4th May 2005 07:00
Lonmin PLC4 May 2005 Lonmin PlcInterim Statement March 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: o Long term growth potential from realisation of Messina resource base o Substantial synergy benefits particularly through improved smelter recoveries o Earnings enhancing from 2007 Financial highlights - continuing operations Six months to 31 March 2005 2004Turnover $421m $444mEBITDA (i) $177m $155mEBIT (ii) $152m $128mProfit before taxation $142m $117mEarnings per share 48.7c 26.2cUnderlying earnings per share (iii) 48.7c 39.7cInterim dividend per share (iv) 30.0c 30.0cNet borrowings $473m $277mInterest 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, inovercoming the financial impact of the smelter accident. Our production andcosts are both improving, in order to manage our cost efficiencies, we havedecided to reduce the amount of higher cost open cast Merensky ore processed inthe second half. We therefore expect Platinum production for the year to 30September 2005 to be between 905,000 and 925,000 ounces without any benefit fromSouthern Platinum. Our full year cost guidance remains at R2,475 per PGM ouncesold. Our longer term growth plans remain on track and are enhanced by ourSouthern Platinum acquisition." Enquiries: Alex Shorland-Ball, Lonmin Plc +44 (0) 20 7201 6060Anthony Cardew/Nadja Vetter, Cardew Group: +44 (0)20 7930 0777This press release is available on www.lonmin.com. A live webcast of the interimresults' presentation starting at 09.30hrs (London) on 4 May 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 Officer's Comments Introduction The first six months of the 2005 financial year were challenging for Lonmin. Weexperienced an accident at our smelting facility on 18 November 2004, whichresulted in the loss of nine weeks of metal production. Repairs have beencompleted and the smelter came back on line on 20 January 2005. The final cost of the smelter accident and repairs is $14 million (including thecosts of running the Pyromet furnaces and toll refining), of which $9 millionhas been expensed in the first half. These costs were offset by insurancesettlements 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 sharesof Southern Platinum Corp. for $190 million. This transaction will addsubstantially to our future Platinum growth potential and is expected to closeby 1 July 2005, subject to approval by Southern Platinum shareholders and theSouth 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 thefiscal 2005 year compared to last year. We suffered one industrial relatedfatality and deeply regret that two children drowned in one of our unfenced minereclaim water ponds during the period. This result compares to eight industrialfatalities 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 majorprogramme underway to reduce all lost time injuries in our operations. Mining operations produced 5,427,000 tonnes milled (5,405,000 tonnes mined) fromunderground operations and 1,480,000 tonnes milled (1,244,000 tonnes mined) fromopen cast operations. These raw ore tonnes were converted to 66,852 tonnes ofconcentrate (62,248 tonnes of concentrate despatched) containing 22,810 kgm ofPGMs. This was in line with budget expectations. Metallurgical operationsproduced 366,781 ounces of Platinum and 666,303 ounces of total PGMs. We have made significant progress with our mechanisation and automation projectsduring the period. Our fully mechanised ULP (Ultra Low Profile) Merensky miningsite has successfully achieved its target of 12,000 tonnes per month per set ofequipment at a total mining cost of less than R230 per tonne. We are nowcommitted to rolling out this mining method with an additional two sets ofequipment at the Karee mine, which will ramp up to 37,000 tonnes per monthMerensky ore production by year-end and ultimately to 70,000 tonnes per month bymid-2006 at an expected cost of less than R190 per tonne, as compared to currentaverage traditional mining method costs of around R200 per tonne. Plans are alsoin an advanced stage to expand this mining method into the UG2 reef at Kareemine and other potential sites across the property. Our capital growth programme to increase production to 1.1 million ounces ofPlatinum by 2010 (without any benefit from Southern Platinum) remains onschedule and on budget (in Rand terms). The $72 million Hossy shaft complex isthe most advanced of the three major capital projects being undertaken.Expenditure is 64% complete and we continue to expect full production during2008. The Hossy Vertical is complete with the Sub Incline at 20% completion. Costs The metallurgical recovery rates assumed in the Base Metal Refinery and PreciousMetal Refinery have been conservatively estimated in the past and as a result ofactual outturns we have now increased the ongoing achievable recoveries. The reported unit costs of R2,431 per PGM ounce sold include the effects of $9million of smelter incident costs, $3 million redundancy costs and an $11million benefit arising from the spreading of a $29 million improvement inmetallurgical recoveries over the overall anticipated sales for the year. Nobenefit has been taken in these unit costs for the insurance proceeds of $22million. Due to the cost profile of the open cast operations, we have elected toaccelerate the switch in production sources from lower grade, higher cost opencast ounces to higher grade, lower cost underground ounces. This transition willhelp ensure that we meet our long-term production ramp up profile while helpingkeep costs in check. In the second