SUMMARISED CONSOLIDATED
ANNUAL RESULTS FOR THE YEAR
ENDED 30 JUNE 2014
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NOTES TO THE FINANCIAL INFORMATION
for the year ended 30 June 2014

1.

General information
  Impala Platinum Holdings Limited (Implats, Group or Company) is a primary producer of platinum and associated platinum group metals (PGMs). The Group has operations on the Bushveld Complex in South Africa and the Great Dyke in Zimbabwe, the two most significant PGM-bearing ore bodies globally.
  The Company has its listing on the JSE Limited.
  The summarised consolidated financial information was approved for issue on 28 August 2014 by the board of directors.
   

2.

Audit opinion
  The consolidated financial statements of Impala Platinum Holdings Limited for the year ended 30 June 2014 from which these summarised consolidated financial statements have been derived have been audited by PricewaterhouseCoopers Inc. Their unqualified audit opinion is available for inspection at the Company’s registered office. These summarised consolidated financial statements have themselves not been audited.
   

3.

Basis of preparation
  The summarised consolidated financial statements for the year ended 30 June 2014 have been prepared in accordance with the JSE Limited’s Listings Requirements (Listings Requirements) and the requirements of the Companies Act, Act 71 of 2008 applicable to summarised financial statements. The Listings Requirements require financial statements 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.
  The summarised consolidated financial information should be read in conjunction with the consolidated financial statements for the year ended 30 June 2014, which have been prepared in accordance with IFRS.
  The summarised consolidated financial information has 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 with a binomial option model.
  The summarised consolidated financial information is presented in South African rand, which is the Company’s functional currency.
   

4.

Accounting policies
  The principal accounting policies applied in the preparation of the consolidated financial statements from which the summarised consolidated financial statements were derived, are in terms of IFRS. The following new standards, amendments to standards and interpretations have been adopted by the Group as from 1 July 2013:
  • IAS 27 Separate Financial Statements (revised), IAS 28 Investment in Associates and Joint Ventures (revised), IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of interest in other entities were issued dealing with consolidation, joint arrangements, associates and disclosure. IFRS 10, IFRS 11 and IFRS 12 were subsequently amended to clarify certain transitional guidance on the first-time application of these standards. The Group has adopted these standards, including the subsequent amendments during the year. The main impact is that Implats now equity accounts for its investment in the joint venture, Mimosa, which was previously proportionately consolidated (note 7). The accounting policy was applied retrospectively. The application of IFRS 12 results in more extensive disclosure in the consolidated financial statements.
  • IAS 36 Impairment of Assets (effective 1 January 2014). The amendment requires additional disclosure on the recoverable amount of non-financial assets when an impairment loss was recognised. The amendment resulted in additional disclosure in the consolidated financial statements.
  • IAS 39 Financial Instruments: Recognition and Measurement (effective 1 January 2014). This amendment, regarding novation of derivatives, allows for the continuation of hedge accounting. The amendment has no impact on the results of the Group.
  • IFRIC 21 Levies (effective 1 January 2014). The new interpretation addresses concerns on how to account for levies based on financial data of a different period from that in which the activity resulting in the payment of the levy occurs. The new interpretation has no impact on the results of the Group.
   

5.

Segment information
  The Group differentiates its segments between mining operations, refining services (which include metals purchased and toll refined), chrome processing and other.
  Management has determined the operating segments based on the business activities and management structure within the Group. Mimosa, previously included in the mining segment, will in future be reported internally as other mine-to-market operations and included in the other segment.
  Capital expenditure comprises additions to property, plant and equipment (note 6), including additions resulting from acquisitions through business combinations.
  Impala mining segment’s two largest sales customers amounted to 12% and 11% of total sales (June 2013: 13% each).
  The statement of comprehensive income shows the movement from gross profit to total profit before income tax.
   
