ANNUAL RESULTS FY2018implats-reports.co.za/results/annual-results-2018/pdf/presentation.pdf · ANNUAL RESULTS FY2018 Description 2018 2017 Var(%) Platinum ounces produced (refined)

ANNUAL RESULTS FY201813 September 2018

ANNUAL RESULTS FY2018

Certain statements contained in this presentation, other than the statements of historical fact, contain forward‐looking statements regarding Implats’ operations, economic performance or financial condition, including, without limitation, those concerning the economic outlook for the platinum industry, expectations regarding metal prices, production, cash costs and other operating results, growth prospects and the outlook of Implats’ operations, including the completion and commencement of commercial operations of certain of Implats’ exploration and production projects, its liquidity and capital resources and expenditure and the outcome and consequences of any pending litigation, regulatory approvals and/or legislative frameworks currently in the process of amendment, or any enforcement proceedings. Although Implats believes that the expectations reflected in such forward‐looking statements are reasonable, no assurance can be given that such expectations will prove to be correct. Accordingly, results may differ materially from those set out in the forward‐looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes in the regulatory environment and other government actions, fluctuations in metal prices, levels of global demand and exchange rates and business and operational risk management. For a discussion on such factors, refer to the risk management section of the company’s Integrated Annual Report. Implats is not obliged to update publicly or release any revisions to these forward‐looking statements to reflect events or circumstances after the dates of the Annual Report or to reflect the occurrence of unanticipated events.

Disclaimer: This entire presentation and all subsequent written or oral forward‐looking statements attributable to Implats or any person acting on its behalf are qualified by caution. Recipients hereof are advised the presentation is prepared for general information purposes and not intended to constitute a recommendation to buy‐ or offer to sell shares or securities in Implats or any other entity. Sections of this presentation are not defined and assured under IFRS, but included to assist in demonstrating Implats’ underlying financial performance. Implats recommend you address any doubts in this regard with an authorised independent financial advisor, stockbroker, tax advisor, accountant or suitably qualified professional.

FORWARD LOOKING AND CAUTIONARY STATEMENT

2


BUSINESS OUTLOOK

AGENDA

GROUPOVERVIEW

OPERATIONAL REVIEW

FINANCIAL REVIEW

Nico Muller Mark MunroeGerhard Potgieter

Meroonisha Kerber

MARKET REVIEW

Sifiso Sibiya Nico Muller

3

OVERVIEWNico Muller, CEO


• 9 Shaft 2.51 million

• 6 Shaft 2.05 million• 11 Shaft 1.95 million• 1 Shaft 1.25 million

• Mimosa 1.12 million

GROUP ‐ SAFETY OVERVIEW

4

7

119

7

6.105.27

6.495.92

5.55

0

1

2

3

4

5

6

7

02468

10121416

2014 2015 2016 2017 2018

FATALITIES & LOST‐TIME INJURY FREQUENCY RATE

LTIFR

• Rtb Services 12.34 million

• Refineries 11.33 million• Zimplats 8.78 million• Minpro 3.33 million

• 4 Shaft 2.56 million• 14 Shaft 2.63 million

Fall of ground

Equipment

CAUSES

4

3

Impala Rustenburg

MarulaLOCATION

1

6

Fatality Free Shifts

7 x FATALITIES

• 7 months fatality free, new Implats record

• 11 out of 17 millionaire sites

5

• The entire Impala Rustenburg operation has achieved 4.26 million fatality free shifts


GROUP ‐ SUSTAINABILITY OVERVIEW

Improvinghealth

Socialinvestment

Environmentalcustody

29%increase in social investment spend• Kanana Multipurpose

Centre & Library• Luka Makgotla offices• Road infrastructure• Schools• Water reticulation

3

3 366

16%

$6.0m

schools officially opened in Rustenburg

in FY2018

homes built in local communities since 2009

increase in local procurement from

suppliers in mine lease areas in SA (R2.9bn)

invested in socio‐economic development at Zimplats• Kadoma Hospital• Turf Police Station• Commercial livestock

project

of Zimplats’ total annual procurement spend from

local suppliers

69%

ZEROLevel 4‐5 environmental incidents since 2014

6%

4%

13%

11%

improvement in water utilisation year‐on‐year (2.12Kl/tonne milled)

lower direct SO2emissions year‐on‐year

decrease in Level 3 environmental incidents

year‐on‐year

less energy used in FY2018

51%decline in employee

deaths from AIDS‐related causes since 2014

530

43%

15%

$2.5m

TB incident rate per 100 000, significantly lower than national average of 1 000

reduction in new pulmonary TB cases recorded over 5 years

improvement in ART uptake year‐on‐year

invested in refurbishment of Kadoma Hospital in

Zimbabwe

45%Of water used was

recycled

6


Description 2018 2017 Var (%) Remarks

Tonnes Milled Mt 19.36 18.33 6 • Significant improvement despite 9 additional milling shifts in previous period

