Annual financial statements statement 2015
Supplement to the integrated annual report 30 June 2015
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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
13.   Share capital  
    2015   2014  
    Rm   Rm  
  Ordinary shares   16   16  
  Share premium   13 369   13 371  
  Share-based payment reserve   2 348   2 237  
  Total share capital   15 733   15 624  
  The authorised share capital of the holding company is R21 (2014: R21) million consisting of 844 008 000 (2014: 844 008 000) ordinary shares with a par value of 2.5 cents each.      
    (million)  (million) 
  The number of ordinary shares in issue outside the Group are net of treasury shares held
as follows:  		    
  Number of ordinary shares issued   632.21   632.21  
  Treasury shares   (16.23)  (16.23) 
  Morokotso Trust   (8.87)  (8.87) 
  Share Incentive Trust   (0.03)  (0.06) 
  Number of ordinary shares issued outside the Group   607.08   607.05  
       
  The movement of ordinary shares during the year was as follows:      
  Beginning of the year   607.05   606.91  
  Shares issued – Implats Share Incentive scheme   0.03   0.14  
  Shares issued – Long-term Incentive Plan   0.04   —  
  Shares purchased – Long-term Incentive Plan   (0.04)  —  
  End of the year   607.08   607.05  
 

Morokotso Trust and Share Incentive Trust (Implats Share Incentive Scheme) are consolidated and the Implats shares held by them are resultantly accounted for as treasury shares. During the year, 24 108 (2014: 145 852) treasury shares were sold by the Share Incentive Trust, resulting in R1 (2014: R8) million being recognised within the statement of changes of equity as share premium. 8 903 016 (2014: 8 927 124) treasury shares with a historical cost of R1 413 (2014: R1 420) million held by these two trusts are expected to be sold before the end of 2016. 16 233 994 treasury shares bought in terms of a share buyback is held at the discretion of the Group.  
13.1   Equity-settled share-based compensation  
 

The Group issues equity-settled and cash-settled (note 17) share-based payments to employees. Equity-settled schemes include the Long-term Incentive Plan, comprising Share Appreciation Rights (SAR) and Conditional Share Plan (CSP) consisting of shares with a nil exercise price and the Implats Share Incentive Scheme (ISIS). Grants under the ISIS ceased in September 2004. All these share options have now vested and have been accounted for.  
 

During the year R111 (2014: R123) million was expensed in terms of the Long-term Incentive Plan.  
 

The fair value of the equity-settled share-based payments was calculated using the binomial option model for non-vested shares, except for fully paid shares which are valued using the share price on valuation date, adjusted for the present value of expected dividends during the vesting period as well as market performance conditions.  
  The average inputs for determining the fair value are as follows:  
    Long-term Incentive  
Plan – (SAR) 		 Long-term Incentive  
Plan – (CSP) 
    2015   2014   2015   2014  
  Weighted average option value (rand)1   38.42   46.46   102.23   130.62  
  Weighted average share price on valuation date (rand)2   110.93   138.67   108.86   138.33  
  Weighted average exercise price (rand)3 and5   112.33   140.47   Nil   Nil  
  Volatility4   34.97   34.51   N/A   N/A  
  Dividend yield (%)  0.53   1.01   0.53   1.01  
  Risk-free interest rate (%)  6.49   6.33   6.52   6.34  
 
1 The weighted average option value of equity-settled shares is calculated on grant date.
2 Weighted average share price for valuation of equity-settled shares is calculated taking into account the market price on all grant dates. 
3 The weighted average exercise price for equity-settled shares is calculated taking into account the exercise price on each grant date.
4 Volatility for equity-settled shares is the 400-day moving average historical volatility on Implats shares on each valuation date. 
5 The weighted average market price of the share on date of issue approximates the weighted average exercise price. Options are granted based on the market price at the date of issue. 
 
