| Thu 5 Aug 2004, 8:35 | | RESULTS AND DIVIDEND DECLARATION |
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NORTHAM PLATINUM LIMITED - REVIEWED PRELIMINARY ANNOUNCEMENT OF RESULTS AND
DIVIDEND DECLARATION FOR THE YEAR ENDED 30 JUNE 2004
NORTHAM PLATINUM LIMITED
(Registration number 1977/003282/06)
(Incorporated in the Republic of South Africa)
JSE code: NHM
ISIN: ZAE000030912
REVIEWED PRELIMINARY ANNOUNCEMENT OF RESULTS AND DIVIDEND DECLARATION FOR THE
YEAR ENDED 30 JUNE 2004
KEY FEATURES
* Cash distribution of 80 cents per share
* Sales revenue up 16.9%
* Operating cash flow improves by 31.5%
* Headline earnings R254 million
* Metal sales volumes up 27.9%
* Increase in unit cash costs contained to 2.7%
INCOME STATEMENT
Year Year
ended ended
30 June 30 June
Change 2004 2003
% R000 R000
Sales revenue 16.9 1 720 399 1 471 999
Cost of sales 22.6 1 331 614 1 086 571
Operating costs 1 057 568 1 004 327
Concentrates purchased 14 632 -
Refining and realisation costs 60 569 68 549
Metal leasing costs (14 149) 14 149
Depreciation 97 527 89 059
Change in metal stocks 115 467 (89 513)
Operating profit 0.9 388 785 385 428
Net investment income 38 174 64 140
Net sundry revenue/(expenditure) (36 392) 23 946
Profit before tax (17.5) 390 567 473 514
Tax (31.1) 136 869 198 601
Net income (7.7) 253 698 274 913
Reconciliation of headline earnings
Net income 253 698 274 913
Profit on sale of fixed assets (193) (505)
Tax effect 58 152
253 563 274 560
Earnings per share - cents 109.6 118.8
Fully diluted earnings per share -
cents (8.4) 107.1 116.9
Headline earnings per share - cents (7.8) 109.5 118.7
Dividends per share - cents 105.0 90.0
Capital repayment per share - cents 20.0 55.0
Weighted average number of shares in
issue 231 540 413 231 313 068
Fully diluted number of shares in
issue 236 938 116 235 108 275
Number of shares in issue at year end 231 543 500 231 538 500
CASH FLOW STATEMENT
Cash flows from operations 512 808 390 040
Profit before tax 390 567 473 514
Depreciation 97 527 89 059
Change in working capital 139 362 (97 701)
Tax paid (117 766) (75 554)
Other 3 118 722
Cash flows utilised in investing
activities (118 496) (172 171)
Property, plant and equipment
Additions to maintain operations (122 925) (175 758)
Disposals 4 427 3 597
Investments - net 2 (10)
Cash flows utilised in financing
activities (187 665) (654 207)
Proceeds from issue of shares 24 6 742
Reduction of share premium (81 394) (219 606)
Dividends paid (104 194) (439 449)
Increase in Restoration Trust Fund (2 101) (1 894)
Net cash flow 206 647 (436 338)
Cash and cash equivalents at
beginning of period 294 975 731 313
Cash and cash equivalents at end of
period 501 622 294 975
STATEMENT OF CHANGES IN EQUITY
Equity at beginning of period 1 515 508 1 892 908
Net income for the period 253 698 274 913
Issue of new shares 24 6 742
Reduction of share premium (81 394) (219 606)
Dividends distributed (104 194) (439 449)
Equity at end of period 1 583 642 1 515 508
BALANCE SHEET
Fixed assets 1 355 765 1 334 203
Unlisted investments 181 183
Northam Platinum Restoration Trust
Fund 12 563 10 462
Current assets 804 015 747 907
Inventories 223 187 339 156
Accounts receivable 79 206 113 776
Cash and cash equivalents 501 622 294 975
2 172 524 2 092 755
Share capital 1 996 759 2 078 129
Accumulated loss (413 117) (562 621)
Shareholders` equity 1 583 642 1 515 508
Deferred tax 332 395 330 323
Long-term provisions 15 151 11 442
Current liabilities 241 336 235 482
Accounts payable 161 855 173 032
Tax 79 481 62 450
2 172 524 2 092 755
Operating statistics
Year Year
ended ended
Change 30 June 30 June
% 2004 2003
Merensky
Development metres (21.2) 10 713 13 596
Square metres mined 1.5 322 451 317 677
Tons milled (2.6) 1 541 234 1 582 421
Head grade (g/ton - 3 PGEs + Au) 6.0 5.9
Available ore reserves in months 15 20
UG2
Development metres 47.3 1 690 1 147
Square metres mined (0.5) 113 754 114 373
Tons milled 8.6 691 353 636 717
Head grade (g/ton - 3 PGEs + Au) 4.3 4.0
Available ore reserves in months 24 38
Combined
Development metres (15.9) 12 403 14 743
Square metres mined 1.0 436 205 432 050