Concentrate production

Mine‐to‐market productionImpalaZimplatsTwo RiversMimosaMarula

Third‐party purchased

Pt koz

Pt kozPt kozPt kozPt kozPt kozPt koz

Pt koz

1 574

1 31666927416312585

259

1 557

1 30465128118212268

253

1

13

(2)(11)

325

2

• Increased production from build‐up shafts, offset by closure of old shafts at Impala• FY2018 calendar change – milling shifts reduce by 9 days• Lower grade due to split reef at Two Rivers • Steady production• Excellent improvement following FY2017 restructuring & improved stability

• Benefitted from a once off toll refining contract

Refined production Pt koz 1 468 1 530 (4) • 77 000 pt oz stock build‐up due to smelter repairs and fire at No 5 furnace

Unit cost (milled)

Unit cost (refined stock adjusted)

Unit cost (refined)

R/t

R/oz

R/oz

1 035

22 931

24 660

1 076

22 838

22 657

4

‐

(9)

• Operating costs well contained ‐ separation costs has been excluded from cash costs

• Stock‐adjusted unit costs (refined) well below inflation

• Unit cost (refined) impacted by temporary stock build‐up

Capital expenditureImpalaZimplatsMarula

RbnRmRmRm

4 6062 7671 738101

3 4302 472863113

(34)(12)

(101)11

• Furnace rebuild and increase in capitalized development• New Mupani mine development, restore Bihma mine to full production, fleet• Tailings dam extension delayed

Waterberg project Rm 425 ‐ ‐ • Purchase of 15% stake in the project

GROUP ‐ OPERATIONAL OVERVIEW

7


GROUP – MOVEMENT IN PLATINUM IN CONCENTRATE CONTRIBUTION

1 557

1 574

18

17

6 3 7

19

1 530

1 540

1 550

1 560

1 570

1 580

1 590

1 600

1 610

FY2017 Impala Marula 3rd party receipts Mimosa Zimplats TwoRivers FY2018

Pt koz in

con

centrate

669xx6693%

8525%

2592%

1253%

274‐2%

163‐11%

Koz Pt in concentrate

8


Description 2018 2017 Var (%)

Platinum ounces produced (refined) koz 1 468 1 530 (4)

Platinum ounces sold koz 1 355 1 469 (8)

Revenue per platinum ounce sold R/oz 25 935 24 670 5

Revenue Rbn 35.85 36.84 (3)

Cost of sales Rbn 34.28 37.37 8

Gross profit Rm 1.58 (0.53) 398

Impairment Rm 13 629 10 229 ‐

Loss for the year Rbn 10 793 8 098 (33)

HEPS cps (171) (137) (25)

GROUP ‐ BUSINESS OVERVIEW

0

5 000

10 000

15 000

20 000

25 000

30 000

TwoRivers inconce

Zimplatsin matte

Mimosain conc

Marulain conc

Impalarefined

Impala +IRS

refined

GroupRefined

Cash costs Stay in business capitalReplacement capital Expansion capital2018 R/Pt oz sold

(R/Pto

z)

REVENUE AND COST OF PRODUCTION

9


MINERAL RESOURCES AND MINERAL RESERVES

• Attributable Group Mineral Resource estimatereduced by 57.8 million platinum ounces

− Zimplats release of land ‐44.5 Moz pt− Imbasa & Nkosi prospecting rights ‐8.6 Moz pt− Impala prospecting rights ‐ 5.2 Moz pt

• Attributable Group Mineral Reserve estimatereduced by 1.2 million platinum ounces

− Impala strategic review ‐4.4 Moz pt− Two Rivers (Kalkfontein RE portion) +0.9 Moz pt− Zimplats steeps +2.5 Moz pt

10

37%

37%

9%

9%6%2%

ATTRIBUTABLE MINERAL RESOURCES OF

134 MOZ PT

Zimplats Impala Two RiversAfplats Marula Mimosa

47%

36%

8%5%4%

ATTRIBUTABLE MINERAL RESERVES OF 21.2 MOZ PT

Zimplats Impala Two RiversMarula Mimosa

191.

6

133.

8

0

40

80

120

160

200

2017

Zim

plat

s

Afpl

ats

/Im

bsa

/In

kosi

Impa

la

Mim

osa

Mar

ula

Two

Riv

ers

2018

Moz

Pt

ATTRIBUTABLE MINERAL RESOURCES (Variance Moz Pt)

‐8.6 ‐5.2 ‐0.1 ‐0.040.8

‐44.6

22.4

21.2

0

5

10

15

20

25

2017

Impa

la

Mim

osa

Mar

ula

Two

Riv

ers

Zim

plat

s

2018

Moz

Pt

ATTRIBUTABLE MINERAL RESERVES (Variance Moz Pt)

‐4.4 ‐0.1 ‐0.1

2.50.9

For details please see Implats Mineral Resource and Mineral Reserve statement 2018


Priority Areas

Turnaround Impala

Rustenburg

Decisive MarulaStrategy

Increase Organisational Effectiveness

Develop Strategic Agility

Maintain Social

Licence to Operate

• FY2018• Year‐on year circa R1 billion saving• Reduced 2 200 employees• Closed 4#

• FY2019• Strategic review concluded• 300 of 1 500 earmarked positions reduced (as at end August 2018)

