Interim Results
ANTOFAGASTA HOLDINGS PLC
16 September 1999
INTERIM RESULTS ANNOUNCEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 1999
US Dollars Sterling
Unaudited Unaudited
6 months to: 6 months to:
30.6.99 30.6.98 30.6.99 30.6.98
US$'m US$'m £'m £'m
Profit before
tax 18.2 45.7 11.2 27.4
Profit before
tax and
exceptional items 18.2 46.0 11.2 27.6
Earnings per
share 8.0c 22.3c 4.8p 13.4p
The Group's interests include copper mining, transport and
other services. It also has an investment of 33.6% in Quinenco
S.A. These interests are mainly based in Chile.
The Los Pelambres project continues to be on target and within
budget with first production scheduled for October/November
1999. The El Tesoro project is fully financed and
construction is expected to start in November 1999 with first
production planned for March 2001. These two low cost mines
when fully operational will increase the Group's annual copper
production from 60,000 tonnes to over 400,000 tonnes.
Low copper prices during the six month period have been partly
offset by good results from the Railway and interest income
from the Group's strong cash position.
Enquiries to:
Hussein Barma
Chief Financial Officer
Tel : 0171 374 8091
Email: hbarma@antofagasta.co.uk
Issued by:
Ian Seaton
Citigate Dewe Rogerson
Tel : 0171 638 9571
Email: ian.seaton@citigatedr.co.uk
Directors' Comments on the Interim Results to 30 June 1999
Mining
The Group has advanced its strategy to become a major low cost
copper producer. First production is expected from Los Pelambres
in October/November with the construction of El Tesoro scheduled
to begin in November 1999. When fully operational, these two low
cost mines will increase the Group's annual copper production
from 60,000 tonnes to over 400,000 tonnes.
In the six month period to June 1999, Group copper production was
30,000 tonnes compared with 39,000 tonnes in the same period last
year, mainly due to the closure of the El Chacay mine during 1998
as part of the Los Pelambres development. The operating loss from
the mining division was US$6.4 million, compared with US$1.0 million
for the same period in 1998. The average copper price for the
first half of 1999 was US$0.65/lb. compared with US$0.78/lb. in
the same period in 1998.
Los Pelambres
Construction at Los Pelambres, in which the Group has a 60%
interest, has continued and the project is now nearly 90%
complete. Poor quality rock was encountered at some stages in the
coarse ore tunnels. Tunnelling is now complete and the conveyor
belt system is being installed. The depreciation of the Chilean
peso against the dollar has contributed to the project's
finances, enabling it to stay within its budget of US$1.36
billion. First production of concentrate is expected in
October/November 1999, within the original construction target.
Shipments from the new port facility at Los Vilos are scheduled
for early January 2000. When full capacity is reached in March
2000, the average annual production over the 30-year mine plan
will be 246,000 tonnes of copper in concentrates at average cash
costs of US$0.43/lb., thus placing Los Pelambres amongst the
lowest cost producers.
The Group's total equity contribution to the Los Pelambres
development based on the budget of US$1.36 billion is expected to
amount to US $246 million. US$30 million was spent before debt
financing arrangements were finalised in November 1997. As part
of these arrangements, the Group placed US$316 million in escrow
to meet its remaining equity contribution and to provide for any
unexpected cost overruns. At 30 June 1999, US$145 million had
been drawn down and accumulated interest was US$22 million. The
balance on deposit was US$193 million.
El Tesoro
El Tesoro secured project financing of US$205 million from a
consortium of international banks in July. The Group's 61%
interest in the El Tesoro project will be jointly developed with
Equatorial Mining Limited, a subsidiary of AMP, Australia's
largest fund management group, which holds the remaining 39%.
Financial closing is expected in November when construction is
due to begin with first production in March 2001. El Tesoro
will produce 75,000 tonnes of cathodes annually using a standard
heap-leach SX-EW technology, with average cash costs of
US$0.45/lb. over the first ten years, placing it amongst the
lowest cost producers. Total development costs are expected to
be US$296 million, including the construction of the cathode
plant under a US$170 million fixed price turn-key contract.
