Final Results
Anglo American PLC
23 February 2005
News Release
23 February 2005
Anglo American reports record headline earnings of $2.7 billion,
up 59%
• Record results: headline earnings(1) up 59% at $2,689 million;
headline earnings per share up 57% at $1.88
• Total profit for the year up 83% at $2,913 million
• Cash generation: EBITDA (2) up by $2.3 billion at $7.1 billion
• Record Base and Ferrous Metals performances
• $1.5 billion of projects successfully commissioned: $4.7 billion
project pipeline on track
• Ongoing optimisation of asset base: $2.1 billion of disposals,
including Hudson Bay and stakes in Gold Fields and Terra. Minera Sur Andes
and Kumba acquisitions performing well
• Cost savings and efficiencies up 65% at $554 million
• Final dividend increased by 31% to 51 cents. Total dividend up 30% at
70 cents
HIGHLIGHTS FOR THE YEAR TO 31 DECEMBER 2004 Year ended Year ended Change
31.12.04 31.12.03
US$ million except per share amounts %
Turnover including share of joint ventures and associates 31,795 24,909 27.6
Total operating profit before operating exceptional items 4,572 2,892 58.1
Profit for the year 2,913 1,592 83.0
Headline earnings for the year (1) 2,689 1,694 58.7
Net operating assets (3) 37,601 29,709 26.6
EBITDA (2) 7,110 4,785 48.6
Net cash inflow from operating activities 4,773 3,184 49.9
Capital expenditure 3,129 3,025 3.4
Basic earnings per share (US$):
Profit for the year 2.03 1.13 79.6
Headline earnings for the year 1.88 1.20 56.7
Dividend for the year (US cents per share) 70.0 54.0 29.6
(1) See note 7 for basis of calculation of headline earnings.
(2) EBITDA is operating profit before exceptional items plus depreciation and amortisation of subsidiaries
and share of EBITDA of joint ventures and associates. EBITDA is reconciled to net cash inflow from
operating activities above the cash flow statement.
(3) See note 2 for definition of net operating assets.
Tony Trahar, Chief Executive, said:
"The record results achieved by the Group in 2004 reflect the transformation of
our asset base into a focused global resources group over the last five years.
During that period, we have completed over $15 billion of acquisitions and $9
billion of disposals, creating a balanced portfolio of high quality natural
resource assets and positioning the Group to benefit from growing demand for our
products. Our strong cash generation has provided the flexibility to continue
investing in our current businesses through our $4.7 billion project pipeline
and $8 billion of potential projects, while seeking further growth opportunities
through acquisition. We remain intensely focused on improving the operating
efficiency of our assets and on leveraging procurement spend and innovation
initiatives across our business units. Our ongoing programme has already
realised $1.2 billion in efficiency and cost improvement initiatives across the
Group since 2002, $554 million of which were achieved in 2004.
The Group achieved record headline earnings of $2.7 billion for 2004, an
increase of 59% over 2003. Global growth during 2004 was the highest for
several decades, due both to the sustained recovery in the US and continued
robust economic growth in Asia, in particular the ongoing industrialisation of
China, which fed through into strong demand for many of our commodities. Copper,
nickel, zinc, coal and iron ore markets all benefited materially as a result and
a number of these commodities reached their highest price levels for many years.
Of particular note was the strong performance by Base Metals, which recorded
headline earnings of over $1 billion on the back of record production of copper,
nickel, zinc and mineral sands products and significantly higher base metal
prices. The Minera Sur Andes (formerly Disputada) acquisition performed
particularly well, earning an EBITDA return of 48% on this recent investment.
With global steel production surpassing 1 billion tonnes for the first time,
headline earnings from Ferrous Metals and Industries also reached record levels,
increasing more than fourfold. Coal and Platinum achieved increased profit
contributions compared to the prior year, benefiting from stronger prices for
their products. However, the continued strength of the South African rand, which
rose 15% against the US dollar, remained a challenge for our South African
operations, impacting our gold and platinum businesses in particular. Cash
generation increased, with EBITDA rising by 49% to $7.1 billion, on the back of
the Group's strong operating performance.
Reflecting the significant increase in earnings, the final dividend has been
increased by 31% to 51 cents per share, giving a total dividend of 70 cents per
share, up 30%.
We continue to make good progress on our project pipeline, one of the largest in
the resources sector. During 2004, the Group successfully commissioned several
major new projects, including the Collahuasi Rosario project in Chile, the
Skorpion zinc mine in Namibia and the Buxton cement plant in the UK. The
platinum expansion programme continues with production scheduled to increase
from the current 2.45 million ounces per annum to 2.6 million ounces per annum
in 2005. Mondi has brought on stream an additional 105,000 tonnes capacity of
pulp and 110,000 tonnes of paper at its Ruzomberok mill, completing its $233
million paper and pulp expansion in Slovakia.
The outlook for the year ahead is very dependent on growth prospects for both
OECD countries and China. While the leading indicators for the OECD currently
point to some slowing of industrial output, China continues to grow strongly and
will remain a vital market for many of our commodities. On the supply side,
global output is generally set to increase and much will depend on the industry
maintaining capital discipline in the face of higher commodity prices. A key
challenge for the Group will be to continue improving operating efficiencies and
cost control against a background of volatile currencies and in particular a
weak US dollar. In the meantime, Anglo American's geographic and commodity
diversity, its significant project pipeline, its disciplined acquisition process
and strong cash generation will continue to underpin performance."
REVIEW OF 2004
Headline earnings for the year reached record levels at $2,689 million compared
with $1,694 million in 2003. Profit for the year increased by 83% to $2,913
million compared with $1,592 million in the prior year. The increased profit in
2004 is principally due to strong operational results, significant profits on
the sale of the Group's non-core assets including its holding in Gold Fields
Limited and a reduction in net exceptional impairment charges. These more than
compensated for an increased net interest charge and increase in effective tax
rate.
Base Metals achieved record headline earnings of $1,042 million (39% of Anglo
American's total headline earnings), an increase of over 400% compared with
2003, on the back of record production of copper, nickel, zinc and mineral sands
products and significantly higher base metals prices.
Ferrous Metals and Industries reported record headline earnings of $480 million,
a rise of 349% over 2003 (18% of Anglo American's total). This performance was
due to improved prices for iron ore, manganese, ferrochrome, steel and vanadium,
a full contribution from Kumba, together with increased volumes and cost
savings.
Diamonds recorded headline earnings of $381 million (14% of Anglo American's
total) compared to $386 million in 2003. Jewellery sales remained firm during
2004, with strong growth in Asia-Pacific and India, in particular. Demand for
rough diamonds increased and DTC sales were 3% higher than in 2003.
Paper and Packaging headline earnings fell by 10% to $381 million (14% of Anglo
American's total), reflecting a significantly tougher trading environment,
particularly in the business paper sector, despite the positive impact of
incremental volumes and cost savings.
Coal increased headline earnings by 51% to $351 million (13% of Anglo American's
total) as strong coal demand during the year led to significantly higher export
coal prices. Sales tonnage also increased by 3%.
Industrial Minerals contributed $267 million to headline earnings (10% of Anglo
American's total), $3 million lower than the prior year. Tarmac faced
challenging market conditions in the UK, with lower asphalt volumes and higher
bitumen and fuel costs. However, Copebras in Brazil recorded a significantly
improved performance due to buoyant local market conditions, increased
production and higher fertiliser prices.
Platinum recorded a 17% increase in headline earnings to $239 million (9% of
Anglo American's total) due primarily to improved prices and greater sales
volumes, offset by the strength of the South African rand, which raised costs in
dollar terms.
Gold recorded a 5% decrease in headline earnings to $158 million (6% of Anglo
American's total) mainly due to stronger operating currencies, in particular the
South African rand, and lower grades. As a result of the merger to form
AngloGold Ashanti, gold production increased by 8% to 6.05 million ounces.
Acquisitions
One of the most significant transactions of the year was the merger of AngloGold
and Ashanti Goldfields of Ghana, which was completed in April. The merger has
resulted in a substantial increase in gold reserves against a background of a
diminishing global base. AngloGold Ashanti, in which Anglo American holds a 51%
stake, is the world's second largest gold mining company in terms of production.
AngloGold Ashanti continues to pursue further growth opportunities in new
frontiers such as Laos, the Philippines and Russia, in partnership with junior
mining and exploration companies.
In April, Anglo American acquired the remaining 30% minority interest in
Frantschach AG for a total consideration of $390 million. Frantschach is now a
wholly owned subsidiary of Anglo American. The acquisitions of Copamex's
industrial packaging operations, renamed Mondimex, for $52 million and
Bauernfeind for $432 million were completed in the first quarter of 2004 and are
performing according to expectations, having bolstered Mondi's position in the
North American and central European markets respectively.
In central Europe, the acquisition by Industrial Minerals of the Bilfinger
Berger building materials business in December 2003 has brought with it a
long-term reserve position in hardstone aggregates in Germany and the Czech
Republic.
Codemin in Brazil became a wholly-owned Base Metals subsidiary following the
purchase of the remaining 10% of the company from the International Finance
Corporation.
Although Anglo American remains cautious about valuations at this point in the
cycle, the Group continues to examine expansion and acquisition opportunities in
all its business sectors.
Disposals totalling $2.1 billion in 2004
In March, Anglo American disposed of its 20% stake in Gold Fields Limited to
Norilsk Nickel for $1.18 billion, realising a gain of $464 million on the sale.
At the beginning of 2004, Anglo American completed the disposal of its remaining
stake in FirstRand Limited for $47 million.
In line with Base Metals' strategy of focusing on fewer, larger, lower cost
assets, its 25% stake in the Nkomati nickel mine in South Africa was sold for
$37 million in February and Hudson Bay Mining and Smelting in Canada was sold
for a total consideration of $257 million in December.
Ferrous Metals and Industries continues to reshape its portfolio around core
businesses. The Group's entire shareholding in Terra was sold for $255 million.
In addition to the 2004 disposals, Highveld Steel and Samancor sold half their
shareholdings in Acerinox in January 2005. Anglo American's attributable share
of the proceeds was $69 million. In February 2005, Anglo American and BHP
Billiton announced that they had reached agreement for the sale of their
respective 40% and 60% shareholdings in Samancor Chrome for an enterprise value
of $469 million.
Organic Growth
Anglo American has one of the strongest project pipelines in the mining and
natural resource industry, with $4.7 billion of approved projects and more than
$8 billion of unapproved projects, spread across all its business units and
geographies.
Completed projects during 2004
The Collahuasi Rosario transition project in Chile was successfully completed
five weeks ahead of schedule and under budget at a capital cost of $627 million.
Design capacity has been exceeded and the project will enable Collahuasi to
maintain production of copper in concentrate at a long term average rate of
400,000 tonnes per annum.
The $454 million Skorpion mine in Namibia entered commercial production in May
2004 within budget, achieving 95% of design capacity by year end.
Anglo Industrial Minerals' new cement plant at Buxton in the UK commenced
operation in March having been completed at a cost of £110 million, £5 million
below budget, and the plant is performing to expectations. In China, the Yang
Quarry, a new quarry supplying the Shanghai market, commenced production at the
end of the year. Production will be ramped up during 2005.
In Coal, the Kleinkopje and Greenside expansion projects in South Africa and the
Dartbook Kayuga expansion in Australia were completed.
Mondi has brought on stream an additional 105,000 tonnes capacity of pulp and
110,000 tonnes of paper at its Ruzomberok mill in Slovakia completing its $233
million paper and pulp expansion. At Richards Bay in South Africa, the final
commissioning of Mondi's $235 million pulp mill modernisation and expansion
project is progressing well.
Current projects
In December, Anglo American and Mitsui announced the approval of the $653
million Dawson Complex, which will include the recapitalisation of the existing
coal operation at Moura in central Queensland, Australia and the establishment
of two additional operations on adjacent tenures. This will increase production
of coal by 5.7 million tonnes per annum, over Moura's existing saleable
production of 7 million tonnes per annum. In October, Anglo American and Kumba
signed Heads of Agreement that could lead to the development of a major coking
coal mine in central Queensland. The $106 million Grasstree project remains on
schedule to start up during 2006 and will produce 3.9 million tonnes per annum.
Earlier in the year it was announced that a Memorandum of Understanding with BHP
Billiton had been signed to investigate a proposed expansion of adjacent coal
resources in the Western Complex in South Africa. The Isibonelo coal mine is
expected to commence production in July 2005 and reach full production capacity
in 2006, supplying 5 million tonnes per annum to Sasol.
In Colombia, the approved expansion at Cerrejon from 22 million tonnes per annum
to 28 million tonnes per annum is on schedule and should be achieved by 2007.
During the year, approval was received for the $80 million El Soldado pit
extension project that extends mine life by more than 20 years at that copper
operation and for the $21 million Chagres de-bottlenecking project, which will
be built and commissioned during the routine 45-day smelter maintenance shutdown
in 2005. This will increase capacity from 162,000 tonnes per annum to 184,000
tonnes per annum of copper anode/blister. The construction of a $47 million
molybdenum plant with a capacity of 6,700 tonnes per annum at Punta Patache was
also approved by Collahuasi and will enter production in 2006. Scoping studies
for significant increases in production are under way at both Collahuasi and Los
Bronces.
The $67 million Codemin 2 project in Brazil, which will increase nickel
production to in excess of 10,000 tonnes per annum, was commissioned on time and
on budget and will ramp up to full capacity during the first quarter of 2005.
The sinking of both the main and ventilation shafts at Black Mountain are
complete and hoisting operations commenced in early 2005. The development of the
Deeps mine and the ramping up of zinc production will continue throughout 2005.
The final estimated cost of the project is $125 million, against a budget of
$110 million, as a result of the strength of the rand.
In October, Kumba announced the $55 million expansion of its Grootegeluk coal
mine in South Africa to increase production of semi-soft coking coal from 1.8
million tonnes per annum to 2.5 million tonnes per annum by 2006.
Regarding Kumba's Hope Downs iron ore project in Australia, which has been the
subject of a dispute with a local partner, Kumba is appealing a recent
arbitration decision. Subject to Kumba's rights of appeal, the process for
determining a fair value, at which the local partner can elect to acquire
Kumba's project interest, has commenced. Until Kumba's participation in the
project is finally resolved, it continues to perform its contractual obligations
in respect of the project.
After a lengthy permitting process, the Group's associate De Beers has received
approval of its environmental impact assessment for the proposed Snap Lake
diamond mine in Canada's Northwest Territories. Subject to final approval being
granted by the De Beers board in the first half of 2005, start-up production is
envisaged in 2007.
