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Interim Results - Part 2

11th May 2009 07:00

RNS Number : 9902R

Lonmin PLC

11 May 2009

Operating Statistics

				6 months to 31 March 2009	6 months to 31 March 2008

Tonnes mined	Marikana	Underground - conventional	000	4,487	4,349
		Underground - M&A 1	000	771	552
		Underground - total	000	5,258	4,901
		Opencast	000	229	624
		Total	000	5,488	5,525
	Limpopo	Underground	000	87	264
		Opencast	000	0	0
		Total	000	87	264
	Pandora attributable 2	Underground	000	71	68
	Pandora attributable 2	Opencast	000	110	101
		Total	000	181	169
	Lonmin Platinum	Underground	000	5,417	5,233
	Lonmin Platinum	Opencast	000	339	725
		Total	000	5,756	5,958

Tonnes milled 3	Marikana	Underground	000	5,124	4,844
		Opencast	000	194	719
		Total	000	5,319	5,563
	Limpopo	Underground	000	92	207
		Opencast	000	0	0
		Total	000	92	207
	Pandora 4	Underground	000	168	159
		Opencast	000	251	192
		Total	000	419	351
	Ore	Underground	000	0	0
	Purchases 5	Opencast	000	0	30
		Total	000	0	30
	Lonmin Platinum	Underground	000	5,384	5,210
		Head grade 6	g/t	4.57	4.72
		Recovery rate 7	%	80.8	81.5
		Opencast	000	445	941
		Head grade 6	g/t	4.68	3.18
		Recovery rate 7	%	70.6	56.8
		Total	000	5,829	6,151
		Head grade 6	g/t	4.58	4.48
		Recovery rate 7	%	80.0	78.8

				6 months to 31 March 2009	6 months to 31 March 2008

Metals in concentrate 8	Marikana	Platinum	oz	308,617	319,543
		Palladium	oz	143,110	146,474
		Gold	oz	7,057	8,522
		Rhodium	oz	43,000	43,328
		Ruthenium	oz	66,454	66,680
		Iridium	oz	14,520	13,945
		Total PGMs	oz	582,759	598,492
		Nickel 9	MT	1,321	1,493
		Copper 9	MT	825	906
	Limpopo	Platinum	oz	3,770	8,589
		Palladium	oz	3,331	6,493
		Gold	oz	243	620
		Rhodium	oz	487	894
		Ruthenium	oz	688	1,302
		Iridium	oz	159	274
		Total PGMs	oz	8,679	18,172
		Nickel 9	MT	76	175
		Copper 9	MT	54	120
	Pandora 4	Platinum	oz	25,754	17,825
		Palladium	oz	11,601	8,148
		Gold	oz	202	133
		Rhodium	oz	3,566	2,478
		Ruthenium	oz	5,216	3,676
		Iridium	oz	971	615
		Total PGMs	oz	47,310	32,875
		Nickel 9	MT	25	25
		Copper 9	MT	15	11
	Ore	Platinum	oz	0	937
	Purchases 5	Palladium	oz	0	793
		Gold	oz	0	74
		Rhodium	oz	0	83
		Ruthenium	oz	0	107
		Iridium	oz	0	25
		Total PGMs	oz	0	2,019
		Nickel 9	MT	0	16
		Copper 9	MT	0	11
	Lonmin Platinum	Platinum	oz	338,142	346,894
	Lonmin Platinum	Palladium	oz	158,042	161,908
		Gold	oz	7,503	9,349
		Rhodium	oz	47,053	46,783
		Ruthenium	oz	72,358	71,765
		Iridium	oz	15,649	14,859
		Total PGMs	oz	638,748	651,558
		Nickel 9	MT	1,422	1,709
		Copper 9	MT	894	1,048

				6 months to 31 March 2009	6 months to 31 March 2008

Metallurgy	Lonmin refined metal production	Platinum	oz	317,904	282,650
		Palladium	oz	147,393	128,140
		Gold	oz	8,647	9,563
		Rhodium	oz	44,688	42,437
		Ruthenium	oz	72,952	62,763
		Iridium	oz	12,479	10,577
		Total PGMs	oz	604,063	536,128
	Toll refined metal production	Platinum	oz	315	0
		Palladium	oz	0	0
		Gold	oz	0	0
		Rhodium	oz	573	0
		Ruthenium	oz	1,009	0
		Iridium	oz	184	0
		Total PGMs	oz	2,081	0
	Total refined PGMs	Platinum	oz	318,219	282,650
		Palladium	oz	147,393	128,140
		Gold	oz	8,647	9,563
		Rhodium	oz	45,261	42,437
		Ruthenium	oz	73,961	62,763
		Iridium	oz	12,663	10,577
		Total PGMs	oz	606,145	536,128
	Base metals	Nickel 10	MT	1,632	1,323
		Copper 10	MT	1,079	795