Michilla
Production of 30,000 tonnes of copper was unchanged compared with
the same period last year. Michilla benefited from the cost-
cutting programme implemented in 1998. This enabled it to reduce
cash costs to US$0.56/lb. compared with US$0.65/lb. in the same
period last year, thereby mitigating the recent period of very
low copper prices. Michilla is continuing its efforts to reduce
its costs to a target of US$0.53/lb. by the end of the year. A
successful exploration programme during 1998 has identified
further reserves, which are now adequate to 2008.
Transport and other services
The overall volume of rail traffic increased to 1.5 million
tons from 1.3 million tons in the same period of 1998 as a
result of new contracts with the Escondida and Lomas Bayas mines.
This volume growth enabled both turnover and operating profits to
be maintained despite the difficult economic environment in Chile.
Quinenco S.A.
The Group holds a 33.61% investment in Quinenco S.A., a
diversified industrial and financial group listed in Santiago and
New York with interests in the Southern Cone of Latin America and
Brazil. During the period the Group received dividends of US$5.5
million and, at 30 June 1999, the market value of the Group's
holding in Quinenco was US$340.2 million.
Quinenco completed the sale of a 50% stake in OHCH to Banco
Santander Centro Hispanoamericano (BSCH) for US$600 million in
May at a net profit of US$261 million after a buy & sell offer
initiated by BSCH. Quinenco's subsidiary, VTR, also sold its
cable television division to UIH Latin America for US$259
million, at a net profit to Quinenco of US$67 million. Quinenco
is required under Chilean legislation to pay a dividend of at
least 30% of its net profits and the Group expects to receive a
substantial dividend in 2000 relating to these sales.
Quinenco continues to take advantage of investment opportunities.
In August it announced the acquisition of a 43.5% controlling
interest in Banco Edwards for US$244 million. Banco Edwards is a
well-established Chilean commercial bank which is listed in
Santiago and New York.
Dividends
An interim dividend of 2.25p (1998 interim - 2.25p) will be paid
on 3 December 1999 to shareholders on the Register at the close
of business on 5 November 1999.
Current trading prospects
Following mine closures announced in the first half of this year,
copper prices have begun to recover from their recent lows to
around US$0.75/lb. These events, together with encouraging news
from the Far East and Japan, suggest the recent economic crisis
may be ending. We expect inventory levels to reduce and copper
prices to gradually increase through 2000. The Group should be
well placed to benefit from any improvement in prices when Los
Pelambres is fully operational.
Group Profit and Loss Account
US Dollar Sterling
Unaudited Unaudited Unaudited Restated Restated
half year to year to half year to half year to year to
30.6.99 30.6.98 31.12.98 30.6.99 30.6.98 31.12.98
Notes US$'m US$'m US$'m £'m £'m £'m
Turnover 2 70.7 101.4 184.9 43.5 61.4 111.4
----------------------------------------------------------
Operating profit2 3.2 7.3 9.5 1.9 4.4 5.7
Share of
operating profit
in associates 0.9 1.2 2.8 0.6 0.7 1.7
Profit on
disposal of
fixed assets - 1.0 1.0 - 0.6 0.6
Income from
other fixed
asset investments 5.6 23.7 23.6 3.4 14.3 14.2
Net interest
receivable
Group 8.4 12.3 23.4 5.2 7.3 14.1
Associates 0.1 0.2 0.2 0.1 0.1 0.1
-----------------------------------------------------------
Profit before
Tax 2,3 18.2 45.7 60.5 11.2 27.4 36.4
Tax 4
Group (2.9) (2.6) (3.9) (1.8) (1.6) (2.3)
Associates (0.4) (0.4) (0.6) (0.2) (0.2) (0.4)
Profit after
tax 14.9 42.7 56.0 9.2 25.6 33.7
Minority
interests -
equity 0.3 (0.3) 0.3 0.1 (0.2) 0.1
------------------------------------------------------------
Profit for
the financial
period 15.2 42.4 56.3 9.3 25.4 33.8
Dividends
Preference -
non equity (0.1) (0.1) (0.1) (0.1) (0.1) (0.1)
Ordinary -
Equity 6 (7.0) (7.4) (23.7) (4.4) (4.4) (14.3)
------------------------------------------------------------
Retained profit 8.1 34.9 32.5 4.8 20.9 19.4
============================================================
Earnings per
Share 5 8.0c 22.3c 29.6c 4.8p 13.4p 17.8p
Earnings per
share before
exceptional
items 5 8.0c 22.3c 30.9c 4.8p 13.4p 18.6p
Dividend per
share 6 2.25p 2.25p 7.25p
Other recognised gains and losses
Other recognised gains and losses in the period (exchange
differences) are shown in Note 10 together with other movements
in shareholders' funds.The effect on prior period comparatives
of adopting FRS 12 'Provisions, Contingent Liabilities and
Contingent Assets' is shown in Note 1.
