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NHM
NHM
NHM - Northam Platinum - Reviewed preliminary announcement of results and
dividend declaration for the year ended 30 June 2007
NORTHAM
PLATINUM LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1977/003282/06)
("Northam Platinum" or "the company")
JSE code: NHM
ISIN code: ZAE000030912
Reviewed preliminary announcement of results and dividend declaration
for the year ended 30 June 2007
Key Features
Sales revenue up 57% to R3,7 billion
Operating profit exceeds R2 billion
Headline earnings up 85%
Dividend of 280 cents per share declared
Consolidated Income statement
Change Year Year
% ended ended
30 June 30 June
2007 2006+
R000 R000
Sales revenue 56.7 3 739 805 2 386 326
Cost of sales 25.9 1 727 945 1 372 727
Operating costs 9.7 1 360 818 1 240 320
Concentrates purchased 106 447 -
Refining and other costs 54.3 91 816 59 520
Depreciation 12.5 129 040 114 713
Change in metal inventories (195.2) 39 824 (41 826)
Operating profit 98.5 2 011 860 1 013 599
Investment income 110.7 83 643 39 700
Net sundry income (73.2) 5 303 19 820
Profit before tax 95.8 2 100 806 1 073 119
Tax 110.7 774 562 367 555
Net profit attributable to 88.0 1 326 244 705 564
shareholders
Reconciliation of headline
earnings
Net profit attributable to 1 326 244 705 564
shareholders
Profit on sale of property, (388) (146)
plant and equipment
Profit on disposal of unlisted - (129)
investments
Tax effect 113 61
88.0 1 325 969 705 350
Earnings per share - cents 85.6 560.2 301.9
Fully diluted earnings per 86.0 547.9 294.5
share - cents
Headline earnings per share - 85.6 560.1 301.8
cents
Dividends per share - cents 525.0 280.0
Weighted average number of 236 746 919 233 704 034
shares in issue
Fully diluted number of shares 242 047 082 239 542 861
in issue
Number of shares in issue at 237 226 000 236 003 000
year end
Consolidated Balance Sheet
Property, plant and equipment 1 536 289 1 481 901
Township development 35 198 6 602
Available for sale investments 6 6
Investments held by Northam Platinum 18 920 16 393
Restoration Trust Fund
Enviromental Guarantee Investment 10 311 6 279
Current assets 1 733 264 1 231 073
Inventories 254 490 280 372
Accounts receivable 268 862 119 415
Cash and cash equivalents 1 209 912 831 286
Total assets 3 333 988 2 742 254
Share capital 2 030 914 2 018 786
Equity compensation reserve 29 777 22 788
Retained earnings/(accumulated loss) 320 755 (39 942)
Total equity 2 381 446 2 001 632
Deferred tax 376 163 357 632
Long-term provisions 21 749 25 149
Current liabilities 554 630 357 841
Accounts payable 211 439 186 380
Tax 343 191 171 461
Total equity and liabilities 3 333 988 2 742 254
Consolidated Cash Flow Statement
Cash flows from operations 1 555 025 852 501
Profit before tax 2 100 806 1 073 119
Depreciation 129 040 114 713
Change in working capital (98 506) (69 755)
Tax paid (584 301) (274 694)
Other 7 986 9 118
Cash flows utilised in investing (211 636) (212 045)
activities
Property, plant and equipment
Additions to maintain operations (187 562) (210 512)
Disposals 4 522 4 839
Township development (28 596) (6 602)
Investments - net - 230
Cash flows utilised in financing (964 763) (315 052)
activities
Proceeds from issue of shares 12 128 64 053
Dividends paid (970 332) (373 880)
Increase in investments held by Northam (2 527) (1 950)
Platinum Restoration Trust Fund
Increase in investments held by (4 032) (3 275)
Environmental Contingency Fund
Net increase in cash and cash 378 626 325 404
equivalents
Cash and cash equivalents at beginning 831 286 505 882
of period
Cash and cash equivalents at end of 1 209 912 831 286
period
+ Financial figures restated
Consolidated Statement of Changes in Equity
Year Year
ended ended
30 June 30 June
2007 2006+
R000 R000
Equity at beginning of period as previously 2 001 632 1 596 753
stated
Prior year adjustment - 2 133
2 001 632 1 598 886
Net profit attributable to shareholders 1 326 244 705 564
Credit in respect of share based payments 11 774 7 009
Issue of new shares 12 128 64 053
Dividends distributed (970 332) (373 880)
Equity at end of period 2 381 446 2 001 632
Capital Commitments
Authorised but not contracted 179 380 170 105
Contracted 25 712 17 584
205 092 187 689
Other Commitments
Information Technology Outsource Service
Provider
Due in one year 8 851 8 123
Due in two to five years 1 868 10 224
Operating lease rentals - office equipment
Due in one year 114 622
Due in two to five years 31 101
Operating lease rentals - premises
Due in one year 99 155
Due in two to five years - 81
Housing development
Contracted 1 913 2 843
These commitments will be financed out of operating cash flows.
