Social capital and licence to operate
our economic and social value added

Our strategic approach to investing in socio-economic development is premised on the belief that the long-term viability of our business is linked to the well-being of the communities in which we operate and the areas from which a significant portion of our employees emanate.

Securing the trust and endorsement of these communities and their political representatives is essential to maintaining our social licence to operate.

In our South African operations our investment strategy focuses primarily on infrastructure, health, education, community empowerment and poverty alleviation projects. The strategy aims to complement our accommodation and living conditions initiatives, through the provision of schools, clinics and other amenities. Our commitment to improving the living conditions of our employees through access to housing provides an opportunity for differentiation and competitive advantage in attracting future skills. It represents a strong business/employee linkage and serves as the cornerstone of other pillars of our broader transformation strategy. It supports skills retention, procurement from local enterprises and enterprise development in host communities through the value chain, and forms part of our broader commitment to respecting the human rights and interests of our stakeholders.

Implats' operations make a significant positive
contribution to socio-economic development in
both South Africa and Zimbabwe

Through our core activities, Implats' operations make a significant positive contribution to socio-economic development in both South Africa and Zimbabwe. Our social programmes and investments are identified in collaboration with community representatives and the local municipality in our areas of operation. These are further aligned with the regional Integrated Development Plan (IDP) for the South African operations, and are assessed quarterly through a third party to determine impacts and risks. Through the Human Resources Committee people investments are discussed on a monthly basis, taking into account skills development expenditure, the team mobilisation programme and other people-related initiatives. This is evaluated against team productivity, absenteeism, skills turnover and other indicators. The re-establishment of our sustainable development forum in the new year will give further support to the management and monitoring of value creation through socio-economic investments. Discussions are held quarterly with community forums comprising community representatives, the local municipality, traditional representatives and company representatives for each discipline. Performance elements are monitored and reported quarterly to the social ethics and transformation committee of the board.

In the year under review we have continued to provide employment, skills and training, we have paid taxes and royalties to governments and dividends to our shareholders, we have purchased goods and services from local businesses, and invested in the development and improvement of infrastructure and other social services in the communities that are home to our employees.

A detailed breakdown of the economic value added throughout 2014 is provided in the following table:

Value added statement

for the year ended 30 June	2014 Rm	2013 Rm	2012 Rm
Revenue	29 028	29 844	27 393
Net cost of products and services	(17 091)	(14 542)	(13 463)
Value added by operations	11 937	15 302	13 930
Other net (expenditure)/income	153	(185)	1 152
Depreciation	(3 341)	(3 332)	(1 629)
Total value added	8 749	11 784	13 453
Applied as follows to:
Employee benefits	7 609	8 276	6 521
Labour and other	7 378	8 374	6 894
Share-based payments	231	(98)	(373)
The state as direct taxes	706	1 080	1 109
Deferred tax	(562)	312	698
Royalty recipients	693	674	598
Providers of capital	666	1 008	3 731
Financing costs	432	375	248
Non-controlling interest	(137)	53	119
Dividends	371	580	3 364

Total value distributed	9 112	11 350	12 657
Reinvested in the Group	(363)	435	796
	8 749	11 785	13 453

Implats supports the principles of the Extractive Industries Transparency Initiative on the disclosure of payments to governments. In the years under review R1 548 million was paid to the South African Government as taxes and US$78 million was paid to the Zimbabwean Government.

Taxes paid directly to government by category and country*

South
Africa^**
(Rm)

Zimbabwe^***
(US$m)

Profit taxes

489

Employee PAYE

1 001

Royalties taxes

Total

1 548

^*	Reporting in line with the Extractive Industries Transparency Initiative (EITI).
^**	Excludes Two Rivers.
^***	Excludes Mimosa.

Distribution of value in 2014

	Employees wages (A to C4)*	62%
	Management wages	19%
	Share-based payments	3%
	State as direct taxes	2%
	Royalties	8%
	Providers of capital	7%

^*	Employees lost an additional R1.9 billion in wages during the five-month strike. If included, the percentage employee wages would increase from 62% to 69% and management would decrease from 19% to 16%.

During 2014, we created significant value for our various stakeholders in the form of:

Employee wages and benefits R7 609 million	Taxation and royalties paid to government excluding PAYE R1 140 million
Dividends paid to shareholders R371 million	Payment to providers of capital R666 million
Skills and training spend in South Africa R331 million	De-investment in the Group to sustain value creation for stakeholders R363 million
Investments in socio-economic development initiatives in our communities – in South Africa R71 million and Zimbabwe US$6 million	Payments to suppliers and contractors – in South Africa R7 900 million and Zimbabwe US$326 million

Social capital and licence to operate our economic and social value added

Our strategic approach to investing in socio-economic development is premised on the belief that the long-term viability of our business is linked to the well-being of the communities in which we operate and the areas from which a significant portion of our employees emanate.

Implats' operations make a significant positive contribution to socio-economic development in both South Africa and Zimbabwe

Value added statement

Taxes paid directly to government by category and country*

Distribution of value in 2014

During 2014, we created significant value for our various stakeholders in the form of:

Employee wages and benefits R7 609 million

Taxation and royalties paid to government excluding PAYE R1 140 million

Dividends paid to shareholders R371 million

Payment to providers of capital R666 million

Skills and training spend in South Africa R331 million

De-investment in the Group to sustain value creation for stakeholders R363 million

Investments in socio-economic development initiatives in our communities – in South Africa R71 million and Zimbabwe US$6 million

Payments to suppliers and contractors – in South Africa R7 900 million and Zimbabwe US$326 million

Social capital and licence to operate
our economic and social value added

Implats' operations make a significant positive
contribution to socio-economic development in
both South Africa and Zimbabwe

Employee wages and benefits
R7 609 million

Taxation and royalties paid to government excluding PAYE
R1 140 million

Dividends paid to shareholders
R371 million

Payment to providers of capital
R666 million

Skills and training spend in South Africa
R331 million

De-investment in the Group to sustain value creation for stakeholders
R363 million

Investments in socio-economic development initiatives in our communities – in South Africa
R71 million
and Zimbabwe
US$6 million

Payments to suppliers and contractors – in South Africa
R7 900 million
and Zimbabwe
US$326 million