Interim Results
Anglo American PLC
08 August 2003
News Release
8 August 2003
A sound performance for the 6 months to 30 June 2003
• Headline earnings per share increased by 2% to 61 US cents despite
weakness of the US dollar.
• Strength from product and geographic diversity.
• Outstanding contribution from Diamonds, up 49%, strong performances
from European Paper and Packaging and Industrial Minerals, more than offset
reduced earnings from Platinum, Gold and Coal.
• Geographic headline earnings significantly altered:
H1 2003 H12002
Europe 30% 21%
South Africa 30% 54%
North & South America 12% 7%
Rest of World 28% 18%
• Further cost savings and efficiency improvements of $127 million
achieved.
• Strong cash generation: EBITDA(1) up 9% at $2.4 billion; EBITDA
interest cover of 14 times; annualised EBITDA return on total capital 19%.
• $6 billion expansion programme in progress.
• Interim dividend maintained at 15 US cents per share.
HIGHLIGHTS FOR THE SIX MONTHS TO 30 JUNE 2003 6 months 6 months ended Change
ended 30.06.02
US$ million except per share amounts 30.06.03
Turnover 12,076 9,567 26%
Total operating profit for the period 1,534 1,581 (3)%
Total operating profit before operating exceptional items 1,546 1,565 (1)%
Profit for the period 760 767 (1)%
Profit for the period before exceptional items 762 762 -
Headline earnings for the period (2) 856 840 2%
Net operating assets (3) 24,012 17,073 41%
Net cash inflow from operating activities 1,286 1,381 (7)%
Capital expenditure 1,172 850 38%
Earnings per share (US$):
Profit for the period 0.54 0.54 -
Profit for the period before exceptional items 0.54 0.54 -
Headline earnings for the period 0.61 0.60 2%
Dividend for the period (US cents per share) 15 15 -
(1) EBITDA is operating profit before exceptional items plus depreciation and amortisation of subsidiaries
and share of EBITDA of joint ventures and associates.
(2) See note 6 for basis of calculation of headline earnings.
(3) See note 2 for definition of net operating assets.
Tony Trahar, Chief Executive, said:
"The increase in headline earnings, against a backdrop of a weak US dollar, and
a significantly stronger South African rand, was an impressive performance
during a challenging first six months of the year. Particularly pleasing were
the strong performances from Diamonds, Paper and Packaging and Industrial
Minerals which more than offset the lower contributions from Platinum, Gold and
Coal. The emphasis on reducing costs and improving efficiencies across the Group
is continuing to yield significant results and contributed materially to the
improved performance. We continue to deliver value from the acquisitions and new
projects undertaken in recent years and are ahead of projections in realising
synergies from the integration of the Disputada copper operations in Chile,
acquired last year.
Growth opportunities, both organic and through acquisition, will continue to be
pursued actively. Anglo American has one of the largest, high quality project
pipelines in the resources sector, with $6 billion of approved projects
underway. A number of major projects are coming to fruition this year.
While geopolitical tensions have reduced somewhat following the cessation of the
Iraq war and equity markets have risen strongly since March this year, the low
growth forecasts for the US, Japan and much of Euroland remain of concern.
Against this background and the prospect of a continued strong rand/dollar
exchange rate, the outlook for our key businesses remains challenging."
First half results - overview
Headline earnings for the first half of 2003 of $856 million (61 US cents per
share) were 2% higher than the corresponding period in 2002, reflecting again
the benefits of the Group's diversified asset base and broad product mix. This
robust performance came on the back of an outstanding performance by De Beers,
strong contributions from Paper and Packaging and Industrial Minerals and an
improved contribution from Base Metals. These results more than compensated for
the significant impact of the stronger South African rand, which appreciated by
some 27% against the US dollar compared with the first six months of last year.
Lower earnings were recorded by Anglo Platinum, AngloGold and the Coal business,
due in the main to the impact of the firming of the South African rand against
the US dollar. Platinum's earnings were also impacted by a temporary increase in
pipeline stock levels from new projects, while lower export coal prices also
affected the contribution from Coal.
The Group's geographic sources of headline earnings altered significantly,
mainly as a result of the strong performances of the European based Industrial
Minerals and Paper and Packaging operations, as well as the weakness of the US
dollar. Europe contributed some 30% of such earnings (21% in the first half of
2002), South Africa 30% (54%), North and South America 12% (7%) and the Rest of
the World 28% (18%).
First half developments
A number of significant projects were completed in the first six months of the
year. In May, the first metal was produced at the wholly owned Skorpion zinc
mine in Namibia, expected to be one of the lowest cost zinc producers in the
world. The $454 million project, announced in 2001, has been completed within
budget and the mine is expected to produce 150,000 tonnes of zinc per annum when
it reaches full production at the end of 2004.
The new $147 million Copebras phosphate fertiliser plant in the state of Goias,
Brazil, was officially opened in April by the President of Brazil. Fertiliser
production will increase by 455,000 tonnes a year, significantly enhancing
Copebras' position in Brazil's agribusiness markets.
The $26 million upgrade of Mondi's Merebank PM2 uncoated woodfree paper machine
in KwaZulu Natal, South Africa, was completed successfully in the first half of
the year and will increase annual production by 40,000 tonnes.