In line with Anglo Platinum's stated policy of implementing only those projects
which meet its investment hurdle rate, and with the unlikely prospect of higher
rand prices in the short term, the rate of implementation of the expansion
programme has been adjusted. Current plans for 2005 indicate capital expenditure
of $1 billion at current exchange rates and refined platinum production of 2.6
million ounces. While Anglo Platinum remains flexible with regard to the rate
of expansion, the revised implementation is expected to result in refined
platinum production in 2006 of between 2.7 million and 2.8 million ounces.
The $121 million Cuiaba deepening project in Brazil has been approved, which
will increase production at AngloGold Ashanti Brazil (formerly Morro Velho) from
190,000 ounces per year to 250,000 ounces per year within two years of the
project's completion.
Cost savings
All businesses across the Group continued to focus on efficiency and cost
improvement initiatives during 2004. The total cost savings achieved amounted to
$554 million, of which operating efficiencies (comprising maintenance,
administration and overheads, labour and materials and supplies) realised $366
million, restructuring and synergies $6 million and procurement $182 million.
South Africa: Black Economic Empowerment
During the year, several developments took place concerning the legislative
framework governing the transformation process in South Africa's mining
industry. Most notably, the Mineral and Petroleum Resources Development Act,
which aims to make transformation effective across a broad front - including
human resources and community development, as well as employment equity --- came
into effect on 1 May 2004. All South African mining operations are focused on
the implementation of this Act. During the year the South African government
confirmed that royalties in terms of the Royalty Bill will become payable only
in 2009; a second draft of the Royalty Bill is expected to be unveiled in the
future.
We have adopted a comprehensive approach to transformation in South Africa,
including the establishment of a transformation committee, which has been
integrated with all the business unit activities. Procurement remains an
important area of focus: over the last year, we spent the equivalent of $900
million on business development and the procurement of goods and services from
black-owned businesses, up 62% on the previous year.
Mondi South Africa concluded two significant empowerment transactions during
2004. Firstly in June, a joint venture was formed with Shanduka Resources
(formerly MCI Resources) in its integrated newsprint business with Mondi
retaining a 58% interest, and secondly, Mondi disposed of 42% of its $370
million South African packaging businesses to Shanduka, effective 1 January
2005. These empowerment transactions allowed for a further 8% interest in the
newsprint business and 3% interest in the packaging business to be set aside by
Mondi for broad-based participation by Mondi South Africa employees and relevant
communities.
Anglo American has submitted a number of applications to convert old-order
rights into new-order mineral rights. The Group hopes to be able to report
progress in this regard later in the year.
Exceptional items
Operating exceptional charges amounted to $92 million. These included
impairments or write-downs of $100 million to the carrying value of Black
Mountain in Base Metals and the Group's share, $117 million, of an impairment of
Palabora in Base Metals. Impairments were partially offset by the $154 million
reversal of a previous impairment of Terra Industries Inc.
Non-operating exceptional gains amounted to $520 million. These included $464
million of profit from the sale of the Group's holding in Gold Fields Limited.
Interest
The net interest charge increased from $319 million in the prior year to $359
million in 2004. The increase reflects higher average net debt levels during
2004 when compared to the average during 2003.
Taxation
The effective rate of taxation before exceptional items was 30% compared to 29%
in 2003. This change was due to a number of one-off tax benefits arising in 2003
and a change in the mix of earnings contributed by the Group's businesses.
Balance sheet
Total shareholders' funds were $24,998 million compared with $19,772 million(1)
as at 31 December 2003. The increase was primarily due to retained earnings and
the appreciation of the South African rand and other local currencies against
the dollar.
Net debt was $8,121 million, a decrease of $512 million from 2003. Net debt at
31 December 2004 comprised $10,782 million of debt, offset by $2,661 million of
cash and current asset investments. Net debt to total capital as at 31 December
2004 was 21.5%, compared with 27.1%(1) in 2003.
Cash flow
Net cash flow from operations was $4,773 million compared with $3,184 million in
2003. EBITDA was $7,110 million, a substantial increase of 49% from $4,785
million in 2003. Depreciation and amortisation increased by $660 million to
$2,123 million.
Acquisitions expenditure accounted for an outflow of $1,119 million compared
with $1,469 million in 2003. The Group has increased its interests in Anglo
Platinum to 74.8% and, following the merger of AngloGold and Ashanti Goldfields,
purchased further shares in AngloGold Ashanti to restore the Group's holding to
51%. The Group has also acquired the remaining 30% minority interest in
Frantschach AG.
(1) Restated for UITF (Urgent Issues Task Force) abstract 38 'Accounting for
ESOP trusts'. See Note 1 to the financial information.
Proceeds from disposals, excluding sale of other investments, totalled $1,863
million, with $1,180 million from the sale of Gold Fields Limited, $246 million
cash consideration from the sale of Hudson Bay Mining and Smelting Co Ltd and
$255 million from the sale of Terra Industries Inc. Net proceeds from sale of
other investments totalled $263 million, including sale of our remaining stake
in FirstRand Limited, part disposal of our interest in Western Areas and sale of
our interest in Avgold.
Purchases of tangible fixed assets amounted to $3,129 million, an increase of
$104 million from 2003. Increased capital expenditure by Paper and Packaging,
AngloGold Ashanti and Ferrous Metals and Industries was partially offset by a
reduction in capital expenditure by Anglo Platinum.
Dividend
The directors recommend a final dividend of 51 US cents per share to be paid on
29 April 2005. Total dividends for the year amount to 70 US cents per share,
increasing last year's total dividend by 30%.
Outlook
The outlook for the year ahead is very dependent on growth prospects for both
OECD countries and China. While the leading indicators for the OECD currently
point to some slowing of industrial output, China continues to grow strongly and
will remain a vital market for many of Anglo American's commodities. On the
supply side, global output is generally set to increase, and much will depend on
the industry maintaining capital discipline in the face of higher commodity
prices. A key challenge for the Group will be to continue improving operating
efficiencies and cost control against a background of volatile currencies and in
particular a weak US dollar. In the meantime, Anglo American's geographic and
commodity diversity, its significant project pipeline, its disciplined
acquisition process and strong cash generation will continue to underpin
performance.
For further information:
Anglo American - London
Investor Relations Media Relations
Nick von Schirnding Kate Aindow
Tel: +44 207 698 8540 Tel: +44 207 698 8619
Charlie Gordon
Tel: +44 207 698 8933
Anglo American - Johannesburg
Investor Relations Media Relations
Anne Dunn Marion Dixon
Tel: +27 11 638 4730 Tel: +27 11 638 3001
Notes to Editors:
Anglo American plc is one of the world's largest mining and natural resource
groups. With its subsidiaries, joint ventures and associates, it is a global
leader in platinum group metals, gold and diamonds, with significant interests
in coal, base and ferrous metals, industrial minerals and paper and packaging.
The group is geographically diverse, with operations in Africa, Europe, South
and North America, Australia and Asia. (www.angloamerican.co.uk)
Note: Throughout this press release '$' denotes United States dollars.
Webcast:
A live webcast of the results presentation starting at 10am GMT on 23 February
2005 can be accessed through the Anglo American website at
www.angloamerican.co.uk.
Pictures:
High resolution images can be downloaded by the media at www.vismedia.com
OPERATIONS REVIEW
BASE METALS
$ million 2004 2003
Total operating profit before exceptional items 1,275 286
Copper 1,046 269
Nickel, Niobium, Mineral Sands 224 106
Zinc 38 (62)
Head office expenses and other (33) (27)
Total operating profit after exceptional items 1,038 78
Headline earnings 1,042 206
EBITDA 1,626 569
Net operating assets 4,062 4,087
Capital expenditure 286 352
Share of Group headline earnings (%) 39 12
Share of Group net operating assets (%) 11 14
Anglo Base generated record operating profits, before exceptional items, of
$1,275 million (2003: $286 million) following record production of copper,
nickel, zinc and mineral sands products and significantly higher base metal
prices. While on-mine cost control remained tight, margins were adversely
affected by increased prices in areas such as energy, explosives, chemicals,
freight, insurance and, in the copper concentrate market, a significant increase
in treatment charges and refining charges. However, $47 million was realised
from efficiency improvements and cost saving initiatives, partly offsetting the
increased operating costs.
Markets
2004 witnessed a record performance on the back of a sustained rebound in world
economic growth. Strong growth in metal demand, together with relatively
constrained supply increases, resulted in metal market deficits and lower
inventories. This, together with a weakening of the US dollar and significant
speculative fund interest, propelled US dollar base metal prices to multi-year
highs.
Operating performance
The copper division's operating profit before exceptional items was $1,046
million (2003: $269 million) as a result of its highest ever attributable copper
production of 766,000 tonnes (2003: 708,800 tonnes) and a higher average copper
price received of 133 c/lb (2003: 81 c/lb). Los Bronces produced a record
231,600 tonnes on the back of higher mining rates and grades and improved
metallurgical recoveries. Attributable production from Collahuasi was a record
211,600 tonnes, mainly due to higher tonnages treated through the concentrator
following the Rosario project commissioning.
The Rosario transition project was successfully completed five weeks ahead of
schedule at a capital cost of $627 million (budget $654 million) and its mill
throughput has consistently exceeded design capacity of 110,000 tonnes per day.
The $80 million El Soldado pit extension project, approved during the year, will
extend mine life by more than 20 years. The $21 million Chagres de-bottlenecking
project, which increases production capacity from 162,000 tonnes per annum to
184,000 tonnes per annum of anode/blister, was also approved during the year and
will be built and commissioned during 2005. The construction of a $47 million
molybdenum plant with a capacity of 6,700 tonnes per annum at Punta Patache was
approved by Collahuasi and will enter production in 2006. Scoping studies for
significant increases in production are under way at both Collahuasi and Los
Bronces.
The Minera Sur Andes operations generated an operating profit of $511 million in
2004. Current indications are that the remaining $86 million of the contingent
purchase price will be paid in May 2005.
The Group's share of an impairment of Palabora amounted to $117 million.
The nickel, niobium and mineral sands division generated an operating profit of
$224 million (2003: $106 million) on the back of attributable nickel production
of 24,000 tonnes and an average nickel price received of 617 c/lb (2003: 403 c/
lb). Production at both Loma de Niquel and Codemin was essentially unchanged,
while niobium production rose slightly. At Namakwa, rutile and zircon production
grew by 16% and 28% respectively as the operation recovered from the
after-effects of the mineral separation plant fire in the second half of 2003.
All operations saw significant upward pressure on costs due to currency effects,
the rising prices of key inputs such as power, fuel oil, aluminium powder and
anthracite and, in Brazil, the imposition of new taxes.
The 25% interest in the Nkomati joint venture was sold for $37 million and
Codemin became a wholly owned subsidiary following the purchase of the
outstanding 10% of the company. The $67 million Codemin 2 project which will
increase nickel production to in excess of 10,000 tonnes per annum, was
commissioned on time and on budget and will ramp up to full capacity during the
first quarter of 2005. The Barro Alto feasibility study will be completed in
2005.
The zinc division's operating profit before exceptional items was $38 million
(2003: $62 million loss) following zinc production of 410,700 tonnes and an
average zinc price received of 48 c/lb (2003: 38 c/lb). Skorpion mine entered
commercial production in May 2004. The operation produced 119,200 tonnes of zinc
during 2004 and achieved 95% of capacity by year end. Lisheen saw lower
production of zinc and lead due to lower grades and reduced mining rates ahead
of the commissioning of the pastefill plant which commenced in October 2004.
Black Mountain continued to experience lack of mining flexibility ahead of the
Deeps orebody entering production. Mill throughput was maintained and zinc
production rose 9% but lower grades resulted in lead production of 37,500 tonnes
(2003: 39,600 tonnes). Currency effects at all operations placed significant
upward pressure on costs.
The sinking of both the main and ventilation shafts at Black Mountain is
complete and hoisting operations commenced in early 2005. The development of the
Deeps mine and the ramping up of zinc production will continue throughout 2005.
The final estimated cost of the project is $125 million, against a budget of
$110 million, as a result of the strength of the rand.
Hudson Bay, which contributed $37 million to operating profit in 2004, was sold
in December for $257 million, resulting in a $42 million loss on the sale. A
decision was also made to impair the carrying value of Black Mountain by $100
million.
Outlook
A weaker US dollar and low metal inventories should provide a solid support to
dollar-denominated prices. Nonetheless, some base metals markets could move
towards balance or even into surplus in the second half as price-induced supply
increases gather pace.
FERROUS METALS AND INDUSTRIES
$ million 2004 2003
Total operating profit before exceptional items 895 208
Kumba 205 33
Highveld Steel 168 11
Scaw Metals 101 70
Samancor 236 41
Boart Longyear 67 33
Tongaat-Hulett 69 10
Terra 53 14
Other (4) (4)
Total operating profit after exceptional items 1,050 208
Headline earnings 480 107
EBITDA 1,249 441
Net operating assets 5,534 4,629
Capital expenditure 284 195
Share of Group headline earnings (%) 18 6
Share of Group net operating assets (%) 15 16
Ferrous Metals and Industries lifted operating profit before exceptional items
to record levels in 2004, from $208 million to $895 million. The business
benefited from improved prices for iron ore, manganese, ferrochrome, steel and
vanadium. In addition, significant progress was made in efficiency improvements
and cost saving initiatives which totalled $103 million.
Markets
World crude steel production in 2004 increased by 8.8% over 2003, to a record
level at 1.05 billion tonnes of crude steel, while China produced 272.5 million
tonnes of crude steel, an increase of 23.2%. The South African steel market was
also characterised by strong local demand, rising by 20%.
In respect of US fertiliser group, Terra, a previous impairment of $154 million
was released during the year as an operating exceptional gain. Anglo American's
entire shareholding in Terra was sold for $255 million, resulting in a further
exceptional gain of $13 million.
In January 2005, Highveld Steel and Samancor sold half their shareholdings in
Acerinox. Anglo American's attributable share of the proceeds was $69 million.
In February 2005, Anglo American and BHP Billiton announced that they had
reached agreement for the sale of their respective 40% and 60% shareholdings in
Samancor Chrome for an enterprise value of $469 million.