Tons milled 0.6 2 232 587 2 219 138
Head grade (g/ton - 3 PGEs + Au) 5.5 5.3
Financial statistics
Year Year
ended ended
Change 30 June 30 June
% 2004 2003
Precious metals in
concentrates produced* kg 2.3 10 592 10 354
Precious metals sold* kg 27.9 11 733 9 174
Average price realised* R/kg (9.9) 130 874 145 273
Operating costs* R/kg 3.3 109 052 105 600
Cash costs* R/kg 2.7 99 532 96 880
Precious metals in
concentrates produced* oz 2.3 340 547 332 888
Precious metals sold* oz 27.9 377 239 294 947
Average price realised* US$/oz 19.9 597 498
Operating costs* US$/oz 35.3 491 363
Cash costs* US$/oz 34.8 449 333
Average exchange rate US$1.00 = R 6.90 9.05
* - 3PGE + Au
Operating cost per tonne
milled R/tonne 5.1 517 492
Cash cost per tonne milled R/tonne 4.4 472 452
Outstanding hedging instruments at period-end
Platinum Not July 2003 to
Period applicable September 2003
Average quantity
hedged per month - oz 5 000
Average contract price- US$/oz 661.45
Fair value price at
period end - US$/oz 661.92
Unrealised
gain/(loss)
recognised - US$000 8
- R000 60
Palladium
Period Not July 2003 to
applicable February 2004
Average quantity
hedged per month - oz 4 250
Average contract price- US$/oz 244.43
Fair value price at
period end - US$/oz 179.74
Unrealised
gain/(loss)
recognised - US$000 2 199
- R000 16 640
Currency
Period July 2004 to Not
September 2004 applicable
Average volumes
hedged per month - US$000 2 000
Average contract rate - US$1.00 = R 7.05
Fair value rate at
period end - US$1.00 = R 6.20
Unrealised
gain/(loss)
recognised - R000 4 078
Capital commitments R000 R000
Authorised but not contracted 127 737 106 387
Contracted 8 399 23 644
136 136 130 031
Other commitments
Information Technology Outsource Service Provider
Due in one year 8 346 7 314
Due in two to five years 29 607 26 993
Thereafter - 1 388
Operating lease rentals - office equipment
Due in one year 167 167
Due in two to five years 332 438
Operating lease rentals - premises
Due in one year 204 390
Due in two to five years - 204
These commitments will be financed out of operating cash flows.
Operating and financial results
Production of metal in concentrates (3PGEs + Au) was higher at 10 592 kg (340
547oz) than that achieved for the year ended 30 June 2003.
Unit sales increased by 27.9% to 11 733kg (377 239oz). Despite a 19.9% increase
in the US$ basket price to US$597 per ounce, the sustained strength of the Rand
resulted in the average Rand basket price declining by 9.9% to R130 874 per kg.
The net result was that sales revenues for the current year increased by 16.9%
to R1 720 million.
Good cost control was maintained, with total operating costs increasing by 5.3%
and unit cash costs increasing by 2.7% to R99 532 per kg. Refining and
realisation costs decreased by 11.6%, returning to more normal levels after the
higher costs incurred in toll refining the concentrates during the smelter shut
down in the previous financial year. Cost of sales includes R15 million relating
to concentrates purchased in order to optimise smelter efficiencies, as well as
a credit of R14 million relating to metal that was leased during the previous
year and returned during the current year. The depreciation charge increased
following a re-assessment of the estimated life of the mine which is now
estimated at 18 years. The change in metal inventories is as a result of the
higher unit sales volumes.
Although the cost of sales increased by 22.6%, the higher sales revenue resulted
in operating profit remaining constant.
Net investment income declined to R38 million as a consequence of the lower
average cash balance and lower interest rates.
Metal hedging losses, partially offset by currency hedging gains were primarily
responsible for the net sundry expenditure of R36 million compared to net sundry
revenue of R24 million during the previous year.
The profit attributable to shareholders fell by 7.7% compared to the previous
year.
Hedging
During the previous year the company embarked on a hedging programme to protect
its revenues from a potential decline in the prices of platinum and palladium.