Group Balance Sheet
US Dollar Sterling
Unaudited Unaudited Unaudited Unaudited Restated Restated
30.6.99 30.6.98 31.12.98 30.6.99 30.6.98 31.12.98
Notes US$'m US$'m US$'m £'m £'m £'m
Fixed assets
Tangible fixed 7 1,265.7 554.6 950.8 801.0 334.5 575.1
assets
Investments in 8 19.7 19.1 20.4 12.7 12.3 13.1
Associates
Other
investments 9 186.0 185.8 185.8 108.4 108.4 108.3
--------------------------------------------------------
1,471.4 759.5 1,157.0 922.1 455.2 696.5
========================================================
Current assets
Stocks 10.8 21.6 11.5 6.8 12.9 6.9
Debtors 76.0 60.1 108.3 48.0 36.0 65.3
Current asset 291.0 422.1 385.2 184.2 252.8 232.1
investments
(including time
deposits)
Cash at bank and 1.0 1.8 4.2 0.7 1.1 2.5
in hand
--------------------------------------------------------
378.8 505.6 509.2 239.7 302.8 306.8
Creditors -
amounts falling
due within one
year
Trade and other (79.9) (60.6) (101.7) (50.6) (36.3) (61.5)
Creditors
Loans (1.7) (7.0) (3.3) (1.1) (4.2) (2.0)
Dividends (8.3) (8.0) (17.3) (5.2) (4.7) (10.4)
--------------------------------------------------------
(89.9) (75.6) (122.3) (56.9) (45.2) (73.9)
--------------------------------------------------------
Net current 288.9 430.0 386.9 182.8 257.6 232.9
assets --------------------------------------------------------
Total assets 1,760.3 1,189.5 1,543.9 1,104.9 712.8 929.4
less current
liabilities
Loans due after (691.2) (205.9) (511.1) (437.5) (123.3) (307.9)
more than
one year
Provisions for (9.8) (9.3) (9.5) (6.2) (5.6) (5.7)
liabilities and
charges --------------------------------------------------------
1,059.3 974.3 1,023.3 661.2 583.9 615.8
========================================================
Capital and
reserves
Called up share 18.2 19.2 19.1 11.5 11.5 11.5
Capital
Share premium 231.6 244.9 243.4 146.6 146.6 146.6
Reserves 620.1 603.1 601.2 383.1 361.6 361.5
--------------------------------------------------------
Shareholders' 10 869.9 867.2 863.7 541.2 519.7 519.6
funds
Minority 189.4 107.1 159.6 120.0 64.2 96.2
interests ---------------------------------------------------------
1,059.3 974.3 1,023.3 661.2 583.9 615.8
=========================================================
Approved by the Board of Directors on 15 September 1999.
