16th Nov 2005 07:00
Lonmin PLC16 November 2005 16 NOVEMBER 2005 Lonmin Plc Final Results Growth and Operational Excellence • EBIT from continuing operations up 16.5% to US$353 million• Underlying earnings per share from continuing operations excluding acquisitions up 29% to 124.9 cents per share• Total production of 916,420 ounces of Platinum and 1,704,249 ounces of PGMs• Six Sigma programme delivers R206 million of net benefit• Limpopo integration progresses well - achieves positive EBITDA in September• Dividend maintained at 72.0 cents per share (Final 42.0 cents per share) +--------------------------------------------------------+----------+----------+|Financial highlights - Continuing Operations | 2005 | 2004 |+--------------------------------------------------------+----------+----------+|Year to 30 September | | |+--------------------------------------------------------+----------+----------+|Turnover | $1,128m | $1,030m |+--------------------------------------------------------+----------+----------+|EBITDA (i) | $416m | $357m |+--------------------------------------------------------+----------+----------+|EBIT (ii) | $353m | $303m |+--------------------------------------------------------+----------+----------+|Profit before taxation | $323m | $290m |+--------------------------------------------------------+----------+----------+|Earnings per share | 115.0c | 87.0c |+--------------------------------------------------------+----------+----------+|Underlying earnings per share (iii) | 116.4c | 96.9c |+--------------------------------------------------------+----------+----------+|Underlying earnings per share excluding acqusitions | 124.9c | 96.9c |+--------------------------------------------------------+----------+----------+|Dividend per share (iv) | 72.0c | 72.0c |+--------------------------------------------------------+----------+----------+|Trading cash flow per share | 191.2c | 229.2c |+--------------------------------------------------------+----------+----------+|Free cash flow per share | 39.5c | 70.7c |+--------------------------------------------------------+----------+----------+|Equity shareholders' funds | $812m | $744m |+--------------------------------------------------------+----------+----------+|Net borrowings | $588m | $275m |+--------------------------------------------------------+----------+----------+|Interest cover (v) | 13.9x | 30.4x |+--------------------------------------------------------+----------+----------+|Gearing (vi) | 41% | 27% |+--------------------------------------------------------+----------+----------+ 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 exchange, the effects of a change in the South African tax rate on the opening deferred tax balance, reorganisation costs and exceptional items as disclosed in note 7.(iv) The Board recommends a final dividend of 42.0 cents per share payable on 8 February 2006 to shareholders on the register on 13 January 2006.(v) Interest cover is calculated as Group operating profit excluding exceptional items divided by net interest excluding exchange.(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. Commenting on the results, Brad Mills, Lonmin's Chief Executive said: "This year has seen us recover fully from last November's Smelter accident andour furnace is now performing at record levels of throughput. With theacquisition of Southern Platinum, we now have the resource base to deliveraround 1 million ounces of Platinum production in our 2006 financial year. We are creating a Lonmin culture that is committed to safety and operationalexcellence which fully reflects the demographics of South Africa. Our Six Sigmaprogramme has had a very successful year delivering net benefits well ahead ofour target. We will continue to focus on cost containment in 2006 with theexpansion of our Six Sigma programme, the introduction of Shared BusinessServices, our New Era Labour Agreement and the continued de-bottlenecking of ouroperations. We expect to make considerable progress with the mechanisation ofour operations in 2006 with around 8% of our ore delivery coming from fullymechanised stoping panels by year end." Enquiries:Alex Shorland-Ball, Lonmin Plc +44 (0) 20 7201 6060Anthony Cardew/Rupert Pittman, CardewGroup: +44 (0)20 7930 0777 This press release is available on www.lonmin.com. A live webcast of the finalresults' presentation starting at 09.30hrs (London) on 16 November 2005 can beaccessed through the Lonmin website. There will also be a web question facilityavailable during the presentation. An archived version of the presentation,together with the presentation slides, will be available on the Lonmin website. Chief Executive's Comments Introduction This financial year we have made significant progress with our Smelter and havefully recovered from the explosion last November. After the accident we havemade significant improvements in the way we run the furnace. The Smelter is nowperforming well reaching a new record throughput level in Q4 2005. Thisperformance has allowed us to process more metal than ever before through ourSmelter, Base Metal Refinery and Precious Metal Refinery and to deliver fullyear Platinum production of 916,420 ounces. Our growth profile has been strengthened by the acquisition of Lonmin PlatinumLimpopo which allows us to increase our Platinum production to around 1 millionounces in financial year 2006. We are committed to delivering this growth while transforming the culture ofLonmin to one of operational excellence. We have made considerable progress thisyear in executing on our key cost initiatives with our Six Sigma programmedelivering net benefits of R206 million ahead of our target of R70 million. Safety We continued to improve our safety performance at our Marikana operations duringthe year with the elimination of all work related fatal accidents on surface andnow need to improve further our performance underground. We suffered a total ofsix industrial fatalities during the year and the deeply regrettable drowning oftwo children in a mine water reclaim pond prior to it being fenced. Our LostTime Injury Frequency Rate continued to improve with a 13% reduction versus the2004 financial year to 18.1 per million man hours worked. Historically, the Limpopo operations had a very poor safety record due both topoor operating discipline and the mining method being used. Since taking controlof the mine, we have made great progress in reforming the operating practiceswhich has materially reduced the number of LTIs and the severity of theincidents. As a company we are totally committed to achieving Zero Harm across ouroperations and we continue to introduce further safety initiatives to ingrainthe concept of safe production as an integral part of every aspect of the livesof our employees and contractors. Each shift now has a 15 minute safety break todiscuss safety procedures and risks and we have continued to roll out DuPontVisible Felt Leadership training to all staff with a target of 100% penetrationby the end of the 2006 financial year. Production Our Marikana mining operations produced 11,101,656 tonnes ore milled fromunderground operations and 2,444,581 tonnes ore milled from opencast operations.We have continued to reduce production from our opencast operations to ensurethat our mills are processing the maximum amount possible of high grade, lowercost underground ore. Looking forward we expect to see this trend continuing andare forecasting the phase out of our current UG2 opencast operations at Marikanaduring 2006. Following last November's smelter accident we worked diligently utilising theadvice of both external consultants and our in house Six Sigma team tounderstand and determine the optimal way to operate our No. 1 furnace. This workhas resulted in several changes in the way we run the furnace and the Smelter isnow recording record levels of monthly throughput. We achieved an all timerecord production in September of 21,114 tonnes smelted through our No.1furnace. Total throughput for the financial year was 195,755 tonnes. The strong performance of the Smelter enabled us to process a record amount ofour PGM ounces through our Smelter, Base Metal Refinery and Precious MetalRefinery giving us overall production of 916,420 ounces of Platinum and1,704,249 ounces of PGMs. The smelter