• Reduced community disruptions

• 25% year on year increase in Pt ounces

• Cash flow before capital and finance activities improved from negative R839 million in the previous year to R77 million positive in FY2018

• Well positioned to benefit from higher future palladium and rhodium prices

• Improved safety performance – significant reduction in fatalities in FY2018 H2

• Active stakeholder engagement⁃ Impala restructuring⁃ Zimplats – sustain licence to operate⁃ Stable community relations

•No level 4 or 5 environmental incidents

• TB/HIV rates well below national average

• Impala Rustenburg strategic review –will reduce exposure to high cost deep level conventional mining

• Waterberg – increased bias towards low cost mechanised palladium rich assets

• Exciting new Zimbabwe strategy

• Group headroom of R6.2bn (cash R3.7bn & undrawn facilities of R2.5bn)

• Secured R2.0bn facility to affect forward pipeline sales• R820 million dividend from Zimplats• Ongoing review of optimal capital structure

STRATEGIC FOCUS AREAS

Capital Allocation and Cash

Management

11

• Key executive appointments ‐Meroonisha Kerber, CFO and Mark Munroe, CE: Impala Rustenburg

• Remuneration policy updated – STI and LTI structures aligned to shareholder expectations

• Performance Management Framework rolled out to all management employees

11

OPERATIONAL REVIEWMark Munroe, CE: Rustenburg operations


IMPALA

636 651 669627 655 581

0

100

200

300

400

500

600

700

800

FY2016 FY2017 FY2018

Pt oz(000)

PRODUCTION

Pt in concentrate Pt refined

22 139 23 543 27 183

22 114 23 856 24 005

0

5000

10000

15000

20000

25000

30000

0

5000

10000

15000

20000

25000

30000

FY2016 FY2017 FY2018

R/oz

COSTS

Cost/Pt oz refined Stock‐adjusted

‐2 049‐3 379

‐4 033

FY2016 FY2017 FY2018

Rm

CASH MOVEMENT

Description FY2018 FY2017Var(%) Remarks

Tonnes milled Mt 10.95 10.12 8%• Higher production from 1, 11, 12, 14 & 16 #• Lower volumes at 9 & 10 shafts• Closure of 4, 7 and 7A shafts

PGE head grade g/t 4.09 4.06 1% • Increase in stoping to development ratio

Platinum in concentrateRefined platinum

kozkoz

669581

651655

3%(11%)

• Higher volume & grade, lower surface sources• 77 koz stock build‐up

Cost per platinum ounceStock adjusted

R/ozR/oz

27 18324 005

23 54323 856

(15%)(1%)

• Lower refined production volumes• Supported by higher production

Capital expenditure Rbn 2.77 2.47 (12%)• Increased capitalised development and

expenditure at 16 and 20 Shafts• Number 5 furnace rebuild

Cash flow before financing and working capital Rm (4 033) (3 379) (19%)

• Separation cost R525m• Higher finance charge R159m• Capital R295m higher

− Furnace 5 rebuild and transformer fire resulted in stock build up of 77 000 platinum ounces− Strategic review completed

• Section 52 and 189(3) notices issued• Stakeholder engagement initiated• 9 shaft mining fully outsourced (contracted)• As at end August 2018: 300 of the 1 500 positions reduced through natural attrition

13


IMPALA SHAFTS ‐MOVEMENT IN PLATINUM CONTRIBUTION

Long‐term future shafts 14

Prod

uctio

n im

provem

ent

Shafts closed

Clean‐up

, surface so

urces

& re

coverie

s

646 658

49

21

10 7

6 5 2 2 3

3 11

13

13

47

580

600

620

640

660

680

700

720

740

760

FY2017 14 16 12 1 20 11 6 EF 9 10 7A 7 4 Other FY2018

Pt oz(00

0)

Ramp –u

p after fire

Build

up Shaft

Shaft in

harvest m

ode

Safety

incide

nts

Build

up Shaft

10828.5

1230.5

‐‐

‐‐

7028.6

2826.6

1922.4

3422.0

10826.4

6929.9

7828.6

5128.8

7429.9

Koz ptR’000/pt oz


KEY PROJECTS

16 Shaft 20 Shaft

Description FY2018 FY2017 FY2018 FY2017

Project completion % 90% 85% 98% 95%

Estimated completion date date Nov 21 May 22 Jun 19 Jun 22

Estimate at completion Rm 7 939 7 939 7 930 8 434

Expenditure to date Rm 7 159 6 795 7 804 7 496

Design capacity (at steady state) koz per annum 180 185 130 130

Estimated steady‐state achievement date Jun 22 Jun 22 Jul 21 Jul 21

Platinum production koz 74 53 69 63

Available face m 2 542 1 512 1 316 1 297

Stoping teams teams 75 53 57 51

Panel Ratio panels/team 1.20 1.35 1.18 1.00

Productivity ca/team/month 297 292 291 297

Total cost (excl Project capital) R/Pt oz 29 885 33 009 29 900 28 474

• Revised completion date due to exclusion of D ore pass (21‐24 levels)

