| Thu 25 Nov 2004, 9:18 | | Lonmin Final Results |
|
Lonmin Plc - Final Results
Lonmin Plc
(`Lonmin`)
(Incorporated in England)
(Registered in the Republic of South Africa under registration number
1969/000015/10)
ISIN code: GB0031192486
Share code: LON
Issuer code: LOLMI
Final Results
Positioned for Growth
- Dividend for the year maintained at 72 cents.
- The Ashanti sale was completed and monetised for $390m. A net $70m profit
from discontinued operations represented the $112m profit from the sale of the
shares in AngloGold Ashanti offset by the $42m funding requirement on the buy-
out of the SUITS pension scheme.
- The purchase of an additional 9.11% of Eastern and Western Platinum for $283m
was completed on 30 September 2004, increasing the Group`s ownership in its core
platinum operations from 73% to 82%.
- The formation of Incwala Resources in which the Group has a 24% interest has
created a unique Black Economic Empowerment company as a partner for our South
African operations.
- The adoption of a New Mine Extraction Plan enables the Group to set a new
target of 1.1m sustainable ounces of primary platinum production from 2010
onwards.
- The development at 3 of the Company`s shafts has been accelerated to support
the planned growth.
- Record primary mine platinum production of 913,263 ounces achieved.
- A 32% growth in turnover to $1,030m in 2004 from a 17% increase in the average
price of the basket of metals sold and a modest growth in volumes sold.
- 91.8% reduction in SO2 stack emissions from 2003.
- A comprehensive safety management system based on visible leadership has been
developed and implemented during the year.
Financial highlights - continuing operations
Full year to 30 September 2004 2003
Turnover $1,030m $779m
EBITDA (i) $357m $344m
EBIT (ii) $303m $297m
Profit before taxation $290m $291m
Earnings per share 88.4c 52.5c
Underlying earnings per share (iii) 96.9c 87.2c
Dividends per share (iv) 72.0c 72.0c
Trading cash flow per share 229.2c 161.0c
Free cash flow per share 70.7c 48.2c
Equity shareholders` funds - restated (v) $744m $645m
Net borrowings $275m $197m
Gearing (vi) 27% 23%
NOTES ON HIGHLIGHTS
(i) EBITDA is Group operating profit before interest, tax, depreciation and
amortisation.
(ii) EBIT is total operating profit.
(iii) Underlying earnings per share are calculated on profit for the year
excluding exceptional items and exchange adjustments on tax as disclosed in note
7.
(iv) The Board recommends a final dividend of 42.0 cents per share payable on 14
February 2005 to shareholders on the registers on 21 January 2005.
(v) Equity shareholders` funds have been restated to show the investment in the
Employee Share Ownership plan as a deduction from equity shareholders` funds.
(vi) Gearing is calculated on the net borrowings attributable to the Group
divided by the net borrowings attributable to the Group plus equity
shareholders` funds.
Press enquiries: Anthony Cardew / Olivia Gallimore, Cardew Chancery: +44 (0)20
7930 0777
This press release is available on www.lonmin.com
Chairman`s comments
Lonmin`s Chairman, Sir John Craven said: `2004 was a watershed for Lonmin.
Against the background of a strong operating performance, we completed a number
of key strategic initiatives and have positioned the Company for growth and
development under a new Chief Executive`.
`The financial outcome was again adversely affected by the strength of the South
African Rand against the US Dollar, which hits our results as our costs are
overwhelmingly in Rand while our revenues are wholly in Dollars. The currency
issue is a continuing problem for the whole of the South African mining industry
but affects the platinum and gold sectors more than others. We expect this
situation to reverse itself at some point but there can be no certainty as to
when this might occur`.
`With these strategic moves behind us we are set fair to design and develop a
new future for Lonmin. As a Board we support the management`s stated objective
to seek new growth opportunities, acknowledging that these are likely to broaden
and diversify the business in both geographic and commodity terms`.