Restructuring in Base Metals continued in line with its strategy of focusing on
long life, low cost operations and projects and disposing of smaller non-core
assets. Anglo American disposed of its investments in Anaconda Nickel in
Australia in January, and in Bindura Nickel in Zimbabwe in July. Also in July,
agreement was reached to purchase Ivernia West's 50% equity interest in Lisheen
which included a cash consideration of $1.8 million. On completion, and
following the refinancing of its debt structure, Lisheen will be a debt-free,
wholly owned subsidiary of Anglo American. The integration of the Disputada
copper mine in Chile, acquired in November 2002, is proceeding well, with
annualised cost savings amounting to some $15 million and the first half
operating profit contribution of $46 million, in line with budget.
During the period, Anglo American increased its stake in Anglo Platinum to
72.25%, as part of its ongoing programme of buying shares in the market from
time to time.
Anglo American's strategic objective of securing a meaningful interest in South
Africa's iron ore sector is still subject to approval by the country's
Competition Tribunal. Following the disposal of the stake in Avmin earlier this
year, Anglo American is focusing on Kumba, the largest iron ore producer in
South Africa (and the fifth largest in the world) where it has an equity
interest of 20.1%. The acquisition of further shares in Kumba is subject to
Competition Tribunal approval.
In August, AngloGold and Ashanti Goldfields Company Limited announced a proposed
merger of the two companies. Anglo American has confirmed its full support for
the proposed transaction, which, if approved, would dilute Anglo American's
shareholding in the merged entity from 51.4% to 44.5%, but in a larger, more
diversified gold company with an enhanced reserve base. The Securities
Regulation Panel of South Africa has granted to Anglo American an exemption from
making a mandatory offer to AngloGold minority shareholders should Anglo
American acquire AngloGold shares to increase its holding to above 50% in less
than 12 months.
Other developments during the first half included the launch of Anglo American's
inaugural euro-denominated benchmark bond offering, through Anglo American
Capital plc. The five-year bond raised €1.0 billion, with a coupon of 3.625%,
and was swapped into floating rate US dollars at a current all-in cost of
approximately 1.75% per annum. The funds have been used to repay existing bank
debt.
Going for growth
Anglo American's $6 billion expansion programme is one of the largest in the
resources sector.
Anglo Platinum's $2 billion expansion programme to increase production by 75% to
3.5 million ounces of platinum by 2006 is proceeding satisfactorily, although a
build-up of metal in process in the new plants resulted in reduced production of
refined metal during the period under review. Most of this is expected to be
released in the second half of the year. The viability and scheduling of Anglo
Platinum's projects will continue to be evaluated in the context of changing
market conditions and currency parameters.
AngloGold announced a $117 million expansion of its TauTona mine in South
Africa, which will deliver an additional 1.8 million ounces over the next ten
years. The mine currently produces around 640,000 ounces a year.
In March, Anglo American announced that its Paper and Packaging business
(renamed from Forest Products, to more accurately reflect the nature of its
business) is to proceed with a $221 million expansion and modernisation of its
Richards Bay mill in KwaZulu Natal in South Africa, increasing capacity for
bleached eucalyptus pulp production by some 40%. The project is expected to be
completed by April 2005. At the Ruzomberok pulp and paper mill in Slovakia, a
$233 million expansion project, covering the rebuild of PM18 and modernisation
of the pulp mill, is on track for completion. The project will increase annual
output by 100,000 tonnes of paper in 2004 and 103,000 tonnes of pulp in 2005.
A number of projects are due to come on line later this year. The $173 million
cement plant at Buxton in Derbyshire is due to be completed in 2003, with the
first firing of the kiln anticipated by year-end. The new cement plant will
increase production by 425,000 tonnes per year. The Kleinkopje and Greenside
coal expansion projects in South Africa are also due to commence production
later this year and will increase coal production by some 2.3 million tonnes a
year. In Base Metals, the Hudson Bay 777 mine and shaft will commence
production in the second half, five months ahead of schedule and within budget.
In July, Anglo Coal and Sasol announced the development of the Kriel South coal
reserves in South Africa, which are expected to yield an estimated 200 million
tonnes of thermal coal over 20 years. Anglo Coal will invest $65 million in the
project which is due to commence production in 2005.
Black Economic Empowerment
The Group continues to make good progress in South Africa in terms of Black
Economic Empowerment. In May, the disposal of its 34.5% holding in Avmin to a
consortium comprising African Rainbow Minerals Gold Limited and Harmony Gold
Mining Company Limited (Harmony) was announced, for an aggregate cash
consideration of $231 million. In July, Anglo American disposed of its 11.5%
stake in Avgold Limited to Harmony for $80 million.
The South African Money Bill
The relatively high royalty levels proposed for mineral commodities in South
Africa in the draft Money Bill have caused concern within the mining industry,
in particular regarding the proposed rates for diamonds, platinum and gold.
Anglo American believes that in some sectors the proposals may both damage the
international competitiveness of existing operations and reduce the relative
attraction of South Africa as an investment destination. The Group is engaging
with the South African authorities as part of industry efforts to achieve a
reasonable outcome.
HIV/AIDS
Good progress has been made in rolling-out anti-retroviral therapy (ART) for
those employees infected with HIV/AIDS in South Africa. Access to drugs at
preferential rates has been secured, treatment protocols have been established
with the advice of South African clinicians and the London School of Hygiene and
Tropical Medicine and training of managers and medical staff has been
undertaken. Early indications of the impact from the treatment have been
encouraging. Approximately 500 employees are already receiving ART. Anglo
American is actively seeking to extend treatment to dependants and local
communities through partnerships with government, trade unions, NGOs and
international funding organisations.
