Wrap Text
LONMIN PLC - AUDITED RESULTS
31 May 2001
Lonmin Plc Invests in Platinum Australia Limited
Lonmin is pleased to announce that it has entered into a Share Subscription
Agreement with Platinum Australia Limited (PLA) whereby Lonmin can acquire
up to a 55 per cent fully diluted interest in PLA.
The primary asset of PLA is the Panton Platinum-Palladium Project, located
in the Kimberley region of Western Australia. The lower series of this
layered mafic-ultramafic body comprises platinum group metal rich chromitite
layers above and below a lower grade dunite. The Project is generally at
the Resource Definition stage, whilst a Pre-Feasibility study will shortly
be completed by PLA. In addition, PLA has a number of platinum group metal
prospects in its portfolio.
Lonmin's proposed investment, which is subject to regulatory and PLA
shareholder approval, will be in two tranches of shares:
* The first tranche of 23.08 million shares, representing 39% on an
undiluted basis, at A$0.52 per share will inject A$12 million (US$6.2
million) into PLA and the proceeds will be applied primarily to fund the
Feasibility Study for the Project; and
* On completion of the Feasibility Study and on PLA securing finance, Lonmin
can elect to subscribe for a second tranche of up to 66.75 million shares at
A$0.60 per share to achieve a 55 per cent fully diluted interest in PLA.
The A$40 million (US$20 million) so raised will provide a significant
portion of the funding for the Project.
Lonmin has the right to provide Project financing on commercial terms.
Lonmin and PLA will enter into a Technical Assistance Agreement whereby
Lonmin will make available its extensive knowledge and experience in the
mining and processing of platinum group metals, particularly from the UG2
chromitite reef.
PLA will enter into a product offtake agreement with Lonmin, entitling
Lonmin to purchase PLA's final products on competitive prices and terms.
Lonmin's representation on the Board of PLA will be in proportion to its
investment.
Following the recently announced Memorandum of Understanding with Helix
Resources NL, this Agreement further enhances Lonmin's position in Australia
and is a further step in building Lonmin's international portfolio of
platinum group metal assets.
For further information please contact Anthony Cardew or Jon Simmons at
Cardew and Co; tel: 020 7930 0777, or Ian Farmer/Chris Davies at Lonmin;
tel: 020 7201 6000.
Reference may also be made to the PLA website: www.platinumaus.com.au
NEWS RELEASE
ISSUED BY LONMIN PLC
4 GROSVENOR PLACE, LONDON SW1X 7YL
TEL 020 7201 6000 FAX 020 7201 6100
INTERIM STATEMENT - 31 MARCH 2001
Financial Highlights 6 months to 6 months to
31 March 2001 31 March 2000
Restated
PROFITS - continuing operations
EBITDA - up 76% $259m $147m
Group operating profit - up 83% $240m $131m
Profit before exceptional items - up 98% $252m $127m
Earnings per share pre-exceptional
items - up 64% 72.6c 44.3c
Interim dividend per share 16.9p/24.0c 9.3p/14.0c
CASH FLOW - continuing operations
Trading cash flow per share - up 68% 92.6c 55.0c
Free cash flow per share - up 84% 49.4c 26.9c
BALANCE SHEET
Equity interests $1,017m $662m
Net cash/(borrowings) $447m $(166)m
(iii) Gearing nil 19%
Commenting on the figures, the Chief Executive, Edward Haslam said:
"Underlying these encouraging results was a solid production performance and
a robust PGM market. The announcement of the joint venture to develop the
Pandora project brings an annual production target of 1 million troy ounces
of platinum by 2007 within our reach."
NOTES ON HIGHLIGHTS
(i)EBITDA - earnings before interest, tax, depreciation and amortisation.
(ii)The interim dividend will be paid on 16 August 2001 to shareholders on
the registers at 20 July 2001.
(iii)Gearing is calculated on the equity and minority interests of the
Group.
Press enquiries: Anthony Cardew, Cardew & Co - +44 (0)20 7930 0777
This press release is available on http://www.lonmin.com
Photographs available for the media at http://www.newscast.co.uk
CHIEF EXECUTIVE'S STATEMENT
Lonmin's first half performance will satisfy all stakeholders. In line with
our previously stated corporate policy we are focused on the building of a
leading platinum group metals mining business and these strong interim
results demonstrate the record beating performance of our South African
platinum assets.