half we will lower the proportion of open cast Merensky oreprocessed. As a result of this we now estimate that overall production for theyear will be between 905,000 and 925,000 ounces of Platinum and our costguidance for the year remains unchanged at R2,475 per PGM ounce sold. Our Six Sigma programme has identified significant saving opportunities and weexpect to capture R70 million of net EBIT benefits in the second half of theyear. We are currently working on the introduction of a central shared servicesfunction. This will replace duplicated technical and administrativeinfrastructure at our mines and shafts and is anticipated to result in furthercost savings. Working Capital Due to the smelter accident in November we experienced a cash outflow on workingcapital in the period as stocks built up ahead of the smelter. We expect thisoutflow to be reversed in the second half. Exploration Our exploration group completed a joint venture agreement with Inco Limitedduring the period to explore for PGM deposits adjacent to some of theirhistorically important nickel properties in the geologically prolific SudburyBasin. 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 of2005. Our BEE partner, Incwala, has performed well during the period and has providedvaluable support and guidance for our mining licence application and BEEprogramme. Markets PGM prices have been well supported in the period under review both by soundunderlying auto catalyst demand and industrial demand for the full suite ofcommodities. The supply outlook has been restrained by the current low Randbasket value of metals. Southern Platinum We have made a $190 million offer for Southern Platinum, a Canadian listed groupwith platinum mining operations at Messina in South Africa. Southern Platinumhas 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 producesaround 45,000 ounces of Platinum a year from a strike length of just 4kilometres. Our initial plan is to increase Platinum production to 75,000 ouncesby 2007. Exciting potential exists to exploit the larger untapped resource onthe remaining strike length of the property. We will start developing plans forthe realisation of this once the acquisition closes. In addition to its growth potential, Messina also offers considerable synergybenefits. Smelting the base metal rich Messina ore with our existing high chromeores is expected to improve overall smelter recoveries by around 2%. Althoughthe Messina operations are currently operating at a loss, we believe that asuccessful mine turnaround, plus anticipated smelter benefits, will enhanceearnings from 2007 onwards. Outlook and Dividend We expect our markets to remain strong during the second half of our fiscalyear. We are making significant progress in our discussions with the Unions on a newlong-term labour agreement, which is intended to allow us to achieve longer-termoperational stability. As a result we will be able to increase our focus onsafety, growth and cost management. Our acquisition of Southern Platinum, when completed, together with the organicgrowth at our existing operations, will enable us to target 1.1 million ouncesof Platinum production by 2008. Growth beyond 2008 will be supported by organicgrowth 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. Karende Segundo (formerly of Shell) has joined our Board in a non-executive position.Alistair Ross (formerly of Inco) has accepted the role of President, PlatinumOperations in South Africa. Alex Shorland-Ball (formerly of Finsbury Group) hasjoined us in the role of Vice-President Investor Relations and Communicationsand Khumo Seopela (formerly of De Beers) has joined us as Vice-President HumanCapital 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 miningcompany benchmarking itself against the 'best of breed' on measures such assafety performance, operational efficiency, capital returns and humanproductivity. This process is never easy and I would like to thank all ofLonmin's employees, contractors and community members who are supporting thiseffort. 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 MillsChief Executive Officer Commentary on the Group Financial Review 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 interim 2005 EBIT from continuing operations with the priorperiod is set out below: $m-------------------------------------------------------------------------------EBIT - six months to 31 March 2004 128Increase in sales prices 42Decrease in sales volumes (22)Insurance receipts 22Smelting incident costs (9)Incwala 4Exchange (21)Improved recoveries 29Other 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 793,526ounces to 671,591 ounces due to the smelter incident in November 2004 andturnover amounted to $421 million for the six months to 31 March 2005. Unitcosts in rand at R2,431 per PGM ounce sold were only 3.5% higher than the priorperiod. The improved recoveries reflected an improvement in underlyingmetallurgical recoveries which led to an increase in the opening stockvaluation. The strength of the South African rand against the US dollar impactedon costs in dollar terms with the average exchange rate appreciating 9% on theprior period. The investment in Platinum Australia was sold on 31 March 2005 forbook value with no material profit impact. The resulting EBIT, which included $4million for our 23.56% share of Incwala's operating profits, amounted to $152million. Profit before taxation for the 2005 interim period amounted to $142 millioncompared with $117 million for the 2004 interim period. Interest Net