Operating performance
Kumba's contribution to Anglo American's operating profit before exceptional
items was $205 million (as a subsidiary) compared with $33 million in 2003
(representing a 20.1% attributable equity interest for 10 months and as a
subsidiary for one month). This performance reflected higher commodity prices,
solid operational performances and margin-improvement initiatives, countered to
some extent by the strong rand. The global market for seaborne iron ore
increased by an estimated 95 million tonnes in 2004. Kumba's iron ore operations
benefited from an average 19% annual increase in dollar-denominated prices, with
effect from 1 April, and further significant increases are anticipated in 2005.
Its Sishen and Thabazimbi mines produced a total of 30.1 million tonnes of iron
ore during the year, of which 20.9 million tonnes were exported.
Regarding Kumba's Hope Downs iron ore project in Australia, which has been the
subject of a dispute with a local partner, Kumba is appealing a recent
arbitration decision. Subject to Kumba's rights of appeal, the process for
determining a fair value, at which the local partner can elect to acquire
Kumba's project interest, has commenced. Until Kumba's participation in the
project is finally resolved, it continues to perform its contractual obligations
in respect of the project.
Scaw Metals' operating profit was $101 million (2003: $70 million). This was
achieved against a background of greatly increased international steel making
raw material prices and resulting input cost increases, offset to some extent by
higher selling prices. Production was higher, with strong performances in most
divisions. Import competition, however, aided by the strong rand and weak
dollar, continued to have a negative effect on some of Scaw's downstream
businesses.
The attributable share of Samancor's operating profit amounted to $236 million
(2003: $41 million). The manganese business had an outstanding year, benefiting
from improved market conditions as a result of product shortages, driven
primarily by Chinese crude steel production. This led to significantly higher
alloy prices being achieved in 2004. The chrome operations benefited similarly
from higher ferrochrome prices, offset to some extent by the strong rand. The
benchmark ferrochrome price rose by 60% to average 61 USc/lb during the year.
Highveld Steel had a record year, with an operating profit of $168 million
(2003: $11 million). This was largely a result of higher prices for steel,
vanadium and manganese alloys, together with increased volumes sold into the
South African market. Production costs were well controlled and cost savings of
$38 million were achieved, resulting in substantially higher operating margins.
Ferrovanadium prices increased from historically low levels in early 2003 of
around $6/kgV to recent levels of $52/kgV. All divisions, with the exception of
Vanchem, exceeded 2003 production volumes.
Boart Longyear's operating profit totalled $67 million (2003: $33 million).
Product and contracting results in the Americas and Asia Pacific were
substantially better than last year owing to much higher drilling activity,
while those in sub-Saharan Africa improved as a result of increased sales of
rockdrills and capital equipment. The Hardmaterials and Wendt operations
benefited from restructurings undertaken in 2003, and Wendt also profited from
increased machine sales as a result of the improved business environment. The
European business continued to struggle, posting a loss for the full year.
Tongaat-Hulett's operating profit was $69 million (2003: $10 million). The
aluminium division performed well on the back of increased volumes, an improved
product mix, and reduced costs, while the sugar division's profitability was
negatively impacted by the relatively small South African sugar crop. Import
competition and higher maize input costs adversely affected the starch and
glucose operations. A new maize procurement model and product pricing was
implemented in the fourth quarter, which will benefit profitability. Moreland
Properties posted strong results capitalising on buoyant demand across all its
portfolios.
Terra generated an attributable operating profit before exceptional items of $53
million (2003: $14 million), largely reflecting the higher nitrogen margins.
Outlook
Ferrous metal prices may soften in the coming year as anticipated Chinese demand
for steel slows. China's domestic steel consumption growth rate has reportedly
fallen as the country shifts from being the world's biggest steel importer to a
net exporter. The persistent strength of the rand is expected to continue to
affect margins adversely in the coming year. Ferrous Metals and Industries will
continue to reshape its portfolio around core businesses, focusing on increased
iron ore output and improved margins through greater operating efficiencies and
cost saving initiatives.
COAL
$ million 2004 2003
Total operating profit 487 333
South Africa 244 133
Australia 79 130
South America 164 70
Headline earnings 351 232
EBITDA 686 505
Net operating assets 2,539 2,152
Capital expenditure 217 207
Share of Group headline earnings (%) 13 14
Share of Group net operating assets (%) 7 7
Operating profit increased by 46% to $487 million, mainly due to higher export
prices and a 3 million tonne (3%) rise in sales.
Markets
During the year, coal demand was strong and prices increased markedly.
Metallurgical coal prices were driven by robust steel sector raw material
demand, led by sustained Chinese economic growth and rising imports, a tight
supply situation and logistics chain constraints. Healthy thermal coal offtake
in China moderated the level of Chinese exports.
Power, oil, gas and thermal coal prices were influenced by continued
inefficiencies in the logistics chain, mainly affecting South Africa and
Australia, coupled with global energy demand and security of supply concerns.
Relatively small imbalances in supply and demand continue to bring significant
price and directional uncertainty to the world's energy and raw material
markets, especially for thermal coals. Spot South African steam coal prices
increased by 73% during the first six months and although they had reduced by
25% at year end, they remain well above historic average price levels.
Operating performance
Operating profit for South African-sourced coal, at $244 million, was 83% higher
than in 2003 and export prices were up 42%. The rand continued to strengthen
against the dollar, reducing headline earnings by $17 million.
Production rose by 5% to 54.5 million tonnes. This reflected strong domestic
demand from Eskom, the South African power utility, which led Kriel and New Vaal
collieries to produce at record levels. Plans are in place to acquire additional
mining equipment for New Denmark, the other colliery serving the domestic
market, so that it can increase output substantially in 2005. Production at most
of the export mines was slightly higher, with the exception of Bank and Landau,
where difficult mining conditions affected production.
Capital expenditure in South Africa rose by $27 million, mainly due to the
development of Isibonelo colliery, due to start production in 2005. Following
the signing of a memorandum of understanding with BHP Billiton relating to the
Western Complex reserves, a feasibility study is investigating the optimal use
of these reserves.
Operating profit for the Australian operations fell by 39% to $79 million. This
was mainly because production ceased at Moranbah North Mine (MNM) for eight
months following a roof collapse at the tail end of the longwall face in January
2004. The effects were partly mitigated by an estimated $40 million, the
proceeds from a related insurance claim. Gains from exchange-rate hedges taken
out during the year dampened some of the adverse effects of the stronger
Australian dollar (up by 11% against the US currency). Following the roof strata
collapse at MNM, the longwall was relocated. Production resumed in late August
and by year end production rates were reaching targeted expectations. However,
the colliery produced 2.3 million tonnes less high-margin coking coal than the
previous year. At Dartbrook, output was marginally down and production at
Drayton was in line with prior year, while Callide, Moura and Capcoal exceeded
previous performances, which offset MNM's negative volume impact. Aggregate
attributable saleable coal production was in line with the previous year, at
25.6 million tonnes.
Total attributable sales declined by 4% to 25.5 million tonnes, though domestic
sales increased by 0.7 million tonnes, mainly driven by generating capacity
demand. Export sales were further limited by port constraints at Dalrymple Bay
Coal Terminal, though a port-allocation system at Newcastle has helped eliminate
ship congestion.
The Moura/Theodore/Dawson project was announced in December and is scheduled to
commence in early 2005. Work continues on the feasibility study for Lake
Lindsay, adjacent to the Capcoal complex.
On 18 June, a Supreme Court decision on the Grasstree project's compliance with
the Coal Mining Safety and Health Regulations resulted in Grasstree suspending
operations. This suspension was lifted at the beginning of December and
Grasstree remains on schedule to start up during 2006. Dartbrook successfully
made the transition to the Kayuga seam during the first six months.
Anglo Coal has now acquired all the shares in Australian Power and Energy
Limited (APEL) that it did not previously own. APEL is conducting a
pre-feasibility study into producing liquid fuel from brown coal in Victoria.
Operating profit at the South American operations rose by 134% to $164 million
following significantly improved coal prices and a 9% increase in attributable
sales volume, to 9.9 million tonnes. These gains were partly offset by increases
in fuel prices and royalty payments and the effects of the weakening dollar. In
addition, equipment availability at Venezuela's Carbones del Guasare (CDG) was
reduced by administration problems with newly introduced exchange controls,
although these appeared to be under control by the year end.
Cerrejon continues to expand its operations, with a production goal of 28
million tonnes per annum by the end of 2006. Feasibility studies on further
expansion opportunities are under way at both Cerrejon and CDG.
Anglo Coal realised $51 million from efficiency improvements and cost saving
initiatives.
Outlook
With MNM back in operation, improved production is expected in 2005. Rand and
Australian dollar strength together with coal prices will continue to be the two
main variables. Metallurgical coal prices have again risen substantially in
negotiations for 2005, and high prices for thermal coals - notwithstanding their
reductions in the second half of 2004 - are expected to continue in the current
year.
INDUSTRIAL MINERALS
$ million 2004 2003
Total operating profit before exceptional items 346 325
Tarmac 280 290
Copebras 66 35
Total operating profit after exceptional items 337 325
Headline earnings 267 270
EBITDA 624 557
Net operating assets 4,729 4,304
Capital expenditure 299 316
Share of Group headline earnings (%) 10 16
Share of Group net operating assets (%) 13 14
Operating profit before exceptional items increased by 6% to $346 million.
Tarmac group's operating profit before exceptional items declined by 3% to $280
million, mainly due to challenging market conditions in the UK. In contrast,
Copebras benefited from buoyant local market conditions and increased
international fertiliser prices which, together with the increased production
from the new plant, resulted in an 89% increase in operating profit.
Markets and operating performance
In the UK, markets were disappointing. Following the completion of work on large
projects such as the M6 toll road in 2003, demand for asphalt was weaker, with
little major contract activity during the year. Aggregates demand was slightly
lower, although concrete volumes increased. Modest price improvements were
achieved, but these were insufficient to offset higher bitumen and fuel costs.
The benefits of Tarmac's ongoing business improvement and procurement programmes
continued to be felt, with the group achieving a total of $64 million in cost
savings and efficiency improvements, but these were partially offset by the
disappointing performance of Concrete Products.
By contrast, the cement business had a good year. The new Buxton plant began
operating in March, having been completed at a cost of £110 million - £5 million
below budget. The plant is performing to expectations, which has resulted in a
near-doubling in contribution from this business. The mortar business also
performed well, assisted by recent investments in dry silo mortar plants in
Leeds, Glasgow and Coventry. As Tarmac continued to develop its business in the
UK, three acquisitions were completed during the year, including that of David W
Gordon Ltd, one of Scotland's leading concrete block producers. Significant
investments were also made in new plant, including a new ready-mixed concrete
plant at Kings Cross in London and the replant of a major limestone quarry in
South Yorkshire.
In continental Europe, operating profit grew by 9%. France benefited from a
strong private housing market, although the public sector was more subdued. The
businesses in Poland and the Czech Republic experienced stronger market
conditions. The latter also benefited from a first-time contribution from
Bilfinger Berger Baustoffe, which is performing above expectations. During the
year, Wisniowka, a well-located high quality sandstone quarry in central Poland,
was acquired. This will enable the business to benefit from anticipated Polish
infrastructure projects. Operating profit in Spain improved again despite weaker
market conditions in Madrid. The business on the Mediterranean coast, which was
the main part of the Mavike acquisition in 2002, showed a substantial
improvement. Weak market conditions, however, continued in Germany.
The Middle East business experienced another year of substantial growth. With
its local partner, Tarmac is developing a new quarry in the United Arab Emirates
to supply this buoyant market. The Far East business continued to improve. At
the end of the year a new quarry supplying the Shanghai market commenced
operation. Production will be ramped up during 2005.
Copebras had an excellent year. Operating profit increased by 89%, due to
continued strong Brazilian demand for phosphate-based fertilisers and higher
international prices. The continuing recovery of the South American economies
also resulted in a significant improvement in sales volumes of sodium
tripolyphosphate (STPP), which is used in detergents.
Outlook
Market conditions in the UK are expected to remain extremely challenging
throughout 2005. Volumes are not expected to grow significantly and the industry
is facing cost increases arising mainly from fossil fuel price rises and
legislative compliance. Tarmac has announced price increases for all its major
products with effect from the beginning of January. In addition, Tarmac's
performance will be underpinned by continuing cost reductions and initiatives to
improve customer service.
In continental Europe, healthy market conditions are expected in Poland and the
Czech Republic as these economies continue to grow. The short term outlook in
Germany remains uncertain, although in those major cities where the business is
active, demand is expected to remain stable. The run-up to the 2006 World Cup,
which takes place in Germany, may provide a boost. In Spain, although demand in
Madrid may be weaker, continued growth on the Mediterranean coast is expected.
France is expected to see modest improvement. In all regions, opportunities to
invest in the core product areas will continue to be examined - both in existing
and adjacent countries of focus.
Local market conditions for fertilisers in Brazil remain buoyant although there
is some concern about lower international prices for some agricultural
commodities. However, the new plant at Goias, which is in the country's interior
and away from the threat of imports, gives Copebras a strong position in this
market.
PLATINUM
$ million 2004 2003
Total operating profit 537 433
Headline earnings 239 205
EBITDA 867 673
Net operating assets 7,563 6,119
Capital expenditure 633 1,004
Share of Group headline earnings (%) 9 12
Share of Group net operating assets (%) 20 21
Anglo Platinum's operating profit rose by 24% to $537 million. This was largely
due to improved prices and greater sales volumes, though partially offset by the
strength of the rand, which raised costs in dollar terms.
Markets
The average dollar price realised for the basket of metals sold equated to
$1,194 per platinum ounce sold, 25.9% greater than in 2003, with improved
platinum, rhodium and nickel prices making the largest contribution. The average
realised price for platinum of $842 per ounce was $146 higher, while rhodium
prices climbed from $527 to $933 per ounce, with nickel rising from $4.07 per
pound to $5.92.
Operating performance
Refined platinum production increased by 6.3% to 2.45 million ounces. The
increase was due mainly to improved smelting recoveries, additional production
from the mines and the commencement of the Western Limb Tailings Retreatment
Plant in January 2004.
Cash operating costs per equivalent refined ounce of platinum rose to $784
following a 9.2% increase in rand unit costs and the strength of the rand
against the dollar, which raised costs in dollar terms. Mining unit costs were
adversely affected by production lost to a wage strike in October, the ongoing
substitution of higher grade Merensky production with UG2 production and
difficult geological conditions at Amandelbult and Modikwa which, while
anticipated, had a greater impact than expected. Cost performance at the
processing operations was excellent and the overall smelting and refining unit
cost decreased in rand terms. The restructuring initiative has made good
progress to the stage where sustainable cost savings will be realised from 2005.
