Wrap Text
LONMIN PLC - RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2003
Lonmin Plc
("Lonmin")
(Incorporated in England)
(Registered in the Republic of South Africa under registration number
1969/000015/10)
ISIN code: GB0002568144
Share code: LON
Issuer code: LOLMI
RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2003
Financial highlights - continuing Year to Year to
operations 30 September 30 September
2003 2002
PROFITS
(i) EBITDA $344m $372m
Total operating profit $297m $331m
Profit before taxation $291m $332m
Earnings per share 52.5c 121.5c
(ii) Underlying earnings per share 87.2c 98.5c
(iv) Dividends per share 72.0c 72.0c
CASH FLOW
Trading cash flow per share 161.0c 118.9c
Free cash flow per share 48.2c (4.6)c
BALANCE SHEET
Equity interests $648m $675m
Net borrowings $197m $155m
(iii) Gearing 23% 18%
Commenting on the results, the Chief Executive, Edward Haslam said:
"This year"s results show another strong performance, breaking all production
records. We are on track to meet our target of 1 million ounces a year by 2008
and our current trading remains satisfactory."
NOTES ON HIGHLIGHTS
(i) EBITDA is Group operating profit before interest, tax, depreciation and
amortisation.
(ii) Underlying earnings per share are calculated on attributable profit
excluding exceptional items and exchange adjustments on tax.
(iii) Gearing is calculated on the equity and minority interests of the Group.
(iv) The Board recommends a final dividend of 42.0 cents per share payable on 16
February 2004 to shareholders on the registers on 23 January 2004.
Press enquiries: Anthony Cardew/Jackie Range, Cardew Chancery: +44 (0)20 7930
0777
This press release is available on http://www.lonmin.com
Chairman"s statement
I am pleased to present the Report and Accounts for the year ended 30 September
2003. It has been a year of operational challenge and achievement coupled with
progress on a variety of strategic fronts.
Results have been adversely affected - throughout the South African mining
industry - by the sustained strength of the Rand against other currencies. Our
results have been particularly impacted because we account and report in US
dollars.
In his report Edward Haslam, the Chief Executive, sets out a comprehensive
review of the year"s operations. Therefore I will restrict my comment on
operational matters to the smelter explosion just after Christmas 2002. This
had the potential to disrupt the Company"s business in a very major way. It is
a tribute to our management and all the staff involved that not only did we deal
with the disruption but that we managed significantly to increase production of
refined metals to a new record for the Company. I must however strike a note of
caution by pointing out that the smelter has not yet been re-commissioned; this
is intended to take place towards the end of the calendar year.
Early in the year we announced the sale of Independence Mining, our gold mining
business in Zimbabwe. This had been part of the Group for many years but had
become increasingly irrelevant strategically as we moved to concentrate on
Platinum Group Metals. Operating conditions and financial management of the
business became ever more difficult as a direct result of political conditions
in Zimbabwe. We were pleased to dispose of our interests in Zimbabwe without
significant financial cost. I would like to take this opportunity to thank our
management and staff who did an outstanding job in protecting our interests in
exceptionally difficult conditions in the years before our withdrawal and to
wish them all good fortune in the future.
Since the year end AngloGold has announced the outcome of its offer for Ashanti.
This offer has been accepted by the Board of Ashanti and will be recommended
unanimously to its shareholders. Both major shareholders, the Government of
Ghana with its shareholding of 17% and ourselves (with 27.5%) have undertaken
irrevocably to support the proposals and we hope that it will proceed smoothly
to completion during the first quarter of the New Year.
We have been shareholders in Ashanti for a very long time - indeed it was
originally acquired for GBP16m by Lonrho (as the company was then named) in
1969. We have supported Ashanti and its management in a variety of ways over the
years, most recently by injecting $75 million of new capital when the company
was struggling to overcome the financial difficulties stemming from its hedging
programme in 1999. We did this because we believed - rightly as it turns out-
that the terms on which Ashanti"s Bondholders were being invited to subscribe
for new shares would result in excessive dilution for the rest of the
shareholders including ourselves. Furthermore we wished to retain a sufficient
shareholding to protect our position in the negotiations about the ultimate
ownership of Ashanti which we were confident would eventually come to pass. We
hope that our shareholders now accept the wisdom and foresight of this step.