FINANCIAL REVIEW
The earnings and cash flow results from operations in the six months to
March 2001 showed substantial growth on those achieved last year. Profit
before tax and exceptionals at $252m was double the $127m achieved in 2000,
with earnings per share before exceptional items at 72.6c recording a 64%
growth on the 44.3c in 2000. It should be noted that the 2000 numbers have
been restated to reflect the adoption of FRS 19 on Deferred Tax, whereby
full provision is now made for deferred taxation on an undiscounted basis.
More importantly, the key cash flow measure, which reflects the underlying
strength of the platinum business, has also shown material growth in the
period.
Continuing Operations
6 months to 6 months to
31 March 2001 31 March 2000
$m $m
Net cash inflow from operations 233 103
Net interest received/(paid) 13 (8)
Tax paid (81) (7)
Trading cash flow 165 88
Capital expenditure:
Platinum (45) (34)
Other (2) (2)
Minority dividends paid (30) (9)
Free cash flow 88 43
Acquisitions and disposals 6
Equity dividends paid (66) (20)
Shares issued 2 3
Cash inflow 24 32
Trading cash flow per share 92.6c 55.0c
Free cash flow per share 49.4c 26.9c
Note:The increase in net cash since 30 September 2000 of $25m is made up of
a cash inflow of $24m and an exchange profit on borrowings of $1m.
The more than doubling of cash inflow from operations reflects the increased
PGM prices experienced during the first half of the year together with the
tight control on working capital.
Trading cash flow per share increased by 68% from 55.0c in 2000 to 92.6c in
2001 with a comparable increase in free cash flow per share of 84% from
26.9c in 2000 to 49.4c in 2001 notwithstanding an increase in the tax paid
from $7m to $81m. This increase reflects the payment of corporate tax in
South Africa for the first time resulting from the increase in profitability
achieved last year. Payments of this magnitude can be expected to recur
whilst the current levels of profitability are maintained.
Despite the payment of the final dividend of $66m, the strong free cash flow
still resulted in an overall increase in net cash of $25m to $447m at the
end of March 2001. The majority of this cash is now held in US dollars in
London.
As indicated earlier, the strong growth in profits and cash flow in the
first half of the year resulted primarily from the increase in the realised
prices for the three key PGMs - platinum, palladium and rhodium. The
comparison of the first half of this year with the first half of last year
produces a particularly flattering picture. Comparison with the second half
of last year will provide a more stable illustration of performance.
The balance sheet clearly remains robust with net cash of $447m and equity
interests in excess of $1bn, some $350m more than at this time last year.
PLATINUM GROUP METALS OPERATIONS
Underlying these very strong financial figures was an equally solid
production performance. Total tonnes milled during the half year increased
by 4% to just over 5m tonnes, which resulted in a PGMs plus gold production
of 568,289 tr oz.
This figure would have been even higher had we not had to take the Merensky
Smelter off-line for the six weeks immediately prior to the half year end.
During this period, the furnace was extensively refurbished and the PGMs,
contained in the stockpiled concentrate, will be brought to account during
the second half.
The building of the new smelter, which is important to our future production
targets, is now well advanced.
The capital investment programme announced last year, which will deliver an
initial 43% increase in production, continues on target and on budget.
During the first half, the Newman Incline Shaft commenced production and the
new mills and concentrators referred to as the Karee "B" Stream were
commissioned in February without any significant problems. This provides an
additional nominal milling capacity of 120,000 tonnes per month, but after
only three months of operating, the new plant is already milling over
126,000 tonnes per month.
As well as the improvements in both financial and production performances,
we are also pleased to report a significant improvement in our safety
record, resulting from the introduction throughout the Mines of a campaign
entitled "Stop Fatals Totally". We are also pleased to report in this
context that shortly after the half year end each of the Western and Eastern
Platinum Mines received the coveted 1 million fatality free shifts award.
The market for PGMs remains strong across all major industrial applications.
The average Platinum price realised during the period was $586 per tr oz
compared with $454 per tr oz during the previous half year. The same
figures for Palladium were $845 per tr oz ($471 per tr oz) and for Rhodium
were $1,954 per tr oz ($1,291 per tr oz). The high Platinum price, together
with the weaker Yen/Dollar exchange rate, has resulted in a fall in
jewellery demand in Japan more than compensated for by increased demand
elsewhere.
ASHANTI
We retain our 32% interest, which continues to be accounted for as an
investment. We continue to support the management, believing the Company to
be substantially undervalued and note with pleasure the continuing
encouraging progress at operating level, resulting in competitive cash costs
of production.
