     (178)  
Repayments of borrowings     (5 061)   (6 720)
Proceeds from borrowings net of transaction costs     873   9 026
Repayments of lease liabilities     (232)   (155)
Repurchase of ZAR bonds     (8 641)  
Cash received from cancellation of cross-currency interest rate swap       77
Invitation premium paid on US$ bond conversion       (509)
Dividends paid to Company’s shareholders     (11 041)   (973)
Dividends paid to non-controlling interest     (177)   (100)
Net cash outflow from financing activities     (26 070)   (576)
Net increase in cash and cash equivalents     11 011   4 383
Cash and cash equivalents at the beginning of the year     13 205   8 242
Effect of exchange rate changes on cash and cash equivalents held in foreign currencies     (742)   580
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR1     23 474   13 205
1 Cash and cash equivalents are net of bank overdrafts of R126 million in the prior period.

The notes are an integral part of these summarised consolidated financial statements.

Notes to the summarised consolidated financial statements

for the year ended 30 June 2021

1. GENERAL INFORMATION

Impala Platinum Holdings Limited (“Implats”, “the Company” or “the Group”) is a leading producer of platinum group metals (PGMs). Implats is structured around six mining operations and Impala Refining Services (IRS), a toll refining business. The mining operations are located on the Bushveld Complex in South Africa, the Great Dyke in Zimbabwe – the two most significant PGM-bearing ore bodies in the world – and the Canadian Shield, a prominent layered igneous complex domain for PGMs.

The Company has its listing on the securities exchange operated by JSE Limited in South Africa and a level 1 American Depositary Receipt programme in the United States of America.

The summarised consolidated financial statements were approved for issue on 2 September 2021 by the board of directors.

2. INDEPENDENT AUDITOR’S OPINION

The summarised consolidated financial statements have been derived from the audited consolidated financial statements. The summarised consolidated financial statements for the year ended 30 June 2021 have been audited by our external auditor, Deloitte & Touche, who has expressed an unmodified opinion thereon. The auditor also expressed an unmodified opinion on the consolidated financial statements, which included key audit matters, from which these summarised consolidated financial statements were derived. A copy of the auditor’s report on the summarised consolidated financial statements and of the auditor’s report on the consolidated financial statements are available for inspection at the Company’s registered office, together with the financial statements identified in the respective auditor’s reports. The auditor’s report does not necessarily report on all the information contained in this announcement. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor’s engagement, they should obtain a copy of that report together with the accompanying financial information from the Company’s registered office. Any forward looking statements have not been reviewed or reported on by the Company’s external auditor.

3. BASIS OF PREPARATION

The summarised consolidated financial statements for the year ended 30 June 2021 have been prepared in accordance with the Listings Requirements of the JSE Limited, the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guidelines as issued by the Accounting Practices Committee, Financial Pronouncements as issued by the Financial Reporting Standards Council, the Companies Act, No 71 of 2008 and the minimum requirements of International Accounting Standards (IAS) 34 Interim Financial Reporting.

The summarised consolidated financial statements should be read in conjunction with the annual consolidated financial statements for the year ended 30 June 2021, which have been prepared in accordance with IFRS, and the commentary included in the results.

The summarised consolidated financial statements have been prepared under the historical cost convention except for certain financial assets, financial liabilities and derivative financial instruments which are measured at fair value and liabilities for cash-settled share-based payment arrangements which are measured using a binomial option model.

The summarised consolidated financial statements are presented in South African rand, which is the Company’s functional currency.

The summarised consolidated financial statements and consolidated financial statements have been prepared under the supervision of the chief financial officer Ms M Kerber, CA(SA).

The directors take full responsibility for the preparation of the consolidated financial statements from which the summarised consolidated financial statements are derived.

4. ACCOUNTING POLICIES

The principal accounting policies and methods used by the Group are in accordance with IFRS and are consistent with those of the prior year, except for changes due to the adoption of new or revised IFRSs. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in the notes where necessary and indicated with .

The following amendments to standards are not yet effective but were early adopted by the Group on 1 July 2020:

IAS 16 Property, plant and equipment

  • The amendment prohibits deducting from the cost of an item of property, plant and equipment, any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. An entity instead recognises the proceeds from selling such items, and related-cost of production in profit or loss. The adoption of this amendment had no material impact on the Group.

Disclosure of accounting policies

  • Amendment to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements changes the requirements in IAS 1 Presentation of Financial Statements regarding the disclosure of accounting policies. The amendments explain how an entity can identify a material accounting policy, with added examples of when an accounting policy is likely to be material
  • To support the amendment, guidance and examples have also been developed to explain and demonstrate the application of the “four-step materiality process” described in IFRS Practice Statement 2. The practice statement provides entities with guidance on making materiality judgements when preparing their annual financial statements
  • The Practice Statement is a non-mandatory document and does not change or introduce any requirements in IFRS standards. The amendments had no material impact on the Group.

Definition of accounting estimates

  • Amendments to IAS 8 replace the definition of a change in accounting estimates with a definition of accounting estimates, defined as “monetary amounts in financial statements that are subject to measurement uncertainty”
  • The amendments further clarify that a change in accounting estimate that results from new information or new developments is not the correction of an error. The effects of a change in an input or a measurement technique used to develop an accounting estimate are changes in accounting estimates if they do not result from the correction of prior period errors. The amendments had no material impact on the Group.

Amendments to IAS 12 Income Taxes

  • Narrows the IAS 12 scope of the initial recognition exception so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences. The amendments apply to taxable and deductible temporary differences associated with right-of-use assets and lease liabilities, and decommissioning obligations and the corresponding amounts recognised as assets. Amendments require an entity to recognise the related deferred tax asset and liability, with the recognition of any deferred tax asset subject to the recoverability criteria in IAS 12. The amendment had no material impact on the Group as Implats provides for deferred tax on lease assets and liabilities as well as rehabilitation provisions and the associated assets.