We are pleased to have played a role in the development of this important
African company over many years and will follow keenly its further development.
Should this transaction be completed we will receive 10.4 million shares of
AngloGold. No decision has yet been taken in respect of any future stake we may
hold in the merged entity.
Our principal operating company is Lonplats in South Africa where we mine, smelt
and refine platinum group metals, with our primary product being platinum.
Since 1990 when we acquired the Karee mine, our competitor, Impala Platinum, has
owned a 27% interest in Lonplats. The associated contractual arrangements
(including joint board representation and constraints on the change of control
of Lonmin) have restricted our freedom to develop and implement an independent
strategy for Lonmin, notwithstanding the fact that our relationship with Impala
has always been open and constructive and that they have been a good partner.
In mid 2002 the South African Minister of Minerals and Energy announced a new
Act setting out the Mining Charter under which companies will have to meet
certain criteria in order to qualify for a "new order" mining licence. One of
these is that at least 15% of the share capital should be in the hands of
Historically Disadvantaged South Africans (HDSA"s) within five years of the
legislation becoming effective.
Shortly before the year-end we announced that we had signed a non legally
binding Memorandum of Understanding with Impala under which:
- Impala will sell its 27.1% shareholding in Lonplats,
- of this, 18% will be taken up by a new company, Incwala Resources (Pty)
Limited (Incwala), formed for this purpose and initially owned in equal shares
jointly by Impala and ourselves, at the cost of $531 million, and
- Lonmin will acquire the remaining 9.1% of Lonplats for an estimated net $242
million, taking its interest in Lonplats to 82%.
It is the stated intention of Impala and ourselves progressively to reduce our
shareholdings in Incwala to the point where we are no longer in joint control by
introducing a broad base of qualified HDSA shareholders. Ultimately it is our
intention that Incwala - which will retain an 18% shareholding as our partner
in Lonplats - will be developed as an independent, commodity diversified mining
company to act as a flagship BEE company in the South African mining industry.
We plan to introduce appropriate HDSA management at the earliest opportunity and
then to list the shares on the Johannesburg Stock Exchange with a broad
distribution to retail investors thus making a significant contribution to
broader share ownership and the development of deeper and more efficient capital
markets in South Africa. We are committed to Incwala"s success, as can be seen
from the composition of the initial Board comprising Impala"s Peter Joubert and
Keith Rumble, and myself as non-executive directors. The non-executive chairman
will be Brian Gilbertson and Ian Farmer will take the role of Chief Executive.
David Brown of Impala will become Incwala"s Finance Director.
Assuming we are able to bring these initiatives to a successful conclusion we
will have removed the constraints on our corporate strategic development and
more than satisfied the HDSA ownership criteria to ensure that we will qualify
on this count for a "new order" mining licence. The Group will continue to
explore the best ways of delivering additional shareholder value in the years
ahead.
We were pleased to welcome Michael Hartnall to the Board during the year. He
has behind him a long and distinguished career most recently as Finance Director
of Rexam Plc. Michael has taken over from Sir Alastair Morton as Chairman of
the Audit Committee where he is already making a most useful contribution.
Finally I should like to thank the management, staff and employees for their
contribution to results which in all the circumstances are very satisfactory.
This is a fine company in an exciting sector of the natural resource industry.
It is well run by a highly experienced management and I hope we as a Board have
also demonstrated a willingness to tackle energetically the strategic issues
with which we are confronted.
Sir John Craven
Chairman
Chief Executive"s statement
Contrast, change and challenge, characterised the year under review. A 29%
increase in the price for refined platinum contrasted sharply with a 40% drop in
the price of palladium and a 38% drop in the price of rhodium. The signing of a
non-binding Memorandum of Understanding opened the way to a fundamental change
in our contractual relationship with Impala and a December explosion in the new
No1 furnace, presented us with a serious challenge to maintain our published
expansion profile.
Against this background, I am delighted to be able to report that whilst
containing the year on year Rand per pgm ounce cost increase to 12%, in line
with South African inflation as it affects the mines, we were able to break all
previous production records.
Turnover increased by 12% to $779 million. This was the result of increased pgm
prices and additional production off-set by a reduction of $55 million which was
last year"s turnover from the Zimbabwean gold mines sold at the beginning of the
year. Earnings per share, however, fell by 57% largely due to the effects on
the tax charge of a 26% appreciation of the Rand against the U.S. dollar.
