Platmin to early convert to International Financial Reporting Standards
TORONTO, July 13 /CNW/ - Platmin Limited (the "Company" or "Platmin",
TSX/AIM: PPN) announces today that Platmin has received an exemption order
from the applicable Canadian securities regulatory authorities to permit
Platmin to report its financial statements for the financial year commencing 1
March 2009, and subsequent interim and annual periods, in accordance with
International Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board ("IASB"). The Canadian Accounting
Standards Board confirmed in February 2008 that IFRS will replace Canadian
GAAP for publicly accountable enterprises for financial periods beginning on
and after January 1, 2011, with the option available to early adopt IFRS from
periods beginning on or after January 1, 2009 upon receipt of approval from
the Canadian securities regulatory authorities. In accordance with the
exemption order, Platmin will also be re-filing its management's discussion
and analysis for the financial year ended 28 February 2009 to include IFRS
related disclosures.
IFRS Conversion Project
The Audit Committee has managed the transition from Canadian GAAP to IFRS
and has regularly updated the Board of Directors with the progress of the
conversion project. The IFRS conversion project consists of three primary
phases, which in certain cases will occur concurrently as IFRS is applied in
specific areas:
- Impact assessment analysis to isolate key areas that will be impacted
by the transition to IFRS;
- Evaluation to identify specific changes required to existing
accounting policies, information systems and business processes,
together with an analysis of policy alternatives allowed under IFRS
and the development of draft IFRS financial statements; and
- Implementation and review to execute changes to information systems
and business processes and completing formal authorizations.
Accounting Policy Changes and First-time Adoption of IFRS
IFRS 1, First-time Adoption of International Financial Reporting
Standards ("IFRS 1") sets forth guidance for the initial adoption of IFRS.
Commencing with the interim period ended 31 May 2009 Platmin will present its
comparative 2009 financial statements for annual and interim in accordance
with IFRS. In addition, the Company will reconcile equity and net earnings
from the previously reported fiscal 2009 Canadian GAAP amounts to the restated
2009 IFRS amounts. IFRS 1 generally requires that first-time adopters
retrospectively apply all IFRS standards and interpretations in effect at 31
March 2009. IFRS 1 also provides for certain optional exemptions and certain
mandatory exceptions to this general principle. Platmin has elected to apply
the following IFRS 1 optional exemptions:
- Apply the requirements of IFRS 2, Share-based Payment, only to share
options granted after 7 November 2002 that have not vested before the
transition date of 1 March 2008;
- Apply the requirements of IFRS 3, Business Combinations, prospectively
from the transition date of 1 March 2008 and as a result has not
restated business combinations that took place prior to the 1 March
2008 transition date;
- The cumulative translation differences for all foreign operations are
deemed to be zero at the transition date of 1 March 2008;
- Borrowing costs will be capitalised for assets for which the
commencement date for capitalization is after 1 January 2009.
Major Differences between Accounting Policies Under Canadian GAAP and
IFRS
The conversion to IFRS will result in differences in recognition,
measurement, and disclosure of balances and transactions in the financial
statements. For Platmin, major accounting policy differences are outlined
below:
- Basis of consolidation. Platmin has adopted IAS 27(R) Consolidated and
Separate Financial Statements (Revised) in accordance with the
transitional provisions of IFRS 1. As a result, for the year ending
28 February 2009, shareholders equity will remain unchanged however,
US$16,617,981 reflecting the minority shareholders interest in
Platmin's results will be debited to non-controlling shareholders
interest in order to comply with the disclosure requirements in
IAS 27(R).
- Functional currency and foreign operations. IFRS requires that the
functional currency of each entity in the consolidated group be
determined separately in accordance with the indicators as per IAS 21
and should be measured using the currency of the primary economic
environment in which the entity operates ("the functional currency").
The group's functional currency is the South African rand ("ZAR"). The
consolidated financial statements are presented in United States
dollars ("US$") which is the group's presentation currency. Under
IFRS, the results and financial position of all the group entities
(none of which has the currency of a hyper-inflationary economy) that
have a functional currency different from the presentation currency
are translated into the presentation currency as follows:
- assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance sheet;
- income and expenses for each income statement are translated at
average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are
translated at the rate on the dates of the transactions); and
- all resulting exchange differences are recognized as a separate
component of equity.
As a result of the application of translation rules, for the year
ending 28 February 2009 non-monetary assets, which includes property,
plant and equipment, mineral rights, exploration and evaluation assets
and mineral properties, will decrease by US$41,023,552 with a
corresponding adjustment to the foreign currency translation reserve.
- Impairment of assets. Under Canadian GAAP, for assets other than
financial assets, a write-down to estimated fair value is recognized
if the estimated undiscounted future cash flows from an asset or group
of assets are less than their carrying value. IAS 36 requires a
write-down to be recognized if the recoverable amount, determined as
the higher of the estimated fair value less costs to sell or value in
use is less than carrying value. Platmin performed impairment
assessments as of the transition date and has concluded that there is
no impairment charge under IFRS as of the transition date and
28 February 2009.
- Share-based payment transactions (IFRS 2). The fair value of share
options under the employee share incentive schemes and other equity
instruments granted to the Platmin group employees is recognised as an
employee expense with a corresponding increase in equity. The fair
value is measured at grant date and expensed over the period during
which the employee becomes unconditionally entitled to the equity
instruments. The total amount to be expensed is determined by
reference to the fair value of the options granted, excluding the
impact of any non-market service and performance vesting conditions.
