| Wed 2 May 2007, 10:38 | | LON - Lonmin Plc - Interim Results |
|
LON
LOLMI
LON - Lonmin Plc - Interim Results
Lonmin Plc
(Incorporated in England and Wales)
(Registered in the Republic of South Africa under registration number
1969/000015/10)
JSE code: LON
Issuer Code: LOLMI & ISIN:GB0031192486
("Lonmin")
News Release
Interim Results (Part 1 of 2)
Embedding Further Growth
A difficult operational first half with positive PGM price movements
Mine production of 450,894 saleable ounces of Platinum and 848,548 saleable
ounces of total PGMs in concentrate
New mechanised shafts at Marikana performing ahead of expectations and will
continue to ramp up in the second half of the year
Number One furnace rebuild completed successfully and smelter capacity
increased
Viable project for around 85,000 Platinum ounces per annum defined at Limpopo
phase 2
Akanani potential increased as drill results confirm continuity of mineralogy
for entire 9 km strike length of property
Maintaining full year sales guidance of around 980,000 to 1 million ounces of
Platinum
Interim dividend increased by 22% to 55 cents per share
+--------------------------------+-------+-------------+------------+----------+
|Financial highlights - | | | | |
|Continuing Operations | | 2007 | 2006 | Variance |
|Six Months - 31 March 2007 | | | | |
+--------------------------------+-------+-------------+------------+----------+
|Turnover | US$m | 631 | 708 | (10.9)% |
+--------------------------------+-------+-------------+------------+----------+
|EBITDA (i) | US$m | 272 | 342 | (20.5)% |
+--------------------------------+-------+-------------+------------+----------+
|EBIT (ii) | US$m | 229 | 304 | (24.7)% |
+--------------------------------+-------+-------------+------------+----------+
|Underlying profit before | | | | |
|taxation (iii) | US$m | 235 | 288 | (18.4)% |
+--------------------------------+-------+-------------+------------+----------+
|Profit before taxation | US$m | 132 | 81 | 63.0% |
+--------------------------------+-------+-------------+------------+----------+
|Earnings per share | cents | (2.0) | (47.1) | 95.8% |
+--------------------------------+-------+-------------+------------+----------+
|Underlying earnings per share | | | | |
|(iii) | cents | 81.5 | 110.3 | (26.1)% |
+--------------------------------+-------+-------------+------------+----------+
|Trading cash flow per share (iv)| cents | 107.3 | 122.3 | (12.3)% |
+--------------------------------+-------+-------------+------------+----------+
|Free cash flow per share (v) | cents | 25.8 | 63.2 | (59.2)% |
+--------------------------------+-------+-------------+------------+----------+
|Equity shareholders` funds | US$m | 1,658 | 734 | 125.9% |
+--------------------------------+-------+-------------+------------+----------+
|Net debt (vi) | US$m | 665 | 590 | 12.7% |
+--------------------------------+-------+-------------+------------+----------+
|Interest cover (vii) | x | 58.5 | 15.9 | 267.9% |
+--------------------------------+-------+-------------+------------+----------+
|Gearing (viii) | % | 27 | 44 | (38.6)% |
+--------------------------------+-------+-------------+------------+----------+
NOTES ON HIGHLIGHTS
(i) EBITDA is operating profit before depreciation and amortisation.
(ii) EBIT is defined as revenue and other operating expenses before net
finance costs and before share of profit of associates and joint
ventures.
(iii) Underlying earnings are calculated on profit for the period excluding
movements in the fair value of the embedded derivative associated with
the convertible bond, exchange on tax balances, profits on the sale of
Marikana houses and an adjustment to the interest capitalised in prior
years as disclosed in note 3 to the accounts.
(iv) Trading cash flow is defined as cashflow from operating activities,
being the net profit or loss for the period adjusted to eliminate the
effects of non cash movements. It reflects the net impact of all
operating activity transactions on the cash flow of the Group.
(v) Free cash flow is trading cash flow from operating activities less
expenditure on property, plant and equipment, intangibles, proceeds from
disposal of assets held for sale and dividends paid to minority
interests.
(vi) Net debt comprises cash and cash equivalents, bank overdrafts repayable
on demand, interest-bearing loans and borrowings, and convertible bonds
grossed up for capitalised fees.
(vii) Interest cover is calculated for the 12 month periods to 31 March 2007
and 31 March 2006 on the underlying operating profit divided by the
underlying net interest payable excluding exchange.
(viii) Gearing is calculated on the net debt attributable to the Group divided
by the total of the net debt attributable to the Group and equity
shareholders` funds.
Commenting on the results, Brad Mills, Lonmin`s Chief Executive said:
"Our results reflect the successful conclusion of a difficult operational first
half. We have deliberately deferred substantial revenue and earnings into our
second half to preserve margins otherwise lost on the sale of concentrate. We
have now completed the rebuild of the Number One furnace and have also added
substantially to our smelting capacity with the re-commissioning of the 8 mega
watt Merensky furnace. This furnace is running extremely well and we expect to
process our entire concentrate inventory in the second half of the year. We are
maintaining our guidance for full year sales of around 980,000 to 1 million
ounces of Platinum. We continue to build strong production growth into Lonmin.
At Akanani, we are pleased that drilling has confirmed mineralisation of a
similar profile at slightly narrower widths for the northern part of the strike
length of the property and we are today announcing a new resource for the
southern part of the property."
Enquiries:
Alex Shorland-Ball, Lonmin Plc +44 (0) 20 7201 6060
This press release is available on www.lonmin.com. A live webcast of the
interim results` presentation starting at 09.30hrs (London) on 2 May 2007 can
be accessed at http://gaia.world-television.com/lonmin/20070502/trunc. There
will also be a web question facility available during the presentation. An
archived version of the presentation, together with the presentation slides,
will be available on the Lonmin website.
Chief Executive`s Comments
Introduction
The first half of our financial year was adversely impacted by the shutdown and
subsequent rebuild of the Number One furnace. As a consequence of the accident
we have deliberately stockpiled concentrate to be processed and sold in our
second half in order to retain margin otherwise lost on concentrate sales. The
rebuild of the furnace has now been completed and normal operations have
resumed. We completed the re-commissioning of our Merensky furnace during the
period and this furnace is running well, delivering throughput ahead of our
expectations. In the second half of the year we plan to process all our
concentrate stocks and we are maintaining our full year sales forecast of around
980,000 to 1 million ounces of Platinum.
Both our Marikana and Limpopo mining operations experienced a challenging first
half. Marikana was impacted by a longer than usual Christmas break and a one day
wildcat strike but still delivered 403,860 saleable ounces of Platinum in
concentrate in the period. Our new mechanised mines at Saffy and Hossy shafts
have come into production using the ultra low profile equipment and are
delivering ahead of budget. We will continue to ramp up production from these
new shafts in the second half of the year. At Limpopo we focused on achieving
the development rate necessary to support sustained mining operations.
We continue to build strong growth into Lonmin`s portfolio and completed the
acquisition of a 74% interest in the Akanani project in February. Akanani is
developing into an exceptional PGM ore body and, we believe, can be developed
into a low cost mechanised mine adding to our production from 2013 onwards. At
Akanani we have continued to drill new holes since we completed the acquisition
of the asset. An additional 7 drill holes have been completed in the northern
section of the property, which indicated an arithmetic average grade of 4.57
grams per tonne (3PGE + Au) over an average width of 11.59 metres. These
results indicate that the mineralisation continues north from the initial
inferred resource area along strike and confirm the potential for this project.
We have completed the pre-feasibility study for Limpopo phase 2 which indicates
this asset can be developed into a fully mechanised mine delivering around
85,000 attributable ounces of Platinum per annum when it reaches full
production.
Safety
Our safety performance has been broadly flat during the period with our lost
time injury frequency rate per million man hours worked down to 12.37 versus
12.45 at the end of the last financial year. The severity of injuries has
continued to reduce, with our severity ratio now running at an average of 10.57
days lost per LTI, an improvement of 23.5% on the 13.81 we recorded for the 2006
financial year. We regrettably suffered two industrial fatalities during the six
months at our Marikana operations.