Sir John Craven
Chairman
Chief Executive`s comments
Brad Mills, Lonmin`s Chief Executive said: `Lonmin is a new company today. With
the sale of our Ashanti holding and the completion of our buy-out of Impala`s
holding in our Platinum assets, we are now a focused mining company with no
legacy entanglements to impede our future growth. During the year, we also
completed a ground breaking Black Economic Empowerment transaction - the sale of
18% of Eastern and Western Platinum to Incwala Resources (Pty) Limited - this
transaction sets us firmly on the path to the conversion of our mining rights to
` new order ` rights under South African legislation. Conversion will guarantee
us long-term access to the mineral rights that support our operations.`
`Our Platinum operations are in excellent shape. The markets for our products
remain strong. We have fully recovered from the smelter accident of two years
ago. Our mining and process engineers have developed a new mine extraction plan
that will allow us to grow production from our core properties to a sustainable
1,100,000 ounces of primary mine produced Platinum per year from 2010 onwards -
a 20% increase from this year`s record 913,263 ounces of Platinum. Our Pandora
Joint Venture, to which we have not yet committed, remains a source of future
growth. To further strengthen our operations and ensure they retain their status
as the lowest cost primary producers of Platinum in the industry, we are
embarking on a major continuous improvement programme utilising the 6 Sigma
methodology. This will help us eliminate errors, waste and excess costs in our
production processes and improve our overall efficiency and productivity`.
`At Lonmin, a critical focus is our Safety, Health, Environmental and Community
performance. As a mining company we have to get these areas of our business
right. Regrettably, during our 2004 fiscal year, we suffered 8 fatalities. While
this is a reasonable result in line with the deep level South African mining
industry, it is not an acceptable outcome for this management. We are committed
to the elimination of all serious accidents and injuries and we are therefore
establishing new behavioural and risk based safety programmes for all of our
operations`.
`Our biggest health exposure in our operations is the high incidence of AIDS in
our work force. Voluntary testing has revealed that about 25-30% of our work
force is currently HIV positive. We have embarked on major AIDS awareness and
prevention campaigns with our employees and with the local communities. In
addition, we offer anti-retroviral treatment to all employees who can benefit
from this drug therapy. Our goal in this area is to continue to improve the
overall quality of our employees` lives and eliminate those factors that
contribute to this tragic epidemic such as single sex hostel living
arrangements`.
`Our environmental and community performance is often tightly interwoven. We
have made and continue to make substantial investments into lessening or
eliminating our impact on the environment and improving our relations with the
local communities. Our long-term goal is self-sustaining, healthy communities
that support our operations and employees. We have firm programmes in place to
ensure that we are making steady progress in both of these important areas`.
`Looking forward, one of the critical issues that has been facing the Company is
how best to grow value given the relatively limited opportunities in the
Platinum industry`.
`The characteristics that make our business strong are a highly consolidated
industry structure with long-term contracts between our customers and ourselves.
Our customers value continuity of supply, this is critical for their businesses.
They need to know that we will meet our commitments to them. Our low cost
operations ensure that we can operate uninterrupted through any price cycle.
Today, Lonmin has some of the best Platinum assets in the world and we are
looking to add to this similar quality mineral deposits that have the same kind
of customer-supplier relationships in commodities with similar industry
dynamics. Our core mining skills are readily transferable and our track record
of meeting long-term customer expectation is a strategic asset. We are committed
to the growth of shareholder value and we will be patient in our efforts to
identify opportunities that ensure that we can achieve the core objective of
growing cash flow and earnings per share`.
Webcast
A live webcast of the results` presentation starting at 9.30am London (11.30am
Johannesburg) on 25 November 2004 can be accessed through the Lonmin website
(www.lonmin.com). An archived version of the presentation, together with the
presentation slides, will be available on the Lonmin website.
Brad Mills
Chief Executive
Commentary on the Group Financial Review
Analysis of results
Profit and loss account
A comparison of the 2004 total operating profit from continuing operations with
the prior year is set out below:
$m
*Total operating profit for the year ended 30 September 2003 297
Increase in sales prices 221
Increase in sales volumes 12
Exchange (113)
Smelting and refining costs (9)
Stock adjustment (23)
Depreciation (7)
Operational costs plus inflation (75)
*Total operating profit for the year ended 30 September 2004 303
* from continuing operations and before any exceptional items.
Exchange and Prices and Costs
The average price realised for the basket of metals sold at $/KG17,072 was 17%
higher than the prior year and turnover increased by $251 million to $1,030
million. Unit costs in rand were 22% higher mainly due to benefits in the prior
year not repeated in the current year and wage increases and other inflationary
increases, particularly in steel, water and power. The strength of the South
African rand against the US dollar has continued to impact on costs in dollar
terms with the average exchange rate appreciating some 16% on the prior year.
