8th May 2008 07:01
Lonmin PLC08 May 2008 Lonmin Interim Results (Part 2 of 2) Operating Statistics and Financial Statements Operational statistics 6 months to 6 months to 31 March 31 March Units 2008 2007-------------- -------- ------------ ------ --------- --------- Tonnes mined Marikana Underground conventional 000 4,349 5,344 Underground M&A1 000 552 236 Underground - total 000 4,901 5,580 Opencast 000 624 704 Total 000 5,525 6,284-------------- -------- ------------ ------ --------- --------- Limpopo Underground 000 264 390 Opencast 000 0 0 Total 000 264 390-------------- -------- ------------ ------ --------- --------- Pandora Underground 000 68 60 attributable2 Opencast 000 101 150 Total 000 169 210-------------- -------- ------------ ------ --------- --------- Lonmin Underground 000 5,233 6,030 Platinum Opencast 000 725 854 Total 000 5,958 6,884-------------- -------- ------------ ------ --------- ---------Tonnes milled3 Marikana Underground 000 4,844 5,581 Opencast 000 719 738 Total 000 5,563 6,319-------------- -------- ------------ ------ --------- --------- Limpopo Underground 000 207 397 Opencast 000 0 0 Total 000 207 397-------------- -------- ------------ ------ --------- --------- Pandora4 Underground 000 159 141 Opencast 000 192 336 Total 000 351 477-------------- -------- ------------ ------ --------- --------- Ore Underground 000 0 72 purchases5 Opencast 000 30 0 Total 000 30 72-------------- -------- ------------ ------ --------- --------- Lonmin Underground 000 5,210 6,191 Platinum Head grade6 g/t 4.72 4.96 Recovery rate7 % 81.5% 81.5% Opencast 000 941 1,074 Head grade6 g/t 3.18 4.34 Recovery rate7 % 56.8% 56.0% Total 000 6,151 7,265 Head grade6 g/t 4.48 4.87 Recovery rate7 % 78.8% 78.1%-------------- -------- ------------ ------ --------- --------- 6 months to 6 months to 31 March 31 March Restated8 2008 2007-------------- -------- ------------ ------ --------- ---------Metals inconcentrate9 Marikana Platinum oz 319,543 397,103 Palladium oz 146,474 181,192 Gold oz 8,522 11,030 Rhodium oz 43,328 52,146 Ruthenium oz 66,680 83,954 Iridium oz 13,945 17,284 Total PGMs oz 598,492 742,710 Nickel10 MT 1,493 1,916 Copper10 MT 906 1,155-------------- -------- ------------ ------ --------- --------- Limpopo Platinum oz 8,589 18,759 Palladium oz 6,493 13,083 Gold oz 620 1,448 Rhodium oz 894 1,955 Ruthenium oz 1,302 3,053 Iridium oz 274 722 Total PGMs oz 18,172 39,020 Nickel10 MT 175 416 Copper10 MT 120 285-------------- -------- ------------ ------ --------- --------- Pandora4 Platinum oz 17,824 25,600 Palladium oz 8,148 11,997 Gold oz 133 226 Rhodium oz 2,478 3,707 Ruthenium oz 3,676 5,511 Iridium oz 615 1,198 Total PGMs oz 32,875 48,238 Nickel10 MT 25 30 Copper10 MT 11 17-------------- -------- ------------ ------ --------- --------- Ore Platinum oz 937 2,675 purchases5 Palladium oz 793 1,233 Gold oz 74 36 Rhodium oz 83 416 Ruthenium oz 107 670 Iridium oz 25 138 Total PGMs oz 2,019 5,167 Nickel10 MT 16 16 Copper10 MT 11 8-------------- -------- ------------ ------ --------- --------- Lonmin Platinum oz 346,892 444,136 Platinum Palladium oz 161,908 207,505 Gold oz 9,350 12,740 Rhodium oz 46,783 58,224 Ruthenium oz 71,765 93,189 Iridium oz 14,859 19,342 Total PGMs oz 651,556 835,136 Nickel10 MT 1,709 2,378 Copper10 MT 1,047 1,466-------------- -------- ------------ ------ --------- --------- 6 months 6 months to 31 to 31 March March 2008 2007-------------- -------- ------------ ------ --------- ---------Metallurgy Lonmin Platinum oz 282,650 259,434 refined Palladium oz 128,140 116,581 Metal Gold oz 9,563 7,555 Production Rhodium oz 42,437 31,019 Ruthenium oz 62,763 42,587 Iridium oz 10,577 12,838 Total PGMs oz 536,128 470,015-------------- -------- ------------ ------ --------- --------- Toll Platinum oz 0 23,872 refined Palladium oz 0 10,862 metal Gold oz 0 0 production Rhodium oz 0 3,447 Ruthenium oz 0 5,409 Iridium oz 0 1,063 Total PGMs oz 0 44,653-------------- -------- ------------ ------ --------- --------- Total Platinum oz 282,650 283,306 refined Palladium oz 128,140 127,443 PGMs Gold oz 9,563 7,555 Rhodium oz 42,437 34,466 Ruthenium oz 62,763 47,996 Iridium oz 10,577 13,901 Total PGMs oz 536,128 514,668-------------- -------- ------------ ------ --------- --------- Base Nickel11 MT 1,323 1,604 metals Copper11 MT 795 826-------------- -------- ------------ ------ --------- ---------Capital Rm 1000 750Expenditure $m 139 105-------------- -------- ------------ ------ --------- --------- Sales Refined Platinum oz 284,730 273,191 Metal Palladium oz 133,990 124,884 Sales Gold oz 9,208 7,560 Rhodium oz 43,537 37,170 Ruthenium oz 65,940 56,492 Iridium oz 11,720 13,981 Total PGMs oz 549,127 513,278-------------- -------- ------------ ------ --------- --------- Concentrate Platinum oz 4,233 1,249 and other12 Palladium oz 1,833 496 Gold oz 97 2,037 Rhodium oz 758 46 Ruthenium oz 990 90 Iridium oz 240 22 Total PGMs oz 8,150 3,940-------------- -------- ------------ ------ --------- --------- Lonmin Platinum oz 288,963 274,440 Platinum Palladium oz 135,823 125,380 Gold oz 9,305 9,597 Rhodium oz 44,295 37,216 Ruthenium oz 66,930 56,582 Iridium oz 11,960 14,003 Total PGMs oz 557,276 517,218 Nickel 11 MT 1,216 2,232 Copper11 MT 805 774-------------- -------- ------------ ------ --------- --------- 6 months 6 months to 31 to March 31 March 2008 2007-------------- -------- ------------ ------ --------- ---------Prices Average Platinum $/oz 1,578 1,103 Palladium $/oz 396 325 Gold $/oz 853 602 Rhodium $/oz 7,121 5,325 Ruthenium $/oz 446 305 Iridium $/oz 424 392 Basket price of PGMs13 $/oz 1,558 1,102 Nickel11 $/MT 27,235 25,067 Copper11 $/MT 6,936 6,558-------------- -------- ------------ ------ --------- --------- Cost per PGM ounce soldMining - Marikana R/oz 3,247 2,134Mining - Limpopo R/oz 6,125 4,405Mining - (weighted average) R/oz 3,366 2,270Concentrating - Marikana R/oz 638 408Concentrating - Limpopo R/oz 2,193 1,171Concentrating - (weighted average) R/oz 684 454Process division R/oz 604 722Shared business service R/oz 838 685Stock movement R/oz (489) (83)C1 cost per PGM