Annual financial statements statement 2015
Supplement to the integrated annual report 30 June 2015
MENU

GROUP FINANCIALS STATEMENTS

MENU Notes to the consolidated financial statements — for the year ended 30 June 2015

  1. Accounting policies
  2. Segment information
  3. Property, plant and equipment
  4. Exploration and evaluation assets
  5. Investment in equity-accounted entities
  6. Deferred tax
  7. Other financial assets
  8. Derivative financial instrument
  9. Prepayments
  10. Inventories
  11. Trade and other receivables
  12. Cash and cash equivalents
  13. Share capital
  14. Non-controlling interest
  15. Borrowings
  16. Other financial liabilities
  17. Sundry liabilities
  18. Provisions
  19. Trade and other payables
  20. Financial instruments and financial risk management
  21. Current tax
  22. Revenue
  23. Cost of sales
  24. Other operating income
  25. Other operating expenses
  26. Impairment
  27. Royalty (income)/expense
  28. Finance income
  29. Finance cost
  30. Other income
  31. Other expenses
  32. Income tax expense
  33. Earnings per share
  34. Dividends
  35. Cash generated from operations
  36. Contingent liabilities and guarantees
  37. Related-party transactions
3.   Property, plant and equipment  
    Shafts,  
mining  
develop-  
ment  
and  
infra-  
structure  		 Metal-  
lurgical  
and  
refining  
plants  		 Land  
and   
buildings  		 Assets  
under  
construc-  
tion  		 Other   
assets  		 Total  
    Rm   Rm   Rm   Rm   Rm   Rm  
  Cost              
  Balance at 30 June 2014   34 306   13 113   4 809   7 294   3 524   63 046  
  Capital expenditure   2 423   337   6   1 028   493   4 287  
  Interest capitalised (note 29)  —   —   —   260   —   260  
  Transfer from assets under construction   476   223   —   (699)  —   —  
  Disposals   —   (1)  (6)  —   (10)  (17) 
  Scrapping*   (279)  (179)  —   —   —   (458) 
  Rehabilitation adjustment   110   —   —   —   —   110  
  Exchange adjustment   745   711   273   100   287   2 116  
  Balance at 30 June 2015   37 781   14 204   5 082   7 983   4 294   69 344  
  Balance at 30 June 2013   25 445   12 172   3 994   13 628   3 082   58 321  
  Capital expenditure   2 253   197   99   1 708   88   4 345  
  Interest capitalised (note 29)  —   —   —   155   —   155  
  Transfer from assets under construction   6 879   413   686   (8 334)  356   —  
  Disposals   (2)  —   (76)  —   (130)  (208) 
  Scrapping   (429)  —   —   —   —   (429) 
  Rehabilitation adjustment   (115)  —   —   —   —   (115) 
  Exchange adjustment   275   331   106   137   128   977  
  Balance at 30 June 2014   34 306   13 113   4 809   7 294   3 524   63 046  
   
    Shafts,  
mining  
develop-  
ment  
and  
infra-  
structure  		 Metal-  
lurgical  
and  
refining  
plants  		 Land  
and  
buildings  		 Assets  
under  
construc-  
tion  		 Other  
assets  		 Total  
    Rm   Rm   Rm   Rm   Rm   Rm  
  Accumulated depreciation and impairment              
  Balance at 30 June 2014   8 922   4 112   479   —   2 617   16 130  
  Depreciation (note 23)  1 398   536   227   —   432   2 593  
  Disposals   —   —   —   —   (4)  (4) 
  Scrapping*   (17)  (4)  —   —   —   (21) 
  Impairment   —   —   —   2 872   —   2 872  
  Exchange adjustment   167   134   41   —   184   526  
  Balance at 30 June 2015   10 470   4 778   747   2 872   3 229   22 096  
  Balance at 30 June 2013   7 778   3 569   300   —   2 264   13 911  
  Depreciation (note 23)  1 288   490   167   —   396   2 341  
  Disposals   —   —   (65)  —   (126)  (191) 
  Scrapping   (206)  —   —   —   —   (206) 
  Impairment   —   —   65   —   —   65  
  Exchange adjustment   62   53   12   —   83   210  
  Balance at 30 June 2014   8 922   4 112   479   —   2 617   16 130  
               
  Carrying amount at 30 June 2015   27 311   9 426   4 335   5 111   1 065   47 248  
  Carrying amount at 30 June 2014   25 384   9 001   4 330   7 294   907   46 916  
  Included in property, plant and equipment are land and buildings with a carrying amount of R908 (2014: R986) million, refining plants with a carrying amount of R93 (2014: R104) million and other assets with a carrying amount of R5 (2014: nil) million arising from finance leases capitalised (note 15.6).  
 
* The scrapping of R437 million net book value comprises R261 million for the collapse within a section of the underground working area of Zimplats' Bimha Mine and R176 million of the bankable feasibility and technical studies of Zimplats' Base Metal Refinery at Selous.  