     Revenue  
Rm  		 30 June 2014  
Gross profit  
Rm  		 Revenue  
Rm  		 30 June 2013  
Gross profit  
Rm  
  Mining        
  – Impala   28 308   (1 773)  29 110   2 315  
  Mining   10 327   (1 902)  14 588   2 097  
  Metals purchased   17 981   129   14 522   218  
  – Zimplats   5 973   2 039   4 159   1 451  
  – Marula   1 791   (12)  1 404   (216) 
  – Afplats   —   (5)  –   (2) 
  Chrome processing   179   41   181   38  
  Inter-segment adjustment    (7 778)  1 144   (5 563)  (267) 
  External parties   28 473   1 434   29 291   3 319  
  Refining services   18 495   1 813   14 696   1 397  
  Inter-segment adjustment   (17 940)  (5)  (14 143)  (4) 
  External parties   555   1 808   553   1 393  
  Total external parties   29 028   3 242   29 844   4 712  
    Capital  
expenditure  
Rm  		 Total  
assets  
Rm  		 Capital  
expenditure  
Rm  		 Total  
assets  
Rm  
  Mining          
  – Impala   2 823   49 946   4 390   52 231  
  – Zimplats   1 226   12 856   1 449   10 971  
  – Marula   159   3 048   125   3 115  
  – Afplats   175   5 912   215   6 677  
  Total mining   4 383   71 762   6 179   72 994  
  Refining services   —   4 580   –   3 969  
  Chrome processing   2   120   79   159  
  Other   —   3 405   –   3 270  
  Total   4 385   79 867   6 258   80 392  
       

6.  

Property, plant and equipment  

    
    30 June 2014  
Rm  		 30 June 2013  
Rm  
  Opening net book amount   44 410   38 876  
  Additions   4 345   6 135  
  Additions through business combination   —   79  
  Interest capitalised   155   64  
  Disposals   (17)  (44) 
  Depreciation (note 11)  (2 341)  (2 314) 
  Impairment   (65)  —  
  Scrapping   (223)  —  
  Rehabilitation adjustment   (115)  (20) 
  Exchange adjustment on translation   767   1 634  
  Closing net book amount   46 916   44 410  
       
  Capital commitment      
  Capital expenditure approved at 30 June 2014 amounted to R15.6 (June 2013: R19.1) billion, of which R1.9 (June 2013: R2.7) billion is already committed. This expenditure will be funded internally and, if necessary, from borrowings.  
       

7.  

Investment in equity-accounted entities  

    
    30 June 2014  
Rm  		 30 June 2013  
Rm  
  Summary – Balances      
  Joint venture:      
  Mimosa   1 756   1 786  
  Associates:      
  Two Rivers   1 134   1 072  
  Makgomo Chrome   69   64  
  Friedshelf 1226 and 1169   —   —  
  Total investment in equity-accounted entities   2 959   2 922  
  Summary – Movement      
  Beginning of the year   2 922   2 524  
  Share of profit   383   220  
  Share of other comprehensive income   120   323  
  Interest accrued   —   2  
  Payments received   —   (51) 
  Dividends received   (466)  (96) 
  End of the year   2 959   2 922  
  The investment in Mimosa was previously proportionately consolidated on a line-for-line basis. The equity method of accounting was applied retrospectively and the balances previously proportionately consolidated, which now form part of the investment, are as follows:  
    As at  
30 June 2013  		 As at  
1 July 2012   
  Non-current assets   1 717   1 474  
  Current assets   704   594  
  Total assets   2 421   2 068  
  Non-current liabilities   514   429  
  Current liabilities   121   136  
  Total liabilities   635   565  
  Net asset value (Investment in joint venture)  1 786   1 503  
       

8.  

Loans  

    
    Year ended  
30 June 2014  
Rm  		 Year ended  
30 June 2013  
Rm  
  Summary – Balances      
  Employee housing   55   44  
  Reserve Bank of Zimbabwe   73   135  
  Contractors   5   16  
  Silplats   12   —  
    145   195  
  Short-term portion   (12)  (21) 
  Long-term portion   133   174  
  Summary – Movement      
  Beginning of the year   195   1 625  
  Loans granted during the year   22   7  
  Interest accrued   7   37  
  Impairment   (71)  (1 098) 
  Repayment received   (17)  (364) 
  Exchange adjustment   9   (12) 
  End of the year   145   195  
       

9.  