Covid-19-related rent concessions beyond 30 June 2021

  • Amendment to IFRS 16 Leases
    Due to the ongoing nature of the pandemic, the IASB has extended the practical expedient in the IFRS 16 amendment (that relieves a lessee from assessing whether a Covid-19-related rent concession is a lease modification) to reduction in lease payments originally due on or before 30 June 2022 (previously 30 June 2021). The amendment had no material impact on the Group.

5. SEGMENT INFORMATION

The Group distinguishes its reportable segments between the mining operations (Mining), processing and refining (Impala Refining Services) and “All other segments”.

Management has defined the operating segments based on the business activities and management structure within the Group. Management’s judgements to identify reportable segments include factors such as the nature of products and services and geographical areas.

Capital expenditure comprises additions to property, plant and equipment (note 11).

The reportable segments’ measure of profit or loss is profit after tax. This is reconciled to the entities’ consolidated profit after tax and the basis of accounting for reportable segments is consistent with the Group’s consolidated financial statements.

Sales to the two largest customers amounted to 14% and 11% (2020: 13% and 9% each) of total revenue. These sales are reported as Impala and Impala Refining Services’ revenue.

    2021     2020
    Revenue
Rm
Profit/(loss)
after tax
Rm
    Revenue
Rm
Profit/(loss)
after tax
Rm
Mining              
– Impala   51 393 27 973     30 220 6 528
– Zimplats   20 054 6 566     14 426 4 904
– Marula   9 309 2 636     5 272 1 673
– Impala Canada   8 971 2 768     3 254 185
Impala Refining Services   68 895 7 063     36 304 4 316
All other segments   316 2 917     79 310
Reconciliation   (29 363) (2 068)     (19 704) (1 432)
Total   129 575 47 855     69 851 16 484
Reconciliation comprises the following items:              
Unrealised profit in inventory consolidation adjustment     (2 227)
      (1 818)
Inventory adjustments made on consolidation     159       386
      (2 068)       (1 432)
    2021  
    Capital
expenditure
Rm
Total
assets
Rm
Total
liabilities
Rm
 
Mining          
– Impala   2 484 50 747 28 036  
– Zimplats   2 450 31 117 6 178  
– Marula   342 7 735 3 236  
– Impala Canada   1 124 14 343 8 727  
Impala Refining Services   36 315 19 883  
All other segments   37 44 440 19 468  
Total   6 437 184 697 85 528  
Intercompany balances eliminated     (49 412) (50 287)  
Unrealised profit in inventory, NRV and other inventory adjustments     (8 810)  
Deferred income tax raised on consolidation (foreign entities FCTR and reserves)       3 025  
Segmental deferred tax asset/liability allocations and deferred tax on consolidation     (2 467)  
Total     126 475 35 799  
    2020
    Capital
expenditure
Rm
Total
assets
Rm
Total
liabilities
Rm
Mining        
– Impala   1 757 29 569 34 557
– Zimplats   1 735 29 722 7 464
– Marula   340 3 879 2 866
– Impala Canada   657 14 916 11 653
Impala Refining Services   30 384 12 487
All other segments   39 974 11 134
Total   4 489 148 444 80 161
Intercompany balances eliminated     (47 098) (47 972)
Unrealised profit in inventory, NRV and other inventory adjustments     (3 990)
Deferred income tax raised on consolidation (foreign entities FCTR and reserves)       1 738
Segmental deferred tax asset/liability allocations and deferred tax on consolidation     (1 501) (2 618)
Total     95 855 31 309
    Year ended 30 June 2021
    Impala
Rm
Zimplats
Rm
Marula
Rm
Impala
Canada
Rm
Revenue from          
Platinum   9 942 3 395 1 206 219
Palladium   12 142 6 845 2 878 7 952
Rhodium   25 699 5 036 4 354
Nickel   911 870 53
Other metals   2 699 1 351 272 627
Commodity price adjustments   2 557 550 173
Treatment charges   (4)
Treatment income  
Revenue   51 393 20 054 9 309 8 971
    Year ended 30 June 2021
    IRS
Rm
All other
segments
Rm
Reconcilia-
tion
Rm
Total
Rm
Revenue from          
Platinum   12 036 (4 601) 22 197
Palladium   20 531 (9 723) 40 625
Rhodium   27 739 (9 390) 53 438
Nickel   2 209 (923) 3 120
Other metals   6 054 344 (1 651) 9 696
Commodity price adjustments   (3 107) 173
Treatment charges   (28) 32
Treatment income   326 326
Revenue   68 895 316 (29 363) 129 575
    Year ended 30 June 2020
    Impala
Rm
Zimplats
Rm
Marula
Rm
Impala
Canada
Rm
Revenue from          
Platinum   8 855 3 282 937 75
Palladium   9 099 6 138 2 053 2 815
Rhodium   8 858 2 190 1 565
Nickel   1 036 872 43
Other metals   2 372 1 153 101 213
Commodity price adjustments   791 573 151
Treatment income  
Revenue   30 220 14 426 5 272 3 254
    Year ended 30 June 2020
    IRS
Rm
All other
segments
Rm
Reconcilia-
tion
Rm
Total
Rm
Revenue from          
Platinum   9 729 (4 219) 18 659
Palladium   13 716 (8 191) 25 630
Rhodium   8 947 (3 755) 17 805
Nickel   1 285 (915) 2 321
Other metals   2 436 79 (1 260) 5 094
Commodity price adjustments   (1 364) 151
Treatment income   191 191
Revenue   36 304 79 (19 704) 69 851

6. REVENUE

    2021
Rm
    2020
Rm
DISAGGREGATION OF REVENUE BY CATEGORY          
Sales of goods          
Precious metals          
   Platinum   22 197     18 659
   Palladium   40 625     25 630
   Rhodium   53 438     17 805
   Ruthenium   2 141     886
   Iridium   3 424     1 445
   Gold   2 571     1 963
   Silver   41     33
    124 437     66 421
Base metals          
   Nickel   3 120     2 321
   Copper   967     559
   Cobalt   80     26
   Chrome   472     182
    4 639     3 088
Commodity price adjustments   173     151
Revenue from services          
   Toll refining   326     191
    499     342
    129 575     69 851

Note 5 contains additional disclosure of revenue per operating segment.

