| Wed 4 May 2005, 8:36 | | Lonmin plc - Interim Statement March 2005 |
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Lonmin plc - Interim Statement March 2005
Lonmin plc
(Reg no: 1969/000015/10)
Code: LON
ISIN: GB0031192486
(`Lonmin`)
4 May 2005
Production and Cost Recovery
* Earnings before interest and tax $152 million up 19 per cent (including
insurance recoveries and metallurgical recoveries)
* Underlying earnings per share 48.7 cents up 23 per cent
* Smelter returned to full operation and full year cost and production impact
minimised
* Platinum production of 366,781 ounces and total PGM production of 666,303
ounces
* Costs managed in line with previous guidance at R2,431 per PGM ounce sold
* Dividend maintained at 30 cents per share
* Southern Platinum acquisition expected to complete by 1 July 2005, providing:
* Long term growth potential from realisation of Messina resource base
* Substantial synergy benefits particularly through improved smelter
recoveries
* Earnings enhancing from 2007
Financial highlights -
continuing operations 2005 2004
Six months to 31 March
Turnover $421m $444m
EBITDA (i) $177m $155m
EBIT (ii) $152m $128m
Profit before taxation $142m $117m
Earnings per share 48.7c 26.2c
Underlying earnings per share 48.7c 39.7c
(iii)
Interim dividend per share (iv) 30.0c 30.0c
Net borrowings $473m $277m
Interest cover (v) 32.3x 21.4x
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 attributable profit
excluding exchange, the effects of a change in the South African tax rate on the
opening deferred tax balance and exceptional items (prior period only) as
disclosed in note 7.
(iv) The interim dividend will be paid on 5 August 2005 to shareholders on the
registers on 8 July 2005.
(v) Interest cover is calculated for the 12 month periods to 31 March 2005 and
31 March 2004.
Commenting on the results, Brad Mills, Chief Executive Officer said:
`I am pleased with the progress we have made, as shown by these results, in
overcoming the financial impact of the smelter accident. Our production and
costs are both improving, in order to manage our cost efficiencies, we have
decided to reduce the amount of higher cost open cast Merensky ore processed in
the second half. We therefore expect Platinum production for the year to 30
September 2005 to be between 905,000 and 925,000 ounces without any benefit from
Southern Platinum. Our full year cost guidance remains at R2,475 per PGM ounce
sold. Our longer term growth plans remain on track and are enhanced by our
Southern Platinum acquisition.`
Enquiries:
Alex Shorland-Ball, Lonmin Plc +44 (0) 20 7201 6060
Anthony Cardew/ Nadja Vetter, CardewGroup: +44 (0)20 7930 0777
This press release is available on www.lonmin.com. A live webcast of the
interim results` presentation starting at 09.30hrs (London) on 4 May 2005 can be
accessed through the Lonmin website. 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 Officer`s Comments
Introduction
The first six months of the 2005 financial year were challenging for Lonmin. We
experienced an accident at our smelting facility on 18 November 2004, which
resulted in the loss of nine weeks of metal production. Repairs have been
completed and the smelter came back on line on 20 January 2005.
The final cost of the smelter accident and repairs is $14 million (including the
costs of running the Pyromet furnaces and toll refining), of which $9 million
has been expensed in the first half. These costs were offset by insurance
settlements during the first half from prior outstanding claims of $22 million.
On 22 March 2005 we made a cash offer to acquire all of the outstanding shares
of Southern Platinum Corp. for $190 million. This transaction will add
substantially to our future Platinum growth potential and is expected to close
by 1 July 2005, subject to approval by Southern Platinum shareholders and the
South African Competition Commission.
Key Accomplishments
* Recovery from the smelter accident and minimising cost and production impacts
for the full year.
* Platinum production of 366,781 ounces. Total PGM production of 666,303 ounces.
Cost per PGM ounce sold of R2,431 achieved in the first half (excluding any
benefit of insurance settlements) in line with full year guidance of R2,475.
* Filing of our new order mining rights conversion application on 14 December
2004.
* Offer to acquire Southern Platinum on 22 March 2005.
* Sudbury PGM Exploration JV with Inco signed.