interest payable and similar items were $10 million compared with $11million in 2004. Borrowing levels were higher during the 2005 interim periodresulting in higher interest payable but this was offset by lower amortisationcharges on bank loan facilities and lower exchange losses due to the majority ofborrowings being held in US dollars. Tax The 2005 interim tax charge was $57 million compared with $65 million in theprior period and included $11 million of exchange losses (March 2004 - $30million). The corporate tax rate in South Africa was reduced to 29% during theperiod and was applicable to taxable results from 1 October 2004. The change intax rate resulted in an adjustment to the opening deferred tax balance at 1October 2004 to reduce it by $11 million. The effective tax rate, excluding theeffects of exchange, the adjustment to the opening deferred tax balance andexceptional items (prior period only) was 40% compared with 33% during the lastinterim period due to the significantly higher incidence of STC in 2005 than thesame period in 2004. Net profit Profit for the 2005 interim period rose to $69 million from $37 million in theprior period and included minority deductions at 18% of the platinum operationsresults after tax compared with 27% in the prior period. Basic earnings pershare were 48.7 cents for the six months to 31 March 2005 compared with 26.2cents in the prior period. Underlying earnings per share, being earningsexcluding exchange on tax balances, the adjustment to the opening deferred taxbalance as a result of a change in the South African corporate tax rate andexceptional items (prior period only) amounted to 48.7 cents (March 2004 - 39.7cents), an increase of 23%. On 30 September 2004 the Group increased its effective holding in its underlyingplatinum assets from 73% to 82% at a cost of $311 million. In addition itinvested $90 million in 23.56% of Incwala Resources and advanced $34 million ofloans to HDSA and seed capital investors in Incwala Resources. The effects of these acquisitions in the first half of 2005 have been to improvereported earnings per share by 3 cents. Balance sheet Equity interests were $771 million at 31 March 2005 compared with $744 millionat 30 September 2004 mainly reflecting the profit of $69 million earned duringthe period offset by the 2005 interim dividend declared of $43 million. Stock levels were $177 million at the March 2005 balance sheet date comparedwith $81 million at the September 2004 balance sheet date due to stock build-upfollowing 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 netborrowings attributable to the Group divided by these attributable netborrowings and the equity interests outstanding at the relevant balance sheetdates. Cash flow The following table summarises the main components of the cash flow during theperiod: March March 2005 2004 $m $m--------------------------------------------------------------------------------Operating profit - Group 148 129Working capital (132) (3)Other items (mainly depreciation) 27 35--------------------------------------------------------------------------------Net cash inflow from operating activities 43 161Interest and finance costs (8) (9)Tax (57) (49)--------------------------------------------------------------------------------Trading cash flow (22) 103Capital expenditure (87) (85)Associate dividend received 2 -Minority dividends paid (21) (34)--------------------------------------------------------------------------------Free cash flow (128) (16)Acquisitions (10) (6)Shares issued - 4Equity 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 72.9 cFree cash flow per share (90.4)c (11.3)c-------------------------------------------------------------------------------- Net cash inflow from operating activities was $43 million during the six monthsto 31 March 2005 and included an outflow on working capital of $132 million dueto stock build-up and settlement of 2004 year-end creditors. After interest andfinance costs paid of $8 million and tax payments of $57 million, trading cashflow amounted to an outflow of $22 million against an inflow of $103 million inthe prior period. Trading cash flow per share amounted to (15.5) cents for the2005 interim period compared with 72.9 cents in the 2004 interim period. Capital expenditure of $87 million was similar to the prior period in dollarterms but reduced in rand terms by 10%. Associate and minority dividends in 2005represented dividends received and paid to Incwala and free cash flow amountedto an outflow of $128 million. Free cash flow per share was (90.4) cents (March2004 - (11.3) cents). Acquisitions represented expenses incurred on the Incwalaand Eastern and Western Platinum transactions that completed on 30 September2004. After accounting for equity dividends paid of $59 million, the cashoutflow was $197 million and net borrowings amounted to $473 million at 31 March2005. It is expected that the significant cash outflow on working capital will reversein the second half of the financial year as the smelter processes the backlog ofconcentrate 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 (March2004 - 0.9 times). On an underlying earnings basis, this represents a cover of1.6 times compared with 1.3 times in 2004. International financial reporting standards (IFRS) All European listed companies are required to prepare their consolidatedfinancial statements in accordance with IFRS for accounting periods beginning onor after 1 January 2005. Consequently, the Group will be implementing IFRS from1 October 2005. The