• C ore pass rehabilitation in progress• Key focus is on opening mineable face and productivity build‐up• Critical capital development ends exceeded targets for the year

• Key focus is on opening mineable face and productivity build‐up• Poor geology hampers production build‐up• Level 16 and 17 capital development deferred ‐ reduces capex in FY19 and FY20 by R445m

15


Unprofitable operation

11operational

shafts ramping up to 750koz Pt

All‐in cost R29 006

R2 767m

~40 100

Current StateFY20181

Profitable operation

6operational

shafts producing

~520koz Pt

All‐in cost <R24 500

R1 400m

~27 000

Employees

Capital/an

num

(Real FY2

018)

Cost/Pt o

unce

(FY2

018 term

s)Shafts and

ou

tput/ann

umDELIVERING A PROFITABLE FUTURE STATE AT IMPALA RUSTENBURG

STATUTORY REQUIREMENTS

• Bi‐monthly on‐mine Future Forum meetings held. (Economic status of the operation discussed)

• Section 189(3) issued – reduction of 1 500 over‐complement employees

• Section 52 notice (1, 9, 12, 14) issued

PROGRESS AND NEXT STEPS

• Restructuring project charter, plan & resources

• Technical and commercial scoping and terms

• Engagement with interested parties

• Job loss mitigation framework

• Section 52 process and stakeholder engagements

STAKEHOLDER ENGAGEMENTS

• DMR engagement commenced in 2017, continued leading up to and post announcement, very constructive.

• Union: Frequent and constructive engagements

• Communities: Information sharing with the Kgosi and leadership of the Royal Bafokeng Nation

• Met with all major SA shareholders

BUSINESS DEVELOPMENT

• Outsourcing of 1 Shaft well advanced. Expressions of interest invited and received, a short list of four potential vendors identified, technical scoping and commercial terms being developed

• Scoping and approach to develop commercial options has been initiated for four shafts under the Section 52 process

$

Future stateFY2021

16

OPERATIONAL REVIEWGerhard Potgieter, COO


MARULA

7868

85

0

50

100

FY2016 FY2017 FY2018

Pt ozin conc

(000

)

PRODUCTION

0

24 13129 278

24 877

FY2016 FY2017 FY2018

R/oz

COSTS

‐456

‐839

77

FY2016 FY2017 FY2018

Rm

CASH MOVEMENT

Description FY2018 FY2017 Var(%) Remarks

Tonnes milled kt 1 838 1 495 23% • Very few disruptions

PGE head grade g/t 4.33 4.26 2% • Increase in stoping/development ratio

Platinum ounces in concentrate koz 85 68 25% • Fewer disruptions and increased productivity

Cost per platinum ounce in concentrate R/oz 24 877 29 278 15% • Costs contained/ increased volumes

Capital expenditure Rm 101 113 11% • Reduced fleet replacement costs

Cash flow before financing and working capital Rm 77 (839) 109% • Higher production and metal prices

• Operational continuity maintained with only minor community related impact

• Chrome plant restarted in January 2018

• Record production year

• Encouraging unit cost trend

• Benefiting from higher rhodium prices

• R182 million contribution to Group gross profit, including IRS

18

18


TWO RIVERS

186 182163

0

20

40

60

80

100

120

140

160

180

200

FY2016 FY2017 FY2018

Pt ozin con

c(000

)

PRODUCTION

11 775 12 92514 517

FY2016 FY2017 FY2018

R/oz

COSTS

635563

529

FY2016 FY2017 FY2018

Rm

CASH MOVEMENT


Tonnes milled Mt 3.46 3.50 (1) • Additional toll treated tonnage in FY2017

PGE head grade g/t 3.63 3.90 (7) • Dilution from split reef

Platinum ounces in concentrate 000 oz 163 182 (11) • Lower grade from split reef

• Lower recovery due to lower grades

Cost per platinum ounce in concentrate R/oz 14 517 12 925 (12) • Lower ounces increased unit costs

Capital expenditure Rm 454 293 (55) • Deepening of Main Decline

Cash flow before financing and working capital Rm 529* 563 (6) • Cash flow impacted by lower production

• Mining production levels maintained

• Split reef mining impacting on mill grade and concentrate production

• Mitigation strategies, including a possible concentrator expansion, will only be effective in the longer‐term

• Remaining extent of Kalkfontein now included in Mining Right

*excludes the shares issued for the acquisition of the Kalkfontein RE‐ block of R675 million

19


ZIMPLATS

290 281 271

0

50

100

150

200

250

300

350

FY2016 FY2017 FY2018Pt ozin matte incl.

concen

trate sold (0

00)

PRODUCTION

1 130 1 249 1 313

FY2016 FY2017 FY2018

US$/oz

COSTS

12

78

43

FY2016 FY2017 FY2018

US$m

CASH MOVEMENT


Tonnes milled Mt 6.6 6.7 (2) • Production levels maintained• 9 more days in previous period

PGE head grade g/t 3.48 3.49 0 • Maintained

Platinum ounces in matte 000 oz 271 281 (4) • 9 more days in previous period• Small lock up in the smelter