ounce sold before base metal credits R/oz 5,003 4,048Base metal credits R/oz (493) (867)C1 costs per PGM ounce sold after base credits R/oz 4,510 3,181Amortisation R/oz 496 367C2 costs per PGM ounce sold R/oz 5,006 3,548Pandora mining costs:C1 Pandora mining costs (in joint venture) R/oz 3,945 1,921Pandora JV cost/ounce to Lonmin (adjusting R/oz 6,703 3,686Lonmin share of profit) Exchange Average rate for period R/$ 7.14 7.31Rates Closing rate R/$ 8.08 7.24 Notes:1 M&A comprises ore produced by our ultra low profile mechanised equipment.2 JV attributable tonnes mined includes Lonmin's share (42.5%) of the total tonnes mined on the Pandora 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 The metals in concentrate numbers for the prior year have been restated to adjust for a measurement error, discovered during the fourth quarter in the prior year, which occurred at one of our concentrators during the 2007 financial year.9 Metals in concentrate includes slag and have been calculated at industry standard downstream processing losses.10 Corresponds to contained base metals in concentrate.11 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.12 Concentrate and other sales have been adjusted to a saleable ounces basis using standard industry recovery rates.13 Basket price of PGMs is based on the revenue generated from the actual PGMs sold in the period. Consolidated income statementfor the 6 months ended 31 March 2008 ----------------------------------------------------------------------------------------------------------------------- 6 months Special 6 months 6 months Special 6 months Year ended Special Year ended to to to items to 30 items 30 September September 31 March items 31 March 31 March 31 March 2007 2007 2008 2008 2007 2007 Underlying Total Underlying (note 3) Total Underlying (note Total (i) (note (i) (i) 3) 3)Continuing operations Note $m $m $m $m $m $m $m $m $m======================================================================================================================== Revenue 2 907 - 907 631 - 631 1,941 - 1,941========================================================================================================================EBITDA (ii) 417 (3) 414 271 1 272 883 (2) 881Depreciation and amortisation (46) - (46) (43) - (43) (87) - (87)------------------------------------------------------------------------------------------------------------------------Operating profit/(loss) (iii) 2 371 (3) 368 228 1 229 796 (2) 794Finance income 4 8 - 8 12 - 12 32 - 32Finance expenses 4 (1) - (1) (15) (104) (119) (35) (104) (139)Share of profit of associate and joint venture 21 - 21 10 - 10 18 - 18------------------------------------------------------------------------------------------------------------------------Profit / (loss) before taxation 399 (3) 396 235 (103) 132 811 (106) 705Income tax income/(expense) (iv) 5 (137) 96 (41) (84) (28) (112) (255) (42) (297)------------------------------------------------------------------------------------------------------------------------Profit / (loss) for the period 262 93 355 151 (131) 20 556 (148) 408========================================================================================================================Attributable to:- Equity shareholders of Lonmin Plc 207 76 283 123 (126) (3) 453 (139) 314- Minority interest 55 17 72 28 (5) 23 103 (9) 94------------------------------------------------------------------------------------------------------------------------Earnings / (loss) per share 6 132.5c 181.1c 81.5c (2.0)c 295.9c 205.1c------------------------------------------------------------------------------------------------------------------------Diluted earnings / (loss) per share (v) 6 132.0c 180.5c 80.7c (2.0)c 293.4c 203.3c------------------------------------------------------------------------------------------------------------------------Dividend per share paid in period 7 60.0c 55.0c 110.0c------------------------------------------------------------------------------------------------------------------------ Consolidated statement of recognised income and expensefor the 6 months ended 31 March 2008 -------------------------------------------------------------------------------------------------------------------- 6 months to 6 months to Year ended 31 March 31 March 30 September 2008 2007 2007 Note $m $m $m--------------------------------------------------------------------------------------------------------------------Profit for the period 355 20 408Change in fair value of available for sale financial assets (33) 72 111Effective portion of changes in fair value of cash flow hedges - (35) 20Net change in fair value of cash flow hedges transferred to income statement (8) 10 (8)Deferred tax on items taken directly to the statement of recognised income and expense 7 - (32)Actuarial losses on the post retirement benefit plan - - (11)--------------------------------------------------------------------------------------------------------------------Total recognised income for the period 321 67 488==================================================================================================================== Attributable to:- Equity shareholders of Lonmin Plc 8 250 49 392- Minority interest 8 71 18 96-------------------------------------------------------------------------------------------------------------------- 8 321 67 488==================================================================================================================== Footnotes: (i) Underlying earnings are calculated on profit for the period excluding pension scheme payments to fund augmentations of transfer values as part of a liability reduction exercise, profit on disposal of subsidiaries, foreign exchange on tax balances and effects of changes in corporate tax rates on deferred tax. For prior periods, special items also includes profit on the sale of Marikana houses, impairment of non-mining investments and movements in the fair value of the embedded derivative associated with the convertible bonds as disclosed in