accident last November led to a loss of nine weeks' metal productionin the first half of the year. Although we have made substantial progress inprocessing the additional inventory that arose as a result of Smelter shutdownwe finished the year with a higher than normal cash outflow of working capitalof US$43 million. We expect this working capital outflow to reverse itself inthe 2006 financial year. Costs In the past, we have reported our costs as a single number of costs in Rand perPGM ounce sold. This highly aggregated number has not always given a very clearpicture of our overall cost performance. After review, we have changed the waywe will report costs in the future to give a clearer cost picture and alloweasier analysis and comparison of our performance. We will report cost of metalproduction from continuing operations net of base metal credits and providereconciliation of this cost number to our EBIT result. For the 2005 financialyear our cost of metal production from our Marikana operations net of base metalcredits was R2,243 per PGM ounce versus a like for like cost of R2,186 per PGMounce in financial year 2004. This cost figure is not directly comparable withthe figures for costs per PGM ounce sold which we have historically reported. Six Sigma Our Six Sigma programme performed extremely well during the year and realisednet benefits of R206 million, well ahead of our target of R70 million for thelast six months. We are targeting an additional benefit from Six Sigma of R300million for the 2006 financial year. Shared Business Services Considerable progress has been made with the implementation of a Shared BusinessServices model and the design of the new structure is substantially complete. Weexpect to fully implement this programme by the end of March 2006 and weanticipate substantial annualised cost savings from Shared Business Services ofaround R140 million. As we indicated at the time of the interim results thecosts of this reorganisation impact this year's results and we have recorded areorganisation cost for this of US$7 million. Mechanisation and Automation We made substantial progress with the implementation of our mechanisationstrategy during the second half of the year. We have taken delivery of oursecond set of ULP (Ultra Low Profile) equipment at 1B shaft at our Karee mine. Athird set of equipment will arrive early in 2006, allowing production to ramp upto a rate of 38,000 tonnes per month. The mining costs at our mechanised siteare now at similar levels to those for our conventional mining at around R200per tonne and we expect these to continue to trend lower as we increaseproduction. We have committed to a further two sets of equipment during the 2006financial year which will allow us to reach around 8% mechanised production bythe end of the period with a target of 20% mechanisation by the end of 2007. On 13 October 2005 we signed a partnership agreement with Sandvik Mining &Construction to cement our relationship in delivering on Lonmin's commitment tomechanisation. A key part of this agreement is Sandvik's commitment to work withLonmin to develop jobs in the Rustenburg/Marikana area through developingSandvik's service capability and local manufacturing in the Marikana area. New Era Labour Agreement On 21 June 2005, we signed a ground breaking New Era Labour Agreement for aperiod of five years from 1 October 2005. This agreement is the first of itskind in the South African mining industry and limits basic wage increases foreach of the five years to a CPIX increase. In years one and two only we haveagreed to an additional basic wage increase over CPIX of 2%. The agreement,which is fully supported by the three unions at Marikana, introduces the conceptof gain sharing to our workforce where they will receive bonuses linked toimprovements they make in safety, costs and productivity. This agreement givesus transparency and certainty of wage costs which make up around 50% of ourcurrent overall cost base until 2010. This agreement gives us an important toolto allow us to manage our costs going forwards. Lonmin Platinum Limpopo The integration of Limpopo continues to progress extremely well and there-engineering and mechanisation of the mine is ahead of target. The minecontributed 11,524 ounces of Platinum and 25,741 ounces of PGMs in the periodsince 15 June 2005 when we took control. In September Limpopo achieved positiveEBITDA of US$0.1 million in line with our integration plan. Cost per saleablePGM ounce in concentrate for Limpopo over the period were R4,102. We have identified a new opportunity to access a portion of the ore body on theproperty through opencast mining and we are currently conducting a feasibilitystudy on development of an opencast mine at Limpopo. We currently believe thisproject could begin production in 2006 and give us an additional around 20,000Platinum ounces per annum over the next two years in addition to our currentunderground plans of around 50,000 to 60,000 ounces of Platinum in financialyear 2006 and around 75,000 ounces in financial year 2007. We have revised ourinitial capital expenditure profile for the current Limpopo operation which weinitially estimated to be US$75 million over three years to US$63 million overthe same period. When we acquired Limpopo we also acquired the offtake contract in relation tothe mine which as part of the terms of the buyout we have agreed will expire in2006. During Q4 to satisfy the remaining term of the contract we have begun tosubstitute concentrate from our Marikana operations for the Limpopo concentrate. Black Economic Empowerment We have continued during the year to develop our Social and Labour Plan and makeprogress towards gaining our New Order Mining Licence. We are pleased with thedevelopment of our Black Economic Empowerment partner, Incwala whose asset valuehas continued to grow during the year benefiting all shareholders includingourselves. We have extended an invitation to Incwala to participate in LonminPlatinum Limpopo and discussions on this are ongoing. Growth Profile The addition of the significant resource at Limpopo and continuing evaluation ofthe potential of our Marikana operations has allowed us to increase our Platinumproduction guidance to around 1 million ounces in 2006 increasing to around 1.3million ounces in 2010. In addition to this strong growth profile, future potential additional upside isprovided by our Pandora JV and the opencast opportunity at Limpopo. In line withour stated strategy to identify and capture quality Platinum resources wecontinue to develop our portfolio of exploration projects and will continue toevaluate other acquisition targets. This revised production profile and our commitment to mechanisation of newdevelopment where ever possible has resulted in some calendarisation changes inour capital expenditure profile over the next few years with a slightlyincreased capital spend in 2006 and 2007 before the spend declines more rapidly.For the 2006 financial year we are currently forecasting capital expenditure ofaround US$200 million inclusive of both our Marikana and Limpopo operations. Ourcapital expenditure for this year was $190 million which included $12 million ofspend on our ERP project and $3 million of capital spend at Limpopo. Markets The Platinum market has continued to be robust during the year with strongdemand for autocatalysts and from other industrial uses. Supply has remainedconstrained given the continued strength of the Rand limiting development of newsources of Platinum production in South Africa. We expect these dynamics tocontinue to drive the market in 2006 and we continue to be very positive aboutthe outlook for Platinum and Rhodium. We expect both these metals to experiencecontinued strong growth in demand over the next few years. Outlook We now have the resources in place to accelerate production growth to around 1million ounces in 2006. As a company we remain committed to managing our costsand have put in place robust initiatives to achieve this outcome. We currentlyexpect our C1 cost of metal produced net of Base Metal by product credits in2006 for our Marikana operations to be between R2,300 and 2,400 per PGM ounce.Our C1 cost guidance for our Limpopo mine for 2006 is R2,900 per saleable PGMounce in concentrate. The Board has recommended