RBPlat em­barks on a re­struc­tur­ing and right-siz­ing ex­er­cise

The Star Early Edition - - COMPANIES - Sizwe Dlamini

ROYAL Bafo­keng Plat­inum (RBPlat) has em­barked on a process to re­struc­ture and right-size the over­head and op­er­a­tional struc­ture of its busi­ness to be ap­pro­pri­ate for the cur­rent and fu­ture mar­ket en­vi­ron­ment.

It said dur­ing the pre­sen­ta­tion yes­ter­day of its in­terim re­sults for the six months ended in June that it would re­duce out­put and with­hold spend­ing plans to pre­serve cash amid de­pressed com­mod­ity prices.

The re­struc­tur­ing strat­egy would also in­clude re­duc­ing the fixed cost base in labour and the en­hance­ment of the qual­ity of the rev­enue stream.

“The rev­enue en­hance­ment will be achieved through the clo­sure of the non-prof­itable South shaft UG2 pro­duc­tion sec­tions and re­de­ploy­ing 60 per­cent of the UG2 min­ing crews to su­pe­rior-mar­gin Meren­sky at South and North shafts and UG2 pro­duc­tion at North shaft,” the com­pany said.

“This will en­able us to main­tain cur­rent lev­els of plat­inum group me­tal pro­duc­tion, but with the en­hanced ef­fect of the base met­als rev­enue that ac­com­pa­nies Meren­sky pro­duc­tion and op­ti­mised pro­cess­ing ar­range­ments equat­ing to about R37mil­lion per an­num.”

RBPlat an­nounced that it suc­cess­fully raised R1.2 bil­lion through the place­ment of con­vert­ible bonds and se­cured R2bn debt fa­cil­i­ties dur­ing the pe­riod.

But the group said it in­curred a head­line loss of 15.3 cents a share for the pe­riod com­pared to a head­line profit of 77.8c a share dur­ing the same pe­riod last year.

RBPlat said the main rea­sons for the re­gres­sion to a loss per share were a 9.8 per­cent lower re­alised av­er­age rand bas­ket price for the pe­riod and a once-off re­struc­tur­ing charge of R57.1m.

Net rev­enue de­creased by 3.2per­cent from R1 646.9m in the first half of last year to R1 593.9m for the first half of this year while the av­er­age cash op­er­at­ing cost per plat­inum ounce in­creased 0.2per­cent from R15 882 to R15 913 due to a 7.3 per­cent rise in plat­inum ounce pro­duc­tion and a 7.5per­cent in­crease in cash op­er­at­ing costs.

“Our gross profit mar­gin re­duced from 11.4per­cent… to 0.7 per­cent. This was due to the 3.2per­cent de­crease in net rev­enue and an 8.5per­cent in­crease in to­tal cost of sales,” the group said.

De­pre­ci­a­tion and amor­ti­sa­tion charges in­cluded in the cost of sales were R15.9m higher than those of the com­par­a­tive pe­riod last year due to in­creased pro­duc­tion. Earn­ings be­fore in­ter­est, tax and de­pre­ci­a­tion and amor­ti­sa­tion a per­cent­age of rev­enue de­creased from 18.5 per­cent to 6.3 per­cent in the first half of this year mainly as a re­sult of the de­creased rev­enue and re­struc­tur­ing costs.

RBPlat said it had cash and near cash in­vest­ments of R1 664.5m dur­ing the pe­riod, R67.7m of which was ringfenced for the hous­ing project and R420m ear­marked for the set­tle­ment of the con­vert­ible bond coupon.

“Our to­tal cash op­er­at­ing costs in­creased by 7.5 per­cent from R1329m to R1429m when com­pared to the first six months of 2016, in line with the in­creased BRPM vol­umes and in­fla­tion re­lated in­creases,” the group said.

RBPlat shares rose 2.54 per­cent on the JSE yes­ter­day to close at R31.47.

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