Sales	Refined metal sales	Platinum	oz	313,671	284,731
		Palladium	oz	147,184	133,991
		Gold	oz	9,318	9,208
		Rhodium	oz	38,739	43,537
		Ruthenium	oz	67,501	65,941
		Iridium	oz	12,500	11,720
		Total PGMs	oz	588,913	549,127
	Concentrate and other 11	Platinum	oz	(1,818)	4,233
		Palladium	oz	(3,222)	1,833
		Gold	oz	0	97
		Rhodium	oz	0	758
		Ruthenium	oz	0	990
		Iridium	oz	0	240
		Total PGMs	oz	(5,039)	8,150
	Lonmin Platinum	Platinum	oz	311,853	288,963
	Lonmin Platinum	Palladium	oz	143,962	135,823
		Gold	oz	9,318	9,305
		Rhodium	oz	38,739	44,295
		Ruthenium	oz	67,501	66,931
		Iridium	oz	12,500	11,960
		Total PGMs	oz	583,873	557,277
		Nickel 10	MT	1,368	1,216
		Copper 10	MT	907	805

					6 months to 31 March 2009	6 months to 31 March 2008

Average Prices	Lonmin Platinum		Platinum	$/oz	947	1,578
			Palladium	$/oz	192	396
			Gold	$/oz	871	853
			Rhodium	$/oz	1,650	7,121
			Ruthenium	$/oz	124	446
			Iridium	$/oz	393	424
			Basket price of PGMs 12	$/oz	699	1,558
			Nickel 10	$/MT	15,721	27,235
			Copper 10	$/MT	6,062	6,936

Capital Expenditure				Rm	1,050	1,000
				$m	106	139


Cost per PGM ounce 13

Mining - Marikana				R/oz	4,712	3,247
Mining - Limpopo				R/oz	7,404	6,125
Mining - (weighted average)				R/oz	4,751	3,366
Concentrating - Marikana				R/oz	817	638
Concentrating - Limpopo				R/oz	1,820	2,193
Concentrating - (weighted average)				R/oz	831	684
Process division				R/oz	827	604
Shared business services				R/oz	547	838
C1 cost per PGM ounce produced				R/oz	6,956	5,492
Stock movement				R/oz	103	(489)
C1 cost per PGM ounce sold before base metal credits				R/oz	7,059	5,003
Base metal credits				R/oz	(508)	(493)
C1 costs per PGM ounce sold after base metal credits				R/oz	6,551	4,510
Amortisation				R/oz	430	496
C2 costs per PGM ounce sold				R/oz	6,981	5,006
Pandora mining costs:
C1 Pandora mining costs (in joint venture)				R/oz	3,004	3,945
Pandora JV cost/ounce to Lonmin (adjusting Lonmin share of profit)				R/oz	4,537	6,703

Exchange Rates		Average rate for period		R/$	9.91	7.14
Exchange Rates		Closing rate		R/$	9.49	8.08

Footnotes:

1	M&A comprises ore produced by our fully mechanised shafts and from Saffy shaft, which is being transitioned to hybrid mining.
2	Pandora attributable tonnes mined includes Lonmin's share (42.5%) of the total tonnes mined on the joint venture.
3	Tonnes milled excludes slag milling.
4	Lonmin purchases 100% of the ore produced by the Pandora joint venture for onward processing which is included in downstream operating statistics.
5	Relates to the tonnes milled and derived metal in concentrate from third-party ore purchases.
6	Head Grade is the grammes per tonne (5PGE + Au) value contained in the tonnes milled and fed into the concentrator from the mines (excludes slag milled).
7	Recovery rate in the concentrators is the total content produced divided by the total content milled (excluding slag).
8	Metals in concentrate includes slag and have been calculated at industry standard downstream processing losses.
9	Corresponds to contained base metals in concentrate.
10	Nickel is produced and sold as nickel sulphate crystals or solution and the volumes shown correspond to contained metal. Copper is produced as refined product but typically at LME grade C.
11	Concentrate and other sales have been adjusted to a saleable ounces basis using standard industry recovery rates.
12	Basket price of PGMs is based on the revenue generated from the actual PGMs sold in the period.
13	With the restructuring of the business the cost allocation between business units has been changed and therefore whilst the C1 cost per PGM ounce produced total is on a like-for-like basis individual line items are not totally comparable.

Consolidated income statement

for the 6 months to 31 March 2009

		6 months to 31 March 2009	Special items	6 months to 31 March 2009	6 months to 31 March 2008	Special items	6 months to 31 March 2008	Year ended 30 Sep 2008	Special items	Year ended 30 Sep 2008
		Underlying i	(note 3)	Total	Underlying i	(note 3)	Total	Underlying i	(note 3)	Total
Continuing operations	Note	$m	$m	$m	$m	$m	$m	$m	$m	$m
Revenue	2	436	-	436	907	-	907	2,231	-	2,231

(LBITDA) / EBITDA ii		(51)	(44)	(95)	417	(3)	414	1,059	(25)	1,034
Depreciation, amortisation and impairment		(47)	-	(47)	(46)	-	(46)	(96)	(174)	(270)