a final dividend of 42 cents per share giving adividend for the year of 72 cents per share. At Lonmin we are on a journey to transform ourselves into a modern and efficientworld class mining company utilising the best available operating practices andcapitalising on the diversity of our South African workforce. This year we havemade substantial progress but also experienced some challenges. I would like tothank all the Lonmin employees, contractors and community members for yourimmense contribution to the transformation of Lonmin. Your hard work, dedicationand professionalism during the course of the last year has been greatlyappreciated. Bradford A MillsChief Executive Financial Review Introduction The financial information presented has been prepared on the same basis andusing the same accounting policies as those used to prepare the financialstatements for the year ended 30 September 2004. Analysis of results Profit and loss account A comparison of the 2005 total operating profit with the prior year is set outbelow: $m--------------------------------------------------------------------------------Total operating profit for the year ended 30 September 2004 261Increase in sales prices 140Decrease in sales volumes (14)Insurance receipts 22Smelting incident costs (13)Improved recoveries 29Stock measurement (22)Exchange (34)Depreciation and amortisation (16)Reorganisation costs (7)Share of Incwala 6Acquisitions (8)Other cost increases (33)Prior year funding requirement on SUITS pensions buy-out 42--------------------------------------------------------------------------------Total operating profit for the year ended 30 September 2005 353-------------------------------------------------------------------------------- The average price realised for the basket of metals sold at 19,979 $/kg was 17%higher than the prior year. Sales volumes of PGMs decreased from 1,761,171ounces to 1,692,517 ounces and turnover amounted to $1,128 million. The C1 costper PGM ounce sold net of by-product credits on own production from the Marikanaoperations amounted to R2,243 for 2005 compared with R2,186 for 2004, anincrease of 2.6%. Further details of unit costs analysis can be found in theoperating statistics table. The improved recoveries detailed above reflected animprovement in underlying metallurgical recoveries which led to an increase inthe 2004 year-end closing stock valuation. During the second half of the year,the method of measuring stockpiles and concentrate was refined to value thesebased on metal content rather than tonnage. This had the effect of reducing the2005 year-end closing stock by $22 million. The strength of the South Africanrand against the US dollar continued to impact on costs in dollar terms with theaverage exchange rate appreciating some 5% on the prior year. The investment inPlatinum Australia was sold on 31 March 2005 for book value with no materialprofit impact. The resulting total operating profit which included $6 millionfor our 23.56% share of Incwala's operating profit, amounted to $353 million(2004 - $261 million). The total operating profit from continuing operationsexcluding acquisitions amounted to $363 million, an increase of 20% on the prioryear. Net interest payable and similar items in 2005 were $30 million compared with$13 million in 2004. Borrowing levels were higher during the year following theacquisition of Southern Platinum Corporation resulting in higher interestpayable. This was offset by lower exchange losses due to the majority ofborrowings being held in US dollars and lower levels of amortisation of expenseson bank facilities. Profit before tax amounted to $323 million in 2005 compared with $360 million in2004. Included in 2004 were exceptional profits totalling $70 million relatingto the sale of AngloGold Ashanti ($112 million) and the SUITS pension buy-out($42 million). The 2005 tax charge was $118 million compared with $113 million in 2004 andincluded $2 million of exchange losses (2004 - $20 million). The corporate taxrate in South Africa was reduced to 29% during the year and was applicable totaxable results from 1 October 2004. The change in tax rate resulted in anadjustment to the opening deferred tax balance at 1 October 2004 to reduce it by$11 million as disclosed in note 5. The effective tax rate, excluding theeffects of exchange, the adjustment to the opening deferred tax balance andexceptional items was 39% compared with 33% last year mainly due to higherdividends declared during the year and the resulting secondary tax chargethereon. Profit for the year amounted to $163 million (2004 - $195 million) and earningsper share were 115.0 cents compared with 137.9 cents in 2004. Underlyingearnings per share, being earnings excluding exchange on tax balances, theadjustment to the opening deferred tax balance as a result of the South Africancorporate tax rate change, reorganisation costs and exceptional items amountedto 116.4 cents (2004 - 96.9 cents). Underlying earnings per share fromcontinuing operations excluding acquisitions were 124.9 cents, an increase of29% on the 2004 amount of 96.9 cents. On 30 September 2004, the Group increased its effective holding in itsunderlying platinum assets from 73% to 82% at a cost of $313 million. Inaddition, 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 effect of these acquisitions on the 2005 year-end results has been toimprove reported earnings by 4 cents per share. Balance sheetEquity interests were $812 million at 30 September 2005 compared with $744million at 30 September 2004 mainly reflecting the profit for the year of $163million offset by dividends declared of $42 million and $60 million for theinterim and final dividends respectively. The Southern Platinum Corporation was acquired on 15 June 2005, with acompulsory acquisition of the remaining shares on 28 July 2005. The acquisitionwas made for a total purchase price of $192 million, including expenses of $5million, with $55 million of net debt acquired. The excess of the purchase priceover the book value of the assets acquired has been shown within fixed assets asmineral rights of $46 million and an uplift to the underlying values of otherfixed assets of $36 million. An underlying minority interest of 8.5% remains atthe operational level in Messina Platinum. An amount of $15 million has alsobeen capitalised within intangible fixed assets. This represented the amount theCompany paid to Impala Platinum Holdings Limited to acquire the Messinaconcentrate off-take contract. This is being amortised over 20 years. The fair value assessment on the 9.11% acquisition of Eastern Platinum Limitedand Western Platinum Limited on 30 September 2004 was finalised during the year.This resulted in an allocation of $40 million to goodwill which is beingamortised over 20 years. Net borrowings amounted to $588 million at 30 September 2005 with the maincomponents being the convertible bonds of $216 million and bank loans of $382million. Gearing was 41% compared with 27% at 30 September 2004, calculated onnet borrowings attributable to the Group divided by those attributable netborrowings and the equity interests outstanding at the balance sheet date. Cash flow The following table summarises the main components of the cash flow during theyear: -------------------------------------------------------------------------------- 2005 2005 2005 2004 Continuing Acquisitions Total Total-------------------------------------------------------------------------------- $m $m $m $m--------------------------------------------------------------------------------Net cash inflow from operatingactivities 385 (8) 377 400Interest and finance costs (16) (11) (27) (9)Tax (79) - (79) (67)--------------------------------------------------------------------------------Trading cash flow 290 (19) 271 324Capital expenditure - purchases (188) (2) (190) (187)Associate dividends received 2 - 2 -Minority dividends (27) - (27) (37)--------------------------------------------------------------------------------Free cash flow 77 (21) 56 100Acquisitions* (10) (207) (217) (390)Disposals - - - (41)Financial investments 1 - 1 352Shares issued 6 - 6 6Equity dividends paid (102) - (102) (102)--------------------------------------------------------------------------------Cash outflow (28) (228) (256) (75)Opening net