Underlying earnings per share, which excludes the effect of exceptional items
and the exchange adjustments in the tax charge, were 87.2Cents (USD) per share a
decrease of only 11% over the previous year.
Free cash flow per share rose from a negative 4.6Cents (USD) per share last year
to a positive 48.2Cents (USD) per share.
These solid underlying financial results were the consequence of a strong
production performance at our Platinum mines.
Tonnes milled at 14.2 million, were up 26% year on year. Production of refined
platinum was 23% higher at 932,867 tr. oz, which comfortably exceeded our
published expansion target. In December 2002, a serious explosion occurred in
the No1 furnace some nine months after its commissioning. The most likely cause
was refractory displacement which allowed water from the copper cooling system
to come into contact with the furnace bath and the resulting explosion put the
furnace out of operation for the rest of the year. Repairs and necessary
modifications have now been completed and re-commissioning is expected over the
coming calendar year end.
Contingency plans were in place for such an eventuality including the re-
commissioning of the Merensky and Pyromet furnaces and the sending of
concentrate to Impala for toll smelting. This resulted in an addition to our
smelting costs of some $8 million for the former and $26 million for the latter.
Record breaking, however, was not limited to production and again I am delighted
to report that all three mines improved considerably on last year"s
disappointing safety record. Two of the three mines achieved the rare two
million fatality free shift status, one mine achieved the one million fatality
free status twice during the year and the Western Platinum mine for the first
time ever was `fatality free" for the whole year. Both management and miners
are to be commended for these considerable achievements. Hard rock underground
mining however, remains inherently dangerous and, although they did not all
occur underground, unfortunately there were six fatal accidents during the year.
Our sympathies and material help have been extended to the families concerned.
The pgm markets are dealt with in some detail further on in this report, but it
is worth highlighting that the realised value of the basket of metals rose by 7%
year on year and the price of platinum, our principal product, rose to a 23 year
high towards the end of the period. Demand was buoyed by increased automobile
consumption of catalytic converters required to clean up exhaust emissions as
the world strives for ever cleaner air and heavy duty diesel engines are
included for the first time in this initiative. We expect the Platinum supply
and demand balance to remain influenced by a potential, if not actual, deficit
for some time to come.
Our overall production expansion target of 1 million ounces of annual Platinum
production by 2008 remains firmly on track. The Karee 4 and the Hossy and Saffy
vertical shafts are either on or ahead of budget both in timing and cost.
Whilst our South African expansion programme remains our core business we will
continue to pursue our objective to economically produce some pgm"s outside this
traditional area. In this context the two ventures in Western Australia did not
convince us that our objectives could be met and we thus did not proceed with
either, although, the Panton Sill project did provide us with valuable process
data which has the potential to improve efficiencies in our South African mines.
The Memorandum of Understanding signed with Impala has the potential to greatly
simplify our corporate structure whilst at the same time opening up a clear path
to conforming with equity requirements of the South African Government"s Black
Empowerment initiatives.
Equity transfer is however, only one of the requirements and I am pleased to be
able to report that the most recent independent audits of our progress in
employment equity; social and corporate investment and procurement, show that
significant progress has been made in all these areas and we remain confident
that we will achieve timely compliance with the requirements for the granting of
a "new order" mining licence.
The HIV/AIDS pandemic remains of great concern to us and for some years now we
have had programmes in place which were aimed at curbing the spread of the
disease. From December 1st 2003, which is World Aids Day, we will extend our
interventions by providing anti-retroviral drugs (ART) to employees through our
overall health-care arrangements. The combined effect is expected to improve
productivity, reduce absenteeism and extend the working life of Aids sufferers.
During the year a fully tested financial model prepared by the Actuarial Society
of South Africa was used to project the total additional future costs of
HIV/AIDS including the provision of ART. This model shows that the total
additional cost will peak in 2006 and will represent approximately $6 per pgm
ounce of production.
Having previously taken the decision to transform Lonmin into a pure Platinum
producer, we set ourselves in 2000 three strategic objectives. They were to
remove the Impala change of control clause, to maximise the value of our shares
in Ashanti and Indepgold and to expand our South African operations to an annual
Platinum production level of 1 million tr. oz. by 2008. A fourth objective was
added in 2002 which was to comply with the Government"s proposed BEE charter.
