Notes to the financial information

1.

General information

Impala Platinum Holdings Limited (“Implats”, “the Company” or “the Group”) 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 condensed interim financial information was approved for issue on 26 February 2015 by the board of directors.

2.

Basis of preparation

The condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), IAS 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council, requirements of the Companies Act, Act 71 of 2008, as amended, and the Listings Requirements of the JSE Limited.

The condensed consolidated interim financial statements should be read in conjunction with the annual consolidated financial statements for the year ended 30 June 2014, which have been prepared in accordance with IFRS.

The condensed consolidated interim 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 except for equity and liabilities for share-based payment arrangements which are measured with a binomial option model.

The condensed consolidated interim financial information is presented in South African rand, which is the Company’s functional currency.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

3.

Accounting policies

The principal accounting policies applied are in terms of IFRS and are consistent with those of the annual consolidated financial statements for the year ended 30 June 2014, except as described below. The following new standards, amendments to standards and interpretations have been adopted by the Group as from 1 July 2014 and have no impact on the results of the Group:

• IAS 1 Presentation of Financial Statements (effective 1 January 2016). Disclosure initiative amendments to provide improved presentation and disclosure guidelines.
• IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets (effective 1 January 2016). Amendments to prohibit entities from using a revenue-based depreciation method and introduce a rebuttable presumption that a revenue-based amortisation method is inappropriate.
• IAS 16 Property, Plant and Equipment and IAS 41 Agriculture (effective 1 January 2016). Amendments to define bearer plants and to include it in the scope of IAS 16.
• IFRS 10 Consolidated Financial Statements and IAS 28 Investment in Associates and Joint Ventures (effective 1 January 2016). Amendments regarding the sale or contribution of assets between an investor and its associate or joint venture.
• IAS 27 Separate Financial Statements (effective 1 January 2016). Amendment to allow the equity method of accounting for investments in subsidiaries, joint ventures and associates in the entities’ separate financial statements.
• IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities and IAS 28 Investments in Associates and Joint Ventures (effective 1 January 2016). Amendment confirming the availability of exemption from preparing consolidated financial statements for subsidiary parent companies if the ultimate holding company is an investment company that measures its subsidiaries at fair value.
• IFRS 11 Joint Arrangements (effective 1 January 2016). Amendment requiring the application of the relevant principles for business combinations for the accounting for the acquisition of an interest in a joint operation in which the activity of the joint operation constitutes a business.
• IFRS 14 Regulatory Deferral Accounts (effective 1 January 2016). New standard permitting an entity who is a first-time adopter of IFRS to continue to account for regulatory deferral account balances as previously.
• Improvements to IFRS 2010 – 2012 Cycle (effective 1 July 2014). Various necessary, non-urgent changes to seven different standards.
• Improvements to IFRS 2011 – 2013 Cycle (effective 1 July 2014). Various necessary, non-urgent changes to four different standards.
• Improvements to IFRS 2012 – 2014 Cycle (effective 1 January 2016). Various necessary, non-urgent changes to five different standards.

The reviewed December 2013 interim consolidated statement of financial position and interim consolidated statement of cash flows were restated in line with the audited June 2014 consolidated statement of financial position and consolidated statement of cash flows.

In the June 2014 financial statements a decision was taken to classify the derivative financial asset and the derivative financial liability, previously included under current assets and liabilities, under trade and other receivables, and trade and other payables as a non-current asset and non-current liability respectively.

Guardrisk has also been deconsolidated and is carried as an available-for-sale investment in the December 2013 interim consolidated statement of financial position, in line with the June 2014 audited financial statements, and the December 2013 interim consolidated cash flow was adjusted accordingly.

The impact on the interim consolidated statement of financial position is as follows:  

4.

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.

Capital expenditure comprises additions to property, plant and equipment (note 5).

Impala mining segment’s largest sales customers amounted to 12% and 11% of total sales (December 2013: 12% and 11%) (June 2014: 12% and 11%).

The statement of comprehensive income shows the movement from gross profit to total profit before income tax.

5.

Property, plant and equipment  

Capital commitment  

6.

Investment in equity accounted entities  

Summary – Balances  

Summary – Movement  

7.

Loans  

Summary – Balances  

Summary – Movement  

8.

Inventories  

9.

Borrowings  

10.

Cost of sales  

On-mine operations  

Processing operations  

Refining operations  

Other cost  

Share-based compensation  

Chrome operation – cost of sales  

Depreciation of operating assets (note 5) 

Metals purchased  

Change in metal inventories  

11.

Other operating expenses/(income) 

12.

Headline earnings  

Headline earnings per share (cents) 

13.

Dividends  

14.

Contingent liabilities and guarantees  

15.

Related party transactions  

• The Group entered into PGM purchase transactions of R1 791 million (December 2013: R1 722 million) (June 2014: R3 409 million) with Two Rivers Platinum, an associate company, resulting in an amount payable of R903 million (December 2013: R995 million) (June 2014: R93 million). It also received refining fees to the value of R12 million (December 2013: R9 million) (June 2014: R21 million).
• The Group previously entered into sale and leaseback transactions with Friedshelf, an associate company. At the end of the period, an amount of R1 227 million (December 2013: R1 212 million) (June 2014: R1 221 million) was outstanding in terms of the lease liability. During the period, interest of R63 million (December 2013: R48 million) (June 2014: R111 million) was charged and a R57 million (December 2013: R60 million) (June 2014: R114 million) repayment was made. The finance leases have an effective interest rate of 10.2%.
• The Group entered into PGM purchase transactions of R1 530 million (December 2013: R1 176 million) (June 2014: R2 642 million) with Mimosa Investments, a joint venture, resulting in an amount payable of R740 million (December 2013: R639 million) (June 2014: R778 million). It also received refining fees and interest to the value of R119 million (December 2013: R98 million) (June 2014: R223 million).

16.

Financial instruments  

17.

Subsequent events