The resulting total operating profit from continuing operations and before any
exceptional charges amounted to $303 million.
Profit before tax from continuing operations amounted to $290 million in 2004
compared with $291 million in 2003.
Interest
Net interest payable and similar items was $13 million compared with $28 million
last year. Exchange losses were $16 million lower this year due to most
borrowings being held in US dollars for the 2004 financial year but interest and
finance costs were higher, primarily due to the amortisation of expenses on bank
facilities arising from the Incwala transactions.
Tax
The 2004 tax charge was $113 million compared with $183 million in 2003 and
included $20 million of exchange losses (2003 - $85 million). An exceptional
tax credit has been included in the tax charge in respect of South African tax
overprovided in 2003 on the disposal of the Brakspruit mineral rights. The
effective tax rate, excluding the effects of exchange and exceptional items was
33% compared with 35% last year.
Net Profit
Profit for the year from continuing operations rose to $125 million from $74
million in 2003 and earnings per share were 88.4 cents compared with 52.5 cents
in 2003. Underlying earnings per share from continuing operations, being
earnings excluding exchange on tax balances and exceptional items amounted to
96.9 cents (2003 - 87.2 cents).
Discontinued Operations
The profit for the year arising from discontinued operations amounted to $70
million representing a profit of $112 million on the sale of the investment in
AngloGold Ashanti during June 2004 offset by a funding requirement on the buy-
out of the SUITS pension scheme during September 2004 of $42 million.
Cash flow
Net cash inflow from operating activities from continuing operations was $400
million during 2004, a 35% increase on last year`s figure of $296 million. The
increase included an inflow of working capital of $39 million compared with an
outflow of $54 million last year. After interest and finance costs of $9
million and tax payments of $67 million, trading cash flow amounted to $324
million in 2004 against $227 million in 2003, with trading cash flow per share
of 229.2 cents in 2004 against 161.0 cents in 2003.
Capital expenditure of $187 million was incurred during the year, an increase of
$26 million on the prior year. This increase included the effect of the marked
appreciation in the South African rand during the year; actual rand expenditure
decreased by 5%. After minority dividends paid of $37 million, free cash flow
was $100 million and free cash flow per share was 70.7 cents (2003 - 48.2
cents). Financial investment, acquisitions and disposals primarily represented
the net cash outflow on the Incwala and EPL/WPL transactions of $424 million
(including expenses of $17 million), the receipt from the sale of the investment
in and repayment of loans from AngloGold Ashanti of $390 million and a $41
million funding requirement on the buy-out of the SUITS pension scheme. After
accounting for shares issued on the exercise of share options of $6 million and
equity dividends paid of $102 million, the cash outflow was $75 million during
2004 and net borrowings amounted to $275 million at 30 September 2004.
Balance sheet
Equity interests were $744 million at 30 September 2004 compared with $645
million (restated for ESOP accounting) at 30 September 2003 mainly reflecting
the profit for the year of $195 million offset by dividends declared of $42
million and $60 million for the interim and final dividends respectively.
The Incwala transactions were completed on 30 September 2004 resulting in an
increase of 9.11% in the Group shareholding in Eastern Platinum Limited (EPL)
and Western Platinum Limited (WPL) to 82%. In addition, an investment was made
in Incwala Resources (Pty) Limited (Incwala) resulting in a 23.56% ownership.
Funding was also provided to HDSAs (Historically Disadvantaged South Africans)
to assist with their purchase of 9.0% of EPL and WPL from Gazelle Platinum
Limited and to Seed Capital investors investing in Incwala. These transactions
have been shown in the balance sheet on 30 September 2004 as follows:
- the investment in Incwala amounting to $90 million has been shown as an
associate
- the loans provided to HDSAs and Seed Capital investors amounting to $34
million have been shown as loans receivable
- the excess of the purchase price of $311 million including expenses of $28
million over the book value of the 9.11% acquisition of EPL and WPL has been
shown within fixed assets as additional mineral rights
- the minority interest in EPL and WPL has been reduced from 27.11% to 18.0%.
Net borrowings amounted to $275 million at 30 September 2004 with the main
component being the convertible bonds of $216 million. Gearing was 27% compared
with 23% at 30 September 2003, calculated on net borrowings attributable to the
Group divided by these attributable net borrowings and the equity interests
outstanding at the balance sheet date.