Dividend
An unchanged interim dividend of 15 US cents has been declared.
Outlook
While geopolitical tensions have reduced somewhat following the cessation of the
Iraq war and equity markets have risen strongly since March this year, the low
growth forecasts for the US, Japan and much of Euroland remain of concern.
Against this background, and with the prospect of a continued strong rand/dollar
exchange rate, the outlook for Anglo American's businesses remains challenging.
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
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 with its subsidiaries, joint ventures and associates is a
global leader in the mining and natural resource sectors. It has significant and
focused interests in gold, platinum, diamonds, coal, base metals, ferrous metals
and industries, industrial minerals and paper and packaging as well as financial
and technical strength. The Group is geographically diverse, with operations in
Africa, Europe, South and North America and Australia. (www.angloamerican.co.uk)
Note: Throughout this press release '$' means United States dollars.
OPERATIONS REVIEW
Highlights
Despite the weakness of the US dollar, headline earnings per share for the six
months to 30 June 2003 were 61 US cents per share, an increase of 2% over the
corresponding prior period. This reflects the strong performance of many of the
Group's businesses. Diamonds, Paper and Packaging, and Industrial Minerals
performed well. The Group's product and geographic diversity, with contributions
to headline earnings from Europe 30%, South Africa 30%, North and South America
12% and Rest of World 28%, demonstrated its benefits during a period of
difficult market conditions combined with the weakening of the US dollar. The
average exchange rate for the rand/US dollar of 8.03 reflects a 27%
strengthening of the South African rand compared to the prior period.
Profit for the financial period was $760 million compared with $767 million in
the prior period. Excluding exceptional items, earnings per share were 54 US
cents for the six months to June 2003, in line with the first half of 2002.
Platinum
$ million 6 months ended 6 months ended
30.06.03 30.06.02
Total operating profit 204 389
Headline earnings 107 158
Net operating assets 4,803 2,623
Capital expenditure 394 229
Share of Group headline earnings (%) 13% 19%
Share of Group net operating assets (%) 20% 15%
Anglo Platinum's operating profit fell sharply to $204 million, $185 million
lower than in the first half of 2002. This resulted primarily from the
strengthening South African rand, which significantly increased operating costs
in dollar terms, combined with a rise in costs from higher production volumes at
ramp-up mining and smelting operations. Headline earnings reduced from $158
million to $107 million.
The average dollar basket price of metals sold was slightly above that of the
same period in 2002, with the benefit of a higher platinum price largely offset
by lower palladium and rhodium prices. The average realised price for platinum
of $649 per ounce was $136 higher than the same period in 2002. However,
realised palladium and rhodium prices were significantly down at $202 per ounce
for palladium (2002: $371) and $556 per ounce for rhodium (2002: $946).
The contained platinum output from mining operations was 9.6% higher, reflecting
rising output from the Rustenburg UG2, Modikwa and Bafokeng-Rasimone mining
operations. However, the simultaneous commissioning of the ACP convertor, the
slag cleaning furnace and Polokwane smelter caused a temporary increase in
pipeline stock levels that resulted in reduced production of refined metal.
Refined platinum production (including attributable Northam Platinum output)
amounted to 933,300 ounces. Platinum output from mining operations is expected
to continue to increase in the second half of the year and the temporary lock-up
of metal in the newly commissioned metallurgical facilities will be reduced by
year-end, resulting in significantly higher refined production for the latter
six months.
In June, the company announced a venture with Aquarius Platinum (SA) whereby
certain mining assets will be pooled and operated together, with both parties
sharing equally in the proceeds. This project is expected to require capital
expenditure of approximately $100 million in 2003 terms, and is likely to
produce 280,000 ounces of platinum per annum at full production.
Anglo Platinum believes that the expansion programme target to produce at the
rate of 3.5 million ounces of refined platinum per year by the end of 2006
remains appropriate in view of market demand fundamentals. The viability of
projects will continue to be evaluated in the context of changing market
parameters, such as sustained strength of the rand, and this may affect project
scheduling and the time taken to bring new operations on stream.
Gold
$ million 6 months ended 6 months ended
30.06.03 30.06.02
Total operating profit 180 197
Headline earnings 82 100
Net operating assets 2,675 2,018
Capital expenditure 117 107
Share of Group headline earnings (%) 10% 12%
Share of Group net operating assets (%) 11% 12%
AngloGold's operating profit for the first half of 2003 was 9% lower at $180
million. Headline earnings were down by 18% to $82 million mainly because of the
firmer South African currency.
AngloGold's production at 2.8 million ounces was marginally up on the
corresponding period last year, though at a lower grade, primarily at Geita and
Great Noligwa. Total cash costs increased from $156 to $217 per ounce mainly
owing to the weakening of the US dollar against the local currencies in which
AngloGold operates, which had a significant negative impact on costs, margins
and earnings. However, these effects were more than compensated by an 18%
increase in the realised dollar gold price.
The company continued to reduce its net hedge position as the dollar gold price
maintained its strength. The hedge book was drawn down against the first half of
2002 by 17% (1.8 million ounces) to 8.7 million ounces. This reflects
AngloGold's stated policy in respect of hedging: "this is a risk-management tool
which the company has successfully used to underpin its revenue stream and which
will be employed and, where necessary, moderated, as the market and its
operating circumstances require. Under present circumstances, AngloGold will
continue to deliver into maturing sales contracts, further reducing the
company's forward sales position." The AngloGold board has decided to change the
targeted level of hedging commitments from 50% to 30% of five years' production.
