Performance 2011


Headline earnings improved by 41% to R11.05 per share from R7.86. The single biggest contributor to the increase in earnings was the higher dollar metal prices experienced over the year

Financial performance

Results for the year

  • Group production increased to 1.836 million ounces of platinum from 1.741 million ounces the previous year
  • Revenue per platinum ounce was up by 21% in Dollar terms, but only up 12% in Rand terms
  • Revenue improved 30% to R33.1 billion
  • Group unit cost per platinum ounce, excluding share-based compensation, rose by 8% to R10 867
  • Gross margin was 10% up to 35%
  • Headline earnings at 1 105 cents per share improved by 41%
  • Total dividend increased to 570 cents per share – R3.4 billion returned to shareholders
  • Cash net of debt was R2.7 billion compared to R1.7 billion in the prior year.

The financial review is intended to help the reader understand Implats’ financial performance and the significant variances compared to the prior year. A value added statement is included in the Sustainable Development Report.

The financial review should be read in conjunction with our audited consolidated financial statements for the year ended 30 June 2011, presented from here and the non-GAAP financial performance measures.


Refined platinum production.  

(000oz)  2011   2010  
Impala   941   871  
Zimplats   175   154  
Marula   71   68  
Mimosa (100%)  99   94  
Two Rivers (100%)  142   135  
Third-party contracts   159   188  
Recycling and toll treatment   249   231  
Total production   1 836   1 741  


The individual operational reviews, set from here., should be read for a full appreciation of the movements in production. Set out below is a summary of the salient features of the controlled operations.


Production increased by 70 000 platinum ounces off a relatively low base in 2010, which had been impacted by the closures of two sections due to the 14 Shaft fall of ground tragedy (38 000 platinum ounces lost) and industrial action (43 000 platinum ounces lost). The mining of surface material partially offset mining volumes lost to stoppages as a result of Section 54 notices issued by the DMR.


The first year of full production from the Phase 1 expansion was achieved in 2011 which, combined with an improvement in concentrator recoveries, resulted in an extremely satisfying increase of 21 000 ounces of platinum.


Due to operational difficulties, the planned improvement in production failed to materialise leaving output largely unchanged at 71 000 platinum ounces.

Statement of comprehensive income

An analysis of the abridged statement of comprehensive income, including comments on significant variances is presented below:

(R million)  2011   2010  
Revenue   33 132   25 446  
Cost of sales   (21 490)  (17 294) 
Gross profit   11 642   8 152  
Other net expenses   (1 894)  (929) 
Net finance (expense)/income   (187)  2  
Profit before tax   9 561   7 225  
Income tax expense   (2 751)  (2 431) 
Profit for the year   6 810   4 794  

Other financial data  

Headline earnings per share – cents   1 105   786  
Dividend per share – cents   570   390  


Headline earnings improved by 41% to R11.05 per share from R7.86. The single biggest contributor to the increase in earnings was the higher dollar metal prices experienced over the year, albeit that this was, to some extent, offset by a stronger Rand/Dollar exchange rate.


The improvement in revenue is attributable to the following:

Sales volumes

Sales volumes improved due to higher production levels, as well as the sale of the platinum inventory built up at the Impala operations during FY2010. Platinum sales volumes for 2011 were 1.665 million oz compared to 1.435 million oz in the previous year – up 16%. Palladium volumes rose by 7% to 1.011 million oz and rhodium volumes declined 3% to 221 000 oz as a result of rhodium de-stocking in the previous financial year. In total, the higher volumes resulted in a positive sales volumes variance of R3.4 billion.

Higher dollar metal prices

The movement in the average dollar metal prices realised during FY2011 compared to FY2010 can be described as follows: platinum rose by 18% to $1 691/oz; palladium by 78% to $670/oz and rhodium by 6% to $2 275/oz. Across all metals, the appreciation in dollar metal prices contributed to a positive price variance of R6.9 billion.

Strengthening of the R/$ exchange rate

The average exchange rate for the year was R7.03/$, compared to R7.58/$ for FY2010. This resulted in negative exchange rate variance of R2.6 billion. Consequently, although the dollar revenue per platinum ounce sold rose by 21% to $2 799/oz, the rand revenue per platinum ounce sold only rose by 12% to R19 677/oz compared to R17 555/oz in 2010.

The Group sold a total of 187 821 platinum ounces (11% of total platinum sales) to South African customers who further beneficiated the metal in South Africa. Similarly, 309 791 palladium ounces was sold locally (31% of total palladium sales) for further beneficiation.