Dividends
The Board recommends a final dividend of 42.0 cents (2003 - 42.0 cents) making
total dividends for the year of 72.0 cents (2003 - 72.0 cents). This represents
a cover of 1.2 times on earnings from continuing operations (2003 - 0.7 times).
On an underlying earnings from continuing operations basis, this represents a
cover of 1.3 times compared with 1.2 times in 2003.
John Robinson
Chief Financial Officer
Platinum Operating Statistics - Five Year Review
Sept Sept
2004 2003
Tons milled (excluding slag) - underground (000) 11,121 11,418
- opencast (000) 3,283 2,790
- total (000) 14,404 14,208
Tons mined - underground (000) 11,070 11,450
- opencast (000) 2,730 2,880
- total (000) 13,800 14,330
UG2 to Merensky Ratio (%) 82.4 81.6
Noble metals in matte (kg) 55,031 54,295
Yield into matte (g/t) 3.82 3.83
Primary mine platinum (oz) 913,263 907,599
production
Refined production of - platinum (oz) 918,454 932,867
- palladium (oz) 397,894 417,418
- rhodium (oz) 113,327 140,514
- total PGMs (oz) 1,679,871 1,757,757
Capital expenditure (R million) 1,230.1 1,293.6
($ million) 186.8 161.5
Sales - platinum (oz) 942,843 903,077
- palladium (oz) 406,177 405,073
- rhodium (oz) 126,956 131,752
- total PGMs (oz) 1,764,474 1,728,387
Average price received per - platinum (R) 5,356 5,053
ounce
($) 816 645
- palladium (R) 1,485 1,698
($) 227 212
- rhodium (R) 4,876 4,201
($) 745 529
Basket price of PGMs and base metals ($/kg) 17,072 14,618
Cash cost per refined ounce of PGM sold (R) 2,422 1,974
(incl royalties)
($) 365 251
Cash cost per refined ounce of PGM sold (ex (R) 2,411 1,969
royalties)
($) 363 250
Cash cost per refined ounce - underground (R) 2,399 2,022
of
PGM produced (ex royalties) ($) 369 257
- opencast (R) 2,787 1,801
($) 422 229
- total (R) 2,469 1,996
($) 379 254
Average exchange rates - Sterling (GBP/$) 0.56 0.62
- S A Rand (R/$) 6.60 7.90
Closing exchange rates - Sterling (GBP/$) 0.55 0.60
- S A Rand (R/$) 6.48 6.97
Sept Sept Sept
2002 2001 2000
Tons milled
(excluding slag) - underground (000) 11,260 10,520 9,734
- opencast (000) - - -
- total (000) 11,260 10,520 9,734
Tons mined - underground (000) 12,346 10,111 9,858
- opencast (000) - - -
- total (000) 12,346 10,111 9,858
UG2 to Merensky
Ratio (%) 78.3 77.1 76.0
Noble metals in
matte (kg) 46,557 44,163 40,810
Yield into matte (g/t) 4.13 4.20 4.19
Primary mine
platinum production (oz) 757,451 716,697 659,770
Refined production
of - platinum (oz) 757,451 716,697 659,770
- palladium (oz) 350,792 323,725 293,274
- rhodium (oz) 113,549 101,881 88,797
- total PGMs (oz) 1,467,525 1,357,301 1,235,501
Capital expenditure (R million) 1,558.2 936.5 768.2
($ million) 150.3 113.5 110.0
Sales - platinum (oz) 757,958 707,379 658,664
- palladium (oz) 349,243 315,697 297,741
- rhodium (oz) 109,194 95,138 91,918
- total PGMs (oz) 1,415,112 1,307,495 1,244,853
Average price
received per ounce - platinum (R) 5,357 4,411 3,400
($) 501 544 504
- palladium (R) 3,759 5,404 3,645
($) 351 670 540
- rhodium (R) 9,123 13,813 11,475
($) 850 1,703 1,684
Basket price of PGMs and base
metals ($/kg) 13,662 18,652 N/C
Cash cost per refined ounce of PGM
sold (incl royalties) (R) 1,863 1,660 1,432
($) 176 205 212
Cash cost per refined ounce of PGM
sold (ex royalties) (R) 1,847 1,655 1,412
($) 174 205 209
Cash cost per refined -
ounce of underground (R) 1,776 N/C N/C
PGM produced ($) 168 N/C N/C
(ex royalties)
- opencast (R) 2,726 N/C N/C
($) 257 N/C N/C
- total (R) 1,780 1,594 1,416
($) 168 197 214
Average exchange
rates - Sterling (GBP/$) 0.68 0.69 0.64
- S A Rand (R/$) 10.70 8.00 6.60
Closing exchange - Sterling
rates (GBP/$) 0.64 0.69 0.69
- S A Rand (R/$) 10.54 8.77 7.23
Consolidated profit and loss account
For the year ended 30 September
2004 2003 2004 2004 2003
Conti- Conti- Discon- Total Total
nuing nuing tinued
oper- opera- opera-
ations tions tions
- excep-
tional
items
Note $m $m $m $m $m
Turnover 2 1,030 779 - 1,030 779
EBITDA (i) 2 357 344 (42) 315 344