Inventories  

    
    30 June 2014  
Rm  		 30 June 2013  
Rm  
  Mining metal      
  Refined metal   1 300   2 301  
  Main products – at cost   941   1 394  
  Main products – at net realisable value   286   814  
  By-products – at net realisable value   73   93  
  In-process metal   1 728   2 294  
  At cost   1 270   1 480  
  At net realisable value   458   814  
  Non-mining metal      
  Refined metal   1 160   1 086  
  At cost   1 134   886  
  At net realisable value   26   200  
  In-process metal   2 291   2 154  
  At cost   2 291   1 526  
  At net realisable value   —   628  
       
  Metal inventories   6 479   7 835  
  Stores and materials inventories   733   621  
    7 212   8 456  
 

Refined metal:  
  Refined main products at a cost of R361 (June 2013: R1 346) million were written down by R49 (June 2013: R332) million to net realisable value of R312 (June 2013: R1 014) million.  
  Included in refined metal is metal on lease to third parties of 36 000 (June 2013: 36 000) ounces ruthenium.  
 

In-process metal:  
  Changes in engineering estimates resulted in a reduction of R806 million.   
  After this adjustment, in-process metal of main products at a cost of R544 (June 2013: R1 888) million were written down by R86 (June 2013: R446) million to net realisable value amounting to R458 (June 2013: R1 442) million.  
       

10.  

Borrowings  

    
    30 June 2014  
Rm  		 30 June 2013  
Rm  
  Summary – Balances      
  Standard Bank Limited – BEE partners Marula   878   876  
  Standard Bank Limited – Zimplats   1 117   1 037  
  Convertible bonds – ZAR   2 429   2 365  
  Convertible bonds – US$   1 981   1 803  
  Finance leases   1 382   1 398  
    7 787   7 479  
  Short-term portion   (618)  (220) 
  Long-term portion   7 169   7 259  
       
  Summary – Movement      
  Beginning of the year   7 479   2 940  
  Proceeds   —   4 146  
  Leases capitalised   —   (20) 
  Interest accrued   549   344  
  Repayments   (462)  (273) 
  Exchange adjustment   221   342  
  End of the year   7 787   7 479  
       

11.  

Cost of sales  

    
    Rm   Rm  
  Included in cost of sales:      
  On-mine operations   9 090   12 013  
  Wages and salaries   6 085   7 074  
  Materials and consumables   3 323   4 148  
  Utilities   819   791  
  Minus: Cost incurred during strike period   (1 137)  —  
  Processing operations   2 733   3 044  
  Wages and salaries   562   624  
  Materials and consumables   1 333   1 530  
  Utilities   956   890  
  Minus: Cost incurred during strike period   (118)  –  
  Refining operations   880   941  
  Wages and salaries   406   413  
  Materials and consumables   354   414  
  Utilities   120   114  
  Other costs   655   656  
  Corporate costs, salaries and wages   483   321  
  Selling and promotional expenses   172   335  
  Share-based compensation   231   (98) 
  Chrome operation – cost of sales   117   137  
  Depreciation of operating assets   2 341   2 314  
  Metals purchased   8 601   7 588  
  Change in metal inventories   1 138   (1 463) 
    25 786   25 132  
       

12.  

Other operating expenses/(income) 

    
    30 June 2014  
Rm  		 30 June 2013  
Rm  
  Other operating expenses/(income) comprise the following principal categories:      
  Non-production cost during strike   1 255   —  
  Profit on disposal of property, plant and equipment   (76)  (86) 
  Rehabilitation provision – change in estimate   (44)  (32) 
  Impairment   1 071   2 279  
  Trade payables – commodity price adjustment   246   (331) 
  Scrapping of assets   223   —  
  Insurance claim   (112)  —  
  Audit remuneration   14   15  
  Other   (7)  (21) 
    2 570   1 824  
  Production ceased at Impala Rustenburg’s operation during the five-month industrial action. Cost incurred during this period was reallocated from cost of sales to other operating expenses.  
       

13.  

