| 16. |
Financial instruments (continued) |
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Derivative instruments (continued) |
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A hedge of the foreign currency risk of a firm commitment is designated and accounted for as a cash flow hedge.
When a hedge expires, is sold or no longer meets the criteria for hedge accounting, any cumulative gains or losses in equity at that time remain in equity until the forecasted transaction occurs, at which time it is recognised in the income statement. When the forecasted transaction is no longer expected to occur, the cumulative gains or losses reflected in equity are immediately transferred to the income statement.
If a fair value hedge qualifies for hedge accounting, any changes in the fair value of the derivative, together with any changes in the fair value of the hedged assets or liability that are attributable to the hedged risk, are recorded in the income statement. Derivatives embedded in other financial instruments or host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of their host contracts and the host contracts themselves are not carried at fair value with unrealised gains or losses reported in the income statement. |
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| 17. |
Foreign currencies |
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The South African rand is the functional currency of all of the operations of the Group, which reflects the economic substance
of the underlying events and circumstances.
Foreign currency transactions are recorded at the spot rate of exchange on the transaction date. Monetary assets and
liabilities denominated in foreign currencies are translated at rates of exchange ruling at the reporting date.
Foreign exchange gains or losses arising from foreign exchange transactions are included in the determination of net profit. |
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| 18. |
Environmental rehabilitation provisions |
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Estimated long-term environmental obligations, comprising pollution control, rehabilitation and mine closure, are based on the
Group's environmental management plans in compliance with current technology, environmental and regulatory
requirements. |
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Decommissioning costs |
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The discounted amount of estimated decommissioning costs that embody future economic benefits is capitalised as a
decommissioning asset when the asset reaches commercial production and concomitant provisions are raised. These
estimates are reviewed annually and discounted using a pre-tax risk-free rate that reflects current market assessments of the
time value of money. The increase in decommissioning provisions, due to the passage of time, is charged to interest paid. All
other changes in the carrying amount of the provision subsequent to initial recognition are included in the determination of
the carrying amount of the decommissioning asset.
Decommissioning assets are amortised on a straight-line basis over the lesser of 30 years or the expected benefit period. |
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Restoration costs |
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Changes in the discounted amount of estimated restoration costs are charged to net profit during the period in which such
changes occur. Estimated restoration costs are reviewed annually and discounted using a pre-tax risk-free rate that reflects
current market assessments of the time value of money. The increase in restoration provisions, due to the passage of time, is
charged to interest paid. |
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Ongoing rehabilitation costs |
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Expenditure on ongoing rehabilitation costs is recognised as an expense when incurred. |
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Platinum Producers’ Environmental Trust |
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The Group contributes to the Platinum Producers' Environmental Trust annually. The Trust was created to fund the estimated
cost of pollution control, rehabilitation and mine closure at the end of the lives of the Group's mines. Contributions are
determined on the basis of the estimated environmental obligation over the life of a mine. Contributions made are reflected
in non-current investments held by the Platinum Producers' Environmental Trust if the investments are not short-term. If the
investments are short-term and highly liquid, the amounts are reflected as cash and cash equivalents. |
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| 19. |
Borrowing costs |
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Borrowing costs are charged to interest paid. When borrowings are utilised to fund qualifying capital expenditure, such
borrowing costs are capitalised in the period in which the capital expenditure and related borrowing costs are incurred. |
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| 20. |
Employee benefits |
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Short-term employee benefits |
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Remuneration paid to employees in respect of services rendered during a reporting period is recognised as an expense in
that reporting period. Accruals are made for accumulated leave and are measured at the amount that the Group expects to
pay when the leave is used. |
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Termination benefits |
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Termination benefits are charged against income when the Group is demonstrably committed to terminating the employment
of an employee or group of employees before their normal retirement date. |
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Post-employment benefits |
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Retirement, provident and pension funds |
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Contributions to defined contribution plans in respect of services rendered during a reporting period are recognised as an
expense in that period. |
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Defined benefit plans |
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Post-retirement medical aid liability |
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The post-retirement medical aid liability is recognised as an expense systematically over the periods during which services are
rendered using the projected unit credit method. Independent actuarial valuations are conducted annually.
Actuarial gains and losses arising as a result of experience adjustments and/or the effects of changes in actuarial assumptions
are recognised as income or expenditure as and when they occur. Any increase in the present value of plan liabilities expected
to arise from employee service during the period is charged to operating profit. The expected return on plan assets and the
expected increase during the period in the present value of plan liabilities are included in interest income and interest
expense.
Past-service cost is recognised immediately to the extent that benefits are already vested and otherwise is amortised on a
straight-line basis over the average period until the benefits become vested.
The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit
obligation as adjusted for unrecognised past-service costs and as reduced by the fair value of scheme assets. |
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| 21. |
Segmental information |
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The Group produces PGMs primarily in South Africa. The risks and rewards associated with the individual operations are not
sufficiently dissimilar to warrant identification of separate geographical segments.
Therefore the directors consider that the primary reporting format is by business segment. Two business segments are
identified. Firstly, mining, extraction and production of platinum group metals and, secondly, the purchase of metals for further
treatment and refining. Costs are allocated to business segments on a full absorption costing basis.
Where pricing arrangements with customers are not at quoted spot prices, these revenues are allocated to the "mined"
segment, unless similar pricing arrangements are contained in purchase arrangements. |
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| 22. |
Share-based payments |
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The Group issues equity-settled and cash-settled share-based instruments to certain employees. Equity-settled share-based
payments are measured at the fair value of the equity instruments at the date of grant. The fair value determined at the grant
date of the equity-settled share-based payments is expensed over the vesting period, based on management's estimate of
shares that are expected to eventually vest. A liability equal to the portion of the services received is recognised at the fair
value determined at each balance sheet date for cash-settled share-based payments. Fair value is measured using the binomial
option pricing model. The fair values used in the model have been adjusted, based on management's best estimate, for the
effects of non-transferability, exercise restrictions and behavioural considerations. |