Group Cash Flow Statement
US Dollar Sterling
Unaudited Unaudited Unaudited Unaudited Unaudited Audited
half half year half half year
year to year to to year to year to to
30.6.99 30.6.98 31.12.98 30.6.99 30.6.98 31.12.98
Notes US$'m US$'m US$'m £'m £'m £'m
Net cash inflow
from operating
activities 11 15.2 4.7 27.9 9.2 2.8 16.9
------------------------------------------------------
Returns on
investment and
servicing of
finance
Dividends
received from
associates 1.3 1.7 1.7 0.8 1.0 1.0
Dividends
received from
other fixed
asset
investments 5.6 23.7 23.6 3.4 14.3 14.2
Interest 9.6 17.5 28.6 5.7 10.5 17.2
received
(including
capitalised
interest)
Interest paid (16.0) (6.5) (14.9) (9.9) (4.0) (9.0)
(including
capitalised
interest)
Preference (0.1) (0.1) (0.2) (0.1) (0.1) (0.1)
dividends paid
Dividends paid - (3.8) (5.6) - (2.3) (3.4)
to minority
interests -----------------------------------------------------
Net cash inflow 0.4 32.5 33.2 (0.1) 19.4 19.9
from returns on
investment and
servicing of
finance
-------------------------------------------------------
Tax (2.6) (1.9) (0.8) (1.6) (1.1) (0.5)
-------------------------------------------------------
Net cash
outflow
from capital
expenditure and
financial
investment (301.1) (171.4) (576.7) (186.0) (104.5) (347.4)
---------------------------------------------------------
Net cash
outflow
from
acquisitions
and disposals - (3.9) (4.0) - (2.4) (2.4)
---------------------------------------------------------
Equity
dividends
paid (15.8) (14.9) (21.8) (9.5) (9.1) (13.3)
---------------------------------------------------------
Cash outflow
before
management of
liquid resources (303.9) (154.9) (542.2) (188.0) (94.9) (326.8)
---------------------------------------------------------
Management of
liquid resources
Net decrease in
time deposits 91.9 3.4 40.0 56.6 2.1 24.0
---------------------------------------------------------
Financing
Contribution 30.4 11.8 64.9 18.8 7.1 39.1
from minority
interests
Net other
borrowings in
period 178.9 138.3 439.4 110.4 83.9 264.7
---------------------------------------------------------
Net cash
inflow
from financing 209.3 150.1 504.3 129.2 91.0 303.8
---------------------------------------------------------
Net cash 12 (2.7) (1.4) 2.1 (2.2) (1.8) 1.0
(outflow)/inflow
in the period
=========================================================
Notes
1 Accounting policies
The profit and loss account, balance sheet and cash flow
statement for the half year to 30 June 1999 have been prepared
on the basis of the accounting policies set out in the Group's
statutory accounts for the year to 31 December 1998 except as
stated below:
(a) The Group's operations, cash balances and borrowings are
substantially US dollar-based. To reflect this, these
interim results have been additionally reported in US
dollars on a basis consistent with the sterling-denominated
results. Share capital remains denominated in sterling and
dividends continue to be declared and paid in sterling. For
the purposes of reporting in US dollars only, share capital,
share premium and dividends declared are translated at the
period-end rate of exchange.
