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RBP
RBP
RBP - RBPlat - Audited Abridged Results for the year ended 31 December 2011
Royal Bafokeng Platinum Limited
(Incorporated in South Africa)
(Registration number: 2008/015696/06)
Share code: RBP ISIN: ZAE000149936
("RBPlat" or the "Company" or the "Group")
Audited Abridged Results for the year ended 31 December 2011
Key features
- Achievements
- Fatality-free year
- 1.8 million fatality-free shifts by year-end
- Landmark three-year wage agreement
- Ungeared balance sheet
- Styldrift I declared R323 million savings to date
- Immediately stopable reserves (IMS) improved from 4.9 months to 5.5
months
- R273.7 million headline earnings (relatively flat)
- R326 million cash inflow from settlement of Rustenburg Platinum Mines
(RPM) balances
- Accelerated Bafokeng Rasimone Platinum Mine (BRPM) Joint Venture capex
of R1 164 million (2010: R967 million)
Disappointments
- Intermittent safety stoppages
- Strike by JIC Mining Services contract workers
Improvements
- Headgrade up from 4.31 to 4.35 g/t (4E)
- BRPM concentrator recoveries at 87.83% (a 1.5% improvement)
- R1 364 million healthy cash and near cash position
Challenges
- 4.2% decrease in tonnes milled
- 2.2% decrease in 4E ounces
- 10.7% increase in cash operating cost per tonne milled to R782/tonne
- 8.7% increase in cash operating cost per platinum ounce to R9 863/Pt oz
- Reduction in headline earnings per share to R1.67 (2010: R1.91)
Condensed consolidated statement of financial position
As at 31 December 2011
Group
2011 2010
Restated*
Notes R (million) R (million)
Assets
Non-current assets
Property, plant and equipment 5 7 999.3 7 337.9
Mineral rights 6 700.5 6 756.7
Goodwill 2 275.1 2 275.1
Environmental trust deposit 92.4 87.5
Deferred tax asset 34.2 15.2
17 101.5 16 472.4
Current assets
Inventories 31.1 48.4
Trade and other receivables 995.7 1 384.5
Held-to-maturity investments 264.9 250.9
Current tax receivable 0.2 4.8
Cash and equivalents 6 1 099.2 899.4
2 391.1 2 588.0
Total assets 19 492.6 19 060.4
Equity and liabilities
Share capital 1.7 1.7
Share premium 7 759.9 7 759.9
Retained earnings 3 435.3 3 161.9
Share-based payment reserve 81.1 18.8
Non-controlling interest 3 859.2 3 721.8
Total equity 15 137.2 14 664.1
Non-current liabilities
Deferred tax liability 4 054.1 3 901.4
Long-term provisions 58.1 73.4
4 112.2 3 974.8
Current liabilities
Trade and other payables 239.8 421.5
Current tax payable 3.4 -
243.2 421.5
Total liabilities 4 355.4 4 396.3
Total equity and liabilities 19 492.6 19 060.4
* Refer Note 4 for details of restatement
Condensed consolidated statement of comprehensive income
For the year ended 31 December 2011
Group
2011 2010
Restated*
Notes R (million) R (million)
Revenue 8 2 974.9 2 106.8
Cost of sales 9 (2 408.7) (1 608.1)
Gross profit 566.2 498.7
Other income 54.8 1.6
Profit on remeasurement of - 2 894.8
previously held interest in
BRPM
Administration expenses (104.3) (60.6)
Finance income 62.6 15.7
Finance cost (4.9) (12.5)
Profit before tax 574.4 3 337.7
Income tax expense (163.6) (171.7)
Net profit 410.8 3 166.0
Other comprehensive income - -
Total comprehensive income 410.8 3 166.0
Total comprehensive income
attributable to:
Owners of the Company 273.4 3 164.8
Non-controlling interest 137.4 1.2
410.8 3 166.0
Basic earnings (cents per 13 167 2 242
share)
Diluted earnings (cents per 13 167 2 240
share)
* Refer Note 4 for details of restatement
Condensed consolidated statement of changes in equity
For the year ended 31 December 2011
Number of Ordinary Share Share-based
shares shares* premium* payment
issued* reserve
R (million) R (million) R (million)
Balance at 31 163 677 779 1.7 7 759.9 18.8
December 2010
(Restated)**
Share-based - - - 62.3
payment charge
Profit for the - - - -
year
Balance at 31 163 677 779 1.7 7 759.9 81.1
December 2011
Balance at 31 137 057 500 1.4 6 817.8 -
December 2009
Transactions
with
shareholders
Shares issued
- Contingent 10 000 000 0.1 (0.1) -
consideration
for the 17% in
BRPM
- Shares issued 16 620 299 0.2 1 005.4 -
on listing of
the Company
- Capitalisation - - (63.2) -
of listing
transaction
costs
163 677 799 1.7 7 759.9 -
Share-based - - - 18.8
payment charge
Profit for the - - - -
year
Non-controlling - - - -
interest on
gaining control
of BRPM
As previously 163 677 799 1.7 7 759.9 18.8
reported
Purchase price - - - -
adjustment
Balance at 31 163 677 779 1.7 7 759.9 18.8
December 2010
(Restated)**
Retained Attributable Non- Total
earnings to controlling
owners of interest
the Company
R (million) R (million) R (million) R (million)