ZIMBABWE
Our gold mines produced 82,555 tr ozs valued at $22m during the half year
which represented 5% of Lonmin's total turnover. Obviously the much
publicised economic and political difficulties currently experienced in
Zimbabwe had a very serious effect on both performance and morale and we are
proud of the management team for their continuing efforts to maintain the
business.
OUTLOOK AND DIVIDEND
The development of a wide variety of new technologies incorporating PGMs,
including fuel cells, together with the introduction of first time emission
control legislation in countries such as India, will help to ensure that the
market for PGMs remains robust for some time to come.
Lonmin is well placed to benefit from this continuing strength of demand.
We will continue to seek growth opportunities, and in this context, we were
pleased to announce recently our Pandora joint venture project with Anglo
Platinum to exploit contiguous mineral rights. The Pandora project brings
our production target to around 1m ozs of platinum or 2m ozs of PGMs by
2007. Since the end of the half year we have announced a Memorandum of
Understanding with Helix Resources principally to advance the Munni Munni
joint venture project. This strategy is well supported by an extremely
strong balance sheet and we are actively exploring other acquisitions and
joint ventures both in South Africa and elsewhere.
Lonmin is in excellent shape, has outstanding operating management, and is
delivering value enhancing growth.
We are committed to providing shareholders with competitive returns and
accordingly, we are declaring an interim dividend of 24.0c per share,
equivalent to 16.9p per share, which is twice covered by free cash and
represents a 71% increase over last year, or an increase of 82% in sterling
terms.
Finally, I would like to take this opportunity to record publicly my
appreciation to the entire management and workforce for the continuation of
a truly outstanding performance at every level.
Edward Haslam
30 May 2001
PLATINUM OPERATING STATISTICS
March March
2001 2000
PRODUCTION
Tons milled ('000) 5,006 4,824
Built-up head grade (g/ton) 5.00 5.17
Refined production
Platinum (oz) 302,901 306,007
Palladium (oz) 135,714 134,420
Rhodium (oz) 39,836 36,177
Total PGMs (oz) 568,289 565,385
COSTS
Total cash cost per platinum
oz refined:
Cash operating costs ($) 428 427
Revenue from other PGMs
and gold ($) 718 452
Net cash operating costs ($) (290) (25)
Cash cost per total PGM
oz refined ($) 228 232
Cash cost per total PGM oz
Refined (Rand) 1,775 1,465
Cash cost per theoretical
PGM oz produced (Rand) 1,542 1,409
SALES
Sales prices achieved
Platinum ($) 586 454
Palladium ($) 845 471
Rhodium ($) 1,954 1,291
Independent review report by KPMG Audit Plc to Lonmin Plc
Introduction
We have been instructed by the Company to review the financial information
set out on pages 8 to 15 and we have read the other information contained in
the Interim Report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
Directors' responsibilities
The Interim Report, including the financial information contained therein,
is the responsibility of, and has been approved by, the Directors. The
Listing Rules of the Financial Services Authority require that the
accounting policies and presentation applied to the interim figures should
be consistent with those applied in preparing the preceding annual accounts
except where they are to be changed in the next annual accounts in which
case any changes, and the reasons for them, are to be disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin
1999/4: "Review of interim financial information", issued by the Auditing
Practices Board. A review consists principally of making enquiries of
group management and applying analytical procedures to the financial
information and underlying financial data and, based thereon, assessing
whether the accounting policies and presentation have been consistently
applied unless otherwise disclosed. A review is substantially less in scope
than an audit performed in accordance with Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications
that should be made to the financial information as presented for the six
months ended 31 March 2001.
KPMG Audit Plc
Chartered Accountants
London
30 May 2001
Lonmin Plc
Consolidated profit and loss account
Note 6 months to 6 months to
31 March 2001 31 March 2000
Restated
$m $m
Turnover 1 415 499
- continuing operations
- discontinued operations 415 306
193
EBITDA* 2 259 165
- continuing operations 259 147
- discontinued operations
Depreciation (19) (28)
Group operating profit 3 240 137
- continuing operations 240 131
- discontinued operations 6
Share of associate's operating loss
(1)
Total operating profit 240 136
- continuing operations 240 131
- discontinued operations 5
Profit on sale of fixed assets
Group - continuing operations 8 8
Loss on sale or termination of operations
Group - discontinued operations 8 (8)
Profit before net interest
receivable/(payable) and similar
items 240 136
Net interest receivable/(payable)
and similar items 5 12 (5)
Profit before taxation 4 252 131
- continuing operations 252 135
- discontinued operations (4)
Taxation 6 (75) (27)
Profit after taxation 177 104
Minority interests (47) (30)
Profit for the period 130 74
- continuing operations 130 78
- discontinued operations (4)
Interim dividend (43) (22)
Retained profit for the period 87 52
Earnings per share pre-exceptional
items - continuing operations 7 72.6C 44.3C
Earnings per share 7 72.6C 46.4C
Diluted earnings per share 7 71.9C 42.9C
Interim dividend per share 16.9p/24.0c 44.3c
* EBITDA is earnings before interest, tax, depreciation and amortisation.