(b) These results reflect the implementation of FRS 12,
'Provisions, Contingent Liabilities and Contingent Assets'. FRS
12 requires provision to be made for all obligations that arise
in the course of an entity's operations. Previously, the Group
accounted for costs relating to the eventual closure of its
mining operations and severance indemnities payable in Chile on
termination of employment when paid. The effect of implementing
FRS 12 on previously reported comparatives is as follows:
Sterling
30.6.98 31.12.98
Profit Shareholders' Profit Shareholder's
for the funds for the funds
financial financial
period period
£'m £'m £'m £'m
As previously
reported 25.7 524.6 34.2 524.6
Effect of
restatement (0.3) (4.9) (0.4) (5.0)
------------------------------------------
As restated 25.4 519.7 33.8 519.6
------------------------------------------
2 Segmental analysis
a) Turnover by geographical destination
US Dollar Sterling
Unaudited Unaudited Unaudited Audited
half year half year
year to to year to to
30.6.99 30.6.98 31.12.98 30.6.99 30.6.98 31.12.98
Notes US$'m US$'m US$'m £'m £'m £'m
UK 4.3 8.4 18.0 2.6 5.1 10.9
Rest of Europe 25.8 20.1 33.1 15.9 12.2 19.9
Chile 23.8 42.5 53.3 14.6 25.7 32.1
Rest of Latin
America 13.9 15.2 32.1 8.6 9.2 19.3
North America - 4.1 23.8 - 2.5 14.4
Asia Pacific / 2.9 11.1 24.6 1.8 6.7 14.8
Other -----------------------------------------------
70.7 101.4 184.9 43.5 61.4 111.4
-----------------------------------------------
b) Turnover and profit before tax by class of business and
geographical location. Operations are based in Chile, except
where stated below. Turnover and profit before tax can be
analysed as follows:
US Dollar Sterling
Unaudited Unaudited Unaudited Restated
half year half half Restated
year to to year to year to year to
30.6.99 30.6.98 31.12.98 30.6.99 30.6.98 31.12.98
Notes US$'m US$'m US$'m £'m £'m £'m
Turnover
Mining 45.1 75.6 130.1 27.9 45.8 78.4
Transport and
other services 25.6 25.8 54.8 15.6 15.6 33.0
------------------------------------------------------
70.7 101.4 184.9 43.5 61.4 111.4
------------------------------------------------------
Profit before
tax
Operating profit
Before
exceptional
items
Mining (6.4) (1.0) (5.4) (3.9) (0.5) (3.2)
Transport and 9.6 9.6 20.0 5.8 5.7 12.0
other services ----------------------------------------------------
3.2 8.6 14.6 1.9 5.2 8.8
Share of
operating profit
in associates
(Bolivian
Railways) 0.9 1.2 2.8 0.6 0.7 1.7
Income from
other fixed
asset
investments 5.6 23.7 23.6 3.4 14.3 14.2
Net interest
receivable
Group 8.4 12.3 23.4 5.2 7.3 14.1
Associates 0.1 0.2 0.2 0.1 0.1 0.1
----------------------------------------------------
Profit before 18.2 46.0 64.6 11.2 27.6 38.9
exceptional
items and tax
Exceptional - (0.3) (4.1) - (0.2) (2.5)
items
(see note 3) ------------------------------------------------------
Profit before 18.2 45.7 60.5 11.2 27.4 36.4
tax ------------------------------------------------------
3 Exceptional items
US Dollars Sterling
Unaudited half Unaudited Unaudited half Audited
year to year to year to year to
30.6.99 30.6.98 31.12.98 30.6.99 30.6.98 31.12.98
US$'m US$'m US$'m £'m £'m £'m
Operating
Provision for - (1.3) (5.1) - (0.8) (3.1)
write-down of
mining assets
and cost of
temporary
closure
Non-operating
Profit on sale - 1.0 1.0 - 0.6 0.6
of land by
Railway ---------------------------------------------------
- (0.3) (4.1) - (0.2) (2.5)
Tax effect - - 0.2 - - 0.1
Minority - - 1.3 - - 0.8
interest effect ---------------------------------------------------
- (0.3) (2.6) - (0.2) (1.6)
===================================================
4 Tax
The tax charge of US$ 3.3 million (£2.0 million; 1998 half year -
US$ 3.0 million; £1.8 million) represents an effective rate of
18.1% (1998 half year - 6.1%) on profit before tax, as compared
with the Chilean statutory tax rate of 15%. The lower effective
rate in 1998 arose mainly because of the substantially larger
dividend from Quinenco received that year which was paid out of
its post tax profits and not subject to further tax on receipt.
