Results for the year
Sales revenue (or turnover) grew by R5.0 billion (up 71%) to R12.0 billion. This exceptional increase was on the back of:

• An average basket of dollar prices of US$1 254 per platinum ounce which was
  47% higher than the previous financial year
  
• A 20% depreciation in the South African Rand against the US dollar.

Both of these factors combined to provide an improvement of 74% in the average Rand prices achieved for the major metals. Implats has benefited tremendously from the majority of its revenue stream being US dollar denominated while the majority of costs are incurred in Rands.

Group attributable income (or net profit) of R4.6 billion increased by 106% from R2.2 billion the previous year.

As the group continues to expand, the contributions to attributable income from the various components are changing.

The Impala lease area still contributes most of the attributable income, but reliance on this as the major contributor will reduce over time as the recently announced projects begin to feed through to the bottom line.

IRS continues to play a central role in the group's growth strategy and contributed R300 million, up 156% on last year's figure of R117 million.

The slower than anticipated start up at Crocodile River mine had a negative impact, and the adjusted attributable income contribution reflects the group's accounting policy on the elimination of any unrealised profit on inter-company transactions. This should reverse in the next financial year.

Our shareholding in the Lonplats group has reaped significant benefits with attributable income rising from R220 million to R647 million, an increase of 194%. This figure represents the equity accounted earnings for the year up to March 2001. For the most part that attributable income was received in the form of R542 million in cash dividends. This cash is earmarked for investment in the recently announced Zimplats, Mimosa and Two Rivers Platinum projects which in turn will deliver significant contributions to the group’s attributable income in the future.

The cost performance during the period under review was not in line with the group's philosophy of ensuring single digit unit cost increases. Cash operating cost per ounce of refined platinum rose by 16% to R3 156 (or in dollar terms decreased by 3% to US$415). The effective cost of producing an ounce of platinum, net of by product revenue was a credit of R1 879 per ounce, which was 268% better than the previous year. The table below illustrates the Impala cost performance and is calculated as the cost of mining, concentrating, smelting, refining, marketing and head office costs divided by the relevant platinum production units.

The group has, in US dollar terms, benefited greatly as a result of the depreciation of the Rand against the US dollar and US dollar costs have actually decreased for the period under review.

With respect to margins, the Implats group derives its income from three separate revenue streams, namely :

• Mine-to-market where Implats owns and manages the operations, such as Impala Platinum, Crocodile River mine and, in the future, the Winnaarshoek project.
• Income from associated companies such as Lonplats and in the future from Zimplats, Mimosa, Two Rivers Platinum and the Aquarius group.
• Income from the processing of third party material through IRS.

The margins vary between different business units from 65% at the mine-to-market Impala model to approximately 19% from IRS activities. Implats believes that the philosophy of optimising its refining capacity through securing toll refining contracts and, in addition, acquiring significant minority equity shareholdings, is an optimal strategy. It recognises that this business will produce lower margins than the traditional mine-to-market models. The comparison is skewed, however, if the focus is on one side of the risk/reward equation only. The measure of total risk/return is a combination of weighing the project risks against the project rewards where the Implats group model delivers certain key benefits to shareholders :

• Reduced exposure to mining risk
• Lower investments (in terms of both capex and equity)
• Reduced payback periods
• Comparable return on investment to the mine-to-market model as metal prices decrease. This is as a result of fixed percentage returns on the IRS contracts.
• Exploitation of smaller deposits enabled because of the symbiotic relationship between the miner and the processor.
• Increased process throughput allowing economy of scale benefits to be realised and reduce the fixed cost recovery on Impala mined metals. This is estimated at approximately a 20% reduction in fixed cost recovery based on present throughput.

The margins on production from the Impala lease area can be summarised as follows:

Further details are contained in the segmental reporting note 1 in the Annual Financial Statements.

Earnings per share
Headline earnings per share for the year at 7 024 cents were 108% ahead of the previous year's 3 383 cents. The previous year's earnings per share were adjusted for the change in accounting for the final dividend. The adoption of this statement had a positive impact on the current year’s attributable income which increased by an amount of R55 million. This is covered in more detail in note 11 to the Annual Financial Statements.

The weighted average number of shares in issue was 66 158 million in the current year compared with 65 891 million in the prior year, an increase of less than half a percent. The increase in shares during the current financial year was mainly as a result of shares issued in terms of the share option scheme. (Details are outlined in the directors' report and note 20 to the Annual Financial Statements).

Dividends
The board has proposed a final dividend of 2 380 cents per share, bringing the total declared and proposed dividends for the year to 6 800 cps. This includes the special dividend of 3 000 cps. The increase in interim and final dividends represents a 116% increase over the previous financial year.

Dividends are covered 1,9 times by earnings per share. This is in line with the board's stated dividend policy. The dividend cover philosophy is underpinned by an awareness of returning excess cash to shareholders. This was confirmed by the special dividend payment announced in February 2001.

Currency
The average Rand/US dollar exchange rate achieved was 7.68 this year, some 20% lower than last year's 6.40 achieved. Implats is well positioned to benefit from this weakening in the exchange rate as most of the group's earnings are denominated in US dollars.

Implats' policy remains to be unhedged to fluctuations in the Rand/US dollar exchange rate movement but in certain circumstances forward exchange contracts are entered into to hedge anticipated future transactions.

Shareholder value
We believe that the best measurement of shareholder value is the total return to shareholders (TSR) method. This is a combination of the appreciation in share price, plus dividends returned to shareholders. Implats’ TSR from the end of the 1998 financial year to the end of the period under review has seen the group deliver a phenomenal return of 890%.

Balance sheet structure and cash flow
Implats maintains a low gearing ratio and has substantial debt capacity. As a result the group's weighted average cost of capital (WACC) is not optimal. Consideration is being given to utilising part of the capacity for future projects in an appropriate manner, but taking into account the exposure to US dollar commodity prices and Rand/US dollar exchange rates.

Implats maintains a strong balance sheet in order to meet working capital requirements and provide internal funding for the majority of future capital projects.

The group generated R5.7 billion during the period under review. This was sufficient to fund capital expenditure programmes, the significant dividends paid and the payment for Platexco Inc. Despite this, Implats’ closing cash position was similar to that of the previous financial year.

Implats’ cash position for the next financial period is anticipated to be substantially lower than the closing position as at the end of June 2001.This is mainly due to:

- Payment for recent acquisitions (Zimplats, Mimosa and Two Rivers)
- Potentially lower metal prices
- Increased final dividend payment
- Ongoing capex on the Impala lease area,
   Crocodile River mine and Winnaarshoek.

Capital expenditure Group capital expenditure was recorded at R2 090 million, of which R950 million related to the purchase of the Winnaarshoek mineral rights. Capital expenditure at Impala Platinum of R978 million for the year was R246 million higher than 2000, with expenditure on the decline projects at 1 shaft (R129 million), 12 shaft (R56 million), 14 shaft (R261 million) and 11 shaft (R116 million) accounting for more than half of that. Capex (adjusted for the Winnaarshoek purchase) is expected to increase by R890 million, to R2 001 million in 2002. Of this, R870 million is for continued expenditure on the decline projects, R640 million for the Winnaarshoek project and R132 million at Crocodile River mine.