During 2004, a total of $80 million was achieved in cost saving initiatives.
In May 2004, Anglo Platinum successfully concluded a rights offer of convertible
perpetual cumulative preference shares, which raised $599 million. Anglo
American subscribed for the rights offer, investing $459 million. The proceeds
were used to reduce short term borrowings. Net debt has decreased from $1,038
million at the end of 2003 to $608 million. Capital expenditure for 2004
amounted to $633 million (2003: $1,004 million).
Operations at the Anglo Platinum Converting Process were stable and in line with
planned production build-ups, with significantly reduced sulphur emissions. The
Polokwane Smelter recovered well from the cooler failure and overall performance
for the year was good. The Western Limb Tailings Retreatment plant commissioned
at the end of 2003 achieved a rapid build-up of tonnage and is continuing
towards maximising recoveries.
The Kroondal Platinum Mine, jointly mined with Aquarius Platinum, is operating
well and made a useful contribution to Anglo Platinum's performance for the
year. Negotiations in respect of other joint ventures are continuing.
Anglo Platinum continues to work closely with South Africa's Department of
Minerals and Energy and good progress is being made towards meeting the
requirements of the Mineral and Petroleum Resources Development Act and the
Broad-based Economic Empowerment Charter. The conversion of 'old-order' rights
to 'new-order' rights in accordance with the requirements of the new Act has
begun.
Outlook
Anglo Platinum remains confident of the robustness of current and future demand
for platinum and will continue its expansion programme. In line with its stated
policy of implementing only those projects which meet its investment hurdle
rate, and with the unlikely prospect of higher rand prices in the short term,
the rate of implementation of the expansion programme has been adjusted. Current
plans for 2005 indicate refined platinum production of 2.6 million ounces. While
Anglo Platinum remains flexible with regard to the rate of expansion, the
revised implementation is expected to result in refined platinum production in
2006 of between 2.7 and 2.8 million ounces.
Demand for platinum continues to be strong and given the existing currency
environment and the outlook for supply, is supportive of a platinum price at
levels of $800 per ounce and above.
GOLD
$ million 2004 2003
Total operating profit before exceptional items 263 369
Total operating profit 262 326
Headline earnings 158 167
EBITDA 701 642
Net operating assets 6,425 3,302
Capital expenditure 572 339
Share of Group headline earnings (%) 6 10
Share of Group net operating assets (%) 17 11
Total operating profit before exceptional items was 29% lower at $263 million
(2003: $369 million). The average spot price of $409 per ounce for the year was
$46 per ounce or 12.7% stronger than for 2003. However, the South African rand
strengthened against the dollar by some 15% during the year and the average
local price of R84,700 per kilogram was 4% lower than for 2003. Despite the
increase in the average dollar gold price and a rise in gold output, total cash
costs were $54/oz higher, at $268/oz, mainly due to stronger operating
currencies and lower grades. Efficiency improvements and cost saving initiatives
totalled $51 million.
Gold production was 8% higher at 6.05 million ounces, attributable largely to
the merger with Ashanti Goldfields, completed on 26 April, as well as higher
production at Sunrise Dam in Australia and Cripple Creek & Victor in the US.
These increases were offset by the disposal of Jerritt Canyon in the US and the
closure of Union Reefs in Australia, as well as reduced production from South
Africa.
Markets
The return of investor interest in gold during the third quarter of 2004
produced a sustained rise in the gold price, and the final quarter of the year
produced a spot gold price of $457 per ounce, the highest price seen in almost
17 years. The driving influence on investor sentiment remained the weakening of
the US dollar, particularly against the euro, but also against the Japanese yen.
This has been the case throughout the past three-and-a-half year rise in the
spot price of gold and it underlines the primary influence of the health of the
US currency on the gold price in this current gold market cycle.
The physical market for gold during 2004 showed some positive moves. Against the
background of a long term downward trend in the crucial area of demand for gold
jewellery, there was improved offtake in the Middle East and in south east Asia
and sustained demand in India. In China, sales of modern, 18 carat gold
jewellery in metropolitan markets grew sharply.
Operating performance
The merger with Ashanti Goldfields brought to AngloGold a substantial gold ore
reserve. The challenge now is to ensure that these operations, starved of
working capital for an extended period, realise their ore reserve, profit margin
potential and growth potential.
In addition to current growth projects, which will have the effect of
maintaining the AngloGold Ashanti annual production profile of some 6.5 million
ounces through to around 2012, management is focused on growing the reserve and
resource base. This growth will be achieved through exploration and a
disciplined, value-adding mergers and acquisitions programme, concentrating
outside of the world's mature gold regions. In terms of this new frontiers
policy, joint ventures have been formed in Russia with London-based
Trans-Siberian Gold, in the Philippines with Australian listed company Red 5,
and in Laos, where AngloGold Ashanti has formed an exploration alliance with
Oxiana. In Mongolia the company has an exploration team on the ground and is
acquiring land positions in several prospective areas. In the Democratic
Republic of Congo, the company has been active for several months establishing a
base in the north east of the country. The company has also established an
office in Colombia and other prospective areas in Central America are under
consideration.
Outlook
The weakening of the US currency has been the primary driver of the gold price
rise over the past three and a half years and the gold price correlation with
the dollar remains an important one for the year ahead. Against this background
the gold price is expected to trade in the current range or higher in 2005.
DIAMONDS
$ million 2004 2003
Total operating profit 586 562
Headline earnings 381 386
EBITDA 688 638
Group's share of De Beers' net assets(1) 3,069 2,886
Share of Group headline earnings (%) 14 23
(1) De Beers is an independently managed associate of the Group. The Group's
share of De Beers' net assets is disclosed.
The figures for the Group's share of net operating assets shown for other
businesses relate to the Group's subsidiaries only.
The Group's share of total operating profit from De Beers increased by $24
million over the 2003 figure to $586 million. Diamond stocks at year end were at
a similar level to that reported at the end of 2003.
Markets
Overall, 2004 was another good year for the diamond industry. Against the
background of accelerating economic growth in the major diamond-consuming
countries, diamond jewellery sales performed well. Preliminary indications are
that global retail sales of diamond jewellery for the year as a whole were about
6% higher than the previous year in local currency and, because of the continued
weakening of the dollar, about 8% higher in dollars. Strong areas of growth were
Asia-Pacific, India and the Gulf region, with Japan also recording modest growth
for the second year running. The US, accounting for over 50% of world diamond
jewellery sales, had a solid Christmas season overall, despite concerns over
high personal debt levels.
During the year, levels of polished stocks in the cutting centres declined, but
cutting-centre bank debt continued to climb in line with the increase in the
volume of trade. However, the lending banks seem reasonably comfortable with the
ability of the trade to finance the higher level of debt.
There was strong demand for rough diamonds from the cutting centres throughout
the year and full-year sales by The Diamond Trading Company (DTC), the marketing
arm of De Beers, were $5,695 million, 3% higher than in 2003. During the year,
the DTC raised its rough diamond prices on three occasions, the cumulative
effect being that sales by the DTC in 2004 were at prices, on average, 14%
higher than in 2003. The DTC had a strong first 'sight' in 2005 at which it
raised its rough diamond prices by a further 3% on the evidence of the
underlying demand growth achieved in 2004 and anticipated in 2005.
Operating performance
Despite De Beers group diamond production being significantly below target in
the first half of the year, the deficit was more than made up in the second six
months. Production for the year, inclusive of its joint ventures in Botswana and
Namibia, totalled 47 million carats, 3 million carats (7%) more than in 2003.
Debswana produced a record 31.1 million carats, an increase of 2% over 2003,
notwithstanding experiencing a number of operational difficulties and industrial
action. Namdeb's production of 1.86 million carats was 28% higher and included
record marine production of 865,000 carats.
De Beers' South African mines produced a total of 13.7 million carats in 2004,
an increase of 1.8 million carats (15%) on 2003. Mainly because of the new
Combined Treatment Plant, Kimberley Mines produced a record 2 million carats, a
production level last achieved 90 years ago, in 1914. Although rand mining costs
per tonne were lower than in 2003, the weakness of the dollar, the currency in
which diamonds are sold, has put De Beers' older and more marginal mines under
continued pressure, with five of its seven mines operating at a loss. Management
continues to focus its efforts on further reducing costs and driving
efficiencies throughout its operations.
De Beers recently reached agreement with the Government of the Republic of
Botswana (GRB) for the renewal of the Jwaneng mining licence for a further
25-year period from 1 August 2004 and the extension of the Orapa, Damtshaa and
Letlhakane mining licences to the same end date. De Beers and the GRB have also
agreed that the 15% holding in De Beers' ultimate holding company, DB
Investments sa, previously owned by Debswana, be directly owned by GRB.
De Beers has made a number of commitments to the European Commission regarding
its proposed trade agreement with the Russian diamond producer, Alrosa. De Beers
believes that it has now addressed the concerns raised by the Commission and
looks forward to having the commitments formally accepted by the Commission in
the near future.
The reorganisation of De Beers' South African assets is now in the process of
being implemented. Accordingly, De Beers Consolidated Mines Limited should be in
a position to implement a black economic empowerment transaction during 2005.
Outlook
2005 is likely to be a more challenging year for the diamond industry. However,
with the transformation of the industry that has taken place over the last few
years, there is now growing evidence that diamonds are competing favourably with
other luxury products.
PAPER AND PACKAGING
$ million 2004 2003
Total operating profit 559 656
Packaging 284 302
Business Paper 209 294
Other 66 60
Headline earnings(1) 381 425
EBITDA 996 976
Net operating assets 6,496 4,820
Capital expenditure 819 601
Share of Group headline earnings (%) 14 25
Share of Group net operating assets (%) 17 16
1) Headline earnings for Paper and Packaging have been adjusted for the year
ended 31 December 2003 as net interest for wholly owned operations in Paper and
Packaging is now accounted for centrally within Corporate Activities. Net
interest for wholly owned operations in Paper and Packaging was $95 million for
the year ended 31 December 2004 (year ended 31 December 2003: $57 million).
Headline earnings on the former basis would therefore have been $286 million and
$368 million for year ended 31 December 2004 and 31 December 2003 respectively.
See note 3 to the financial information.
Operating profit at $559 million was 15% lower than 2003. This reflected a
significantly tougher trading environment than in 2003, particularly in the
business paper sector, despite the positive impact of increased volumes and cost
reductions. Dollar-reported results are improved by the translation impact of
the stronger euro and rand.
Operating performance
In November, Mondi announced the restructuring of its operations into global
product groups with the formation of two primary business units, Mondi Packaging
and Mondi Business Paper. The rebranding and reorganisation of the existing
businesses under the Mondi name has improved Mondi group's visibility to
customers, and has reduced its overhead cost structure. Mondi Packaging is a
combination of the Frantschach group, including Swiecie, with the existing Mondi
Packaging Europe group and the containerboard machines at Syktyvkar and Richards
Bay. Mondi Business Paper incorporates Neusiedler and the South African uncoated
woodfree paper machines in Merebank, the pulp mill in Richards Bay and the
related forest operations. The balance of the Mondi group consists of the South
African packaging businesses, the European paper merchant group Europapier and
the European and South African newsprint businesses.
Mondi Packaging's operating profit of $284 million was 6% below that of 2003.
The adverse impact of soft markets was not fully offset by the positive impact
of substantial cost savings and profit improvement initiatives achieved in 2004
and the acquisition of the Roman Bauernfeind business. This acquisition is
performing above expectation. The purchase of the remaining 30% minority
interest in Frantschach AG was completed in April.
Mondi Business Papers' operating profit of $209 million fell 29% short of the
previous year. Total production volumes increased by 19% to 1,881,851 tonnes,
with the PM18 rebuild at Ruzomberok performing well. Production in South Africa
was affected by the planned March shutdown for the mill modernisation and
expansion project - RB720. Production output since the shutdown has been highly
satisfactory and the final commissioning of the pulp mill is currently
progressing well. Office communication paper prices fell by 9% compared with
2003, due to competitive markets and the adverse effects of currency movements.
These negative price impacts were, however, countered by further cost savings
and production efficiency improvements.
The balance of the Mondi operations performed in line with 2003, with higher
earnings at the paper merchant offset by lower newsprint earnings, following the
part disposal of the South African newsprint assets in 2004.
Paper and Packaging delivered $144 million in cost savings and productivity
improvements during 2004, offsetting to a large extent lower prices.
Other developments
The joint venture with Shanduka Resources (formerly MCI Resources) in Mondi
South Africa's integrated newsprint business was completed in the first half of
2004. Mondi retained a 58% interest and this empowerment transaction allows for
a further 8% in the newsprint business to be set aside for broad-based
participation by Mondi South Africa employees and relevant communities.
Mondi has also sold, with effect from 1 January 2005, a 42% interest in its
South African packaging businesses to Shanduka Resources in an empowerment
transaction which values the entire business at $370 million. There is a further
earn-out of $35 million in current terms if certain cash flow projections are
achieved over the next four years. A further 3% will be set aside by Mondi for
broad based participation by Mondi South Africa employees.
In South Africa, the disposal of non-core assets is well advanced, with a
binding offer having been accepted for Mondi's share in surplus plantations in
the Eastern Cape. That transaction is expected to be concluded during early
2005.
Outlook
In 2005, Mondi will continue its product differentiation strategy, capitalising
on the recent expansion projects and innovation programmes combined with further
aggressive cost reduction initiatives. If dollar weakness is sustained, this
will continue to place pressure on European and South African prices. The impact
on pricing should be largely offset by increased volume from the Ruzomberok
rebuild which will reach full capacity in 2005 as well as the Richards Bay RB720
project which is currently commissioning.
EXPLORATION
The Group spent $120 million on exploration in 2004 - $41 million on base
metals, $9 million on coal, $14 million on ferrous metals, $43 million at
AngloGold Ashanti and $13 million at Anglo Platinum.
Anglo Base Metals concentrated on brownfield exploration near its mines in
Chile, Brazil, Ireland, South Africa and Namibia. Drilling identified additional
copper resources at El Soldado and Los Bronces in Chile. Other copper
exploration took place in Mexico, Peru, Philippines and Brazil, while zinc
exploration focused on India and Australia. Nickel exploration continued around
the West Raglan sulphide discovery in northern Quebec as well as in Brazil and
Finland.
Anglo Coal's exploration stayed close to existing operations in Australia,
Colombia and South Africa. Prospecting for coal-bed methane took place in South
Africa and Australia, while the Xiwan project in China's Shaanxi province
completed an extensive initial drilling programme.