We continue to work to embed the value of safe production within our systems and
behaviours in order to achieve our goal of Zero Harm. We have continued to use
DuPont Visible Felt Leadership Training across the operations and are completing
the roll out of our Fatal Risk Protocols. Each operation has now put in place a
detailed safety plan to achieve our targeted improvement in performance.
Industrial theatre has also proved a useful tool in influencing behaviours and
we will continue to use it throughout the second half of the year.
Marikana Mining
The Marikana mining operations produced 5.58 million tonnes mined from
underground operations. This was in line with our performance in the same period
last year after stripping out the effect of the additional seven days of
production which were included in last year`s figures in order to align our
production month with the calendar month. We have continued to reduce the
opencast tonnes mined on Marikana ground with 0.7 million tonnes mined versus
0.9 million for the six months to March 2006.
During the period we began stoping operations at Saffy and Hossy; our two new
deep shafts. These shafts are being developed on a fully mechanised basis using
our ultra low profile equipment. The start up of these operations has progressed
well and both shafts are currently performing ahead of our expectations. We will
continue to increase production from these shafts and other mechanised areas in
the second half of the year. We remain confident that we will achieve our target
of 50% mechanised production by 2010.
Limpopo Mining
Our Limpopo mine produced 18,759 saleable ounces of Platinum and 39,020 saleable
ounces of total PGMs in concentrate in the period. At Limpopo we continued to
work towards our target of achieving steady state production of around 120,000
tonnes per month. Our focus during the first six months has been on reaching an
optimal development rate as quickly as possible to give us the flexibility of
sufficient open reserves to sustain this production level. This plan has
progressed well but will mean a reduced level of production from the mine this
year. We now forecast around 46,000 to 50,000 saleable Platinum ounces in
concentrate for the 2007 financial year. On our current plan, the mine will
reach a steady state of 120,000 tonnes per month by mid 2008.
Pandora Joint Venture
We continued to mine ore from the Pandora ground during the six months both as
an extension of our E3 shaft and an open pit operation. Once mined, Lonmin
purchases the ore from the Pandora Joint Venture and these ounces are then
included in our tonnes milled and metallurgical figures. We produced 25,600
saleable ounces of Platinum and 48,238 saleable ounces of total PGMs in
concentrate in the period. We receive revenue from the Pandora ground both as a
42.5% partner in the Joint Venture and from the on sale of the ounces we produce
from our ore purchases. In total Pandora contributed US$38 million to our
revenue line and US$7 million to our profit before tax in the period.
Process Division
On 16 December 2006 a leak occurred in the Number One furnace adjacent to one of
the matte tap holes. We shut down the furnace and after a thorough investigation
determined that the integrity of the vessel had been compromised and a total
rebuild was required. This rebuild has now been completed and we tapped matte
from the Number One furnace on 30 April 2007.
In the second half of 2006 we took the decision to re-commission our 8 mega watt
Merensky furnace to add to our smelting capacity and mitigate the risks of our
reliance on one smelting vessel. The first matte tap from the Merensky furnace
took place on 12 March 2007 and it has been running very well delivering
throughput in excess of our targeted rate of 200 tonnes per day.
With the Merensky furnace, the rebuilt Number One furnace and our three Pyromet
furnaces we now have installed smelting capacity of around 40 mega watts, an
increase of around 25% on last year. We will use a combination of our available
capacity in the second half of the financial year which will allow us to process
the considerable concentrate stocks which have built up during the first six
months.
Our Base Metal Refinery and Precious Metal Refinery have seen much reduced
levels of throughput during the period due to the smelter shutdown. We have
taken the opportunity to conduct necessary maintenance and upgrades during the
period to prepare both plants for the increased throughput in the second half of
the financial year.
We produced 470,015 ounces of total PGMs from our own refineries in the six
months. We despatched an additional around 190,000 ounces of total PGMs in
concentrate which we were unable to store for toll refining. Of these, at the
end of March, we had received back 44,653 ounces of toll treated PGMs. We will
receive back the remainder of these ounces for sale during the second half of
the financial year. Concentrate inventory built up for processing within Lonmin,
at the end of the six month period, is estimated to contain around 185,000
ounces of total PGMs.
Metal sales for the period reflect the lower level of throughput with 274,440
Platinum ounces and 517,218 ounces of total PGMs sold.
Six Sigma
Our Six Sigma programme continues to perform well with R175 million of benefit
generated in the first half of which a large element is currently reflected in
stock. We remain on track to achieve our target of R400 million of net EBIT
benefit in this financial year.
Costs and Capital Expenditure
Costs in dollar terms were broadly unchanged compared with the same period last
year. In Rand terms costs increased by US$81 million, around half of which was
due to planned additional costs, including the increased amount of Pandora ore
we purchased (US$14 million), and the other half was due to cost pressures
common within the industry, including increased labour costs. These increases
were offset by a currency gain on translating the weaker Rand against the dollar
of US$64 million and higher base metal credits of US$28 million.
Our Rand C1 costs have been impacted by these cost pressures and by the lower
levels of throughput in the first half, with C1 costs of own production of
R3,181 per PGM ounce sold net of base metal credits for our Marikana and Limpopo
operations combined.
We expect to see a significant improvement in our unit cost performance in the
second half of the year as we return to more normal levels of production. We are
maintaining our full year cost guidance of between R2,650 to R2,700 per PGM
ounces sold net of base metal credits for Marikana, which translates into a
blended C1 cost for the Marikana and Limpopo operations of between R2,900 and
R3,000 per PGM ounce sold net of base metal credits.
We are revising our forecast for capital expenditure for the full year from
US$370 million to US$300 million as we experience short delays in some of our
smaller capital projects and a proportion of the spending on these projects will
now fall into the early part of next financial year.
Markets
The Platinum market has continued to be robust with ongoing strong demand
particularly from the autocatalyst sector as global trends towards stricter and
tighter emissions requirements continue. The supply side has remained
constrained. During the six months the price has moved from US$1,156 per ounce
to US$1,246 per ounce, an increase of 7.8%.
The Palladium price has risen by 10.6% during the period on the back of both
strong autocatalyst demand and continued modest interest from the Chinese
jewellery market.
The Rhodium market is being driven by autocatalyst demand and inelastic supply
with the price at the end of the six months at US$6,225 per ounce, a rise of
29.7% over the period.
The last six months have seen a strong upward trend in the Ruthenium price which
has moved from US$185 per ounce to US$700 per ounce an increase of 278.4%. This
price increase is driven primarily by demand from manufacturers of hard disk
drives where it is used alongside Platinum to substantially increase the storage
capacity of the disks without increasing the size. Supply response is completely
inelastic as the metal is entirely a by product of Platinum production.
The Iridium price has also increased by 15% during the last six months from
US$400 per ounce to US$460 per ounce on the back of increased demand for the
production of crucibles used in single crystal growth.
Growth - Akanani
During the last six months we have continued to consolidate our strong growth
profile with the acquisition of the Akanani project. This acquisition was
completed at the beginning of February. We are excited about the potential for
Akanani which is a unique deposit in the Bushveld and has an ore body of a width
which will allow us to develop the project as a low cost fully mechanised mine.