borrowings (275) - (275) (197)Exchange (1) (1) (2) (3)Net borrowings in subsidiariesacquired - (55) (55) ---------------------------------------------------------------------------------Closing net borrowings (304) (284) (588) (275)-------------------------------------------------------------------------------- Trading cash flow per share 204.6c (13.4)c 191.2c 229.2c--------------------------------------------------------------------------------Free cash flow per share 54.3c (14.8)c 39.5c 70.7c--------------------------------------------------------------------------------* includes $15 million on intangible fixed asset acquired Net cash inflow from operating activities was $377 million during 2005, a 6%decrease on last year's figure of $400 million. Included was an outflow onworking capital of $43 million compared with an inflow of $39 million last yeardue to stock build-up and higher year-end debtors. After interest and financecosts of $27 million and tax payments of $79 million, trading cash flow amountedto $271 million in 2005 against $324 million in 2004, with trading cash flow pershare of 191.2 cents in 2005 against 229.2 cents in 2004. Capital expenditure of $190 million was incurred during the year, an increase onthe prior year in dollar terms, but a 4% reduction in rand terms. Associate andminority dividends received and paid in 2005 represented dividends from and toIncwala. Free cash flow amounted to $56 million with free cash flow per share at39.5 cents (2004 - 70.7 cents). Acquisitions of $217 million in 2005 representedthe purchase of Southern Platinum for $192 million (including expenses of $5million), $15 million for the purchase of the concentrate off-take agreement(shown as intangible fixed asset) and costs relating to the 2004 purchase of afurther 9.11% of Eastern Platinum Limited and Western Platinum Limited.Financial investments included proceeds of $3 million arising from the sale ofPlatinum Australia in March 2004. After accounting for shares issued on theexercise of share options of $6 million and equity dividends paid of $102million, the cash outflow was $256 million during 2005 and net borrowingsamounted to $588 million at 30 September 2005. Dividends The Board recommends a final dividend of 42.0 cents (2004 - 42.0 cents) makingtotal dividends for the year of 72.0 cents (2004 - 72.0 cents). This representsa cover of 1.6 times on earnings (2004 - 1.2 times). On an underlying earningsbasis, this represents a cover of 1.6 times compared with 1.3 times in 2004. Financial risk management The Group's functional currency remains the US dollar and the share capital ofthe Company is based in US dollars. The Group's business is mining and it does not undertake trading activity infinancial instruments. Interest rate risk Monetary assets and liabilities are subject to the risk of movements in interestrates. The borrowings at 30 September 2005 represented $216 million of long-termborrowings in the form of US dollar 3.75% convertible bonds due 2008, drawingsunder long-term bank loans of $205 million and $42 million and $1 million ofoverdrafts in the UK. In South Africa, a short-term bank loan of $85 million anda long-term bank loan of $49 million were drawn together with an outstandingfinance lease obligation of $1 million. Cash deposits represented balances of $9million in the UK and $2 million in South Africa. A two-year floating rate interest swap was entered into during October 2003 inrespect of the convertible bonds with interest calculated on a six-month LIBORin arrears basis. This expired on 30 September 2005 and no further contractswere entered into. The resulting interest charged on the bonds during 2005 was$10 million (2004 - $6 million), equivalent to an interest rate of 4.7% (2004 -2.5%). This compared to interest of $8 million which would have been charged onthe bonds at the fixed rate of 3.75% had the swap not been entered into. Allother borrowings tend to be drawn under floating interest rates. Liquidity risk Liquidity risk measures the risk that the Group may not be able to meet itsliabilities as they fall due and, therefore, its ability to continue trading.The Group's policy on overall liquidity is to ensure that there are sufficientcommitted facilities in place which, when combined with available cashresources, are sufficient to meet the funding requirements in the forseeablefuture. At the 2005 year end, the Group had $1,518 million of committedfacilities in place, of which $597 million were drawn down. A long-term bankloan of $205 million was included in the amounts drawn down. Although thisfacility specifies an expiry date of 28 January 2006 the Company has the optionto extend the maturity of any amount drawn down for up to a further four years. Foreign currency risk Foreign currency risk arises when movements in exchange rates, particularly theUS dollar against the South African rand, affect the transactions the Groupenters into, reported profits and net assets. Most of the Group's operations arebased in South Africa and the majority of the revenue stream is in US dollars.Most of the cash held in South Africa is in US dollars and is normally remittedto the UK on a regular basis. Short-term working capital facilities required inSouth Africa are drawn primarily in US dollars. Fluctuations in the Rand to US dollar exchange rate can have a significantimpact on the Group's results. A strengthening of the Rand against the US dollarhas an adverse effect on profits due to the majority of costs being denominatedin Rand. The approximate effect on the Group's results of a 10% movement in theRand to US dollar 2005 year average exchange rate would be as follows: +-------------------------------------------+-------------+--------------------+|EBIT |+/- |$40 m |+-------------------------------------------+-------------+--------------------+|Profit for the year |+/- |$23 m |+-------------------------------------------+-------------+--------------------+|EPS |+/- |16.5 c |+-------------------------------------------+-------------+--------------------+ These sensitivities are based on 2005 prices, costs and volumes and assume allother variables remain constant. They are estimated calculations only. Commodity price risk Commodities trade on worldwide commodities markets and are subject to pricefluctuations. Therefore, the prices obtained are dependent upon the prevailingmarket prices. Any change in prices will have a direct effect on the Group'strading results. Forward sales are undertaken where the Board determines that itis in the Group's interest to secure a proportion of future cash flows. No suchforward sales were undertaken during the year. The approximate effects on the Group's results of a 10% movement in the 2005year average market prices for platinum, palladium and rhodium would be asfollows: +--------------------------+--------------------+--------------+---------------+| |Pt |Pd |Rh |+--------------------------+--------+-----------+------+-------+------+--------+|EBIT |+/- |$78 m |+/- |$7 m |+/- |$19 m |+--------------------------+--------+-----------+------+-------+------+--------+|Profit for the year |+/- |$45 m |+/- |$4 m |+/- |$11 m |+--------------------------+--------+-----------+------+-------+------+--------+|EPS |+/- |32.0 c |+/- |3.0 c |+/- |7.9 c |+--------------------------+--------+-----------+------+-------+------+--------+ The above sensitivities are based on 2005 volumes and assume all other variablesremain constant. They are estimated calculations only. International financial reporting standards (IFRS) Lonmin Plc currently presents its financial information in accordance with UKGenerally Accepted Accounting Principles (UK GAAP). Following a European UnionRegulation issued in 2002, the group will be reporting its results in accordancewith International Financial Reporting Standards (IFRS) as adopted by theEuropean Union from 1 October 2005. Accordingly, the first financial informationto be reported by the Group in accordance with IFRS will be for the six monthsending 31 March 2006. The requirement to present comparative information meansthat a balance sheet as at 30 September 2004 and primary statements for the sixmonths to 31 March 2005 and the year to 30 September 2005, prepared inaccordance with IFRS, will also be required. The Group intends to present