note 3 to the interim accounts. (ii) EBITDA is operating profit before depreciation and amortisation. (iii) Operating profit is defined as revenue and other operating expenses before finance income and expense and before share of profit of associate and joint venture. (iv) The income tax expense relates to overseas taxation and includes exchange gains of $83 million (March 2007 - losses of $28 million) as disclosed in note 5 to the interim accounts. (v) In the prior periods the calculation of diluted EPS includes consideration of the movement in fair value of the embedded derivative within the convertible bonds subject to the limitation under IAS 33 - Earnings Per Share, that this cannot thereby create a figure exceeding basic EPS. Consolidated balance sheetas at 31 March 2008 --------------------------------------------------------------------------------------- As at As at As at 31 March 31 March 30 September 2008 2007 2007 Note $m $m $m---------------------------------------------------------------------------------------Non-current assetsGoodwill 186 186 186Intangible assets 937 939 936Property, plant and equipment 1,780 1,526 1,673Investment in associate and joint venture 152 123 131Financial assets:- Available for sale financial assets 207 170 226- Other receivables 21 22 22Employee benefits - 9 ---------------------------------------------------------------------------------------- 3,283 2,975 3,174--------------------------------------------------------------------------------------- Current assetsInventories 299 256 186Trade and other receivables 246 171 338Assets held for sale 6 8 7Tax recoverable 12 4 3Financial assets:- Derivative financial instruments - - 8Cash and cash equivalents 13 48 222 --------------------------------------------------------------------------------------- 576 487 764--------------------------------------------------------------------------------------- Current liabilitiesBank overdraft repayable on demand (38) (1) (1)Trade and other payables (207) (152) (286)Financial liabilities:- Interest bearing loans and borrowings (138) (332) (237)- Derivative financial instruments - (29) -Tax payable - (18) (40)--------------------------------------------------------------------------------------- (383) (532) (564)---------------------------------------------------------------------------------------Net current assets 193 (45) 200--------------------------------------------------------------------------------------- Non-current liabilitiesEmployee benefits (27) (10) (24)Financial liabilities:Interest bearing loans and borrowings (343) (380) (359)Deferred tax liabilities (521) (506) (585)Provisions (40) (43) (46)--------------------------------------------------------------------------------------- (931) (939) (1,014)---------------------------------------------------------------------------------------Net assets 2,545 1,991 2,360======================================================================================= Capital and reservesShare capital 8 156 155 156Share premium 8 303 249 299Other reserves 8 88 64 96Retained earnings 8 1,586 1,190 1,417---------------------------------------------------------------------------------------Attributable to equity shareholders of Lonmin Plc 8 2,133 1,658 1,968Attributable to minority interest 8 412 333 392---------------------------------------------------------------------------------------Total equity 8 2,545 1,991 2,360======================================================================================= Consolidated cash flow statementfor the 6 months ended 31 March 2008 6 months to 6 months to Year ended 31 March 31 March 30 September 2008 2007 2007 Note $m $m $m-------------------------------------------------------------------------------------------------------Profit for the period 355 20 408Taxation 5 41 112 297Finance income 4 (8) (12) (32)Finance expenses 4 1 119 139Share of profit after tax of associate and jointventure (21) (10) (18)Depreciation and amortisation 46 43 87Change in inventories (113) (121) (51)Change in trade and other receivables 92 225 58Change in trade and other payables (79) (60) 70Change in provisions (6) 4 4Profit on sale of assets held for sale - (1) (1)Profit on sale of subsidiary (2) - -Share-based payments 7 - 24Other non cash charges 2 3 (2)-------------------------------------------------------------------------------------------------------Cash flow from operations 315 322 983Interest received 4 4 16Interest paid (16) (15) (41)Tax paid (144) (149) (266)-------------------------------------------------------------------------------------------------------Cash flow from operating activities 159 162 692------------------------------------------------------------------------------------------------------- Cash flow from investing activitiesAcquisition of subsidiaries (net of cash acquired) 10 - (393) (393)Proceeds from disposal of subsidiaries 3 - -Purchase of intangible assets (9) (4) (6)Purchase of property, plant and equipment (130) (101) (270)Proceeds from available for sale financial assets - - 51Purchase of available for sale financial assets (17) (3) (72)Proceeds from disposal of assets held for sale 1 3 5-------------------------------------------------------------------------------------------------------Cash used in investing activities (152) (498) (685)------------------------------------------------------------------------------------------------------- Cash flow from financing activitiesEquity dividends paid to Lonmin shareholders 8 (94) (85) (171)Dividends paid to minority 8 (51) (21) (41)Proceeds from current borrowings 9 - 332 237Repayment of current borrowings 9 (99) - -Proceeds from non-current borrowings 9 - 92 71Repayment of non-current borrowings 9 (16) - -Issue of ordinary share capital 8 4 19 68-------------------------------------------------------------------------------------------------------Cash used in financing activities (256) 337 164-------------------------------------------------------------------------------------------------------(Decrease)/increase