At the time we made the acquisition the ore body had only been drilled to any
material extent along strike in the southern section of the property. Since we
acquired Akanani we have completed nine further drill holes seven of which were
along 6 kilometres of strike in the northern portion of the asset. These seven
northern holes indicate the ore body continues at a similar width and grade
along the entire 9 km strike. The arithmetic average from these holes in the
northern area is 4.57 grams per tonne (3 PGE+Au) at a width of 11.59 metres. As
a result of the additional drilling in the southern section of the property
since the last resource estimate was completed in September 2006, we have
revised our resource estimate to 18.1 million tonnes of indicated resources in
the upper mineralised zone of the Platreef ("P2") section of the reef at 4.88
grams a tonne (3 PGE+Au) and P2 inferred resources of 236.6 million tonnes at
3.80 grams per tonne (3PGE+Au). For the lower mineralised zone of the Platreef
("P1") section of the reef we estimate an initial inferred resource of 109.9
million tonnes at a grade of 2.50 grams per tonne (3PGE+Au). The additional
individual bore holes are as follows:
+------------------+----------------+----------------+------------+-----------+
| Borehole | Width (metres) | 3PGE+Au (g/t) | Cu (%) | Ni (%) |
| | | | | |
+------------------+----------------+----------------+------------+-----------+
| Northern section | | | | |
+------------------+----------------+----------------+------------+-----------+
| MO007 | 9.44 | 3.88 | 0.13 | 0.23 |
+------------------+----------------+----------------+------------+-----------+
| MO008 | 12.89 | 5.72 | 0.17 | 0.31 |
+------------------+----------------+----------------+------------+-----------+
| MO010 | 29.13 | 5.25 | 0.17 | 0.33 |
+------------------+----------------+----------------+------------+-----------+
| MO011 | 1.97 | 3.52 | 0.03 | 0.12 |
+------------------+----------------+----------------+------------+-----------+
| MO012 | 3.08 | 3.50 | 0.11 | 0.20 |
+------------------+----------------+----------------+------------+-----------+
| MO015 | 7.85 | 4.31 | 0.07 | 0.16 |
+------------------+----------------+----------------+------------+-----------+
| MO018 | 16.75 | 5.83 | 0.13 | 0.23 |
+------------------+----------------+----------------+------------+-----------+
| Arithmetic | 11.59 | 4.57 | 0.12 | 0.23 |
| Averages | | | | |
+------------------+----------------+----------------+------------+-----------+
| | | | | |
+------------------+----------------+----------------+------------+-----------+
| Southern section | | | | |
+------------------+----------------+----------------+------------+-----------+
| ZF034 | 2.02 | 2.30 | 0.05 | 0.08 |
+------------------+----------------+----------------+------------+-----------+
| ZF039 | 39.65 | 4.45 | 0.25 | 0.41 |
+------------------+----------------+----------------+------------+-----------+
During the second half of the year we will continue our programme of drilling at
Akanani both to increase our confidence in the reserves in the southern section
of the property and to extend the reserves along strike in the northern section.
Growth - Limpopo phase 2 and Pandora
We completed our pre-feasibility study on the Limpopo phase 2 project at the end
of March 2007. The pre-feasibility study confirms our initial view that this
project can be developed as a fully mechanised mine. The property will produce
around 85,000 Platinum ounces for Lonmin`s account when at steady state
production. We currently expect first production in 2011. The initial estimates
for Lonmin`s share of the capital for the project are US$350 million.
We have also completed the pre-feasibility study for the Pandora project. Due to
the difficult nature of the geologic ground conditions in this area, it is our
view that it is not possible to develop this property as a viable mechanised
mine. This property will however support an economically viable conventional
style PGM mine. The development of a new conventional mine is not in line with
our operating strategy and we have removed Pandora from our current growth
profile. We are currently reviewing our options around this property with our
Joint Venture partners.
Dividend
Based on our continued confidence in the outlook for our business against a
backdrop of strong PGM markets, the Board has declared an interim dividend of 55
cents per share, an increase of 22% on the interim dividend paid last year.
Outlook
The last six months have been challenging operationally for Lonmin on both the
mining and processing sides of the business. However, the work we have completed
during the period leaves us well positioned for the second half of the year. We
have completed the rebuild of the Number One furnace and built further
flexibility into our smelting operations with the re-commissioning of the
Merensky furnace to provide additional capacity. In the remainder of the
financial year this will allow us to process the concentrate inventory which has
built up in the first half. Our new mechanised shafts at Saffy and Hossy have
come into production and are performing ahead of our expectations. We will
continue to ramp up production from these shafts in the second half of the year.
We continue to execute our strategy to capture and build additional production
growth for Lonmin in a robust market for Platinum and the other PGMs. We have
completed the pre-feasibility study for Limpopo phase 2 and confirmed the
viability of a mechanised mine producing around 85,000 Platinum ounces for our
account. We have confirmed the potential of the ore body at Akanani with
drilling showing the mineralogy continues along strike at a similar width and
grade to that which we have seen in the southern section of the property.
The contribution of Lonmin employees, contractors and community members during
the last six months and to the ongoing success of Lonmin is highly valued and
their hard work and dedication is greatly appreciated.
Bradford A Mills
Chief Executive
1 May 2007
Financial Review
Introduction
The financial information presented has been prepared on the basis of
International Financial Reporting Standards (IFRSs).
Analysis of results
Income Statement
The key operating factor influencing performance in the period was the
occurrence of a leak in the Number 1 furnace on the 16th December 2006. As a
result of the detailed design review which followed the incident we decided to
undertake a full re-build of the furnace to restore it to its original design
condition. The Number 1 furnace was non-operational for the remainder of the
financial period and re-commenced production on 30th April 2007. During the
period we ran our three pyromet furnaces but capacity was constrained. As a
result of the above, sales volumes of PGMs at 517 thousand ounces in the period
were nearly 280 thousand ounces lower than the comparative period. The fall in
volume was offset by a 31% price increase for the PGMs sold, reflecting the
strong market conditions, and an additional $28 million by-product revenues from
Nickel and Copper. The resultant revenue for the period was $631m (2006: $708m).
A comparison of the period`s total operating profit with the prior period is set
out below:
$m
Total reported operating profit for the 6 months to 31 March 2006 304
PGM volume (222)
PGM prices 142
Base metals 28
Foreign exchange 64
Cost changes (81)
Sale of houses (special) (6)
_____
Total reported operating profit for the 6 months to 31 March 2007 229
=====
Operating profit for the period was adversely impacted by the 35% reduction in
PGM sales volumes described above and this had a profit flow effect of $222
million. This was offset by $142 million of pricing benefit in PGMs and the $28
million benefit in by-products. The average R:$ exchange rate was some 16%
weaker than in the prior period and this generated a $64 million benefit as the
majority of costs are based in Rand. Underlying costs in Rand increased by $81
million.
Cost changes (increase) / decrease:
$m
Safety, health, environment and community (`SHEC`) (6)
Social and labour plan (4)
Capital and strategic planning (3)
Depreciation (5)
Exploration (including AfriOre) (5)
Pandora ore purchases (14)
Limpopo costs (4)
Labour escalation (17)
Commodity / other escalation (13)
Plant running (3)
Royalties (4)
Other (3)
_____
(81)
=====
The Group continues to invest to develop the business and to meet our
obligations under the South African mining charter. Particular areas of focus
have been in the areas of safety and people development and in this period we
have embarked on a substantial adult education and training programme as part of
our social and labour plan. We have also enhanced our capital and strategic
planning departments to support the significant projects portfolio being
developed including projects such as metallurgical expansion and the new
generation platinum mines.
We continue to be active in the area of exploration and have increased our
investment levels modestly. This increase also reflects the work being
undertaken through the acquisition of AfriOre.
At the EBIT level costs have increased by $14 million reflecting ore purchases
from the Pandora joint venture. This arises as a result of an arm`s-length
transaction at market rates and therefore includes a profit element in the joint
venture and also generates additional margin on downstream processing.
Labour costs rose $17 million in the period. In other cost areas we experienced
high levels of increases, particularly for commodities such as steel, zinc,
chemicals and cement which gave rise to an additional $13 million of cost. As
reported at the prior year end we continue to incur higher plant running costs
in the Process Division. Due to the Number 1 furnace outage we have continued to
run our pyromet furnaces which have high running costs. We are also operating
new plant required to meet environmental requirements.