Cost of sales rose by R4.2 billion or 24% to R21.5 billion from R17.3 billion in the previous year. There were several key drivers:
  • Metals purchased, including inventory movements, accounted for R2.4 billion – more than half of the rise in cost of sales. This is due to both higher rand metal prices and volumes from Two Rivers
  • Wages and salaries grew by almost R1 billion or 18% to R6.5 billion. This was largely due to a combination of a low base in 2010 when striking workers did not receive pay for the period that they were not at work, higher number of employees and an escalation of 10% in pay scales.
    The minimum wage in the South African operations of the Group increased in the year under review by 8%
  • Consumables were up by R637 million or 13%. The increase in consumable cost on the South African operations relates mainly to higher mining contractor costs, increased repairs and maintenance and support costs
  • The depreciation charge increased by R289 million as a result of higher production both at Impala and Zimplats
  • Utilities inflation of 24% accounts for the bulk of the higher utilities bill amounting to R274 million
  • Share-based compensation resulted in a R420 million movement year-on-year Changes in the market input factors influencing the valuation, primarily a decrease in volatility and time to vesting, resulted in the net credit of R82 million compared to a charge in 2010 of R338 million.

In the interests of good business practice and in line with the requirements of the South African Mining Charter, Implats has a procurement policy based on granting preferential status to suppliers identified and accredited as being historically disadvantaged South African (HDSA) or qualifying as BEE candidates. Included in the cost of sales is a total discretionary spend of R5.0 billion, of which 53% was spent with vendors with HDSA/BEE ownership of greater than 25% (2010: R4.4 billion or 50%).

% HDSA/BEE discretionary procurement* included in cost of sales (South Africa) 

Consumables   15   48   45  
Services   40   59   59  
* Discretionary procurement is defined as total procurement less procurement from public-sector vendors (rates and taxes), utility service providers (electricity), pass through payments (medical and pension) and sponsorships 


Cost per platinum ounce performance for the year 

  Excluding SBP# Including SBP#
  2011   2010   2011   2010  
Impala (refined)  10 801   10 003   10 732   10 399  
Zimplats (in matte)  8 232   7 614   8 342   7 614  
Marula (in concentrate)  16 884   14 208   16 799   14 579  
Mimosa (in concentrate)  9 685   9 018   9 685   9 018  
Implats Group (refined)  10 867   10 089   10 824   10 417  

# Share-based payments 

The cost per platinum ounce includes all cash costs to produce an ounce of platinum (either, as applicable, refined, in matte or in concentrate). Excluding the share-based compensation, the unit costs per refined platinum ounce for the Group rose by 8% to R10 867 per platinum ounce. Group inflation of 7% accounted for the bulk of the increase. SA mining inflation amounted to 8% made up of labour which went up by 10%, consumables by 4% and utilities inflation of 24%. Unit costs were also impacted by additional safety costs and higher employee levels required to deliver the additional development at Impala Rustenburg and Marula.


The Group’s margin improved to 35% from 32%.This was due to the cumulative effect of revenue strengthening by 30% and cost of sales rising by 24%.

  Gross profit
(R million)
profit margin
  2011   2010   2011   2010  
Impala   7 486   5 222   41   37  
Zimplats   2 133   1 571   58   52  
Marula   (41)  (11)  (3)  (1) 
Mimosa   715   495   56   48  
IRS   1 419   1 188   10   11  
Inter-segment adjustment   (70)  (313)     
Implats Group   11 642   8 152   35   32  


Royalty expense increased by R268 million to R804 million due to higher revenues as well as the first full year of the new South African state royalty. The new state royalty amounted to R413 million and the amortisation of the prepaid royalty was a further R261 million of the total royalty for FY2011.

The movement in closing exchange rates resulted in R448 million foreign currency exchange losses in the current year compared to a R52 million gain in the previous year.


The net finance expense of R187 million, compared to the net finance income of R2 million in 2010 was largely due to fair value adjustments of R214 million on loans where the interest rates charged are below market.


The taxation charge rose by R320 million to R2.8 billion, primarily as a result of higher earnings for the year. The effective tax rate was 28.8% (2010: 33.6%).


The impact of all of the above resulted in headline earnings for the financial year increasing by 41% to R11.05 per share, compared to R7.86 per share in the previous year.