Operating (loss) / profit iii	2	(98)	(44)	(142)	371	(3)	368	963	(199)	764

Impairment of available for sale financial assets		-	(39)	(39)	-	-	-	-	(19)	(19)
Finance income	4	3	-	3	8	-	8	13	-	13
Finance expenses	4	(27)	-	(27)	(1)	-	(1)	(6)	-	(6)
Share of profit of associate and joint venture		9	-	9	21	-	21	27	-	27
(Loss) / profit before taxation		(113)	(83)	(196)	399	(3)	396	997	(218)	779
Income tax income/(expense) iv	5	16	53	69	(137)	96	(41)	(322)	109	(213)
(Loss) / Profit for the period		(97)	(30)	(127)	262	93	355	675	(109)	566
Attributable to:
- Equity shareholders of Lonmin Plc		(79)	(33)	(112)	207	76	283	550	(95)	455
- Minority interest		(18)	3	(15)	55	17	72	125	(14)	111
(Loss) / earnings per share	6	(50.2)c		(71.2)c	132.5c		181.1c	351.9c		291.1c
Diluted (loss) / earnings per share v	6	(50.2)c		(71.2)c	132.0c		180.5c	350.7c		290.2c
Dividend per share paid in period	7			0.0c			60.0c			119.0c

Consolidated statement of recognised income and expense

for the 6 months to 31 March 2009

	Note	6 months to 31 March 2009	6 months to 31 March 2008	Year ended 30 September 2008
		$m	$m	$m
(Loss) / profit for the period		(127)	355	566
Change in fair value of available for sale financial assets		(23)	(33)	(127)
Net change in fair value of cash flow hedges		10	(8)	16
Gains on settled cash flow hedges released to the income statement		(14)	-	(4)
Foreign exchange gain on retranslation of associate		5	-	5
Deferred tax on items taken directly to the statement of recognised income and expense		7	7	16
Total recognised (expense) / income for the period		(142)	321	472

Attributable to:
- Equity shareholders of Lonmin Plc	8	(126)	250	352
- Minority interest	8	(16)	71	120
	8	(142)	321	472

Footnotes:

i	Underlying (loss) / earnings for the period are calculated on profit excluding one-off restructuring and reorganisation costs, impairment of available for sale financial assets and foreign exchange on tax balances. For prior periods, special items also includes profits on disposal of subsidiaries, revaluations and impairment of assets, takeover bid defence costs, pension scheme payments relating to scheme settlements and effects of changes in corporate tax rates as disclosed in note 3 to the interim accounts.
ii	(LBITDA) / EBITDA is operating (loss) / profit before depreciation, amortisation and impairment.
iii	Operating (loss) / profit is defined as revenue less operating expenses before impairment of available for sale financial assets, finance income and expenses and before share of profit of associate and joint venture.
iv	The income tax income / (expense) relates substantially to overseas taxation and includes exchange gains of $50 million (March 2008 - gains of $83 million) as disclosed in note 5 to the interim accounts.
v	Diluted (loss) / earnings per share are based on the weighted average number of ordinary shares in issue adjusted by dilutive outstanding share options. In the 6 months to 31 March 2009 outstanding share options were anti-dilutive and so have been excluded from diluted earnings per share in accordance with IAS 33 - Earnings Per Share.

Consolidated balance sheet

as at 31 March 2009

		As at 31 March 2009	As at 31 March 2008	As at 30 September 2008
	Note	$m	$m	$m
Non-current assets
Goodwill		113	186	113
Intangible assets		956	937	949
Property, plant and equipment		1,950	1,780	1,893
Investment in associate and joint venture		174	152	163
Available for sale financial assets		34	207	96
Other receivables		18	21	19
		3,245	3,283	3,233

Current assets
Inventories		285	299	319
Trade and other receivables		112	246	326
Assets held for sale		6	6	6
Tax recoverable		-	12	5
Derivative financial instruments		16	-	20
Cash and cash equivalents	9	82	13	226
		501	576	902

Current liabilities
Overdraft	9	(6)	(38)	-
Trade and other payables		(239)	(207)	(346)
Interest bearing loans and borrowings	9	-	(138)	-
Tax payable		(9)	-	(55)
		(254)	(383)	(401)
Net current assets		247	193	501

Non-current liabilities
Employee benefits		(11)	(27)	(21)
Interest bearing loans and borrowings	9	(525)	(343)	(529)
Deferred tax liabilities		(457)	(521)	(540)
Provisions		(48)	(40)	(50)
		(1,041)	(931)	(1,140)
Net assets		2,451	2,545	2,594

Capital and reserves
Share capital	8	157	156	156
Share premium	8	320	303	305
Other reserves	8	97	88	100
Retained earnings	8	1,463	1,586	1,586
Attributable to equity shareholders of Lonmin Plc	8	2,037	2,133	2,147
Attributable to minority interest	8	414	412	447
Total equity	8	2,451	2,545	2,594

Consolidated cash flow statement

for the 6 months to 31 March 2009

		6 months to 31 March 2009	6 months to 31 March 2008	Year ended 30 September 2008
	Note	$m	$m	$m