The C1 cost per PGM ounce sold net of by-product credits on own production from
the combined Marikana and Limpopo operations amounted to R3,181 for the period
compared with an equivalent R2,533 in 2006, an increase of 26% reflecting the
operational issues and cost increases described above. This equated to a 8%
increase in dollar terms.
Net finance costs in 2007 were $107 million compared with $226 million in 2006.
In 2007 this includes a $104 million charge for the fair value movement of the
embedded derivative in the convertible bond (2006: $235 million). On 15 November
2006 we gave notice to force redemption of all outstanding convertible bonds at
their principal amount. This led to the issuance of 10,576,944 shares and a
reduction in non-current financial liabilities of $211 million. Interest cover
(calculated on a 12 month rolling basis) at 58.5 times (2006: 15.9 times)
remains very strong.
Reported profit before tax in 2007 increased by $51 million to $132 million. At
an underlying level however, profit before tax fell by $53 million with the
principal difference being the lower charge from the fair value movement of
convertible bonds in the period.
The 2007 tax charge was $112 million compared with $110 million in 2006. The
corporate tax rate in South Africa has remained at 29% during the year. The
effective tax rate, excluding the effects of exchange, and special items was 36%
compared with 33% in the comparative period mainly due to a higher level of
dividends remitted this period. The overall tax charge includes a cost of $22
million (2006: $12 million) arising on the translation adjustment of the
deferred tax balance. This resulted from a 7% appreciation of the Rand:$
exchange rate from the abnormally high year end rate which stood at R7.77:$1.
The loss for the period attributable to equity shareholders amounted to $3
million (2006: $67 million loss) and loss per share was 2.0 cents compared with
47.1 cents in 2006. Underlying earnings per share, being earnings excluding
special items, amounted to 81.5 cents per share, a decrease of 28.8 cents versus
the comparable period.
Balance sheet
Equity interests were $1,658 million at 31 March 2007 compared with $734 million
at 31 March 2006. This increase over the 12 month period principally reflected
the recognised income attributable to equity shareholders of Lonmin Plc of $467
million and $587 million arising on the conversion of the bond and associated
equity derivative offset by dividends paid of $149 million.
AfriOre Limited was acquired on 26 January 2007 for a gross consideration of
$413 million with a compulsory acquisition of the remaining shares on 16
February 2007. The provisional fair value assessment on the acquisition of
AfriOre Limited was undertaken during the period and resulted in the recognition
of net assets of $382 million being driven by intangible assets and the
associated deferred tax required under IAS. There was no goodwill on
acquisition.
Net debt amounted to $665 million at 31 March 2007 which is an increase of $207
million since 30 September 2006. The debt increase for the six months was $423
million, which included $393 million (net of cash acquired) on the acquisition
of AfriOre. This was offset through the cancellation of debt when the bond was
converted.
Cash flow
The following table summarises the main components of the cash flow during the
period:
_______________________________________________________________________________
March March
2007 2006
Total Total
$m $m
_______________________________________________________________________________
Operating profit 229 304
Working capital 44 (68)
Other items (mainly depreciation and amortisation) 49 38
_______________________________________________________________________________
Cash flow from operations 322 274
Interest and finance costs (11) (23)
Tax (149) (77)
_______________________________________________________________________________
Trading cash flow 162 174
Capital expenditure (105) (85)
Proceeds from disposal of assets held for sale 3 19
Dividends paid to minority (21) (18)
_______________________________________________________________________________
Free cash flow 39 90
Acquisitions (net of cash acquired) (393) (14)
Financial investments (3) (33)
Shares issued 19 12
Equity dividends paid (85) (60)
_______________________________________________________________________________
Cash inflow / (outflow) (423) (5)
Opening net debt (458) (585)
Foreign exchange 3 -
Debt of convertible bond converted to equity 213 -
_______________________________________________________________________________
Closing net debt (665) (590)
_______________________________________________________________________________
Trading cash flow (cents per share) 107.3c 122.3c
_______________________________________________________________________________
Free cash flow (cents per share) 25.8c 63.2c
_______________________________________________________________________________
The reduction in operating profit was more than compensated for by an
improvement in working capital giving a $48 million increase in cash flow from
operations in the period. The working capital flow was driven by a $225 million
improvement in debtors, reflecting the collection of the high level of
concentrate sales which occurred in the final quarter of 2006. This more than
offset the increase in stocks of $121 million which arose due to the limited
processing capacity. Had this stock been sold as concentrate we estimate EBIT
would have increased by $80 million. We believe that with Number 1 furnace back
on stream, and with the recent recommissioning of the Merensky furnace,
sufficient capacity exists to process the processing backlog in the second half
of the year. Therefore, we decided not to sell the concentrate stock in the
period as we expect that processing the backlog will generate $120 million of
EBIT ie an incremental $40 million.
Net debt decreased through most of the period both through cash generation and
the conversion of the bond, and only increased again at the end of the period
with the acquisition of AfriOre. This led to a decrease in interest paid versus
the prior period. Conversely tax paid was high at $149 million reflecting the
strong profits in the second half of last year. The net effect was a trading
cash flow of $162 million marginally below the prior period with a trading
cash flow per share of 107.3 cents (2006: 122.3 cents).
Capital expenditure of $105 million was incurred during the period (2006: $85
million). Minority dividends paid represented dividends to Incwala. Free cash
flow amounted to $39 million with free cash flow per share at 25.8 cents (2006 -
63.2 cents).
The free cash inflow of $39 million becomes an overall cash outflow of $423
million largely through the acquisition of AfriOre at $393 million and the
equity dividends paid.
Dividends
As dividends are accounted for on a cash basis under IFRS the dividend shown in
the accounts represents the 2006 final of 55.0 cents. In addition the Board
recommends an interim dividend of 55.0 cents (2006 - 45.0 cents).