Contribution to headline earnings by company  

R million   2011   %   2010   %  
Headline earnings:          
Impala   4 573   68.9   3 428   72.7  
Zimplats   1 117   16.8   497   10.5  
Marula   (200)  (3.0)  (104)  (2.2) 
Mimosa   400   6.0   185   3.9  
Two Rivers   231   3.5   95   2.0  
IRS   573   8.6   599   12.7  
Investment & other   (55)  (0.8)  18   0.4  
  6 639   100.0   4 718   100.0  
Profit on disposal of assets   1     4    
Loss on disposal of investment   (2)    (7)   
Profit attributable to owners of the Company   6 638     4 715    


The total dividend for the year increased by 46% surpassing the improvement in headline earnings of 41%.

A final dividend of 420 cents per share was declared on 25 August 2011, amounting to R2.5 billion, payable in September 2011. An interim dividend of 150 cents per share (R901 million) was paid in March 2011. The total distribution to shareholders was 570 cents per share which amounted to R3.4 billion, compared to the prior period of 390 cents per share which amounted to R2.3 billion.

Capital expenditure

The growth in expenditure on property, plant and equipment arose largely from capital expenditure relating to the Group’s current mining projects. The Group’s capital expenditure for 2011 increased by 22% to R5.5 billion, compared to R4.6 billion in the previous financial year. Of this, R4.2 billion was spent at Impala, primarily on the development of No 20, 16, and 17 Shafts. The Zimplats operations accounted for capital expenditure of R840 million, largely due to the completion of the Phase 1 expansion and the commencement of the Phase 2 expansion.

Capital investment underpins the development and sustainability of the Group.

Capital expenditure by entity

R million   2011   2010  
Impala   4 240   3 435  
Zimplats   840   698  
Marula   242   281  
Mimosa (50%)  186   127  
Afplats   32   13  
Implats Group   5 540   4 554  

Capital expenditure for 2011 was expected to be R7 billion. The lower than expected spend of R5.5 billion was as a result of lower spend at Impala (R600 million) and Zimplats (R900 million). Impala comprised a range of issues, including projects which were planned but not subsequently approved by the Board, whereas at Zimplats capital was impacted by a later start than originally anticipated for the Phase 2 expansion. It is estimated that the capital expenditure will be R35 billion over the next five years with R7.0 billion being spent in 2012. This will be funded from internally generated cash flow and if necessary from borrowings. As of 1 July 2011, there will be a change in accounting estimate for development costs which will result in certain development costs being capitalised. The effect is not expected to be material.

The focus on improving the living conditions of employees continued during the year, attracting capital expenditure of R238 million, inclusive of R49 million for home ownership.

As with the procurement of consumables and services, the Group has a policy of granting preferential status to BEE/HDSA suppliers of capital goods as well as to local suppliers.

% South African capital spend procured from HDSA/BEE suppliers  

  Mining Charter  
Target 2011  
Capital   10   57   46  

Moreover, the Group promotes procurement from vendors within the province of operations – “local procurement”. Total local procurement (capital and working cost) in 2011 grew to R7.4 billion or 53% of total procurement.

Total local procurement as a percentage of total procurement (South Africa)

Rustenburg   51   48  
Springs   79   74  
Marula   28   16  
Total South Africa   53   48  


Cash flow statement

An analysis of the abridged cash flow statement is presented and significant variations are commented on below.

R million   FY2011   FY2010  
Cash generated from operating activities   8 285   5 918  
Cash flows from investing activities   (4 472)  (3 600) 
Cash flows from financing activities   (3 044)  (1 816) 
Net cash generated   769   502  
Opening balance   3 858   3 348  
Exchange rate adjustments – cash translation   (85)  8  
Closing balance   4 542   3 858  
Debt   (1 842)  (2 128) 
Cash net of debt   2 700   1 730  


The Group is still committed to the principles of maintaining adequate levels of liquidity and a strong balance sheet. The Group will continue to fund its requirements from cash generated from operations, and will use its adequate banking facilities to cover any shortfalls. Notwithstanding the slower than expected economic recovery, the Group’s continued spend on capital projects, as well as the payment of an interim and a final dividend, the Group generated R769 million cash in the financial year. Due to the dynamic nature of the underlying businesses, the Group aims to maintain flexibility in funding by keeping committed and uncommitted facilities available. The total undrawn committed and uncommitted facilities at year-end were R3.9 billion (2010: R3.4 billion).

