ANNUAL FINANCIAL STATEMENTS 2019 OVERVIEW

  • The significant accounting policies, judgements and estimates, that are deemed material and have been applied in the preparation of these Group and Company financial statements, along with the transitional impact of newly adopted IFRSs are set out within the relevant notes to the financial statements and are indicated as follows:

    ACCOUNTING POLICIES

    The specific principles, bases, conventions, rules and practices applied by the Company for preparing and presenting financial statements.

    ESTIMATES AND JUDGEMENTS

    The complex or subjective judgements that have the most significant effect on amounts recognised and assumptions and other sources of estimation uncertainty where there is a significant risk of material adjustment to the carrying amounts of assets or liabilities with the next reporting period.

    TRANSITION

    The implementation requirements and related impacts of a newly adopted IFRS.

  • Accounting policies, which are useful to users, especially where particular accounting policies are based on judgement regarding choices within International Financial Reporting Standards have been disclosed. Accounting policies for which no choice is permitted in terms of International Financial Reporting Standards, have been included only if management concluded that the disclosure would assist users in understanding the financial statements as a whole, taking into account the materiality of the item being discussed. Accounting policies which are not applicable from time to time, have been removed, but will be included if the type of transaction occurs in future.

    Accounting policies that refer to “consolidated or Group”, apply equally to the Company financial statements where relevant. The composition of the Group is further described in note 3 of the Company financial statements. These consolidated financial statements are presented in South African rand and rounded to millions, unless otherwise stated.

    The following US dollar exchange rates were used when preparing these consolidated financial statements:

    Year-end rate:   R14.09 (2018: R13.73)
    Annual average rate:
      R14.19 (2018: R12.85)

    The following Interbank RTGS dollar/US$ exchange rates were used when preparing these consolidated financial statements:

    Year-end rate:   RTGS$6.02
    Annual average rate (February to June):
      RTGS$3.66

    The Old Mutual Implied RTGS dollar/US$ exchange rates were:

    Year-end rate:   RTGS$9.95
    Annual average rate (October to June):
      RTGS$5.79

    On 1 July 2018 Impala Platinum and Impala Refining Services (IRS), both subsidiaries of the Group, entered into a sale of business agreement in terms of which IRS becomes a division of Impala and Impala acquired the metal purchase and toll refining operations of IRS as a going concern, using the Group roll‐over relief provisions of sections 45 and 47 of the Income Tax Act No. 58 of 1962.

    This transaction represented a business combination under common control and had no financial impact on the Group’s consolidated financial statements.


  • NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

  • SIGNIFICANT ACCOUNTING POLICIES, JUDGEMENTS AND ESTIMATES

  • FOREIGN CURRENCIES

NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

The principal accounting policies used by the Group are consistent with those of the previous year, except for changes from new or revised IFRSs.

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    NEW AND REVISED IFRSs NOT ADOPTED BY THE GROUP

    The following new standards and amendments to standards are not effective and have not been early adopted by the Group:

    IFRS 16 LEASES

    The new standard provides a comprehensive model to identify lease arrangements and the treatment thereof in the financial statements of both lessees and lessors. Implats has identified operating leases to the value of approximately R20 million which will have to be brought onto the balance sheet in terms of the new standard and additional disclosure will be required. The standard is effective for year-ends beginning on or after 1 January 2019. The standard will be applied using the simplified approach with the cumulative effect of initially applying the standard recognised at date of initial application (1 July 2019). The practical expedient to treat leases for which the lease term ends within 12 months of the date of initial application in the same way as short-term leases will be applied.

    IFRIC 23 UNCERTAINTY OVER INCOME TAX TREATMENT

    This new interpretation standard sets out how to determine the accounting tax position when there is uncertainty over income tax treatments. The impact of the interpretation will be assessed and applied to uncertain tax positions in future. The interpretation is effective for year-ends beginning on or after 1 January 2019.

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    NEW AND REVISED IFRSs ADOPTED BY THE GROUP

    The following new standards and amendments to standards are not effective and have not been early adopted by the Group:

    IFRS 15

    Revenue from Contracts with Customers, refer note 19.

    IFRS 9

    Financial Instruments, refer “Financial Instruments – Adopting IFRS 9” on page 44.


  • STATEMENT OF COMPLIANCE

    The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, requirements of the South African Companies Act, Act 71 of 2008, and the Listings Requirements of the JSE Limited.

    BASIS OF PREPARATION

    The consolidated financial statements have been prepared under the historical cost convention except for the following:

    • Certain financial assets and financial liabilities are measured at fair value
    • Derivative financial instruments are measured at fair value
    • Liabilities for cash-settled share-based payment arrangements are measured using a binomial option model.

    Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique.

    The consolidated financial statements are prepared on the going-concern basis. It also requires management and the board to exercise their judgement in the process of applying the Group’s accounting policies. The preparation of financial statements in conformity with IFRS also requires the use of certain critical accounting estimates and assumptions. The estimates and underlying assumptions are reviewed on an ongoing basis and are based on historical experience and other factors that are considered relevant, including current and expected economic conditions, expectations of future events that are believed to be reasonable under the circumstances.

    These estimates will seldom equal the actual results exactly. Revisions to accounting estimates are recognised in the period in which the estimates are reviewed and in future periods. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in the notes where necessary and indicated with EJ.

  • SUMMARY OF CRITICAL ESTIMATES AND JUDGEMENTS:

    • Impairment of property, plant and equipment (note 2.1.4)
    • Inventory valuation and quantities (note 8)
    • Environmental rehabilitation provision (note 14)
    • Functional currency of Zimplats operation (page 17)

    CONSOLIDATION

    The consolidated financial statements include those of the parent company, Impala Platinum Holdings Limited, its subsidiaries, associates, joint ventures and structured entities, using uniform accounting policies.

    Subsidiaries

    Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has right to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases.

    Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

    SUMMARY OF CRITICAL ESTIMATES AND JUDGEMENTS:

    • Impairment of property, plant and equipment (note 2.1.4)
    • Inventory valuation and quantities (note 8)
    • Environmental rehabilitation provision (note 14)
    • Functional currency of Zimplats operation (page 17)


  • Functional and presentation currency

    Items included in the financial statements of each entity in the Group are measured in its functional currency, ie the currency of the primary economic environment in which the entity operates. For South African operations, the functional currency is South African rand and for Zimbabwean operations (Zimplats and Mimosa), it is US dollar. The consolidated financial statements are presented in South African rand, which is the presentation currency of the Group.

    Functional currency of Zimplats operations

    In 2019 the Zimbabwean government officially introduced the Real Time Gross Settlement (RTGS$) and subsequent to that, in June 2019 the multi-currency system was discontinued.

    Considering the primary economic environment in which Zimplats operates, as well as considering factors such as which currency influences sales prices, the currency in whose competitive forces and regulations primarily determine sales prices, the currency which influences cost, the currency funding financing activities and the currency in which receipts from operating activities are retained, management concluded that Zimplats’ functional currency is still the US$. Before floating the RTGS$ in the open market in February 2019, Zimplats managed to realise an exchange rate of 1:1 between the US$ and RTGS$, and therefore this rate was applied to transactions during that period between October 2018 and February 2019. Reporting transactions between March and June 2019 were converted at the interbank market rate, as indicated on page 16.

    The production and operating expenditure recognised in profit or loss by Zimplats amounts to US$ 448 million. This includes transactions concluded in the US$ and transactions concluded in RTGS$. The RTGS$ transactions were translated into US$ using the rates indicated above.

  • In the absence of an official exchange rate, if the RTGS$ transactions were translated into US$ using the Old Mutual Implied Rate, the production and operating expenditure would have been reduced by between US$85 million and US$105 million and a corresponding exchange translation loss of equal value would have been recognised. (A range was provided due to the complexity involved in the calculation of the exchange translation loss.) As Implats presents its profit or loss statement by function these adjustments would not impact the amounts disclosed on the face of the profit or loss statement. The exposure to RTGS$ on statement of financial position at year-end has been disclosed in note 31.2.2.

    Transactions and balances

    Foreign currency transactions are accounted for at the rates of exchange ruling at the date of the transaction. Foreign currency monetary assets and liabilities are translated at year-end exchange rates. Gains or losses arising on settlement of such transactions and from the translation of foreign currency monetary assets and liabilities are recognised in profit or loss.

    Group companies

    Total comprehensive income of the foreign subsidiary and joint venture is translated into South African rand at the actual exchange rate on transaction date. The average exchange rate is, where appropriate, used as an approximation of the actual rate at transaction date. Assets, including goodwill, and liabilities are translated at rates ruling at the reporting date. The exchange differences arising on translation of assets and liabilities of the foreign subsidiary and joint venture are recognised in other comprehensive income and accumulated in the foreign currency translation reserve. On proportionate disposal of the foreign entity, all of the translation differences are reclassified to profit or loss when control is lost over the entity, or the proportionate share of accumulated exchange differences are reattributed to non-controlling interest if control is not lost.