Financial Results
The key financial results for the period were:
* A 19% growth in EBIT to $152 million (including insurance recoveries and
metallurgical recoveries);
* A 23% increase in underlying earnings per share from 39.7 cents in 2004 to
48.7 cents in 2005, despite the smelter accident;
* A maintained interim dividend; and
* Cash outflow in the period on working capital which is expected to be reversed
in the second half.
Platinum Operations
Our safety performance improved significantly during the first half of the
fiscal 2005 year compared to last year. We suffered one industrial related
fatality and deeply regret that two children drowned in one of our unfenced mine
reclaim water ponds during the period. This result compares to eight industrial
fatalities for the whole of last year. We remain deeply committed to our goal
of `Zero Harm` in our mining operations in South Africa. We currently have a
major programme underway to reduce all lost time injuries in our operations.
Mining operations produced 5,427,000 tonnes milled (5,405,000 tonnes mined) from
underground operations and 1,480,000 tonnes milled (1,244,000 tonnes mined) from
open cast operations. These raw ore tonnes were converted to 66,852 tonnes of
concentrate (62,248 tonnes of concentrate despatched) containing 22,810 kgm of
PGMs. This was in line with budget expectations. Metallurgical operations
produced 366,781 ounces of Platinum and 666,303 ounces of total PGMs.
We have made significant progress with our mechanisation and automation projects
during the period. Our fully mechanised ULP (Ultra Low Profile) Merensky mining
site has successfully achieved its target of 12,000 tonnes per month per set of
equipment at a total mining cost of less than R230 per tonne. We are now
committed to rolling out this mining method with an additional two sets of
equipment at the Karee mine, which will ramp up to 37,000 tonnes per month
Merensky ore production by year-end and ultimately to 70,000 tonnes per month by
mid-2006 at an expected cost of less than R190 per tonne, as compared to current
average traditional mining method costs of around R200 per tonne. Plans are
also in an advanced stage to expand this mining method into the UG2 reef at
Karee mine and other potential sites across the property.
Our capital growth programme to increase production to 1.1 million ounces of
Platinum by 2010 (without any benefit from Southern Platinum) remains on
schedule and on budget (in Rand terms). The $72 million Hossy shaft complex is
the most advanced of the three major capital projects being undertaken.
Expenditure is 64% complete and we continue to expect full production during
2008. The Hossy Vertical is complete with the Sub Incline at 20% completion.
Costs
The metallurgical recovery rates assumed in the Base Metal Refinery and Precious
Metal Refinery have been conservatively estimated in the past and as a result of
actual outturns we have now increased the ongoing achievable recoveries.
The reported unit costs of R2,431 per PGM ounce sold include the effects of $9
million of smelter incident costs, $3 million redundancy costs and an $11
million benefit arising from the spreading of a $29 million improvement in
metallurgical recoveries over the overall anticipated sales for the year. No
benefit has been taken in these unit costs for the insurance proceeds of $22
million.
Due to the cost profile of the open cast operations, we have elected to
accelerate the switch in production sources from lower grade, higher cost open
cast ounces to higher grade, lower cost underground ounces. This transition
will help ensure that we meet our long-term production ramp up profile while
helping keep costs in check.
In the second half we will lower the proportion of open cast Merensky ore
processed. As a result of this we now estimate that overall production for the
year will be between 905,000 and 925,000 ounces of Platinum and our cost
guidance for the year remains unchanged at R2,475 per PGM ounce sold.
Our Six Sigma programme has identified significant saving opportunities and we
expect to capture R70 million of net EBIT benefits in the second half of the
year.
We are currently working on the introduction of a central shared services
function. This will replace duplicated technical and administrative
infrastructure at our mines and shafts and is anticipated to result in further
cost savings.
Working Capital
Due to the smelter accident in November we experienced a cash outflow on working
capital in the period as stocks built up ahead of the smelter. We expect this
outflow to be reversed in the second half.
Exploration
Our exploration group completed a joint venture agreement with Inco Limited
during the period to explore for PGM deposits adjacent to some of their
historically important nickel properties in the geologically prolific Sudbury
Basin.
Black Economic Empowerment
We made good progress on all fronts of our BEE effort in the first half,
submitting our new order mining licence conversion application in December 2004.