Depreciation (53) (46) - (53) (46)
Group operating profit 304 298 (42) 262 298
Share of associate`s operating
loss (1) (1) - (1) (1)
Total operating profit 2 303 297 (42) 261 297
Profit on sale of fixed assets 4 - 24 112 112 24
Loss on sale or termination of
operations 4 - (2) - - (2)
Profit before net interest
payable and similar items 303 319 70 373 319
Net interest payable and
similar items 3 (13) (28) - (13) (28)
Profit before taxation 2 290 291 70 360 291
Taxation (ii) 5 (113) (183) - (113) (183)
Profit after taxation 177 108 70 247 108
Equity minority interest (52) (34) - (52) (34)
Profit for the year 125 74 70 195 74
Dividends 6 (102) (101) - (102) (101)
Retained profit/(loss) for the
year 23 (27) 70 93 (27)
Earnings per share 7 88.4c 52.5c 49.5c 137.9c 52.5c
Underlying earnings per share
(v) 7 96.9c 87.2c - 96.9c 87.2c
Diluted earnings per share 7 85.9c 52.3c 45.9c 131.8c 52.3c
Dividends per share 6 72.0c 72.0c - 72.0c 72.0c
Financial ratios
Tax rate (iii) 33% 35% - 33% 35%
Net debt to EBITDA 0.8 0.6 - 0.9 0.6
times times times times
Notes:
(i) EBITDA is Group operating profit before interest, tax, depreciation and
amortisation.
(ii) The taxation charge includes exchange losses of $20 million (September 2003
- $85 million) as disclosed in note 5.
(iii) The tax rate has been calculated excluding exceptional items and exchange
as disclosed in note 5.
(iv) Discontinued operations comprised a funding requirement on the buy-out of
the SUITS pension scheme and a profit on the disposal of AngloGold Ashanti as
disclosed in note 4.
(v) Underlying earnings per share are calculated on the profit for the year
excluding exceptional items and exchange adjustments on tax as disclosed in note
7.
Consolidated balance sheet
As at 30 September
2004 2003
Restated
$m $m
Fixed assets
Tangible assets 1,370 983
Investments: 133 289
Associate
Other investments
90 4
43 285
Total fixed assets 1,503 1,272
Current assets
Stocks 81 100
Debtors 124 159
Investments 5 3
Cash and short-term deposits 20 66
Total current assets 230 328
Creditors: amounts falling due within one year (217) (249)
Current loans and overdrafts (23) (46)
Other (194) (203)
Net current assets 13 79
Total assets less current liabilities 1,516 1,351
Creditors: amounts falling due after more than
one year (268) (215)
Convertible debt (212) (211)
Other loans (56) -
Other - (4)
Provisions for liabilities and charges (353) (277)
895 859
Capital and reserves
Called up share capital 142 141
Share premium account 6 1
Revaluation reserve 16 16
Capital redemption reserve 88 88
Profit and loss account 492 399
Equity shareholders` funds 744 645
Equity minority interest 151 214
895 859
Consolidated cash flow statement
For the year ended 30 September
Note 2004 2003
$m $m
Net cash inflow from operating activities 8 359 296
Returns on investment and servicing of finance
(46) (35)
Interest - received 8 2
- paid (13) (10)
Financing expenses (4) (4)
Dividends paid to minority (37) (23)
Taxation (67) (57)
Capital expenditure and financial investment 165 (136)
Acquisitions and disposals (390) 10
Equity dividends paid (102) (101)
Net cash outflow before financing (81) (23)
Financing 60 85
New long-term loans 56 -
Repayment of short-term loans (2) (1)
Repayment of long-term loans - (130)
Issue of convertible bonds - 216
Issue of ordinary share capital 6 -
(Decrease)/increase in cash in the year (21) 62
Statement of total consolidated recognised gains and losses
For the year ended 30 September
2004 2003
$m $m
- Profit/(loss) for the year - Group 196 75
- Associate (1) (1)
Total consolidated recognised gains relating to the
year 195 74
The cumulative effect on the statement of total recognised gains and losses of
UITF Abstract 17 (revised 2003) - Employee Share Schemes is $nil as a result of
writing back previously charged amortisation of $2 million and charging $2
million of amortisation under UITF 17 based on the intrinsic value of the
shares.