Cost per platinum ounce US$/oz 1 313 1 249 (5) • Lower ounces• Increased labour rates

Capital expenditure US$m 135 63 (114) • Expenditure on Mupani and Bimhadevelopment

Cash flow before financing and working capital US$m 43 78 (45) • Significant increase in capex

• Planned furnace maintenance completed in October 2017

• Bimha reached full production in April 2018

• Mupani decline ahead of schedule

• Business remains cash generative

• Ground north of Portal 10 returned to Zimbabwean government and SML migrated to ML

• Corporate tax rate increased from 15.45% to 25.75%, but APT falls away

20


KEY PROJECTS

Mupani

Description FY2018 FY2017

Project completion % 16% 4%

Estimated completion date date Jun 24 Jun 24

Estimate at completion $m 264 264

Expenditure to date $m (14%) 37 (4%) 11

Design capacity (at steady state) koz per annum 90 90

Estimated steady‐state achievement date Jul 30 Jul 30

Platinum production koz ‐ ‐

Available face m ‐ ‐

Stoping teams teams ‐ ‐

Panel Ratio panels/team ‐ ‐

Productivity ca/team/month ‐ ‐

Total cost (excl Project capital) R/Pt oz ‐ ‐

• Project progressing on schedule and budget• Decline development ahead of schedule• Intersection of ore contour scheduled for April 2019

21


MIMOSA

120 122 125

0

20

40

60

80

100

120

140

FY2016 FY2017 FY2018Pt ozin conc

(000

)

PRODUCTION

1 463 1 511 1 521

FY2016 FY2017 FY2018

US$/oz

COSTS

‐15

28 28

FY2016 FY2017 FY2018

US$m

CASH MOVEMENT


Tonnes milled Mt 2.80 2.73 3 • Excellent operational performance

PGE head grade g/t 3.84 3.83 0 • Maintained

Platinum ounces in concentrate 000 oz 125 122 3 • Best ever performance

Cost per platinum ounce in concentrate US$/oz 1 521 1 511 (1) • Higher volumes and good cost control

Capital expenditure US$m 44 33 (33) • Increased capital development • Conveyor belt extensions

Cash flow before financing and working capital US$m 28 28 2 • Cash flow maintained

• Strong operational performance

• 15% export levy deferred to January 2019 and lowered to 5%

• Ongoing engagement with Government with regard to beneficiation• Construction of a smelter remains unaffordable

• 30ktpm expansion studies progressing, outcome expected in September 2018

22


IRS

• Once off treatment for a toll refining customer

• Refined output constrained by Rustenburg smelter maintenance

• R1 228 million cash generated in the year

• IRS business now included in Impala

669637 630

FY2016 FY2017 FY2018

oz(000)

MINE‐TO‐MARKET RECEIPTS

205 197155

56104

FY2016 FY2017 FY2018

oz(000)

THIRD‐PARTY RECEIPTS

3rd party purchased 3rd party returns

14121175 1228

FY2016 FY2017 FY2018

Rm

CASH MOVEMENT


Receipts 000 oz 889 890 0 • No change

Mine‐to‐market 000 oz 630 637 (1) • Lower receipts from Two Rivers• Higher receipts from Marula

3rd Party receipts 000 oz 259 253 2 • Higher third party volumes

Refined output 000 oz 887 875 1 • Impacted by furnace 5 rebuild

Refined metal returned 000 oz 140 15 ‐ • Once‐off third party material

Cash flow before financing Rm 1 228 1 175 5 • Higher tax paid of R127m• Lower net finance income of R109m

23


Project Progress Funding

WATERBERG PROJECT PROGRESS

• DFS on track for completion in Q2 FY2019. Progress to date:

• Exploration drilling complete• Resources and Reserves• Bulk services• Mining Right application

• 600ktpm and ~300ktpm options being evaluated

• DFS will quantify the capital commitment required based on the chosen build

The Waterberg project supports our strategy to mine low‐cost, shallow, mechanised ore bodies

• Funding strategy will be defined further once project parameters are agreed as part of the DFS.

• Potential sources of project funding include:

• Group cash resources• Project debt finance• Equity raise• Structured finance options

24

Project background• Implats acquired 15% interest

in the JV for US$30 m • Assuming a positive DFS

outcome, Implats has the following options:

• Increase shareholding to 50% +1, or

• Maintain 15% stake, but maintain first right to concentrate offtake.

