Annual financial statements statement 2015
Supplement to the integrated annual report 30 June 2015
MENU

GROUP FINANCIALS STATEMENTS

MENU Notes to the consolidated financial statements — for the year ended 30 June 2015

  1. Accounting policies
  2. Segment information
  3. Property, plant and equipment
  4. Exploration and evaluation assets
  5. Investment in equity-accounted entities
  6. Deferred tax
  7. Other financial assets
  8. Derivative financial instrument
  9. Prepayments
  10. Inventories
  11. Trade and other receivables
  12. Cash and cash equivalents
  13. Share capital
  14. Non-controlling interest
  15. Borrowings
  16. Other financial liabilities
  17. Sundry liabilities
  18. Provisions
  19. Trade and other payables
  20. Financial instruments and financial risk management
  21. Current tax
  22. Revenue
  23. Cost of sales
  24. Other operating income
  25. Other operating expenses
  26. Impairment
  27. Royalty (income)/expense
  28. Finance income
  29. Finance cost
  30. Other income
  31. Other expenses
  32. Income tax expense
  33. Earnings per share
  34. Dividends
  35. Cash generated from operations
  36. Contingent liabilities and guarantees
  37. Related-party transactions

17.  

Sundry liabilities  
      2015   2014  
    Notes   Rm   Rm  
 

Summary

  		      
  Post-employment medical benefits   17.1   66   64  
  Cash-settled share-based compensation   17.2   57   360  
  Deferred profit on sale and leaseback of houses   17.3   338   366  
  Employee retention scheme   17.4   6   141  
      467   931  
  Current     (90)  (321) 
  Non-current     377   610  

17.1

  

Post-employment medical benefits

  		      
  Beginning of the year     64   62  
  Employee benefit expense (note 23)    —   3  
  Finance cost     5   5  
  Actuarial loss     3   1  
  Benefits paid     (6)  (7) 
  End of the year     66   64  
  Current     (5)  (5) 
  Non-current     61   59  

  The Company historically provided post-retirement medical scheme subsidies to qualifying employees. Post-employment medical benefits for remaining employees and retirees are an unfunded liability. A 1% increase in the medical inflation rate results in a R6.9 (2014: R6.5) million increase in the provision and a decrease of 1% results in a decrease in the provision of R5.9 (2014: R5.5) million. Subsidies of R5.2 (2014: R5.1) million are expected to be paid in the next financial year.  
  Qualifying active employees have an average age of 50 (2014: 51) years and an average remaining service period of 14 (2014: 14) years. Retirees have an average age of 74 (2014: 73) years.  
  The determination of Implats’ obligation for post-retirement healthcare liabilities depends on the selection of certain assumptions used by actuaries to calculate amounts. These assumptions include, among others, the discount rate, healthcare inflation costs, rates of increase in compensation costs and the number of employees who reach retirement age before the mine reaches the end of its life. While Implats believes that these assumptions are appropriate, significant changes in the assumptions may materially affect post-retirement obligations as well as future expenses, which may result in an impact on earnings in the periods that the changes in the assumptions occur.  
  As at 30 June 2015, actuarial parameters used by independent valuators assumed 8.0% (2014: 7.8%) as the long-term medical inflation rate and an 8.5% (2014: 8.6%) risk-free interest rate corresponding to the yields on long-dated high-quality bonds.  

17.2

  

Cash-settled share-based compensation

  
  The Group issues equity-settled (note 13) and cash-settled share-based payments to employees. The cash-settled share appreciation rights include the Employee Share Option Participation Scheme (ESOP) and the Share Appreciation Rights Scheme (SARS). The fair value of share-based payments is calculated using the binomial option model for non-vested shares. Vested cash-settled shares are valued at their intrinsic value.  
 

Share Appreciation Rights Scheme (SARS) 
  The Group allocates to D and E Patterson band employees notional shares in the holding company. These notional shares confer the conditional right on a participant to be paid a cash bonus equal to the appreciation in the share price from the date of allocation to the date of vesting of the notional share. Notional shares vest after two years of allocation to a maximum of 25% of the allocation. In subsequent years an additional 25% becomes exercisable per year. All unexercised shares lapse after 10 years from date of allocation. Allocations under this scheme ceased in November 2012.  
 

Employee Share Ownership Programme (ESOP) 
  The ESOP for the South African operations provides for participation in the Morokotso Trust and is for employees in the A, B and C Patterson bands in the employment of the Company before 4 July 2008.  
  
The trust holds the shares on behalf of these employees for a period of 10 years. After the end of five years (July 2011), 40% of the shares became exercisable and could be sold by the trust. The profit made from the sale, less costs, was distributed equally among employees who opted to sell their shares. After another five years, the remaining 60% of the shares will vest, and will be sold in terms of the rules of the fund.  