Balance at 31 3 161.9 10 942.3 3 721.8 14 664.1
December 2010
(Restated)**
Share-based - 62.3 - 62.3
payment charge
Profit for the 273.4 273.4 137.4 410.8
year
Balance at 31 3 435.3 11 278.0 3 859.2 15 137.2
December 2011
Balance at 31 (2.9) 6 816.3 - 6 816.3
December 2009
Transactions
with
shareholders
Shares issued
- - - - -
Contingent
consideration
for the
17% in BRPM
- Shares issued - 1 005.6 - 1 005.6
on listing of
the Company
- Capitalisation - (63.2) - (63.2)
of listing
transaction
costs
(2.9) 7 758.7 - 7 758.7
Share-based - 18.8 - 18.8
payment charge
Profit for the 3 166.3 3 166.3 1.9 3 168.2
year
Non-controlling - - 3 405.5 3 405.5
interest on
gaining control
of BRPM
As previously 3 163.4 10 943.8 3 407.4 14 351.2
reported
Purchase price (1.5) (1.5) 314.4 312.9
adjustment
Balance at 31 3 161.9 10 942.3 3 721.8 14 664.1
December 2010
(Restated)**
* The number of shares is net of treasury shares relating to the Company`s
management share incentive scheme and the Mahube Trust as shares held by
these special purpose vehicles are eliminated on consolidation
** Refer Note 4 for details of restatement
Condensed consolidated cash flow statement
For the year ended 31 December 2011
Group
2011 2010
Notes R (million) R (million)
Cash generated by operations 998.4 777.0
Interest paid - (9.8)
Interest received 48.6 15.7
Tax (paid)/refund (21.9) 2.4
Net cash flow generated by 1 025.1 785.3
operating activities
Net cash flow utilised by (1 151.1) (880.0)
investing activities
Cash impact of the business - 91.7
combination
Increase in held-to-maturity - (250.9)
investments
Proceeds from disposal of 0.3 0.1
property, plant and equipment
Acquisitions of property, plant (1 146.5) (718.5)
and equipment
Increase in environmental trust (4.9) (2.4)
deposit
Net cash flow generated by 325.8 942.6
financing activities
Issue of ordinary shares net of - 942.4
cost
Related party loans received - 0.2
Settlement of RPM receivable 325.8 -
Net increase in cash and cash 199.8 847.6
equivalents
Cash and cash equivalents at 899.4 51.5
beginning of year
Cash and cash equivalents at 6 1 099.2 899.4
end of year
Notes to the condensed consolidated annual financial statements
For the year ended 31 December 2011
1. Principal activities and profile
Royal Bafokeng Platinum Limited (RBPlat) was incorporated in July 2008 by
Royal Bafokeng Holdings (RBH), the investment arm of the Royal Bafokeng
Nation (RBN), and listed on the JSE Limited on 8 November 2010.
When Bafokeng Rasimone Platinum Mine (BRPM) Joint Venture between Royal
Bafokeng Holdings and Anglo American Platinum Limited was restructured in
2008 control of the mining operations of the joint venture vested in RBN via
RBPlat, which is RBN`s platinum mining investment vehicle.
RBPlat ultimately operates the BRPM and is developing the Styldrift I
Project. These operations, located in the North West province of South
Africa, 120 kilometres from Johannesburg, 30 kilometres from Rustenburg and
just 17 kilometres from Phokeng - the capital of the RBN, exploit the
Merensky and UG2 reefs. RBPlat`s significant reserves and resources can
sustain operations for at least the next 60 years. RBPlat currently employs 8
275 people, 3 028 being its own employees and 5 247 being contractors.
2. Basis of preparation and accounting policies
The consolidated financial statements have been prepared under the historical
cost convention in accordance with International Financial Reporting
Standards (IFRS). These condensed consolidated financial statements include
the minimum information required by IAS 34, "Interim Financial Reporting".
The principal accounting policies used by the Group are consistent with those
of the previous year, except for the adoption of various revised and new
standards. The adoption of these standards has no material impact on the
financial results for the 2011 year.
3. Audit opinion
The financial statements have been audited by PricewaterhouseCoopers Inc.
whose unqualified opinion is available for inspection at the registered
office of RBPlat.
4. Restatement of prior year statement of financial position, statement of
comprehensive income and statement of changes in equity
In the 2010 financial statements the Group stated that it is still in the
process of assessing the fair values allocated to individual components,
specifically mineral rights included in the life of mine.
During 2011, the assessment of fair values allocated to individual components
and the purchase price allocation were finalised, resulting in a revised
allocation of the fair values of assets, liabilities and goodwill.