John Robinson
Chief Financial Officer
1 May 2007
This information is provided by RNS
The company news service from the London Stock Exchange
END
www.lonmin.com
Interim Results (Part 2 of 2)
Operating Statistics and Financial Statements
Operational statistics
_______________________________________________________________________________
6 months 6 months
to 31 to 31
March 2007 March 2006(1)
________________________________________________________________________________
Mining
Tonnes mined Marikana Underground 000 5,580 5,676
Opencast 000 704 899
Total 000 6,284 6,575
Limpopo Underground 000 390 461
Opencast 000 - 14
Total 000 390 475
JV attributable(2) Underground 000 60 50
Opencast 000 150 35
Total 000 210 85
Lonmin Platinum Underground 000 6,030 6,187
Opencast 000 854 948
Total 000 6,884 7,135
________________________________________________________________________________
Tonnes milled(3) Marikana Underground 000 5,581 5,622
Opencast 000 738 1,196
Total 000 6,319 6,818
Limpopo Underground 000 397 487
Opencast 000 - 14
Total 000 397 501
JV(4) Underground 000 141 117
Opencast 000 336 68
Total 000 477 185
Ore purchases(5) Underground 000 72 -
Lonmin Platinum Underground 000 6,191 6,226
Opencast 000 1,074 1,278
Total 000 7,265 7,504
________________________________________________________________________________
Metals in concentrate(6)
Lonmin Platinum Platinum oz 450,894 484,263
Palladium oz 210,175 233,145
Gold oz 12,901 13,797
Rhodium oz 59,242 65,903
Ruthenium oz 95,312 95,249
Iridium oz 20,024 19,901
Total PGMs oz 848,548 912,258
Nickel(7) MT 2,395 2,514
Copper(7) MT 1,471 1,571
________________________________________________________________________________
Metallurgical production
Lonmin refined
metal production Platinum oz 259,434 356,351
Palladium oz 116,581 159,536
Rhodium oz 31,019 56,773
Total PGMs oz 470,015 680,158
Toll refined metal production Platinum oz 23,872 -
Palladium oz 10,862 -
Rhodium oz 3,447 -
Total PGMs oz 44,653 -
Total refined PGMs Platinum oz 283,306 356,351
Palladium oz 127,443 159,536
Rhodium oz 34,466 56,773
Total PGMs oz 514,668 680,158
Base metals Nickel(8) MT 1,604 -
Copper(8) MT 826 -
________________________________________________________________________________
Capital expenditure Rm 750 544
$m 105 85
________________________________________________________________________________
Sales Lonmin Platinum Platinum oz 274,440 411,328
Palladium oz 125,380 191,752
Gold oz 9,597 12,083
Rhodium oz 37,216 64,910
Ruthenium oz 56,582 97,946
Iridium oz 14,003 18,645
Total PGMs oz 517,218 796,664
Nickel(8) MT 2,232 2,457
Copper(8) MT 774 1,314
________________________________________________________________________________
Prices
Average price
received per ounce Platinum $/oz 1,103 968
Palladium $/oz 325 266
Gold $/oz 602 511
Rhodium $/oz 5,325 3,142
Ruthenium $/oz 305 79
Iridium $/oz 392 176
Nickel(8) $/MT 25,067 10,431
Copper(8) $/MT 6,558 4,149
Basket price of PGMs $/oz 1,102 847
________________________________________________________________________________
Cost per PGM ounce sold
Group:
+----------------------+
Mining - Marikana R/oz | 2,134 1,586 |
Mining - Limpopo R/oz | 4,405 2,854 |
+----------------------+
Mining (weighted average) R/oz 2,270 1,675
+----------------------+
Concentrating - Marikana R/oz | 408 269 |
Concentrating - Limpopo R/oz | 1,171 759 |
+----------------------+
Concentrating (weighted average) R/oz 454 303
Process division R/oz 722 442
Shared business services R/oz 685 365
Stock movement R/oz (83) 7
________________________
C1 cost per PGM ounce sold before base metal credits
R/oz 4,048 2,792
Base metal credits R/oz (867) (259)
________________________
C1 cost per PGM ounce sold after base metal credits
R/oz 3,181 2,533
Amortisation R/oz 367 296
________________________
C2 costs per PGM ounce sold R/oz 3,548 2,829
________________________
Pandora mining cost:
C1 Pandora mining cost (in joint venture) R/oz 1,921 2,518
Pandora JV cost / ounce to Lonmin
(adjusting Lonmin share of profit) R/oz 3,686 3,370
________________________________________________________________________________
Exchange Rates
Average rate for period SA Rand R/$ 7.31 6.29
Sterling GBP/$ 0.51
0.58
Closing rate SA Rand R/$ 7.24 6.15
Sterling GBP/$ 0.51
0.58
________________________________________________________________________________
Footnotes:
(1) The 6 months to March 2006 comprised an additional 7 days mining
performance for WPL and EPL arising on the change of basis to report on a
calendar month.
(2) JV attributable tonnes mined includes Lonmin`s share (42.5%) of the total
tonnes mined on the Pandora joint venture.
(3) Tonnes milled excludes slag milling.
(4) Lonmin purchases 100% of the ore produced by the Pandora joint venture for
onward processing which is included in downstream operating statistics.
(5) Relates to the tonnes milled and derived metal in concentrate from
third-party ore purchases.
(6) Metals in concentrate has been changed from the previously reported
definition of full contained metal to adjust for industry standard
downstream processing losses.
(7) Corresponds to contained base metals in concentrate.
(8) Nickel is produced and sold as nickel sulphate crystals or solution and the
volumes shown correspond to contained metal. Copper is produced as refined
product but typically at LME grade C.
(9) Concentrate and other sales have been adjusted to a saleable ounces basis
using standard industry recovery rates.
Consolidated income statement
for the 6 months ended 31 March 2007
6 months to 31 Special 6 months to 6 months to
March 2007 items 31 March 31 March
Underlying (i) (note 3) 2007 2006
Total Underlying
(i)
Continuing Note $m $m $m $m
operations
Revenue 2 631 - 631 708
EBITDA (ii) 271 1 272 335
Depreciation (43) - (43) (38)
and
amortisation
Operating 2 228 1 229 297
profit (iii)
Finance 4 9 - 9 5
income
Finance 4 (12) (104) (116) (17)
expenses
Share of 10 - 10 3
profit of
associate
and joint
venture
Profit / 235 (103) 132 288
(loss)
before
taxation
Income tax 5 (84) (28) (112) (96)
expense (iv)
Profit / 151 (131) 20 192
(loss) for
the period
Attributable 123 (126) (3) 157
to: - Equity
shareholders
of Lonmin
Plc
- Minority 28 (5) 23 35
interest
Earnings / 6 81.5c (2.0)c 110.3c
(loss) per
share
Diluted 6 80.7c (2.0)c 109.0c
earnings/
(loss) per
share (v)
Dividend per 7 55.0c
share paid
in period
Special 6 months Year to 30 Special Year to 30
items to 31 September items September
(note 3) March 2006 (note 3) 2006
2006 Underlying Total
Total (i)
Continuing Note $m $m $m $m $m
operations
Revenue 2 - 708 1,855 - 1,855
EBITDA (ii) 7 342 911 12 923
Depreciation - (38) (81) - (81)
and
amortisation
Operating 2 7 304 830 12 842
profit (iii)
Finance 4 - 5 12 - 12
income
Finance 4 (214) (231) (34) (206) (240)
expenses
Share of - 3 19 - 19
profit of
associate
and joint
venture
Profit / (207) 81 827 (194) 633
(loss)
before
taxation
Income tax 5 (14) (110) (280) 78 (202)
expense (iv)
Profit / (221) (29) 547 (116) 431
(loss) for
the period
Attributable (224) (67) 445 (132) 313
to: - Equity
shareholders
of Lonmin
Plc
- Minority 3 38 102 16 118
interest
Earnings / 6 (47.1)c 312.1c 219.5c
(loss) per
share
Diluted 6 (47.1)c 307.7c 216.4c
earnings/
(loss) per
share (v)
Dividend per 7 42.0c 87.0c
share paid
in period
Consolidated statement of recognised income and expense
for the 6 months ended 31 March 2007
________________________________________________________________________________
6 months to 6 months to Year ended
31 March 31 March 30 September
2007 2006 2006
Note $m $m $m
________________________________________________________________________________
Profit/(loss) for the period 20 (29) 431
Change in fair value of
available for sale financial assets 72 - 46
Effective portion of changes
in fair value of cash flow hedges (35) - (4)
Net change in fair value of
cash flow hedges transferred
to income statement 10 - -
Actuarial losses on the post
retirement benefit plan - - (6)
________________________________________________________________________________
Total recognised income
for the period 67 (29) 467
________________________________________________________________________________
Attributable to:
- Equity shareholders
of Lonmin Plc 9 49 (68) 350
- Minority interest 9 18 39 117
________________________________________________________________________________
9 67 (29) 467
________________________________________________________________________________
Footnotes:
(i) Underlying earnings are calculated on profit for the period excluding
movements in the fair value of the embedded derivative associated with the
convertible bond, exchange on tax balances, profit on the sale of Marikana
houses and an adjustment to the interest capitalised in prior periods as
disclosed in note 3.
(ii) EBITDA is operating profit before depreciation and amortisation.
(iii) Operating profit is defined as revenue and other operating expenses before
net finance costs and before share of profit of associate and joint
venture.
(iv) The income tax expense relates to overseas only and includes exchange
losses of $28 million (March 2006 - losses of $12 million) as disclosed in
note 5.
(v) The calculation of diluted EPS includes adjustments for the movement in
fair value of the embedded derivative within the convertible bond subject
to the limitation under IAS 33 - Earnings Per Share, that this cannot
thereby create a figure exceeding basic EPS.