Deferred tax has been fully provided for in accordance with Financial
Reporting Standard 19 - Deferred Tax and the March 2000 figures have been
restated accordingly. The effect of the implementation of this standard has
been to reduce the tax charge in the 6 months to March 2001 by $7m and to
reduce the tax charge in the 6 months to March 2000 by $2m.
Lonmin Plc
Consolidated balance sheet
As at As at As at
31 March 30 Sept 31 March
2001 2000 2000
Restated
$m $m $m
Fixed assets
Tangible assets 739 710 1,055
Investments: 34
Associates
Other investments 205 206 209
205 206 243
944 916 1,298
Current assets
Stocks 28 21 59
Debtors 100 113 130
Investments 2 2 28
Cash and short-term deposits 467 439 141
597 575 358
Creditors: amounts falling
due within one year (195) (242) (280)
Net current assets 402 333 78
Total assets less current liabilities 1,346 1,249 1,376
Creditors: amounts falling due
after more than one year
Convertible debt (169)
Other (7) (8) (98)
(7) (8) (267)
Provisions for liabilities and
Charges (146) (155) (221)
1,193 1,086 888
Capital and reserves
Called up share capital 255 259 254
Reserves 762 667 408
Equity interests 1,017 926 662
Minority equity interests 176 160 226
1,193 1,086 888
Net cash/(borrowings) 447 422 (166)
The 31 March 2000 and 30 September 2000 balance sheets have been restated
for Financial Reporting Standard 19 - Deferred Tax. The effect of this
restatement on the March 2000 balance sheet has been to reduce associates by
$9m, increase provisions by $165m, reduce reserves by $126m and reduce
minority equity interests by $48m.
The effect of this restatement on the September 2000 balance sheet has been
to increase provisions by $144m, reduce reserves by $105m and reduce
minority equity interests by $39m.
Lonmin Plc
Consolidated cash flow statement
6 months to 6 months to
31 March 31 March
2001 2000
$m $m
Net cash inflow from operating
activities
- continuing operations 233 103
discontinued operations 7
233 110
Net interest received/(paid) 13 (17)
Dividends paid to minorities (30) (9)
Returns on investment and
servicing of finance (17) (26)
Taxation (81) (8)
Capital expenditure and financial
Investment (47) (47)
Acquisitions and disposals 6
Equity dividends paid (66) (20)
Net cash inflow/(outflow) before
use of liquid resources and
financing 22 15
- continuing operations 22 29
- discontinued operations
Management of liquid resources (22)
Financing 1 (4)
Increase/(decrease) in cash in
the period 1 11
- continuing operations 1 21
- discontinued operations (10)
Reconciliation of operating profit
to net cash inflow from operating activities:
Operating profit from continuing
Operations 240 131
Depreciation charge 19 16
Increase in working capital (27) (45)
Other items 1 1
Net cash inflow in respect of
continuing operations 233 103
Net cash inflow in respect of
discontinued operations 7
Net cash inflow from operating
Activities 233 110
Lonmin Plc
Statement of total consolidated recognised gains and losses
6 months to 6 months to
31 March 2001 31 March 2000
$m Restated
$m
- Profit/(loss) for the
- period - Group 130 75
- Associate (1)
Total consolidated recognised
gains relating to the period 130 74
Prior year adjustment for deferred
Tax (105)
Total consolidated recognised gains
since last annual report 25
Reconciliation of movement in equity interests
6 months to 6 months to
31 March 2001 31 March 2000
Restated
$m $m
Total consolidated recognised gains
relating to the period 130 74
Dividend (43) (22)
Retained profit for the period 87 52
Shares issued on exercise of
Options 2 3
Other items 2 1
Net increase in equity interests in
the period 91 56
Equity interests at
1 October - restated for
deferred tax 926 606
Equity interests at 31 March 1,017 662
Lonmin Plc
1 Turnover
Turnover is analysed by activity and geographical area below:
6 months to 6 months
31 March 2001 31 March 2000
$m $m
Platinum 393 278
Gold 22 28
Continuing operations 415 306
Discontinued operations 193
South Africa 393 278
Zimbabwe 22 28