Headline earnings  

    
  Headline earnings attributable to equity holders of the Company arises from operations as follows:      
    30 June 2014  
Rm  		 30 June 2013  
Rm  
  Profit/(loss) attributable to owners of the Company   8   1 015  
  Adjustments:      
  – Profit on disposal of property, plant and equipment   (47)  (54) 
  – Impairment   630   1 018  
  – Scrapping of property, plant and equipment   223   –  
  – Insurance compensation relating to scrapping of property, plant and equipment   (112)  –  
  – Total tax effects of adjustments   (179)  15  
  Headline earnings   523   1 994  
  Weighted average number of ordinary shares in issue for basic earnings per share   606.94   606.76  
  Weighted average number of ordinary shares for diluted earnings per share   607.85   607.06  
  Headline earnings per share (cents)     
  Basic   86   329  
  Diluted   86   328  
       

14.  

Dividends  

    
    30 June 2014  
Rm  		 30 June 2013  
Rm  
  No dividends were declared in respect of the 2014 financial year.      
  Dividends paid      
  Final dividend No 91 for 2013 of 60 (2012: 60) cents per share   371   366  
  No interim dividend for 2014 (2013: interim dividend No 90 of 35 cents per share)  —   214  
    371   580  

15.  

Contingent liabilities and guarantees  
  As at the end of June 2014 the Group had bank and other guarantees of R1 370 (June 2013: R1 112) million from which it is anticipated that no material liabilities will arise.  
  The companies which are subject to water licences with the Department of Water Affairs are in the process of compiling a plan, including future cash flow, to ensure that adherence to the water management requirements, including treatment and rehabilitation requirements of the Department of Water Affairs, are met. This could result in a liability and a corresponding asset in the statement of financial position. Measurement of the liability is currently in progress.  
   

16.  

Related-party transactions  
 
  • The Group entered into PGM purchase transactions of R3 409 (June 2013: R2 990) million with Two Rivers Platinum, an associate company, resulting in an amount payable of R936 (June 2013: R759) million. It also received refining fees to the value of R21 million (June 2013: refining fees and interest to the value of R20 million). The shareholders’ loan was repaid during the previous year.
  • The Group previously entered into sale and leaseback transactions with Friedshelf, an associate company. At the end of the period, an amount of R1 221 (June 2013: R1 224) million was outstanding in terms of the lease liability. During the period, interest of R111 (June 2013: R123)million was charged and a R114 (June 2013: R100) million repayment was made. The finance leases have an effective interest rate of 10.2%.
  • The Group entered into PGM purchase transactions of R2 642 (June 2013: R2 034) million with Mimosa Investments, a joint venture, resulting in an amount payable of R778 (June 2013: R572) million. It also received refining fees and interest to the value of R223 (June 2013: R169) million.
  These transactions are entered into on an arm’s-length basis at prevailing market rates.  
 

Key management compensation (fixed and variable):  

    
    30 June 2014  
R000  		 30 June 2013  
R000  
  Non-executive directors’ remuneration   7 9761  6 969  
  Executive directors’ remuneration   25 9743  35 9162 
  Prescribed officers   27 5734  19 050  
  Senior executives and company secretary   22 811   22 303  
  Total   84 334   84 238  
  1 Includes three additional directors compared to prior year
  2 Includes R16.8 million paid to DH Brown
  3 Includes severance payment to PA Dunne of R9.2 million
  4 Includes one additional prescribed officer compared to prior year  
       

17.  

Financial instruments  

    
    30 June 2014  
Rm  		 30 June 2013  
Rm  
  Financial assets – carrying amount      
  Loans and receivables   6 145   7 405  
  Financial instruments at fair value through profit and loss   3322  902 
  Held-to-maturity financial assets   35   32  
  Available-for-sale financial assets   541  1101 
    6 566   7 637  
  Financial liabilities – carrying amount      
  Financial liabilities at amortised cost   11 626   12 003  
  Financial instruments at fair value through profit and loss   182  302 
    11 644   12 033  
  The carrying amount of financial assets and liabilities approximate their fair values.  
  1 Level 1 of the fair value hierarchy – Quoted prices in active markets for the same instrument.  
  2 Level 2 of the fair value hierarchy – Significant inputs are based on observable market data.