in cash and cash equivalents (249) 1 171Opening cash and cash equivalents 9 221 43 43Effect of exchange rate changes 9 3 3 7-------------------------------------------------------------------------------------------------------Closing cash and cash equivalents 9 (25) 47 221======================================================================================================= Notes to the Accounts 1. Statement on accounting policies Basis of preparationLonmin Plc (the "Company") is a company domiciled in the United Kingdom. Thecondensed consolidated interim financial statements of the Company as at and forthe six months ended 31 March 2008 comprise the Company and its subsidiaries(together referred to as the "Group") and the Group's interests in associatesand joint ventures. These condensed consolidated interim financial statements have been prepared inaccordance with IAS 34 - Interim Financial Reporting, as adopted by the EU. Theydo not include all of the information required for full annual financialstatements and should be read in conjunction with the consolidated financialstatements of the Group for the year ended 30 September 2007. The comparative figures for the financial year ended 30 September 2007 are notthe Group's full statutory accounts for that financial year. Those accounts havebeen reported on by the Group's auditors and delivered to the registrar ofcompanies. The report of the auditors was (i) unqualified, (ii) did not includea reference to any matters to which the auditors drew attention by way ofemphasis without qualifying their report, and (iii) did not contain a statementunder section 237(2) or (3) of the Companies Act 1985. The consolidated financial statements for the Group as at and for the year ended30 September 2007 are available upon request from the Company's registeredoffice at 4 Grosvenor Place, London, SW1X 7YL. These condensed consolidated interim financial statements were approved by theBoard of Directors on 7 May 2008. These consolidated interim financial statements apply the accounting policiesand presentation that were applied in the preparation of the Group's publishedconsolidated financial statements for the year ended 30 September 2007, exceptfor the changes outlined below. New standards and amendments in the year IFRS 7 - Financial Instruments: Disclosure and the Amendment to IAS 1 -Presentation of Financial Statements: Capital Disclosures require extensive disclosures about the significance of financial instruments for an entity's financial position and financial performance and qualitative and quantitative disclosures on the nature and extent of risks. IFRS 7 and amended IAS 1, which become mandatory for the Group's 2008 annual financial statements, will require additional disclosure with respect to the Group's financial instruments and share capital. New standards that are relevant to the Group but have not yet been adopted IFRS 8 - Operating Segments introduces the "management approach" to segmentreporting. IFRS 8, which becomes mandatory for the Group's 2009 financialstatements, will require the disclosure of segment information based on theinternal reports regularly reviewed by the Group's Chief Operating DecisionMaker in order to assess each segment's performance and to allocate resources tothem. Currently the Group presents segment information by business group andgeographical location. Revised IAS 23 - Borrowing Costs removes the option to expense borrowing costsand requires that an entity capitalises borrowing costs directly attributable tothe acquisition, construction or production of a qualifying asset as part of thecost of the asset. The revised IAS 23 will become mandatory for the Group's 2009financial statements. Currently, the Group has elected to capitalise allrelevant borrowing costs to the cost of the asset and therefore the change willnot impact on the Group's results. 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 2008 ------------------------------------------------------ Platinum Corporate Exploration Total Analysis by business group $m $m $m $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 JV 21 - - 21 ------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------(Restated (ii)) 6 months to 31 March 2007 ------------------------------------------------------ Platinum Corporate Exploration TotalAnalysis by business group $m $m $m $m=================================================================================================Revenue - external sales 631 - - 631Operating profit / (loss) 255 (18) (8) 229Segment total assets 2,722 50 690 3,462Segment total liabilities (956) (342) (173) (1,471)Capital expenditure(i) 107 - 4 111Depreciation and amortisation 43 - - 43Share of profit of associate and JV 10 - - 10------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------- Year ended 30 September 2007 ------------------------------------------------------ Platinum Corporate Exploration Total Analysis by business group $m $m $m $m -------------------------------------------------------------------------------------------------Revenue - external sales 1,941 - - 1,941 Operating profit / (loss) 880 (63) (23) 794 Segment total assets 3,211 41 686 3,938 Segment total liabilities (1,066) (339) (173) (1,578) Capital expenditure(i) 353 - 19 372 Depreciation and amortisation 87 - - 87 Share of profit of associate and JV 18 - - 18 ------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------- 6 months to 31 March 2008 ------------------------------------------------------ South Africa UK Other Total Analysis by geographical location $m $m $m $m =================================================================================================Revenue - external sales 907 - - 907 Segment total assets 3,817 6 36 3,859 Capital expenditure(i) 154 - - 154 ------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------- 6 months to 31 March 2007 ------------------------------------------------------ South Africa UK Other Total Analysis by geographical location $m $m $m $m =================================================================================================Revenue - external sales 631 - - 631 Segment total assets 3,410 50 2 3,462 Capital expenditure(i) 111 - - 111 ------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------- Year ended 30 September 2007 ------------------------------------------------------ South Africa UK Other Total Analysis by geographical location $m $m $m $m =================================================================================================Revenue - external sales 1,941 - - 1,941 Segment total assets 3,867 41 30 3,938 Capital expenditure(i) 372 - - 372 ------------------------------------------------------------------------------------------------- Revenue by destination is analysed by geographical area below: --------------------------------------------------------------------------------------------- 6 months to 6 months to Year ended 31 March 31 March 30 September 2008 2007 2007 $m $m $m---------------------------------------------------------------------------------------------The Americas 216 76 419Asia 356 300 705Europe 104 60 314South Africa 226 184 482Zimbabwe 5 11 21--------------------------------------------------------------------------------------------- 907 631 1,941--------------------------------------------------------------------------------------------- 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) Figures for the 6 months to 31 March 2007 have been restated to revise the classification of Exploration assets and liabilities. 3. Special items 'Special items' are those items of financial performance that the Group believesshould be separately disclosed on the face of the income statement to assist inthe understanding of the financial performance achieved by the Group and forconsistency with prior years. ---------------------------------------------------------------------------------------------- 6 months to 6 months to Year ended 31 March 31 March 30 September 2008 2007 2007 $m $m $m----------------------------------------------------------------------------------------------EBITDA- Sale of houses (i) - 1 1- Pensions expense (ii) (5) - 2- Impairment loss (iii) - - (5)- Profit on disposal of subsidiary (iv) 2 - -Finance expenses- Movement in fair value of embedded - (104) (104) derivative (v)----------------------------------------------------------------------------------------------Loss on special items before taxation (3) (103) (106)Taxation related to special items (note 5) 96 (28) (42)Special profit/(loss) before minority interest 93 (131) (148)Minority interest (17) 5 9----------------------------------------------------------------------------------------------Special profit/(loss) for the period attributable to equity shareholders of Lonmin Plc 76 (126) (139)---------------------------------------------------------------------------------------------- (i) A substantial number of our employees are accommodated in hostels and married quarters. The Company is selling houses to employees to encourage home-ownership. Any profits or losses from such sales at fair value are not deemed to represent underlying earnings. (ii) In December 2007 the Company contributed $5 million to the Lonmin Superannuation Scheme to fund augmentations of transfer values as part of a liability reduction exercise. (iii)The Group carried out a review of non-mining investments in the prior year resulting in a $5 million impairment charge to the income statement. (iv) During the period 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. (v) In prior periods convertible bonds existed which contained an embedded derivative that, because of the cash settlement option, was held at fair value with movements in fair value taken to the income statement. Fluctuations in fair value were mainly due to share price and as they were not considered underlying they were reported as special. The convertible bonds were fully redeemed during the 2007 fiscal year with the movement in fair value from the previous year end to the date of redemption being reported as special. 4. Finance income and expense -------------------------------------------------------------------------------------------------------- 6 months to 6 months to Year ended 31 March 31 March 30 September 2008 2007 2007 $m $m $m--------------------------------------------------------------------------------------------------------Finance income: 8 12 32 ----------- ---------- ----------Interest receivable | 4 | | 4 | | 16 | Expected return on defined benefit pension scheme | | | | | | assets | - | | 4 | | 8 | Movement in fair value of non-current other | | | | | | receivables | 1 | | 1 | | 1 | Exchange gains on net debt as defined by the Group (i) | 3 | | 3 | | 7 | ----------- ---------- ----------Finance expenses: (1) (15) (35) ----------- ---------- ----------Interest expense | (16) | | (15) | | (45) |Capitalised interest | 15 | | 6 | | 23 |Discounting on provisions | - | | - | | (3) |Unwind of discounting on convertible bonds | - | | (2) | | (3) |Interest cost of defined benefit pension scheme | | | | | |liabilities | - | | (4) | | (7) | ----------- ---------- ---------- Special items (note 3): - (104) (104) ----------- ---------- ----------Movement in fair values of derivative financial | | | | | | instruments | - | | (104) | | (104) | ----------- ---------- ----------Total finance expense (1) (119) (139)--------------------------------------------------------------------------------------------------------Net finance income/(expense) recognised in the income statement 7 (107) (107)-------------------------------------------------------------------------------------------------------- Interest expenses incurred have been capitalised on a Group basis to the extentthat there is an appropriate qualifying asset. Footnote: (i) Exchange gains on net debt as defined by the Group have been moved from finance expenses to finance income. 