Operating activities

Profit before tax was R9.4 billion and taxes of R1.8 billion were paid. A positive adjustment to profit before tax of R1.1 billion consists primarily of non-cash flow items such as depreciation (+R1.4 billion); sale of ounces on loan account (-R0.8 billion) and a revaluation of foreign currency loans (+R0.3 billion). Cash utilised to increase working capital reduced from the previous year’s R1.2 billion to R252 million. The combination of the above resulted in cash generated from operating activities of R8.3 billion.

Investing activities

Net cash used in investing activities was R4.5 billion, mainly due to capital expenditure.

Financing activities

Net cash used in financing activities increased by R1.2 billion compared to the prior year mainly as a result of higher dividend payments to shareholders as well as a repayment of loans from Standard Bank.


Total debt of R1.8 billion consisted of bank borrowings of R1.2 billion and lease liabilities of R0.6 billion.

The net result of Implats’ operating, investing and financing activities was a net cash inflow of R769 million, which when combined with the opening balance of R3.9 billion, resulted in a closing cash and cash equivalent balance of R4.5 billion net of exchange rate adjustments.


During the year under review, Implats decided to discontinue with its Fitch credit rating. The Group has a strong balance sheet and a credit rating is not a prerequisite for the adequate committed and uncommitted facilities that have been secured. The formal cessation of the rating occurred post the year-end on 12 July 2011.

Non-financial performance

Safety performance

It is with deep regret that we report that eight of our employees died in work-related accidents during the year. In FY2010, 15 Implats employees died. While this year’s performance is a significant improvement on the previous year, and is the best performance in the Group’s history, we believe that any loss of life is unacceptable. We will strive to eliminate all fatal accidents.

In terms of key safety performance parameters, we report the following:
  • The Group’s fatal injury frequency rate (FIFR) improved by 57% on the previous year, from 0.12 per million hours worked to 0.05 per million hours worked
  • The lost time injury frequency rate (LTIFR) has risen by 7% from 4.61 per million hours worked to 4.94 per million hours worked
  • Restricted work cases (RWCs) improved by 30%
  • The total injuries rate, a measure of all injuries including medical treatment cases reduced by 11%.

In memoriam  
The following employees died while at work during FY2011. We extend our sincere
condolences to their families, friends and colleagues.  
    Mr Motlhanke Maku died in a fall of ground accident on 7 July 2010
at Impala Rustenburg 4 Shaft    
    Mr Innocent Ndlovu died in an accident dealing with explosives, on 5 September 2010
at the Mimosa Mine  
    Mr Alfiado Bacitela died in an equipment handling accident on 17 September 2010
at Impala Rustenburg 11 Shaft  
    Mr Mankoene Nkhoaneng died after being overcome by methane gas on 21 October 2010
at Impala Rustenburg 11 Shaft  
    Mr Gadeni Hlophe died in a fall of ground accident on 1 November 2010
at Impala Rustenburg 11 Shaft  
    Mr Mvesilo Mswedi died in an equipment handling accident on 20 December 2010
at Impala Rustenburg 14 Shaft  
    Mr Michael Molokwane died in an accident involving an LHD on 25 February 2011
at Impala Rustenburg 14 Shaft  
    Mr Rui Wamba Tila died in a fall of ground accident on 25 June 2011
at Impala Rustenburg 5 Shaft.
This fatality occurred subsequent to the current year-end statistical close and will be
included in the reported statistics for financial year 2012.  

Health performance


TB remains a significant health risk to employees. In FY2011, 350 new cases of pulmonary TB were detected (FY2010: 399), which is a rate of 6.12 per 1 000 employees. The high level of HIV/AIDS in South Africa exacerbates the incidence of TB as infected employees’ immune systems are compromised, in turn increasing their risk of contracting TB. Seventy-seven per cent of newly diagnosed TB patients are HIV-positive.

Treatment is provided by the Group in line with the World Health Organisation’s directly observed treatment supervision (DOTS) protocol. The success rate of treatment at the Group’s operations has increased to 91%.

Four new cases of multi-drug-resistant TB (MDRTB) (FY2010: Five cases) and one case of extremely drug-resistant TB (XDRTB) (FY2010: One) were detected during the year.


The Group runs HIV testing and wellness programmes concurrently to ensure that there is adequate management of the disease and to prevent, where possible, its progression to AIDS. The current HIV prevalence rate at the Impala Rustenburg operation, a material operation to the Group, is estimated at 23%. Both employees and their dependants are encouraged to undergo voluntary testing, and when an individual tests positive, the necessary support is provided in the form of ongoing counselling through peer educators, induction into the wellness programme and provision of anti-retroviral therapy, where necessary.

