Gross production of platinum in FY2008 declined to 1.907Moz with 1.044Moz (55%) coming from Impala. PGM production decreased to 3.644Moz in FY2008, a decrease of 5.6% on the 3.858Moz produced the previous year. Production, excluding the once-off Lonmin ounces treated in FY2007, increased by 2%.
Sales for the 2008 financial year increased by 19.5% to R37.6 billion from R31.5 billion for the preceding financial year. In dollar terms, sales were 17.5% higher at $5.1 billion. The main sales drivers were as follows:
Cost of sales rose by 17% to R19.9 billion as a result of a significant increase in the cost of metals purchased due to higher metal prices and an increase in share-based payment costs in line with the share price moving from R216 in 2007 to close at R309 in June 2008.
The main changes in the cost of sales are analysed as follows:
The unit cost per platinum ounce produced rose by 22% to R7 750. If share-based payments of R1 042 million (adjusted for non-operating cost) are excluded from the unit cost calculation, the increase in the unit cost per platinum ounce that relates to operating costs was 17%, giving a unit cost of R6 930/oz.
Once again, the group’s margins improved, rising to 47% with Impala reporting a margin of 65% for the year under review.
|Impala||1 044||1 055|
|Non-managed mine-to-market operations|
|Two Rivers (100%)||91||68|
|IRS third party purchases||336||449|
|IRS toll treatments||206||183|
|Gross production||1 907||2 026|
|Once off Lonmin||(9)||(162)|
|Headline production||1 898||1 864|
|Excluding share-based |
|Impala (refined)||6 546||5 614||7 489||6 138|
|Marula (in concentrate)||9 020||8 497||9 830||8 773|
|Zimplats (in matte)||9 215||7 047||9 215||7 047|
|Mimosa (in concentrate)||7 023||5 409||7 023||5 409|
|Implats group (refined)||6 930||5 921||7 750||6 370|
Headline earnings for the financial year increased by 57% to 2 065 cents per share compared with 1 312 cents per share in FY2007. If the BEE compensation charge of R1.79 billion in FY2007 is excluded, normalised headline earnings were 26% higher per share (normalised headline earnings for FY2007 were 1 636 cent per share). The increase in earnings was mainly as a result of the 26% growth in rand revenue per platinum ounce sold during FY2008.
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 (14%) and equity income from investments (5%).
|Impala||8 393||67.2||5 936||65.8|
|IRS||1 700||13.6||1 313||14.6|
|12 485||100||9 022||100|
|Fair value discount on BEE transactions||-||-||(1 790)||-|
|Headline earnings||12 485||-||7 232||-|
|Profit on sale of investments||5 181|
|Profit on disposal of assets||4||-||-||-|
|Impairment of assets||(74)||-||-||-|
|Net profit||17 596||100||7 232||100|
Cash generated from operations was a combination of profits before taxation of R22.8 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 was the profit on disposal of investments amounting to R4.8 billion.
Cash generated by operations before tax of R22.8 billion was reduced by interest paid of R92 million, income taxes paid of R5.1 billion and working capital adjustments of R3.3 billion.
There was a net cash inflow from operating activities of R11.2 billion in FY2008, which is more than the net cash inflow of R10.0 billion recorded in FY2007.
As mentioned previously, the group sold its stake in AQP and AQPSA for a cash contribution of R5.7 billion.
A pre-paid royalty of R12.5 billion was paid to the RBN in FY2007.
Group capital expenditure for FY2008 totalled R5.3 billion as compared to R2.8 billion in the previous financial year. The largest portion of this (R3.4 billion) was spent at Impala, primarily on the development of 16 and 20 shafts. The Zimbabwean operations accounted for capital expenditure of R1.3 billion, and Marula R345 million.
Net cash flow from investing activities was R1.3 billion in FY2008.
Net cash flows from financing activities decreased by R15.3 billion to a R5.5 billion outflow compared to an inflow of R9.8 billion in FY2007. 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 during 2007.
The group acquired 826 473 (FY2007: nil) of its own shares in this financial year in terms of an approved share buy-back scheme for an amount of R183 million (2007: nil).
Net proceeds from borrowings amounted to R664 million. These loans were raised as a result of the consolidation of the Marula BEE shareholders’ interest (R321 million) in terms of the guarantees provided and the drawdown of a facility to partially finance the expansion at Zimplats (R370 million).
Dividend payments totalling R6.1 billion were made during the year. The dividend payment totalled R3.1 billion in FY2007.
The net result of Implats operating, investing and financing activities was a net cash inflow of R7.1 billion which, when combined with the opening balance of R3.2 billion, and a positive translation of R0.1 billion, resulted in a closing cash and cash equivalent balance of R10.4 billion.
Capital expenditure for FY2009 is estimated at R7.9 billion and will be managed in line with profitability and cash flows.
A final dividend of 1 175 cents per share was declared on 28 August 2008 which amounts to a further payment to shareholders of R7.1 billion.
The dividend cover for the group has been adjusted to 1.4 times (previously 1.7 times) earnings.
Implats - Annual Report 2008| Forward-looking statements