In terms of the guidance provided in IFRS 3, Business combinations, the Group
has restated its statement of financial position, statement of comprehensive
income and statement of changes in equity and accompanying notes, for the
2010 financial year, to reflect the abovementioned changes as if they had
occurred at the acquisition date. These changes did not impact the cash flow
statement. The 2009 results were not impacted by the restatement.
4. Restatement of prior year statement of financial position, statement of
comprehensive income and statement of changes in equity (continued)
The revised details of net assets acquired and goodwill are as follows:
R (million) Restated 8 November
2010*
Previously
reported
Fair value of 67% interest assumed as 10 002.7 10 002.7
the purchase price
Purchase consideration allocated to 11 448.2 10 371.0
identifiable net assets:
- Property, plant and equipment 7 212.3 7 212.3
- Mineral rights 6 767.0 5 730.9
- Environmental trust deposit 87.0 87.0
- Inventories 61.3 61.3
- Trade and other receivables 999.5 995.7
- Amounts receivable from RPM 341.0 6.9
- Cash and cash equivalents 277.9 277.9
- Deferred tax liability (3 860.7) (3 570.6)
- Long-term provisions (67.8) (67.8)
- Trade and other payables (369.3) (362.6)
Less: Non-controlling interest (3 720.6) (3 405.5)
Goodwill 2 275.1 3 037.2
* Date of listing of RBPlat
A multi-period excess earnings model was used to finalise the fair value of
mineral rights included in the life of mine resulting in an increase in the
value of mineral rights of R1 billion. Uncertainty relating to the amounts
receivable from RPM were resolved with a final settlement.
The revised details of comprehensive income are as follows:
2010 2010
Restated Previously
reported
For the year ended 31 December 2010 R
(million)
Amortisation of mineral rights 28.6 26.4
Profit for the year attributable to:
Owners of the Company 3 164.5 3 166.3
Non-controlling interest 1.5 1.9
Total comprehensive income 3 166.0 3 168.2
Basic earnings (cents per share) 2 242 2 243
Diluted earnings (cents per share) 2 240 2 241
5. Property, plant and equipment
Buildings Furniture Mining Capital
and assets work in
fittings progress
and
computer
ware
R R R R
(million) (million) (million) (million)
2011
At 1 January 2011 72.3 36.2 3 889.9 2 128.9
Additions - 4.9 - 1 111.9
Disposals and - (0.6) - -
scrapping
Change in - - (21.9) -
estimates of
decommissioning
asset
Depreciation (4.4) (13.9) (328.5) -
Transfers 1.6 11.2 1 140.3 (1 208.6)
At 31 December 69.5 37.8 4 679.8 2 032.2
2011
Cost 74.8 54.0 5 087.4 2 032.2
Accumulated (5.3) (16.2) (407.6) -
depreciation
At 31 December 69.5 37.8 4 679.8 2 032.2
2011
2010
At 1 January 2010 64.6 13.7 2 004.2 975.3
Additions 22.0 24.8 14.7 398.7
Disposals - - - -
Depreciation (3.8) (7.9) (185.3) -
Transfers 13.6 0.1 - (93.6)
At 8 November 96.4 30.7 1 833.6 1 280.6
Carrying amount (96.4) (30.0) (1 833.6) (1 280.6)
of previously
held 67% interest
in BRPM
Fair value of 72.9 33.6 3 967.1 1 911.3
100% of BRPM on
business
combination
Additions from 8 0.3 4.2 1.9 217.6
November
Depreciation from (0.9) (2.3) (79.1) -
8 November
At 31 December 72.3 36.2 3 889.9 2 128.9
2010 Restated
Cost 73.2 38.5 3 969.0 2 128.9
Accumulated (0.9) (2.3) (79.1) -
depreciation
At 31 December 72.3 36.2 3 889.9 2 128.9
2010 Restated
Plant Vehicles Total
and and
machinery equipment
R R R
(million) (million) (million)
2011
At 1 January 2011 1 193.3 17.3 7 337.9
Additions 29.7 - 1 146.5
Disposals and - - (0.6)
scrapping
Change in estimates - - (21.9)
of decommissioning
asset
Depreciation (109.1) (6.7) (462.6)
Transfers 52.7 2.8 -
At 31 December 2011 1 166.6 13.4 7 999.3
Cost 1 292.8 21.1 8 562.3
Accumulated (126.2) (7.7) (563.0)
depreciation
At 31 December 2011 1 166.6 13.4 7 999.3
2010
At 1 January 2010 586.9 7.4 3 652.1
Additions 36.7 1.9 499.0
Disposals - (0.3) (0.3)
Depreciation (47.8) (1.8) (246.6)
Transfers 79.4 0.5 -
At 8 November 655.2 7.7 3 904.2
Carrying amount of (655.2) (7.7) (3 903.5)
previously held 67%
interest in BRPM
Fair value of 100% 1 209.1 18.3 7 212.3
of BRPM on business
combination
Additions from 8 1.3 - 225.3
November
Depreciation from 8 (17.1) (1.0) (100.4)
November
At 31 December 2010 1 193.3 17.3 7 337.9
Restated
Cost 1 210.4 18.3 7 438.3
Accumulated (17.1) (1.0) (100.4)
depreciation
At 31 December 2010 1 193.3 17.3 7 337.9
Restated
The Company has the life of mine right to use, but not ownership of assets
with a carrying amount of R1 383 275 089 (2010: R1 536 112 129) which is
included in balances above.