Anglo Ferrous Metals exploration activities in 2004 all related to Kumba with
the majority of expenditure incurred on greenfield and brownfield iron ore
exploration in South Africa.
AngloGold Ashanti continued to explore around its mines in Argentina, Australia,
Brazil, Ghana, Mali, Guinea, South Africa, Namibia, Tanzania and the US. In
Asia, the company has an exploration team on the ground in Mongolia, where it is
acquiring land positions in several prospective areas, and has set up an
exploration office in China. It has also established joint ventures in the
Philippines and Laos; in addition its investment in Trans-Siberian Gold provides
opportunities for further growth in the Russia region. Elsewhere, AngloGold
Ashanti is exploring in prospective areas of Peru, Colombia and Alaska, and is
establishing an exploration base in the north east region of the Democratic
Republic of Congo.
Anglo Platinum's efforts focused on exploration in South Africa. Elsewhere, its
partners carried out programmes in Canada and Russia, while a joint venture
began to explore in the Sichuan province of China.
International Financial Reporting Standards (IFRS)
The IFRS transition project is well advanced and the Group is on track to meet
its reporting deadlines. All significant project milestones, including system
changes and targeted IFRS training for all employees affected by the transition,
have now been completed.
The Group has prepared IFRS accounting and treasury policies in accordance with
standards expected to be effective, or available for early adoption, as at 31
December 2005, the date of the Group's first annual IFRS financial statements.
The Audit Committee has approved the Group's first-time adoption choices made in
accordance with IFRS 1, including the adoption of IAS 32 (Financial Instruments:
Disclosure and Presentation) and IAS 39 (Financial Instruments: Recognition and
Measurement) prospectively from 1 January 2005. The UK GAAP balance sheet as at
1 January 2004 and financial information for the six months ended 30 June 2004
and year ended 31 December 2004 will be restated in accordance with these
first-time accounting choices and policies (excluding IAS 32 and 39).
The 2004 restated financial information will be published in May 2005. This
publication will include a reconciliation of the Group's UK GAAP reported profit
and loss account, balance sheet and total equity to the restated IFRS results,
and will provide details of material policy differences and adjustments arising.
Exchange rates against the US dollar
Average 2004 2003
South African rand 6.44 7.55
Pound sterling 0.55 0.61
Euro 0.80 0.88
Australian dollar 1.36 1.53
Chilean peso 609 690
Year end
South African rand 5.65 6.67
Pound sterling 0.52 0.56
Euro 0.74 0.79
Australian dollar 1.28 1.33
Chilean peso 556 593
Commodity prices
Average market prices for the period
2004 2003
Gold - US$/oz 409 363
Platinum - US$/oz 847 692
Palladium - US$/oz 231 201
Rhodium - US$/oz 991 530
Copper - US cents/lb 130 81
Nickel - US cents/lb 628 437
Zinc - US cents/lb 48 38
Lead - US cents/lb 40 23
Iron ore - lumpy - US$/t 26 20
Ferrovanadium US$/t 20 10
Mc - Ferromanganese - US$/t 1,207 707
European eucalyptus pulp price US$/tonne 520 500
Consolidated profit and loss account
for the year ended 31 December 2004
Before Exceptional Before Exceptional
exceptional items exceptional items
items (note 5) items (note 5)
US$ million Note 2004 2004 2004 2003 2003 2003
Group turnover including share of joint 2 31,795 - 31,795 24,909 - 24,909
ventures and associates
Less: Share of joint ventures' 2 (1,195) - (1,195) (1,060) - (1,060)
turnover
Share of associates' turnover 2 (5,670) - (5,670) (5,212) - (5,212)
Group turnover - subsidiaries 2 24,930 - 24,930 18,637 - 18,637
Operating costs (21,869) 25 (21,844) (16,740) (286) (17,026)
Group operating profit - subsidiaries 2 3,061 25 3,086 1,897 (286) 1,611
Share of operating profit of joint 2 446 - 446 247 - 247
ventures
Share of operating profit of associates 2 1,065 (117) 948 748 - 748
Total operating profit 2 4,572 (92) 4,480 2,892 (286) 2,606
Profit on disposal of fixed assets 5 - 520 520 - 386 386
Profit on ordinary activities before 4,572 428 5,000 2,892 100 2,992
interest
Investment income 345 - 345 308 - 308
Interest payable (704) - (704) (614) (13) (627)
Profit on ordinary activities before 4,213 428 4,641 2,586 87 2,673
taxation
Tax on profit on ordinary activities 6 (1,280) 1 (1,279) (749) 13 (736)
Profit on ordinary activities after 2,933 429 3,362 1,837 100 1,937
taxation
Equity minority interests (449) - (449) (339) (6) (345)
Profit for the financial year 3 2,484 429 2,913 1,498 94 1,592
Equity dividends to shareholders (1,007) - (1,007) (766) - (766)
Retained profit for the financial year 1,477 429 1,906 732 94 826
Headline earnings for the financial 7 2,689 1,694
year
Basic earnings per share (US$):
Profit for the financial year 8 2.03 1.13
Headline earnings for the financial 8 1.88 1.20
year
Diluted earnings per share (US$):
Profit for the financial year 8 1.96 1.10
Headline earnings for the financial 8 1.81 1.17
year
Dividend per share (US cents) 70.0 54.0
Basic number of shares outstanding(1) 8 1,434 1,415
(million)
Diluted number of shares outstanding(1) 8 1,500 1,478
(million)
(1) Basic and diluted number of shares outstanding represent the weighted
average for the year.
The impact of acquired and discontinued operations on the results for the year
is not material.
Consolidated balance sheet
as at 31 December 2004
US$ million 2004 2003
Note (as restated)
(1)
Fixed assets
Intangible assets 2,590 2,267
Tangible assets 31,155 24,379
Investments in joint ventures: 10 1,496 1,630
Share of gross assets 2,216 2,483
Share of gross liabilities (720) (853)
Investments in associates 10 4,346 4,804
Other investments 889 772
40,476 33,852
Current assets
Stocks 3,401 2,744
Debtors 5,668 4,383
Current asset investments 575 1,032
Cash at bank and in hand 2,086 1,094
11,730 9,253
Creditors due within one year
Short term borrowings (3,333) (4,094)
Other current liabilities (6,820) (5,224)
Net current assets/(liabilities) 1,577 (65)
Total assets less current liabilities 42,053 33,787
Creditors due after one year
Long term borrowings: (7,449) (6,665)
Convertible debt(2) (2,081) (1,088)
Other long term liabilities (5,368) (5,577)
Provisions for liabilities and charges (4,986) (3,954)
Equity minority interests (4,445) (3,396)
Non-equity minority interests (175) -
Net assets 24,998 19,772
Capital and reserves
Issued share capital 747 738
Share premium account 1,633 1,284
Merger reserve 489 460
Other reserves 716 716
Profit and loss account 21,413 16,574
Total shareholders' funds (equity) 24,998 19,772
(1) The Group has adopted Urgent Issues Task Force (UITF) abstract 38 '
Accounting for ESOP trusts'. As required by this abstract, own shares held by
employee trusts have been reclassified from other investments and are
now recorded as a reduction in shareholders' funds. See note 1 to the
financial information.
(2) Includes $990 million (2003: nil) of convertible debt issued by listed
subsidiaries.
Reconciliation from EBITDA to net cash inflow from operating activities
for the year ended 31 December 2004
US$ million 2004 2003
EBITDA 7,110 4,785
Less:
Share of operating profit of joint ventures (446) (247)
Share of operating profit of associates before exceptional items (1,065) (748)
Amortisation of goodwill in joint ventures and associates (46) (50)
Underlying depreciation and amortisation in joint ventures and (369) (380)
associates
Increase in stocks (242) (302)
Increase in debtors (419) (246)
Increase in creditors 69 348
Increase in provisions 91 38
Other items 90 (14)
Net cash inflow from operating activities 4,773 3,184
EBITDA is operating profit before exceptional items plus depreciation and
amortisation in subsidiaries and share of EBITDA of joint ventures and
associates.
Consolidated cash flow statement
for the year ended 31 December 2004
US$ million Note 2004 2003
Net cash inflow from operating activities 11 4,773 3,184
Dividends from joint ventures and associates 408 426
Returns on investments and servicing of finance:
Interest received and other financial income 270 201
Interest paid (572) (452)
Dividends received from other fixed asset investments 28 42
Dividends paid to minority shareholders (238) (349)
Net cash outflow from returns on investments and servicing of finance (512) (558)
Taxation:
UK corporation tax (50) (6)
Overseas tax (428) (701)
Net cash outflow from taxation (478) (707)
Capital expenditure and financial investment:
Payments for tangible fixed assets 9 (3,129) (3,025)
Proceeds from the sale of tangible fixed assets 151 117
Payments for other investments(1) (142) (46)
Proceeds from the sale of other investments(1) 263 617
Net cash outflow from capital expenditure and financial investment (2,857) (2,337)
Acquisitions and disposals:
Acquisition of subsidiaries(2)(3) (1,119) (1,469)
Disposal of subsidiaries 402 3
Investment in joint ventures (21) (1)
Sale of interests in joint ventures 37 -
Repayment of loans and capital from joint ventures 77 -
Investment in associates(3) - (78)
Sale of interests in associates 1,424 219
Repayment of loans and capital from associates 299 41
Net cash inflow/(outflow) from acquisitions and disposals 1,099 (1,285)
Equity dividends paid to Anglo American shareholders (818) (741)
Cash inflow/(outflow) before management of liquid resources and
financing 1,615 (2,018)
Management of liquid resources 456 182
Financing 11 (1,169) 1,785
Increase/(decrease) in cash in the year 12 902 (51)
(1) Comprises disposal and acquisition of other investments classified as fixed
assets.
(2) Net of cash acquired within subsidiaries of $92 million (2003: $214
million).
(3) All amounts paid in 2003 in respect of the acquisition of Kumba are included
within acquisition of subsidiaries.
Consolidated statement of total recognised gains and losses
for the year ended 31 December 2004
US$ million Note 2004 2003
Profit for the financial year: 3 2,913 1,592
Joint ventures 355 190
Associates 575 479
Unrealised profit on deemed disposal of AngloGold(1) 410 -
Unrealised gain arising on exchange of business - 13
Currency translation differences on foreign currency net investments 2,512 3,282
Related tax charge (12) (59)
Other gains recognised during the year 21 -
Total recognised gains for the financial year 5,844 4,828
Prior year adjustment(2) (622)
Total recognised gains since last annual report 5,222
(1) AngloGold merged with Ashanti Goldfields Company Limited on 26 April 2004.
As a result of this transaction, the Group's shareholding decreased from
55.8% to 47.2% and the Group has therefore accounted for a deemed disposal in
accordance with FRS 2 'Accounting for subsidiary undertakings'. The holding was
subsequently increased to 51% through the purchase of additional shares.
(2) The Group has adopted UITF abstract 38, 'Accounting for ESOP trusts'. As
required by this abstract, own shares held by employee trusts have been
reclassified from other investments and are now recorded as a reduction in
shareholders' funds. See note 1 to financial information. This change
has been accounted for as a prior year adjustment and prior year numbers
have been restated accordingly. The impact of adopting this abstract is to
reduce net assets and shareholders' funds by $622 million at 1 January 2004
(1 January 2003: $630 million).
Combined statement of movement in shareholders' funds and movement of reserves
for the year ended 31 December 2004
Issued Profit
share Share Merger Other and loss
US$ million capital premium reserve reserves account(1) Total
Balance at 1 January 2004 (as 738 1,284 460 716 17,196 20,394
previously reported)
Prior year adjustment(2) - - - - (622) (622)
At 1 January 2004 (as restated) 738 1,284 460 716 16,574 19,772
Profit for the financial year - - - - 2,913 2,913
Dividends paid and proposed - - - - (1,007) (1,007)
Realisation of merger reserve - - 29 - (29) -
Shares issued 9 349 - - - 358
Unrealised profit on deemed disposal of
AngloGold(3) - - - - 410 410
Other reserve movements - - - - 52 52
Currency translation differences on
foreign currency net investments - - - - 2,512 2,512
Related tax charge - - - - (12) (12)
Balance at 31 December 2004 747 1,633 489 716 21,413 24,998
(1) Certain of the Group's subsidiaries operate in South Africa, where
significant exchange control restrictions on distributions limit the Group's
access to distributable profits and cash balances.
(2) The Group has adopted UITF abstract 38 'Accounting for ESOP trusts'. As
required by this abstract, own shares held by employee trusts have been
reclassified from other investments and are now recorded as a reduction in
shareholders' funds. See note 1 to the financial information.
(3) AngloGold merged with Ashanti Goldfields Company Limited on
26 April 2004. As a result of this transaction, the Group's shareholding
decreased from 55.8% to 47.2% and the Group has therefore had to account
for a deemed disposal in accordance with FRS 2 'Accounting for subsidiary
undertakings'. The holding was subsequently increased to 51% through the
purchase of additional shares.
Notes to financial information
1. Basis of preparation
The financial information has been prepared according to the historical cost
convention, and in accordance with accounting standards applicable in the United
Kingdom. The accounting policies applied in preparing the financial information
are consistent with those adopted and disclosed in the Group's financial
statements for the year ended 31 December 2003 with the addition of UITF
abstract 38 'Accounting for ESOP trusts', which has been adopted for the first
time this year. As required by this abstract, own shares held by employee
trusts have been reclassified from other investments and are now recorded as a
reduction in shareholders' funds. This change has been accounted for as a prior
year adjustment and previously reported figures have been restated accordingly.
The impact of adopting this abstract is to reduce net assets and shareholders'
funds by $622 million at 1 January 2004 (1 January 2003: $630 million).
