Financials & Shareholders' Information

Directors' report

Profile
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 2004 are described below:

Capital
Authorised capital

The company's authorised share capital of 100 000 000 ordinary shares of 20 cents each remained unchanged during the year.

Issued capital

During the year 27 188 new ordinary shares were issued in terms of the Implats share option scheme. Following allotments, the issued capital of the company was 66 621 177 ordinary shares of 20 cents each (2003: 66 593 989).

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 No 61 of 1973 and the Listing Requirements of the JSE Securities Exchange South Africa (JSE).

In addition, shareholders authorised the directors to issue for cash up to 15% of the company's issued share capital in any one year.

These general authorities expire at the forthcoming annual general meeting. Shareholders will be asked to consider resolutions renewing these general authorities. The proposed resolutions are set out in the notice convening the annual general meeting.

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. The rules of the share option scheme were amended at the last annual general meeting. Details of participation in the share option scheme are set out in Note 13 of the financial statements.

The trustees of the scheme are Messrs PG Joubert, JV Roberts and JM McMahon.

Shareholding in the company

The issued capital of the company is held by public and non-public entities as follows:

Zimbabwe Operations
Zimbabwe Platinum mines Limited (Zimplats)

The company holds an 83% (2003: 51%) equity interest in Australian-listed Zimplats. During the year the company acquired an additional 32% stake in Zimplats at A$4.11 per share (R631.9 million).

Makwiro Platinum Mine (Pvt) Limited (Makwiro)

The company holds a 30% direct interest in Makwiro which comprises the Ngezi open cast mine and the Selous Metallurgical Complex. Ngezi is situated 77 kilometres from the Selous Metallurgical Complex and a feasibility study has indicated a 90 000 platinum ounce per annum project over a 20-year life.

The direct (30%) and indirect interest (through Zimplats) in Makwiro is therefore 88%.

Risk amelioration

The following factors militate against the sovereign risk exposure of the Zimbabwean operations, namely:

• The use of off-shore bank accounts for both operations
• Dividends from both operations have been received in the year under review
• The practical security offered by the contracts with IRS

Two Rivers Platinum

The company owns a 45% interest in the Two Rivers project with the balance held by Anglovaal Mining Limited (AVMIN). AVMIN has, following corporate activity between itself, African Rainbow Minerals and Harmony, become African Rainbow Minerals Resources.

Barplats Investments Limited

The company sold its entire 83.2% shareholding in Barplats for a cash consideration of R2.10 per share (R389 million) to a consortium comprising Brier Global Limited, Flower Valley Investment Inc, Photon Global Limited, Rivercity Holdings Corp and the Kleo Trust (the Salene Platinum Consortium).
 

Financial affairs
Results for the year

The results for the year are fully dealt with in the financial statements forming part of the annual report. Refer to pages 92 to 143.

Dividends

An interim dividend (No 72) of 500 cents per share was declared on 12 February 2004, and a final dividend (No 73) of 1 600 cents per share was declared on 27 August 2004, payable on 27 September 2004, for a total dividend for the 2004 financial year of 2 100 cents per share (2003: 2 650 cents per share). These dividends amount to R1 399 million for the year (2003:R1 765 million).

Capital expenditure

Capital expenditure for the year amounted to R1 822 million (2003: R1 787 million).

The estimated R2 178 million capital expenditure by Implats envisaged for the 2005 financial year will be funded from internal resources and, if appropriate, borrowings.
 

Post-balance sheet events
Lonplats

The company has entered into non-binding agreements with Historically Disadvantaged South Africans (HDSAs) and Lonmin plc in terms of which the company will sell its 27.1% shareholding in Eastern Platinum Limited and Western Platinum Limited (collectively Lonplats) for $800 million.