Operating Statistics
Year Year
ended ended
30 June 30 June
2007 2006+
% change R000 R000
Merensky
Development metres 4.1 11 555 11 102
Square metres mined (10.1) 249 812 277 896
Tonnes milled (5.8) 1 341 057 1 424 160
Head grade (g/ton - 3 PGEs + Au) 5.6 6.1
Available ore reserves in months 15 21
UG2
Development metres 15.9 3 267 2 818
Square metres mined 6.2 146 698 138 170
Tonnes milled 5.6 928 149 878 924
Head grade (g/ton - 3 PGEs + Au) 4.4 4.5
Available ore reserves in months 24 26
Combined
Development metres 6.5 14 822 13 920
Square metres mined (4.7) 396 510 416 066
Tonnes milled (1.5) 2 269 206 2 303 084
Head grade (g/ton - 3 PGEs + Au) 5.1 5.5
Financial Statistics
Precious metals in kg (10.3) 10 087 11 247
concentrates produced *
Precious metals in kg 404 -
concentrates purchased *
Precious metals sold * kg (5.2) 10 703 11 285
Average price realised * R/kg 57.1 297 292 189 286
Operating costs * R/kg 23.6 148 872 120 475
Cash operating costs * R/kg 23.6 135 248 109 441
Precious metals in oz (10.3) 324 296 361 599
concentrates produced *
Precious metals in oz 12 989 -
concentrates purchased *
Precious metals sold * oz (5.2) 344 101 362 821
Average price realised * US$/oz 40.3 1 288 918
Operating costs * US$/oz 9.7 643 586
Cash operating costs * US$/oz 9.8 584 532
Average exchange rate US$1.00 12.0 7.18 6.41
realised = R
* - 3PGE + Au
Operating cost per tonne R/tonne 12.6 662 588
milled
Cash cost per tonne milled R/tonne 12.5 601 534
COMMENT ON RESULTS
Safety
The company remains totally committed to providing an enabling environment
whereby every person on the mine pledges to working safely. Regrettably
three employees died in three separate incidents during this reporting
period and the board wishes to extend its sincere condolences to the
families concerned.
Following the year-end, the mine achieved 1 million fatality-free shifts on
25 July 2007.
Operating performance
The anticipated difficult geological and mining conditions on the Merensky
reef negatively impacted production from this horizon which resulted in
milled tonnage declining by 5.8% to 1 341 057 tonnes and the head grade
lower by 8.6% at 5.6 g/t compared to the previous reporting period. UG2
tonnage milled of 928 149 tonnes, was 5.6% higher and the grade only
marginally lower than the previous year at 4.4 g/t. Year on year
production of metals in concentrate declined by 10.3% from 11 247 kg (361
399 oz) to 10 087 kg (324 296 oz). However, when taking into account the
effect of the reverts (702 kg, or 22 570 oz) from the smelter reported in
F2006, this decline was contained to 4.3%.
Production on the Merensky reef horizon on 14 level started in April 2007.
Purchases of custom material containing 404 kg (12 989 oz) resulted in
total metals produced and processed in F2007 amounting to 10 491 kg (337
293 oz).
Total metres advanced on both reefs increased by 6.5% from 13 921 metres to
14 822 metres. Given the current mining and geological conditions the
Merensky ore reserve declined from 21 months to 15 months despite
development metres increasing by 4.1%. The UG2 ore reserve remains at a
satisfactory 24 months` availability.
Financial results
The combination of a 40.3% increase in the average US Dollar basket price
received to US$ 1 288 per ounce, and a weakening of the Rand by some 12.0%,
resulted in the average Rand basket price received increasing by 57.1% to
R297 292 per kg. This more than offset a 5.2% decrease in unit sales to 10
703 kg (344 077 oz) including the custom material, and resulted in sales
revenue increasing by 56.7% to R3 740 million.