In the United States, AngloGold concluded the sale in June of its 70% interest
in the Jerritt Canyon Joint Venture to Queenstake Resources USA Inc. Queenstake
accepted full closure and reclamation liabilities and posted surety bonds
totalling $33 million with the regulatory agencies. Permits for the operation of
the mine were transferred to Queenstake with effect from 30 June 2003.
In August, AngloGold and Ashanti Goldfields Company Limited, following an
announcement in May that the two parties were in discussions, announced the
detailed terms and conditions of a proposed merger of the two companies. It is
proposed that the merger will be implemented at a ratio of 26 AngloGold shares
for every 100 Ashanti ordinary shares or global depository securities. In
particular, the merger is conditional upon the support by, as well as certain
regulatory and other consents of, the Government of Ghana, a substantial
shareholder and regulator of Ashanti. To this end, the Government of Ghana has
appointed a consortium of advisors to advise it in considering the terms of the
proposed merger. AngloGold welcomes this appointment as an important step
forward and hopes to have clarity on the views of the Government by mid
September.
Diamonds
$ million 6 months ended 6 months ended
30.06.03 30.06.02
Total operating profit 378 242
Headline earnings 248 166
Share of Group headline earnings (%) 29% 20%
Attributable operating profit from De Beers of $378 million was 56% higher than
the prior corresponding period. Headline earnings of $248 million were 49%
higher.
The diamond industry started 2003 in a cautiously optimistic mood. Retail sales
in the first two months were encouraging but then lost momentum as the global
economy slowed sharply. War in Iraq and the impact of the SARS virus on Asian
economies undermined consumer confidence. More recently, retail sales have shown
signs of recovery in line with growing consumer confidence and global retail
sales of diamond jewellery for the first six months are anticipated to at least
match those of the first half of last year.
Throughout the first six months, demand for rough diamonds from the cutting
centres was strong, largely owing to a willingness to hold higher levels of
inventory as interest rates continued to decline. Sales by The Diamond Trading
Company, the marketing arm of De Beers, totalled $2,920 million, 2.75% higher
than the equivalent period in 2002. There was a marked reduction in diamond
stocks of more than $600 million during the period, while operating cash flow
generated $1.1 billion.
In view of the exceptionally strong operating cash flow generated in the
two-year period to June 2003, De Beers has decided to refinance its existing
bank facilities by replacing the existing term loan and revolving credit
facilities, arranged on leveraged buy-out terms, with a five-year $2.5 billion
Syndicated Multi-Currency Revolving Credit facility on standard commercial
terms. Syndication was launched on 26 June and has been successfully completed.
De Beers and the Russian diamond producer Alrosa have continued to engage in
constructive dialogue with the European Commission to address the Commission's
concerns relating to the five-year trade agreement jointly notified to the
Commission for clearance in March 2002.
Provided the strong demand for rough diamonds continues through the second half,
De Beers' results for the year as a whole should be ahead of the previous year.
Coal
$ million 6 months 6 months ended
ended
30.06.03 30.06.02
Total operating profit 172 232
South Africa 54 144
Australia 74 57
South America 29 29
United Kingdom 15 2
Headline earnings 107 142
Net operating assets 1,904 1,680
Capital expenditure 74 41
Share of Group headline earnings (%) 13% 17%
Share of Group net operating assets (%) 8% 10%
Anglo Coal's operating profit was $172 million, 26% lower than for the first
half of 2002. Headline earnings of $107 million were 25% down, mainly owing to
lower export prices and exchange impacts arising from the continued
strengthening of the rand and the Australian dollar.
Operating profit for South African sourced coal fell by 53% to $69 million.
Headline earnings mirrored this drop, declining by 54% to $37 million, mainly as
a result of significantly lower export prices, which were 19% down on a year
ago, and the weaker US dollar. This was partially offset by strong cost control.
Sales volumes increased by 8% to 25 million tonnes. The Kriel South project has
been approved by the Competition Tribunal and production is scheduled to
commence in 2005. The Kleinkopje and Greenside expansions are in their final
stages and will be completed during 2004.
In Australia, operating profit rose by 29% to $74 million owing to strict
control of operating costs and improved production performances at Moranbah
North and Dartbrook. The average price of thermal coal fell by 2% and coking
coal remained at similar levels to last year. Total attributable sales tonnes
were slightly down on last year mainly because of weak domestic demand. On
average, the Australian dollar appreciated against the US dollar by 15% compared
with the corresponding period a year ago. This was partially offset by
favourable exchange rate hedges taken out earlier in the year. Work continues on
the development of the Grasstree, Kayuga and Theodore projects.
In Colombia, synergies achieved as a result of merging the two operations in
2002 continue to exceed expectations. Cerrejon has now embarked on the expansion
of the operation to 28 million tonnes per annum. The Carbones del Guasare
operation in Venezuela was negatively affected by political events in that
country during the first half of 2003 - initially, by the national strike at the
beginning of the year and, more recently, by the problems administering the
exchange controls imposed at that time. The operation has, however, received
assurances from the authorities that this situation is being addressed.