Consolidated balance sheet
as at 31 March 2007
________________________________________________________________________________
As at As at As at
31 March 31 March 30 September
2007 2006 2006
Note $m $m $m
________________________________________________________________________________
Non-current assets
Goodwill 113 113 113
Intangible assets 8 879 323 328
Property, plant and equipment 1,526 1,399 1,463
Investment in associate and joint venture 123 94 113
Financial assets:
- Available for sale financial assets 170 49 98
- Other receivables 22 24 19
Employee benefits 9 12 6
________________________________________________________________________________
2,842 2,014 2,140
________________________________________________________________________________
Current assets
Inventories 256 173 135
Trade and other receivables 171 144 396
Assets held for sale 8 16 6
Tax recoverable 4 5 3
Cash and cash equivalents 48 27 61
________________________________________________________________________________
487 365 601
________________________________________________________________________________
Current liabilities
Bank overdraft repayable on demand (1) (6) (18)
Trade and other payables (149) (123) (209)
Financial liabilities:
- Interest bearing loans and borrowings (332) (128) -
- Derivative financial instruments (29) - (4)
Tax payable (18) (36) (91)
________________________________________________________________________________
(529) (293) (322)
________________________________________________________________________________
Net current assets (42) 72 279
________________________________________________________________________________
Non-current liabilities
Employee benefits (10) - (7)
Financial liabilities:
- Interest bearing loans and borrowings (380) (481) (499)
- Derivative financial instruments - (276) (268)
Deferred tax liabilities (489) (362) (294)
Provisions (43) (44) (39)
________________________________________________________________________________
(922) (1,163) (1,107)
________________________________________________________________________________
Net assets 1,878 923 1,312
________________________________________________________________________________
________________________________________________________________________________
Capital and reserves
Called up share capital 9 155 143 143
Share premium account 9 249 23 26
Other reserves 9 64 88 84
Retained earnings 9 1,190 480 836
________________________________________________________________________________
____________
Attributable to equity
shareholders of Lonmin Plc 9 1,658 734 1,089
Attributable to minority interest 9 220 189 223
________________________________________________________________________________
Total equity 9 1,878 923 1,312
________________________________________________________________________________
Consolidated cash flow statement
for the 6 months ended 31 March 2007
________________________________________________________________________________
6 months to 6 months to Year ended
31 March 31 March 30 September
2007 2006 2006
Note $m $m $m
________________________________________________________________________________
___________
Profit/(loss) for the period 20 (29) 431
Taxation 5 112 110 202
Finance income 4 (9) (5) (12)
Finance expenses 4 116 231 240
Share of profit after tax of
associate and joint venture (10) (3) (19)
Depreciation and amortisation 43 38 81
Change in inventories (121) (63) (25)
Change in trade and other receivables 225 5 (249)
Change in trade and other payables (60) (10) 74
Change in provisions 4 2 (2)
Profit on sale of assets held for sale (1) (7) (12)
Other non cash charges 3 5 13
________________________________________________________________________________
Cash flow from operations 322 274 722
Interest received 4 - 1
Interest paid (15) (23) (32)
Tax paid (149) (77) (185)
________________________________________________________________________________
Cash flow from operating activities 162 174 506
________________________________________________________________________________
Cash flow from investing activities
Acquisition of subsidiaries (net of cash
acquired) 11 (393) (14) (14)
Purchase of intangible assets 8 (4) (6) (21)
Purchase of property, plant and
equipment (101) (79) (161)
Purchase of other financial assets (3) (33) (36)
Proceeds from disposal of assets
held for sale 3 19 28
________________________________________________________________________________
Cash used in investing activities (498) (113) (204)
________________________________________________________________________________
Cash flow from financing activities
Equity dividends paid to Lonmin
shareholders 9 (85) (60) (124)
Dividends paid to minority 9 (21) (18) (62)
Proceeds from current borrowings 332 42 -
Repayment of current borrowings - - (86)
Proceeds from non-current
borrowings 10 92 - 288
Repayment of non-current borrowings10 - (26) (296)
Issue of ordinary share capital 9 19 12 15
________________________________________________________________________________
Cash used in financing activities 337 (50) (265)
________________________________________________________________________________
Increase in cash and cash equivalents 1 11 37
Opening cash and cash equivalents 10 43 10 10
Effect of exchange rate changes 3 - (4)
________________________________________________________________________________
Closing cash and cash equivalents 10 47 21 43
________________________________________________________________________________
Notes to the Accounts
1. Statement on accounting policies
Basis of preparation
The interim accounts have been prepared on the same basis and using the
same accounting policies as those used to prepare the financial statements
of the Lonmin Group for the year ended 30 September 2006 and those
standards and amendments that have been endorsed and will be applied at 30
September 2007.
2. Segmental analysis
________________________________________________________________________
6 months to 31 March 2007
_____________________________________________
Platinum Corporate Exploration Total
Analysis by business group $m $m $m $m
________________________________________________________________________
Revenue - external sales 631 - - 631
Operating profit 255 (18) (8) 229
Segment total assets 3,279 50 - 3,329
Segment total liabilities (1,109) (342) - (1,451)
Capital expenditure(i) 111 - - 111
Depreciation and
amortisation 43 - - 43
________________________________________________________________________
________________________________________________________________________
6 months to 31 March 2006
_____________________________________________
Platinum Corporate Exploration Total
Analysis by business group $m $m $m $m
________________________________________________________________________
Revenue - external sales 708 - - 708
Operating profit 325 (16) (5) 304
Segment total assets 2,296 83 - 2,379
Segment total liabilities (684) (772) - (1,456)
Capital expenditure(i) 85 - - 85
Depreciation and
amortisation 38 - - 38
________________________________________________________________________
________________________________________________________________________
Year ended 30 September 2006
_____________________________________________
Platinum Corporate Exploration Total
Analysis by business group $m $m $m $m
________________________________________________________________________
Revenue - external sales 1,855 - - 1,855
Operating profit 877 (19) (16) 842
Segment total assets 2,596 145 - 2,741
Segment total liabilities (926) (503) - (1,429)
Capital expenditure(i) 232 1 - 233
Depreciation and
amortisation 81 - - 81
________________________________________________________________________
________________________________________________________________________
6 months to 31 March 2007
_____________________________________________
South UK Other Total
Africa
Analysis by geographical
location $m $m $m $m
________________________________________________________________________
Revenue - external sales 631 - - 631
Segment total assets 3,277 50 2 3,329
Capital expenditure(i) 111 - - 111
________________________________________________________________________
________________________________________________________________________
6 months to 31 March 2006
_____________________________________________
South UK Other Total
Africa
Analysis by geographical
location $m $m $m $m
________________________________________________________________________
Revenue - external sales 708 - - 708
Segment total assets 2,293 83 3 2,379
Capital expenditure(i) 85 - - 85
________________________________________________________________________
________________________________________________________________________
Year ended 30 September 2006
_____________________________________________
South UK Other Total
Africa
Analysis by geographical
location $m $m $m $m
________________________________________________________________________
Revenue - external sales 1,855 - - 1,855
Segment total assets 2,594 145 2 2,741
Capital expenditure(i) 232 1 - 233
________________________________________________________________________
Revenue by destination is analysed by geographical area below:
_________________________________________________________________________
6 months to 6 months to Year ended
31 March 31 March 30 September
2007 2006 2006
$m $m $m
_________________________________________________________________________
The Americas 76 190 435
Asia 300 219 518
Europe 60 89 291
South Africa 184 207 602
Zimbabwe 11 3 9
_________________________________________________________________________
631 708 1,855
_________________________________________________________________________
Footnote:
(i) Capital expenditure includes additions to plant, property and equipment
(including capitalised interest), intangible assets and goodwilI in
accordance with IAS 14 - Segment Reporting.
3. Special items
`Special items` are those items of financial performance that the Group believes
should be separately disclosed on the face of the income statement to assist in
the understanding of the financial performance achieved by the Group.