7. COST OF SALES

    2021
Rm
    2020
Rm
Production costs          
On-mine operations   24 709     18 581
Processing operations   7 739     6 096
Refining and selling   1 927     1 720
Depreciation of operating assets   5 475     4 521
Other costs          
Metals purchased   33 903     18 465
Corporate costs   1 368     1 139
Royalty expense   4 740     1 367
Change in metal inventories   (5 288)     (7 108)
Covid-19 abnormal-production costs       1 278
Chrome operation – cost of sales   241     84
Other   1 306     437
    76 120     46 580

EJ

Direct Covid-19 costs, which include heightened risk mitigation through early Covid-19 detection, pandemic awareness initiatives, workplace hygiene, medical surveillance, additional personal protective equipment and medical supplies, and isolation and treatment of suspected and confirmed cases, are included in cost of sales as part of the cost of production.

Due to the three-week national lock down starting on 26 March 2020, R1 278 million of abnormal production-related costs, which would otherwise have formed part of the calculation of average cost of production for valuing inventory (note 14) were incurred in the prior period.

These costs were excluded from normal production-related costs and presented separately in cost of sales in the prior period. The amount of abnormal production costs separately disclosed was calculated by taking into account the actual shifts worked in relation to target production shifts scheduled for normal budgeted production.

8. REVERSAL OF IMPAIRMENT

    2021
Rm
    2020
Rm
Property, plant and equipment (note 11)   10 437    
Prepaid royalty (note 13)   4 291    
    14 728    

The significant increase in rand PGM prices, as well as a lower increase in operating costs relative to the increase in PGM prices, have resulted in improved expected future operating results for the Group. Consequently, an impairment of R14 728 million was reversed during the current period, R10 437 million of which relates to prior impairments of shafts, mining development and infrastructure and R4 291 million relates to the prepaid royalty to the Royal Bafokeng Nation (RBN) at the Impala operating segment.

The reversal of impairment was limited to what the carrying amounts of the assets would have been at 31 December 2020 had the assets not been impaired. Refer notes 11 and 13 for detailed disclosure relating to the reversal of the impairment.

EJ

The key financial assumptions for the cash-generating units used at December 2020 in the impairment reversal calculations are:

  • Overall long-term real basket price per 6E ounce sold of R21 200 adjusted for the individual asset or cash-generating unit’s prill split
  • Long-term post-tax real discount rate – a range of 6% to 13% and long-term pre-tax real discount rate – a range of 16% to 24% for the various cash-generating units in the Group
  • In situ resource valuation of between US$2 and US$11 per 6E ounce depending on whether the resource is inferred, indicated and measured
  • If the long-term metal prices were to increase by 5%, the recoverable amount would increase by approximately R8.8 billion. Conversely, a decrease of 5% would negatively affect the recoverable amount by approximately R9.2 billion. A 10% increase or decrease in the in situ 6E value would affect the recoverable amount by approximately R160 million
  • If the real discount rate were to increase or decrease by 50 basis points, the recoverable amount will decrease or increase respectively by approximately R600 million.

9. OTHER INCOME

    2021
Rm
    2020
Rm
Insurance proceeds – business interruption (Number 5 furnace fire)       353
Emergency wage subsidy – Impala Canada   54    
Profit on disposal of property, plant and equipment   49     43
Profit on sale and leaseback of houses   30     30
Dividend received – Rand Mutual Assurance (RMA)   30     8
Bargain purchase on acquisition of North American Palladium       11
Other   51     26
    214     471

10. OTHER EXPENSES

    2021
Rm
    2020
Rm
Marula IFRS 2 BEE charge   1 514    
Invitation premium paid on US$ bond conversion       509
Restructuring costs       105
Derivative financial instruments – fair value movements          
– Conversion option – US$ convertible bond       203
– Cross-currency interest rate swap       74
– Foreign exchange rate collars       441
Acquisition-related costs – North American Palladium       147
Non-production-related corporate costs   150     192
Repurchase of ZAR bond costs   169    
Loss on reclassification of Waterberg investment       113
Auditor remuneration   26     20
Exploration expenditure   142     92
Other   174     67
    2 175     1 963
Auditor remuneration comprises:   26     20
    Other services      
    Audit services including interim review   26     20

Marula IFRS 2 BEE charge

The Group concluded the refinancing of the Standard Bank loan with its Marula empowerment partners (note 17), which included the establishment of an employee share ownership trust (ESOT). The transaction reduced the BEE partners shareholding in Marula from 27% to 22.7% but also introduced a 4% shareholding by the ESOT, resulting in an effective BEE ownership of 26.7% post the refinancing. The ESOT is controlled by Implats and therefore consolidated. The 22.7% BEE shareholding will only be accounted for as non-controlling interest when the loan is substantially repaid, at which point the BEE partners’ rights to the shares in Marula become unconditional. The IFRS 2 BEE charge of R1 514 million represents the difference between fair value of the interest in Marula disposed of and the fair value of the consideration received from the BEE shareholders.