We currently hope to receive approval of this application before the end of
2005.
Our BEE partner, Incwala, has performed well during the period and has provided
valuable support and guidance for our mining licence application and BEE
programme.
Markets
PGM prices have been well supported in the period under review both by sound
underlying auto catalyst demand and industrial demand for the full suite of
commodities. The supply outlook has been restrained by the current low Rand
basket value of metals.
Southern Platinum
We have made a $190 million offer for Southern Platinum, a Canadian listed group
with platinum mining operations at Messina in South Africa. Southern Platinum
has PGM resources of 20 million ounces, over a strike length of 23 kilometres,
and will boost Lonmin`s current resource base by 17%. Messina currently
produces around 45,000 ounces of Platinum a year from a strike length of just 4
kilometres. Our initial plan is to increase Platinum production to 75,000
ounces by 2007. Exciting potential exists to exploit the larger untapped
resource on the remaining strike length of the property. We will start
developing plans for the realisation of this once the acquisition closes.
In addition to its growth potential, Messina also offers considerable synergy
benefits. Smelting the base metal rich Messina ore with our existing high
chrome ores is expected to improve overall smelter recoveries by around 2%.
Although the Messina operations are currently operating at a loss, we believe
that a successful mine turnaround, plus anticipated smelter benefits, will
enhance earnings from 2007 onwards.
Outlook and Dividend
We expect our markets to remain strong during the second half of our fiscal
year.
We are making significant progress in our discussions with the Unions on a new
long-term labour agreement, which is intended to allow us to achieve longer-term
operational stability. As a result we will be able to increase our focus on
safety, growth and cost management.
Our acquisition of Southern Platinum, when completed, together with the organic
growth at our existing operations, will enable us to target 1.1 million ounces
of Platinum production by 2008. Growth beyond 2008 will be supported by organic
growth from our core Lonplats operations and Messina.
The Board has maintained the interim dividend at 30.0 cents per share.
A number of important appointments have been made in the last six months. Karen
de Segundo (formerly of Shell) has joined our Board in a non-executive position.
Alistair Ross (formerly of Inco) has accepted the role of President, Platinum
Operations in South Africa. Alex Shorland-Ball (formerly of Finsbury Group) has
joined us in the role of Vice-President Investor Relations and Communications
and Khumo Seopela (formerly of De Beers) has joined us as Vice-President Human
Capital in South Africa. I would like to welcome all of them to Lonmin.
Lonmin is in the process of transforming itself into a world class mining
company benchmarking itself against the `best of breed` on measures such as
safety performance, operational efficiency, capital returns and human
productivity. This process is never easy and I would like to thank all of
Lonmin`s employees, contractors and community members who are supporting this
effort. I would especially like to thank all of the employees and contractors
at the smelter. Your professionalism in managing the impact of the smelter
accident and minimising the damage and financial costs of this incident is most
appreciated.
Bradford A Mills
Chief Executive Officer
Commentary on the Group Financial Review
The financial information presented has been prepared on the same basis and
using the same accounting policies as those used to prepare the financial
statements for the year ended 30 September 2004.
Analysis of results
Profit and loss account
A comparison of the interim 2005 EBIT from continuing operations with the prior
period is set out below:
$m
EBIT - six months to 31 March 2004 128
Increase in sales prices 42
Decrease in sales volumes (22)
Insurance receipts 22
Smelting incident costs (9)
Incwala 4
Exchange (21)
Improved recoveries 29
Other cost increases (21)
EBIT - six months to 31 March 2005 152
Prices, costs and exchange
The average price realised for the basket of metals sold at $18,889/kg was 15%
higher than the prior period. Sales volumes of PGMs decreased from 793,526
ounces to 671,591 ounces due to the smelter incident in November 2004 and
turnover amounted to $421 million for the six months to 31 March 2005. Unit
costs in rand at R2,431 per PGM ounce sold were only 3.5% higher than the prior
period. The improved recoveries reflected an improvement in underlying
metallurgical recoveries which led to an increase in the 2004 year-end stock
valuation. The strength of the South African rand against the US dollar impacted
on costs in dollar terms with the average exchange rate appreciating 9% on the
prior period. The investment in Platinum Australia was sold on 31 March 2005
for book value with no material profit impact. The resulting EBIT, which
included $4 million for our 23.56% share of Incwala`s operating profits,
amounted to $152 million.