In FY2011, 14 072 HIV tests were undertaken by the Group (FY2010: 6 837) on employees and dependants. Employees who tested negative were counselled to remain so, while those who tested positive were encouraged to join the Group’s wellness programme.

In FY2011, a total of 5 121 employees participated in the wellness programme (FY2010: 4 151), of whom 2 771 (FY2010: 1 905) received anti-retroviral therapy (ART). 1 324 of those on ART joined the ART programme during the year. The number of employees receiving ART through external medical aids or government health facilities is not known and so these figures may be underestimated.


ART treatment regimens have been adapted in line with government programmes and in response to increasing drug resistance. Consequently, costs related to ART treatment have risen to around R8 355 per person per year.

Regrettably, 131 patients died in service due to Aids-related illnesses (FY2010: 134), while a further 388 patients (FY2010: 281) applied for medical incapacity benefits and left the Group.

Environmental performance


Total Group water consumption in FY2011 was 42 megalitres, an increase of 13% on FY2010. This was as a result of an improvement of measuring techniques and some conservation inefficiencies which are being addressed.

In total, 15 megalitres of water was recycled in FY2011, which equates to 35% of all the water consumed in our operations (FY2010: 27%). This is an improvement in our recycling of some 49% year-on-year, with all operations having contributed to this improvement.


In FY2011, around 69% of our total energy consumption was electrical energy, which made up approximately 9% of our overall cash cost base. In FY2010, electricity represented 8% of our costs. The increase in 2011 reflects the sharp rise in electricity costs of 25%, year-on-year.



Sulphur dioxide (SO2) emissions represent the most significant air quality risk for the Group.

Total Group direct SO2 emissions in FY2011 were 18 881 tonnes (FY2010: 16 926 tonnes) up 12% on the prior year.

At Rustenburg SO2 emitted per day for the year was 17.3 tonnes (FY2010: 10.4 tonnes), showing a deterioration in sulphur dioxide emissions at these operations. The operations have investigated the cause of this deterioration in air quality at the smelter and the findings indicate that high sulphur content in the Merensky ore and inefficiencies in the abatement systems was the cause. The operations are working on restoring SO2 levels to below 16 tonnes of SO2 a day. At our Zimplats operations the average SO2 emitted in a day during FY2011 was 33.2 tonnes (FY2010: 34.1 tonnes per day).



Our total direct CO2 emissions (from burning fuel such as coal, diesel, petrol and gases) during FY2011 were 435 605 tonnes, an increase of 10% on FY2010. Total indirect CO2 emissions rose by 6% to 3.6 million tonnes year-on-year.

The Group’s Rustenburg operations accounted for approximately 72% of our total emissions in FY2011 and Impala Refineries accounted for approximately 8%. The reliance on the South African electricity grid (which is coal-based) denotes that even with sound energy efficiency measures, our operations are carbon intensive. In Zimbabwe, 43% of our energy is coal-based, and 57% is derived from hydro-electric power.

Social performance


Overall, Group skills development expenditure for our South African operations was R357 million, a 31% increase year-on-year (FY2010: R272 million). Four percent of this (R14 million) was spent on ABET training.


Overall, the Group’s average literacy levels improved by 1% due mainly to our ABET programmes, and as a result of our recruitment drives focusing on hiring employees who have completed their high school education. The most significant improvements were experienced at the Rustenburg operations where currently 57% of the workforce is literate (FY2010: 55%). All our Zimbabwean employees are literate.

In FY2011, 842 employees across the Group were enrolled for ABET, in both full-time and part-time classes. Seventy-two percent of those who enrolled successfully completed their programmes, while 20% either stopped attending classes or were unsuccessful in their examinations.


During FY2011, the Group awarded 70 full-time bursaries to university students studying primarily in the engineering and mining-related disciplines.


A total of approximately 451 individuals have benefited from our apprenticeship programmes.


23 members of our management team participated in our senior management and executive development programmes which were presented by the Gordon Institute of Business Science. 30% of those who participated in the programme were women.


Overall, the employee turnover for the Group was 8.3%, an increase of 38% year-on-year. This was anticipated as the recovery of the global economy led to higher demand for skills in the mining industry. The highest rate of employee turnover occurred at the Marula Operation due to the need to right size the operation. We continue to experience high employee turnover levels in critical skills, at miner level it stood at 20% in FY2011.