Each of these objectives has either been achieved or is the subject of a clearly
established course leading to its achievement.
A further objective to competitively produce a quantity of pgm"s outside South
Africa after 2008 is in hand.
During the coming year we remain confident that the Platinum supply and demand
balance will continue to provide attractive prices. This year"s Platinum
production included some 30,000 tr. oz. of non-repeatable production so a more
representative production figure for the year would have been around 900,000 tr.
oz. We expect to marginally improve on this figure during the coming year.
Finally, I would like to add to the sentiments expressed by the Chairman my own
very sincere thanks and appreciation to all my colleagues, at all levels, for a
very solid year"s performance.
Edward Haslam
Chief Executive
Financial Review
Introduction
The financial information presented has been prepared on the same basis and
using the same accounting policies as those used to prepare the 2002 financial
statements.
Analysis of results
Profit and loss account
Turnover increased by 12% to $779 million in the year ended 30 September 2003
representing a reduction of $55 million from the gold mining operations in
Zimbabwe which were sold in October 2002 offset by an increase of $137 million
arising from the platinum operations in South Africa. The latter arose from a
higher average price realised for the basket of metals sold of 7% against that
achieved last year together with a growth in sales of PGM"s. Costs in US
dollars were higher than in 2002 due to a combination of the strengthening in
the South African rand average exchange rate of 26% during the year and higher
smelting costs following the explosion of the new smelter in December 2002. The
effect on the profit and loss account has, however, been mitigated by higher
levels of closing stocks at 30 September 2003 as a result of increased
production from the opencast operations and higher levels of finished metal and
concentrate stocks. EBITDA amounted to $344 million for the year (2002 - $372
million) and profit before tax was $291 million (2002 - $332 million).
Exceptional items in the year included a profit of $24 million on the sale of
Brakspruit surface and mineral rights in South Africa which were sold in March
2003 and a loss on the sale of the Zimbabwe gold mining operations of $2 million
in October 2002.
The tax charge for 2003 was $183 million compared with $75 million in 2002. $85
million of exchange losses were included in the 2003 tax charge against $48
million of exchange profits in 2002. The effective tax rate, excluding all
exchange effects and a tax charge on the Brakspruit exceptional item of $3
million, was 35% compared with 37% last year.
Attributable profit fell to $74 million for the 2003 year from $185 million in
2002. Earnings per share were 52.5 cents based on a weighted average number of
shares outstanding of 141 million compared with 121.5 cents for 2002 based on a
weighted average number of shares outstanding of 152 million. Excluding net
exceptional items of $13 million, earnings per share were 43.3 cents.
Underlying earnings per share, which are based on the attributable profit for
the year excluding exceptional items and exchange on tax balances, were 87.2
cents compared with 98.5 cents for 2002.
Balance sheet
Equity interests were $648 million at 30 September 2003 compared with $675
million at 30 September 2002 reflecting the attributable profit of $74 million
earned in the year offset by dividends declared of $42 million and $59 million
for the interim and final dividends respectively. Net borrowings amounted to
$197 million at 30 September 2003 compared with $155 million at 30 September
2002 and included $215.8 million of US dollar 3.75% convertible bonds due 2008
raised to refinance existing debt in London and for general corporate purposes.
Gearing at 30 September 2003 amounted to 30% on equity interests and 23% on
equity and minority interests (30 September 2002 - 23% on equity interests and
18% on equity and minority interests). Stock amounted to $100 million at 30
September 2003 compared with $41 million at 30 September 2002 as a result of
increased finished metal and concentrate stocks.
Cash flow
The following table summarises the main components of the cash flow during the
year:
2003 2002
$m $m
Net cash inflow from operating activities 296 359
Interest and finance costs (12) 3
Tax (57) (181)
Trading cash flow 227 181
Capital expenditure - purchases (161) (152)
- sales 25 -
Minority dividends (23) (36)
Free cash flow 68 (7)
Financial investment, acquisitions and disposals 10 (78)
- 3
- (128)
- (360)
(101) (109)
Shares - issued
- bought back
Capital return
Equity dividends paid
Cash outflow (23) (679)
Opening net (borrowings)/cash (155) 523
Exchange (19) 1
Closing net (borrowings) (197) (155)
Trading cash flow per share 161.0c 118.9c
Free cash flow per share 48.2c (4.6)c
Net cash inflow from operating activities was $296 million during 2003, an 18%
decrease on last year"s figure of $359 million. The reduction arose from the
lower profitability achieved during the year together with an increase in
working capital mainly due to the higher stock levels at 30 September 2003.