2. Segmental information
Turnover(1) Operating profit(2) Net operating
assets(3)
Before Exceptional
exceptional items
items (note 5)
-------------- ------------------------------------------ -------------
US$ million 2004 2003(4) 2004 2004 2004 2003 2004 2003
By business segment
Group subsidiaries
Platinum 3,065 2,232 529 - 529 428 7,563 6,119
Gold 2,166 1,718 204 (1) 203 226 6,425 3,302
Coal 1,911 1,556 315 - 315 260 2,539 2,152
Base Metals 2,612 1,720 932 (120) 812 (36) 4,062 4,087
Industrial Minerals 3,697 3,196 323 (9) 314 308 4,729 4,304
Ferrous Metals and
Industries 4,938 2,863 590 155 745 130 5,534 4,629
Paper and Packaging 6,541 5,352 551 - 551 638 6,496 4,820
Exploration - - (120) - (120) (125) - -
Corporate Activities - - (263) - (263) (218) 253 296
24,930 18,637 3,061 25 3,086 1,611 37,601 29,709
Joint ventures(5)
Gold 230 312 59 - 59 99
Coal 3 - - - - -
Base Metals 620 346 347 - 347 114
Industrial Minerals 136 100 18 - 18 14
Ferrous Metals and
Industries 56 28 8 - 8 2
Paper and Packaging 150 274 14 - 14 18
1,195 1,060 446 - 446 247
Associates(5)
Platinum 55 46 8 - 8 5
Gold 13 11 - - - 1
Diamonds 3,177 2,967 586 - 586 562
Coal 468 295 172 - 172 73
Base Metals 88 60 (4) (117) (121) -
Industrial Minerals 25 22 5 - 5 3
Ferrous Metals and
Industries 1,526 1,476 297 - 297 76
Paper and Packaging 228 2 (6) - (6) -
Corporate Activities 90 333 7 - 7 28
5,670 5,212 1,065 (117) 948 748
31,795 24,909 4,572 (92) 4,480 2,606
(1) Turnover is measured at the fair value of consideration received or
receivable for all significant products. Where a by-product is not regarded as
significant, revenue may be credited against the cost of sales.
The amount credited to cost of sales for the year ended 31 December 2004 was $81
million (2003: $55 million) and relates principally to AngloGold
Ashanti which credits uranium and silver to cost of sales in accordance with the
Gold Industry Standard on production costs.
(2) An analysis of operating exceptional items for 2003 by business segment is
given in note 3.
(3) Net operating assets consist of tangible assets, intangible assets, stocks
and operating debtors less non-interest bearing current liabilities. See note
13 for the reconciliation of net operating assets to net assets.
(4) 2004 Base Metals' turnover is stated net of treatment and refining charges
on concentrate sales to external parties and refining charges on copper anode
sales from Chagres to refineries. On this basis, 2003 total Base Metals'
turnover would be $1,957 million. There is no impact on operating profit for
either 2004 or 2003.
(5) Net assets for joint ventures and associates are
disclosed in note 10.
2. Segmental information (continued)
Turnover Operating profit Net operating
assets(1)
Before Exceptional
exceptional items
items (note 5)
------------- -------------------------------------- ---------------
US$ million 2004 2003 2004 2004 2004 2003 2004 2003
By geographical segment (by
origin)
Group subsidiaries
South Africa 10,080 7,308 1,236 (100) 1,136 837 18,012 14,148
Rest of Africa 574 44 (29) - (29) (4) 3,191 873
Europe 9,214 7,721 637 (9) 628 592 9,504 8,086
North America 986 708 6 154 160 (279) 596 868
South America 2,565 1,675 1,070 (20) 1,050 360 3,417 3,168
Australia and Asia 1,511 1,181 141 - 141 105 2,881 2,566
Joint ventures(2)
South Africa 56 17 10 - 10 9
Rest of Africa 230 312 59 - 59 98
Europe 235 372 22 - 22 31
North America 32 28 4 - 4 2
South America 611 323 346 - 346 105
Australia and Asia 31 8 5 - 5 2
Associates(2)
South Africa 1,565 1,302 289 (117) 172 135
Rest of Africa 1,972 2,157 364 - 364 398
Europe 969 640 168 - 168 116
North America 461 504 32 - 32 (4)
South America 447 280 129 - 129 61
Australia and Asia 256 329 83 - 83 42
31,795 24,909 4,572 (92) 4,480 2,606 37,601 29,709
By geographical segment (by destination)
Group subsidiaries
South Africa 4,554 3,503
Rest of Africa 479 295
Europe 11,998 9,726
North America 2,841 1,607
South America 1,349 859
Australia and Asia 3,709 2,647
Joint ventures(2)
South Africa 162 7
Rest of Africa 6 11
Europe 588 787
North America 182 91
South America 1 45
Australia and Asia 256 119
Associates(2)
South Africa 340 399
Rest of Africa 21 34
Europe 1,476 1,287
North America 2,222 2,157
South America 66 41
Australia and Asia 1,545 1,294
31,795 24,909
(1) Net operating assets consist of tangible and intangible assets, stocks and
operating debtors less non-interest bearing current liabilities. See note 13
for the reconciliation of net operating assets to net assets.
(2) Net assets for joint ventures and associates are disclosed in note 10.
3. Profit for the financial year
The table below analyses the contribution of each business segment to the
Group's profit for the financial year and its headline earnings which the
directors consider to be a useful additional measure of the Group's performance.
Headline earnings is calculated in accordance with the definition issued by the
Institute of Investment Management and Research (now Society of Investment
Professionals), in Statement of Investment Practice No. 1, 'The Definition of
Headline Earnings'.
2004
Net
Operating Operating Non-operating interest
profit profit after Operating exceptional tax and
before operating exceptional items Goodwill minority
US$ million operating exceptionals items amortisation interests
exceptionals
Total
By business segment
Platinum 537 537 - - 17 (315) 239
Gold 263 262 1 - 43 (148) 158
Diamonds 586 586 - - 35 (240) 381
Coal 487 487 - - 8 (144) 351
Base Metals 1,275 1,038 237 - 2 (235) 1,042
Industrial Minerals 346 337 9 - 60 (139) 267
Ferrous Metals and 895 1,050 (155) - 9 (424) 480
Industries
Paper and Packaging 559 559 - - 27 (205) 381
Exploration (120) (120) - - - 29 (91)
Corporate (256) (256) - - 20 (283) (519)
Activities
Total/Headline 4,572 4,480 92 - 221 (2,104) 2,689
earnings
Headline earnings adjustment (92) 520 (221) 17 224
(note 7)
Profit for the 2,913
financial year
2003
Net
Operating Operating Non-operating interest
profit profit after Operating exceptional tax and
before operating exceptional items Goodwill minority
US$ million operating exceptionals items amortisation interests
exceptionals
Total
By business segment
Platinum 447 433 14 - 17 (259) 205
Gold 369 326 43 - 41 (243) 167
Diamonds 562 562 - - 32 (208) 386
Coal 333 333 - - 8 (109) 232
Base Metals 286 78 208 - 1 (81) 206
Industrial Minerals 325 325 - - 53 (108) 270
Ferrous Metals and 208 208 - - 13 (114) 107
Industries
Paper and Packaging(1) 656 656 - - 18 (249) 425
Exploration (105) (125) 20 - - 22 (83)
Corporate (189) (190) 1 - 20 (52) (221)
Activities
Total/Headline 2,892 2,606 286 - 203 (1,401) 1,694
earnings
Headline earnings adjustment (286) 386 (203) 1 (102)
(note 7)
Profit for the 1,592
financial year
(1) Headline earnings for Paper and Packaging and Corporate Activities have been
adjusted for the year ended 31 December 2003, as net interest for the wholly
owned operations in Paper and Packaging is now accounted for centrally within
Corporate Activities. Net interest payable for the wholly owned operations in
Paper and Packaging was $95 million for the year ended 31 December 2004 (2003:
$57 million). On the former basis headline earnings for Paper and Packaging
would have been $286 million for the year ended 31 December 2004 (2003: $368
million).
4. Exploration expenditure
US$ million 2004 2003
By business segment
Platinum 13 11
Gold 43 36
Base Metals 41 50
Coal 9 5
Ferrous Metals and Industries 14 1
Impairment of Boyongan (see note 5) - 20
Other - 2
120 125
5. Exceptional items
Operating exceptional items
US$ million 2004 2003
Reversal of impairment of Terra Industries Inc 154 -
Impairment of Black Mountain Mineral Development (100) -
Write down of assets at Mantos Blancos SA (20) -
Impairment of Hudson Bay Mining and Smelting Co Ltd - (208)
Impairment of Boyongan - (20)
Impairment of Savuka - (34)
Other impairments (9) (24)
Share of associate's impairment charge - Palabora Mining Company Limited (117) -
Total operating exceptional charge (92) (286)
Taxation 42 22
Minority interests 1 23
(49) (241)
Exceptional finance charge
US$ million 2004 2003
Share of associate's charge on early redemption of debt - (13)
Total exceptional finance charge - (13)
Non-operating exceptional items
US$ million 2004 2003
Disposal of interest in Gold Fields Limited 464 -
Part disposal of Western Areas 45 -
Disposal of remaining interest in FirstRand Limited 32 117
Disposal of interest in Nkomati 28 -
Disposal of interest in Avgold 25 51
Disposal of Terra Industries Inc 13 -
Loss on redemption of De Beers' preference shares (44) -
Loss on disposal of Hudson Bay Mining and Smelting Co Ltd (42) -
Disposal of interest in Li & Fung - 163
Disposal of interest in East Africa Gold Mines - 25
Disposal of interest in Randgold Resources - 17
Disposal of interest in JCI - (20)
Disposal of Anglovaal Mining Limited - (13)
Other items (12) 21
Share of associates' exceptional items 11 25
Profit on disposal of fixed assets 520 386
Total non-operating exceptional gain 520 386
Taxation (41) (9)
Minority interests (1) (29)
478 348
Total exceptional items (net of tax and minority interest) 429 94
Operating exceptional items
A review of the carrying value of Black Mountain Mineral Development has
resulted in a $100 million exceptional charge to operating profit, attributable
to Base Metals.
Following a review of operations at Empresa Minera de Mantos Blancos SA, the
carrying values of certain dump leach assets were written down. This has
resulted in an exceptional charge to operating profit of $20 million,
attributable to Base Metals.
During the year, in light of the prolonged recovery in the company's markets and
share price, Ferrous Metals and Industries reversed $154 million of the
impairment provision held against Terra Industries Inc.
Palabora, an associate within Base Metals, recorded an impairment of $409
million during the year. The Group's share of this impairment amounted to $117
million.
Non-operating exceptional items
The Group disposed of its investment in Gold Fields Limited in March 2004.
Proceeds of $1.2 billion resulted in an exceptional gain of $464 million.
The Group disposed of a holding of approximately 8.5% of Western Areas in
December 2004. Proceeds of $48 million resulted in a gain of $45 million.
An exceptional currency retranslation loss of $44 million arose on the
redemption of $175 million of De Beers' preference shares.
Base Metals completed the sale of Hudson Bay Mining and Smelting Co Ltd in
December 2004. Proceeds of $257 million, including cash consideration of $246
million, resulted in an exceptional loss of $42 million.
Ferrous Metals and Industries disposed of its interest in Terra Industries Inc.
Proceeds of $255 million resulted in an exceptional gain of $13 million.
6. Tax on profit on ordinary activities
a) Analysis of charge for the year
2004 2004 2003 2003
Excluding Including Excluding Including
exceptional exceptional exceptional exceptional
US$ million items items items items
United Kingdom corporation tax at 30%(1) 54 54 26 26
South Africa corporation tax at 30% 261 261 74 74
Other overseas taxation 337 337 240 240
Share of taxation charge of joint ventures 19 19 15 15
Share of taxation charge of associates 308 308 200 200
Current tax on exceptional items - 59 - 9
Total current tax 979 1,038 555 564
Deferred taxation - subsidiaries 258 258 193 193
Deferred taxation - joint ventures 55 55 17 17
Deferred taxation - associates (12) (12) (16) (16)
Deferred tax on exceptional items - (60) - (22)
Total deferred tax (2) 301 241 194 172
Total tax charge(2) 1,280 1,279 749 736
(1) Net of double tax relief of $259 million (2003: nil). UK corporation tax
before double tax relief was $313 million (2003: $26 million).
(2) In addition, $12 million (2003: $59 million) of deferred tax has been
recognised in the Statement of Total Recognised Gains and Losses.
b) Factors affecting current tax charge for the year
The current tax charge assessed for the year is lower than the standard rate of
corporation tax in the United Kingdom and South Africa (30%). The differences
are explained below:
2004 2003
Including Including
exceptional exceptional
US$ million items items
Profit on ordinary activities before tax 4,641 2,673
Tax on profit on ordinary activities at 30% (2003: 30%) 1,392 802
Tax effects of:
Expenses not deductible for tax purposes:
Operating exceptional items (15) 86
Goodwill amortisation 66 61
Exploration costs 36 32
Non-taxable income:
Dividends receivable (8) (11)
Non-operating exceptional items (115) (103)
Tax allowances for capital expenditure in excess of (91) (207)
depreciation
Movement in tax losses (130) 15
South African secondary tax on companies 96 45
Effect of differences between local and UK rates (98) (66)
Other differences (95) (90)
Current tax charge for the year 1,038 564
c) Factors that may affect future tax charges
The Group anticipates that its effective rate will remain above the statutory
rate of 30% as the Group operates in certain countries where tax rates are
higher than the UK rate, including South Africa (effective rate of 37.8%
assuming distribution of profits).
In addition to the amounts provided in deferred tax, unrecognised assets exist
in respect of taxable losses. No asset has been recognised in respect of these
losses as it is not regarded as more likely than not that there will be suitable
taxable profits against which to offset these losses. Any utilisation of these
losses in the future may lead to a reduction in effective tax rates.
No deferred tax has been provided in respect of accumulated reserves of overseas
subsidiaries, associates or joint ventures as future dividends are expected to
be paid out of future earnings.
7. Headline earnings
2004 2003
Basic Basic
earnings earnings
per share per share
US$ million (unless otherwise stated) Earnings US$ Earnings US$
Profit for the financial year 2,913 2.03 1,592 1.13
Operating exceptional charges 92 0.06 286 0.20
Exceptional finance charge - - 13 0.01
Non-operating exceptional gains (520) (0.36) (386) (0.27)
Amortisation of goodwill:
Subsidiaries 175 0.13 153 0.11
Joint ventures and associates 46 0.03 50 0.04
Related tax (1) - (13) (0.01)
Related minority interest (16) (0.01) (1) (0.01)
Headline earnings for the financial year 2,689 1.88 1,694 1.20
Headline earnings is calculated in accordance with the definition in the
Institute of Investment Management and Research ("IIMR") Statement of Investment
Practice No 1, 'The Definition of IIMR Headline Earnings', which the directors
consider to be a useful additional measure of the Group's performance.