(Loss) / profit for the period		(127)	355	566
Taxation	5	(69)	41	213
Finance income	4	(3)	(8)	(13)
Finance expenses	4	27	1	6
Share of profit after tax of associate and joint venture		(9)	(21)	(27)
Impairment of available for sale financial assets	3	39	-	19
Depreciation and amortisation		47	46	96
Other impairment	3	-	-	174
Change in inventories		34	(113)	(133)
Change in trade and other receivables		214	92	12
Change in trade and other payables		(102)	(79)	37
Change in provisions		(3)	(6)	-
Profit on disposal of subsidiary	3	-	(2)	(2)
Dividend received from associate		3	-	-
Share-based payments		(10)	7	6
Other non cash charges		-	2	(7)
Cash flow from operations		41	315	947
Interest received		2	4	11
Interest and bank fees paid		(9)	(16)	(23)
Tax paid		(48)	(144)	(229)
Cash flow from operating activities		(14)	159	706

Cash flow from investing activities
Proceeds from disposal of subsidiary		-	3	3
Purchase of intangible assets		(8)	(9)	(24)
Purchase of property, plant and equipment		(98)	(130)	(354)
Purchase of available for sale financial assets		-	(17)	(17)
Proceeds from disposal of assets held for sale		-	1	1
Cash used in investing activities		(106)	(152)	(391)

Cash flow from financing activities
Equity dividends paid to Lonmin shareholders	8	-	(94)	(186)
Dividends paid to minority	8	(17)	(51)	(65)
Repayment of current borrowings	9	-	(99)	(237)
Proceeds from non-current borrowings	9	-	-	170
Repayment of non-current borrowings	9	(4)	(16)	-
Issue of ordinary share capital	8	15	4	6
Cash used in financing activities		(6)	(256)	(312)
(Decrease) / increase in cash and cash equivalents	9	(126)	(249)	3
Opening cash and cash equivalents	9	226	221	221
Effect of exchange rate changes	9	(24)	3	2
Closing cash and cash equivalents	9	76	(25)	226

Notes to the Accounts

1 Statement on accounting policies

Basis of preparation

Lonmin Plc (the "Company") is a company domiciled in the United Kingdom. The condensed consolidated interim financial statements of the Company as at and for the six months to 31 March 2009 comprise the Company and its subsidiaries (together referred to as the "Group") and the Group's interests in associates and joint ventures.

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting, as adopted by the EU. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 30 September 2008.

The comparative figures for the financial year ended 30 September 2008 are not the Group's full statutory accounts for that financial year. Those accounts have been reported on by the Group's auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 237(2) or (3) of the Companies Act 1985.

The consolidated financial statements of the Group as at and for the year ended 30 September 2008 are available upon request from the Company's registered office at 4 Grosvenor Place, London, SW1X 7YL.

These condensed consolidated interim financial statements were approved by the Board of Directors on 10 May 2009.

These consolidated interim financial statements apply the accounting policies and presentation that were applied in the preparation of the Group's published consolidated financial statements for the year ended 30 September 2008.

The Directors believe, after making inquiries that they consider to be appropriate and taking account of the net proceeds of the fully underwritten rights issue announced today, that the Company has adequate resources to continue in operational existence for the foreseeable future. The Directors continue to adopt the going concern basis in preparing the financial statements.

New standards that are relevant to the Group but have not yet been adopted

The following standards, issued by the IASB, have not yet been adopted by the Group:

IFRS 8 - Operating Segments introduces the "management approach" to segment reporting. IFRS 8, which becomes mandatory for the Group's 2010 financial statements, will require the disclosure of segment information based on the internal reports regularly reviewed by the Group's Chief Operating Decision Maker in order to assess each segment's performance and to allocate resources to them. Currently the Group presents segment information by business group and geographical location.

Amendment to IAS 1 - Presentation of Financial Statements. The Group will be required to present both a statement of comprehensive income and a statement of changes in equity as primary statements. The statement of comprehensive income effectively combines the current content of the income statement and statement of recognised income and expense. This represents a change from the current requirement to present either the statement of recognised income and expense or a statement of all changes in equity as a financial statement.

The Group is currently assessing the impact that these standards would have on the presentation of its consolidated results.

The Group does not expect the adoption of other new, or revisions to existing, standards or interpretations, issued by the IASB but not listed above, to have a material impact on the consolidated results or financial position of the Group.

Notes to the Accounts (continued)

2 Segmental analysis

The Group's primary operating segment is in the mining of Platinum Group Metals. The majority of the Group's operations are based in South Africa.

	6 months to 31 March 2009
Analysis by business group	Platinum ii $m	Corporate iii $m	Explorationiv $m	Total $m
Revenue - external sales	436	-	-	436
Operating loss	(116)	(19)	(7)	(142)
Segment total assets	2,981	7	758	3,746
Segment total liabilities	(865)	(249)	(181)	(1,295)
Capital expenditure i	94	-	17	111
Depreciation and amortisation	47	-	-	47
Impairment losses (note 3)	39	-	-	39
Share of profit of associate and joint venture	9	-	-	9
Share of net assets of associate and joint venture	174	-	-	174

	6 months to 31 March 2008
Analysis by business group	Platinum ii $m	Corporateiii $m	Explorationiv $m	Total $m
Revenue - external sales	907	-	-	907
Operating profit / (loss)	426	(42)	(16)	368
Segment total assets	3,118	16	725	3,859
Segment total liabilities	(937)	(196)	(181)	(1,314)
Capital expenditure i	138	-	16	154
Depreciation and amortisation	46	-	-	46
Share of profit of associate and joint venture	21	-	-	21
Share of net assets of associate and joint venture	152	-	-	152