5 Earnings per share
Earnings per share is calculated on profit after tax, minority
interests and preference dividends giving adjusted earnings of
US$15.1 million (£9.2 million; 1998 half year - US$42.3 million;
£25.3 million).
6 Dividends
The Board has declared an interim dividend of 2.25p (1998
half year - 2.25p) per share for payment on 3 December 1999
to shareholders on the Register at the close of business on
5 November 1999. Dividends are declared gross, but dividends
payable to United Kingdom shareholders will be paid net of
witholding tax.
7 Tangible fixed assets
US Dollars
Rolling
stock,
Freehold Permanent plant,
land and way and machinery
buildings works and water
distri-
bution Mining Total
US$'m US$'m US$'m US$'m US$'m
1 January 1999 19.4 - 2.0 929.4 950.8
(unaudited)
Additions 0.4 0.9 1.1 324.8 327.2
Disposals - - (0.8) (0.5) (1.3)
Depreciation - (0.3) (1.4) (8.8) (10.5)
charge for the
period
Exchange (0.3) - (0.2) - (0.5)
------------------------------------------------
30 June 1999 19.5 0.6 0.7 1,244.9 1,265.7
(unaudited) ================================================
Sterling
Rolling
stock,
Freehold Permanent plant,
land and way and machinery
buildings works and water
distri-
bution Mining Total
£'m £'m £'m £'m £'m
1 January 1999 19.2 20.6 24.9 510.4 575.1
(audited)
Additions 0.2 0.6 0.7 200.5 202.0
Disposals - - (0.5) (0.3) (0.8)
Depreciation - (0.2) (0.9) (5.3) (6.4)
charge for the
period
Exchange 0.4 - - 30.7 31.1
--------------------------------------------
30 June 1999 19.8 21.0 24.2 736.0 801.0
(unaudited) ============================================
8 Investments in associates
US$'m £'m
1 January 1999 20.4 13.1
Share of profit before tax 1.0 0.6
Share of tax (0.4) (0.2)
Exchange - -
Dividends received (1.3) (0.8)
-----------------
30 June 1999 (unaudited) 19.7 12.7
=================
9 Other investments
US$'m £'m
1 January 1999 185.8 108.3
Additions 0.2 0.1
Disposals - -
-----------------
30 June 1999 (unaudited) 186.0 108.4
=================
The book value of quoted investments at 30 June 1999 included
above was US$185.7 million, and the corresponding market value
was US$344.4 million.
10 Reconciliation of movements in shareholders' funds
US Dollars Sterling
Unaudited Unaudited Unaudited Unaudited Restated Restated
half year half year year to half year half year year to
to 30.6.99 30.6.98 31.12.98 to 30.6.99 to 30.6.98 31.12.98
US$'m US$'m US$'m £'m £'m £'m
Profit for the 15.2 42.4 56.3 9.3 25.4 33.8
period
Other recognised
gains/ (losses)
relating to the
period
Exchange 10.8 (5.7) (5.2) 16.8 (5.8) (4.4)
----------------------------------------------------
Total recognised 26.0 36.7 51.1 26.1 19.6 29.4
gains and losses
Dividends (7.1) (7.5) (23.8) (4.5) (4.5) (14.4)
----------------------------------------------------
18.9 29.2 27.3 21.6 15.1 15.0
Exchange (12.7) 3.2 1.6 - - -
movement on
sterling
denominated
share capital
and share
premium
Opening 863.7 834.8 834.8 519.6 504.6 504.6
shareholders'
funds ----------------------------------------------------
Closing 869.9 867.2 863.7 541.2 519.7 519.6
shareholders'
funds ====================================================
11 Reconciliation of operating profit to net cash inflow
from operating activities
US Dollars Sterling
Unaudited Unaudited Unaudited Unaudited Restated Restated
half year half year year to half year half year year to
to 30.6.99 to 30.6.98 31.12.98 to 30.6.99 to 30.6.98 31.12.98
US$'m US$'m US$'m £'m £'m £'m
Operating profit 3.2 7.3 9.5 1.9 4.4 5.7
Depreciation 10.5 9.9 19.8 6.4 6.0 11.9
Loss on disposal 0.5 0.5 6.0 0.3 0.3 3.7
of tangible
fixed assets
Decrease in 0.7 4.4 6.4 0.4 2.6 3.8
stocks