the effects of adopting IFRS on its 2005 interim UKGAAP figures which were announced on 4 May 2005 and the 2005 annual UK GAAPfigures now presented in this report during the early part of the 2006 calendaryear. The main differences identified to date between UK GAAP and IFRS which willaffect the Group's UK GAAP financial statements are: Post retirement benefitsUnder UK GAAP, the Group accounts for defined benefit pension schemes inaccordance with SSAP 24 - Accounting for pension costs. Surpluses or deficitsare spread on a straight-line basis over the expected average remaining servicelives of employees in the scheme. Under IAS 19 - Employee benefits (amendedDecember 2004), there are several ways in which surpluses or deficits can berecognised. This will depend on whether the revised IAS 19 will be adopted bythe European Union. The Group may choose to recognise surpluses or deficitsdirectly in shareholders' funds through the Statement of recognised income andexpense. This treatment is similar to FRS 17 - Retirement benefits. Share-based paymentsUnder UK GAAP, the cost of share options is based on the intrinsic value of theaward, being the difference between the exercise price and the grant price.Hence, options granted to employees at market price or under Inland Revenueapproved SAYE schemes do not generate an expense. Under IFRS 2 - Share-basedpayments, the economic cost of all share-based payments granted since 7 November2002 is to be recognised by reference to the fair value on the grant date usingoptions pricing models and charged to the income statement over the expectedvesting period. Proposed dividendsUnder UK GAAP, proposed dividends are accrued for as an adjusting post balancesheet event in the period to which they relate in accordance with SSAP 17 -Accounting for post balance sheet events. Under IAS 10 - Events after thebalance sheet date, dividends that do not represent a present obligation at thereporting date are not accrued for in the balance sheet. Instead, they arerecognised in the accounting period in which they are declared. Financial instrumentsThe IFRS requirements for financial instruments are included in IAS 32 -Financial instruments: disclosure and presentation and IAS 39 - Financialinstruments: recognition and measurement. Financial assets and liabilities aremeasured at fair value or amortised cost and foreign currency borrowings andderivative contracts are designated, where applicable, as hedges of specificassets, liabilities, income and/or expenses. The convertible bonds contain anembedded derivative in the form of a conversion right, which the Company cansettle in cash. The debt and embedded derivative elements are separated and theamount relating to the embedded derivative is subject to fair value accountingunder IFRS. This may introduce some material volatility to reported earnings butwill have no impact on cash flow. Investments in associatesUnder UK GAAP, the Group's share of an associate's operating profit, interestand tax are shown within the separate profit and loss account headings. UnderIAS 28 - Investments in Associates, the Group's share of an associate's profitafter tax is presented as a single item within the profit and loss account. GoodwillUnder UK GAAP, goodwill is required to be amortised. Under IFRS 3 - BusinessCombinations, amortisation of goodwill is no longer required and instead, annualimpairment reviews must be performed. Due to the finite life of mining assets,impairment charges relating to goodwill are expected to arise in futurereporting periods. The Group has elected to take advantage of the exemptionallowed in IFRS 1 - First-time Adoption of International Financial ReportingStandards not to recalculate goodwill for business combinations occurring priorto the transition date of 1 October 2005. Therefore, the goodwill which arose onthe purchase of a further 9.11% of Eastern Platinum Limited and Western PlatinumLimited on 30 September 2004 remains at its UK GAAP disclosed amount.Amortisation charged on this goodwill during 2005 will be reversed under IFRSand will be subject to an impairment test. Presentation of financial statementsThere are a number of reclassifications on the balance sheet to separately showcurrent and non-current assets and liabilities in accordance with IAS 1 -Presentation of Financial Statements. It should be noted that the above summary is not intended to be a complete listof areas affected by the introduction of IFRS. Further differences may arise asa result of the Group's continued detailed assessment and interpretations ofIFRS and any further pronouncements issued by the International AccountingStandards Board ("IASB"). John RobinsonChief Financial Officer15 November 2005 Platinum Operating Statistics - Five Year Review Sept Sept Sept Sept Sept 2005 2004 2003 2002 2001------------------------------------------------------------------------------------------------------------Tons milled (1) Marikana - underground (000) 11,102 11,121 11,418 11,260 10,520 Limpopo - underground (000) 214 - - - - Marikana - opencast (000) 2,444 3,283 2,790 - - - total (000) 13,760 14,404 14,208 11,260 10,520Tons mined Marikana - underground (000) 11,047 11,070 11,450 12,346 10,111 Limpopo - underground (000) 212 - - - - Marikana - opencast (000) 2,653 2,730 2,880 - - - total (000) 13,912 13,800 14,330 12,346 10,111UG2 to Merensky Ratio (%) 74.3 82.4 81.6 78.3 77.1Noble metals in matte Marikana (kg) 53,290 55,031 54,295 46,557 44,163Noble metals in Limpopo (kg) 801 - - - -concentrateYield into matte (g/t) 3.81 3.82 3.83 4.13 4.20Production (1) Marikana refined - platinum (oz) 830,911 833,822 932,867 757,451 716,697 - palladium (oz) 360,753 358,705 417,418 350,792 323,725 - rhodium (oz) 93,445 90,012 140,514 113,549 101,881 - total PGMs (oz) 1,510,553 1491,760 1,757,757 1,467,525 1,357,301 Marikana concentrate (2) - platinum (oz) 73,985 82,935 - - - - palladium (oz) 38,345 38,341 - - - - rhodium (oz) 24,491 23,082 - - - - total PGMs (oz) 167,955 184,808 - - - Limpopo concentrate (2) - platinum (oz) 11,524 - - - - - palladium (oz) 9,043 - - - - - rhodium (oz) 1,320 - - - - - total PGMs (oz) 25,741 - - - - Lonmin Platinum - platinum (oz) 916,420 916,757 853,867 757,451 716,697 - palladium (oz) 408,141 397,046 381,018 350,792 323,725 - rhodium (oz) 119,256 113,094 130,114 113,549 101,881 - total PGMs (oz) 1,704,249 1,676,568 1,631,957 1,467,525 1,357,301 Capital expenditure (R million) 1,180.0 1,230.1 1,293.6 1,558.2 936.5 ($ million) 190.3 186.8 161.5 150.3 113.5Sales (1) Lonmin Platinum - platinum (oz) 912,844 941,146 903,077 757,958 707,379 - palladium (oz) 402,425 405,329 405,073 349,243 315,697 - rhodium (oz) 117,944 126,723 131,752 109,194 95,138 - total PGMs (oz) 1,692,517 1,761,171 1,728,387 1,415,112 1,307,495 Average price received - platinum (R) 5,366 5,356 5,053 5,357 4,411per ounce ($) 856 816 645 501 544 - palladium (R) 1,184 1,485 1,698 3,759 5,404 ($) 189 227 212 351 670 - rhodium (R) 10,494 4,876 4,201 9,123 13,813 ($) 1,661 745 529 850 1,703Basket price of PGMs and base ($/kg) 19,979 17,072 14,618 13,662 18,652metals Platinum Operating Statistics - Five Year Review Cash Costs - Underground (R) 1,838 1,698 N/C N/C N/C - Opencast (R) 2,149 1,686 N/C N/C N/C --------------------- - Mining - weighted average cost (R) 1,889 1,696 N/C N/C N/C - Smelting & refining (R) 261 242 N/C N/C N/C - Shared business Services (R) 347 316 N/C N/C N/C - Movement in physical stock (R) (11) 165 N/C N/C N/C ---------------------Cost per PGM ounce sold before By Products (R) 2,486 2,419 N/C N/C N/C Credits - Base metal credits (R) (243) (233) N/C N/C N/CC1 - Cost per PGM ounce sold net of By Product --------------------- Credits - Marikana (R) 2,243 2,186 N/C N/C N/C - Improved recoveries (R) (118) (29) N/C N/C N/C - Smelter Repair (R) 47 - N/C N/C N/C - Accounting change for stock valuation (R) 91 - N/C N/C N/COther EBIT items:- Amortisation (R) 253 232 N/C N/C N/C - Insurance proceeds (R) (83) - N/C N/C N/C - Restructuring (R) 23 - N/C N/C N/C - Other off mine exploration /donations (R) 12 26 N/C N/C N/C ---------------------C2 - Costs per PGM ounce sold own - Marikana (R) 2,468 2,415 N/C N/C N/C production ---------------------Cash cost per saleable PGM ounce in concentrate - Limpopo (R) 4,102 - - - - ($) 632 - - - -Cash cost per refined ounce of PGM sold (incl (R) N/C N/C 1,974 1,863 1,660 royalties) ($) N/C N/C 251 176 205Cash cost per refined ounce of PGM sold (ex (R) N/C N/C 1,969 1,847 1,655 royalties) ($) N/C N/C 250 174 205Cash cost per refined ounce of - underground (R) N/C N/C 2,022 1,776 N/C PGM produced (ex royalties) ($) N/C N/C 257 168 N/C - opencast (R) N/C N/C 1,801 2,726 N/C ($) N/C N/C 229 257 N/C - total (R) N/C N/C 1,966 1,780 1,594 ($) N/C N/C 254 168 197Average exchange rates - Sterling (£/$) 0.54 0.56 0.62 0.68 0.69 - S A Rand (R/$) 6.28 6.60 7.90 10.70 8.00Closing exchange rates - Sterling (£/$) 0.57 0.55 0.60 0.64 0.69 - S A Rand (R/$) 6.36 6.48 6.97 10.54 8.77------------------------------------------------------------------------------------------------------------Notes:(1) Excluding slag.