Consolidated historical cost profits and losses
For the year ended 30 September
2004 2003
$m $m
Reported profit before taxation 360 291
Disposal of fixed assets at valuation - 1
Difference between an historical cost depreciation
charge and the actual depreciation charge calculated
on the revalued amount 2 2
Historical cost profit before taxation 362 294
Historical cost retained profit/(loss) for the year 95 (25)
Reconciliation of movement in equity shareholders` funds
For the year ended 30 September
2004 2003
Restated
$m $m
Total consolidated recognised gains relating to the
year 195 74
Dividends (102) (101)
Retained profit/(loss) for the year 93 (27)
Shares purchased by ESOP (2) -
Amortisation of share-based payments 2 1
Shares issued on the exercise of share options 6 -
Net increase/(decrease) in equity shareholders` funds
in the year 99 (26)
Equity shareholders` funds at 1 October - restated for
ESOP accounting (note 1) 645 671
Equity shareholders` funds at 30 September 744 645
1. Basis of preparation
The year end 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 2003 with the exception of the
implementation of the provisions of Urgent Issues Task Force (UITF) Abstract 38
- Accounting for Employee
Share Ownership Plan (ESOP) Trusts and related amendments to UITF Abstract 17 -
Employee Share Schemes (revised).
2. Segmental analysis
By business origin:
2004
Total
opera- Net
ting operating
Turnover EBITDA profit PBE PBT assets
$m $m $m $m $m $m
Platinum 1,030 384 332 324 324 1,197
Exploration - (7) (8) (8) (8) 3
Other - (2) (2) (2) (2) -
Corporate - (18) (19) (24) (24) (4)
Continuing
operations 1,030 357 303 290 290 1,196
Discontinued
operations - (42) (42) (42) 70 -
Total 1,030 315 261 248 360 1,196
South Africa 1,030 387 335 327 327 1,195
Other - (12) (13) (13) (13) 5
Corporate - (18) (19) (24) (24) (4)
Continuing
operations 1,030 357 303 290 290 1,196
Discontinued
operations - (42) (42) (42) 70 -
Total 1,030 315 261 248 360 1,196
2003
Total
opera- Net
ting operating
Turnover EBITDA profit PBE PBT assets
$m $m $m $m $m $m
Platinum 775 367 321 296 320 827
Gold 4 1 1 1 (1) 277
Exploration - (10) (11) (11) (11) 4
Other - (1) (1) (1) (1) -
Corporate - (13) (13) (16) (16) 10
Continuing
operations 779 344 297 269 291 1,118
South Africa 775 367 321 296 320 825
Zimbabwe 4 1 1 1 (1) -
Ghana - - - - - 277
Other - (11) (12) (12) (12) 6
Corporate - (13) (13) (16) (16) 10
Continuing
operations 779 344 297 269 291 1,118
Net operating assets exclude loans receivable of $34 million at 30 September
2004 (2003 - $nil), net borrowings of $275 million at 30 September 2004 (2003 -
$197 million) and the dividend proposed of $60 million at 30 September 2004
(2003 - $59 million).
3. Net interest payable and similar items
2004 2003
$m $m
Interest payable:
On bank loans and overdrafts (18) (10)
Other loans - -
Finance leases - (1)
Discounting on provisions - (1)
(18) (12)
Capitalisation of interest - 1
Interest receivable on cash and deposits 4 2
Interest receivable on loans to Ashanti 4 -
Exchange differences on net borrowings (3) (19)
Net interest payable and similar items (13) (28)
4. Exceptional items
2004 2003
$m $m
Operating items:
- Funding requirement on the buy-out of the SUITS (42) -
pension fund
Profit on sale of fixed assets
- Sale of Brakspruit mineral rights - 24
- Sale of investment in AngloGold Ashanti 112 -
Sale or termination of operations:
- Loss on sale of gold mining interests - (2)
Exceptional items before taxation and minority
interest 70 22
Taxation 3 (3)
Minority interest (1) (6)
Net exceptional profit 72 13
Continuing operations 2 13
Discontinued operations 70 -
The exceptional tax credit in 2004 represents the closing US dollar value of
South African tax over-provided in 2003 on the disposal of the Brakspruit
mineral rights.