Profit before taxation for the 2005 interim period amounted to $142 million
compared with $117 million for the 2004 interim period.
Interest
Net interest payable and similar items were $10 million compared with $11
million in 2004. Borrowing levels were higher during the 2005 interim period
resulting in higher interest payable but this was offset by lower amortisation
charges on bank loan facilities and lower exchange losses due to the majority of
borrowings being held in US dollars.
Tax
The 2005 interim tax charge was $57 million compared with $65 million in the
prior period and included $11 million of exchange losses (March 2004 - $30
million). The corporate tax rate in South Africa was reduced to 29% during the
period and was applicable to taxable results from 1 October 2004. The change in
tax rate resulted in an adjustment to the opening deferred tax balance at 1
October 2004 to reduce it by $11 million. The effective tax rate, excluding the
effects of exchange, the adjustment to the opening deferred tax balance and
exceptional items (prior period only) was 40% compared with 33% during the last
interim period due to the significantly higher incidence of STC in 2005 than the
same period in 2004.
Net profit
Profit for the 2005 interim period rose to $69 million from $37 million in the
prior period and included minority deductions at 18% of the platinum operations
results after tax compared with 27% in the prior period. Basic earnings per
share were 48.7 cents for the six months to 31 March 2005 compared with 26.2
cents in the prior period. Underlying earnings per share, being earnings
excluding exchange on tax balances, the adjustment to the opening deferred tax
balance as a result of a change in the South African corporate tax rate and
exceptional items (prior period only) amounted to 48.7 cents (March 2004 - 39.7
cents), an increase of 23%.
On 30 September 2004 the Group increased its effective holding in its underlying
platinum assets from 73% to 82% at a cost of $311 million. In addition it
invested $90 million in 23.56% of Incwala Resources and advanced $34 million of
loans to HDSA and seed capital investors in Incwala Resources.
The effects of these acquisitions in the first half of 2005 have been to improve
reported earnings per share by 3 cents.
Balance sheet
Equity interests were $771 million at 31 March 2005 compared with $744 million
at 30 September 2004 mainly reflecting the profit of $69 million earned during
the period offset by the 2005 interim dividend declared of $43 million.
Stock levels were $177 million at the March 2005 balance sheet date compared
with $81 million at the September 2004 balance sheet date due to stock build-up
following the smelter incident in November 2004.
Net borrowings amounted to $473 million at 31 March 2005 and gearing was 36%
compared with 27% at 30 September 2004 and 31 March 2004, calculated on net
borrowings attributable to the Group divided by these attributable net
borrowings and the equity interests outstanding at the relevant balance sheet
dates.
Cash flow
The following table summarises the main components of the cash flow during the
period:
March March
2005 2004
$m $m
Operating profit - Group 148 129
Working capital (132) (3)
Other items (mainly depreciation) 27 35
Net cash inflow from operating activities 43 161
Interest and finance costs (8) (9)
Tax (57) (49)
Trading cash flow (22) 103
Capital expenditure (87) (85)
Associate dividend received 2 -
Minority dividends paid (21) (34)
Free cash flow (128) (16)
Acquisitions (10) (6)
Shares issued - 4
Equity dividends paid (59) (59)
Cash outflow (197) (77)
Opening net borrowings (275) (197)
Exchange (1) (3)
Closing net borrowings (473) (277)
Trading cash flow per share (15.5)c 72.9c
Free cash flow per share (90.4)c (11.3)c
Net cash inflow from operating activities was $43 million during the six months
to 31 March 2005 and included an outflow on working capital of $132 million due
to stock build-up and settlement of 2004 year-end creditors. After interest and
finance costs paid of $8 million and tax payments of $57 million, trading cash
flow amounted to an outflow of $22 million against an inflow of $103 million in
the prior period. Trading cash flow per share amounted to (15.5) cents for the
2005 interim period compared with 72.9 cents in the 2004 interim period.