first financial information to be reported by the Group in accordance withIFRS will be for the six months ending 31 March 2006 but the requirement topresent comparative information means that a balance sheet as at 30 September2004 and primary statements for the six months to 31 March 2005 and the year to30 September 2005, prepared in accordance with IFRS, will also be required. TheGroup will continue to report its consolidated financial statements inaccordance with UK GAAP for the year to 30 September 2005. The Group has undertaken a preliminary assessment of the impact of IFRS on itsaccounting policies and published financial statements and a detailed impactstudy is continuing. Based on the work carried out to date, the following areas could impact on theGroup's financial statements: Post retirement benefits Under 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 three alternative ways in which surpluses or deficitscan be recognised. It is likely that the Group will choose to recognisesurpluses or deficits directly in shareholders' funds through the statement ofrecognised income and expense. This treatment is similar to FRS 17 - Retirementbenefits. The Group currently reports the effects of FRS 17 in the notes to theannual financial statements. Share-based payments Under 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 dividends Under 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 instruments The 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 as hedges of specific assets, liabilities,income and/or expenses. The convertible bonds contain an embedded derivative inthe form of a conversion right, which the Company can settle in cash. The debtand embedded derivative elements are separated and the amount relating to theembedded derivative is subject to fair value accounting under IFRS. This mayintroduce some material volatility to reported earnings but will have no impacton cashflow. The above summary is not intended to be a complete list of areas. Furtherdifferences may arise as a result of the Group's continued detailed assessmentand interpretations of IFRS and any further pronouncements issued by theInternational Accounting Standards Board ("IASB"). John RobinsonChief Financial Officer Platinum Operating Statistics March March 2005 2004-------------------------------------------------------------------------------------------------------------MiningTonnes milled (excluding slag) - underground (000) 5,427 5,646 - opencast (000) 1,480 1,582 - total (000) 6,907 7,228Tonnes mined - underground (000) 5,405 5,617 - opencast (000) 1,244 1,158 - total (000) 6,649 6,775-------------------------------------------------------------------------------------------------------------MetallurgyNoble metals in matte (kg) 22,810 26,161Refined production of (1) - platinum (oz) 366,781 402,877 - palladium (oz) 157,058 176,245 - rhodium (oz) 35,253 46,660 - total PGMs (oz) 666,303 729,474-------------------------------------------------------------------------------------------------------------Sales(1) - platinum (oz) 365,653 412,533 - palladium (oz) 152,725 181,682 - rhodium (oz) 39,330 59,039 - total PGMs (oz) 671,591 793,526-------------------------------------------------------------------------------------------------------------PricesAverage price received per ounce - platinum (R) 5,000 5,358 ($) 842 811 - palladium (R) 1,170 1,485 ($) 196 227 - rhodium (R) 7,855 3,488 ($) 1,320 531Basket price of PGMs and base metals ($/kg) 18,889 16,387-------------------------------------------------------------------------------------------------------------CostsCash cost per refined ounce of PGM sold (incl royalties) (R) 2,433 2,366 ($) 409 343Cash cost per refined ounce of PGM sold (excl royalties) (R) 2,431 2,348 ($) 409 340Cash cost per refined ounce of - underground (R) 2,421 2,555PGM produced (excl royalties) ($) 409 392 - opencast (R) 2,612 1,934 ($) 441 297 - total (R) 2,452 2,423 ($) 415 372 Capital Expenditure (R millions) 510 567 ($ millions) 87 85-------------------------------------------------------------------------------------------------------------Exchange ratesAverage exchange rates - Sterling (£/$) 0.53 0.56 - S A Rand (R/$) 5.94 6.51Closing exchange rates - Sterling (£/$) 0.53 0.55 - S A Rand (R/$) 6.22 6.31 Note: 1 These statistics exclude sales of slag------------------------------------------------------------------------------------------------------------- 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 155Depreciation (29) (26)----------------------------------------------------------------------------------------------Operating profit/(loss) - Group 148 129 - Associates 4 (1)----------------------------------------------------------------------------------------------Total operating profit 152 128Net interest payable and similar items - Group (9) (11) - Associate (1) -----------------------------------------------------------------------------------------------Profit before taxation 142 117Taxation (iii) (57) (65)----------------------------------------------------------------------------------------------Profit after taxation 85 52Equity minority interest (16) (15)Profit for the period 69 37Interim dividend (43) (42)----------------------------------------------------------------------------------------------Retained profit/(loss) for the period 26 (5)----------------------------------------------------------------------------------------------Earnings per share 48.7c 26.2c----------------------------------------------------------------------------------------------Underlying