Summary consolidated annual financial statements
Directors' report

Profile

Nature and business of the Company

Impala Platinum Holdings Limited (Implats/Company/Group) is one of the foremost producers and suppliers of platinum group metals (PGMs) to industrial economies. The Company's holdings in various mining and exploration activities as at 30 June 2014 (unchanged from 30 June 2013) are described below:

Share capital

There were no changes to the authorised or issued share capital during the year.

American depositary receipts

At 30 June 2014, Implats had 6 812 256 (2013: 7 264 014) sponsored American depositary shares in issue through Deutsche Bank AG London and trading on the over-the-counter markets in the US. Each American depositary share is equal to one Implats ordinary share.

Treasury shares

The Group holds 16 233 994 ordinary shares of 2.5 cents each which were bought in terms of an approved share buy-back scheme in prior years. No additional shares were bought by the Company during the year under review. The shares are held as "treasury shares" by a wholly owned subsidiary of the Company.

Share-based compensation

Details of participation in the share option scheme are set out in note 39 of the consolidated financial statements.

The trustee of the Share Incentive Trust is Ms NDB Orleyn; however, the Group no longer offers employees any further options under the Implats Share Incentive Scheme. All eligible employees are now offered shares under a new long-term incentive plan (LTIP) which was approved by shareholders in 2012. The LTIP has effectively replaced the Implats Share Appreciation Bonus Plan (ISABP) and no further notional shares have been issued under the ISABP.

Shareholding in the Company

Black economic empowerment (BEE) ownership

The Group believes that it has fully met the equity ownership objectives of the Mineral and Petroleum Resources Development Act as it recognises that the transformation of the equity ownership of the Company is a key strategic goal. Our BEE partners are drawn from a wide range of groups from the significant stake held by the Royal Bafokeng Nation to smaller BEE companies and community groups. The Morokotso Trust, an Employee Share Ownership Plan established in 2006, has delivered value to some 24 000 employees in South Africa with 40% of the shares having vested in July 2011. The remaining 60% will continue to be held by the Trust on behalf of our employees until the termination date in 2016.

Investments

Indigenisation of Zimbabwean investments
Discussions continue with the Government of Zimbabwe on the subject of indigenisation and how it can be implemented. The Company has been advised by the government to factor in certain corporate social responsibility projects with a view to accruing credits towards the 51% indigenous shareholding target. Both Zimplats and Mimosa are engaged in discussions with the Minister of Youth Development, Indigenisation and Economic Empowerment with regard to the indigenisation implementation plan.

Zimplats Holdings Limited (Zimplats)
During the period under review, the Company owned 86.9% (2013: 86.9%) of Zimplats, which in turn holds 100% of Zimbabwe Platinum Mines (Pvt) Limited (Zimplats Pvt) – an operating company in Zimbabwe. Pending the finalisation of the indigenisation plans, Implats continued to consolidate its shareholding in Zimplats in 2014.

Mimosa Investments Limited (Mimosa)
The Company holds a 50% (2013: 50%) shareholding in Mimosa with the balance being held by Aquarius Platinum Limited (Aquarius). Mimosa Mining Company (Pvt) Limited (Mimosa Pvt), the operating company, is a wholly owned subsidiary of Mimosa. In 2014, Implats equity accounted its 50% interest in the joint venture in line with the new accounting standard requiring equity accounting of joint ventures.

Two Rivers Platinum Proprietary Limited (Two Rivers)
The Company owns a 45% (2013: 45%) interest in Two Rivers with the balance held by African Rainbow Minerals Limited. Upon receipt of all regulatory approvals Implats will acquire a further 4% interest in Two Rivers in exchange for vending into Two Rivers portions 4, 5 and 6 of the farm Kalkfontein, as well as the area covered by the Tweefontein prospecting rights.

Marula Platinum Proprietary Limited (Marula)
The Company owns a 73% (2013: 73%) interest in Marula.