After interest and finance costs of $12 million and tax payments of $57 million,
trading cash flow amounted to $227 million in 2003 against $181 million in 2002,
with trading cash flow per share of 161.0 cents in 2003 against 118.9 cents in
2002.
Capital expenditure of $161 million was incurred during the year and sales of
fixed assets represented the sale proceeds of $25 million received on the sale
of Brakspruit during March 2003. After minority dividends paid of $23 million,
free cash flow was $68 million and free cash flow per share was 48.2 cents (2002
- a negative 4.6 cents). Financial investment, acquisitions and disposals
mainly represented the net sale proceeds received on the disposal of the
Zimbabwe gold mining operations. After accounting for equity dividends paid of
$101 million, the cash outflow was $23 million during 2003 and net borrowings
amounted to $197 million at 30 September 2003.
Dividends
The Board recommends a final dividend of 42.0 cents (2002 - 42.0 cents) making
total dividends for the year of 72.0 cents (2002 - 72.0 cents). This represents
a cover of 0.7 times on earnings (2002 - 1.7 times). On an underlying earnings
basis, this represents a cover of 1.2 times compared with 1.4 times in 2002.
John Robinson
Finance Director
Lonmin Plc
Platinum Operating Statistics - Five Year Review
2003 2002 2001 2000 1999
Development included (ms) 202,320.5 205,153.2 189,352.9 159,685.6 152,1
in working costs
Capital development (ms) 28,660.2 33,036.5 30,450.3 44,109.7 38,96
including shaft
sinking
Centares mined (000) 2,154 2,158 1,956 1,943 1,873
underground ex stopes
Centares mined (000) 265 272 237 223 217
underground ex
development
Total centares mined (000) 2,419 2,430 2,193 2,166 2,090
underground
Total tons milled (000) 14,208 11,260 10,520 9,734 9,069
(excluding slag)
Total tons mined (000) 14,330 12,346 10,111 9,858 9,355
UG2 to Merensky ratio (%) 81.6% 78.3% 77.1% 76.0% 76.7%
Noble metals in matte (kg) 54,295 46,557 44,163 40,810 39,16
Yield into matte (g/t) 3.83 4.13 4.20 4.19 4.32
Refined production of
(i)
- Platinum (oz) 932,867 757,451 716,697 659,770 609,5
- Palladium (oz) 417,418 350,792 323,725 293,274 280,8
- Gold (oz) 17,617 17,224 16,779 15,665 15,29
- Rhodium (oz) 140,514 113,549 101,881 88,797 85,14
- Ruthenium (oz) 208,827 194,798 168,363 151,496 147,4
- Iridium (oz) 38,823 33,711 29,856 26,499 24,71
- Total PGM"s (oz) 1,757,757 1,467,525 1,357,301 1,235,501 1,163
Capital expenditure (Rm) 1,293.6 1,558.2 936.5 768.2 362.2
Exchange rate as at
year end (R/$) 6.9650 10.5385 8.7687 7.2300 6.042
Average exchange rate (R/$) 7.8844 10.6516 8.0083 6.6027 6.050
Average price received
- Platinum (R) 5,053 5,357 4,411 3,400 2,102
($) 645 501 544 504 347
- Palladium (R) 1,698 3,759 5,404 3,645 1,921
($) 212 351 670 540 317
- Rhodium (R) 4,201 9,123 13,813 11,475 4,879
($) 529 850 1,703 1,684 806
Basket price of metals
($/kg) 14,618 13,662 18,652 N/C N/C
Cash cost per refined
ounce of PGM (R) 2,001 1,810 1,627 1,426 1,325
(including royalties) ($) 254 171 201 216 218
Cash cost per refined
ounce of PGM
(excluding royalties)
- Total (R) 1,996 1,780 1,594 1,416 1,325
($) 254 168 197 214 218
- Underground (R) 2,022 1,776 N/C N/C N/C
- Open Cast (R) 1,801 2,726 N/C N/C N/C
Total complement in
service (including
capital projects and
hired services) -
average 25,822 24,565 20,915 18,972 17,747
Total employees in
service (excluding
capital projects)-
average 20,273 19,565 18,411 16,853 16,344
Total contractors in
service - average 5,549 5,000 2,504 2,119 1,403
Total employees at
work - average 18,529 17,549 15,189 13,462 13,207
Tons milled per total
employees at work 63.9 53.5 58.0 60.3 57.2
Square metres per