(2) Produced for sale as concentrate or toll refined. Consolidated profit and loss accountFor the year ended 30 September 2004 Before 2004 2005 exceptional Exceptional 2004 Total items items Total----------------------------------------------------------------------------------------------- Note $m $m $m $m-----------------------------------------------------------------------------------------------Turnover 2 1,128 1,030 - 1,030 - continuing operations 1,122 1,030 - 1,030 - acquisitions (iv) 6 - - ------------------------------------------------------------------------------------------------EBITDA (i) 2 416 357 (42) 315 - continuing operations 424 357 - 357 - acquisitions (8) - - - - discontinued operations - - (42) (42)Depreciation and amortisation (69) (53) - (53)-----------------------------------------------------------------------------------------------Group operating profit/(loss) 347 304 (42) 262 - continuing operations 357 304 - 304 - acquisitions (10) - - - - discontinued operations - - (42) (42)Share of associates' operating 6 (1) - (1)profit/(loss)-----------------------------------------------------------------------------------------------Total operating profit/(loss) 2 353 303 (42) 261Profit on sale of fixed assets 4 - - 112 112-----------------------------------------------------------------------------------------------Profit before net interest payable 353 303 70 373and similar items Net interest payable and similaritems - Group 3 (27) (13) - (13) - Associates 3 (3) - - ------------------------------------------------------------------------------------------------Profit before taxation 2 323 290 70 360Taxation (ii) 5 (118) (116) 3 (113)-----------------------------------------------------------------------------------------------Profit after taxation 205 174 73 247Equity minority interest (42) (51) (1) (52)-----------------------------------------------------------------------------------------------Profit for the year 163 123 72 195 - continuing operations 180 123 2 125 - acquisitions (17) - - - - discontinued operations - - 70 70Dividends 6 (102) (102) - (102)-----------------------------------------------------------------------------------------------Retained profit for the year 61 21 72 93----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Underlying earnings - total 7 116.4c 96.9c - 96.9cper share (v) - continuing 124.9c 96.9c - 96.9c operations - acquisitions (8.5)c - - ------------------------------------------------------------------------------------------------Earnings per share - total 7 115.0c 87.0c 50.9c 137.9c - continuing 127.0c 87.0c 1.4c 88.4c operations - acquisitions (12.0)c - - - - discontinued - - 49.5c 49.5c operations-----------------------------------------------------------------------------------------------Diluted earnings per share 7 113.4c 85.9c 45.9c 131.8c-----------------------------------------------------------------------------------------------Dividends per share 6 72.0c 72.0c - 72.0c-----------------------------------------------------------------------------------------------Financial ratios-----------------------------------------------------------------------------------------------Tax rate (iii) 39% 33% - 33%-----------------------------------------------------------------------------------------------Net debt to EBITDA 1.4 times 0.8 times - 0.9 times----------------------------------------------------------------------------------------------- Notes:(i) EBITDA is Group operating profit before interest, tax, depreciation and amortisation.(ii) The taxation charge includes exchange losses of $2 million (September 2004 - $20 million) as disclosed in note 5.(iii)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 as disclosed in note 5.(iv) Acquisitions represented Southern Platinum Corporation.(v) Underlying earnings per share are calculated on profit for the year excluding exchange, the effect of a change in the South African tax rate on the opening deferred tax balance, reorganisation costs and exceptional items as disclosed in note 7. Consolidated balance sheetAs at 30 September 2005 2004 $m $m-------------------------------------------------------------------------------Fixed assets Intangible assets 53 -Tangible assets 1,719 1,370Investments: 132 133Associate 91 90Other investments 41 43 -------------------------------------------------------------------------------Total fixed assets 1,904 1,503-------------------------------------------------------------------------------Current assets Stocks 110 81Debtors 152 124 Investments 7 5Cash and short-term deposits 11 20-------------------------------------------------------------------------------Total current assets 280 230Creditors: amounts falling due within one year (308) (217)Current loans and overdrafts (86) (23)Other (222) (194)-------------------------------------------------------------------------------Net current (liabilities)/assets (28) 13-------------------------------------------------------------------------------Total assets less current liabilities 1,876 1,516-------------------------------------------------------------------------------Creditors: amounts falling due after more than one year (510) (268)Convertible debt (213) (212)Other loans (296) (56)Other (1) -Provisions for liabilities and charges (388) (353)------------------------------------------------------------------------------- 978 895-------------------------------------------------------------------------------Capital and reserves Called up share capital 142 142 Share premium account 12 6Revaluation reserve 16 16Capital redemption reserve 88 88Profit and loss account 554 492-------------------------------------------------------------------------------Equity shareholders' funds 812 744Equity minority interests 166 151------------------------------------------------------------------------------- 978 895------------------------------------------------------------------------------- Consolidated cash flow statementFor the year ended 30 September 2005 2004 $m $m-------------------------------------------------------------------------------Net cash inflow from operating activities 377 359 Dividend received from associate 2 - Returns on investment and servicing of finance (54) (46)Interest - received 2 8 - paid (23) (13)Financing expenses (6) (4)Dividends paid to minority (27) (37) Taxation (79) (67) Capital expenditure and financial investment (204) 165 Acquisitions and disposals (197) (390) Equity dividends paid (102) (102) -------------------------------------------------------------------------------Net cash outflow before financing (257) (81) Financing 269 60New long-term loans 204 56New short-term loans 85 -Repayment of long-term loans (26) -Repayment of short-term loans - (2)Issue of ordinary share capital 6 6 -------------------------------------------------------------------------------Increase/(decrease) in cash in the year 12 (21)------------------------------------------------------------------------------- Net cash inflow from operating activities 2005 2004 $m $m-------------------------------------------------------------------------------Group operating profit before exceptional items 347 304Depreciation and amortisation 69 53(Increase)/decrease in stock (26) 19(Increase)/decrease in debtors (22) 26Increase/(decrease) in creditors 5 (6)Increase in provisions 3 -Other 1 4-------------------------------------------------------------------------------Net cash inflow from operating activities - continuing operationsand