	Year ended 30 September 2008
Analysis by business group	Platinum ii $m	Corporate iii $m	Explorationiv $m	Total $m
Revenue - external sales	2,231	-	-	2,231
Operating profit / (loss)	892	(101)	(27)	764
Segment total assets	3,369	25	741	4,135
Segment total liabilities	(1,100)	(267)	(174)	(1,541)
Capital expenditure i	389	-	36	425
Depreciation and amortisation	96	-	-	96
Impairment losses (note 3)	193	-	-	193
Share of profit of associate and joint venture	27	-	-	27
Share of net assets of associate and joint venture	163	-	-	163

Notes to the Accounts (continued)

2 Segmental analysis (continued)

	6 months to 31 March 2009
Analysis by geographical location	South Africa $m	UK $m	Other $m	Total $m
Revenue - external sales	436	-	-	436
Segment total assets	3,729	4	13	3,746
Capital expenditure i	111	-	-	111

	6 months to 31 March 2008
Analysis by geographical location	South Africa $m	UK $m	Other $m	Total $m
Revenue - external sales	907	-	-	907
Segment total assets	3,817	6	36	3,859
Capital expenditure i	154	-	-	154

	Year ended 30 September 2008
Analysis by geographical location	South Africa $m	UK $m	Other $m	Total $m
Revenue - external sales	2,231	-	-	2,231
Segment total assets	4,091	10	34	4,135
Capital expenditure i	425	-	-	425

Revenue by destination is analysed by geographical area below:

	6 months to 31 March 2009 $m	6 months to 31 March 2008 $m	Year ended 30 September 2008 $m
The Americas	77	216	580
Asia	141	356	798
Europe	162	104	349
South Africa	56	226	496
Zimbabwe	-	5	8
	436	907	2,231

Footnotes:

i	Capital expenditure includes additions to plant, property and equipment (including capitalised interest), intangible assets and goodwill in accordance with IAS 14 - Segment Reporting.
ii	The platinum segment includes all operational activities together with direct overheads, plus investments in mining related assets.
iii	The corporate segment consists of the London head office and the Johannesburg head office.
iv	The exploration segment comprises the investment in the Akanani deposit and various exploration sites around the world.

Notes to the Accounts (continued)

3 Special items

Special items are those items of financial performance that the Group believes should be separately disclosed on the face of the income statement to assist in the understanding of the financial performance achieved by the Group and for consistency with prior periods.

	6 months to 31 March 2009	6 months to 31 March 2008	Year ended 30 September 2008
	$m	$m	$m
Operating loss	(44)	(3)	(199)
- Restructuring and reorganisation costs i	(44)	-	-
- Impairment loss ii	-	-	(174)
- Profit on disposal of subsidiary iii	-	2	2
- Defence costs iv	-	-	(18)
- Pensions v	-	(5)	(9)

Impairment of available for sale assets vi	(39)	-	(19)

Loss on special items before taxation	(83)	(3)	(218)
Taxation related to special items (note 5)	53	96	109
Special (loss) / profit before minority interest	(30)	93	(109)
Minority interest	(3)	(17)	14
Special (loss) / profit for the period attributable to equity shareholders of Lonmin Plc	(33)	76	(95)

Footnotes:

i	In the current period the Group has incurred $44 million in restructuring and reorganisation costs primarily comprising employee exit costs together with abnormal non productive operating costs at Limpopo following the announcement of its closure.
ii	The 2008 full year impairment charges primarily comprised the write down of property, plant and equipment of $89 million for Baobab shaft at Limpopo together with $73 million of smelting synergies recognised as goodwill at acquisition and $7 million relating to the remaining carrying value of the Messina concentrate off-take contract. The impairment arose as a result of reduced reserves and weaker short-term pricing anticipated. The 2008 income statement was presented to incorporate these charges within depreciation, amortisation and impairment.
iii	During the first half of 2008 the Group disposed of a subsidiary, Southern Era Mining Exploration South Africa (Pty) Limited, for consideration of $3 million resulting in a profit before tax of $2 million.
iv	In the second half of 2008 the Group incurred $18 million of defence costs relating to a takeover bid that occurred.
v	During 2008, the Group settled the Lonmin Superannuation Scheme (LSS) and incurred a $9 million charge of which $5 million was incurred in the first half. No further expense relating to the LSS is expected in future periods.
vi	Certain available for sale financial assets were marked to market and fell below original acquisition costs resulting in $39 million of impairment charges taken to the income statement. $19 million impairment was recognised in the second half of 2008.

