Business of the company
Impala Platinum Holdings Limited (Implats/company/group) is principally in the business of producing and supplying platinum group metals (PGMs) to industrial economies. The company's holdings in various mining and exploration activities as at 30 June 2005 are described below:
The company's authorised share capital of 100,000,000 ordinary shares of 20 cents each remained unchanged during the year.
During the year 224,018 new ordinary shares were issued in terms of the Implats share option scheme. Following these allotments, the issued capital of the company was 66,845,195 ordinary shares of 20 cents each (2004: 66,621,177).
In terms of a resolution passed at the last annual general meeting, 10% of the unissued share capital is under the control of the directors until the forthcoming annual general meeting. Shareholders granted a general authority for the company or any of its subsidiaries to acquire up to 10% of the shares issued by the company in terms of the Companies Act and the Listing Requirements of the JSE Limited (JSE).
The resolution proposed at the last general meeting to authorise the directors to issue up to 15% of the company's share capital for cash was withdrawn from the meeting, due to proxy votes indicating a resistance to approve this authority.
The general authority to acquire up to 10% of the shares issued by the company expires at the forthcoming annual general meeting. Shareholders will be asked to consider a resolution renewing this general authority. The proposed resolution is set out in the notice convening the annual general meeting.
The group acquired 1,230,622 (1,84%) of its own shares in terms of an approved share buy-back scheme, through purchases on the JSE for an amount of R613 million (2004:nil). The shares are held as "treasury shares" by a subsidiary.
Share option scheme
The directors are authorised to issue, allot or grant options to acquire up to a maximum of 2,177,000 ordinary shares in the unissued share capital of the company in terms of employee share options schemes. Details of participation in the share option scheme are set out in Note 13 of the financial statements.
In line with recent remuneration developments, the group will no longer offer employees any further options under the existing Share Incentive Scheme, but will pay relevant employees a fully taxable bonus based on the increase in the share price. Employees' interests will still be aligned with those of shareholders but without any dilutionary effect.
The rules governing the quantum and timing of benefits to be delivered to employees under the new bonus scheme will be no different from those under the existing Share Incentive Scheme.
The trustees of the share option scheme are Ms NDB Orleyn and Messrs JM McMahon and JV Roberts.
Shareholding in the company
The issued capital of the company is held by public and non-public entities as follows:
The following shareholders beneficially hold more than 5% of the issued share capital:
Zimplats Holdings Limited
The company owns 86.9% of Zimplats Holdings Limited (Zimplats). During the year, Implats swopped its 30% direct holding in Zimbabwe Platinum Mines (Pvt) Limited (Zimbabwe Mines) for an additional 14,873,160 shares in Zimplats (2.8%) resulting in Zimbabwe Mines becoming a fully owned subsidiary of Zimplats.
In addition, Implats acquired an additional 1% shareholding in Zimplats for R17.1 million (AU$3.7 million), increasing the group's holding to 86.9%.
In June 2005, the name of Zimbabwe Platinum Mines Limited was changed to Zimplats Holdings Limited and Makwiro Platinum Mines (Pvt) Limited changed its name to Zimbabwe Platinum Mines (Pvt) Limited.
A schematic of the above changes is set out below.
Mimosa Holdings (Pvt) Limited (Mimosa)
The company holds a 50% shareholding in Mimosa with the balance held by Aquarius Platinum Limited.
Two Rivers Platinum
The company owns a 45% interest in Two Rivers Platinum (Pty) Limited with the balance held by African Rainbow Minerals Resources (ARM) Limited. During the year, following the completion of a successful trial mining phase, it was decided to proceed with a 220,000 PGM ounce per year project. Capital expenditure was estimated at R1.2 billion to commissioning. R600 million finance has been secured through ABSA and Nedbank with the balance being contributed by the two equity partners in the shareholding ratio. Implats will contribute R270 million and ARM R330 million towards the project capital.
Aquarius Platinum Limited
The company holds an 8.6% interest in Aquarius Platinum Limited (Aquarius). Aquarius is listed on the Australian Stock Exchange, London Stock Exchange and the JSE.
Aquarius Platinum (South Africa) (Pty) Limited
As a result of an Aquarius Platinum BEE transaction, Implats' shareholding would have reduced from 25% to less than 20%. To prevent this, Implats invested an amount of R71.5 million in equity and a shareholder loan to maintain the effective holding at a 20% level post the BEE transaction.
The company entered into an agreement with Lonmin plc in terms of which the company sold its 27.1% shareholding in Eastern Platinum Limited and Western Platinum Limited (collectively known as Lonplats), to Lonmin plc (18.1%) and a number of HDSAs, being Andisa Capital, Dema Group and Vantage Capital (9%), for a total of $794.5 million, thereby facilitating the formation of a newly established BEE company, Incwala Resources (Pty) Limited (Incwala).
The terms and conditions of the transaction were as follows:
The dollar proceeds of the sale realised R4.9 billion and the loans to various BEE companies amounted to R617.5 million.
The loans are structured into interest-bearing and interest-free portions. The interest-bearing loans bear interest in years 3 and 4 at the Johannesburg Interbank Acceptance Rate (JIBAR) plus 1%; in year 5 at JIBAR plus 2%; and thereafter at JIBAR plus 3%.