This programme was continued during the first half of the current financial
year, with a further 51 500 ounces of platinum being hedged at an average price
of US$674.87. The programme was suspended in December 2003. The platinum and
palladium contracts that matured during the year resulted in a net loss of R49
million. There were no outstanding metal hedging contracts at year end.
In addition, the company hedged a portion of its foreign currency revenue in
order to partially mitigate the effects of the continued strength of the Rand.
A realised gain of R6 million is included in net sundry revenue/(expenditure),
and in terms of AC 133 - Financial Instruments: Recognition and Measurement, the
currency hedging instruments outstanding at year end have been recognised at
fair value at the end of the period, with a gain of R4 million being included in
net sundry revenue/(expenditure).
Ore reserves
Owing to poor ground conditions associated with faults and transitions as well
as water intersections, a total of 2.5km of face was lost, resulting in the ore
reserve availability on the Merensky Reef decreasing to 15 months at the end of
June 2004, from 20 months at the end of the previousfinancial year. UG2 ore
reserve availability is as planned at 24 months.
Capital expenditure
The development programme (R38 million), access infrastructure to 1 level and 14
level (R20 million), safety improvements to skip design (R12 million) and
additional refrigeration plants (R15 million) were the major contributors to the
capital expenditure of R123 million, with routine capital expenditure comprising
the balance.
Planned capital expenditure for 2005 amounts to a total of R136 million and
includes the following major items: the development programme (R33 million);
development through 20 Line Fissure Fault (R11 million); furnace slag treatment
facility (R12 million); additional backfill facilities (R12 million); and access
infrastructure to 1 level and 14 level (R33 million).
Safety
The board deeply regrets that four employees lost their lives in underground
accidents during the year under review. Management remains committed to
providing a safe working environment. The continued implementation of a
comprehensive behaviour based safety programme has yielded some satisfactory
results with an overall reduction in the number of injuries sustained during the
year.
Expansion
Pandora Joint Venture (`Pandora`)
In an announcement dated 23 March 2004, shareholders were advised that Northam`s
7.5% interest in the Pandora Joint Venture would temporarily vest in Mvelaphanda
Resources Limited (`Mvela`), pending the resolution of Northam`s HDSA status,
and as soon as this had been resolved, the Pandora interest would be redeployed
to Northam at cost.
Booysendal Project (`Booysendal`)
Finalisation of the agreement regarding the acquisition of Booysendal is well
advanced. A circular will be issued to shareholders in due course.
Further growth opportunities
Northam is actively pursuing other growth opportunities arising from the
prevailing minerals legislation.
Prospects
Should the Rand basket price for metals remain at its current level, earnings
for 2005 are likely to be lower than those for 2004.
Directorate
Mr A S Malone resigned as a director on 1 March 2004.
Audit review
Ernst & Young, the company`s auditors, have reviewed the financial results. A
copy of their review opinion is available for inspection at the company`s
registered office.
Accounting policies
The financial statements have been prepared on the historical cost basis in
accordance with International Financial Reporting Standards and South African
Statements of Generally Accepted Accounting Practice and incorporate the
accounting policies which are consistent with those adopted in the previous
year.
Cash distribution
In terms of the general authority granted to the directors at the annual general
meeting on 6 November 2003, the directors have resolved to effect a reduction in
the company`s share capital by means of a repayment of share premium of 20 cents
per share to shareholders.
A final dividend, dividend number 11, of 60 cents per share has been declared in
South African currency, in respect of the year ended 30 June 2004.
The repayment of share premium and the dividend (`the distribution`) will be
paid on Monday, 30 August 2004 to shareholders recorded in the books of the
company at the close of business on Friday, 27 August 2004 (the record date).
The last day to trade cum the distribution is Friday, 20 August 2004. The shares
will commence trading ex the distribution on Monday, 23 August 2004 and the
record date is Friday, 27 August 2004.
No share certificates may be dematerialised or rematerialised between Monday, 23
August 2004 and Friday, 27 August 2004, both days inclusive.
On behalf of the Board
T M G Sexwale B R van Rooyen
Chairman Director
Johannesburg
4 August 2004
Registered Office
Kenilworth House PO Box 37160
Rutherford Estate Birnam
1 Scott Street 2015
Waverley 2090 Republic of South Africa
Johannesburg
Directors: T M G Sexwale (Chairman),M E Beckett (British),
D T G Emmett, R Havenstein, E Molobi, R H H van Kerckhoven (Belgian),
B R van Rooyen, M J Willcox
Company Secretary: S J van der Spuy
NORTHAM
(Registration number 1977/003282/06)
(Incorporated in the Republic of South Africa)
JSE code: NHM
ISIN: ZAE000030912
These results are available on our website at www.northam.co.za