5. Taxation ------------------------------------------------------------------------------------------------------------ 6 months to 6 months to Year ended 31 March 31 March 30 September 2008 2007 2007 $m $m $m------------------------------------------------------------------------------------------------------------United Kingdom:Current tax expense at 30% (2007 - 30%) 98 42 42Less amount of the benefit arisingfrom double tax relief available (98) (42) (42)------------------------------------------------------------------------------------------------------------Total UK tax expense - - -------------------------------------------------------------------------------------------------------------Overseas:Current tax expense at 28% (2007 -29%) excluding special items 120 67 200 ----------- ---------- ----------Corporate tax expense | 93 | | 53 | | 186 |Tax on dividends remitted | 27 | | 14 | | 14 | ----------- ---------- ---------- Deferred tax expense: 17 17 55 ----------- ---------- ----------Origination and reversal of temporary | | | | | |differences | 17 | | 17 | | 55 | ----------- ---------- ---------- Special items (note 3): (96) 28 42 ----------- ---------- ---------- Retranslation of Rand denominated | | | | | | current tax balance | (11) | | 6 | | 10 | Retranslation of Rand denominated | | | | | | deferred tax balance | (58) | | 22 | | 41 | Retranslation of monetary assets and | | | | | | other translation differences | (14) | | - | | - | | | | | | | ----------- ---------- ----------Total effect of foreign exchange on | | | | | |taxation (i) | (83) | | 28 | | 51 |Utilisation of losses from prior | | | | | |years to offset deferred tax | | | | | |liability | - | | - | | (9) |Change in South African corporate tax | | | | | |rate from 29% to 28% | (13) | | - | | - | ----------- ---------- ---------- ------------------------------------------------------------------------------------------------------------Actual tax charge 41 112 297------------------------------------------------------------------------------------------------------------Tax charge excluding special items(note 3) 137 84 255------------------------------------------------------------------------------------------------------------Effective tax rate 10% 85% 42%------------------------------------------------------------------------------------------------------------ Effective tax rate excluding specialitems (note 3) 35% 36% 31%------------------------------------------------------------------------------------------------------------ A reconciliation of the standard tax charge to the tax charge was as follows: ----------------------------------------------------------------------------------------------------------------------- 6 months to 6 months to 6 months to 6 months to Year ended Year ended 31 March 31 March 31 March 31 March 30 September 30 September 2008 2008 2007 2007 2007 2007 % $m % $m % $m-----------------------------------------------------------------------------------------------------------------------Tax charge at standard tax rate 28 111 29 38 29 204Overseas taxes on dividends remitted by 7 27 11 14 2 14subsidiary companies Special items as defined above (25) (96) 21 28 6 42Tax effect of movements in the fair values of - - 23 30 4 31financial instrumentsTax effect of other timing differences - (1) 1 2 1 6-----------------------------------------------------------------------------------------------------------------------Actual tax charge 10 41 85 112 42 297----------------------------------------------------------------------------------------------------------------------- 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 28% (2007 - 29%). The secondary tax rate on dividends remitted by SouthAfrican companies was 10% (2007 - 12.5%). Footnote: (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 2008 is $333 million (31 March 2007 - $333 million, 30 September 2007 - $392 million). 6. Earnings per share Earnings per share have been calculated on the profit for the periodattributable to equity shareholders amounting to $283 million (March 2007 - lossof $3 million) using a weighted average number of 156,250,562 ordinary shares inissue for the 6 months to 31 March 2008 (6 months to 31 March 2007 - 150,911,303ordinary 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. Shares issuable on conversionof the convertible bonds were anti-dilutive in current and the prior periods andhave been excluded from diluted earnings per share in accordance with IAS 33 -Earnings Per Share. ------------------------------------------------------------------------------------------------------------------- 6 months to 31 March 2008 6 months to 31 March 2007 Year ended 30 September 2007 ---------------------------------------------------------------------------------------------------- Profit for Loss for Per Profit Per the Per share the share for share period Number of amount period Number of amount the year Number of amount $m shares cents $m shares cents $m shares cents-------------------------------------------------------------------------------------------------------------------Basic EPS 283 156,250,562 181.1 (3) 150,911,303 (2.0) 314 153,097,437 205.1Share option schemes - 561,765 (0.6) - - - - 1,324,642 (1.8)-------------------------------------------------------------------------------------------------------------------Diluted EPS 283 156,812,327 180.5 (3) 150,911,303 (2.0) 314 154,422,079 203.3------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------- 6 months to 31 March 2008 6 months to 31 March 2007 Year ended 30 September 2007 ---------------------------------------------------------------------------------------------------- Profit for Profit for Per Profit Per the Per share the share for share period Number of amount period Number of amount the year Number of Amount $m shares cents $m shares cents $m shares cents------------------------------------------------------------------------------------------------------------------- Underlying EPS 207 156,250,562 132.5 123 150,911,303 81.5 453 153,097,437 295.9Share option schemes - 561,765 (0.5) - 1,448,157 (0.8) - 1,324,642 (2.5) -------------------------------------------------------------------------------------------------------------------Diluted Underlying EPS 207 156,812,327 132.0 123 152,359,460 80.7 453 154,422,079 293.4------------------------------------------------------------------------------------------------------------------- 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 per share are based on the profit attributable to equityshareholders adjusted to exclude special items (as defined in note 3) asfollows: ----------------------------------------------------------------------------------------------------------------------- 6 months to 31 March 2008 6 months to 31 March 2007 Year ended 30 September 2007 -------------------------------------------------------------------------------------------------------- Profit/ Per Profit/ Per Profit for Per (loss) for share (loss) for share the share the period Number of amount the period Number of amount year Number of Amount $m shares cents $m shares cents $m shares cents----------------------------------------------------------------------------------------------------------------------- Basic EPS 283 156,250,562 181.1 (3) 150,911,303 (2.0) 314 153,097,437 205.1Special items (note 3) (76) - (48.6) 126 - 83.5 139 - 90.8-----------------------------------------------------------------------------------------------------------------------Underlying EPS 207 156,250,562 132.5 123 150,911,303 81.5 453 153,097,437 295.9----------------------------------------------------------------------------------------------------------------------- Headline earnings and the resultant headline earnings per share are specificdisclosures defined and required by the Johannesburg Stock Exchange. These arecalculated as follows: ------------------------------------------------------------------------------- 6 months to 6 months to Year ended 31 March 2008 31 March 2007 30 September 2007 $m $m $m-------------------------------------------------------------------------------Earnings attributable toordinary shareholders (IAS33 earnings) 283 (3) 314Less profit on sale ofsubsidiary (2) - -Less profit on sale ofavailable for salefinancial assets - - (2)Add back impairment ofavailable for salefinancial assets 1 - 5Tax related to the aboveitems - - (1)-------------------------------------------------------------------------------Headline earnings 282 (3) 316=============================================================================== ----------------------------------------------------------------------------------------------------------------------- 6 months to 31 March 2008 6 months to 31 March 2007 Year ended 30 September 2007 -------------------------------------------------------------------------------------------------------- Profit/ Per Profit/ Per Profit for Per (loss) for share (loss) for share the share the period Number of amount the period Number of amount year Number of Amount $m shares cents $m shares cents $m shares cents----------------------------------------------------------------------------------------------------------------------- Headline EPS 282 156,250,562 180.5 (3) 150,911,303 (2.0) 316 153,097,437 206.4Share option schemes - 561,765 (0.7) - - - - 1,324,642 (1.8)-----------------------------------------------------------------------------------------------------------------------Diluted headline EPS 282 156,812,327 179.8 (3) 150,911,303 (2.0) 316 154,422,079 204.6----------------------------------------------------------------------------------------------------------------------- 7. Dividends The final dividend for the year ended 30 September 2007 of 60.0 cents per sharewas paid on 8 February 2008 and is shown as a deduction from retained earningsin the period as disclosed in note 8 (final dividend for the year ended 30September 2006 of 55.0 cents per share). An interim dividend of 59.0 cents per share will be paid on 8 August 2008 toshareholders on the registers at the close of business on 11 July 2008 (interimdividend of 55.0 cents per share for the 6 months to 31 March 2007 was paid on 3 August 2007 to shareholders on the registers at the close of business on 6 July 2007). 8. Total equity ------------------------------------------------------------------------------------------------- Equity shareholders' funds ---------------------------------------------- Called Share up share premium Other Retained Minority Total capital account reserves earnings Total interests equity $m $m $m $m $m $m $m-------------------------------------------------------------------------------------------------At 1 October 2006 143 26 84 836 1,089 223 1,312Total recognised income and expense - - (20) 69 49 18 67Dividends - - - (85) (85) (21) (106)Conversion of the convertible bonds 11 205 - - 216 - 216Embedded derivative transfer - - - 371 371 - 371Other - - - (1) (1) - (1)Shares issued on exercise of share options 1 18 - - 19 - 19Minority interest on business acquisition - - - - - 113 113-------------------------------------------------------------------------------------------------At 31 March 2007 155 249 64 1,190 1,658 333 1,991------------------------------------------------------------------------------------------------- At 1 April 2007 155 249 64 1,190 1,658 333 1,991Total recognised income and expense - - 32 311 343 78 421Dividends - - - (86) (86) (20) (106)Other - - - 2 2 1 3Shares issued on exercise of share options - 14 - - 14 - 14Shares issued under the IFC options agreement 1 36 - - 37 - 37-------------------------------------------------------------------------------------------------At 30 September 2007 156 299 96 1,417 1,968 392 2,360------------------------------------------------------------------------------------------------- At 1 October 2007 156 299 96 1,417 1,968 392 2,360Total recognised income and expense - - (8) 258 250 71 321Dividends - - - (94) (94) (51) (145)Other - - - 5 5 - 5Shares issued on exercise of share options - 4 - - 4 - 4-------------------------------------------------------------------------------------------------At 31 March 2008 156 303 88 1,586 2,133 412 2,545------------------------------------------------------------------------------------------------- During the period 213,220 shares were issued upon the exercise of share optionsthrough which $4 million of cash was received. Other reserves at 31 March 2008 represent the capital redemption reserve of $88million. The movement in the current period represents the movement on thehedging reserve, which is $nil at 31 March 2008. 