Capital expenditure of $87 million was similar to the prior period in dollar
terms but reduced in rand terms by 10%. Associate and minority dividends in 2005
represented dividends received and paid to Incwala and free cash flow amounted
to an outflow of $128 million. Free cash flow per share was (90.4) cents (March
2004 - (11.3) cents). Acquisitions represented expenses incurred on the Incwala
and Eastern and Western Platinum transactions that completed on 30 September
2004. After accounting for equity dividends paid of $59 million, the cash
outflow was $197 million and net borrowings amounted to $473 million at 31 March
2005.
It is expected that the significant cash outflow on working capital will reverse
in the second half of the financial year as the smelter processes the backlog of
concentrate built up during the first six months.
Dividend
The Board has declared an interim dividend of 30.0 cents per share (March 2004 -
30.0 cents per share). This represents a cover of 1.6 times on earnings (March
2004 - 0.9 times). On an underlying earnings basis, this represents a cover of
1.6 times compared with 1.3 times in 2004.
International financial reporting standards (IFRS)
All European listed companies are required to prepare their consolidated
financial statements in accordance with IFRS for accounting periods beginning on
or after 1 January 2005. Consequently, the Group will be implementing IFRS from
1 October 2005.
The first financial information to be reported by the Group in accordance with
IFRS will be for the six months ending 31 March 2006 but the requirement to
present comparative information means that a balance sheet as at 30 September
2004 and primary statements for the six months to 31 March 2005 and the year to
30 September 2005, prepared in accordance with IFRS, will also be required. The
Group will continue to report its consolidated financial statements in
accordance with UK GAAP for the year to 30 September 2005.
The Group has undertaken a preliminary assessment of the impact of IFRS on its
accounting policies and published financial statements and a detailed impact
study is continuing.
Based on the work carried out to date, the following areas could impact on the
Group`s financial statements:
Post retirement benefits
Under UK GAAP, the Group accounts for defined benefit pension schemes in
accordance with SSAP 24 - Accounting for pension costs. Surpluses or deficits
are spread on a straight-line basis over the expected average remaining service
lives of employees in the scheme. Under IAS 19 - Employee benefits (amended
December 2004), there are three alternative ways in which surpluses or deficits
can be recognised. It is likely that the Group will choose to recognise
surpluses or deficits directly in shareholders` funds through the statement of
recognised income and expense. This treatment is similar to FRS 17 - Retirement
benefits. The Group currently reports the effects of FRS 17 in the notes to the
annual financial statements.
Share-based payments
Under UK GAAP, the cost of share options is based on the intrinsic value of the
award, being the difference between the exercise price and the grant price.
Hence, options granted to employees at market price or under Inland Revenue
approved SAYE schemes do not generate an expense. Under IFRS 2 - Share-based
payments, the economic cost of all share-based payments granted since 7 November
2002 is to be recognised by reference to the fair value on the grant date using
options pricing models and charged to the income statement over the expected
vesting period.
Proposed dividends
Under UK GAAP, proposed dividends are accrued for as an adjusting post balance
sheet event in the period to which they relate in accordance with SSAP 17 -
Accounting for post balance sheet events. Under IAS 10 - Events after the
balance sheet date, dividends that do not represent a present obligation at the
reporting date are not accrued for in the balance sheet. Instead, they are
recognised in the accounting period in which they are declared.
Financial instruments
The IFRS requirements for financial instruments are included in IAS 32 -
Financial instruments: disclosure and presentation and IAS 39 - Financial
instruments: recognition and measurement. Financial assets and liabilities are
measured at fair value or amortised cost and foreign currency borrowings and
derivative contracts are designated as hedges of specific assets, liabilities,
income and/or expenses. The convertible bonds contain an embedded derivative in
the form of a conversion right, which the Company can settle in cash. The debt
and embedded derivative elements are separated and the amount relating to the
embedded derivative is subject to fair value accounting under IFRS. This may
introduce some material volatility to reported earnings but will have no impact
on cashflow.
The above summary is not intended to be a complete list of areas. Further
differences may arise as a result of the Group`s continued detailed assessment
and interpretations of IFRS and any further pronouncements issued by the
International Accounting Standards Board (`IASB`).