The 27% non-controlling interest comprises a 9% equity stake in Marula held by each of the following BEE entities:

• Tubatse Platinum Proprietary Limited
• Mmakau Mining Proprietary Limited
• Marula Community Trust

Implats has consolidated the BEE interest as the vendor finance is guaranteed by Implats.

Afplats Proprietary Limited (Afplats)
The Company owns a 74% (2013: 74%) interest in Afplats, which is continuing the main shaft sinking activities towards establishing a platinum mine – in the Brits district – being Phase 1 of the Leeuwkop project.

Makgomo Chrome Proprietary Limited (Makgomo Chrome)
The Company owns a 50% (2013: 50%) stake in Makgomo Chrome, a company established pursuant to Implats' Local Economic Development strategy for the Marula community. The balance of the issued shares is held by the communities in the Marula area of operations. Twenty percent of the Company's shareholding is held through Marula and all dividends received by Marula are used to fund community development projects.

Impala Chrome Proprietary Limited (Impala Chrome)
The Company holds 70% (2013: 70%) of the shares in issue and Chrome Traders Processing Proprietary Limited (Chrome Traders) holds the remaining 30% of the shares. The Implats board has approved that the Company's shareholding in Impala Chrome be reduced to 40% by earmarking 30% for sale in future to local BEE entities or communities.

Financial affairs

Results for the year

The results for the year were significantly impacted by the five-month industrial action at Impala Rustenburg's operations. The operations outside the Rustenburg area, specifically Zimplats, Mimosa and Two Rivers, all performed admirably and delivered good results.

Group production deteriorated from 1.582 million ounces of platinum to 1.178 million ounces due to industrial action at Impala. At Impala itself, refined production decreased by 42% to 411 000 platinum ounces on the back of the industrial action, which resulted in a loss of some 312 000 platinum ounces (compared to the plan for the second six months).

Revenues reduced by only R816 million to R29.03 billion mainly assisted by destocking and higher rand metal prices.

Cash costs which include on-mine, processing, refining and selling and administration expenses decreased by R3.4 billion. Stringent cash preservation initiatives were implemented as a result of the strike action at Impala Rustenburg. There was a strict application of the ‘no-work-no-pay' principle and operating costs during this period only included security, essential services and maintenance costs. As a result cash costs were curtailed by R3.80 billion.

• Furthermore, an amount of R1.26 billion was transferred from cash costs to other operating expenses for non-production costs incurred during the strike
• Group inflation increased cash costs by 10.8%. South African inflation amounted to 8.7% (10.7% on labour, 5.5% for consumables and 9.0% on utilities), while Zimbabwean dollar inflation amounted to 6.4% but was affected by the 17.9% weakening in the
  rand/dollar exchange rate.

The net results of Implats' operating, investing and financing activities, combined with the opening cash and debt positions, was to end the year with cash of R4.31 billion and net debt (excluding finance leases) of R2.10 billion. InGroup had committed undrawn facilities of R3.0 billion at year end.

Dividends

No dividends were declared in respect of the 2014 financial year (2013: interim dividend – 35 cents per share and final dividend – 60 cents per share).

Convertible bonds interest payments

The Company paid interest in August 2013 and February 2014 to bond holders in line with the terms and conditions of the bonds.

Capital expenditure

Capital expenditure for the year amounted to R4.4 (2013: R6.3) billion.

Capital expenditure of approximately R5.3 billion is planned for the 2015 financial year, of which R1.5 billion relates to 20, 16 and 17 Shafts at Impala (the triple build-up). Approximately R800 million was planned for off-reef development and R1.8 billion on Zimplats. Impala's capital expenditure will principally be funded from the proceeds of the convertible bonds issued in 2013 and operating cash flows. Expenditure in Zimbabwe will be funded from operating cash flows and borrowings if necessary.