EJ

The key financial assumptions in the Marula IFRS 2 BEE charge calculations are:

  • Overall long-term real basket price per 6E ounce sold of R21 000
  • Long-term real post-tax discount rate – a range of 19% to 22% and long-term real pre-tax discount rate – a range of 32% to 35%.

11. PROPERTY, PLANT AND EQUIPMENT

    2021
Rm
    2020
Rm
Carrying value – opening balance   50 885     34 499
Capital expenditure1   6 315     4 279
PPE acquired through the acquisition of North American Palladium (NAP)       11 067
Right-of-use assets capitalised   172     210
Interest capitalised       27
Reversal of impairment (note 8)   10 437    
Disposals and scrappings   (99)     (37)
Depreciation (note 7)1   (5 525)     (4 552)
Rehabilitation adjustment   369     (133)
Exchange adjustment on translation   (4 845)     5 525
Carrying value – closing balance   57 709     50 885
1 Includes depreciation of R50 million (2020: R31 million) which was capitalised to the cost of property, plant and equipment.

Reversal of impairment

During the 2018 financial year, the property, plant and equipment of the Impala operating segment was impaired to its recoverable amount. In the current period, R10 437 million of this impairment, relating to shaft, mining development and infrastructure, was reversed as a result of significant increases in the rand PGM prices as well as an expected overall improvement in future operating results. The recoverable amount of the Impala’s mining cash-generating unit was approximately R31 billion, determined on the basis of fair value less costs to sell and was calculated using future discounted cash flows, including in situ 6E ounce value for mineral resources outside the approved mine plan. This is a level 3 valuation in terms of the fair value hierarchy. Refer note 8.

EJ

Impairment

Long-term mining assets forming part of board-approved projects are valued based on estimates of future discounted cash flows (DCFs) of the latest board-approved business forecasts regarding production volumes, costs of production, capital expenditure, metal prices and market forecasts for foreign exchange rates. The discount rate is a risk-adjusted discount rate, taking into account specific risks relating to the cash-generating unit where cash flows have not been adjusted for the risk.

Mineral resources outside the approved mine plans are valued based on the in situ 6E ounce value. Comparable market transactions are used as a source of evidence adjusting specifically for the nature of each underlying ore body and the prevailing platinum price.

All the above estimates are subject to risks and uncertainties including achievement of mine plans, future metal prices and exchange rates. It is therefore possible that changes can occur which may affect the recoverability of the mining assets.

Possible indicators of impairment were taken into account in the impairment tests for PPE, including Covid-19 as well as climate related impacts where applicable, during the financial year by updating their DCFs to take into consideration the revised production volumes, metal prices, cost forecasts and other factors. No impairment was required.

The key financial assumptions used in the cash-generating units used in the impairment calculations are:

  • Overall long-term real basket price per 6E ounce sold of R23 500 (2020: R20 300 in equivalent 2020 terms) adjusted for the individual asset or cash-generating unit’s prill split
  • Long-term post-tax real discount rate – a range of 5% to 12% (2020: 7% to 15%) and a long-term pre-tax real discount rate – a range of 18% to 29% (2020: 10% to 28%) for the various cash-generating units in the Group
  • In situ resource valuation of between US$1.70 and US$9.00 (2020: US$1.60 and US$8.00) per 6E ounce depending on whether the resource is inferred, indicated and measured.

For the key financial assumptions for the cash-generating units used at December 2020 in the impairment reversal calculations refer note 8.

Right-of-use assets

Included in property, plant and equipment are right-of-use assets, namely, land and buildings with a carrying amount of R489 million (2020: R545 million), refining plants with a carrying amount of R26 million (2020: R37 million) and other assets with a carrying amount of R265 million (2020: R247 million) arising from leases capitalised.

    2021
Rm
    2020
Rm
Capital commitments          
Commitments contracted for   3 297     1 384
Approved expenditure not yet contracted   10 592     4 798
    13 889     6 182
Less than one year   8 176     3 668
Between one and five years   5 713     2 514

Capital expenditure will be funded by internally generated funds and from borrowings, where necessary. Apart from all the right-of-use assets that are encumbered by leases, no other fixed assets were pledged as collateral.

12. INVESTMENT IN EQUITY-ACCOUNTED ENTITIES

    2021
Rm
    2020
Rm
Summary balances          
Joint venture          
Mimosa   4 251     3 428
Associates          
Two Rivers   3 225     1 910
Individually immaterial associates and joint ventures   272     124
    7 748     5 462
Summary movement          
Beginning of the year   5 462     4 437
Share of profit   4 616     1 460
Acquisition of interest in AP Ventures1   232    
Disposal of interest in AP Ventures1   (31)    
Shareholder funding – Waterberg       5
Reclassification – Waterberg investment       (295)
Loss on reclassification of Waterberg investment       (113)
Exchange differences on translating foreign equity-accounted entities   (739)     588
Dividends received   (1 792)     (620)
End of the year   7 748     5 462
Share of profit of equity-accounted entities is made up as follows:
         
Share of profit   4 616
    1 460
Movement in unrealised profit in inventory   (1 404)     (378)
Total share of profit of equity-accounted entities   3 212     1 082
1 During the year Implats acquired a 25% shareholding in AP Ventures, a limited liability partnership established under the laws of England and Wales. The investment comprise a total commitment to contribute US$61 million over a period of nine years. The contribution of R232 million represents draw-downs for the year of US$15.6 million. Equalisation refunds of R31 million (US$2.2 million) were received during the period and which reduced Implats’ shareholding to 19.3%.