Group
2011 2010
R (million) R
(million)
6. Cash and cash equivalents
Cash at bank and on hand 524.0 447.9
Short-term bank deposits 575.2 451.5
Closing balance at 31 December 1 099.2 899.4
Facilities
Royal Bafokeng Resources (RBR), a wholly-owned subsidiary of RBPlat, entered
into a R500 million revolving credit facility (RCF) with Nedbank Capital on 8
January 2010 repayable in full on 31 December 2013. To date, nothing is drawn
from the R500 million RCF.
In addition, the RBPlat Group entered into R250 million, R3 million and R5
million working capital facilities with Nedbank Capital in September 2010
which are repayable in December 2013. The working capital facilities will
share in the same security as the R500 million RCF with the same
restrictions.
At year-end RBR utilised R149.9 million of its working capital facility for
guarantees and RBP MS utilised R0.4 million for guarantees. Refer Note 7.1
for further details.
Group
2011 2010
R R
(million) (million)
7. Contingencies and commitments
7.1 Guarantees issued
Royal Bafokeng Resources (Pty) Ltd, a
wholly-owned subsidiary of RBPlat,
granted the following guarantees:
Eskom to secure power supply for 17.1 17.1
Styldrift project development (financial
guarantee 30823102)
Eskom early termination guarantee for 17.5 -
Styldrift (financial guarantee 31160603)
Eskom connection charges guarantee for 40.0 -
Styldrift (financial guarantee 31173918)
Anglo American Platinum for the 75.3 -
rehabilitation of land disturbed by
mining activities at BRPM
Royal Bafokeng Platinum Management
Services (Pty) Ltd, a wholly-owned
subsidiary of RBPlat, granted the
following guarantees:
Tsogo Sun guarantee arising from lease 0.3 -
agreement (financial guarantee 31101003)
Tsogo Sun guarantee arising from lease 0.1 -
agreement (financial guarantee 31100309)
Royal Bafokeng Management Services (Pty)
Ltd, a fellow subsidiary, granted the
following guarantees on behalf of RBR for
the rehabilitation of land disturbed by
mining:
Department of Mineral Resources - 39.9
(financial guarantee 36790800258)
Department of Mineral Resources - 7.6
(financial guarantee 36790901881)
Total guarantees issued at 31 December 150.3 64.6
Guarantees received from Anglo American
Platinum
For Anglo American Platinum`s 33% of the (5.6) -
Eskom guarantee to secure power supply
for Styldrift project development
(financial guarantee M523084)
For Anglo American Platinum`s 33% of (5.8) -
Eskom early termination guarantee for
Styldrift (financial guarantee M529349)
For Anglo American Platinum`s 33% of the (13.2) -
Eskom connection charges guarantee for
Styldrift (financial guarantee M529350)
Total guarantees received at 31 December (24.6) -
7.2 Capital commitment in respect of
property, plant and equipment
Commitments contracted for 771.9 960.8
Approved expenditure not yet contracted 8 737.9 8 262.1
for
Total 9 509.8 9 229.9
7. Contingencies and commitments (continued)
7.2 Capital commitment in respect of
property, plant and equipment (continued)
The commitments reflect 100% of the BRPM
JV project commitments. Effectively RBR
must fund 67% thereof and RPM the
remaining 33%.
Should either party elect not to fund
their share, the interest will be diluted
according to the terms reflected in the
BRPM JV agreement.
7.3 Operating lease commitments
The Group leases offices for its
corporate office in Johannesburg and for
BRPM`s finance function in Rustenburg
under operating lease agreements. The
corporate office lease term is five years
and it is renewable at the end of the
lease period at market rate. The finance
office lease in Rustenburg is renewable
year-on-year at market rate. The future
aggregate lease payments under these
operating leases are as follows:
No later than one year 1.7 0.6
Later than one year and no later than 6.5 -
five years
Total 8.2 0.6
Group
2011 2010
R R
(million) (million)
8. Revenue
Revenue from concentrate sales - 2 846.6 2 094.7
production from BRPM concentrator
Revenue from UG2 toll concentrate 128.3 -
Revenue from management fee - 12.1
Total revenue 2 974.9 2 106.8
Group
2011 2010
Restated
R R
(million) (million)
9. Cost of sales
On-mine costs:
- Labour 673.9 489.5
- Utilities 144.5 87.6
- Contractor costs 377.0 264.1
- Movement in inventories 23.3 (15.0)
- Materials and other mining costs 614.8 401.5
- Elimination of intergroup management (31.5) (23.9)
fee
State royalties 14.1 8.4
Depreciation - Property, plant and 462.1 347.0
equipment
Amortisation - Mineral rights 56.2 28.6
Share-based payment expenses 33.1 7.2
Social and labour plan expenditure 35.8 7.6
Other 5.4 5.5
Total cost of sales 2 408.7 1 608.1
10. Related party transactions
The Group is controlled by Royal Bafokeng Platinum Holdings (Pty) Ltd
(incorporated in South Africa), which owns 57.1% of RBPlat`s shares.