earnings per share (iv) 48.7c 39.7c----------------------------------------------------------------------------------------------Diluted earnings per share 48.5c 25.6c----------------------------------------------------------------------------------------------Interim dividend per share 30.0c 30.0c----------------------------------------------------------------------------------------------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 September 31 March 2005 2004 2004 $m $m $m----------------------------------------------------------------------------------------------Fixed assets Tangible assets 1,430 1,370 1,042 Investments: 132 133 288 ------------------------------------ Associates 91 90 3Other investments 41 43 285 ------------------------------------ ----------------------------------------------------------------------------------------------Total fixed assets 1,562 1,503 1,330----------------------------------------------------------------------------------------------Current assets Stocks 177 81 128Debtors 128 124 132Investments 5 5 3 Cash and short-term deposits 10 20 68----------------------------------------------------------------------------------------------Total current assets 320 230 331Creditors: amounts falling due within one year (324) (217) (281) ------------------------------------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 after more than one year (272) (268) (212) ------------------------------------Convertible debt (213) (212) (212)Other loans (58) (56) -Other (1) - - ------------------------------------Provisions for liabilities and charges (369) (353) (326)---------------------------------------------------------------------------------------------- 917 895 842 ----------------------------------------------------------------------------------------------Capital and reserves Called up share capital 142 142 141 Reserves 629 602 503----------------------------------------------------------------------------------------------Equity shareholders' funds 771 744 644Equity 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. Accountsfor that year have been delivered to the Registrar of Companies. The Auditorsmade an unqualified report thereon and such report did not contain a statementunder Section 237(2) or (3) of the Companies Act 1985. Consolidated cash flow statement 6 months to 6 months to 31 March 2005 31 March 2004 $m $m-------------------------------------------------------------------------------------------Net cash inflow from operating activities 43 161Dividend received from associate 2 -Returns on investment and servicing of finance (29) (43) -------------------------------Net interest paid (8) (6)Finance expenses - (3)Dividends paid to minority (21) (34) -------------------------------Taxation (57) (49)Capital expenditure and financial investment (87) (85) Acquisitions and disposals (10) (6) Equity dividends paid (59) (59)-------------------------------------------------------------------------------------------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 cashinflow from operating activities: -------------------------------------------------------------------------------------------Operating profit - Group 148 129Depreciation charge 29 26Increase 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 to 6 months to 31 March 2005 31 March 2004 $m $m----------------------------------------------------------------------------------------------------------------------- Profit/(loss) for the period - Group 66 38 - Associate 3 (1)----------------------------------------------------------------------------------------------------------------------- Total consolidated recognised gains and losses relating to the period 69 37----------------------------------------------------------------------------------------------------------------------- Reconciliation of movement in equity shareholders' funds 6 months to 6 months to 31 March 2005 31 March 2004 $m $m----------------------------------------------------------------------------------------------------------------------- Total consolidated recognised gains and losses relating to the period 69 37Interim dividend (43) (42)-----------------------------------------------------------------------------------------------------------------------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'funds in the period 27 (1)Equity shareholders' funds at 1 October 744 645-----------------------------------------------------------------------------------------------------------------------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 operating before operating Turnover EBITDA profit tax assets $m $m $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 operating before operating Turnover EBITDA profit tax assets $m $m $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 to 6 months to 31 March 31 March 2005 2004 $m $m --------------------------------------------------------------------------------------------------- Net financing costs payable - Group 8 8 - Associate 1 - Exchange differences on net borrowings 1 3 --------------------------------------------------------------------------------------------------- Net interest payable and similar items 10 11 --------------------------------------------------------------------------------------------------- 4. Exceptional items 6 months to 6 months 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 to 6 months 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 29%Related Shares:
Lonmin