The terms and conditions of the transaction are as follows:

• The sale by Implats to Lonmin plc of 18.1% of Lonplats for $554.4 million
   
• The sale by Implats to a consortia of HDSAs of 9% of Lonplats for $240.1 million and vendor finance of $95 million on favourable terms repayable over five to seven years
   
• Lonmin will indemnify Implats for the capital repayment of the vendor financing - $68 million repaid after five years and $27 million after seven years
   
• The HDSA consortia will onsell their shareholding to a newly formed company, Incwala Resources (Pty) Limited, in exchange for $240.1 million in cash and shares
   
• Lonplats will sell 9% of the 18.1% shareholding acquired from Implats to Incwala for a consideration of $240.1 million in cash and shares

The transaction is still subject to concluding legally binding agreements with all the parties, and obtaining approvals from Lonmin shareholders and the relevant regulatory authorities. The transaction is expected to be concluded in the first half of financial year 2005.

Aquarius Platinum Limited

The company holds an 8.6% interest in Aquarius Platinum Limited (Aquarius), an Australian and London Stock Exchange-listed company.

Aquarius Platinum (SA) (Pty) Limited

Implats holds 25% of AQP (SA) whose operations comprise Kroondal Platinum, the Marikana mine, Everest South and North project, and the Chieftain's Plain project.

In the previous financial year, Aquarius owned 75% of Aquarius Platinum SA (Pty) Limited (AQP(SA)) and the 25% balance was held by Implats. During the year, Aquarius announced a transaction to sell 29.5% of AQP (SA) to a BEE partnership. Should this transaction take place, Aquarius's shareholding will decline to 50.5%. Implats has stuctured a deal with Aquarius to ensure that its shareholding remains at 20%.

No other 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.

Going concern

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

Information regarding the company's associated companies are given in Note 6 and regarding subsidiaries in Annexure A, both to the financial statements.

Property

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.
 

Directorate
Composition of the board

During the year, the following appointments were made to the board:

Shareholders will be asked to confirm these appointments at the forthcoming annual general meeting.

The directors who retire at the next general meeting are Ms CE Markus, Messrs PG Joubert, JV Roberts and JM McMahon. Mr Joubert, having attained the retirement age for non-executive directors, has decided not to stand for re-election. Ms CE Markus, and Messrs JV Roberts and JM McMahon, being eligible, offer themselves for re-election.

Interest of directors

The interests of directors and senior management 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 board consists of 11 independent directors, one non-executive director and four executive directors.

No share options were granted to independent 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 and the date of this report.

Directors' fees

In terms of the Articles of Association, the fees for services as directors are determined by the company in general meeting. Directors' fees for services as a director are currently R125 000 per annum per director with an amount of R400 000 for the Chairman (which includes attendance at all board committee meetings). Directors serving on board committees are paid as set out below:

In view of the increased responsibilities being placed on directors in terms of the King II report and the revised JSE listings requirements as well as the need to attract suitable candidates for board appointment, it is proposed to increase directors fees as follows:

These fees have been waived by the executive directors.

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.

Administration
Special resolutions

At the last annual general meeting, the following special resolutions were passed:

Acquisition of shares

Allowing the company and its subsidiaries to acquire up to 10% of the shares in the company subject to the Companies Act 1973 and the Listing Requirements of the JSE, provided that the authority expires at the next annual general meeting and may not extend beyond 15 months from the date of granting of the authority.

Articles of association

The articles of association were amended by special resolution to allow for the appointment of a maximum number of 16 directors on the board and to require only that directors' written resolutions be approved by the majority of the board.

Financial, administrative and technical advisers

In terms of a service agreement, Impala Platinum Limited acted as financial, administrative and technical advisors to the Implats group during the year on a fee basis. Messrs DH Brown, PG Joubert, LJ Paton, KC Rumble and Ms CE 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.

Secretaries

During the year Mr R Mahadevey was appointed Group Secretary to Implats and Impala, assisted by Mr AM Snashall. Impala acted as Secretaries to other subsidiaries in the Implats group. The business and postal addresses of the Secretaries are set out on page 152.

London Secretaries

The business and postal addresses of the London Secretaries are set out on page 152.

Public Officer

Mr J van Deventer acted as public officer for the group for the year under review.