FINANCIAL REVIEWMeroonisha Kerber, CFO


INCOME STATEMENT

• Revenue down 3% ‐ impacted by the build‐up in smelter stock of circa 77 000 platinum ounces

• Cost of sales decreased 8% on the back of the inventory build‐up

• Stock adjusted group unit cost up 0.4% to R22 931 per platinum ounce

• Impairment – R13.6 billion for FY2018

• Once‐off deferred tax charge of R1.2 billion on change in Zimplats tax rate (SML 15.45% to ML 25.75%)

R million FY2018 FY2017 Variance (%)

Sales 35 854 36 841 (3)

Cost of sales (34 277) (37 370) 8

Gross profit (loss) 1 577 (529)

Net operating expenses (income) (764) 866

Impairment (13 629) (10 229) (33)

Royalties (350) (561)

Net finance costs (701) (400)

Other net income and forex 442 (331)

Share of associates income 383 496

Loss before tax (13 042) (10 688)

Tax credit 2 249 2 590 (13)

Loss after tax (10 793) (8 098) (33)

Headline earnings (1 228) (983) (25)

GP margin (%) 4.4 (1.4)

Group unit cost (stock adjusted) (R/Ptoz) 22 931 22 838 (0.4)

26


36 84135 854

3 378

2 279

4 670

FY2017 Volume variance Metal prices Exchange rate FY2018

REVENUE

• Revenue down by R987 million:

− Lower sales volumes following the reduction in refined metal due to the build‐up of stocks

− Higher dollar metal prices, US$ basket 12% higher at $2 023 (2017: $1 806)

− Stronger exchange rate, average achieved rate 6.1% stronger at R12.82 (2017: R13.66)

• ZAR basket price achieved of R25 935, up 5% (2017: R24 670)

+R2 391 million

(Rm)

27


COST OF SALES

• Cost of sales decreased by 8% year on year largely due to deferral of costs to inventories following the build up of smelter stocks

• Stock adjusted unit cost remained flat at R22 931 despite inflation of circa 4.2% largely due to impact of cost savings

• Cash costs year on year increase of 2.1%

37 370

37 336 37 33637 818 37 778 37 778 37 535

34 277

34

6 40379

3 258

488 136

Jun‐2017 Separationcosts

Cash cost Share basedpayments

Chromeoperations

Depreciation Metalspurchased

Change instock

Jun‐2018

(Rm)

28


EBITDA AND HEADLINE EARNINGS

• EBITDA improved by 28%

• Stronger ZAR resulted in exchange losses of R662 million (2017: gain of R154 million) which included R102 million relating to the convertible dollar bond

• Separation costs of R525 million in FY2018 compared to R34 million in FY2017

• Lower operating income: Insurance claim on 14 Shaft in FY2017 of R657 million.

• Sundry includes movement on revaluation of derivatives associated with convertible bonds of R881 million and bad debt recovered of R343 million

• Higher deferred tax expense on Zimplats due to change in tax rate from 15.45% to 25.75%

• Headline earnings down by R245 million to a loss of R1.2 billion

Tax effects of reconciling items included in taxation line.

4 311

5 536

379

3 258

421

987 488

816 491 51

FY2017 Revenue Cash cost Metalspurchased

Change instock

FX gains /losses

Separationcosts

Share ofprofits inassociates

Other FY2018

(Rm)

EBITDA

(983)

1 476

(1 228)

2 106

211

1 141

816 1131 298

Jun‐2017 Gross profit Otheroperatinginc/exp

Royalties Exchangegains/loss

Share ofprofit fromassociates

Sundry Taxation Jun‐2018

HEADLINE EARNINGS

(Rm)

29


HEADLINE EARNINGS BY COMPANY

• Impala headline loss of R3 billion

• Zimplats impacted by deferred taxation charge of R1.2 billion on change in tax rate arising conversion from SML to ML

• IRS made a headline profit of R1.2 billion utilising the spare capacity at Impala

(Rm)

‐2958‐3107 ‐3026

‐2825

‐1615

‐1228

(1 228)

181

201

1 210

387

(2 958)(149)

(100)

Impala Zimplats Marula Mimosa Two Rivers IRS Other Jun‐2018

(Rm)

30


CASH FLOW

• Cash from operating activities ‐ R 1 million, after funding increase in inventories of R4.2 billion

• Cash used in investing activities of – R4.6 billion, after funding property plant and equipment of R4.7 billion

• Net decrease in cash and cash equivalents for the year – R4.2 billion

• Impala cash burn of R6.6 billion after funding the inventory increase of R3.1 billion and capital expenditure of R2.8 billion

Rm FY2018 FY2017 Variance

Cash generated from operations 2 364 3 049 ‐685Operating cash flow 5 425 3 771 1 654Working capital‐ Increase in inventories ‐4 247 ‐593 ‐3 654‐ Increase in trade and other payables 1 126 621 505‐ Decrease/(increase) in trade and other receivables 60 ‐750 810Finance cost ‐1 025 ‐716 ‐309Other ‐1 340 ‐1 320 ‐20

Net cash used from operating activities ‐1 1 013 ‐1 014Purchase of property, plant and equipment ‐4 667 ‐3 432 ‐1 235Acquisition of interest in associate ‐Waterberg ‐425 0 ‐425Other 463 768 ‐305

Net cash used in investing activities ‐4 629 ‐2 664 ‐1 965Issue of ordinary shares, net of transaction cost 0 479 ‐479Bonds issued and repaid 423 2 375 ‐1 952Other ‐15 ‐54 39