Base Metals
$ million 6 months ended 6 months ended
30.06.03 30.06.02
Total operating profit/(loss) before exceptional items 98 81
Copper 106 66
Nickel, Niobium, Mineral Sands 47 43
Zinc (44) (20)
Other (11) (8)
Exceptional items - 46
Total operating profit after exceptional items 98 127
Headline earnings 60 37
Net operating assets 3,933 1,939
Capital expenditure 155 146
Share of Group headline earnings (%) 7% 4%
Share of Group net operating assets (%) 16% 11%
Base Metals' operating profit was $98 million against $81 million (excluding the
$46 million profit arising from the sale of Salobo) in the first half of 2002.
Headline earnings of $60 million were 62% higher.
Having started the year positively, base metal prices, with the exception of
nickel, slipped lower, initially on fears of a protracted Iraq conflict and
subsequently owing to concerns about the impact of the SARS virus on Chinese
demand. Although prices have subsequently firmed, economic indicators continue
to be mixed and any improvement in base metal prices is expected to remain muted
until there is clear evidence of a more robust and sustained economic upturn.
The copper price averaged 74.9 US cents/lb (2002: 71.8 US cents/lb).
Attributable copper production amounted to 350,000 tonnes (2002: 232,500
tonnes), generating operating profits of $106 million (2002: $66 million), of
which Disputada, which was acquired in November 2002, contributed $46 million.
The integration of Mantos Blancos and Disputada in Chile has proceeded faster
than originally budgeted, with annualised savings of over $15 million identified
to date, and the original estimate of synergies (with a net present value of
$100 million) is likely to be exceeded.
The nickel, niobium and mineral sands division benefited from buoyant nickel
prices which averaged 379 US cents/lb compared with 298 US cents/lb a year
earlier. Nickel production totalled 12,000 tonnes (2002: 14,400 tonnes). There
were improved performances from Codemin in Brazil and from Venezuelan producer
Loma de Niquel, which achieved design throughput in May 2003, offsetting the
lack of production from the holding in Tati which was sold in 2002. Continuing
political instability in Venezuela, and the recent introduction of foreign
exchange controls, have necessitated active management but, to date, have not
materially impacted operations at Loma de Niquel. Catalao produced 1,700
tonnes of niobium (2002: 1,700 tonnes) but demand remained subdued. Prices at
Namakwa Sands in South Africa remained reasonably firm, but lower recoveries and
throughput resulted in lower production of zircon (4,900 tonnes lower) and
rutile (2,100 tonnes less). Slag production of 73,800 tonnes, although in line
with 2002 production, was also disappointing.
Zinc production rose to 159,500 tonnes (2002: 98,800 tonnes), but continuing low
prices (35.4 US cents/lb compared with 35.7 US cents/lb in 2002) resulted in an
operating loss of $44 million (2002: $20 million loss). Operating performance at
Hudson Bay in Canada continued to improve but financial performance was
adversely impacted by higher than budgeted costs, in part driven by oil prices
and adverse currency movements. In Ireland, at the Lisheen mine (now accounted
for on a 100% basis), production was above design capacity but at slightly lower
grades. In South Africa, output at Black Mountain was slightly lower than in
2002 owing to ore availability difficulties in the mine.
Currency effects (in particular, the strengthening of the rand, Canadian dollar
and euro) had a net adverse impact on profitability of $25 million, compared
with 2002.
Base Metals continued its strategy of upgrading the quality of its asset
portfolio by disposing of its interest in Anaconda Nickel Limited and announcing
the disposal of its interest in Bindura Nickel Corporation. At Lisheen, Anglo
Base repurchased $146 million of bank debt at a discount of 50 cents in the
dollar, and in July agreed to purchase Ivernia West's 50% equity interest which
included a cash consideration of $1.8 million. On completion, and following the
refinancing of its debt structure, Lisheen will be a debt-free, wholly owned
subsidiary of Anglo American.
The $454 million Skorpion project in Namibia was completed on budget during the
first half of 2003. The Hudson Bay 777 mine and shaft (the last component of the
$276 million 777 project) will commence production in the second half of 2003,
some five months ahead of schedule and within budget. In Chile, Collahuasi's
$654 million Rosario project is on schedule to commence production in mid-2004
and is currently on target for completion within budget, while the $110 million
Black Mountain Deeps project in South Africa remains on schedule, although the
recent strength of the rand is putting some pressure on the capital budget.
Industrial Minerals
$ million 6 months ended 6 months ended
30.06.03 30.06.02
Total operating profit 136 113
Tarmac 126 107
Copebras 10 6
Headline earnings 113 89
Net operating assets 3,978 3,532
Capital expenditure 136 159
Share of Group headline earnings (%) 13% 11%
Share of Group net operating assets (%) 17% 21%
Industrial Minerals' operating profit rose to $136 million, 20% higher than for
the first half of 2002, while headline earnings at $113 million were up by 27%.
The performances of both the Tarmac group and Copebras continued to improve.
Tarmac's operating profit increased by 18%, due to an improved trading
performance and US dollar weakness against the European currencies. Copebras
benefited from buoyant local market conditions and increased international
fertiliser prices, which, together with production starting at the phosphate
fertiliser plant at Goias, increased operating profit by nearly 50%.
In the UK, asphalt volumes reflected increased government infrastructure spend.
Volumes of slag products, which are exempt from the aggregates levy, and
concrete products also grew. In increasingly competitive market conditions,
price rises and the benefits of Tarmac's ongoing business improvement and cost
reduction programmes ensured an increase in operating profit. Work continues on
the new cement plant at Buxton and the project remains on target for completion,
below budget, later this year.