Rustenburg Platinum Mines Limited (RPM) owns 12.6% of RBPlat`s shares and the
remaining 30.3% of the shares are widely held. RPM also holds the remaining
33% participation interest in BRPM. The Group`s ultimate parent is Royal
Bafokeng Holdings (Pty) Ltd (incorporated in South Africa) (RBH). RBH is an
investment holding company with a large number of subsidiaries. At present,
RBR sells its 67% share of the concentrate produced by the BRPM JV to RPM for
further processing by RPM.
Investments in subsidiaries and the BRPM Joint Venture and the degree of
control exercised by the Company are:
Issued capital amount Interest in capital
R %
Name 2011 2010 2011 2010
Direct investment
Royal Bafokeng 1 000 1 000 100% 100%
Platinum Management
Services (Pty) Ltd
Royal Bafokeng 320 320 100% 100%
Resources (Pty) Ltd
Indirect investment
via Royal Bafokeng
Resources (Pty) Ltd
Bafokeng Rasimone 1 000 1 000 100% 100%*
Management Services
(Pty) Ltd
BRPM - participation - - 67% 67%
interest
* Interest acquired on date of listing of the Company (8 November 2010)
Transactions between the Company, its subsidiaries and joint venture are
eliminated on consolidation. Refer Note 7.1 for related party guarantees.
The following transactions were carried out with related parties:
Group
2011 2010
R (million) R (million)
Joint venture balances at 31 December:
Amount owing by RPM for concentrate sales 941.8 1 008.5
Amount owing to RPM for contribution to 37.5 69.7
BRPM (working capital nature)
There were no balances with other related
parties.
Joint venture transactions:
Concentrate sales to RPM (Refer Note 8) 2 974.9 2 094.8
Fellow subsidiary transactions:
Royal Bafokeng Platinum Management - 12.1
Services (Pty) Ltd management fee charged
to BRPM prior to 8 November 2010
Transactions with Fraser Alexander for 15.6 5.6
rental of mining equipment, maintenance
of tailings dam and operation of sewerage
plant (a subsidiary of RBH)
Royal Bafokeng Management Services (Pty) - 0.8
Ltd fees of administrative nature (a
subsidiary of RBH)
Royal Marang Hotel for accommodation and 0.5 0.1
conferences (a subsidiary of RBH)
Geoserve Exploration Drilling Company for 15.5 -
exploration drilling on Boschkoppie and
Styldrift (a subsidiary of RBH)
Tarsus Technologies for electronic 0.8 0.1
equipment purchases (a subsidiary of RBH)
Zurich Insurance Company of SA for 0.7 0.8
underwriting a portion of BRPM insurance
(an associate of RBH)
Impala Platinum Ltd for royalties 24.9 -
received (an associate of RBH)
11. Dividends
No dividends have been declared or proposed in the current year (2010: nil).
12. Segmental reporting
The Group is currently operating one mine with two decline shafts and the
Styldrift I Project. The BRPM operation is treated as one operating segment.
The Executive Committee of the Company is regarded as the Chief Operating
Decision Maker.
BRPM
2011 2010
R R
(million) (million)
Concentrate sales 2 974.9 2 914.4
Cash cost of sales (1 802.4) (1 700.4)
Depreciation (357.1) (285.7)
Other operating income 29.0 1.8
Other operating expenditure (101.7) (40.2)
Net finance income 5.2 4.6
Segmental profit before tax 747.9 894.5
Additional depreciation on purchase price (161.2) (140.7)
allocation (PPA) adjustment and amortisation
Overheads of corporate office (104.3) (60.6)
Consolidation adjustments 10.0 244.5
Other income 29.6 2 894.8
Finance income 52.4 4.0
Finance cost - (9.8)
Profit before tax per the statement of 574.4 3 337.7
comprehensive income
Taxation (163.6) (171.7)
Non-controlling interest (137.4) (1.2)
Contribution to basic earnings 273.4 3 164.8
Contribution to headline earnings 273.7 270.2
Segment assets 6 626.8 5 915.3
PPA adjustment to carrying amount of PPE 9 407.1 9 491.3
(includes mineral rights)
Corporate assets and consolidation 3 458.7 3 653.8
adjustments (includes goodwill)
Total assets per the statement of financial 19 492.6 19 060.4
position
Segment liabilities 245.1 269.7
Corporate liabilities and consolidation 52.8 225.2
adjustments
Unallocated liabilities (tax and deferred 4 057.5 3 901.4
tax)
Total liabilities per the statement of 4 355.4 4 396.3
financial position
Cash inflow from operating activities 1 025.1 785.3
Cash flow utilised by investing activities (1 151.1) (880.0)
Cash inflow from financing activities 325.8 942.6
Capital expenditure 1 146.5 718.5
13. Basic and diluted earnings per share
The weighted average number of ordinary shares in issue outside the Group for
the purposes of basic earnings per share and the weighted average number of
ordinary shares for diluted earnings per share are calculated as follows:
Group
2011 2010
Restated
Number Number
Number of shares issued 165 123 164 792
082 561
Mahube Trust (563 914) (563 914)
Management incentive scheme (881 369) (550 848)
Number of shares issued outside the Group 163 677 163 677
799 799
Adjusted for weighted shares issued during the - (22 544
year 967)
Weighted average number of ordinary shares in 163 677 141 132
issue for earnings per share 799 832
Management incentive scheme 462 537 152 700
Weighted average number of ordinary shares in 164 140 141 285
issue for diluted earnings per share 336 532
Profit attributable to owners of the Company R 273.4 3 164.8
(million)
Basic earnings per share (cents/share) 167 2 242
Basic earnings per share is calculated by
dividing the profit attributable to owners of
the Company for the year by the weighted
average number of ordinary shares in issue for
diluted earnings per share.