Continuing operations 415 306
Discontinued operations 193
2 EBITDA
Earnings before interest, tax, depreciation and amortisation (EBITDA) is
analysed by activity and geographical area below:
6 months to 6 months to
31 March 2001 31 March 2000
$m $m
Platinum 268 151
Gold 2
Other (3)
Central costs (6) (6)
Continuing operations 259 147
Discontinued operations 18
259 165
South Africa 261 146
Zimbabwe 2
Europe 4 5
Central costs (6) (6)
Continuing operations 259 147
Discontinued operations 18
259 165
Lonmin Plc
3 Group operating profit
Group operating profit is analysed by
activity and geographical area below:
6 months to 6 months to
31 March 31 March
2001 2000
$m $m
Platinum 250 137
Gold (1)
Other (3)
Central costs (6) (6)
Continuing operations 240 131
Discontinued operations 6
240 137
South Africa 243 132
Zimbabwe (1)
Europe 4 5
Central costs (6) (6)
Continuing operations 240 131
Discontinued operations 6
240 137
4 Profit before taxation
Profit before taxation is analysed by activity and geographical area below:
6 months to 6 months to
31 March 2001 31 March 2000
$m $m
Platinum 251 134
Gold (2) (2)
Other (3)
Central costs (6)
Central interest and similar
Items 12 1
Continuing operations 252 127
Discontinued operations 4
Profit before taxation and
exceptional items 252 131
Exceptional items -
Profit before taxation 252 131
South Africa 244 129
Zimbabwe (2) (2)
Europe 4 5
Central costs (6) (6)
Central interest and similar
Items 12 1
Continuing operations 252 127
Discontinued operations 4
Profit before taxation and
exceptional items 252 131
Exceptional items -
Profit before taxation 252 131
Lonmin Plc
5 Net interest receivable/(payable) and similar items
Net interest receivable/(payable) and similar items is analysed as follows:
6 months to 6 months to
31 March 2001 31 March 2000
$m $m
Net interest receivable/
(payable) 11 (17)
Exchange differences on
net debt 1 12
12 (5)
6 Taxation
The taxation charge includes full provision for deferred tax in accordance
with Financial Reporting Standard 19 Deferred Tax.
The tax charge is analysed below:
6 months to 6 months to
31 March 2001 31 March 2000
Restated
$m $m
- Current taxation 71 22
- Deferred taxation 6 9
- Overseas tax on dividends
remitted by subsidiary companies 19 7
Exchange (21) (11)
75 27
In the 6 months to 31 March 2001, the UK taxation charge was $nil (6 months
to 31 March 2000 - a credit of $5m) and the overseas taxation charge was
$75m (6 months to 31 March 2000 - $32m).
7 Earnings per share
The calculation of earnings per share is based on a weighted average of
178,218,176 shares in issue for the six months to 31 March 2001 (159,902,136
shares in issue for the six months to 31 March 2000).
The calculation of diluted earnings per share for 2001 is based on the
weighted average number of shares in issue adjusted by the dilutive
outstanding share options. For 2000, the calculation is based on the
weighted average number of shares in issue adjusted by the dilutive
outstanding share options and the convertible bonds which were fully
converted by early July 2000.
8 Exceptional items
6 months to 6 months to
31 March 2001 31 March 2000
$m $m
- Profit on sale of fixed assets
- Sale or termination of operations 8
- provision for the loss on sale
of the Bahamas Hotels (8)
Lonmin Plc
9 Exchange Rates
The principal US dollar exchange rates used are as follows:
6 months to 6 months to
31 March 2001 31 March 2000
$m $m
Average rates:
Sterling 0.69 0.62
SA rand 7.78 6.22
Zimbabwe dollar 55.09 38.26
Closing rates:
Sterling 0.70 0.63
SA rand 7.94 6.49
Zimbabwe dollar 55.15 38.19
10 Statutory Disclosure
The balance sheet at 30 September 2000 is taken from but does not constitute
the Company's statutory accounts for the year ended 30 September 2000.
Accounts for that year have been delivered to the Registrar of Companies.
The Auditors made an unqualified report thereon and such report did not
contain a statement under section 237(2) or (3) of the Companies Act 1985.
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