Annual Report 2007
Financial review

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Financial review

Results for the year


Gross production of platinum in FY2007 was 9.8% higher at 2.026Moz than in FY2006, with 1.055Moz (52%) coming from Impala. PGM production increased to 3.858Moz in FY2007, an increase of 11% on the 3.490Moz produced the previous year.

Income statement

Gross profit

Sales for the 2007 financial year increased by 80% to R31.5 billion from R17.5 billion for the preceding financial year. In dollar terms, sales were 59% higher at $4.375 billion. The main sales drivers were as follows:

Cost of sales rose by 67% to R17.0 billion as a result of a significant increase in the cost of metals purchased due to higher metal prices and the greater volumes of metals acquired.

Gross platinum production
(000 oz)


Revenue per platinum ounce sold
(R/oz Pt)


Revenue per platinum ounce sold
($/oz Pt)

Average rand/dollar exchange rate
achieved (R/$)

Refined platinum production
Mimosa (50%)34.433.230.426.411.8
Two Rivers (100%)67.8
Mimosa (50%)34.533.230.426.411.8
Other IRS400.5313.7343.7520.2389.1

Cost per platinum ounce
Impala (refined)6,1384,726
Marula (in concentrate)8,7819,443
Zimplats (in matte)7,0336,302
Mimosa (in concentrate)5,4135,133
Implats group (refined)6,3705,009

The main changes in the cost of sales are analysed as follows:

The unit cost per platinum ounce produced rose by 27.2% to R6,370. If share-based payments of R572 million are excluded from the unit cost calculation, the increase in the unit cost per platinum ounce that relates to operating costs was 21.1%, giving a unit cost of R5,921/oz.

Once again, the group’s margins improved, rising to 46% with Impala reporting a margin of 62% for the year under review.

Other income and expenses

Operating margins
Implats group4642

Headline earnings

Headline earnings for the financial year increased by 75% to 1,312 cents per share compared with 750 cents per share in FY2006. This includes the BEE compensation charge of R1.79 billion. If this charge is excluded, normalised headline earnings of 1,636 cents were 113% higher per share (normalised headline earnings for FY2006 were 768 cent per share, excluding a BEE charge of R95.3 million). The increase in earnings was mainly as a result of the 56% growth in rand revenue per platinum ounce sold during FY2007.

Headline earning per share
(SA cents)


Contribution to revenue by metal –
FY2007 (%)


Contribution to revenue by metal –
FY2006 (%)

Contribution to headline earnings by company
Normalised headline earnings    
Two Rivers1061.2  
Normalised headline earnings9,022100.04,041100.0
Fair value discount on    
BEE transactions(1,790) (95) 
Headline earnings7,232 3,946 
Other (26) 
Impairment of assets 422 
Net profit7,232 4,342 

As in previous years, Implats’ income was derived from three sources with the bulk coming from the mine-to-market operations (81%). The other two sources of income were IRS (15%) and equity income from investments (4%).

Earnings attributable to equity holders rose by 67% to R7.23 billion mainly as a result of higher rand metal prices.

Cash flow

Operating activities

Cash generated from operations was a combination of profits before taxation of R11.2 billion as set out in the income statement, adjusted for movements in working capital, and non-cash flow items. The most significant of the non cash flow items were the amortisation of property, plant and equipment of R865 million and the BEE compensation charge of R1,790 million.

Cash generated by operations of R12.9 billion was reduced by interest paid of R42 million and income taxes paid of R2.9 billion.

There was a net cash inflow from operating activities of R10.0 billion in FY2007, which is more than the net cash inflow of R4.9 billion recorded in FY2006.

Investing activities

On 14 May 2007 the group acquired the entire issued and to be issued share capital of African Platinum Limited (Afplats), an exploration and development business focused on platinum group metals. The purchase price was R4.2 billion, to date the cash outflow related to this transaction is only R3.9 billion with the balance via inter-group loans. Given its nature as a developing and exploration entity, Afplats did not contribute to group revenue or profit for the year under review.

An amount of R12.5 billion pre-paid royalty was paid to the RBN.

Group capital expenditure for FY2007 totalled R2.9 billion as compared to R2.2 billion in the previous financial year. The largest portion of this, R2.0 billion, was spent at Impala, primarily on the development of 16 and 20 shafts. The Zimbabwean operations accounted for capital expenditure of R506 million, and Marula R280 million.

Payment of R259 million was received from AQPSA as partial repayment of a shareholder’s loan.

Net cash flow used in investing activities was R18.4 billion.

Group capex
(R million)


Capital expenditure
by operation


Gross cash position at year-end
(R million)

Financing activities

Net cash flows from financing activities increased by R15.1 billion to R9.8 billion compared to an outflow of R5.3 billion in FY2006. As a result of the BEE transaction with RBH, 75,115,204 shares were issued to RBH for a cash consideration of R12.5 billion.

Net proceeds from borrowings amounted to R391.3 million. These loans were raised as a result of the consolidation of the Marula BEE shareholders’ interest (R435.9 million) in terms of the guarantees provided, repayment of Zimplats loan (R22.6 million) and lease liabilities (R22.0 million).

Dividend payments totalling R3.1 billion were made during the year. The dividend cover for the group has been adjusted to 1.7 times (previously 1.9 times) earnings. The dividend payment totalled R5.5 billion in FY2006 which included a special dividend payment of R3.6 billion.

The net result of Implats operating, investing and financing activities was a net cash inflow of R1.4 billion which, when combined with the opening balance of R1.9 billion, and a negative translation of R15 million, resulted in a closing cash and cash equivalent balance of R3.2 billion.

Dividend per share


Capital expenditure for 2008 is estimated at R6 billion and will be managed in line with profitability and cash flows.

A final dividend of 700 cents per share has been declared on 30 August 2007 which amounts to a further payment to shareholders of R4.2 billion.

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Financial review

Impala Platinum Holdings Limited — Annual Report 2007