Diluted earnings per share (cents/share) 167 2 240
Diluted earnings per share is calculated by
dividing the profit attributable to owners of
the Company for the year by the weighted
average number of ordinary shares in issue for
diluted earnings per share.
Headline earnings
Profit attributable to owners of the Company
is adjusted as follows:
Profit attributable to owners of the Company R 273.4 3 164.8
(million)
Adjustment net of tax:
Profit on remeasurement of previously held - (2 894.8)
interest in BRPM R (million)
Loss on disposal of property, plant and 0.3 0.2
equipment R (million)
Headline earnings R (million) 273.7 270.2
Basic headline earnings per share 167 191
(cents/share)
Diluted headline earnings per share 166 191
(cents/share)
14. Complete set of financial statements
These abridged financial statements should be read with the complete set of
financial statements available at www.bafokengplatinum.co.za.
Commentary
The year under review
RBPlat made good progress against its strategies in 2011, despite a
challenging year during which, internationally, continuing global economic
uncertainty had a negative impact on market conditions and locally, extensive
safety stoppages in the first and fourth quarters, in particular, made it
difficult for the platinum industry to achieve production targets.
Despite these safety stoppages, our safety performance has been excellent
with no fatal injuries in 2011, a 10% improvement in the lost time injury
frequency rate and a 12.1% improvement in the serious injury frequency rate
year-on-year. By year-end, we had achieved 1.8 million fatality-free shifts
and it was with great sadness that, post year-end, we reported a fatal fall
of ground accident at BRPM. We remain committed to our goal of zero harm and
will work closely with the Department of Mineral Resources (DMR) to continue
improving our safety performance. We also recognise that the DMR`s
uncompromising approach to safety and health has elevated the focus on safety
to shareholder level, thereby raising investor expectations of management in
this critical area of the operating environment.
While our business is the mining of platinum group metals (PGMs), our
activities exist within a greater societal context and our objective remains
to achieve sustainable financial returns through the safe, profitable
production of PGMs by maximising the development of our manufactured and
human capital.
The landmark three-year wage agreement concluded with our fulltime employees
is providing our business and its partners with stability and an aligned
growth focus. The agreement contains aspects of remuneration that are being
linked to agreed performance and efficiency targets.
Operational review
The total tonnages we delivered to the concentrator were marginally lower
year-on-year at 2 284 000 tonnes. Significantly, the UG2 tonnages we
delivered increased by more than 232% year-on-year to 258 000 tonnes, in line
with our aim of optimally exploiting the UG2 Reef and taking advantage of an
opportunity to improve our operational flexibility.
The safety stoppages we experienced, the nine-day strike by employees of our
major contractor (JIC Mining Services), the failure of the North shaft Phase
II decline conveyor in the third quarter, along with unusually high labour
turnover, all contributed to lower tonnages mined and the 2.2% reduction in
4E concentrate we produced to 281 598 ounces. Our lower volumes and rising
net costs contributed to a 10.7% and 8.4% increase in cash costs to R782 per
tonne and R6 399 per 4E ounce respectively. The key contributors to the
R75.50 increase in our cost per tonne from R707/t in 2010 to R782/t in 2011
were mainly increases in labour, power and general inflation, together
amounting to an increase of R60.10/t. The reduction in mining volumes due to
the JIC strike, mining skills turnover, Section 54 stoppages and the North
shaft belt failure contributed R23.50/t to the overall increase, with an
additional increase of R8.20/t attributable to our business optimisation
Project Kgolo and other miscellaneous costs. The overall increase was offset,
however, by savings of R16.30/t accrued from Project Kgolo-related
initiatives, the World Class Concentrator Project, revision of rehabilitation
provisions and explosive rebates. While we achieved a number of significant
improvements through Project Kgolo, we did not achieve the bottom line impact
we expected to achieve. In line with our operational strategy, cost reduction
will continue to be a key focus area in 2012.