13. PREPAYMENTS

    2021
Rm
  2020
Rm
Royal Bafokeng Nation (RBN) prepaid royalty   4 112  
Deposits on property, plant and equipment1   472   364
Business-related prepaid expenditure   256   230
Insurance premiums   4   73
Surface lease royalties   12   13
Total prepayments   4 856   680
Current   1 109   680
Non-current   3 747  
1 Property, plant and equipment prepayments mainly relate to amounts prepaid on capital equipment for Bimha Mine redevelopment, Mupani Mine development, the third concentrator module at Ngezi Concentrator and advance payments for trackless mining machinery.

RBN prepaid royalty

In March 2007, the Group finalised a deal with the Royal Bafokeng Nation (RBN). In terms of this transaction, Impala agreed to pay the RBN all future royalties due to them, thus effectively discharging any further obligation to pay royalties. In turn the RBN purchased shares through Royal Bafokeng Impala Investment Company and Royal Bafokeng Tholo Investment Holding Company, giving them a 13.2% holding in the Company at the time. The RBN have subsequently sold their shareholding in the Company.

Reversal of impairment

In the 2017 financial year, the prepaid royalty to the RBN was impaired in full. During the current year, R4 291 million of this impairment, which related to the Impala operating segment, was reversed due to a significant increase in rand PGM prices, as well as an expected improvement in future operating results, resulting from a lower increase in operating costs relative to the increase in PGM prices. The recoverable amount of the Impala’s mining cash-generating unit was approximately R31 billion, determined on the basis of fair value less costs to sell and was calculated using future discounted cash flows, including in situ 6E ounce value for mineral resources outside the approved mine plan. This is a level 3 valuation in terms of the fair value hierarchy. Refer note 8 for management estimates and judgements, as well as detailed disclosure relating to the reversal of the impairment.

14. INVENTORIES

    2021
Rm
  2020
Rm
Mining metal        
Refined metal   2 910   1 421
In-process metal   5 095   4 348
    8 005   5 769
Purchased metal1        
Refined metal   4 551   6 133
In-process metal   8 519   5 995
    13 070   12 128
Total metal inventories   21 075   17 897
Stores and materials inventories   1 636   1 554
Total carrying amount   22 711   19 451
1 The fair value exposure on purchased metal and resultant inventory has been designated as a hedged item and is included in the calculation of the cost of inventories. The fair value exposure relates to adjustments made to commodity prices and US$ exchange rates from the date of delivery until the final pricing date as per the relevant contract.

The net realisable value (NRV) adjustment impacted by prevailing metal prices at the reporting date included in inventory comprised R140 million (2020: R230 million) for refined metal and R428 million (2020: R211 million) for in-process metal.

Purchased metal consists mainly of Impala Refining Services inventory.

EJ

Inventory valuation

Metals classification between main and by-products is determined based on an assessment of the relative metal content for each segment. The relative metal content of Impala Canada, mining on the Canadian Shield, differs materially from what is mined in the Bushveld Complex in South Africa and the Great Dyke in Zimbabwe.

For purposes of inventory valuation, the African operations treat platinum, palladium, rhodium and nickel as main products and other precious and base metals produced, as by-products.

Impala Canada’s mining and processing activities do not form part of the African operations’ production process and its inventory is valued independently. Impala Canada treats palladium as a main product and all other precious and base metals as by-products for inventory valuation purposes.

The average unit cost of normal pre-smelter production for mining metal is determined by dividing mining production cost with mining output on a 12-month rolling average basis. The normal cost of purchased metal is measured based on the acquisition cost determined on a six-month rolling average basis. The refining cost (further conversion through smelter, base metal refinery (BMR) and precious metal refinery (PMR)) per unit is determined by dividing normal refining costs with total output (both mining and purchased) on a 12-month rolling average basis.

Refined ruthenium and iridium metal quantities on hand are valued using the lower of the actual stock quantity and three-months’ sales quantity.

In the prior period, normalised 12-month rolling mining production was calculated assuming that normal production ceased at the end of March 2020 and recommenced in June 2020, due to Covid-19, resulting in work stoppages.

Change in in-process metal estimate

Quantities of recoverable metal are reconciled to the quantity and grade of ore input as well as the quantities of metal actually recovered (metallurgical balancing). The nature of this process inherently limits the ability to precisely monitor recoverability levels. As a result, the metallurgical balancing process is constantly monitored and the engineering estimates are refined based on actual results over time. The Group conducts periodic counts (usually annually) at the refineries to assess the accuracy of inventory quantities. Based on these counts, changes in engineering estimates of metal contained in-process resulted in a pre-tax increase in metal inventory of R851 million (2020: R1 329 million). Tolerances of up to 2% of annual throughput of the joint products are regarded as normal levels of estimation uncertainty in the measurement of work in progress quantities.

15. TAXATION

15.1 Deferred tax

    2021
Rm
  2020
Rm
Deferred tax liabilities   14 405   10 503

The total year-on-year deferred tax movement is mainly attributable to temporary difference movements relating to property, plant and equipment (R3.6 billion) and royalty prepayment (R1.3 billion), offset by foreign currency translation adjustment on deferred tax (R1.2 billion).

15.2 Current tax

    2021
Rm
  2020
Rm
Current tax payable   653   188
Current tax receivable   (1 064)   (348)
Net current tax receivable   (411)   (160)
Reconciliation        
Beginning of the year   (160)   (150)
Taxation expense   14 332   1 703
Payments made during the year   (14 513)   (1 706)
Current tax payable acquired through the acquisition        
of North American Palladium     47
Interest and penalties refund   (10)   2
Exchange adjustment1   (60)   (56)
End of the year   (411)   (160)
1 The exchange adjustment mainly arose from the settlement and translation of Zimbabwe dollar-denominated income tax liabilities to US dollars.

16. SHARE CAPITAL

Restatement due to change in classification of equity components

The comparative numbers of the statement of financial position have been restated to present the share capital and share-based payment reserve, previously presented as a single line item, as separate line items.