total employees at
work 11.0 11.5 12.0 13.4 13.2
Note:
(i) The statistics for 2003 include refined production of metals sold in
concentrate form and slag sales of:
Platinum 79,000 ounces
Palladium 36,400 ounces
Rhodium 10,400 ounces
Lonmin Plc
Consolidated profit and loss account
For the year ended 30 September
2003 2002
Note $m $m
Turnover 1 779 697
EBITDA (ii) 1 344 372
Depreciation (46) (39)
Group operating profit 298 333
Share of associate"s operating loss (1) (2)
Total operating profit 1 297 331
Profit on sale of fixed assets 3 24 -
Loss on sale or termination of operations 3 (2) -
Profit before net interest (payable)/receivable
and similar items 319 331
Net interest (payable)/receivable and similar
items 2 (28) 1
Profit before taxation 1 291 332
Taxation 4 (183) (75)
Profit after taxation 108 257
Minority equity interest (34) (72)
Profit for the year 74 185
Dividends 5 (101) (101)
Retained (loss)/profit for the year (27) 84
Earnings per share 6 52.5c 121.5c
Diluted earnings per share 6 52.3c 121.0c
Dividends per share 5 72.0c 72.0c
Financial ratios
Tax rate (iii) 35% 37%
Net debt to EBITDA 0.6 times 0.4 times
Notes:
(i) The results for both years relate to continuing operations.
(ii) EBITDA is Group operating profit before interest, tax, depreciation and
amortisation.
(iii) The tax rate has been calculated excluding exceptional items and exchange
as disclosed in note 4 on page 14.
Lonmin Plc
Consolidated balance sheet
As at 30 September
2003 2002
$m $m
Fixed assets
Tangible assets 983 887
Investments: 292 294
Associate
Other investments
4 4
288 290
1,275 1,181
Current assets
Stocks 100 41
Debtors 159 105
Investments 3 2
Cash and short-term deposits 66 34
328 182
Creditors: amounts falling due within one year (249) (188)
Net current assets/(liabilities) 79 (6)
Total assets less current liabilities 1,354 1,175
Creditors: amounts falling due after more than
one year (215) (135)
Convertible debt (211) -
Other (4) (135)
Provisions for liabilities and charges (277) (160)
862 880
Capital and reserves
Called up share capital 141 141
Share premium account 1 1
Revaluation reserve 16 16
Capital redemption reserve 88 88
Profit and loss account 402 429
Equity interests 648 675
Minority equity interest 214 205
862 880
Lonmin Plc
Consolidated cash flow statement
For the year ended 30 September
2003 2002
Note $m $m
Net cash inflow from operating activities 7 296 359
Returns on investment and servicing of finance (35) (33)
Interest - received 2 7
- paid (10) (4)
Financing expenses (4) -
Dividends paid to minority (23) (36)
Taxation (57) (181)
Capital expenditure and financial investment (136) (230)
Acquisitions and disposals 10 -
Equity dividends paid (101) (109)
Net cash outflow before use of liquid resources and
financing (23) (194)
Management of liquid resources - 433
Financing 85 (356)
New long-term loans - 130
Repayment of long-term loans (130) -
Repayment of short-term loans (1) (1)
Issue of convertible bond 216 -
Issue of ordinary share capital - 3
Share buybacks - (128)
Capital return - (360)
Increase/(decrease) in cash in the year 62 (117)
Lonmin Plc
Statement of total consolidated recognised gains and losses
For the year ended 30 September
2003 2002
$m $m
Profit/(loss) for the year - Group 75 187
- Associate (1) (2)
Total consolidated recognised gains and losses
relating to the year 74 185
Consolidated historical cost profits and losses
For the year ended 30 September
2003 2002
$m $m
Reported profit before taxation 291 332
Disposal of fixed assets at valuation 1 -
Difference between an historical cost depreciation
charge and the actual depreciation charge calculated on
the revalued amount 2 2
Historical cost profit before taxation 294 334