The profit on disposal of Lonplats, of R3.2 billion, is included in profit for the year.
The original mining plan to mine the UG2 reef using a mechanised bord-and-pillar mining method proved to be unsuccessful due to the undulating and steep dip of the UG2 reef in the area. A new mining method as conventionally used at Impala Platinum's operations is accordingly being employed.
The financial and operating assumptions on which the previous estimates were based have deviated materially to the extent that an impairment charge of R1.0 billion is necessary. Exchange rate appreciation coupled with changes in dollar metal prices and higher capital requirements contributed to the impairment charge.
An impairment charge of R1.0 billion is included in profit for the year (R850 million net of taxation).
The company has undertaken to contribute up to $60 million towards the Ambatovy feasibility study on the 60,000 tonne nickel and 5,600 tonne cobalt per annum project in Madagascar and Springs, South Africa. Implats and Dynatec Corporation of Canada each hold a 37.5% stake and Sumitomo Corporation of Japan a 25% stake in the project. Completion of the feasibility study is expected by February 2006.
Results for the year
The results for the year are fully dealt with in the financial statements forming part of the annual report.
During the year the accounting polices were amended to incorporate IFRS2 which recognises share options granted and dispenses the cost thereof through the income statement. Refer to note 1.2 in the financial statements for further details on changes to accounting policies.
An interim dividend (No 74) of 500 cents per share was declared on 17 February 2005, and a final dividend (No 75) of 1,800 cents per share was declared on 26 August 2005, payable on 26 September 2005, giving a total of 2,300 cents per share (2004: 2,100 cents per share). These dividends amounted to R1,535 million for the year (2004:R1,395 million).
Capital expenditure for the year amounted to R1,992 million (2004: R1,822 million).
The estimated R2,637 million capital expenditure by Implats envisaged for FY2006 will be funded from internal resources and, if appropriate, borrowings.
Post-balance sheet events
No material events have occurred since the date of these financial statements and the date of approval thereof, the knowledge of which would affect the ability of the users of these statements to make proper evaluations and decisions.
The financial statements have been prepared using the appropriate accounting policies, supported by reasonable and prudent judgements and estimates. The directors have a reasonable expectation that the group has adequate resources to continue as a going concern in the foreseeable future.
Associated and subsidiary companies
Details of the freehold and leasehold land and buildings of the various companies are contained in registers, which are available for inspection at the registered offices of those companies.
Composition of the Board
The Board comprises seven independent directors, one non-executive director and four executive directors.
During the year, the following directors resigned or retired from the Board:
No new appointments were made during the year.
The directors retiring at the next general meeting are Ms MV Mennell, and Messrs DH Brown, TV Mokgatlha and LJ Paton, who being eligible offer themselves for re-election.
Interest of directors
The interests of directors in the shares of the company were as follows and did not individually exceed 1% of the issued share capital or voting control of the company.
The remuneration of the directors, secretary and senior management for the year under review was as follows:
An additional amount equivalent to the annual bonus is paid for each individual as a Preferred Compensation payment. The payment is taxed then invested into an endowment policy. The company contributes for up to five years and entitlement only vests provided the employee is still in the service of a group company.
Details of share options and share appreciation bonus options outstanding and exercised by the executive directors, secretary and senior management are as follows:
No share options were granted to non-executive directors. Other benefits accruing to executive directors are set out below.
There were no contracts of significance during or at the end of the financial year in which the directors of the company were materially interested. No material change in the aforegoing interests has taken place between 30 June 2005 and the date of this report.
In terms of the Articles of Association, the fees for services of directors are determined by the company in a general meeting. Fees for the services of a director are currently R150,000 per annum per director, and R700,000 for the Chairman, which includes attendance at all Board committee meetings. Directors' fees for serving on Board committees are set out below.
In order to ensure that directors' fees keep pace with inflation and in line with increases granted elsewhere in the organisation, it is proposed that directors' fees are increased by 5% in each instance:
These fees have been waived by the executive directors.
Executive directors' benefits
A group-owned residential property is made available to Mr KC Rumble on a rent-free basis. Mr Rumble has an option to purchase the property at market value at any time while in the employ of the company.
In the event of corporate action giving rise to a loss of office, demotion or the blighting of any career (in the opinion of the Remuneration Committee) of an executive director, that executive director is entitled to a severance package of 24 months' salary.
Special resolutions proposed
The following special resolution will be proposed to the Implats annual general meeting on 19 October 2005:
Special resolutions passed
During the year the following special resolutions were passed by Implats and its subsidiaries:
Financial, administrative and technical advisers
In terms of service agreement, Impala Platinum Limited acts as financial, administrative and technical advisors to the Implats group during the year on a fee basis. Messrs D H Brown, L J Paton, K C Rumble and Ms C E Markus had an interest in this contract to the extent that they are directors of Impala and of the company, but they do not beneficially own any shares in Impala.
Mr R Mahadevey acted as Secretary to Implats and Impala, and Impala acted as Secretaries to other subsidiaries in the Implats group. The business and postal addresses of the Secretaries are set out under contact details and administration.
The business and postal addresses of the London Secretaries are set out under contact details and administration.
Mr J van Deventer acted as public officer for the group for the year under review.
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|Impala Platinum Holdings Limited
Annual Report 2005