The share capital and share premium columns in the statement of changes in equity have been combined into a single item, share capital. The subtotal comprising share capital and share-based payment reserve has been removed.

This was done to improve comparability in the industry and improve capital disclosure. No financial ratios, including basic earnings per share and headline earnings per share was impacted by this restatement.

        30 June 2020
    2021
Rm
  Previous
classification
Rm
Reclassification
Rm
New
classification
Rm
Statement of financial position            
Share capital and share-based payment reserve     24 481 (24 481)
Share capital   21 189   22 387 22 387
Share-based payment reserve   1 799   2 094 2 094
    22 988   24 481 24 481
Statement of changes in equity            
Ordinary share capital     18 (18)
Share premium     22 369 (22 369)
Share capital   21 189   22 387 22 387
Share-based payment reserve   1 799   2 094 2 094
    22 988   24 481 24 481

 

17. BORROWINGS

    2021   2020
    Non-
current
Rm
Current
Rm
Total
Rm
  Non-
current
Rm
Current
Rm
Total
Rm
Standard Bank Limited – BEE partners Marula     885 885
Convertible bonds – ZAR   1 1   2 707 207 2 914
Impala Canada term loan     2 347 1 310 3 657
Lease liabilities   1 087 240 1 327   1 179 223 1 402
Total borrowings   1 087 241 1 328   6 233 2 625 8 858
    2021
Rm
  2020
Rm
Reconciliation        
Beginning of the year   8 858   8 562
Conversion of bonds to equity   (1 578)   (2 996)
Repurchase of ZAR bonds   (1 502)  
Proceeds from borrowings   873   9 026
Capital repayments   (5 293)   (6 875)
Interest repayments   (342)   (561)
Lease liabilities acquired through the acquisition        
of North American Palladium     76
Leases capitalised   185   210
Interest accrued   555   750
Change in carrying value of Impala Canada term loan   70   (100)
Exchange adjustments   (498)   766
End of the year   1 328   8 858

Convertible bonds – ZAR

During the current period 167 036 of the ZAR denominated convertible bonds (the convertible bonds) were converted into ordinary shares, resulting in an increase of 35 480 632 to number of ordinary shares in issue. The Group also repurchased 157 905 of the convertible bonds through a combination of a tender offer to bondholders (26 146 bonds) and on market purchases (131 759 bonds). The accounting for the total R8.8 billion purchase consideration resulted in a reduction in the carrying value of the bond liability of R1.5 billion, a reduction in equity of R7.1 billion and a charge of R0.2 billion to earnings for the year. The remaining convertible bonds representing less than 1% of the original bonds issued have a par value of R0.59 million and carry a coupon of 6.375% per annum. In July 2021, the remaining 59 bonds were converted into 12 678 ordinary shares. The value of this conversion option derivative was R676 million at the time of issue. The effective interest rate of the bonds was 12.8%.

    2021
Rm
  2020
Rm
Facilities        
Committed revolving credit facility   6 000   4 000
Revolving credit limit facility (US$125 million)   1 788  
Revolving credit limit facility (US$25 million) – Impala Canada Limited     435
    7 788   4 435

Implats entered into a new committed revolving credit facility with various financial institutions consisting of a R6 billion ZAR tranche and a US$125 million US$ tranche. Impala Canada is also a borrower under the US$ tranche.

The committed revolving credit facility of R6 billion bears interest at the three-month Johannesburg Interbank Acceptance Rate (JIBAR) plus a margin and utilisation fee of between 210 and 260 basis points, subject to the level of utilisation and the total net debt to EBITDA levels of the Group. The facility has an accordion option to increase the facility by an additional R2 billion. The facility matures on 24 February 2024 with an option to extend for another two years. The facility was undrawn at year-end.

The committed revolving credit facility of US$125 million bears interest at the three-month London Interbank Offered Rate (LIBOR) plus a margin and utilisation fee of between 185 and 225 basis points, subject to the level of utilisation and the total net debt to EBITDA levels of the Group. The facility has an accordion option to increase the facility by an additional US$50 million. The facility matures on 24 February 2024 with an option to extend for another two years. The facility was undrawn at year-end.

18. CASH GENERATED FROM OPERATIONS

      2021
Rm
  2020
Rm
Profit before tax   67 920   23 030
Adjusted for:        
  Reversal of impairment   (14 728)  
  Depreciation   5 475   4 521
  Amortisation of prepaid royalty   180  
  Finance income   (768)   (538)
  Finance cost   946   1 155
  Share of profit of equity-accounted entities (note 12)   (3 212)   (1 082)
  Marula IFRS 2 BEE charge   1 514  
  Dividend received – Rand Mutual Assurance (note 9)   (30)   (8)
  Employee benefit provisions   (7)   (7)
  Share-based compensation   505   445
  Provisions   (116)   191
  Rehabilitation provisions   20   (86)
  Bargain purchase on acquisition of North American Palladium     (11)
  Foreign currency adjustments   1 035   (1 225)
  Profit on disposal of property, plant and equipment (note 9)   (49)   (43)
  Deferred profit on sale and leaseback of houses (note 9)   (30)   (30)
  Loss on reclassification of Waterberg investment     113
  Fair value adjustments on derivative financial instruments     508
  Invitation premium paid on US$ bond conversion     509
  Tax penalties and interest (received)/paid   (10)   2
      58 645   27 444
Changes in working capital:        
Increase in trade and other receivables   (3 551)   (261)
Increase in inventories   (5 575)   (7 375)
Increase/(decrease) in trade and other payables   7 333   (48)
Cash generated from operations   56 852   19 760

Cash and cash equivalents

Cash and cash equivalents is made up of R17 179 million (2020: R9 193 million) short-term bank deposits, R6 295 million (2020: R3 849 million) cash at bank and Rnil (2020: R283 million) in money market investments. The weighted average effective interest rate on short-term bank deposits was 4.01% and these deposits have a maximum maturity of 32 days.