On the positive side we achieved improvements in the recovery levels in the
concentrator at a weighted average recovery of 87.47%, an 11.6% increase in
efficiencies in the fulltime employee stoping teams reaching 310 square
metres per crew per month, as well as a 3% increase in the run-of-mine
Merensky grade to 4.44g/t (4E), which allowed us to increase our 4E built-up
headgrade from 4.31 to 4.35g/t. Good progress was also made with the Phase II
and III replacement projects at BRPM, with both projects on schedule and
below budget. The Styldrift I Project remains on course to save R1 billion on
completion with declared savings to date of R323 million. Significant
improvements were realised on the shaft sinking rates which had a slow start
when we converted from pre-sink to main sink and by year-end we had achieved
the anticipated shaft advance rates with the main shaft reaching a depth of
219 metres and the service shaft 152 metres.
Financial overview
Our 2011 financial results bear testimony to a challenging year, marked by
global uncertainty and challenges, both at home and abroad. While the basket
price for our PGMs improved by 4.7% in nominal terms, we faced above
inflationary labour and energy cost increases combined with numerous
production interruptions. This meant that in real terms our PGM basket price,
as well as our margins, have contracted during 2011.
The Group`s headline earnings of R273.7 million for 2011 remained relatively
flat compared to R270.2 million for 2010. The 2011 headline earnings per
share of 167 cents are 12.6% lower than the 191 cents per share reported in
2010 mainly due to the increase in the weighted average number of shares used
for the calculation from 141 132 832 in 2010 to 163 677 799 in 2011.
The 2011 results reflect a full consolidation of the BRPM results compared to
the 12 months ended 31 December 2010 which reflect a proportionate
consolidation of 67% of BRPM up to 8 November 2010 and full consolidation of
BRPM for the remainder of 2010.
Our revenue increased by 41.2% compared to 2010, mainly as a result of the
change in control and basis of accounting during 2010 which contributed 39.1%
of this increase and an actual increase in revenue of BRPM which contributed
the remaining 2.1% of the overall increase in RBPlat revenue. The actual
increase in BRPM`s revenue of 2.1% is a combination of a reduction in revenue
of 2.6% due to lower production volumes and an increase in the rand basket
price received of 4.7%.
Notwithstanding the challenges mentioned above, the Group delivered an EBITDA
margin of 34.8% from our operations as a result of a favourable prill split
and a good quality resource located at shallow depths. For the year ended 31
December 2010 BRPM`s average unit cash cost was R707 per tonne milled with
cash operating cost of R9 076 per platinum ounce produced. For the year ended
31 December 2011 BRPM`s average unit cash cost increased to R782 per tonne
milled with cash operating cost increasing to R9 863 per platinum ounce
produced. This increase in operating unit cash cost is mainly as a result of
a 2.2% reduction in the production of 4E ounces, combined with above
inflation mining cost escalations.
Our other income increased from R1.6 million in 2010 to R54.8 million in 2011
mainly due to R28.9 million net income received from the settlement of the
RPM receivable and the first time inclusion of the 6 and 8 shaft Impala
royalty of R24.9 million.
Our finance income increased from R15.7 million in 2010 to R62.6 million in
2011, mainly due to interest earned on funds we raised from the 2010 listing
which are invested in interest bearing deposits and R14.0 million in
dividends we received on our Nedbank preference share investment.
Our current income tax charge increased from R0.4 million in 2010 to R29.9
million due to income tax payable on interest income and the Impala royalty.
RBPlat will not be liable for mining income tax in 2011 as it had an
unredeemed capital expenditure balance of R281.5 million at 31 December 2011.
The Group was able to fund all capital expenditure (including stay-in-
business, replacement and expansion capital) amounting to R1 163.6 million
from cash flows generated by its operations and a cash injection of R326
million from the settlement of the RPM receivable. The Group had cash and
near cash investments on hand at 31 December 2011 of R1 364 million. In
addition, we have an intra-month funding working capital requirement, which
is met through a R250 million working capital facility of which R150.3
million has been utilised for guarantees. The Group also has an unutilised
revolving credit facility of R500 million available until 31 December 2013.
Market review
It was a year of two quite different halves for PGMs. Early in 2011 there was
the devastating earthquake and tsunami in Japan. During this period, platinum
prices traded relatively high at up to US$1 850/oz. This encouraged the
recycling of around 300 000 ounces of platinum jewellery, which capped any
further price appreciation.
In the second half of the year the intensification of the euro crisis
disrupted the recovery of the platinum market from a forecast deficit to a
narrow surplus, as motor vehicle sales weakened. Europe accounts for
approximately 50% of automotive platinum demand and as a result their
fortunes are inextricably linked.
As the region once again entered recession the platinum price, which had
temporarily lifted to almost US$1 900/oz at the end of August 2011, settled
at just below US$1 400/oz by year-end. Throughout 2011 palladium prices,
which largely followed in the wake of platinum prices, were trading below
US$650/oz by year-end. Rhodium underperformed the major PGMs in 2011, and
declined 40% from over US$2 400/oz at the beginning of the year to US$1
400/oz by year-end.