8. Earnings per share
2004 2003
Basic number of ordinary shares outstanding (million)(1) 1,434 1,415
Potentially dilutive ordinary shares (million) 66 63
Diluted number of ordinary shares outstanding (million)(1) 1,500 1,478
Profit for the financial year:
Basic earnings per share (US$)(2) 2.03 1.13
Diluted earnings per share (US$)(3) 1.96 1.10
Headline earnings for the financial year(4):
Basic earnings per share (US$) 1.88 1.20
Diluted earnings per share (US$) 1.81 1.17
(1) Basic and diluted number of shares outstanding represent the weighted
average for the year.
(2) Basic earnings per share is calculated by dividing the profit for the year
attributable to ordinary shareholders by the weighted average number of ordinary
shares in issue during the year. The average number of shares in issue excludes
the shares held by the employee benefit trust.
(3) Diluted earnings per share is calculated by adjusting earnings and the
weighted average number of ordinary shares in issue on the assumption of
conversion of all potentially dilutive ordinary shares.
(4) Basic and diluted earnings per share are also shown based on headline
earnings, which the directors consider to be a useful additional measure of the
Group's performance.
9. Capital expenditure
An analysis by business segment of the payments for tangible fixed assets made
by subsidiaries is shown below:
US$ million 2004 2003
Platinum 633 1,004
Gold 572 339
Coal 217 207
Base Metals 286 352
Industrial Minerals 299 316
Ferrous Metals and Industries 284 195
Paper and Packaging 819 601
Other 19 11
3,129 3,025
10. Joint ventures and associates
2004 2003
Joint Joint
US$ million ventures Associates Total ventures Associates Total
Fixed assets 1,577 5,153 6,730 2,001 5,755 7,756
Current assets 639 2,183 2,822 482 2,269 2,751
Liabilities due within one year (213) (1,237) (1,450) (355) (856) (1,211)
Liabilities due after more than
one year (507) (1,753) (2,260) (498) (2,364) (2,862)
Net assets 1,496 4,346 5,842 1,630 4,804 6,434
US$ million 2004 2003
By business segment:
Platinum 77 73
Gold 230 1,219
Diamonds 3,069 2,886
Coal 461 504
Base Metals 1,088 963
Industrial Minerals 77 60
Ferrous Metals and Industries 629 495
Paper and Packaging 172 178
Corporate Activities 39 56
Net assets 5,842 6,434
By geographical segment:
South Africa 1,607 1,751
Rest of Africa 1,627 1,960
Europe 606 686
North America 161 316
South America 1,499 1,301
Australia and Asia 342 420
Net assets 5,842 6,434
11. Consolidated cash flow statement analysis
a) Reconciliation of Group operating profit to net cash inflow from operating activities
US$ million 2004 2003
Group operating profit - subsidiaries 3,086 1,611
Exceptional (gains)/charges (all non cash items) (25) 286
Group operating profit before exceptionals 3,061 1,897
Depreciation and amortisation charges 2,123 1,463
Increase in stocks (242) (302)
Increase in debtors (419) (246)
Increase in creditors 69 348
Increase in provisions 91 38
Other items 90 (14)
Net cash inflow from operating activities 4,773 3,184
b) Financing
US$ million 2004 2003
(Decrease)/increase in short term borrowings (1,664) 875
Increase in long term borrowings 305 531
Net movement in minorities' shares and loans (2) 3
Exercise of share options 46 71
Issue of shares in subsidiaries 146 305
Financing (1,169) 1,785
c) Reconciliation of net cash flow to movement in net debt
US$ million 2004 2003
Increase/(decrease) in cash in the year 902 (51)
Cash inflow/(outflow) from debt financing 1,359 (1,406)
Cash outflow from management of liquid resources (456) (182)
Change in net debt arising from cash flows 1,805 (1,639)
Loans and current asset investments acquired with subsidiaries (597) (746)
Loans and current asset investments disposed with subsidiaries 10 5
Other non-cash movements (19) -
Exchange adjustments (687) (675)
Movement in net debt 512 (3,055)
Net debt at start of year (8,633) (5,578)
Net debt at end of year (8,121) (8,633)
12. Movement in net debt
Acquisitions Disposals Other
excluding excluding non-cash Exchange
US$ million 2003 Cash flow cash cash movements movements 2004
Cash at bank and in hand 1,094 902 - - - 90 2,086
Debt due after one year (6,665) (305) (348) 23 285 (439) (7,449)
Debt due within one year (4,094) 1,664 (249) 6 (304) (356) (3,333)
(10,759) 1,359 (597) 29 (19) (795) (10,782)
Current asset investments 1,032 (456) - (19) - 18 575
Total (8,633) 1,805 (597) 10 (19) (687) (8,121)
13. Reconciliation of net operating assets to net assets
US$ million 2004 2003
Net operating assets (see note 2) 37,601 29,709
Fixed asset investments 6,731 7,206
Current asset investments 575 1,032
Cash at bank and in hand 2,086 1,094
Other non-operating assets and (4,206) (4,700)
liabilities
Long term liabilities (7,449) (6,665)
Provisions for liabilities and charges (4,986) (3,954)
Equity minority interests (4,445) (3,396)
Non-equity minority interests (175) -
Proposed dividend (734) (554)
Net assets 24,998 19,772
14. Status of financial information
The financial information set out herein does not constitute the Company's
statutory accounts for the year ended 31 December 2004, but is derived from
those accounts which were approved by the board of directors on 22 February
2005. Statutory accounts for the year ended 31 December 2003 have been
delivered to the Registrar of Companies, and those for 2004 will be delivered
following the Company's annual general meeting convened for 20 April 2005. The
auditors have reported on these accounts; their reports were unqualified and did
not contain statements under section 237(2) or (3) of the Companies Act 1985.
Production statistics
The figures below include the entire output of consolidated entities and the
Group's share of joint ventures, joint arrangements and associates where
applicable, except for Collahuasi in Base Metals which is quoted on a 100%
basis.
2004 2003
Anglo Platinum (troy ounces)(1)(2)
Platinum 2,498,200 2,356,100
Palladium 1,331,800 1,213,700
Rhodium 258,600 237,400
Nickel (tons) 22,700 22,500
AngloGold Ashanti (gold in troy ounces)(2)
South Africa 3,079,000 3,281,000
Argentina 211,000 209,000
Australia 410,000 432,000
Brazil 334,000 323,000
Ghana 485,000 -
Guinea 83,000 -
Mali 475,000 577,000
Namibia 67,000 73,000
Tanzania 570,000 331,000
USA 329,000 390,000
Zimbabwe 9,000 -
6,052,000 5,616,000
Gold Fields (gold in troy ounces)(2)
Gold 207,000 870,500
Anglo Coal (tonnes)
South Africa:
Eskom 33,668,300 31,301,000
Trade - Thermal 18,648,600 18,600,200
Trade - Metallurgical 2,143,700 1,835,500
54,460,600 51,736,700
Australia:
Thermal 17,378,800 17,025,400
Metallurgical 8,203,800 9,100,000
25,582,600 26,125,400
South America:
Thermal 9,589,600 8,728,400
89,632,800 86,590,500
Anglo Coal (tonnes)
South Africa:
Bank 2,733,100 3,225,000
Greenside 2,754,800 2,712,400
Goedehoop 6,462,100 5,961,500
Kriel 11,059,500 10,984,300
Kleinkopje 4,691,600 4,381,100
Landau 3,474,100 3,508,000
New Denmark 4,975,800 4,316,800
New Vaal 17,312,000 16,000,000
Nooitgedacht 676,600 647,600
Mafube 321,000 -
54,460,600 51,736,700
(1) Includes Anglo Platinum's share, 44,500 ounces, of Northam
Platinum Limited.
(2) See Anglo American Platinum Corporation Limited, Northam Limited, AngloGold Ashanti Limited and Gold
Fields Limited published results for further analysis of production information.
Production statistics (continued)
2004 2003
Anglo Coal (tonnes) (continued)
Australia:
Callide 9,355,300 8,520,600
Drayton 4,278,800 4,286,100
Dartbrook 2,268,100 2,432,500
German Creek 4,047,600 3,802,000
Jellinbah East 925,200 883,600
Moranbah 1,125,900 3,158,900
Dawson Complex 3,581,700 3,041,700
25,582,600 26,125,400
South America:
Carbones Del Guasare 1,677,600 1,380,900
Carbones Del Cerrejon 7,912,000 7,347,500
9,589,600 8,728,400
Anglo Base Metals
Copper
Collahuasi
100% basis (Anglo American 44%)
Production Copper cathode tonnes 58,200 63,400
Copper in concentrate tonnes 422,800 331,300
Total copper production for tonnes 481,000 394,700
Collahuasi
Minera Sur Andes
Los Bronces mine
Production Copper cathode tonnes 31,800 27,700
Copper in concentrate tonnes 199,800 180,100
Total tonnes 231,600 207,800
El Soldado mine
Production Copper cathode tonnes 8,100 8,000
Copper in concentrate tonnes 60,700 62,500
Total tonnes 68,800 70,500
Chagres Smelter
Production Copper blister/anodes tonnes 165,000 160,100
Acid tonnes 440,500 436,700
Total copper production for
Minera Sur Andes group tonnes 300,400 278,300
Mantos Blancos
Mantos Blancos mine
Production Copper cathode tonnes 58,200 51,600
Copper in concentrate tonnes 36,700 35,300
Total tonnes 94,900 86,900
Mantoverde mine
Production Copper cathode tonnes 60,100 60,200
Black Mountain and Hudson Bay tonnes 79,500 87,800
Other tonnes 19,400 21,900
Total attributable copper production tonnes 766,000 708,800
Production statistics (continued)
2004 2003
Nickel, Niobium and Mineral Sands
Nickel
Codemin
Production tonnes 6,500 6,400
Loma de Niquel
Production tonnes 17,400 17,200
Other tonnes 100 1,300
Total attributable nickel production tonnes 24,000 24,900
Niobium
Catalao
Production tonnes 3,500 3,300
Mineral Sands
Namakwa Sands
Production Ilmenite tonnes 320,600 314,600
Rutile tonnes 23,700 20,400
Zircon tonnes 119,100 93,300
Smelter production Slag tapped tonnes 169,300 165,800
Iron tapped tonnes 105,900 105,900
Zinc and Lead
Black Mountain
Production Zinc in tonnes 28,200 25,900
concentrates
Lead in tonnes 37,500 39,600
concentrates
Copper in tonnes 5,200 4,700
concentrates
Hudson Bay
Production (domestic) Copper tonnes 40,000 39,400
Zinc tonnes 105,200 93,100
Production (total) Copper tonnes 74,300 83,100
Zinc tonnes 107,000 117,900
Gold ounces 73,400 57,500
Silver ounces 1,020,900 1,032,800
Lisheen
Production Zinc in concentrate tonnes 156,300 169,300
Lead in concentrate tonnes 17,200 20,800
Skorpion
Production Zinc tonnes 119,200 47,400
Total attributable zinc production tonnes 410,700 360,500
Anglo Industrial Minerals (tonnes)
Aggregates 70,448,300 67,158,100
Lime products 1,185,700 893,800
Concrete (m3) 8,310,800 7,874,600
Sodium tripolyphosphate 115,700 88,800
Phosphates 1,169,300 1,040,300
Anglo Ferrous Metals and Industries (tonnes)
Kumba Resources Limited
Iron ore production -
Lump 18,248,000 18,172,000
Fines 11,864,000 11,421,000
Total iron ore 30,112,000 29,593,000
Coal
Power Station coal 14,017,000 13,869,000
Coking coal 2,409,000 2,162,000
Steam coal 3,018,000 2,933,000
Total coal 19,444,000 18,964,000
Zinc metal 116,000 112,000
Heavy minerals(1)
Ilmenite 498,000 393,000
(1) Further details of heavy minerals production are
available in Kumba's annual report.
Production statistics (continued)
2004 2003
Anglo Ferrous Metals and Industries (tonnes) (continued)
Scaw Metals
Rolled products 458,000 352,000
Cast products 110,000 115,000
Grinding media 429,000 389,000
Highveld Steel
Rolled products 674,013 578,035
Continuous cast blocks 922,477 877,405
Vanadium slag 67,587 69,814
Samancor
Chrome ore 1,155,000 1,127,400
Chrome alloys 378,600 407,700
Manganese ore (mtu m) 106 76
Manganese alloys 321,100 288,200
Zimbabwe Alloys
Chrome alloys 31,000 39,000
Tongaat-Hulett
Sugar 756,000 843,000
Aluminium 162,000 147,000
Starch and glucose 576,000 610,000
Hippo Valley
Sugar 200,000 224,000
Terra(1)
Ammonia 550,200 677,000
Nitrogen solutions 1,497,200 1,862,400
Urea 163,600 264,500
Ammonium nitrate 387,400 452,800
Anglo Paper and Packaging
Mondi Packaging
Packaging papers tonnes 2,596,701 2,010,423
Corrugated board and boxes m m2 2,103 1,386
Paper sacks m units 3,251 2,723
Consumer bags and pouches
(including self opening) m units 1,070 736
Coating and release liners m m2 1,661 1,584
Films and laminates m m2 395 370
Mondi Business Paper
Uncoated wood free paper tonnes 1,881,851 1,583,496
Pulp - External tonnes 254,777 291,670
Pulp - Integrated tonnes 1,396,124 1,250,042
Wood chips green metric tonnes 2,125,858 2,122,470
Mondi Packaging South Africa
Packaging papers tonnes 365,557 370,917
Corrugated case material m m2 335 297
Newsprint and other
Newsprint (attributable share) tonnes 550,986 572,054
Mining timber tonnes 154,727 158,640
(1) Terra was sold effective December 2004.
Reconciliation of subsidiaries' and associates' headline earnings to those
included in the consolidated financial statements
For the year to 31 December 2004
Note only key reported lines are reconciled
2004
AngloGold Ashanti Limited US$ million
IAS adjusted headline earnings (published) (1) 263
Exploration (excluding joint ventures) 43
Amortisation of bond discount 13
Depreciation on assets revalued on acquisition (5)
Other GAAP adjustments 3
Minority interest (159)
UK GAAP contribution to headline earnings 158
(1) Before unrealised non-hedge derivatives and fair value gains on interest
rate swaps.