________________________________________________________________________________
6 months to 6 months to Year ended
31 March 31 March 30 September
2007 2006 2006
$m $m $m
________________________________________________________________________________
EBITDA
- Sale of houses 1 7 12
Finance costs:
- Calculation of capitalised interest - 21 21
- Movement in fair value of embedded derivative(104) (235) (227)
________________________________________________________________________________
Special loss before taxation (103) (207) (194)
Taxation on above items (note 5) - (2) (4)
Exchange on tax balances (note 5) (28) (12) 82
________________________________________________________________________________
Special loss before minor (131) (221) (116)
Minority interest 5 (3) (16)
________________________________________________________________________________
Special loss for the period attributable to equity
shareholders of Lonmin Plc (126) (224) (132)
________________________________________________________________________________
Sale of houses: we currently accommodate a substantial number of our
employees in hostels and married quarters with the remainder living in their
homes. We are selling houses to employees to encourage home-ownership. Any
profits or losses from such sales at fair value are not deemed to represent
underlying earnings.
Capitalised interest in 2006 represents an adjustment to the interest
capitalised in prior years of $21 million.
The convertible bond contained an embedded derivative which was held at
fair value. Due to the cash settlement option the bond was classified within
non-current liabilities and movements in fair value were taken to the income
statement. Fluctuations in fair value were mainly due to changes in share
price.
Group entities hold both current and deferred tax balances in Rand which
is not the functional currency of the Company or any of its material
entities or the reporting currency of the Group. Given the volatility of
the Rand to US dollar exchange rate the revaluation of such tax balances can
cause significant variations in the tax charge and therefore profitability.
Consequently the directors feel that such foreign exchange impacts should be
treated as special.
4. Net finance costs
________________________________________________________________________________
6 months to 6 months to Year ended
31 March 31 March 30 September
2007 2006 2006
$m $m $m
________________________________________________________________________________
Finance income: 9 5 12
+-------------------------------------+
Interest receivable | 4 - 2 |
Expected return on defined
benefit pension | |
scheme assets | 4 4 8 |
Movement in fair value of
non-current other | |
receivables | 1 1 2 |
+-------------------------------------+
Finance expenses: (12) (17) (34)
+-------------------------------------+
Interest on bank loans and overdrafts | (13) (19) (35)|
Bank fees | (2) (1) (3)|
Capitalised interest | 6 8 16 |
Discounting on provisions | - (1) (2)|
Unwind of discounting on convertible bond| (2) (1) - |
Interest cost of defined
benefit pension scheme | |
liabilities | (4) (3) (6)|
Exchange differences on net debt | 3 - (4)|
+-------------------------------------+
Special items (note 3): (104) (214) (206)
+-------------------------------------+
Prior years` capitalised interest | - 21 21 |
Movement in fair values of
derivative financial | |
instruments | (104) (235) (227)|
+-------------------------------------+
________________________________________________________________________________
Net finance costs (107) (226) (228)
________________________________________________________________________________
5. Taxation
________________________________________________________________________________
6 months to 6 months to Year ended
31 March 31 March 30 September
2007 2006 2006
$m $m $m
________________________________________________________________________________
United Kingdom:
Current tax expense at 30% (2006 - 30%) 42 36 122
Less amount of the benefit arising from double tax
relief available (42) (36) (122)
________________________________________________________________________________
Total UK tax expense - - -
________________________________________________________________________________
Overseas:
Current tax expense at 29% (2006 - 29%) excluding
special items 67 82 259
+-----------------------------------+
Corporate tax expense | 53 70 217 |
Tax on dividends remitted | 14 12 43 |
Prior year items | - - (1)|
+-----------------------------------+
Deferred tax expense: 17 14 21
+-----------------------------------+
Origination and reversal of temporary | |
differences | 17 14 21 |
+-----------------------------------+
Special items (note 3): 28 14 (78)
+-----------------------------------+
Current tax on sale of houses | - 2 4 |
Exchange on current taxation | 6 - (15)|
Exchange on deferred taxation | 22 12 (67)|
+-----------------------------------+
________________________________________________________________________________
Actual tax charge 112 110 202
________________________________________________________________________________
Tax charge excluding special items (note 3) 84 96 280
________________________________________________________________________________
Effective tax rate 85% 136% 32%
________________________________________________________________________________
Effective tax rate excluding
special items (note 3) 36% 33% 34%
________________________________________________________________________________
A reconciliation of the standard tax charge to the tax charge was as follows:
________________________________________________________________________________
6 months 6 months 6 months 6 months Year Year
to to to to ended 30 ended 30
31 March 31 March 31 March 31 March September September
2007 2007 2006 2006 2006 2006
% $m % $m % $m
________________________________________________________________________________
Tax charge at
standard tax rate 29 38 29 23 29 184
Overseas taxes
on dividends remitted by
subsidiary companies 11 14 15 12 7 43
Exchange on current
and deferred tax 21 28 15 12 (13) (82)
Tax effect of movements
in the fair values of
financial instruments 23 30 76 62 10 66
Tax effect of capitalised
interest adjustment - - - - (1) (6)
Tax effect of other
timing differences 1 2 1 1 - (3)
________________________________________________________________________________
Actual tax charge 85 112 136 110 32 202
________________________________________________________________________________
The Group`s primary operations are based in South Africa. Therefore, the
relevant standard tax rate for the Group was the South African statutory tax
rate of 29% (2006 - 29%). The secondary tax rate on dividends remitted by South
African companies was 12.5% (2006 - 12.5%).
6. Earnings per share
Earnings per share have been calculated on the loss for the period attributable
to equity shareholders amounting to $3 million (March 2006 - $67 million) using
a weighted average number of 150,911,303 ordinary shares in issue for the 6
months to 31 March 2007 (6 months to 31 March 2006 - 142,308,120 ordinary
shares).
Diluted earnings per share are based on the weighted average number of ordinary
shares in issue adjusted by dilutive outstanding share options and shares
issuable on conversion of the convertible bonds. Shares issuable on conversion
of the convertible bonds were anti-dilutive in the current and prior periods and
have been excluded from diluted earnings per share in accordance with IAS 33 -
Earnings Per Share.
6 months to 31 March 2007 6 months to 31 March 2006
Loss for Number of Per share Loss for Number of Per share
the shares amount the shares amount
period $m cents period $m cents
Basic EPS (3) 150,911,303 (2.0) (67) 142,308,120 (47.1)
Share - - - - - -
option
schemes
Diluted (3) 150,911,303 (2.0) (67) 142,308,120 (47.1)
EPS
Year ended 30 September 2006
Profit for Number of Per share
the year shares amount
$m cents
Basic EPS 313 142,594,539 219.5
Share - 2,021,331 (3.1)
option
schemes
Diluted 313 144,615,870 216.4
EPS
6 months to 31 March 2007 6 months to 31 March 2006
Profit Number of Per share Profit Number of Per share
for the shares amount for the shares amount
period $m cents period $m cents
Underlying 123 150,911,303 81.5 157 142,308,120 110.3
EPS
Share - 1,448,157 (0.8) - 1,747,259 (1.3)
option
schemes
Diluted 123 152,359,460 80.7 157 144,055,379 109.0
Underlying
EPS
Year ended 30 September 2006
Profit for Number of Per share
the year shares amount
$m cents
Underlying 445 142,594,539 312.1
EPS
Share - 2,021,331 (4.4)
option
schemes
Diluted 445 144,615,870 307.7
Underlying
EPS
Underlying earnings per share have been presented as the Directors consider it
to give a fairer reflection of the underlying results of the business.
Underlying earnings per share are based on the profit attributable to equity
shareholders adjusted to exclude special items (as defined in note 3) as
follows:
6 months to 31 March 2007 6 months to 31 March 2006
Profit Number of Per share Profit Number of Per share
(loss) shares amount (loss) shares amount
for the cents for the cents
period $m period $m
Basic EPS (3) 150,911,303 (2.0) (67) 142,308,120 (47.1)
Reverse 126 - 83.5 224 - 157.4
special
items
(note 3)
Underlying 123 150,911,303 81.5 157 142,308,120 110.3
EPS
Year ended 30 September 2006
Profit Number of Per share
(loss) for shares amount
the year cents
$m
Basic EPS 313 142,594,539 219.5
Reverse 132 - 92.6
special
items
(note 3)
Underlying 445 142,594,539 312.1
EPS
7. Dividends
The final dividend for the year ended 30 September 2006 of 55.0 cents per share
(42.0 cents per share for the year ended 30 September 2005) was declared in
January 2007, paid on 9 February 2007 and is reflected in the 6 months to 31
March 2007.