Appointments
As previously communicated in our interim results announcement, Ms Matsotso
Vuso was appointed to the Board of directors on 11 April 2011 as an
independent non-executive director. She is a member of the Audit and Risk
Committee. Post year-end, Mr Velile Nhlapo was appointed General Manager at
the Styldrift I Project, effective from 1 February 2012. Mr Nhlapo began his
career at Gold Fields Limited in February 1996 as a Learner Official and
reached the level of Unit Manager and Mine Overseer before joining Anglo
American Platinum Limited in January 2005 where he joined as a Mine Section
Manager before being appointed General Manager of the Dishaba Mine. He was
later appointed Head of Business Improvement. He left Anglo American Platinum
Limited in February 2011 and joined Pretoria Portland Cement Company Ltd
(PPC) where he was appointed Executive for Business Development.
Outlook
We expect that conditions going forward for 2012 will continue to be
challenging, from both a market and operational perspective.
We have already seen a recovery in the platinum price at the start of 2012
with prices breaching US$1 600/oz and, despite the downgrading of demand
growth, the lack of supply could result in the market ending 2012 in deficit.
Medium-term demand fundamentals remain overwhelmingly in favour of palladium
owing to emerging market consumption growth favouring palladium-rich gasoline
cars, the ongoing recovery in the USA and the substitution of more expensive
platinum in diesel passenger car catalysts. Rhodium prices look unlikely to
recover significantly in the near term as automotive demand was particularly
badly hit by the earthquake in Japan, a region of relatively high rhodium
loadings, while the fallout from excessively high prices of 2008 has led to
some thrifting in three-way auto catalysts.
Reducing operating costs remains an important hurdle in our journey towards
operational excellence and will be a core focus for us in 2012. We remain
confident about our Styldrift I Project with our focus remaining on further
improving shaft sinking rates and developing our operational readiness. Our
major milestone on Styldrift I will be the intersection of the Merensky Reef
at a depth of 594 metres below surface which we plan to reach by September
2012.
Based on our current global outlook and specifically metal price and exchange
rate assumptions for 2012, we foresee that conditions will remain challenging
and that 2012 will be the first time we will have to utilise some of our
surplus cash resources in addition to the cashflows generated by our
operations to fund our Styldrift I Project expenditure.
Posting of annual report and annual general meeting
We advise our shareholders that the annual financial statements will be
distributed on 28 February 2012. Notice is hereby given that the third annual
general meeting of RBPlat`s shareholders will be held on Tuesday, 3 April
2012 at 10:00 in the Castello room at the Palazzo Hotel, Monte Casino
Boulevard, Fourways.
Conclusion
We would like to thank all our stakeholders, including our shareholders,
employees, the trade unions, business partners and government for the support
they have given us during a challenging year.
Steve Phiri
Chief Executive Officer
Kgomotso Moroka
Chairman
Johannesburg
16 February 2012
JSE Sponsor
Macquarie First South Capital (Pty) Limited
Administration
Company registered office
Royal Bafokeng Platinum Limited
Registration number: 2008/015696/06
Share code: RBP
ISIN: ZAE000149936
The Pivot
No. 1 Monte Casino Boulevard
Block C
4th Floor
Fourways
Johannesburg
2021
PO Box 2283
Fourways
2055
South Africa
Board of directors
Non-executive directors
Kgomotso Moroka (independent Chairman)
Linda de Beer (independent)
Robin Mills (independent)
David Noko (independent
Francis Petersen (independent)
Mike Rogers
Executive directors
Steve Phiri (Chief Executive Officer)
Martin Prinsloo (Chief Financial Officer)
Nico Muller (Chief Operating Officer)
Company Secretary
Lester Jooste (ACIS)
Email: lester@bafokengplatinum.co.za
Telephone: +27 10 590 4519
Telefax: +27 086 572 8047
Investor relations
Lindiwe Montshiwagae
Email: lindiwe@bafokengplatinum.co.za
Telephone: +27 10 590 4517
Telefax: +27 086 219 5131
Public Officer
Martin Prinsloo
Email: martin@bafokengplatinum.co.za
Independent external auditors
PricewaterhouseCoopers Inc
2 Eglin Road
Sunninghill
Johannesburg
2157
South Africa
Transfer Secretaries
Computershare Investor Services (Pty) Ltd
70 Marshall Street
Johannesburg
PO Box 61051
Marshalltown
2107
South Africa
Telephone: +27 11 370 5000
Telefax: +27 11 688 5200
Sponsor
Macquarie First South Capital (Pty) Ltd
The Place
1 Sandton Drive
South Wing
Sandton
Johannesburg
2196
South Africa
Bankers
Nedbank Limited
135 Rivonia Road
Sandton
2196
South Africa
The Pivot,
No 1 Monte Casino Boulevard
Block C, Floor 4, Fourways
Johannesburg, 2021
PO Box 2283
Fourways, 2055
South Africa
Telephone: +27 (0)10 590 4510
Telefax: +27 086 572 8047
www.bafokengplatinum.co.za
27 February 2012
Date: 28/02/2012 08:07:12 Produced by the JSE SENS Department.
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