Exposure by country and currency

The cash and cash equivalents exposures of R23 474 million (2020: R13 205 million), by country, are largely comprised of the South African rand, but also include R3 420 million (2020: R1 146 million) in Europe, denominated in United States dollars, R1 511 million (2020: R1 214 million) in Zimbabwe, denominated in United States dollars, and R760 million (2020: R 1 281 million) in Canada, denominated in Canadian dollars.

Restricted cash

Included in total cash and cash equivalents is restricted cash of R362 million, which mainly consists of R305 million (2020: R289 million) cash invested in the Impala Pollution Control, Rehabilitation and Closure Trust Fund.

19. HEADLINE EARNINGS

      2021
Rm
  2020
Rm
Profit attributable to owners of the Company   47 032   16 055
Remeasurement adjustments:        
Reversal of impairment   (14 728)  
Profit on disposal of property, plant and equipment   (99)   (43)
Bargain purchase on acquisition of North American Palladium     (11)
Loss on reclassification of Waterberg investment     113
Total tax effects of adjustments   4 154   12
Headline earnings   36 359   16 126
Adjusted for:        
  Interest on dilutive ZAR convertible bonds (after tax at 28%)     257
Headline earnings used in the calculation of diluted earnings per share   36 359   16 383
Weighted average number of ordinary shares in issue for basic earnings per share (millions)   784.43   777.20
Adjusted for:        
  Dilutive potential ordinary shares relating to Long-term Incentive Plan   5.12   11.55
  Dilutive potential ordinary shares relating to ZAR convertible bonds   0.01   64.99
Weighted average number of ordinary shares for diluted earnings per share (millions)   789.56   853.74
Headline earnings per share (cents)        
Basic   4 635   2 075
Diluted   4 605   1 919

20. CONTINGENT LIABILITIES, GUARANTEES AND UNCERTAIN TAX MATTERS

Contingent liabilities and guarantees

As at the end of June 2021 the Group had contingent liabilities in respect of guarantees and other matters arising in the ordinary course of business from which it is anticipated that no material liabilities will arise.

The Group has issued guarantees of R80 million (2020: R4 633 million). Guarantees of R2 436 million (2020: R2 177 million) have been issued by third parties and financial institutions on behalf of the Group consisting mainly of guarantees to the Department of Mineral Resources and Energy for R2 042 million (2020: R 1 754 million).

Uncertain tax matters

Implats is subject to income taxes under the various income tax regimes in the countries in which it operates. The Group has filed, and continues to file, all the required income tax returns and to pay the taxes, as reasonably determined, to be due. In some jurisdictions tax authorities are yet to complete all their annual assessments and the income tax assessments, where completed by the tax authorities, remain subject to further examination within prescribed periods. Significant judgement is required in determining the Group’s provisions for income taxes due to the complexity of legislation, which is often subject to interpretation. As a result, disputes can arise with the tax authorities over the interpretation or application of certain rules in respect of the group’s tax affairs within the country involved and the outcome of these claims and disputes cannot be predicted with certainty. On tax matters which are particularly complex or require judgement in applying, management has obtained and will continue to obtain, independent legal and/or tax practitioner opinions which inform and support the tax positions adopted.

Implats’ companies are involved in tax queries, litigation and disputes with various tax authorities in the normal course of business. A detailed review is performed regularly on each matter and a provision is recognised, where appropriate. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially reported, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

Regardless of whether potential economic outflows of matters have been assessed as probable or possible, individually significant matters are included below.

South Africa

At 30 June 2021, the Group has certain unresolved historical tax matters relating mainly to bad debt deductions/provisions at its South African operations. In certain instances, the South African Revenue Service has issued additional assessments or queries relating to these matters and the Group has lodged objections to these assessments. The Group has tax practitioner and legal counsel opinions to support its objections. Should the Group be successful in its objection, it could result in a tax credit of up to R634 million (including interest).

Zimbabwe

The fiscal legislation in Zimbabwe is volatile, highly complex and subject to interpretation. From time to time, Zimplats is subject to a review of its historic income tax returns and in connection with such reviews, disputes can arise with the Zimbabwe Revenue Authority (ZIMRA) over the interpretation and/or application of certain legislation. Judgement is required in determining the provision for income taxes resulting from differences in the interpretation of fiscal legislation which may require determination through the courts. The matter of the currency in which income taxes and royalties should be paid was settled amicably during the year.

Legal matters

Zimplats filed legal proceedings in the Special Court for Income Tax Appeals and the Supreme Court of Zimbabwe in relation to various historical income tax matters and these cases are pending in the courts. The Company has on a without prejudice basis settled the disputed liabilities involved in these cases and therefore, no further liabilities will arise in respect of these disputed tax matters.

21. RELATED-PARTY TRANSACTIONS

    2021
Rm
  2020
Rm
Associates        
Two Rivers        
Transactions with related party        
Purchases of metal concentrates   11 992   6 229
Year-end balances arising from transactions with related party:        
Payables to associate   4 166   1 783
Makgomo Chrome        
Transactions with related party        
Tailings fee expense   44   11
Sale of metal concentrates   44   11
Friedshelf        
Transactions with related party        
Interest accrued   110   117
Repayments   188   173
Year-end balances arising from transactions with related party:        
Borrowings- finance leases   1 019   1 097
The finance leases have an effective interest rate of 10.2%        
Joint ventures        
Mimosa        
Transactions with related party        
Refining fees   287   187
Interest received   3   13
Purchases of metal concentrates   9 136   4 737
Year-end balances arising from transactions with related party:        
Advance to joint venture1   1 744   845
Payables to joint venture   2 733   992
1 Advances have been offset against the metal-purchase trade creditor.

