| Principal accounting policies |
| Basis of preparation |
The financial statements are prepared on the historical cost basis except for certain financial instruments that are fairly valued by
marking to market. Significant details of the Company's and the Group's accounting policies are set out below, which are consistent
with those applied in the previous year, except where otherwise indicated.
The financial statements comply with International Financial Reporting Standards (IFRS) of the International Accounting Standards
Board, South African Statements of Generally Accepted Accounting Practice, the JSE Limited's Listings Requirements and the South
African Companies Act. |
| |
| Critical accounting estimates and judgments |
| In preparing the annual financial statements in terms of IFRS, the Group's management is required to make certain estimates and
assumptions that may materially affect reported amounts of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reported period and the related disclosures. As these estimates and
assumptions concern future events, due to the inherent uncertainty involved in this process, the actual results often vary from these
estimates. These estimates and judgments are based on historical experience, current and expected future economic conditions and
other factors, including expectations of future events that are believed to be reasonable under the circumstances. |
| |
| Critical accounting estimates |
| Those estimates and assumptions that may result in material adjustments to the carrying amount of assets and liabilities and related
disclosures within the next financial year are discussed below: |
| |
| Metal inventory |
| Work-in-progress is valued at the average cost of production or purchase less net revenue from sales of other metals, in the ratio
of the contribution of these metals to gross sales revenue. Production cost is allocated to platinum, palladium, rhodium and nickel
("joint products") by dividing the mine output into total mine production costs, determined on a 12-month rolling average basis.
The quantity of ounces of joint products in work-in-progress is calculated based on the following factors: |
| • |
the theoretical inventory at that point in time which is calculated by adding the inputs to the previous physical inventory and
then deducting the outputs for the inventory period; |
| • |
the inputs and outputs include estimates due to the delay in finalising analytical values; |
| • |
the estimates are however trued up to the final metal accounting contents when available; and |
| • |
the theoretical inventory is then converted to a refined equivalent inventory by applying appropriate recoveries depending on
where the material is within the pipeline. The recoveries are based on actual results as determined by the stocktake and are in
line with industry standards. |
|
| |
| An annual physical stocktake of work-in-progress is done. Due to the nature of in-process inventories being contained in tanks, pipes
and other vessels and due to the dislocation of production required to perform the physical inventory count, these take place only
once per annum typically around February of each year. Once the results of the physical count are finalised, the variance between
the theoretical count and actual count is investigated and recorded. Thereafter, the physical quantity forms the opening balance for
the theoretical inventory calculation. Consequently the estimates are refined based on actual results over time. The nature of the
process inherently limits the ability to precisely measure recoverability levels. As a result, the metallurgical balancing process is
constantly monitored and the variables used in the process are refined based on actual results over time. |
| |
| Critical accounting judgments |
| The following accounting policies have been identified as involving particularly complex or subjective judgments or assessments: |
| |
| Consolidation of special purpose entities |
| A special purpose entity established in a past transaction was not consolidated in the Group results. The substance of the transaction
has been assessed and based on the results of this assessment, management has concluded that the Company does not control the
activities of this entity. This is due to the fact that the Company is not exposed to risks and rewards of the special purpose entity. |
| |
| Decommissioning and rehabilitation obligations |
| The Group's mining and exploration activities are subject to various laws and regulations governing the protection of the
environment. Management estimates the Group's expected total spend for the rehabilitation, management and remediation of
negative environmental impacts at closure at the end of the lives of the mines. The estimation of future costs of environmental
obligations relating to decommissioning and rehabilitation is particularly complex and requires management to make estimates,
assumptions and judgments relating to the future. These estimates are dependent on a number of factors including assumptions
around environmental legislation, life of mine estimates and discount rates. |
| |
| Asset lives |
The Group's assets excluding mining, development and infrastructure assets are depreciated over their expected useful lives which
are reviewed annually to ensure that the useful lives continue to be appropriate. In assessing useful lives, technological innovation,
product life cycles and maintenance programmes are taken into consideration.
Mining development and infrastructure assets are depreciated on a unit-of-production basis (UOP). As the calculation of the UOP
depreciation is based on forecasted production which is calculated using various assumptions including the estimate of proved and
probable reserves, any changes in these assumptions, including changes in the mineral reserves, may impact on the calculation. |
| |
| Valuation of mineral rights |
| The valuation of mineral rights is performed using the comparable transaction valuation methodology. This methodology
involves determining the in-situ mineral reserves and resources of specific properties within the context of other mineral property
valuation. |
| |
| New accounting policies adopted |
| IFRS 7 – Financial Instruments: Disclosure |
| The Group has adopted IFRS 7 – Financial Instruments: Disclosure. The impact of this new standard has resulted in increased
disclosures relating to the significance of financial instruments on the Group's financial position and performance and the nature and
extent of risks arising from these financial instruments to which the Group is exposed during the period and at year end and the
manner in which the Group manages these risks. Furthermore, additional disclosures relating to the Group's objectives, policies and
procedures as well as some quantative disclosures relating to the management of capital have been provided as required by the
amendment to IAS 1 – Presentation of Financial Statements. |
| |
| Amendment to IAS 23 – Borrowing Costs |
| The Group early adopted the amendment to this Standard in the current year. The main change from the previous standard is the
removal of the option to immediately expense borrowing costs on qualifying assets. The Standard requires the capitalisation of
borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset. This amendment
was adopted in the current year as the accounting policy of the Group is already in accordance with the revision to the Standard
and, as a result, the amendment does not have an impact on the Group's financial results. |
| |
| Impact of standards and interpretations not yet adopted |
| At balance sheet date, the following accounting standards were in issue but not yet effective: |
| • |
IAS 1 (Revised) – Presentation of Financial Statements
This standard is effective for periods beginning on or after 1 January 2009. This standard affects the presentation of owner
changes in equity and of comprehensive income and does not impact on the recognition, measurement or disclosure of specific
transactions as required by any other IFRSs. An entity is required to present a "Statement of comprehensive income" which
replaces the income statement. All non-owner changes in equity may be presented in either one statement of comprehensive
income or two statements (ie income statement and statement of comprehensive income). |
| • |
IFRS 8 – Operating Segments
This standard is effective for periods beginning on or after 1 January 2009. This standard replaces IAS 14 – Segment Reporting
and requires an entity to adopt a "management approach" to reporting the financial performance of its operating segments.
Generally, the information is required to be reported on the same basis as used internally for evaluating operating segment
performance and for deciding how to allocate resources to operating segments. |
|
| |
The Group is in the process of assessing the impact of these standards.
At balance sheet date, the following accounting interpretations were in issue but not yet effective: |
| • |
IFRIC 12 – Service Concession Arrangements – effective for annual periods beginning on or after 1 January 2008; |
| • |
IFRIC 13 – Customer Loyalty Programmes – effective for annual periods beginning on or after 1 July 2008; and |
| • |
IFRIC 14, IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their interaction – effective for
annual periods beginning on or after 1 January 2008. |
|
| |
The Group is in the process of assessing the impact of these interpretations but they are not expected to have a material impact
on the financial results of the Group.
IFRIC 11 – IFRS 2 – Group and Treasury Shares was early adopted in the prior financial year. |
|