    2015   2014  
    Rm   Rm  
  Assets under construction      
  Assets under construction consist mainly of (carrying amount):      
 
  • Impala (17, 18 19 and 20 shafts)
 1 529   4 140  
 
  • Afplats (Leeuwkop)
 2 666   2 539  
 
  • Zimplats (Ngezi phase 2 and underground mine project)
 841   559  
 
  • Other immaterial items
 75   56  
    5 111   7 294  
  Other assets      
  Other assets consist mainly of (carrying amount):      
  Mobile equipment   907   812  
  Information technology   115   77  
  Other immaterial items   43   18  
    1 065   907  
  Commitments in respect of property, plant and equipment:      
  Commitments contracted for   2 144   1 855  
  Approved expenditure not yet contracted   13 393   13 733  
    15 537   15 588  
  Less than one year   4 839   4 777  
  Between one and five years   10 698   10 006  
  More than five years   —   805  
       
    15 537   15 588  

 

This expenditure will be funded internally and from borrowings, where necessary. Apart from finance leases, assets are not encumbered by loans. No assets were pledged as collateral.
3.1 Shafts, mining development and infrastructure
 

Individual mining assets are depreciated using the units-of-production (UOP) method (note 1.3.5).
3.2 Metallurgical and refining plants
 

Metallurgical and refining assets are depreciated using the UOP method (note 1.3.5).
3.3 Land, buildings and general infrastructure
 

Assets in this category are depreciated over the life-of-mine using the UOP method because it is expected that houses would lose their value when the mine closes. Depreciation ceases when the residual value exceeds the carrying amount. The useful life of land and buildings subject to a finance lease is limited to the 15-year lease term. Land is not depreciated.

3.4 Other assets
  Other assets are depreciated using the straight-line method over the useful life of the asset limited to the life-of-mine as follows:
Asset type Estimated useful life
  • Information technology
  • Mobile equipment
  • Other immaterial items
 3 years
5 or 10 years
1 to 5 years
3.5 Units-of-production
 

Management has elected to use the centares mined in relation to centares proved and probable mineral reserves as an appropriate units-of-production depreciation methodology. Changes in proved and probable mineral reserves will impact the useful lives of the assets depreciated on the UOP method and this will similarly impact the useful lives of assets depreciated on a straight-line basis, where those lives are limited to the life-of-mine.
3.6 Mineral reserves estimations
 

The estimation of reserves impact the depreciation of property, plant and equipment and the recoverable amount of property, plant and equipment. Factors impacting the determination of proved and probable reserves are:

  • The grade of mineral reserves may vary significantly from time to time (ie differences between actual grades mined and resource model grades)
  • Differences between actual commodity prices and commodity price assumptions
  • Unforeseen operational issues at mine sites
  • Changes in capital, operating, mining, processing and reclamation costs, discount rates and foreign exchange rates.

Expectations regarding future profitability would impact the decision to continue mining and consequently the continued classification as proved and probable mineral reserves.

During the current year proved and probable mineral reserves were reassessed. This reassessment resulted in a change in mineral reserves which had a 1% impact on the depreciation based on the UOP method.
3.7 Production start date
 

The Group assesses the stage of each mine construction project to determine when a mine moves into the production stage. The criteria used to assess the start date are determined based on the unique nature of each mine construction project, such as the complexity of a plant and its location.

When a mine construction project is ready for use and moves into the production stage, the capitalisation of mine construction costs ceases and further costs are either regarded as inventory or expensed, except for cost qualifying for capitalising related to mining asset additions or improvements, underground mine development or mineable reserve development.
3.8 Impairment
 

17 Shaft is a non-productive asset which will in future form part of the Impala cash generating unit (CGU). Currently this asset is valued on a standalone basis until it contributes to the CGU. On a value-in-use basis, using the key assumptions below, the recoverable amount is R1 783 million, resulting in an impairment of R2 872 million.

Long-term mining assets forming part of board approved projects are valued based on estimates of future discounted cash flows (DCFs) of the latest board approved business forecasts regarding production volumes, costs of production, capital expenditure, metal prices and market forecasts for foreign exchange rates. The discount rate is a risk adjusted discount rate, taking into account specific risks relating to the CGU where cash flows have not been adjusted for the risk.

Mineral resources outside the approved mine plans are valued based on the in situ 4E ounce value. Comparable market transactions are used as a source of evidence adjusting specifically for the nature of each underlying ore body and the prevailing platinum price (note 4).

All the above estimates are subject to risks and uncertainties including future metal prices and exchange rates. It is therefore possible that changes can occur which may affect the recoverability of the mining assets.

The key financial assumptions used in the impairment calculations are:

  • Long-term real revenue per platinum ounce sold of R31 246 (2014: R30 264)
  • Long-term real discount rate – a range of 10% to 15% (2014: 6% to 14%) for the various operations in the Group
  • Sensitivity analysis: A change of 10% in the fair value would result in an impairment or reversal of impairment of R178 million.