Net cash from financing activities 408 2 800 0

Net decrease in cash and cash equivalents ‐4 222 1 149 ‐5 371

Opening balance 7 839 6 788 1 051

Exchange rates ‐ cash impact 88 ‐98 186

Closing cash balance 3 705 7 839 ‐4 134

31


NET DEBT

• Net debt increased to R5.33 billion at30 June 2018 (excluding finance leases)

• Group headroom available of R6.2 billion comprising:

− R3.7 billion, cash, including Zimplats cash of R1.6 billion

− Facilities of R4 billion in placeuntil June 2021, R2.5 billion undrawn

• Net debt impacted by circa R4.2 billion due to surplus inventory build up

• Net debt/EBITDA of 0.96 times

• Opportunities to monetise the stock build‐up are being explored

R million June 2018 June 2017 Variance (%)

Gross cash 3 705 7 839 (53)

Convertible bond (5 489) (5 808) 5

Derivative financial instrument 21 (49)

Marula BEE debt (887) (889)

Zimplats debt (1 167) (1 425) 18

Revolving credit facilities (1 510) -

Debt excluding leases (9 032) (8 171) (11)

Net debt excluding leases (5 327) (332)

Gearing ratio 13.4% 0.6%

32


UPDATE ON FUNDING STRATEGY

Group on track to maintain adequate headroom over the implementation period of the strategic review

Continue to explore opportunities to simplify RCF arrangements

Ongoing assessment of optimal capital structure to support operational and future funding requirements

Strategic review Forward sale facility of ~R2 billion approved subsequent to year end

Additional liquidity of up to R2 billion to be realised in FY 2019

Restructuring plan remains fully funded with the current operational and pricing environment

Ongoing funding

33

MARKET REVIEWSifiso Sibiya, Group Executive: Refining and Marketing


1 600

1 700

1 800

1 900

2 000

2 100

21 000

22 000

23 000

24 000

25 000

26 000

Jul‐17 Sep‐17 Nov‐17 Jan‐18 Mar‐18 May‐18

US$/oz

R/oz

Basket price per platinum ounce

ZAR Index US$ Index

METAL PRICE INDEX (FINANCIAL YEAR)

• US$ basket price increased by 12% year‐on‐yearo Platinum ‐ 5% (European diesel and Chinese jewellery demand)o Palladium + 33% (Growing gasoline automotive sales)o Rhodium + 99% (New on‐road compliance tests and focus on NOX)o Nickel + 23% (Global GDP growth and demand for battery metals)

• ZAR:US$ exchange rate improved by 6% year‐on‐yearo Weaker leading up to the ANC conference in December 2017o Stronger after the election of the new ANC leadershipo Weaker recently impacted by Turkey and emerging market currency concerns

• ZAR basket price 6% higher than the previous financial yearo Improved US$ basket offset by strengthening ZAR

35

ANNUAL RESULTS FY2018 36

PGM REVENUE BASKETS FY2018

44%

28%

17%

2%9%

51%

24%

8%

2%

15%

TWO RIVERS

R3.8bn

38%

34%

7%

9%11%

47%

31%

4%

8%

10%ZIMPLATS

R7.5bn43%

31%

8%

7%11%

52%

25%

5%

7%

10%IRS

R22.0bn

37%

41%

16%1% 5%

48%

38%

9%

1% 4%MARULA

R2.4bn

36%

30%

5%

15%

14%

45%

26%

3%

13%

14%

MIMOSA

Platinum Palladium Rhodium Nickel Other

R3.9bn

51%

24%

14%4%

8%

59%21%

7%

3%

10%IMPALA

R13.3bn

Description FY2018 FY2017 Var(%)

Platinum $/oz 943 984 (4)

Palladium $/oz 975 723 35

Rhodium $/oz 1 501 788 90

Nickel $/t 11 488 9 992 15

Basket $/Pt oz soldR/Pt oz sold

2 02325 935

1 80624 670

125

Exchangerate R/$ 12.82 13.66 (6)


WORLD LIGHT‐DUTY VEHICLE SALES BY REGION – 2018 FORECAST

2017

(millions)

2018(est.)

(millions)

2018growth

(%)

North America 17.19 17.15 ‐0.2

Western Europe 16.20 16.66 2.8

China 28.60 29.12 1.8

Japan 5.16 5.20 0.6

Rest of the World 28.13 28.91 2.8

Total 95.29 97.03 1.8

• Automotive marketso 2018: Positive first half performance at +3.5% (2017: +2.4%)o Growth primarily driven by the increases in

– US, Western Europe, Eastern Europe, China and Brazil/Argentina– More than offsetting declines in Japan and Canada

o Diesel share continues to fall in Western Europe favouring increased demand for palladium and rhodium i.e. gasolines engines

o 2018 global light‐duty sales forecast is further growth of 1.8%

• Platinum jewellery marketso 2018 Q2 PGI data indicates slowing declines in Chinao This follows a 5% overall year on year decline in 2017 driven by:

– Continued contraction in the Chinese market– Partially offset by growth in India, Japan and US

• Investmento 2018: ETF and paper markets negative for the first half for both platinum

and palladium o Japanese small bars and coins remained nett positive

DEMAND

37


SUPPLY AND DEMAND BALANCES

• 2018 platinum market to move into a surplus (+ 390 koz)o Demand expected to decline by an estimated 5%