2004
Anglo American Platinum Corporation Limited US$ million
IAS headline earnings (published) 407
GAAP adjustments (16)
Exploration 13
404
Minority interest (101)
Depreciation on assets revalued on acquisition (64)
UK GAAP contribution to headline earnings 239
2004
DB Investments SA US$ million
Reconciliation of headline earnings Total Ordinary Preference
shares shares(3)
DBI headline earnings - IAS (100%) 652 - -
GAAP adjustments(1) 65 - -
DBI headline earnings - UK GAAP (100%) 717 622 95
AA plc's 45% ordinary share interest 280 280 -
Additional 3.65% ordinary share interest(2) 23 23 -
AA plc's portion of the preference shares(3) 78 - 78
AA plc headline earnings 381 303 78
(1) The GAAP adjustments include the reclassification of the $75 million
preference dividends which are finance charges to Dbsa under IFRS, but are not
treated as finance charges under UK GAAP. The GAAP adjustments also include -
$31 million relating to the mark-to-market of interest rate hedging contracts
referred to in Dbsa's 2003 year end press release. Whereas in Dbsa's earnings,
the full amount of $70 million was charged against earnings in 2003, under UK
GAAP only $31 million is charged against earnings in 2004, being the portion
that was realised in the period.
(2) As a result of De Beers' partial interest in Debswana Diamond Company
(Proprietary) Limited (one of the shareholders in DBI), AA plc accounts for an
additional 3.65% of DBI's post-tax earnings attributable to ordinary shares. As
previously announced, the Debswana interest in DBI was ceded to the Government
of the Republic of Botswana as part of a renewal of De Beers' mining licences in
Botswana, signed on 20th December 2004. Accordingly, from this date AA plc no
longer accounts for this additional 3.65% interest.
(3) AA plc grosses up its preference share income to the operating profit level
and accounts for its preference share interest in operating profit, exceptional
items, investment income and net interest, tax and minorities, in the same way
as it accounts for its ordinary share interest in these balances. This
treatment is in accordance with FRS 9, paragraph 33, which indicates that where
preference shares are an integral part of the investor's long-term interest, it
is appropriate to include the preference share interest with the ordinary share
interest in determining the investor's overall share of an associate's results.
The headline earnings attributable to AA plc's $61 million preference share
income are arrived at by adjusting for a proportion of exceptional items (-$2
million) and goodwill amortisation (+$19 million) in the same way as the
ordinary share interest is calculated.
Key financial data
US$ million (unless stated otherwise) 2004 2003(1) 2002(1) 2001(1)(2) 2000(1)(2) 1999(1)(2)
Group turnover including share of joint ventures 31,795 24,909 20,497 19,282 20,570 19,245
and associates
Less: Share of joint ventures' turnover (1,195) (1,060) (1,066) (1,109) (1,590) (1,720)
Share of associates' turnover (5,670) (5,212) (4,286) (3,387) (4,156) (5,947)
Group turnover - subsidiaries 24,930 18,637 15,145 14,786 14,824 11,578
Operating profit before exceptional items 4,572 2,892 3,332 3,298 3,479 2,141
Operating exceptional items(3) (92) (286) (81) (513) (433) -
Total operating profit(3) 4,480 2,606 3,251 2,785 3,046 2,141
Non-operating exceptional items(3) 520 386 64 2,148 490 410
Net interest (expense)/investment income (359) (319) (179) 130 308 265
Profit on ordinary activities before taxation 4,641 2,673 3,136 5,063 3,844 2,816
Taxation on profit on ordinary activities (1,280) (749) (1,042) (1,247) (1,143) (538)
Taxation on exceptional items 1 13 (3) (147) - 18
Equity minority interests (449) (345) (528) (584) (818) (758)
Profit for the financial year 2,913 1,592 1,563 3,085 1,883 1,538
Headline earnings 2,689 1,694 1,759 1,681 1,927 1,296
Earnings per share ($)(4) 2.03 1.13 1.11 2.09 1.20 1.00
Headline earnings per share ($)(4) 1.88 1.20 1.25 1.14 1.23 0.84
Dividend per share (US cents) 70.0 54.0 51.0 49.0 47.5 37.5
Basic number of shares outstanding (million)(4) 1,434 1,415 1,411 1,474 1,567 1,540
EBITDA(5) 7,110 4,785 4,792 4,647 4,688 3,113
EBITDA interest cover(6) 14.9 12.7 20.0 31.2 - -
Operating margin (before exceptional items) 14.4% 11.6% 16.3% 17.1% 16.9% 11.1%
Dividend cover (based on headline earnings) 2.7 2.2 2.5 2.3 2.6 2.2
Balance Sheet
Intangible and tangible fixed assets 33,745 26,646 18,841 12,870 14,315 11,110
Investments 6,731 7,206 6,746 4,873 7,234 7,644
Working capital 2,249 1,903 822 282 971 914
Provisions for liabilities and charges (4,986) (3,954) (2,896) (2,194) (2,594) (2,604)
Net (debt)/funds (8,121) (8,633) (5,578) (2,018) (3,590) 81
Equity minority interests (4,445) (3,396) (2,304) (1,607) (2,212) (2,477)
Non-equity minority interests (175) - - - - -
Shareholders' funds (equity) 24,998 19,772 15,631 12,206 14,124 14,668
Total capital(7) 37,739 31,801 23,513 15,831 19,926 17,064
Net cash inflow from operating activities 4,773 3,184 3,618 3,539 2,959 1,850
Dividends received from joint ventures and 408 426 258 258 258 209
associates
Return on capital employed(8) 13.4% 10.7% 17.5% 19.0% 19.5% 13.2%
EBITDA/average total capital 20.4% 17.3% 24.4% 26.0% 25.3% 18.8%
Net debt/(funds) to total capital 21.5% 27.1% 23.7% 12.7% 18.0% (0.5%)
(1) The comparative years have been restated to reflect the adoption
of UITF abstract 38 'Accounting for ESOP trusts'.
(2) 1999, 2000 and 2001 have been restated for the adoption of FRS
19.
(3) As first noted in 2002, operating profit for 2000 has been
restated for the reclassification of the loss of $167 million arising on the
anticipated disposal of Terra Industries Inc. The disposal did not proceed and
the loss has therefore been reclassified into operating exceptional items as an
impairment.
(4) 2000 and 1999 have been restated to reflect the three-for-one
bonus issue in May 2001.
(5) EBITDA is operating profit before exceptional items plus
depreciation and amortisation in subsidiaries and share of EBITDA of joint
ventures and associates.
(6)EBITDA interest cover is EBITDA divided by net interest expense, excluding
other net financial income (2004: $119 million) and exceptional financing
charges (2004: nil). EBITDA interest cover for 2002 is annualised to account
for acquisitions during the year. The actual EBITDA interest cover for 2002 was
25.5 times. For 2000 and 1999 EBITDA interest cover is not applicable as the
Group was a net interest recipient after adjusting for other net financial
income.
(7) Total capital is the sum of shareholders' funds, net debt and
minority interests.
(8) Return on capital employed is calculated as total operating
profit before impairments for the year divided by the average total capital less
other investments and adjusted for impairments.
Summary by business segment
Turnover(1) TC/RCs(1) EBITDA(2) Operating profit/ Headline earnings
(loss) /(loss)
US$ million (unless 2004 2003 2004 2003 2004 2003 2004 2003 2004 2003
otherwise stated)
Platinum 3,120 2,278 - - 867 673 537 433 239 205
Platinum 3,120 2,278 - - 867 673 537 447 239 205
Exceptional items - (14)
Gold 2,409 2,041 - - 701 642 262 326 158 167
Gold 2,409 2,041 - - 701 642 263 369 158 167
Exceptional items (1) (43)
Diamonds 3,177 2,967 - - 688 638 586 562 381 386
Coal 2,382 1,851 - - 686 505 487 333 351 232
South Africa 1,109 843 - - 297 175 244 133 162 79
Australia 840 739 - - 184 219 79 130 73 94
South America 433 269 - - 205 111 164 70 116 59
Base Metals 3,517 2,126 197 169 1,626 569 1,038 78 1,042 206
Copper 2,247 1,247 94 79 1,252 447 1,046 269 871 216
Collahuasi 650 323 39 34 412 162 345 106 279 78
Minera Sur Andes 1,034 587 44 33 608 216 511 129 430 111
Mantos Blancos 475 277 11 12 225 65 195 35 163 28
Palabora and other 88 60 - - 7 4 (5) (1) (1) (1)
Nickel, Niobium, 528 372 - - 273 151 224 106 172 76
Mineral Sands
Catalao 44 39 - - 29 23 26 20 27 18
Codemin 89 56 - - 48 26 44 22 30 16
Loma de Niquel 247 136 - - 158 73 137 52 103 41
Namakwa Sands 146 124 - - 37 19 16 3 11 (6)
Nkomati and other 2 17 - - 1 10 1 9 1 7
Zinc 741 506 103 90 131 (1) 38 (62) 31 (65)
Black Mountain 74 62 25 22 2 (5) (3) (7) (2) (6)
Hudson Bay 405 294 - - 78 (9) 37 (59) 31 (63)
Lisheen 189 150 78 68 29 13 17 4 16 4
Skorpion 73 - - - 22 - (13) - (14) -
Other 1 1 - - (30) (28) (33) (27) (32) (21)
Exceptional items (237) (208)
Industrial Minerals 3,858 3,318 - - 624 557 337 325 267 270
Tarmac 3,596 3,129 - - 543 510 280 290 238 256
Copebras 262 189 - - 81 47 66 35 29 14
Exceptional items (9) -
Ferrous Metals and 6,520 4,367 - - 1,249 441 1,050 208 480 107
Industries
Kumba 1,413 332 - - 329 67 205 33 72 18
Highveld Steel 775 488 - - 222 29 168 11 92 5
Scaw Metals 910 670 - - 123 86 101 70 72 55
Samancor Group 821 499 - - 268 78 236 41 162 10
Boart Longyear 872 665 - - 102 63 67 33 35 21
Tongaat-Hulett 1,121 994 - - 116 50 69 10 21 (10)
Terra 598 654 - - 92 67 53 14 29 7
Other 10 65 - - (3) 1 (4) (4) (3) 1
Exceptional items 155 -
Paper and Packaging 6,919 5,628 - - 996 976 559 656 381 425
Mondi Packaging 3,766 2,885 - - 535 488 284 302 193 162
Mondi Business 2,003 1,693 - - 352 388 209 294 148 207
Paper
Other 1,150 1,050 - - 109 100 66 60 40 56
Exploration - - - - (120) (104) (120) (125) (91) (83)
Exploration - - - - (120) (104) (120) (105) (91) (83)
Exceptional items - (20)
Corporate 90 333 - - (207) (112) (256) (190) (519) (221)
Gold Fields(3) 90 333 - - 19 72 7 28 6 35
Other - - - - (226) (184) (263) (217) (525) (256)
Exceptional items - (1)
Less TC/RC charges (197) - - - - - - - - -
(1)
31,795 24,909 197 169 7,110 4,785 4,480 2,606 2,689 1,694
(1) Turnover includes share of joint ventures and associates. Base Metals'
turnover is shown before deduction of treatment charges and refining charges
(TC/RCs) in 2004. Refer to note 2 for further details.
(2) EBITDA is operating profit before exceptional items plus depreciation and
amortisation in subsidiaries and share of EBITDA of joint ventures and
associates.
(3) The Group disposed of its holding in Gold Fields Limited in March 2004.
ANGLO AMERICAN plc
(Incorporated in England and Wales - Registered number 3564138)
('the Company')
Notice of Recommended Final Dividend
Notice is hereby given that a final dividend on the Company's ordinary share capital in respect of the year
to 31 December 2004 will, subject to approval by shareholders at the Annual General Meeting to be held on
Wednesday, 20 April 2005, be payable as follows:
Amount (United States currency) 51 cents per ordinary share (notes 1
and 2)
Currency conversion date Friday, 18 February 2005
Last day to trade on the JSE Securities Exchange South Africa ('JSE')
to qualify for the dividend Friday, 4 March 2005
Ex-dividend on the JSE from the commencement of trading on Monday, 7 March 2005
Ex-dividend on the London Stock Exchange from the commencement of
trading on Wednesday, 9 March 2005
Record date (applicable to both the United Kingdom principal register
and South African branch register) Friday, 11 March 2005
Last day for receipt of Dividend Reinvestment Plan ('DRIP') Mandate
Forms by Central Securities Depositary Participants ('CSDPs') (notes
4 and 5) Tuesday, 5 April 2005
Last day for receipt of DRIP Mandate Forms by the UK Registrars or
the South African Transfer Secretaries (notes 4 and 5) Thursday, 7 April 2005
Dividend warrants posted Thursday, 28 April 2005
Payment date of dividend Friday, 29 April 2005
Notes:
1. Shareholders on the United Kingdom register of members with an address
in the United Kingdom will be paid in pounds sterling and those with an address
in a country in the European Union which has adopted the euro, will be paid in
euros. Such shareholders may, however, elect to be paid their dividends in US
dollars provided the UK Registrars receive such election by Friday, 11 March
2005. Shareholders with an address elsewhere (except in South Africa) will be
paid in US dollars. The equivalent of the dividend in sterling will be 26.8974
pence per ordinary share based on an exchange rate of US$1 = £0.5274. The
equivalent of the dividend in euros will be 39.0456 euro cents per ordinary
share based on an exchange rate of US$1 = €0.7656.
2. Shareholders on the South African branch register will be paid in
South African Rand at R3.03246 per ordinary share based on an exchange rate of
US$1 = R5.9460.
3. Dematerialisation and rematerialisation of registered share
certificates in South Africa will not be effected by CSDPs during the period
Monday, 7 March 2005 to Friday, 11 March 2005 (both days inclusive).
4. Those shareholders who already participate in the DRIP need not
complete a DRIP mandate form for each dividend as such forms provide an on-going
authority to participate in the DRIP until cancelled in writing. Shareholders
who wish to participate in the DRIP should obtain a mandate form from the UK
Registrars, the South African Transfer Secretaries or, in the case of those who
hold their shares through the STRATE system, their CSDP.
5. In terms of the DRIP, and subject to the purchase of shares in the
open market, share certificates/ Crest notifications are expected to be mailed
and CSDP investor accounts credited/updated on Friday, 13 May 2005.
6. Copies of the Terms and Conditions of the DRIP are available from the
UK Registrars or the South African Transfer Secretaries.
By order of the Board
N Jordan
Company Secretary
22 February 2005
Registered Office UK Registrars South African Transfer Secretaries
20 Carlton House Terrace Lloyds TSB Registrars Ultra Registrars (Proprietary) Limited
London The Causeway 11 Diagonal Street
SW1Y 5AN Worthing, West Sussex Johannesburg 2001
England BN99 6DA (PO Box 4844, Johannesburg 2000)
England South Africa
This information is provided by RNS
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