9. Analysis of net debt as defined by the Group (i) ------------------------------------------------------------------------------------------------------ As at As at 1 October Subsidiary Non cash 31 March 2007 acquired Cash flow movements 2008 $m $m $m $m $m------------------------------------------------------------------------------------------------------ ---------------------------------------------------------Cash and cash equivalents | 222 (212) 3 13 |Overdrafts | (1) - (37) - (38) | ---------------------------------------------------------Cash and cash equivalents in the 221 - (249) 3 (25)statement of cash flows Current borrowings (237) - 99 - (138) Non-current borrowings (359) - 16 - (343)------------------------------------------------------------------------------------------------------Net debt as defined by the Group (375) - (134) 3 (506)------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------ As at As at 1 April Subsidiary Non cash 30 September 2007 acquired Cash flow movements 2007 $m $m $m $m $m------------------------------------------------------------------------------------------------------ ---------------------------------------------------------Cash and cash equivalents | 48 - 170 4 222 |Overdrafts | (1) - - - (1)| --------------------------------------------------------- Cash and cash equivalents in the statement of cash flows 47 - 170 4 221 Current borrowings (332) - 95 - (237) Non-current borrowings (380) - 21 - (359)------------------------------------------------------------------------------------------------------ Net debt as defined by the Group (665) - 286 4 (375)------------------------------------------------------------------------------------------------------ As at As at 1 October Subsidiary Non cash 31 March 2006 acquired Cash flow movements 2007 (ii) $m $m $m $m $m------------------------------------------------------------------------------------------------------ ---------------------------------------------------------Cash and cash equivalents | 61 20 (36) 3 48 |Overdrafts | (18) - 17 - (1)| ---------------------------------------------------------Cash and cash equivalents in the statement of cash flows 43 20 (19) 3 47 Current borrowings - - (332) - (332) Non-current borrowings (288) - (92) - (380) Convertible bonds (213) - - 213 -------------------------------------------------------------------------------------------------------Net debt as defined by the Group (458) 20 (443) 216 (665)------------------------------------------------------------------------------------------------------ Footnotes: (i) Net debt as defined by the Group comprises cash and cash equivalents, banks overdrafts repayable on demand, interest bearing loans and borrowings and convertible bonds. (ii) The analysis of movement in net debt from 1 October 2006 to 31 March 2007 has been expanded to reflect the cash recognised on acquisition of a subsidiary. 10. Business combinations On 26 January 2007 the Group acquired 94% of AfriOre Ltd. This increased to96.5% on 8 February 2007 and to 100% on 16 February 2007. AfriOre's primaryasset is a 74% stake in Akanani Mining (Pty) Limited which owns the AkananiPGM deposit. The acquisition was accounted for with an effective date of 1February 2007, using the acquisition method of accounting. Since its acquisitionAfriOre has only incurred exploration and evaluation expenditure which has beencapitalised in accordance with the Group's accounting policy. The assets and liabilities of AfriOre Limited and the final fair valuesattributed were as follows: Accounting Final Book value policy fair value Final on acquisition adjustment adjustment fair value $m $m $m $m----------------------------------------------------------------------------------------------------Intangible assets 13 (13) 611 611 Trade and other payables (5) - - (5) Cash and cash equivalents 20 - - 20 Deferred tax liability - - (173) (173)---------------------------------------------------------------------------------------------------- Total assets of acquired entity 28 (13) 438 453---------------------------------------------------------------------------------------------------- Minority interest (113)----------------------------------------------------------------------------------------------------Fair value of assets acquired 340----------------------------------------------------------------------------------------------------Goodwill 73----------------------------------------------------------------------------------------------------Consideration paid 413---------------------------------------------------------------------------------------------------- The fair value exercise recognised the assets of the AfriOre Limited Group atthe fair value they would carry if they held tax benefits. This resulted in theneed to recognise a deferred tax liability of $173 million which in turn causedthe creation of a goodwill balance of $73 million. The fair values were amendedas necessary in accordance with IFRS 3 - Business Combinations resulting in thefinal fair values given above. These fair values have not changed since 30September 2007. The total consideration paid for the acquisition of AfriOre Limited amounted to$413 million comprising cash consideration of $409 million, and expenses on thetransaction of $4 million, all paid in the period. Cash acquired with the entityamounted to $20 million resulting in a net consideration paid of $393 million. There have been no new business combinations in the 6 months to 31 March 2008. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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