Notes to the Accounts (continued)

4 Finance income and expense

	6 months to 31 March 2009	6 months to 31 March 2008	Year ended 30 September 2008
	$m	$m	$m
Finance income:	3	8	13
Interest receivable	2	4	5
Movement in fair value of other receivables	1	1	1
Other interest receivable	-	-	7
Exchange gains on net debt ii	-	3	-

Finance expenses:	(27)	(1)	(6)
On bank loans and overdrafts	(8)	(16)	(22)
Bank fees	(2)	-	(1)
Capitalised interest i	10	15	23
Unwind of discounting on provisions	(1)	-	(4)
Exchange differences on other receivables	(2)	-	(4)
Exchange (losses) / gains on net debt ii	(24)	-	2

Total finance expenses	(27)	(1)	(6)
Net finance (expense) / income	(24)	7	7

Footnotes:

i	Interest expenses incurred have been capitalised on a Group basis to the extent that there is an appropriate qualifying asset. The weighted average interest rate used by the Group for capitalisation in the period was 3.2% (6 months to 31 March 2008 - 5.4%, year ended 30 September 2008 - 4.7%).
ii	Net debt as defined by the Group comprises cash and cash equivalents, bank overdrafts repayable on demand, interest bearing loans and borrowings.

Notes to the Accounts (continued)

5 Taxation

	6 months to 31 March 2009 $m	6 months to 31 March 2008 $m	Year ended 30 September 2008 $m
United Kingdom:
Current tax expense at 28% (2008 - 28%)	31	98	126
Less amount of the benefit arising from double tax relief available	(31)	(98)	(126)
Total UK tax expense	-	-	-

Overseas:
Current tax expense at 28% (2008 - 28%) excluding special items	10	120	261
Corporate tax (income) / expense	-	93	224
Tax on dividends remitted	10	27	37

Deferred tax (income) / expense:	(26)	17	61
Origination and reversal of temporary differences	(26)	17	49
Tax on dividends unremitted	-	-	12

Special items: UK and overseas (note 3):	(53)	(96)	(109)
Deferred tax on reorganisation and restructuring costs	(9)	-	-
Exchange on current taxation i	(3)	(11)	(19)
Exchange on deferred taxation i	(47)	(58)	(69)
Reversal of utilisation / (utilisation) of losses from prior periods to offset deferred tax liability ii	6	-	(2)
Retranslation of monetary assets and other translation differences	-	(14)	-
Change in South African corporate tax rate from 29% to 28% iii	-	(13)	(19)

Actual tax (credit) / charge	(69)	41	213
Tax (credit) / charge excluding special items (note 3)	(16)	137	322
Effective tax rate	35%	10%	27%
Effective tax rate excluding special items (note 3)	14%	35%	32%

Notes to the Accounts (continued)

5 Taxation (continued)

A reconciliation of the standard tax charge to the actual tax charge was as follows:

	6 months to 31 March 2009	6 months to 31 March 2009	6 months to 31 March 2008	6 months to 31 March 2008	Year ended 30 September 2008	Year ended 30 September 2008
		$m		$m		$m
Tax (credit) / charge at standard tax rate	28%	(55)	28%	111	28%	218
Overseas taxes on dividends remitted by subsidiary companies	1%	(2)	7%	27	5%	37
Overseas taxes on dividends unremitted by subsidiary companies	-	-	-	-	2%	12
Special items as defined above	21%	(41)	(25)%	(96)	(14)%	(109)
Tax effect of impairment relating to Baobab shaft at Limpopo	-	-	-	-	6%	49
Tax effect of impairment of available for sale financial assets	(6)%	11	-	-	-	5
Tax effect of unutilised losses	(8)%	15	-	-	-	-
Tax effect of other timing differences	(1)%	3	-	(1)	-	1
Actual tax (credit) / charge	35%	(69)	10%	41	27%	213

The Group's primary operations are based in South Africa. Therefore, the relevant standard tax rate for the Group was the South African statutory tax rate of 28% (2008 - 28%). The secondary tax rate on dividends remitted by South African companies was 10% (2008 - 10%).

Footnotes:

i	Overseas tax charges are predominantly calculated based on Rand financial statements. As the Group's functional currency is US Dollar this leads to a variety of foreign exchange impacts being the retranslation of current and deferred tax balances and monetary assets, as well as other translation differences. The Rand denominated deferred tax balance in US Dollars at 31 March 2009 is $297 million (31 March 2008 - $333 million, 30 September 2008 - $373 million).
ii	The Group holds a number of available for sale financial assets which are marked to market. The investments have decreased in value resulting in the unwind of the associated deferred tax balances. Losses below initial carrying value have not created deferred tax assets because future profits arising in relevant statutory entities are not considered sufficiently certain. In the prior year one of the investments increased in value resulting in a deferred tax balance arising on setting off unutilised tax losses against the gain.
iii	The corporation tax rate changed to 28% with effect from the 2008 financial year. This resulted in net release of deferred tax liabilities of $19 million. This tax saving was reported as special.

Notes to the Accounts (continued)

6 (Loss) / earnings per share

(Loss) / earnings per share have been calculated on the (loss) / earnings for the period attributable to equity shareholders amounting to $112 million (March 2008 - profit $283 million) using a weighted average number of 157.4 million ordinary shares in issue for the 6 months to 31 March 2009 (6 months to 31 March 2008 - 156.3 million ordinary shares).

Diluted (loss) / earnings per share are based on the weighted average number of ordinary shares in issue adjusted by dilutive outstanding share options. In the 6 months to 31 March 2009 outstanding share options were anti-dilutive and so have been excluded from diluted earnings per share in accordance with IAS 33 - Earnings Per Share.

