Implats reported that it had returned to profitability in the year ended June on the back of bumper profits realised as a result of higher platinum group metals (PGM) basket price and a weaker rand. File Photo: IOL

JOHANNESBURG – Impala Platinum (Implats) reported on Thursday that it had returned to profitability in the year ended June on the back of bumper profits realised as a result of higher platinum group metals (PGM) basket price and a weaker rand.

The JSE listed group told investors it had turned the corner and it expected headline earnings to go up to R3.16 billion from a loss of R1.22bn while headline earnings per share were projected at 440 cents from 171c loss last year.

Chief executive Nico Muller said the improved operational performance, particularly at the Impala Rustenburg operations and higher sales volumes which grew by 12 percent to 1 515 platinum ounces and by 21 percent to 929 000 palladium ounces, boosted the group’s fortunes.

“As a result, gross profit for the period is expected to increase from R1.1bn in the comparative period to R6.8bn in the current period,” Muller said. 

“The gross profit for the comparative period was restated from R1.6bn to R1.1bn, a reduction of R440 million, due to a reclassification of certain expenses to cost of sales.” 

Muller said in July the increase in the rand PGM basket price had been a welcome tailwind to the company’s profitability and free cash flow generation.

He said the increase in earnings was partially offset by a non-cash expense of R1.56bn, or 217c per share, relating to the mark to market of the conversion option on the dollar convertible bonds at year-end. 

Last year Implats announced plans to close five of its 11 mines near Rustenburg and cut up to 13 000 jobs over the next few years to arrest losses.

In July, the group said it would issue a $250m debt to equity swop in a bid to cut debt and make the most of the reprieve of surging metal prices and the weak rand.

It invited bondholders to convert bonds to equity which once completed would result in significant savings.

Around 99.9 percent of the dollar convertible bondholders elected to exercise their option to convert their bonds to ordinary shares following the payment of a cash consideration of $37.6m (R574.1m). 

As a result, 64.2 million Implats ordinary shares were issued at the beginning of this month.

The group yesterday said its basic earnings and basic earnings a share for the period was now expected to up to R1.65bn and 230c per share, respectively.

“This includes the adverse impact of R1.65bn, or 230c per share (post-tax), relating to the impairment of the remaining carrying value of the group’s investment in Afplats,” Muller said.

The basic loss and a basic loss per share for the comparative period were R10 679m and 1 486c, respectively. 

Implats shares declined 2.55 percent on the JSE on Thursday to close at R72.60.

BUSINESS REPORT