acquisitions 377 400Net cash outflow from operating activities - discontinuedoperations - (41)-------------------------------------------------------------------------------Net cash inflow from operating activities 377 359------------------------------------------------------------------------------- Statement of total consolidated recognised gains and lossesFor the year ended 30 September 2005 2004 $m $m-------------------------------------------------------------------------------Profit/(loss) for the year - Group 160 196 - Associate 3 (1)-------------------------------------------------------------------------------Total consolidated recognised gains relating to the year 163 195------------------------------------------------------------------------------- Consolidated historical cost profits and lossesFor the year ended 30 September 2005 2004 $m $m-------------------------------------------------------------------------------Reported profit before taxation 323 360Difference between an historical cost depreciation charge and the 2 2actual depreciation charge calculated on the revalued amount-------------------------------------------------------------------------------Historical cost profit before taxation 325 362-------------------------------------------------------------------------------Historical cost retained profit for the year 63 95------------------------------------------------------------------------------- Reconciliation of movement in equity shareholders' fundsFor the year ended 30 September 2005 2004 $m $m-------------------------------------------------------------------------------Total consolidated recognised gains relating to the year 163 195Dividends (102) (102)-------------------------------------------------------------------------------Retained profit for the year 61 93Shares purchased by ESOP (1) (2)Shares disposed of by ESOP 1 -Amortisation of share-based payments 1 2Shares issued on the exercise of share options 6 6-------------------------------------------------------------------------------Net increase in equity shareholders' funds in the year 68 99Equity shareholders' funds at 1 October 744 645-------------------------------------------------------------------------------Equity shareholders' funds at 30 September 812 744------------------------------------------------------------------------------- 1. Basis of preparation The year end accounts have been prepared on the same basis and using the sameaccounting policies as those used to prepare the financial statements of theLonmin Group for the year ended 30 September 2004. 2. Segmental analysis By business origin: 2005 ------------------------------------------------------- Total Profit operating before Net Turnover EBITDA profit tax assets $m $m $m $m $m------------------------------------------------------------------------------Platinum 1,128 450 387 370 1,491------------------------------------------------------------------------------- continuing 1,122 458 397 384 1,306 operations- acquisitions 6 (8) (10) (14) 185------------------------------------------------------------------------------Exploration - (11) (11) (11) -Corporate - (23) (23) (36) (513)------------------------------------------------------------------------------Total 1,128 416 353 323 978------------------------------------------------------------------------------- continuing 1,122 424 363 341 793 operations- acquisitions 6 (8) (10) (18) 185------------------------------------------------------------------------------------------------------------------------------------------------------------South Africa 1,128 457 394 377 1,488Other - (18) (18) (18) 3Corporate - (23) (23) (36) (513)------------------------------------------------------------------------------Total 1,128 416 353 323 978------------------------------------------------------------------------------- continuing 1,122 424 363 341 793 operations- acquisitions 6 (8) (10) (18) 185------------------------------------------------------------------------------ 2004 ------------------------------------------------------- Total Profit operating before Net Turnover EBITDA profit tax assets $m $m $m $m $m------------------------------------------------------------------------------Platinum 1,030 384 332 324 1,217Exploration - (7) (8) (8) 3Other - (2) (2) (2) -Corporate - (18) (19) (24) (325)------------------------------------------------------------------------------Continuing operations 1,030 357 303 290 895Discontinued - (42) (42) 70 -------------------------------------------------------------------------------Total 1,030 315 261 360 895------------------------------------------------------------------------------South Africa 1,030 387 335 327 1,215Other - (12) (13) (13) 5Corporate - (18) (19) (24) (325)------------------------------------------------------------------------------Continuing operations 1,030 357 303 290 895Discontinued - (42) (42) 70 -operations------------------------------------------------------------------------------Total 1,030 315 261 360 895------------------------------------------------------------------------------ The segmental analysis of assets is now based on net assets rather than netoperating assets. 3. Net interest payable and similar items 2005 2004 $m $m-------------------------------------------------------------------------------Interest payable: On bank loans and overdrafts 24 12Bank fees 2 6Discounting on provisions 2 -------------------------------------------------------------------------------- 28 18Capitalisation of interest (1) -Interest receivable on cash at bank and in hand (2) (4)Interest receivable on loans to Ashanti - (4)Exchange differences on net borrowings 2 3-------------------------------------------------------------------------------Net interest payable and similar items - Group 27 13 - Associate 3 -------------------------------------------------------------------------------- 30 13------------------------------------------------------------------------------- 4. Exceptional items 2005 2004 $m $m-------------------------------------------------------------------------------Operating items:- Funding requirement on the buy-out of the SUITS pension fund - (42)Profit on sale of fixed assets:- Sale of investment in AngloGold Ashanti - 112-------------------------------------------------------------------------------Exceptional items before taxation and minority interest - 70Taxation - 3Minority interest - (1)-------------------------------------------------------------------------------Net exceptional profit - 72Continuing operations - 2Discontinued operations - 70------------------------------------------------------------------------------- The exceptional tax credit in 2004 represented the closing US dollar value ofSouth African tax over-provided in 2003 on the disposal of the Brakspruitmineral rights. 5. Taxation 2005 2004 $m $m-------------------------------------------------------------------------------United Kingdom: Corporation tax at 30% (2004- 30%) 53 17Double tax relief (53) (17)------------------------------------------------------------------------------- - -Overseas: Current taxation at 29% (2004 - 30%) 95 60 Excluding tax on local 79 54currency exchange profitsTax on local currency exchange (3) (2)profitsTax on dividends remitted 19 7Exchange on current taxation - 1 Deferred taxation 24 59Origination and reversal of 30 39timing differencesChange in South Africancorporate tax rate to 29% (11) -(2004 - 30%)Exchange on deferred taxation 5 20 Prior year items (current taxation) (1) (6)Exceptional - (4)Other (1) (3)Exchange on prior year items - 1-------------------------------------------------------------------------------Tax charge 118 113-------------------------------------------------------------------------------Tax charge excludingexceptional items, tax rate 127 97adjustmentand exchange-------------------------------------------------------------------------------Effective tax rate excludingexceptional items, tax rate 39% 33%adjustment and exchange------------------------------------------------------------------------------- A reconciliation of the standard tax charge to the current tax charge was asfollows: 2005 2004 $m $m-------------------------------------------------------------------------------Tax charge at standard tax rate of 29% (2004 - 30%) 94 108Overseas taxes on dividends remitted by subsidiary companies 19 7Non-taxable chargeable gains - (34)Other timing differences (15) (20)Effect of exchange adjustments (3) (1)------------------------------------------------------------------------------- 95 60 Prior year items (1) (6)-------------------------------------------------------------------------------Current tax charge 94 54------------------------------------------------------------------------------- The Group's primary operations are based in South Africa. Therefore, therelevant standard tax rate for the Group was the South African statutory taxrate of 29% (2004 - 30%). The secondary tax rate on dividends remitted by SouthAfrican companies was 12.5% (2004 - 12.5%). 