John Robinson
Chief Financial Officer
Platinum Operating Statistics
March March
2005 2004
Mining
Tonnes milled - underground (000) 5,427 5,646
(excluding slag)
- opencast (000) 1,480 1,582
- total (000) 6,907 7,228
Tonnes mined - underground (000) 5,405 5,617
- opencast (000) 1,244 1,158
- total (000) 6,649 6,775
Metallurgy
Noble metals in matte (kg) 22,810 26,161
Refined production of - platinum (oz) 366,78 402,877
1 1
- palladium (oz) 157,05 176,245
8
- rhodium (oz) 35,253 46,660
- total PGMs (oz) 666,30 729,474
3
Sales1
- platinum (oz) 365,65 412,533
3
- palladium (oz) 152,72 181,682
5
- rhodium (oz) 39,330 59,039
- total PGMs (oz) 671,59 793,526
1
Prices
Average price - platinum (R) 5,000 5,358
received per ounce
($) 842 811
- palladium (R) 1,170 1,485
($) 196 227
- rhodium (R) 7,855 3,488
($) 1,320 531
Basket price of PGMs and base metals ($/kg) 18,889 16,387
Costs
Cash cost per refined ounce of PGM sold (R) 2,433 2,366
(incl royalties)
($) 409 343
Cash cost per refined ounce of PGM sold (R) 2,431 2,348
(excl royalties)
($) 409 340
Cash cost per refined - underground (R) 2,421 2,555
ounce of
PGM produced ($) 409 392
(excl royalties)
- opencast (R) 2,612 1,934
($) 441 297
- total (R) 2,452 2,423
($) 415 372
Capital Expenditure (R 510 567
million
s)
($ 87 85
million
s)
Exchange rates
Average exchange - Sterling (GBP/$) 0.53 0.56
rates
- S A Rand (R/$) 5.94 6.51
Closing exchange - Sterling (GBP/$) 0.53 0.55
rates
- S A Rand (R/$) 6.22 6.31
Consolidated profit and loss account
6 months to 6 months to
31 March 31 March
2005 2004
$m $m
Turnover 421 444
EBITDA (ii) 177 155
Depreciation (29) (26)
Operating profit/(loss) Group 148 129
Associates 4 (1)
Total operating profit 152 128
Net interest payable Group (9) (11)
and similar items Associate (1) -
Profit before taxation 142 117
Taxation (iii) (57) (65)
Profit after taxation 85 52
Equity minority (16) (15)
interest
Profit for the period 69 37
Interim dividend (43) (42)
Retained profit/(loss) 26 (5)
for the period
Earnings per share 48.7c 26.2c
Underlying earnings per 48.7c 39.7c
share (iv)
Diluted earnings per 48.5c 25.6c
share
Interim dividend per 30.0c 30.0c
share
Financial ratios
Tax rate (v) 40% 33%
Net debt to EBITDA (vi) 1.2 times 0.8 times
Interest cover (vii) 32.3 times 21.4 times
Notes:
(i) The results for both periods relate to continuing operations.
(ii) EBITDA is Group operating profit before interest, tax, depreciation and
amortisation.
(iii) The taxation charge includes exchange losses of $11 million (March 2004 -
$30 million) as disclosed in note 5.
(iv) Underlying earnings per share are calculated on profit for the period
excluding exchange, the effect of a change in the South African tax rate on the
opening deferred tax balance and exceptional items (prior period only) as
disclosed in note 7.
(v) The tax rate has been calculated excluding exchange, the effect of a change
in the South African tax rate on the opening deferred tax balance and
exceptional items (prior period only) as disclosed in note 5.
(vi) EBITDAs used in this calculation are for the 12 month periods to 31 March
2005 and 31 March 2004.