5. Taxation
2004 2003
$m $m
United Kingdom:
Corporation tax at 30% (2003- 30%) 17 30
Double tax relief (17) (30)
- -
Overseas:
Current taxation 60 69
Excluding tax on local currency exchange profits 54 49
Tax on local currency exchange profits (2) (1)
Tax on exceptional items - 3
Tax on dividends remitted 7 14
Exchange on current taxation 1 4
Deferred taxation 59 114
Origination and reversal of timing differences 39 32
Exchange on deferred taxation 20 82
Prior year items (6) -
Exceptional (4) -
Other (3) -
Exchange on prior year items 1 -
Tax charge 113 183
Tax charge excluding exceptional items and exchange
(continuing operations) 97 95
Effective tax rate excluding exceptional items and
exchange (continuing operations) 33% 35%
A reconciliation of the standard tax charge to the current tax charge is as
follows:
2004 2003
$m $m
Tax charge at standard tax rate 108 87
Overseas taxes on dividends remitted by subsidiary
companies 7 14
Non taxable chargeable gains (34) -
Other timing differences (20) (35)
Effect of exchange adjustments (1) 3
Current tax charge 60 69
The Group`s primary operations are based in South Africa. Therefore, the
relevant standard tax rate for the Group is the South African statutory tax rate
of 30% (2003 - 30%). The secondary tax rate on dividends remitted by South
African companies is 12.5% (2003 - 12.5%).
6. Dividends
2004 2003
$m $m
Interim 30.0c (2003 - 30.0c) per share 42 42
Final 42.0c (2003 - 42.0c) per share 60 59
Total dividends 72.0c (2003 - 72.0c) per share 102 101
Until 31 March 1999, advanced corporation tax (ACT) was paid on dividends at the
rate of 25% of the net dividend. Subject to certain restrictions, this was
recoverable by offsetting it against corporation tax liabilities. When this
offset was not available surplus ACT was generated.
At the year end, the Group had surplus ACT of $103 million (2003 - $103 million)
carried forward and available, subject to certain restrictions, for set-off
against future United Kingdom corporation tax liabilities. The notional `Shadow
ACT`, being the ACT which would have been payable if the system had not been
abolished and which must be set-off prior to utilisation of surplus ACT,
amounted to $167 million (2003 - $132 million).
7. Earnings per share
Earnings per share have been calculated on the profit for the year amounting to
$195 million (2003 - $74 million) using a weighted average number of 141,384,398
ordinary shares (2003 - 140,994,541 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 during the year as follows:
2004 2003
Profit Profit
for Per for Per
the share the share
year Number of amount year Number of amount
$m shares cents $m shares cents
Basic EPS 195 141,384,398 137.9 74 140,994,541 52.5
Share option 4
schemes - 68,002 (0.4) - 336,586 (0.2)
Convertible (
bonds 6 10,576,993 5.7) - 28,978 -
Diluted EPS 201 152,429,393 131.8 74 141,360,105 52.3
Underlying earnings per share are based on the profit for the year adjusted to
exclude exceptional items and exchange on tax balances as follows:
2004 2003
Profit Profit
for Per for Per
the share the share
year Number of amount year Number of amount
$m shares cents $m shares cents
Basic EPS 195 141,384,398 137.9 74 140,994,541 52.5
Exceptional
items before
taxation and
minority
interest (70) - (49.5) (22) - (15.6)
Taxation on
exceptional
items (4) - (2.8) 3 - 2.1
Exchange on
tax balances 20 - 14.1 85 - 60.3
Minority
interest (4) - (2.8) (17) - (12.1)
Underlying EPS 137 141,384,398 96.9 123 140,994,541 87.2
8. Net cash flow from operating activities
2004 2003
$m $m
Group operating profit from continuing operations 304 298
Depreciation charge 53 46
Decrease/(increase) in stock 19 (59)
Decrease/(increase) in debtors 26 (42)
(Decrease)/increase in creditors (6) 47
Increase in provisions - 5
Other 4 1
Net cash inflow from operating activities -
continuing operations 400 296
Net cash outflow from operating activities -
discontinued operations (41) -
Net cash inflow from operating activities 359 296
9. Additional stake in subsidiaries
On 30 September 2004, the Group acquired a further 9.11% in both Eastern
Platinum Limited (EPL) and Western Platinum Limited (WPL) taking its holding
from 73% to 82%. The acquisitions were accounted for using the acquisition
method of accounting.