The expansionary programme of acquisitions and investments has continued in the
six months, including the purchase of Baxter Asphalt, an independent producer of
asphalt in Lancashire, and investment in three dry silo mortar plants. These
plants will be a welcome addition to Tarmac's profitable network of facilities
aimed at providing excellent local service. Phase I of the $15 million
investment in a new decorative paving plant in Yorkshire was successfully
completed in the six months and will enhance Tarmac's ability to supply this
strong growth market in the UK.
Operating profit in continental Europe was 32% higher. This reflected continuing
strong market conditions in Spain, particularly in Madrid, and a first-time
contribution from the Mavike business acquired in 2002. France suffered weak
market conditions, while the businesses in eastern Europe were affected by
unusually extreme cold and snow, which only cleared in April/May. Sales then
improved considerably but this was not enough to offset the adverse impact of
the first three months.
Copebras benefited from the buoyant local agricultural market and higher
international fertiliser prices. The new plant at Goias has successfully
positioned Copebras to participate further in the expected growth of the
fertiliser market in Brazil.
Paper and Packaging
$ million 6 months ended 6 months ended
30.06.03 30.06.02
Total operating profit 357 291
Europe 260 191
South Africa 97 100
Headline earnings 178 153
Net operating assets 4,374 3,474
Capital expenditure 233 132
Share of Group headline earnings (%) 21% 18%
Share of Group net operating assets (%) 18% 20%
Operating profit was $357 million, 23% higher than for the first six months of
2002. Headline earnings rose by 16% from $153 million to $178 million.
Despite a downturn in economic conditions, Mondi Europe reported operating
profits of $260 million, a 36% increase. This was achieved through increased
volumes, ongoing profit improvement initiatives, product differentiation and
incremental earnings from acquisitions, including the realisation of operating
synergies from the integration of acquired businesses. With a significant
proportion of the European earnings denominated in euros, profits were also
boosted by the 19% strengthening of the euro against the dollar compared with
the prior period.
European packaging achieved improved results. Despite falling paper prices,
operating margins have been improved through increased volumes. The group's
converting operations have performed well despite a lacklustre economic
environment. The integration of La Rochette, acquired in July 2002, into Mondi
Packaging Europe has been successfully achieved, with production optimisation
and ongoing focus on high margin products.
In the uncoated woodfree papers sector, the downturn in markets reported in the
fourth quarter of 2002 continued during the first six months of 2003. In spite
of lower input pulp prices, margins have reduced owing to an increasing consumer
trend towards lower grade papers. The group is nevertheless well positioned with
its low cost production operations located in Russia and Slovakia. The
integration of the Russian Syktyvkar mill, acquired in May 2002, is on track
with the acquisition plan. The rebuild of PM18 at Neusiedler Ruzomberok, in
Slovakia, is on schedule, with production due to come on stream in the fourth
quarter of 2003. Newsprint markets have also softened as a result of lower
advertising expenditure, leading to a further reduction in average prices.
Mondi South Africa reported stable operating earnings at $97 million. Despite a
slowing economy, demand for products in the South African market has held at
reasonable levels, but the stronger currency has increased competitive pressure
on pricing. Export volumes increased during the period, although some slowdown
now appears inevitable.
Improved mill outputs and higher efficiencies have countered some of the revenue
effects of competitive markets, particularly at the Richards Bay mill, where
saleable production was 15% higher than in the previous comparable period. The
upgrade of the PM2 uncoated woodfree paper machine at the Merebank Durban mill
was completed successfully during March. The modernisation and expansion of the
Richards Bay mill is on schedule, with all major equipment contracts placed and
the currency risk hedged to secure the capital cost in rands.
Ferrous Metals and Industries
$ million 6 months ended 6 months ended
30.06.03 30.06.02
Ferrous Metals operating profit 74 66
Industries operating profit 30 52
Total operating profit/(loss) 104 118
Highveld Steel 4 14
Scaw Metals 35 21
Samancor Group 27 25
Tongaat-Hulett 23 43
Boart Longyear 9 10
Terra (3) (1)
Other 9 6
Headline earnings 41 50
Net operating assets 2,038 1,367
Capital expenditure 59 33
Share of Group headline earnings (%) 5% 6%
Share of Group net operating assets (%) 8% 8%
Ferrous Metals' operating profit was $74 million, $8 million higher than in the
first half of 2002. Headline earnings of $42 million were $1 million above the
prior year's first half. The robust steel consumption in the South African
domestic market that characterised the second half of 2002 was more than
reversed in the first six months of 2003 owing to slower growth in manufacturing
production, following persistent high interest rates, and the appreciation in
value of the rand against the major currencies. Global steel prices declined
sharply towards the end of the second quarter.
The Scaw group reported an operating profit of $35 million (2002: $21 million),
which included an additional five months' contribution ($7 million) from the
Moly-Cop grinding media operations acquired at the end of May 2002. In addition
to the difficulties in the export market owing to the weaker US dollar, the
domestic market, particularly for rolled products, has weakened significantly
over the past year. These adverse developments, if continued into the second
half of the year, will clearly bring additional pressure upon earnings during
the next six months.
