Implats expects more than 20% earnings drop after RBPlat acquisition

Impala Platinum (Implats) informed shareholders today that it expects its headline earnings per share (HEPS) and basic earnings per share (EPS) to decrease by at least 20% in its 2023 financial year.

The company did not specify its expected EPS and HEPS ranges for the period but said it would publish a further trading statement once it has “a reasonable degree of certainty”.

Implats attributed the drop in its HEPS and headline earnings primarily to the impact of weaker dollar Platinum Group Metals (PGM) pricing and lower refined production due to load-curtailment.

The company also attributed its drop in basic earnings and basic EPS primarily to the lower dollar PGM basket price and lower refined production. 

However, it also pointed to the impact of accounting adjustments arising from the consolidation of Royal Bafokeng Platinum (RBPlat). 

During its 2023 financial year, Implats incurred a cash outflow of around R4.9 billion and issued around 16.2 million shares to increase its aggregate holding in RBPlat from 37.83% to 56.41%, as of 30 June 2023. 

Implats had acquired a further 123.4 million RBPlat shares for a cash consideration of around R11.1 billion and the issue of about 37.0 million Implats shares, resulting in a 98.91% shareholding in RBPlat. 

On 1 August 2023, Implats announced the compulsory acquisition of all remaining RBPlat shares not already owned by Implats. 

The estimated cash outflow and share issuance associated with the compulsory acquisition of the residual shareholding in RBPlat are R286 million and around 952,000 Implats shares, respectively. 

Therefore, Implats’ financial results for this period will include the consolidation of RBPlat results from 1 June 2023, including the subsidiary’s R4.5 billion cash balance. 

RBPlat recently released its interim results for the six months ended 30 June 2023, which revealed a struggling company.

The mining company reported an 85.1% decrease in EBITDA to R507.4 million (H1 2022: R3.41 billion).

It also saw its HEPS drop by more than 114%, swinging from a profit of 767.3 cents per share to a loss of 113.8 cents.

It also went from a gross profit of R2.79 billion to a loss of R394.9 million – a 114.2% decrease.

The company attributed these weak results to a challenging operating environment, characterised by a decline in the basket price combined with ongoing inflationary pressure on the business’ operating costs.

It said the weakening rand against the US dollar also drove higher-than-expected inflation, further exacerbating its cost pressures.