An interim dividend of 55.0 cents per share will be paid on 3 August 2007 to
shareholders on the registers at the close of business on 6 July 2007 (45.0
cents per share for the 6 months to 31 March 2006 to shareholders on the
registers at the close of business on 7 July 2006). In accordance with IFRS the
dividend has not been accrued at 31 March 2007.
Aggregate amounts of dividends paid are shown as a deduction from retained
earnings in note 9.
8. Intangible assets
_____________________________________________________________
$m
_____________________________________________________________
Net book value at 30 September 2005 319
Additions 9
Amortisation charge (5)
_____________________________________________________________
Net book value at 31 March 2006 323
Additions 12
Amortisation charge (7)
_____________________________________________________________
Net book value at 30 September 2006 328
Acquisition 551
Other additions 4
Amortisation charge (4)
_____________________________________________________________
Net book value at 31 March 2007 879
_____________________________________________________________
During the period the Company capitalised $555 million of intangibles
representing $551 million exploration and evaluation assets obtained through the
acquisition of AfriOre Limited (see note 11) on 26 January 2007 and $4 million
software development costs.
9. Total equity
________________________________________________________________________________
Equity shareholders` funds
____________________________________________
Called Share
up share premium Other Retained Minority Total
capital account reserves earnings Total interests equity
$m $m $m $m $m $m $m
________________________________________________________________________________
At 1 October 2005 142 12 88 596 838 166 1,004
Total recognised
income and expense - - - (68) (68) 39 (29)
Deferred tax on
items taken
directly to equity - - - 7 7 1 8
Buy-out of minority
interests in Messina - - - - - 1 1
Dividends - - - (60) (60) (18) (78)
Other - - - 5 5 - 5
Shares issued on
exercise of
share options 1 11 - - 12 - 12
________________________________________________________________________________
At 31 March 2006 143 23 88 480 734 189 923
________________________________________________________________________________
At 1 April 2006 (i) 143 23 88 480 734 189 923
Total recognised
income and expense - - (4) 422 418 78 496
Dividends - - - (64) (64) (44) (108)
Other - - - (2) (2) - (2)
Shares issued on
exercise of
share options - 3 - - 3 - 3
________________________________________________________________________________
At 30 September 2006 143 26 84 836 1,089 223 1,312
_______________________________________________________________________________
At 1 October 2006 143 26 84 836 1,089 223 1,312
Total recognised
income and expense - - (20) 69 49 18 67
Dividends - - - (85) (85) (21) (106)
Conversion of the
convertible bond 11 205 - - 216 - 216
Embedded derivative
transfer - - - 371 371 - 371
Other - - - (1) (1) - (1)
Shares issued on
exercise of
share options 1 18 - - 19 - 19
________________________________________________________________________________
At 31 March 2007 155 249 64 1,190 1,658 220 1,878
________________________________________________________________________________
During the period 11,618,792 shares were issued. This included the exercise of
1,041,848 share options through which $19 million of cash was received (6 months
to 31 March 2006 - 761,407 options exercised through which $12 million cash was
received).
During the period Lonmin Plc gave notice to force redemption of all of the
outstanding convertible bonds at their existing principal amount. This led to
the issue of 10,576,944 shares and a reduction in non-current financial
liabilities of $211 million being the total convertible bond liability at 30
September 2006.
Footnote:
(i) Figures for the 6 months to 30 September 2006 are unaudited.
10. Analysis of net debt
________________________________________________________________________________
As at As at
1 October Non cash 31 March
2006 Cash flow movements 2007
$m $m $m $m
________________________________________________________________________________
+-------------------------------------------+
Cash and cash equivalents | 61 (16) 3 48 |
Overdrafts | (18) 17 - (1)|
+-------------------------------------------+
Cash and cash equivalents
in the statement of cash flows 43 1 3 47
Current borrowings - (332) - (332)
Non-current borrowings (288) (92) - (380)
Convertible bonds (213) - 213 -
________________________________________________________________________________
Net debt as defined by the Group (458) (423) 216 (665)
_______________________________________________________________________________
________________________________________________________________________________
As at As at
1 April Non cash 30 Sep
2006 Cash flow movements 2006
$m $m $m $m
________________________________________________________________________________
+-------------------------------------------+
Cash and cash equivalents | 27 38 (4) 61 |
Overdrafts | (6) (12) - (18)|
+-------------------------------------------+
Cash and cash equivalents
in the statement of cash flows 21 26 (4) 43
Current borrowings (128) 128 - -
Non-current borrowings (270) (18) - (288)
Convertible bonds (213) - - (213)
________________________________________________________________________________
Net debt as defined by the Group (590) 136 (4) (458)
_______________________________________________________________________________
________________________________________________________________________________
As at As at
1 October Non cash 31 March
2005 Cash flow movements 2006
$m $m $m $m
________________________________________________________________________________
+-------------------------------------------+
Cash and cash equivalents | 11 16 - 27 |
Overdrafts | (1) (5) - (6)|
+-------------------------------------------+
Cash and cash equivalents
in the statement of cash flows 10 11 - 21
Current borrowings (86) (42) - (128)
Non-current borrowings (296) 26 - (270)
Convertible bonds (213) - - (213)
________________________________________________________________________________
Net debt as defined by the Group (585) (5) - (590)
________________________________________________________________________________
Net debt comprises cash and cash equivalents, bank overdrafts repayable on
demand and interest bearing loans and borrowings grossed up for capitalised
fees.
11. Business combinations
On 26 January 2007 the Group acquired 94% of AfriOre Limited. This increased to
96.5% on 8 February 2007 and to 100% on 16 February 2007. AfriOre`s primary
asset is a 74% stake in the Akanani PGM deposit. The acquisition was accounted
for with an effective date of 1 February 2007 using the acquisition method of
accounting.
The assets and liabilities of AfriOre Limited and the provisional fair values
attributed were as follows:
________________________________________________________________________________
Provisional Provisional
Book value fair value fair value
on acquisition adjustment 2007
$m $m $m
________________________________________________________________________________
Intangible assets 13 538 551
Trade and other payables (2) - (2)
Cash and cash equivalents 20 - 20
Deferred tax liability - (156) (156)
________________________________________________________________________________
31 382 413
________________________________________________________________________________
The Company has carried out a provisional fair value assessment at acquisition.
This has resulted in the recognition of $538 million of additional exploration
and evaluation assets and a deferred tax liability of $156 million as required
by IAS 12 - Income Taxes. The fair values will be amended as necessary, in
accordance with IFRS 3 - Business Combinations, in light of subsequent knowledge
or events to the extent that these reflect conditions as at the date of
acquisition.
The total consideration paid for the acquisition of AfriOre Limited amounted to
$413 million comprising cash consideration of $409 million, and expenses on the
transaction of $4 million, all paid in the period. Cash acquired with the entity
amounted to $20 million resulting in a net consideration paid of $393 million.
The acquisition has had no material impact on the operating results of the Group
for the period. If the acquisition had taken place at the beginning of the
period it is estimated that some $10 million of exploration and evaluation costs
would have been incurred.
12. Events after the balance sheet date
After the period end, Lonmin Plc has taken the decision to close the defined
benefit Lonmin Superannuation Scheme (LSS) to future accrual with effect from 30
June 2007. In place of membership of the LSS the Company will make available
membership of the Lonmin Retirement Plan, a defined contribution pension scheme.
The expected impact resulting from the closure of the LSS is not material and is
expected to impact the income statement in the second half of the year.
END
Date: 02/05/2007 10:38:02 Produced by the JSE SENS Department.