Historical cost retained (loss)/profit for the year (25) 86
Reconciliation of movement in equity interests
For the year ended 30 September
2003 2002
$m $m
Total consolidated recognised gains relating to the year 74 185
Dividends (101) (101)
Retained (loss)/profit for the year (27) 84
Capital return - (361)
Share buybacks - (128)
Shares issued on exercise of share options - 3
Net decrease in equity interests in the year (27) (402)
Equity interests at 1 October 675 1,077
Equity interests at 30 September 648 675
Lonmin Plc
1. Segmental analysis
By business origin:
2003
Total Net
operating operating
Turnover EBITDA profit PBE PBT assets
$m $m $m $m $m $m
Platinum 775 367 321 296 320 827
Gold 4 1 1 1 (1) 277
Exploration - (10) (11) (11) (11) 4
Other - (1) (1) (1) (1) -
Corporate - (13) (13) (16) (16) 10
779 344 297 269 291 1,118
South Africa 775 367 321 296 320 825
Zimbabwe 4 1 1 1 (1) -
Ghana - - - - - 277
Other - (11) (12) (12) (12) 6
Corporate - (13) (13) (16) (16) 10
779 344 297 269 291 1,118
2002
Total Net
operating operating
Turnover EBITDA profit PBE PBT assets
$m $m $m $m $m $m
Platinum 638 387 348 346 346 795
Gold 59 6 6 6 6 292
Exploration - (10) (12) (12) (12) 4
Other - (1) (1) (1) (1) -
Corporate - (10) (10) (7) (7) 3
697 372 331 332 332 1,094
South Africa 638 377 338 336 336 792
Zimbabwe 59 6 6 6 6 15
Ghana - - - - - 277
Other - (1) (3) (3) (3) 7
Corporate - (10) (10) (7) (7) 3
697 372 331 332 332 1,094
PBE is profit before tax and exceptionals and PBT is profit before tax and after
exceptionals.
Net operating assets exclude net borrowings of $197 million at 30 September 2003
(2002 - $155 million) and the proposed dividend of $59 million at 30 September
2003 (2002 - $59 million).
2. Net interest (payable)/receivable and similar items
2003 2002
$m $m
Interest payable:
On bank loans and overdrafts (10) (3)
Other loans - (1)
Finance leases (1) (1)
Discounting on provisions (1) -
(12) (5)
Capitalisation of interest 1 -
Interest receivable on cash and deposits 2 5
Exchange differences on net debt (19) 1
Net interest (payable)/receivable and similar items (28) 1
3. Exceptional items
2003 2002
$m $m
Profit on sale of fixed assets
- Sale of Brakspruit mineral rights 24 -
Sale or termination of operations:
- Loss on sale of gold mining interests (2) -
Exceptional items before taxation and minority interest 22 -
Taxation (3) -
Minority interest (6) -
Net exceptional profit 13 -
4. Taxation
2003 2002
$m $m
United Kingdom:
Corporation tax at 30% (2002- 30%) 30 37
Double tax relief (30) (37)
- -
Overseas:
Current taxation 69 63
Excluding tax on local currency exchange profits 49 71
Tax on local currency exchange profits (1) 5
Tax on exceptional items 3 -
Tax on dividends remitted 14 16
Exchange on current taxation 4 (29)
Deferred taxation 114 12
Origination and reversal of timing differences 32 36
Exchange on deferred taxation 82 (24)
Total tax charge 183 75
Tax charge excluding exceptional items and exchange 95 123
Effective tax rate excluding exceptional items and
exchange 35% 37%
4. Taxation - continued
A reconciliation of the standard tax charge to the current tax charge is as
follows:
2003 2002
$m $m
Tax charge at standard tax rate 87 100
Overseas taxes on dividends remitted by subsidiary
companies 14 16
Prior year losses utilised - (4)
Other timing differences (35) (25)
Effect of exchange adjustments 3 (24)
Current tax charge 69 63
The Group"s primary operations are based in South Africa. Therefore, the
relevant standard tax rate for the Group is the South African statutory tax rate
of 30% (2002 - 30%). The secondary tax rate on dividends remitted by South
African companies is 12.5% (2002 - 12.5%).