	6 months to 31 March 2009			6 months to 31 March 2008			Year ended 30 September 2008
	(Loss)/profit for the period	Number of shares	Per share amount	Profit for the period	Number of shares	Per share amount	Profit for the year	Number of shares	Per share amount
	$m	millions	cents	$m	millions	cents	$m	millions	cents
Basic (LPS) / EPS	(112)	157.4	(71.2)	283	156.3	181.1	455	156.3	291.1
Share option schemes	-	-	-	-	0.6	(0.6)	-	0.5	(0.9)
Diluted (LPS) / EPS	(112)	157.4	(71.2)	283	156.9	180.5	455	156.8	290.2

	6 months to 31 March 2009			6 months to 31 March 2008			Year ended 30 September 2008
	(Loss)/profit for the period	Number of shares	Per share amount	Profit for the period	Number of shares	Per share amount	Profit for the year	Number of shares	Per share amount
	$m	millions	cents	$m	millions	cents	$m	millions	cents
Underlying (LPS) / EPS	(79)	157.4	(50.2)	207	156.3	132.5	550	156.3	351.9
Share option schemes	-	-	-	-	0.6	(0.5)	-	0.5	(1.2)
Diluted Underlying (LPS) / EPS	(79)	157.4	(50.2)	207	156.9	132.0	550	156.8	350.7

Underlying (loss) / earnings per share have been presented as the Directors consider it to give a fairer reflection of the underlying results of the business. Underlying (loss) / earnings per share are based on the (loss) / profit attributable to equity shareholders adjusted to exclude special items (as defined in note 3) as follows:

	6 months to 31 March 2009			6 months to 31 March 2008			Year ended 30 September 2008
	(Loss)/profit for the period	Number of shares	Per share amount	Profit/(loss) for the period	Number of shares	Per share amount	Profit for the year	Number of shares	Per share amount
	$m	millions	cents	$m	millions	cents	$m	millions	cents
Basic (LPS) / EPS	(112)	157.4	(71.2)	283	156.3	181.1	455	156.3	291.1
Special Items (note 3)	33	-	21.0	(76)	-	(48.6)	95	-	60.8
Underlying (LPS) / EPS	(79)	157.4	(50.2)	207	156.3	132.5	550	156.3	351.9

Notes to the Accounts (continued)

6 Earnings per share (continued)

Headline (loss) / earnings and the resultant headline (loss) / earnings per share are specific disclosures defined and required by the Johannesburg Stock Exchange.

These are calculated as follows:

	6 months to 31 March 2009	6 months to 31 March 2008	Year ended 30 September 2008
	$m	$m	$m
(Loss) / earnings attributable to ordinary shareholders (IAS 33 earnings)	(112)	283	455
Less profit on sale of subsidiary (note 3)	-	(2)	(2)
Add back impairment of assets (note 3)	39	-	193
Tax related to the above items	-	1	1
Headline (loss) / earnings	(73)	282	647

	6 months to 31 March 2009			6 months to 31 March 2008			Year ended 30 September 2008
	(Loss)/profit for the period	Number of shares	Per share amount	Profit for the period	Number of shares	Per share amount	Profit for the year	Number of shares	Per share amount
	$m	millions	cents	$m	millions	cents	$m	millions	cents
Headline (LPS) / EPS	(73)	157.4	(46.4)	282	156.3	180.5	647	156.3	413.9
Share option schemes	-	-	-	-	0.6	(0.7)	-	0.5	(1.3)
Diluted Headline (LPS) / EPS	(73)	157.4	(46.4)	282	156.9	179.8	647	156.8	412.6

7 Dividends

	6 months to 31 March 2009		6 months to 31 March 2008		Year ended 30 September 2008
	$m	Cents per share	$m	Cents per share	$m	Cents per share
Prior year final dividend paid in the period	-	0.0	94	60.0	94	60.0
Interim dividend paid in the period	-	0.0	-	0.0	92	59.0
Total dividend paid in the period	-	0.0	94	60.0	186	119.0
		0.0
Proposed dividend in respect of the period	-	0.0	92	59.0	-	0.0

Notes to the Accounts (continued)

8 Total equity

	Equity shareholders' funds
	Called	Share
	up share	premium	Other	Retained		Minority	Total
	capital	account	reserves ii	earnings	Total	interests iii	equity
	$m	$m	$m	$m	$m	$m	$m
At 1 October 2007	156	299	96	1,417	1,968	392	2,360
Total recognised income and expense	-	-	(8)	258	250	71	321
Dividends	-	-	-	(94)	(94)	(51)	(145)
Other	-	-	-	5	5	-	5
Shares issued on exercise of share options	-	4	-	-	4	-	4
At 31 March 2008	156	303	88	1,586	2,133	412	2,545

At 1 April 2008	156	303	88	1,586	2,133	412	2,545
Total recognised income and expense	-	-	12	90	102	49	151
Dividends	-	-	-	(92)	(92)	(14)	(106)
Other	-	-	-	2	2	-	2
Shares issued on exercise of share options	-	2	-	-	2	-	2
At 30 September 2008	156	305	100	1,586	2,147	447	2,594