Non-market vesting conditions are included in assumptions about the
number of options that are expected to vest. The fair value of the
instruments granted is measured using the Black-Scholes option pricing
formula, taking into account the terms and conditions upon which the
instruments are granted. At each balance sheet date, the entity
revises its estimates of the number of options that are expected to
vest based on the non-marketing vesting conditions. It recognises the
impact of the revision to original estimates, if any, in the income
statement, with a corresponding adjustment to equity. The proceeds
received net of any directly attributable transaction costs are
credited to share capital (nominal value) and share premium when the
options are exercised. This accounting policy has been applied to all
equity instruments granted after 7 November 2002 that have not yet
vested at 1 March 2008. As under IFRS 2, Canadian GAAP also requires
Platmin to measure stock-based compensation related to stock-options
granted to employees at the fair value of the options on the date of
grant and to recognize such expense over the vesting period of the
option.
- Decommissioning and rehabilitation provision. Under Canadian GAAP,
asset retirement obligations are measured at fair value, incorporating
market assumptions and discount rates based on the entity's
credit-adjusted risk-free rate. Adjustments are made to asset
retirement obligations for changes in the timing or amount of the cash
flows and the unwinding of the discount. However, changes in discount
rates alone do not result in a re-measurement of the provision.
Changes in estimates that decrease the liability are discounted using
the discount rate applied upon initial recognition of the liability
while changes that increase the liability are discounted using the
current discount rate. IFRS requires decommissioning provisions to be
measured based on management's best estimate of the expenditures that
will be made and adjustments to the provision are made in each period
for changes in the timing or amount of cash flow, changes in the
discount rate, and the accretion of the liability to fair value
(unwinding of the discount). Furthermore, the estimated future cash
flows should be discounted using the current rates. As a result, for
the year ended 28 February 2009, the decommissioning provision will
increase by US$775,485 with an increase of US$894,170 to the
decommissioning asset. The remaining US$118,685 represents the
accretion of the liability which decreases retained earnings.
Impact of adopting IFRS-IASB on the Key Financial Line Items
The impact on the consolidated balance sheet as at 28 February 2009 and
the consolidated statement of operations for the year ended 28 February 2009
have been prepared using IFRS and are set out below. These reconciliations
represent an official adoption of IFRS and provide the major differences
identified to date based on management's knowledge and interpretation of the
current IFRS standards and current facts, relative to the Company's historical
financial statements. These reconciliations have also been reviewed by the
Company's Auditors.
February 28, November 30, March 1,
2009 2008 2008
$'000 $'000 $'000
----------------------------------------
Total assets per Canadian GAAP 409,630 204,876 171,025
- Translation differences due to
the different rules for
translating non-monetary items (41,023) (12,812) (3,975)
- Increase/(decrease) in
property, plant and equipment
due to the corresponding
increase in the decommissioning
and rehabilitation provision 894 (635) -
----------------------------------------
Total assets per IFRS 369,501 191,429 167,050
----------------------------------------
Total liabilities per Canadian
GAAP 76,462 64,449 6,010
- Increase/(decrease) to
decommissioning and
rehabilitation provision due
to the difference in the
discounting method 776 (641) -
----------------------------------------
Total liabilities per IFRS 77,238 63,808 6,010
----------------------------------------
February 28, November 30, March 1,
2009 2008 2008
$'000 $'000 $'000
----------------------------------------
Total shareholders' equity per
Canadian GAAP 333,168 140,427 165,015
- Foreign currency translation
difference as a result of the
translation of the opening
balances from functional
currency to reporting currency
as at the date of transition - - (3,975)
- Re-allocation of
non-controlling interest
previously included in
accumulated deficit:
Non-controlling interest (16,618) (15,622) 82
Accumulated deficit 16,618 15,622 (82)
- Movement in foreign currency
translation reserve due to
differences upon translation
accounted for in equity (38,012) (39,131) -
- Foreign currency translation
differences arising from the
translation of transactions
recorded in a difference
currency than the functional
currency (2,893) 26,325 -
----------------------------------------
Total shareholders' equity
per IFRS 292,263 127,621 161,040
----------------------------------------
February 28,
2009
$'000
Net loss per GAAP 11,018
- Translation differences due
to the different rules for
translating certain expense
items (5,736)
- Profit from transaction with
minorities, under IFRS
accounted for in equity 4,549
Net loss per IFRS 9,831
Other Comprehensive income
- Exchange differences on
translating foreign operations (38,012)
------------
Comprehensive (profit)/loss
per IFRS (28,181)
------------
About Platmin
Platmin is an explorer and emerging platinum group metal producer whose
four key projects host mineral resources and reserves: Pilanesberg, Mphahlele,
Grootboom and Loskop. All of Platmin's projects are located in the Bushveld
Complex of South Africa, which is estimated to contain approximately 90% of
global platinum mineral resources.
For further information: Keith Liddell, Chairman, +27 12 661 4280; Wayne
Koonin, Chief Financial Officer, +27 12 661 4280; Fiona Owen, Grant Thornton
UK LLP (Nominated Adviser), +44 207 383 5100; Marion Brower, Russell &
Associates, +27 11 880 3924
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