(vii) Interest cover is calculated for the 12 month periods to 31 March 2005 and
31 March 2004.
Consolidated balance sheet
As at As at As at
31 March 30 31 March
2005 September 2004
$m 2004 $m
$m
Fixed assets
Tangible assets 1,430 1,370 1,042
Investments: 132 133 288
Associates
Other investments
91 90 3
41 43 285
Total fixed assets 1,562 1,503 1,330
Current assets
Stocks 177 81 128
Debtors 128 124 132
Investments 5 5 3
Cash and short-term deposits 10 20 68
Total current assets 320 230 331
Creditors: amounts falling due (324) (217) (281)
within one year
Current loans and overdrafts (209) (23) (129)
Other (115) (194) (152)
Net current (liabilities)/assets (4) 13 50
Total assets less current liabilities 1,558 1,516 1,380
Creditors: amounts falling due (272) (268) (212)
after more than one year
Convertible debt (213) (212) (212)
Other loans (58) (56) -
Other (1) - -
Provisions for liabilities and (369) (353) (326)
charges
917 895 842
Capital and reserves
Called up share capital 142 142 141
Reserves 629 602 503
Equity shareholders` funds 771 744 644
Equity minority interest 146 151 198
917 895 842
Net borrowings 473 275 277
Note: Statutory Disclosure
The balance sheet at 30 September 2004 is taken from, but does not constitute,
the Company`s statutory accounts for the year ended 30 September 2004. Accounts
for that year have been delivered to the Registrar of Companies. The Auditors
made an unqualified report thereon and such report did not contain a statement
under Section 237(2) or (3) of the Companies Act 1985.
Consolidated cash flow statement
6 months 6 months
to to
31 March 31 March
2005 2004
$m $m
Net cash inflow from operating 43 161
activities
2 -
Dividend received from associate
(29) (43)
Returns on investment and servicing of
finance
Net interest paid (8) (6)
Finance expenses - (3)
Dividends paid to minority (21) (34)
Taxation (57) (49)
Capital expenditure and financial (87) (85)
investment
(10) (6)
Acquisitions and disposals
(59) (59)
Equity dividends paid
Net cash outflow before financing (197) (81)
Financing 1 3
Short-term loans (1) (1)
Long-term loans 2 -
Issue of share capital - 4
Decrease in cash in the period (196) (78)
Reconciliation of Group operating profit to net
cash inflow from operating activities:
Operating profit - Group 148 129
Depreciation charge 29 26
Increase in working capital (132) (3)
Other items (2) 9
Net cash inflow from operating activities 43 161
Note: The cash flows for both periods relate to continuing operations.
Statement of total consolidated recognised gains and losses
6 months 6 months
to to
31 March 31 March
2005 2004
$m $m
Profit/(loss) for the period - Group 66 38
- Associate 3 (1)
Total consolidated recognised gains and losses 69 37
relating to the period
Reconciliation of movement in equity shareholders` funds
6 months 6 months
to to
31 March 31 March
2005 2004
$m $m
Total consolidated recognised gains and losses 69 37
relating to the period (43) (42)
Interim dividend
Retained profit/(loss) for the period 26 (5)
Amortisation of share-based payments 1 -
Shares issued on the exercise of share options - 4
Net increase/(decrease) in equity shareholders` 27 (1)
funds in the period 744 645
Equity shareholders` funds at 1 October
Equity shareholders` funds at 31 March 771 644
1. 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 2004.
2. Segmental analysis
By business origin:
6 months to 31 March 2005
Total Profit Net
operatin before operatin
Turnove EBITDA g tax g
r $m profit $m assets
$m $m $m
Platinum 421 191 166 161 1,392
Exploration - (3) (3) (3) -
Other - 1 1 1 -
Corporate - (12) (12) (17) 6
421 177 152 142 1,398
South Africa 421 183 158 153 1,389
Other - 6 6 6 3
Corporate - (12) (12) (17) 6
421 177 152 142 1,398
6 months to 31 March 2004
Total Profit Net
operatin before operatin
Turnove EBITDA g tax g
r $m profit $m assets
$m $m $m
Platinum 444 166 141 134 869
Gold - - - - 277
Exploration - (2) (3) (3) 3
Other - (1) (1) (1) -
Corporate - (8) (9) (13) 12
444 155 128 117 1,161
South Africa 444 158 133 126 866
Ghana - - - - 277
Other - 5 4 4 6
Corporate - (8) (9) (13) 12
444 155 128 117 1,161
A reconciliation of net operating assets to net assets per the balance sheet is
as follows:
As at As at
31 March 31 March
2005 2004
$m $m
Net operating assets per above 1,398 1,161
Loans receivable 35 -
Net borrowings (473) (277)
Interim dividend proposed (43) (42)
Net assets per balance sheet 917 842
3. Net interest and similar items
6 months 6 months
to to
31 March 31 March
2005 2004
$m $m
Net financing - Group 8 8
costs payable - Associate 1 -
Exchange differences on net borrowings 1 3
Net interest payable and similar items 10 11
4. Exceptional items
6 months 6 months
to to
31 March 31 March
2005 2004
$m $m
Sale of Brakspruit mineral rights:
Taxation - 4
Minority interest - (1)
Net exceptional profit - 3
The exceptional tax credit in the 6 months to 31 March 2004 represented the
closing US dollar value of South African tax over-provided in 2003 on the
disposal of the Brakspruit mineral rights.