Automotive down 4%

Jewellery flat

Industrial up 0.8%

Investment down 120%

Relatively flat primary and secondary supply

• 2018 palladium market to remain in deficit (‐695 koz)o Demand estimated to increase by 4%

Automotive +5%

Industrial ‐3%

Continued preference of gasoline systems over diesel

Relatively flat primary and secondary supply

• 2018 rhodium to remain in a small fundamental surplus

‐800

‐600

‐400

‐200

0

200

400

600

2017 2018

Platinum Palladium

Including Investment / ETF Movements

(oz0

00)

SUPPLY/DEMAND BALANCES

38


PGM MARKET OUTLOOK

• The gradual recovery of the global economy, with the anticipated revival in industrial production and consumer demand, is expected to be the biggest driver of PGM demand over the medium‐ to longer‐term, however:

o US‐China trade wars could negatively impact commodity and PGM prices o Platinum still lacking fundamental demand growth/pull

• Rest of the metals all enjoying strong supply/demand fundamentals, driven by:

o Palladium: Automotiveo Rhodium: Automotive and Industrial

39

OUTLOOKNico Muller, CEO


STRATEGIC FOCUS AREAS

41

FINANCE AND CASH MANAGEMENT

• Maintain balance sheet flexibility and liquidityo Monetize excess stocks (inventory build‐up)o Mitigate R4 billion planned restructuring costs

• Develop Waterberg funding strategy

LICENCE TO OPERATE

• Prioritise stakeholder engagements ‐restructuring; wages; communities; electionso Mitigate social impact of restructuringo Successfully conclude FY2019 wage negotiations

o Sustain operational continuity

STRATEGY

• Rebalance portfolio ‐ shallow, low cost, mechanised and palladium richo Advance Waterberg project

o Evaluate new Zimbabwe opportunities• Continue to grow organisational capacity

IMPALA RUSTENBURG

• Maintain improved 2018H2 safety performance

• Implement restructuring outcomes• Develop alternatives to shaft closures• Ramp‐up 16 and 20 shafts


GROUP OUTLOOK

Business area Unit FY2017 actual Guidance (February 2018) FY2018 actual Guidance

FY2019

Refined platinum production:Group Pt oz (refined) 1.530 million 1.5 million 1.468 million 1.50 – 1.60 million

Concentrate platinum production:

Impala Pt oz (in concentrate) 651 200 650 00 – 670 000 668 900 650 000 – 690 000

Zimplats Pt oz (in concentrate) 281 100 255 000 – 265 000 274 100 270 000 – 280 000

Two Rivers Pt oz (in concentrate) 181 900 165 000 – 175 000 162 500 160 000 – 170 000

Mimosa Pt oz (in concentrate) 121 600 115 000 – 120 000 125 000 115 000 – 125 000

Marula Pt oz (in concentrate) 67 900 80 000 – 90 000 85 100 85 000 – 95 000

IRS (third party) Pt oz (in concentrate) 252 900 250 000 – 260 000 258 800 170 000 – 180 000

Group unit cost R/Pt oz 22 873 23 600 – 24 200 23 457 24 400 – 25 300

Group unit cost excluding retrenchments R/Pt oz stock adjusted 22 838 ‐ 22 931 23 900 – 24 800

Group capital expenditure Rbn 3.43 4.6 – 4.8 4.61 4.1 – 4.3

42

ANNUAL RESULTS FY201813 September 2018


IMPALA OUTLOOK

FY2017 FY2018 est FY2019 est FY2020 est FY2021 est Long‐term est

Number of shafts No 12 11 10 8 6 6

Tonnes milled kt 10.1 10.9 11.3 10.7 8.1 8.0

Ore split (Merensky) % 40 42 43 45 50 >50

Headgrade 6E g/t 4.06 4.09 4.10 4.15 4.25 4.30

Stock adjusted Pt refined 000oz 646 658 680 660 520 520

Unit cost 1 R/Pt oz 25 100 24 015 <23 800 <23 000 <22 000 <22 000

SIB capital 2 R/Pt oz 2 800 2 960 <2 400 <2 400 <2 000 <2 000

Replacement Capital 2 Rm 707 818 550 260 260 120

Restructuring cost 2 Rm ‐ 525 500 1 600 ‐ ‐

All‐in unit cost 2 R/Pt oz 29 000 29 017 <28 000 <28 300 <24 500 <24 500

Employees No 32 235 29 529 2 ≈28 200 3 ≈27 000 4 ≈20 500 ≈20 500

Contractors No 10 018 10 550 2 ≈11 600 3 ≈7 700 4 ≈6 500 ≈6 500

1 Cost in FY2018 real terms excluding restructuring cost 2 Cost in FY2018 real terms3 As at 30 December 2018 4 As at 30 December 2019

44

Documents

ANNUAL RESULTS FY2018implats-reports.co.za/results/annual-results-2018/pdf/presentation.pdf · ANNUAL RESULTS FY2018 Description 2018 2017 Var(%) Platinum ounces produced (refined)