    2015 2014
    Number   Weighted   
average   
exercise   
price  		 Number   Weighted   
average   
exercise   
price  
    ('000)  (R)  ('000)  (R) 
  SAR          
  Movement in the number of share options outstanding
was as follows:  		        
  Beginning of the year   1 910   140.47   1 019   146.55  
  Granted   1 644   81.80   1 031   134.72  
  Forfeited   (243)  140.47   (140)  146.55  
  Exercised/Shares issued   —   —   —   —  
  End of the year (not yet exercisable)  3 311   112.33   1 910   140.47  
  Share options outstanding (number in thousands) at the end
of the year have the following terms:  		        
  Price per share   Vesting  
years  
2016  		 Vesting  
years  
2017  		 Vesting  
years  
2018  		 Total  
number  
  < R100   14   —   1 591   1 605  
  R100 – R150   857   849   —   1 706  
  Total 2015   871   849   1 591   3 311  
  Total 2014   923   987   —   1 910  
  The share options have a contractual life of three years after vesting date.  
   
        2015   2014  
        Number   Number  
        ('000)  ('000) 
  CSP          
  Movement in the number of share options outstanding was
as follows:  		        
  Beginning of the year       3 499   1 768  
  Granted       3 455   1 859  
  Forfeited       (384)  (126) 
  Exercised/Shares issued       (44)  (2) 
  End of the year (not yet exercisable)      6 526   3 499  
  Share options outstanding (number in thousands) at the end of the year have the following terms:          
    Vesting   Vesting   Vesting    
    years   years   years   Total  
    2016   2017   2018   number  
  Total 2015   1 500   1 682   3 344   6 526  
  Total 2014   1 672   1 827   —   3 499  
 

The share options are full value shares, with a R nil exercise price. The contractual life ends on the vesting date.  
 

Refer to note 37 for the details on share-based payment rights held by key management personnel (directors and senior executive management).  
  Long-term Incentive Plan – Conditional Share Plan (LTIP – CSP) 
 

Fully paid shares are awarded free of charge to the participants at the end of a three-year vesting period. On the date of award, participants are only granted conditional rights to acquire these shares at a future date, and only become shareholders with dividend and voting rights from vesting onwards. There are two CSPs in effect. For the shares to vest in both instances participants must remain employed by a company in the Implats Group but, for certain of these shares, vesting of the shares are subject to the achievement of defined performance vesting conditions over the performance period.  
  The ranking determines the vesting percentage. The proposed vesting scale relative to peer group is as follows:
  • If the ranking of Implats is in the lowest three – no shares will vest
  • If the ranking is fourth – 50% will vest
  • If the ranking is third – 75% will vest
  • If the ranking is second – 90% will vest
  • If the ranking is first – 100% will vest.
  Long-term Incentive Plan – Share Appreciation Rights (LTIP – SAR) 
 

Conditional rights are awarded to participants to receive shares in Implats. The number of shares awarded are calculated with reference to the increase in the share price from the award date until the date on which the SAR is exercised by the participants. A three-year vesting period applies, during which time the participants have no rights in respect of the underlying shares. Vesting is conditional on continued employment and a prescribed level of corporate performance.

The participants are only entitled to exercise the SARs subsequent to and to the extent that vesting has taken place. Participants become shareholders following the exercise of the SARs. All unexercised SARs lapse after six years from date of allocation.  
  These rights are weighted as follows and subject to the following performance conditions:
  • The total shareholder return must exceed growth in the award date share price of CPI plus 2% compounded annually over a three-year period, with a 33.33% weighting
  • A relative earnings before interest, tax, depreciation and amortisation (EBITDA) margin, being EBITDA divided by revenue, with a 33.33% weighting. Implats will be ranked against the peer group companies (on the same scale as for the CSP) based on the EBITDA margin over the three-year period
  • A relative measure on safety with a 33.33% weighting. Implats will be ranked against the peer group companies (on the same scale as for the CSP) based on the fatality injury frequency rate over the three-year period.