There is no contractual relationship governing the Group’s transactions with Mimosa. These are conducted through an intermediary. For accounting purposes, and to demonstrate the economic substance of the transactions, they are disclosed as related-party transactions, as though the Group had transacted directly with Mimosa.

Fixed and variable key management compensation was R406 million (2020: R176 million).

22. FINANCIAL INSTRUMENTS

Background and basis of preparation

The impact of Covid-19 should already be priced into the inputs, which for the Group, mostly relates to securities price risk and commodity price risk used in the level 1 and 2 fair valuation techniques as determined by the market. The level 3 valuation techniques were adjusted internally by amending the cash flows associated with the discounted cash flow valuations. The outcome of these considerations and the resulting adjustments are reflected in the respective carrying amounts of the financial assets and financial liabilities measured at fair value.

The Covid-19 impacts on the credit risk assessment of cash and cash equivalents and trade and other receivables did not result in any material impairments and, to date, there was no material increase in either liquidity risk and own credit risk.

      2021
Rm
    2020
Rm
Financial assets – carrying amount          
Financial assets at amortised cost   27 868     16 583
  Other financial assets   88     86
  Trade receivables   3 631     2 774
  Other receivables   544     538
  Employee receivables   131     143
  Cash and cash equivalents   23 474     13 042
Financial assets at fair value through profit or loss1   2 706     697
  Other financial assets   1 002    
  Trade receivables   1 704     408
  Cash and cash equivalents       289
  Financial assets at fair value through other comprehensive income3   425     394
Total financial assets   30 999     17 674
Financial liabilities – carrying amount          
Financial liabilities at amortised cost   6 428     12 399
  Borrowings   1 328     8 858
  Other financial liability   52     51
  Trade payables   4 822     3 264
  Other payables   226     100
  Bank overdraft       126
Financial instruments at fair value through profit or loss2   9 025     3 871
  Trade payables at fair value through profit or loss   10 772     4 716
  Advances   (1 747)     (845)
Total financial liabilities   15 453     16 270
1 Financial assets at fair value through profit or loss are part of other financial assets and trade and other receivables in the statement of financial position.
2 Level 2 of the fair value hierarchy – valuation techniques for which significant inputs are based on observable market data.
3 Level 1 of the fair value hierarchy – quoted prices in active markets for the same instrument.

The carrying amounts of financial assets and liabilities approximate their fair values.

Fair value hedge accounting

The Group has a hedging strategy and accounting policy to manage the fair value risk (commodity price and foreign currency exchange risk) to which purchased metal (note 14), the hedged item, is exposed. The financial instrument used to hedge this risk is trade payables, related to metal purchases included in trade payables, measured at fair value through profit or loss. The fair value movements on this financial liability have been designated to hedge the price and foreign currency exchange risk on purchased metal inventory.

To the extent that the hedging relationship is effective, that is, to the extent that an economic relationship exists between the hedged item and hedging instrument, the fair value gains and losses on both the hedged item and hedging instrument are offset against each other. Where the hedge is ineffective the gains and losses on trade payables and purchased metal inventory are recognised in profit or loss in other income and other expenses respectively.

The effects of the fair value hedge are as follows:

    2021
Rm
    2020
Rm
Hedging instrument: Trade payables at fair value through profit          
or loss – metal purchases          
Carrying amount   10 772     4 716
Fair value loss used to determine hedge effectiveness   2 069     1 362
Hedged item: Metal purchases inventory          
Metal purchases exposed to fair value movement   10 772     4 716
Change in fair value of hedging instrument used to determine hedge effectiveness   (2 069)     (1 362)
Accumulated fair value hedge loss included in metal purchases in respect of closing inventory1   2 014     372
1 Relates to metal purchases that were still in the refining process at year-end.

Due to the high correlation between the fair value movements in trade payables and inventory, there has been no hedge ineffectiveness, nor identified sources thereof, in the hedging relationship during the current period.

23. EVENTS OCCURRING AFTER THE REPORTING PERIOD

Dividends

The board declared a final cash dividend on 2 September 2021 in respect of the financial year ended 30 June 2021. The final dividend has been declared in terms of the newly approved dividend policy to declare 30% of free cash flow pre-growth capital, subject to the board’s discretion.

The dividend of 1 200 cents per ordinary share or R9 768 million in aggregate is to be paid out of retained earnings, but not recognised as a liability at year-end. The dividend will have no tax consequence for the Group, but will be subject to 20% withholding tax for shareholders who are not exempt from or do not qualify for a reduced rate of withholding tax.

The dividend is payable on Monday, 27 September 2021 to shareholders recorded in the register at the close of business, 23 September 2021.

    2021
Rm
    2020
Rm
Dividends paid:          
Final dividend No 93 for 2020 of 400 cents per ordinary share   3 113    
Interim dividend No 94 for 2021 (No 92 for 2020) of 1 000 cents (2020: 125 cents) per ordinary share   7 928     973

Other events occurring after the reporting period

In July 2021, the remaining 59 bonds were converted into 12 678 ordinary shares, refer note 17. The directors are not aware of any other subsequent events which materially impact the annual financial statements.

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  • Approval of the summarised consolidated financial statements
  • Independent auditor’s report on the summarised consolidated financial statements
  • Summarised consolidated statement of profit or loss and other comprehensive income
  • Summarised consolidated statement of financial position
  • Summarised consolidated statement of changes in equity
  • Summarised consolidated statement of cash flows
  • Notes to the summarised consolidated financial statements