Decrease/ 0.8 (8.5) (5.9) 0.7 (5.2) (3.5)
(increase) in
debtors
(Decrease) in (0.5) (8.9) (7.9) (0.5) (5.3) (4.7)
creditors ----------------------------------------------------
Net cash inflow
from operating 15.2 4.7 27.9 9.2 2.8 16.9
activities ====================================================
12 Reconciliation of net cash flow
to movement in net funds/(debt)
US Dollars Sterling
Unaudited Unaudited Unaudited Audited
half year to year to half year to year to
30.6.99 30.6.98 31.12.98 30.6.99 30.6.98 31.12.98
US$'m US$'m US$'m £'m £'m £'m
Net cash (2.7) (1.4) 2.1 (2.2) (1.8) 1.0
(outflow)/inflow
in the period
Cash inflow from (178.9) (138.3) (439.4) (110.4) (83.9) (264.7)
increase in debt
Cash inflow from (91.9) (3.4) (40.0) (56.6) (2.1) (24.0)
decrease in
liquid resources ---------------------------------------------------------
Change in net (273.5) (143.1) (477.3) (169.2) (87.8) (287.7)
(debt)/funds
resulting from
cash flows
Exchange (2.4) (1.4) (3.2) (9.2) (1.4) (3.2)
---------------------------------------------------------
Movement in net (275.9) (144.5) (480.5) (178.4) (89.2) (290.9)
(debt)/funds in
the period
Net (debt)/funds (125.0) 355.5 355.5 (75.3) 215.6 215.6
at the beginning
of the period ---------------------------------------------------------
Net (debt)/funds (400.9) 211.0 (125.0) (253.7) 126.4 (75.3)
at the end of
the period =========================================================
13 Year 2000
The repair, replacement and testing of critical systems and
equipment is now largely complete and final completion is
scheduled for the end of September 1999. Although significant
disruption is not expected, contingency plans are included as
part of the millennium programme with the intention of minimising
the risks to operations of a systems error or supplier failure
related to critical business processes.
Enhancement and replacement costs of US$0.5 million will be
capitalised in 1999 (1998-US$0.3 million) and further costs in
respect of rendering existing software compliant of US$0.2
million will be charged to the profit and loss account during the
year.
14 Financial information
The Group's statutory accounts for the year to 31 December 1998
have been filed with the Registrar of Companies. The auditors'
report on these accounts was unqualified and did not include a
statement under S237 (2) or (3) of the Companies Act 1985. The
1998 sterling profit and loss account, balance sheet and cash
flow statement shown in this interim report are an abridged
version of these statutory accounts after restatement for the
change in accounting policy explained in Note 1. The financial
information contained in this statement does not constitute
statutory accounts within the meaning of S240 of the Companies
Act 1985.
15 Currency translation
With the exception of fixed assets denominated in Chilean pesos
which are translated at the rate ruling in the period of
purchase, assets and liabilities denominated in foreign
currencies are translated into sterling at the period end rates
of exchange. Results denominated in foreign currencies have been
translated into sterling at the average rate for each period.
Period end rates Average rates
30.06.99 CH$816 = £1 = US$1.58 CH$792 = £1 = US$1.62
30.06.98 CH$778 = £1 = US$1.67 CH$754 = £1 = US$1.65
31.12.98 CH$787 = £1 = US$1.66 CH$763 = £1 = US$1.66
16 Distribution
These results will be sent by first class post to all share-
holders on 16 September 1999. Copies of this report will
be available for members of the public who are not shareholders
at the Company's Registered Office, Park House, 16 Finsbury
Circus, London EC2M 7AH.
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