Highveld Steel's operating profit reduced from $14 million to $4 million. In
South Africa, domestic steel orders and dispatches continued to slow down from
the levels achieved in 2002, resulting in production being diverted to the
export market. During the first few months of the period under review, the
impact of the firmer rand was offset by improved US dollar prices, although
these subsequently reversed. The stronger rand meant that the majority of export
sales were loss making. Vanadium prices remained at high levels during the first
quarter but softened during the second quarter following increased output from
Russia.
In 40% held Samancor, manganese profits were higher than last year owing to
higher alloy sales volumes and prices and lower production costs. Samancor
Chrome recorded an operating loss and continues to be affected by the decline in
value of the US dollar. The average ferrochrome price for the period was 32.2 US
cents/lb compared with 25.0 US cents/lb last year.
During the period under review the 10.5% Stimela option in South African iron
ore producer Kumba was implemented, thereby increasing Anglo American's
shareholding in Kumba to 20.1%. Ferrous Metals is still awaiting approval by the
South African Competition Tribunal to acquire further shares. The 34.5%
shareholding in Avmin was disposed of during the period for $231 million.
The Boart Longyear group's operating profit amounted to $9 million (2002: $10
million). Product and contracting results in the Americas and Asia Pacific were
higher than last year because of much stronger drilling activity, while those in
Sub-Saharan Africa continue to suffer from sluggish contracting and production
performances. The difficult trading conditions in Europe are having a negative
effect on Boart's European region and the Wendt Precision Grinding business.
Tongaat-Hulett's operating profit declined to $23 million (2002: $43 million).
The stronger rand, particularly at a time of increased export volumes, and
higher maize input costs had a negative impact on the group's financial results.
Total sugar production for the current season is estimated to be lower than the
previous season's, mainly because of below-normal rainfall in South Africa's
sugar-growing area. The aluminium division was impacted by continued
international economic weakness and rand value leading to reduced margins. The
starch and glucose division experienced significant product-pricing pressure
from its customers in the food, paper and beverage sectors.
In the United States, Terra recorded an operating loss, as lower sales prices
and volumes and higher natural-gas costs took their toll.
Dividend
Anglo American will pay an interim dividend of 15 US cents per share on Monday
15 September 2003 to shareholders on the register at the close of business on
Friday 22 August 2003.
Cash flow
Cash flow from operations was $1,286 million compared with $1,381 million during
the prior period. This inflow was after a $375 million increase in working
capital (2002: $290 million). Interest remains well covered by EBITDA at 14
times.
Acquisition expenditure accounted for an outflow of $573 million during the
period. The principal acquisitions were increased stakes in Anglo Platinum and
Kumba.
Disposal proceeds of $237 million relate mainly to the sale of Avmin.
Purchases of tangible fixed assets amounted to $1,172 million, an increase of
$322 million from the same period in 2002. The major components of expansion
were in Base Metals, Anglo Platinum, Industrial Minerals and Paper and
Packaging.
Tax payments were $413 million compared with $567 million in the prior period.
Balance sheet
As at 30 June 2003, shareholders' funds were $18,371 million compared with
$16,261 million at 31 December 2002. This increase is due mainly to changes in
exchange rates contributing $1,579 million and retained profit of $548 million.
The increase in the value of the South African rand by 13%, relative to the US
dollar, since 31 December 2002 had a significant impact on the Group's reserves.
Net debt was $6,989 million, an increase of $1,411 million from 31 December
2002. The increase principally reflects capital expenditure and acquisitions
during the period.
Net debt comprises $9,111 million of debt, offset by $2,122 million of cash and
current asset investments.
Net debt to total capital at 30 June 2003 was 25.1% compared with 23.1% at 31
December 2002.
Consolidated profit and loss account
for the six months ended 30 June 2003
6 months 6 months Year
ended ended ended
US$ million Note 30.06.03 30.06.02 31.12.02
Group and share of turnover of joint ventures and associates 2 12,076 9,567 20,497
Less: Joint ventures' turnover (504) (499) (1,066)
Associates' turnover (2,669) (2,148) (4,286)
Group turnover - subsidiaries 8,903 6,920 15,145
Operating costs (7,979) (5,756) (12,804)
Group operating profit - subsidiaries 924 1,164 2,341
Share of operating profit of joint ventures 118 98 185
Share of operating profit of associates 492 319 725
Total operating profit 2 1,534 1,581 3,251
Profit on disposal of fixed assets 3 18 29 98
Loss on termination of operations 3 - (34) (34)
Profit on ordinary activities before interest 1,552 1,576 3,315
Investment income 93 181 304
Interest payable (272) (234) (483)
Profit on ordinary activities before taxation 1,373 1,523 3,136
Tax on profit on ordinary activities 4 (439) (508) (1,045)
Profit on ordinary activities after taxation 934 1,015 2,091
Equity minority interests (174) (248) (528)
Profit for the financial period 5 760 767 1,563
Equity dividends to shareholders - paid and proposed (212) (211) (720)
Retained profit for the financial period 548 556 843
Headline earnings for the financial period 5 856 840 1,759
Basic earnings per share (US$):
Profit for the financial period 6 0.54 0.54 1.11
Headline earnings for the financial period 6 0.61 0.60 1.25
Diluted earnings per share (US$):
Profit for the financial period 6 0.53 0.54 1.10
Headline earnings for the financial period 6 0.60 0.59 1.23
Dividend per share (US cents): 15.0 15.0 51.0
Basic number of shares outstanding(1) (million) 6 1,413 1,410 1,411
Diluted number of shares outstanding(1) (million) 6 1,427 1,430 1,426
(1) Basic and diluted number of shares outstanding represent the weighted
average for the period.