At 1 October 2008	156	305	100	1,586	2,147	447	2,594
Total recognised income and expense	-	-	(3)	(123)	(126)	(16)	(142)
Dividends	-	-	-	-	-	(17)	(17)
Shares issued under the IFC option agreement i	1	15	-	-	16	-	16
At 31 March 2009	157	320	97	1,463	2,037	414	2,451

Footnotes:

i	During the year 1,172,583 shares were issued under the International Finance Corporation option agreement. As the shares were issued at a discount only $15 million of cash was received.
ii	Other reserves at 31 March 2009 represent the capital redemption reserve of $88 million (30 September 2008 - $88 million) and a $9 million hedging reserve net of deferred tax (30 September 2008 - $12 million). The movement in the current period represents the movement on the hedging reserve.
iii	Minority interests represent an 18% shareholding in Eastern Platinum Limited, Western Platinum Limited and Messina Limited and a 26% shareholding in Akanani Mining (Pty) Limited.

Notes to the Accounts (continued)

9 Analysis of net debt i

	As at 1 October 2008	Cash flow	Foreign exchange and non cash movements	As at 31 March 2009
	$m	$m	$m	$m

Cash and cash equivalents	226	(120)	(24)	82
Overdrafts	-	(6)	-	(6)
	226	(126)	(24)	76
Current borrowings	-	-	-	-
Non-current borrowings	(529)	4	-	(525)
Net debt i	(303)	(122)	(24)	(449)

	As at 1 April 2008	Cash flow	Foreign exchange and non cash movements	As at 30 September 2008
	$m	$m	$m	$m

Cash and cash equivalents	13	214	(1)	226
Overdrafts	(38)	38	-	-
	(25)	252	(1)	226
Current borrowings	(138)	138	-	-
Non-current borrowings	(343)	(186)	-	(529)
Net debt i	(506)	204	(1)	(303)

	As at 1 October 2007	Cash flow	Foreign exchange and non cash movements	As at 31 March 2008
	$m	$m	$m	$m

Cash and cash equivalents	222	(212)	3	13
Overdrafts	(1)	(37)	-	(38)
	221	(249)	3	(25)
Current borrowings	(237)	99	-	(138)
Non-current borrowings	(359)	16	-	(343)
Net debt i	(375)	(134)	3	(506)

Footnotes:

i	Net debt as defined by the Group comprises cash and cash equivalents, bank overdrafts repayable on demand, interest bearing loans and borrowings.

Notes to the Accounts (continued)

10 Contingent liabilities

	As at 31 March 2009	As at 31 March 2008	As at 30 September 2008
	$m	$m	$m
Third party guarantees i	7	7	7
Indemnities ii	66	77	74
Preference share capital put options iii	17	17	18
Vantage Capital Investments iv	16	16	18
Outstanding legal claims	2	2	2
Contingent liabilities	108	119	119

Footnotes:

i	Third party guarantees relate to guarantees provided by the Group in connection with the sale of certain subsidiaries in 1996, 1997 and 1998 for which amounts have been reasonably estimated but the liabilities are not probable and therefore the Group has not provided for such amounts in the accounts.
ii	Indemnities represent the vendor financing indemnity given by Lonmin following the purchase of the additional 9.11% in Eastern Platinum Limited (EPL) and Western Platinum Limited (WPL) and the investment in Incwala Resources (Pty) Limited (Incwala). Lonmin agreed to indemnify Impala Platinum Holdings Limited (Impala) against any non-payment on the relevant due date of any principal amount owing to Impala by any HDSA (historically disadvantaged South African) investor in relation to loans made by Impala to HDSA investors for their purchase of shares in EPL and WPL. The indemnity is for the US Dollar equivalent of R618 million ($66 million of which $47 million would become enforceable on 30 September 2009 and $19 million would become enforceable on 30 September 2011). A counter-indemnity has been given by each HDSA investor which is secured on that HDSA investor's shares in Incwala.
iii	Various preference share capital put option agreements were entered into by Lonmin with a number of banks who subscribed for preference shares in HDSAs investing in Incwala. These options, which are for the US Dollar equivalent of R160 million ($17 million), can be put upon Lonmin by the banks in the event that the HDSAs default on payment. A counter-indemnity has been given by each HDSA investor which is secured on that HDSA investor's shares in Incwala.
iv	Vantage Capital Investments:
	1) In 2006, pursuant to a reorganisation of the HDSA shareholdings in Incwala, Lonmin Plc granted Standard Chartered Bank Johannesburg Branch a put option in respect of 96 preference shares in Vantage Capital Investments (Pty) Ltd. During the year ended 30 September 2007 the bank sold 48 of these put options to Thelo Incwala Investments (Pty) Limited (Thelo). The put option granted by Lonmin Plc outstanding at 31 March 2009 was for the US Dollar equivalent of R111 million ($12 million).
	2) The Lonmin Employee Masakane Trust (LEMT) has a 25% shareholding in Thelo. Lonmin Plc has provided a guarantee to Sanlam Capital Markets Limited, on behalf of LEMT, over their 25% share of the Thelo funding to acquire 48 preference shares in Vantage Capital. The guarantee at 31 March 2009 covers the US Dollar equivalent of R41 million ($4 million).

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR ILFLDERITIIA

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