6. Dividends 2005 2004 $m $m-------------------------------------------------------------------------------Interim 30.0c (2004 - 30.0c) per share 42 42Final 42.0c (2004 - 42.0c) per share 60 60-------------------------------------------------------------------------------Total dividends 72.0c (2004 - 72.0c) per share 102 102------------------------------------------------------------------------------- Until 31 March 1999, advanced corporation tax (ACT) was paid on dividends at therate of 25% of the net dividend. Subject to certain restrictions, this wasrecoverable by offsetting it against corporation tax liabilities. When thisoffset was not available surplus ACT was generated. At the year end, the Group had surplus ACT of $103 million (2004 - $103 million)carried forward and available, subject to certain restrictions, for set-offagainst future United Kingdom corporation tax liabilities. The notional "ShadowACT", being the ACT which would have been payable if the system had not beenabolished and which must be set-off prior to utilisation of surplus ACT,amounted to $189 million (2004 - $167 million). 7. Earnings per share Earnings per share have been calculated on the profit for the year amounting to$163 million (2004 - $195 million) using a weighted average number of141,727,124 ordinary shares (2004 - 141,384,398 ordinary shares). Diluted earnings per share are based on the weighted average number of ordinaryshares in issue adjusted by dilutive outstanding share options and sharesissuable on conversion of the convertible bonds during the year as follows: 2005 2004 ---------------------------------------------------------------------------- Profit for Number of Per share Profit for Number of Per share the year shares amount the year shares amount $m cents $m cents-------------------------------------------------------------------------------------------------Basic EPS 163 141,727,124 115.0 195 141,384,398 137.9-------------------------------------------------------------------------------------------------- continuing operations 180 - 127.0 125 - 88.4- acquisitions (17) - (12.0) - - -- discontinued operations - - - 70 - 49.5-------------------------------------------------------------------------------------------------Share optionschemes - 290,375 (0.2) - 468,002 (0.4)Convertiblebonds 10 10,576,993 (1.4) 6 10,576,993 (5.7)-------------------------------------------------------------------------------------------------Diluted EPS 173 152,594,492 113.4 201 152,429,393 131.8------------------------------------------------------------------------------------------------- Underlying earnings per share have been presented as the Directors consider itto give a fairer reflection of the underlying results of the business.Underlying earnings are based on the profit for the year adjusted to excludereorganisation costs, exceptional items, the effect of a change in the SouthAfrican tax rate on the opening deferred tax balance and exchange on taxbalances as follows: 2005 2004 ---------------------------------------------------------------------------- Profit for Number of Per share Profit for Number of Per share the year shares amount the year shares amount $m cents $m cents-------------------------------------------------------------------------------------------------Basic EPS 163 141,727,124 115.0 195 141,384,398 137.9-------------------------------------------------------------------------------------------------- continuing operations 180 - 127.0 125 - 88.4- acquisitions (17) - (12.0) - - -- discontinued operations - - - 70 - 49.5------------------------------------------------------------------------------------------------- Reorganisationcosts 12 - 8.4 - - --------------------------------------------------------------------------------------------------- continuing operations 7 - 4.9 - - -- acquisitions 5 - 3.5 - - -------------------------------------------------------------------------------------------------- Exceptional itemsbefore taxationand minorityinterest- discontinued operations - - - (70) - (49.5)Taxation on aboveitems- continuing operations (2) - (1.4) (4) - (2.8)Tax rate change -effect on openingdeferred taxbalance- continuing operations (11) - (7.7) - - -Exchange on taxbalances- continuing operations 2 - 1.4 20 - 14.1Minority interest- continuing operations 1 - 0.7 (4) - (2.8)-------------------------------------------------------------------------------------------------Underlying EPS 165 141,727,124 116.4 137 141,384,398 96.9-------------------------------------------------------------------------------------------------- continuing operations 177 - 124.9 137 - 96.9- acquisitions (12) - (8.5) - - -------------------------------------------------------------------------------------------------- 8. Analysis of net borrowings At At 1 October Subsidiary Exchange 30 September 2004 Acquired* Cash flow Movements 2005 $m $m $m $m $m ------------------------------------------------------------------------------- Cash 20 - (9) - 11 Overdrafts (22) - 21 - (1) ------------------------------------------------------------------------------- (2) - 12 - 10 Convertible (216) - - - (216) Bonds Loans due after one (56) (60) (178) (2) (296) year Loans due within one (1) - (85) - (86) year ------------------------------------------------------------------------------- Net borrowings (275) (60) (251) (2) (588) * excludes cash in subsidiary acquired of $5 million 9. Statutory Disclosure The financial information set out above is taken from but does not constitutethe Company's statutory accounts for the years ended 30 September 2005 and 2004.Statutory accounts for 2004 have been delivered, and for 2005 will be delivered,to the Registrar of Companies. The Auditors have made unqualified reports onthose accounts and such reports did not contain a statement under Section 237(2)or (3) of the Companies Act 1985. Copies of the 2005 Lonmin Accounts will be posted to shareholders and will beavailable at the Company's registered office before the end of November 2005. 10. Final Dividend Timetable The Board of Lonmin Plc has recommended a final dividend for the year ended 30September 2005 of (42.0) US cents per share. The dividend timetable in respect of this dividend, assuming shareholderapproval at the AGM, is as follows :- Last day to trade cum div SA Friday 6 January 2006 UK Tuesday 10 January 2006 Shares commence trading ex div SA Monday 9 January 2006 UK Wednesday 11 January 2006 Dividend record date Friday 13 January 2006 Last day for receipt of new applications to participate in DividendRe-investment Plan SA Wednesday 1 February 2006 UK Wednesday 25 January 2006Dividend payment date Wednesday 8 February 2006 The South African branch register will be closed for the purposes ofdematerialisation, rematerialisation and transfers to and from the UK registerfrom Monday 9 January 2006 to Friday 13 January 2006, 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 20 January 2006, 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 Thursday 29 December 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) shouldcomprise a signed request to Lloyds TSB Registrars to be received by 1700 hourson Friday 13 January 2006. 11. Annual General Meeting The 2006 Annual General Meeting will be held on 26 January 2006 at the QueenElizabeth II Conference Centre, Board Sanctuary, Westminster, London SWIP 3EE. 12. Availability of this report This report is available on the Lonmin website (www.lonmin.com). This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Lonmin