Post-balance sheet events

Post year end, in July 2014, a collapse within a section of the underground working area of the Bimha mine in Zimbabwe was triggered by the accelerated deterioration of ground conditions associated with a major fault, the Mutambara Shear, which transgresses through the mining area. As a result of the proactive response from the Zimplats management team and the timely evacuation of all personnel, no injuries or damage of mobile equipment were reported.

By 20 August 2014, ground conditions had continued to deteriorate and as a consequence, it was decided to withdraw all employees across the rest of the mine. A team of Company and independent advisers has been appointed to conduct detailed investigations to re-engineer and/or arrest the current mine stability concerns. Consequently, there is a possible production impact of up to 70 000 platinum ounces in 2015.

No other material events have occurred since the date of these consolidated financial statements and the date of approval thereof, the knowledge of which would affect the ability of the users of these statements to make proper evaluations and decisions.

Going concern

The consolidated financial statements have been prepared on a going-concern basis using the appropriate accounting policies, supported by reasonable and prudent judgements and estimates. The directors believe that the Company and the Group will continue to be in operation in the foreseeable future.

Associated and subsidiary companies

Information regarding the Company's associated and subsidiary companies is given in note 17 of the separate annual financial statements of the Company.

Property

Details of the freehold and leasehold land and buildings of the various companies are contained in registers, which are available for inspection at the registered offices of those companies.

Directorate

Composition of the board

The board comprises nine independent non-executive directors, two non-executive directors and two executive directors.

In compliance with the Company's memorandum of incorporation and Schedule 10 of the JSE Listings Requirements, the directors who will retire at the next annual general meeting (AGM) are Ms AA Maule, Ms B Ngonyama, Ms NDB Orleyn, Dr KDK Mokhele and Mr TV Mokgatlha. The average length of service of the 11 non-executive directors is 4.6 years, while that of the executive directors is 3.5 years.

In line with King III and international best practice, directors who have served on the board for longer than nine years are subject to an annual independence test and annual re-election by shareholders at the AGM. Currently, Ms NDB Orleyn, Dr KDK Mokhele and Mr TV Mokgatlha are retiring to satisfy this requirement.

Interests of directors

There have been no changes to the directors' shareholding outlined above since the end of the financial year to the date of this report.

Directors' remuneration and key management compensation

Details of the executive directors, non-executive directors and senior management remuneration paid during the 2014 financial year, and of directors' remuneration proposed for the 2015 financial year, are set out in the remuneration report.

Directors' interests

No contracts of significance were entered into in which the directors of the Company were materially interested, during the financial year. No material change in the aforegoing interests has taken place between 30 June 2014 and the date of this report.

Special resolutions passed

During the year, the following special resolutions were passed by the shareholders:

Acquisition of the Company's shares by the Company or subsidiaries

A renewal of the general authority to acquire up to 5% of the Company's shares subject to the provisions of the JSE Listings Requirements and the Companies Act, provided that the authority does not extend beyond 15 months from the date of the granting of that authority.

Financial assistance

Shareholders approved the granting of financial assistance, subject to the provisions of sections 44 and 45 of the Companies Act, directly or indirectly, to present and future subsidiaries, present and future directors and prescribed officers, or any related or inter-related persons for a period of two years commencing from the date of the resolution.

Administration

Financial, administrative and technical advisers

In terms of a service agreement, Impala acted as financial, administrative and technical advisers to the Group during the year on a fee basis. Mr PA Dunne had an interest in this contract to the extent that he was a director of Impala and of the Company, but he did not beneficially own any shares in Impala. During the year under review, Mr Dunne resigned as a director of Impala.

Company secretary

Ms A Parboosing acted as secretary to Implats and Impala until she resigned on 21 July 2014. Mr T Llale was appointed as secretary to Implats and Impala on 25 August 2014. Impala acted as secretaries to other subsidiaries in the Group. The business and postal addresses of the company secretary are set out here.

United Kingdom secretaries

The business and postal addresses of the United Kingdom secretaries are set out here.

Public officer

Mr SF Naude acted as public officer to companies in the Group for the year under review.