  The average inputs into the binomial option model are as follows:  
    Employee Share Ownership  
Programme (ESOP) 		 Share Appreciation Right  
Scheme (SARS) 
    2015   2014   2015   2014  
  Weighted average option value (rand)1   0.03   11.52   3.62   18.09  
  Weighted average share price on valuation date (rand)2   54.30   106.88   54.30   106.88  
  Weighted average exercise price (rand)3 and 5   159.18   159.18   177.65   175.19  
  Volatility4   35.94   36.25   35.94   36.25  
  Dividend yield (%)  —   0.56   —   0.56  
  Risk-free interest rate (%)  7.86   7.75   7.86   7.75  
 
1 The weighted average option value for cash-settled shares is calculated on reporting date.  
2 The value of cash-settled share appreciation rights are calculated at year end based on the year-end closing price. 
3 The weighted average exercise price for cash-settled shares is calculated taking into account the exercise price on each grant date.  
4 Volatility for equity and cash-settled shares is the 400-day moving average historical volatility on Implats shares on each valuation date.
5 The weighted average market price of the share on date of issue approximates the weighted average exercise price. Options are granted based on the market price at the date of issue.  
  The total intrinsic value was R nil (2013: R nil) as determined by the year-end share price of R54 (2014: R107).  

    2015   2014  
    (’000)  (’000) 
  Movement in the number of share appreciation rights outstanding was as follows:      
  Beginning of the year   26 337   27 575  
  Lapsed during the year   (316)  (1 132) 
  Paid to employees during the year   (367)  (106) 
  End of the year   25 654   26 337  
  Exercisable   14 342   12 504  
  Not yet exercisable   11 312   13 833  
    25 654   26 337  

17.2

  

Cash-settled share-based compensation continued

  
  Cash-settled share-based payment rights outstanding (number in thousands) at the end of the year have the following terms:  
    Vesting years    
  Price per share   2009   2010   2011   2012   2013   2014   2015   2016   2017   2018   Total  
number  
 

SARS

                      
  R63 – R150   30.4   158.7   357.1   176.4   498.8   932.7   568.0   568.0   568.0   13.3   3 871.4  
  R159 – R171   43.0   51.4   587.5   658.9   565.3   824.8   37.3   37.3   37.4   —   2 842.9  
  R171 – R190   0.7   6.9   290.9   310.9   490.1   932.2   645.7   632.9   441.8   —   3 752.1  
  R190 – R210   4.8   13.7   30.1   508.9   1 273.1   1 255.3   1 248.0   770.0   —   —   5 103.9  
  R210 – R334   130.7   290.0   296.8   303.2   190.4   6.6   —   —   —   —   1 217.7  
 

ESOP

                      
  R159.18*   —   —   —   784.0   —   —   —   —   8 081.6   —   8 865.6  
 

Total 2015

 209.6   520.7   1 562.4   2 742.3   3 017.7   3 951.6   2 499.0   2 008.2   9 128.8   13.3   25 653.6  
  Total 2014   377.3   733.8   1 673.4   2 844.1   3 127.9   3 848.3   2 537.4   2 038.8   9 142.7   13.3   26 337.0  
  Actual remaining contractual life (years):                        
 

2015

 1 – 2   1 – 3   1 – 5   2 – 5   2 – 7   3 – 7   5 – 8   6 – 8   2 – 8   8    
  2014   1 – 3   2 – 4   2 – 5   3 – 7   4 – 8   5 – 8   6 – 9   7 – 9   3 – 9   9    
  * These share-based payment rights, excluded from the remaining contractual life table, relate to the ESOP, which have a remaining contractual life of two years.  

  Refer to note 37 for the details on share-based payment rights held by key management personnel (directors and senior executive management).  

17.3

  

Deferred profit on sale and leaseback of houses

  
  The profit on the sale of the houses, which is subject to a sale and leaseback arrangement, is amortised in other operating income over the remaining life of the lease which is 12 years (2014: 13 years).  

17.4

  

Employee retention scheme

  
  The scheme is a retention bonus scheme based on salary and deferred payment as a result of continued employment. Every year one-third of this award is paid over to the employee, provided that the employee stays in service for the period. During October 2014 employees were given the option to exit the scheme in exchange for short-term employee compensation, which resulted in the pay-out of the majority of the balance.  

17.5

  

Pension and provident plans

  
  Independent funds provide pension and other benefits to all permanent employees and their dependants.  
  At the end of the financial year the following funds were in existence:  
Impala Platinum Refineries Provident Fund  
Impala Workers Provident Fund  
Implats Pension Fund  
Mine Employees Pension Fund (industry fund)  
Mining Industry Pension Fund Zimbabwe (industry fund)  
National Social Security Scheme Zimbabwe (industry fund)1  
Old Mutual – Zimasco Pension Fund  
Sentinel Pension Fund (industry fund) 
 

1 This is the only defined benefit plan. This scheme was promulgated under the National Social Security Authority Act 1989. Contributions by all Zimbabwe employees are 3.5% of pensionable remuneration, which is capped at US$700 000 per annum for the purposes of this defined benefit scheme. The Group’s contributions for the year amounted to US$700 000 (2014: US$700 000).