The assets and liabilities of EPL and WPL and the fair values attributed were as
follows:
EPL/WPL
@ 9.11% EPL/WPL
Book value Adjustment Fair value
$m $m $m
Tangible fixed assets 103 235 338
Stocks 7 - 7
Debtors 10 - 10
Creditors (10) - (10)
Overdraft and loans (2) - (2)
Provisions (32) - (32)
76 235 311
The adjustment to fixed assets shown above represents an uplift to reflect the
fair value of mining rights acquired. The figures reflect a preliminary
allocation of the purchase consideration to the assets of EPL and WPL. This
will be reviewed further on 30 September 2005.
The fair value of the consideration given for the Group`s purchase of the
additional 9.11% in EPL/WPL amounted to $311 million which represented a cash
consideration of $283 million and expenses on the transaction of $28 million, of
which $17 million was paid in the year.
10. Exchange Rates
The principal US dollar exchange rates used are as follows:
2004 2003
Average exchange rates:
Sterling 0.56 0.62
SA rand 6.60 7.90
Zimbabwe dollar - 1,000.00
Closing exchange rates:
Sterling 0.55 0.60
SA rand 6.48 6.97
Zimbabwe dollar - 1,000.00
Note: The Zimbabwe dollar exchange rate for 2003 is applicable for the month of
October 2002 only up to the date of disposal of the gold mining interests.
11. Statutory Disclosure
The financial information set out above is taken from but does not constitute
the Company`s statutory accounts for the years ended 30 September 2004 and 2003.
Statutory accounts for 2003 have been delivered, and for 2004 will be delivered,
to the Registrar of Companies. The Auditors have made unqualified reports on
those accounts and such reports did not contain a statement under Section 237(2)
or (3) of the Companies Act 1985.
Copies of the 2004 Lonmin Accounts will be posted to shareholders and will be
available at the Company`s registered office in mid-December 2004.
12. Final Dividend Timetable
The Board of Lonmin Plc has recommended a final dividend for the year ended 30
September 2004 of 42.0 US cents per share.
The dividend timetable in respect of this dividend, assuming shareholder
approval at the AGM, is as follows :-
Last day to trade cum div
S Friday 14 January 2005
A
U Tuesday 18 January 2005
K
Shares commence trading ex div
S Monday 17 January 2005
A
U Wednesday 19 January 2005
K
Dividend record date
Friday 21 January 2005
Last day for receipt of new applications to participate in Dividend Re-
investment Plan
1700 hrs Monday, 31 January 2005
Dividend payment date
Monday 14 February 2005
The South African branch register will be closed for the purposes of
dematerialisation, rematerialisation and transfers to and from the UK register
from Monday 17 January 2005 to Friday 21 January 2005, both dates inclusive.
The dividend will be paid:-
1) In Sterling to shareholders domiciled in the UK (unless they elect to
receive US dollar dividends) calculated at the US dollar to sterling
exchange rate on Friday 28 January 2005, which rate will be announced
on that day
2) In Rand to shareholders on the SA branch register calculated at the
Rand to US dollar exchange rate on Friday 7 January 2005, which rate
will be announced on that day and
3) In dollars to all other overseas shareholders (unless they elect to
receive Sterling dividends or have mandated their dividends to a UK
bank or participate in TAPS.).
Elections to receive an alternative currency (dollars or sterling) should
comprise a signed request to Lloyds TSB Registrars to be received by 1700 hours
on Friday 21 January 2005.
13. Annual General Meeting
The 2005 Annual General Meeting will be held on 27 January 2005 at the Queen
Elizabeth II Conference Centre, Board Sanctuary, Westminster, London SW1P 3EE.
14. Availability of this report
This report is available on the Lonmin website (www.lonmin.com).
Date: 25/11/2004 09:01:18 AM
Produced by the JSE SENS Department