Although total operating costs increased by 9.7%, the lower production
resulted in the unit cash operating costs increasing by 23.6% to R135 248
per kg. Purchases of custom material amounted to R106.4 million, whilst
refining and other costs rose by 54.3% to R91.8 million as a result of a
225.3% increase in nickel refining costs, which costs are linked to
fluctuations in the nickel price. The lower sales volumes combined with
higher unit costs and refining costs resulted in the cost of sales for the
period increasing by 25.9%. The operating margin increased from 42.5% to
53.8%.
The increased cash flows, attributable to higher metal prices, resulted in
investment income rising by 110.7%. Net sundry income reduced by some 73.2%
to R5.3 million primarily as a result of currency translation losses of
R4.7 million compared to gains of R7.6 million in F2006.
The tax charge includes R55.7 million in respect of State`s Share of
Profits.The group was not previously liable for State`s Share of Profits
owing to its unredeemed capital.
The net profit attributable to shareholders increased by 88.0% to R1 326
million compared to the previous year.
Hedging
No currency or metal was hedged during the period, and there were no
outstanding contracts at the end of the period.
Capital expenditure
The major items contributing to the capital expenditure of R187 million
were: development expenditure (R32 million); access infrastructure to 1 and
14 levels (R50 million); upgrading of the backfill reticulation system (R11
million); extensions to the ventilation and hydropower infrastructure (R4
million and R5 million respectively); upgrading of IT systems (R10
million); additional housing for employees (R8 million). The balance
comprised routine capital expenditure.
Prospects
Given the continuing difficult Merensky mining conditions, production of
metals in concentrate and sales of PGMs in the coming year are expected to
be in line with current production and sales volumes. Consequently, should
the Rand basket price remain at current levels, earnings are likely to be
at levels similar to the current year.
Audit review
Ernst & Young Inc., the group`s auditors, have reviewed the financial
results. A copy of their report is available for inspection at the
company`s registered office.
Accounting policies - basis of preparation
The financial statements have been prepared on the historical cost basis,
in accordance with IAS34 - Interim Financial Reporting, except for
financial instruments that are fairly valued, in accordance with
International Financial Reporting Standards (IFRS) issued by the
International Accounting Standards Board and incorporate the accounting
policies which are consistent with those adopted in the financial year
ended 30 June 2006, except for the adoption of changes to IAS39, IFRS6,
IFRIC4, IFRIC8, IFRIC9 and IFRIC10. The adoption of these accounting
policies has had no impact on the financial statements.
Prior year adjustment
Arising out of a review of the group`s insurance policies, it has been
determined that the environmental contingency policy constitutes an
investment, and accordingly the group has recognised this as loans and
receivables at amortised cost. In terms of IAS8 the comparative figures
have been adjusted, resulting in the net profit attributable to
shareholders increasing by R2.6 million and shareholders` equity at 30 June
2005 increasing by R2.1 million.
Dividend
Dividend number 17 of 280 cents per share has been declared in South
African currency, in respect of the year ended 30 June 2007.
The dividend will be paid on Monday, 27 August 2007 to shareholders
recorded in the books of the company at the close of business on Friday, 24
August 2007 (the record date).The last day to trade cum dividend is Friday,
17 August 2007. The shares will commence trading ex dividend on Monday, 20
August 2007 and the record date is
Friday, 24 August 2007.
No share certificates may be de-materialised or re-materialised between
Monday, 20 August 2007 and Friday, 24 August 2007, both days inclusive.
Directorate
The following changes occurred during the period under review:
* Mr Tokyo Sexwale resigned as non-executive director and chairman of the
board of directors of the company on 20 April 2007;
* Mr Lazarus Zim was appointed a non-executive director and chairman on 25
April 2007;
* Mr Roeland van Kerckhoven resigned as non-executive director on 23 March
2007; and
* Mr Norman Mbazima was appointed a non-executive director on 1 May 2007.
On behalf of the board
P L Zim G T Lewis
Chairman Chief Executive Officer
Johannesburg
1 August 2007
Registered Office
1st Floor, Block 1A PO Box 412694
Albury Park Craighall
Magalieszicht Avenue 2024
Dunkeld West Republic of South Africa
Johannesburg
JSE code: NHM ISIN code: ZAE 000030912
Directors: P L Zim (Chairman), G T Lewis (Chief Executive Officer)
(British), M E Beckett (British), Ms N J Dlamini (Dr), R Havenstein, Ms E T
Kgosi, M B Mbazima (Zambian), R G Mills, B R van Rooyen, (Alternate: P C
Pienaar) M J Willcox
Company Secretary: S J van der Spuy
These results are available on our website at www.northam.co.za
Date: 02/08/2007 17:05:01 Produced by the JSE SENS Department.
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