5. Taxation
6 months 6 months
to to
31 March 31 March
2005 2004
$m $m
United Kingdom:
Corporation tax at 30% (March 2004 - 30%) 42 12
Double tax relief (42) (12)
- -
Overseas:
Current taxation 43 25
Excluding tax on local currency exchange profits at 31 18
29% (March 2004 - 30%) (1) -
Tax on local currency exchange profits 14 5
Tax on dividends remitted (1) 2
Exchange on current taxation
Deferred taxation 14 47
Origination and reversal of timing differences 12 19
Change in South African corporate tax rate to 29% (11) -
(March 2004 - 30%) 13 28
Exchange on deferred taxation
Prior year items - (7)
Exceptional - (4)
Other - (3)
Tax charge 57 65
Tax charge excluding exceptional items, tax rate 57 39
adjustment and exchange
Effective tax rate excluding exceptional items, tax 40% 33%
rate adjustment and exchange
6. Dividend
An interim dividend of 30.0 cents per share (30.0 cents per share for the six
months to 31 March 2004) will be paid on
5 August 2005 to shareholders on the registers at the close of business on 8
July 2005.
7. Earnings per share
The calculation of earnings per share is based on a weighted average number of
141,625,478 ordinary shares in issue for the six months to 31 March 2005
(141,242,151 ordinary shares in issue for the six months to 31 March 2004).
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 period as follows:
6 months to 31 March 2005 6 months to 31 March
2004
Profit Number Per Profit Number Per
for of share for of share
the shares amount the shares amount
period cents period cents
$m $m
Basic EPS 69 141,625, 48.7 37 141,242, 26.2
Share option - 478 (0.1) - 151 (0.1)
schemes 5 249,745 (0.1) 2 618,316 (0.5)
Convertible bonds 10,576,9 10,576,9
93 93
Diluted EPS 74 152,452, 48.5 39 152,437, 25.6
216 460
Underlying earnings per share are based on the profit for the period adjusted to
exclude exchange, the effect of a change in the South African tax rate on the
opening deferred tax balance and exceptional items (prior period only) as
follows:
6 months to 31 March 2005 6 months to 31 March
2004
Profit Number Per Profit Number Per
for of share for of share
the shares amount the shares amount
period cents period cents
$m $m
Basic EPS 69 141,625, 48.7 37 141,242, 26.2
Taxation on - 478 - (4) 151 (2.8)
exceptional items - -
Tax rate change - (11) (7.8) - -
effect on opening 11 - 7.8 30 - 21.3
deferred tax balance - - - (7) - (5.0)
Exchange on tax - -
balances
Minority interest
Underlying EPS 69 141,625, 48.7 56 141,242, 39.7
478 151
Analysis of net borrowings
As at As at
1 October Exchange 31 March
2004 Cash flow movements 2005
$m $m $m $m
Cash 20 (10) - 10
Overdrafts (22) (186) (1) (209)
(2) 196) (1) (199)
Convertible bonds (216) - - (216)
Loans due after one year (56) (2) - (58)
Loans due within one
Year (1) 1 - -
Net borrowings (275) (197) (1) (473)
_______________________________
Note: 1. These statistics exclude sales of slag.
Date: 04/05/2005 08:16:29 AM
Produced by the JSE SENS Department