5. Dividends
2003 2002
$m $m
Interim 30.0c (2002 - 30.0c) per share 42 42
Final 42.0c (2002 - 42.0c) per share 59 59
Total dividends 72.0c (2002 - 72.0c) per share 101 101
Until 31 March 1999, advanced corporation tax (ACT) was paid on dividends at the
rate of 25% of the net dividend. Subject to certain restrictions, this was
recoverable by offsetting it against corporation tax liabilities. When this
offset was not available surplus ACT was generated.
At the year end, the Group had surplus ACT of $103 million (2002 - $105 million)
carried forward and available, subject to certain restrictions, for set-off
against future United Kingdom corporation tax liabilities. The notional "Shadow
ACT", being the ACT which would have been payable if the system had not been
abolished and which must be set-off prior to utilisation of surplus ACT,
amounted to $132 million (2002 - $100 million).
6. Earnings per share
Earnings per share have been calculated on the profit attributable to
shareholders amounting to $74 million (2002 - $185 million) using a weighted
average number of 140,994,541 ordinary shares (2002 - 152,251,293 ordinary
shares).
As the table below illustrates, diluted earnings per share are based on the
weighted average number of ordinary shares in issue adjusted by dilutive
outstanding share options and the issue of shares on conversion of the
convertible bond. The convertible bond was issued on 30 September 2003 and the
shares issuable on conversion have been pro-rated accordingly.
2003 2002
Profit Profit
for Per for Per
the share the share
year Number of amount year Number of amount
$m shares cents $m shares cents
Basic EPS 74 140,994,541 52.5 185 152,251,293 121.5
Share option
schemes - 336,586 (0.2) - 650,512 (0.5)
Convertible bond - 28,978 - - - -
Diluted EPS 74 141,360,105 52.3 185 152,901,805 121.0
6. Earnings per share - continued
Underlying earnings per share are based on the profit for the year adjusted to
exclude exceptional items and exchange on tax balances as follows:
2003 2002
Profit Profit
for Per for Per
the Number of share the Number of share
year shares amount year shares amount
$m cents $m cents
Basic EPS 74 140,994,541 52.5 185 152,251,293 121.5
Exceptional items
before taxation
and minority
interest (22) - (15.6) - - -
Taxation on
exceptional items 3 - 2.1 - - -
Exchange on tax
balances 85 - 60.3 (48) - (31.5)
Minority interest (17) - (12.1) 13 - 8.5
Underlying EPS 123 140,994,541 87.2 150 152,251,293 98.5
7. Net cash inflow from operating activities
2003 2002
$m $m
Group operating profit 298 333
Depreciation charge 46 39
Increase in stock (59) (11)
Increase in debtors (42) (6)
Increase in creditors 47 4
Increase/(decrease) in provisions 5 (2)
Other 1 2
Net cash inflow from operating activities 296 359
8. Sale of gold mining interests
On 28 October 2002, the Company sold its gold mining interests in Zimbabwe to
Pemberton International Investments Limited for $15.5 million paid in full on
completion.
9. Exchange Rates
The principal US dollar exchange rates used are as follows:
2003 2002
Average exchange rates:
Sterling 0.62 0.68
SA rand 7.88 10.65
Zimbabwe dollar 1,000.00 415.97
Closing exchange rates:
Sterling 0.60 0.64
SA rand 6.97 10.54
Zimbabwe dollar 1,000.00 640.00
Note: The Zimbabwe dollar exchange rate for 2003 is applicable for the month of
October 2002 only up to the date of disposal of the gold mining interests.
10. Statutory Disclosure
The financial information set out above is taken from but does not constitute
the Company"s statutory accounts for the years ended 30 September 2003 and 2002.
Statutory accounts for 2002 have been delivered, and for 2003 will be delivered,
to the Registrar of Companies. The Auditors have made unqualified reports on
those accounts and such reports did not contain a statement under Section 237(2)
or (3) of the Companies Act 1985.
Copies of the 2003 Lonmin Accounts will be posted to shareholders and will be
available at the Company"s registered office in mid-December 2003.
11. Annual General Meeting
The 2004 Annual General Meeting will be held at 11am on Thursday 5 February 2004
at The Ball Room, Park Lane Hotel, Piccadilly, London W1.
Date: 26/11/2003 09:00:35 AM Supplied by www.sharenet.co.za
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