Announcements 2019

Abridged audited group annual results for the year ended 30 June 2019 and notice of annual general meeting

Key features:

  • Record operating profit of R2.4 billion
  • Record production from own operations of 519 954 oz 4E
  • Normalised headline earnings of 270.1 cents per share, up 226.6%
  • Execution of growth strategy remains firmly in place, with R2.6 billion spent on its execution during the period under review
  • Net debt of R3 billion
  • Commendable safety performance LTIIR of 0.93

Financial results

Northam achieved a record operating profit of R2.4 billion for the financial year ended 30 June 2019 (F2018: R823.3 million), representing a 192.7% increase from the previous corresponding period, underpinned by a solid operating performance at both operations, well contained unit cash costs and a higher basket price received. This translates to an operating profit margin of 22.6% (F2018: 10.9%).

The group achieved a record production from own operations amounting to 519 954 oz 4E (F2018: 483 941 oz 4E), representing a 7.4% increase from the previous corresponding period, with increased contributions from both Booysendal and Zondereinde. Group chrome concentrate production increased by 17.6% to 764 528 tonnes on the back of growth at Booysendal and Zondereinde, as well as first production from Eland (F2018: 650 091 tonnes).

The total comprehensive income for the period was R71.4 million (F2018: loss of R705.4 million). Included in the income for the period is the impact of the black economic empowerment ("BEE") transaction relating to the Zambezi Platinum (RF) Limited preference shares, which are consolidated into the group results and accrued a cumulative variable dividend (accrued dividends) amounting to R1.3 billion (F2018: R1.1 billion). This negatively impacted the consolidated group results for the period under review. Shareholders are reminded that this is a non-cash item.

Normalised headline earnings per share for the period were 226.6% higher at 270.1 cents (F2018: 82.7 cents) per share. Normalised headline earnings, which is Northam's main measure of performance, has been calculated taking into account the headline earnings/loss per share adjusted for non-cash items relating to the BEE transaction. These include the preference share dividends associated with the BEE transaction, as detailed above.

Total group capital expenditure reduced year on year to R2.9 billion as major project milestones were completed. R2.6 billion was spent on expansionary capex and R221.8 million on sustaining capex.

Despite the difficult economic circumstances prevailing during the period under review, both of Northam's mining operations posted an operating profit. Zondereinde achieved an operating profit of R1.3 billion (F2018: R355.4 million) and Booysendal achieved an operating profit of R985.7 million (F2018: R525.4 million).

The group continues to deliver on its strategy of developing low-cost, long-life assets in order to position itself at the lower end of the industry cost curve.

Highlights

 30 June 2019 30 June 2018 Variance
    %
Sales revenueR10.6 billion R7.6 billion 41.0
Operating profit R2.4 billionR823.3 million192.7
Operating profit margin 22.6% 10.9% 107.3
Normalised headline earnings R1.4 billion R421.5 million 226.7
Earnings/(loss) per share 17.2 cents (201.5 cents)
Headline earnings/(loss) per share 15.8 cents (200.5 cents)
Normalised headline earnings per share 270.1 cents 82.7 cents 226.6
EBITDA R2.6 billion R1.1 billion 138.2
EBITDA margin 24.8% 14.7% 68.7
Cash generated from operating activities R2.7 billion R1.1 billion 140.7
Capital expenditure R2.9 billion R3.8 billion (24.3)

Dividends

Given the company's current capital structure, project commitments and economic operating environment, the Northam board of directors (the "board") are of the view that the most efficient way to return value to investors precludes the payment of a cash dividend. The board has therefore resolved not to declare a dividend for the financial year ended 30 June 2019 (F2018: R Nil).

NOTICE OF ANNUAL GENERAL MEETING

The annual general meeting ("AGM") of Northam shareholders ("shareholders") will be held at Northam, Building 4, 1st Floor, Maxwell Office Park, Magwa Crescent West, Waterfall City, Jukskei View, Midrand, South Africa on Thursday, 7 November 2019 at 12:00 to transact the business as stated in the notice of AGM and abridged annual report 2019 ("notice and abridged annual report 2019").

Shareholders are advised that the notice and abridged annual report 2019, containing the condensed audited financial statements for the year ended 30 June 2019, will be distributed to all shareholders by no later than Friday, 30 August 2019.

The annual integrated report 2019, the complete consolidated audited annual financial statements which incorporates the external auditors' report in which Ernst & Young Inc. expressed an unmodified audit opinion and the notice and abridged annual report 2019 are available on the following link:
https://www.northam.co.za/investors-and-media/publications/annual-reports or can be obtained from the company's registered office on request.

The salient dates for the AGM are as follows:

 2019
Record date to determine which shareholders are entitled to receive the notice and abridged annual report 2019Friday, 23 August
Distribution of the notice and abridged annual report 2019Friday, 30 August
Last day to trade in order to be eligible to attend and vote at the AGMTuesday, 22 October
Record date to determine which shareholders are entitled to attend and vote at the AGMFriday, 25 October
Forms of proxy for the AGM to be lodged by 12:00 onWednesday, 6 November*
AGM to be held onThursday, 7 November
Results of AGM released on SENS onThursday, 7 November

* Any forms of proxy not lodged by this date and time must be delivered to the chairperson of the AGM before the appointed proxy may exercise any rights of the shareholder at the AGM.

This short-form announcement is the responsibility of the directors and is only a summary of the information in the full announcement and does not contain full or complete details.

Any investment decision should be based on the full results announcement accessible via the JSE link at https://senspdf.jse.co.za/documents/2019/JSE/ISSE/NHM/AFS_2019.pdf and the full audited annual financial statements available on our website at https://www.northam.co.za/investors-and-media/publications/annual-reports

The full results announcement and the full audited annual financial statements, incorporating the Ernst & Young Inc. auditors' report, are also available at our registered office and at the office of our sponsor for inspection, at no charge, during office hours.

On behalf of the board at Johannesburg on 20 August 2019.

KB Mosehla PA Dunne
Chairman Chief executive
DIRECTORS
KB Mosehla (non-executive chairman)
R Havenstein (lead independent director)
PA Dunne * (chief executive officer)
AH Coetzee (chief financial officer
DH Brown (independent non-executive director)
CK Chabedi (independent non-executive director)
HH Hickey (independent non-executive director)
NY Jekwa (independent non-executive director)
MH Jonas (independent non-executive director)
TE Kgosi (independent non-executive director)
TI Mvusi (independent non-executive director)
JJ Nel (independent non-executive director)
JG Smithies * (independent non-executive director)

* British

Registered office
Building 4, 1st Floor,
Maxwell Office Park
Magwa Crescent West
Waterfall City
Jukskei View, 2090
South Africa

PO Box 412694
Craighall, 2024
South Africa

Telephone +27 11 759 6000
www.northam.co.za

Company secretary
PB Beale
Building 4, 1st Floor,
Maxwell Office Park
Magwa Crescent West
Waterfall City
Jukskei View, 2090
South Africa

PO Box 412694
Craighall, 2024
South Africa

e-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

Transfer secretaries
Computershare Investor Services Proprietary Limited
Rosebank Towers
15 Biermann Avenue
Rosebank, 2196
South Africa

PO Box 61051
Marshalltown, 2017
South Africa

Sponsor and debt sponsor
One Capital
17 Fricker Road
Illovo, 2196
Johannesburg
South Africa

PO Box 784573
Sandton, 2146
South Africa

Johannesburg
23 August 2019