All amounts included above relate to continuing operations.
Consolidated profit and loss account: headline earnings analysis
for the six months ended 30 June 2003
6 months 6 months Year
ended ended ended
US$ million 30.06.03 30.06.02 31.12.02
Platinum 107 158 351
Gold 82 100 205
Diamonds 248 166 324
Coal 107 142 266
Base Metals 60 37 69
Industrial Minerals 113 89 231
Paper & Packaging 178 153 376
Ferrous Metals 42 41 88
Industries (1) 9 38
Exploration (39) (32) (77)
Corporate Activites (41) (23) (112)
Headline earnings for the financial period 856 840 1,759
Consolidated balance sheet
as at 30 June 2003
As at As at As at
US$ million 30.06.03 30.06.02 31.12.02
Fixed assets
Intangible assets 2,269 2,096 2,310
Tangible assets 18,977 12,767 16,531
Investments in joint ventures and associates 6,195 5,151 5,663
Other investments 1,858 1,693 1,713
29,299 21,707 26,217
Current assets
Stocks 2,224 1,469 1,814
Debtors 3,785 3,416 3,337
Current asset investments 926 1,234 1,143
Cash at bank and in hand 1,196 1,231 1,070
8,131 7,350 7,364
Short term borrowings (3,442) (2,431) (1,918)
Other current liabilities (4,218) (3,661) (4,329)
Net current assets 471 1,258 1,117
Total assets less current liabilities 29,770 22,965 27,334
Long term liabilities: (5,669) (4,250) (5,873)
Convertible debt (1,086) (1,082) (1,084)
Other long term liabilities (4,583) (3,168) (4,789)
Provisions for liabilities and charges (3,276) (2,291) (2,896)
Equity minority interests (2,454) (2,014) (2,304)
Net assets 18,371 14,410 16,261
Capital and reserves
Share capital and premium 1,965 1,943 1,951
Reserves 1,352 1,352 1,352
Profit and loss account 15,054 11,115 12,958
Total shareholders' funds (equity) 18,371 14,410 16,261
The interim financial information was approved by the board of directors on 7
August 2003.
Consolidated statement of total recognised gains and losses
for the six months ended 30 June 2003
6 months 6 months Year
ended ended ended
US$ million 30.06.03 30.06.02 31.12.02
Profit for the financial period 760 767 1,563
Unrealised gain arising on exchange of business - - 39
Less: Related overseas current tax charge - - (22)
Currency translation differences on foreign currency net investments 1,579 992 2,531
Less: Related tax charge (31) - -
Total recognised gains for the financial period 2,308 1,759 4,111
Combined statement of movement in shareholders' funds and movement in reserves
for the six months ended 30 June 2003
Issued Share Profit
share premium Merger Other and loss
US$ million capital account reserve reserves account(1) Total
At 1 January 2003 735 1,216 636 716 12,958 16,261
Profit for the financial period - - - - 760 760
Dividends proposed - - - - (212) (212)
Shares issued 1 13 - - - 14
Currency translation differences - - - - 1,579 1,579
Less: Related tax charge - - - - (31) (31)
At 30 June 2003 736 1,229 636 716 15,054 18,371
(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.
Consolidated cash flow statement
for the six months ended 30 June 2003
6 months 6 months Year
ended ended ended
US$ million Note 30.06.03 30.06.02 31.12.02
Net cash inflow from operating activities 8 1,286 1,381 3,618
Dividends from joint ventures and associates 203 115 258
Returns on investments and servicing of finance
Interest received and other financial income 97 175 309
Interest paid (186) (141) (281)
Dividends received from fixed asset investments 14 21 49
Dividends paid to minority shareholders (228) (207) (375)
Net cash outflow from returns on investments and (303) (152) (298)
servicing of finance
Taxes paid (413) (567) (722)
Capital expenditure and financial investment
Payments for fixed assets 9 (1,172) (850) (2,139)
Proceeds from the sale of fixed assets 40 272 313
Exit funding for Konkola Copper Mines (KCM) - (95) (182)
Payments for other investments(1) (53) (210) (351)
Proceeds from the sale of other investments 74 190 217
Net cash outflow for capital expenditure and (1,111) (693) (2,142)
financial investment
Acquisitions and disposals
Acquisition of subsidiaries(2) (386) (1,024) (2,911)
Disposal of subsidiaries 2 33 24
Investment in joint ventures - (28) (34)
Investment in associates (187) (505) (613)
Sale of interests in joint ventures and associates 235 51 146
Investment in proportionally consolidated joint arrangements - (164) (13)
Net cash outflow from acquisitions and (336) (1,637) (3,401)
disposals
Equity dividends paid to Anglo American shareholders (511) (517) (732)
Cash outflow before use of liquid resources and (1,185) (2,070) (3,419)
financing
Management of liquid resources 251 848 1,021
Financing 977 1,448 2,458
Increase in cash in the period 10 43 226 60
(1) Disposal and acquisition of other investments included in fixed assets.
(2) Net of cash acquired within subsidiaries of US$1 million. (2002 interim:
US$51 million, 2002: US$157 million).
Notes to financial information
1 Accounting policies
The financial information has been prepared in accordance with generally
accepted accounting principles in the UK. The accounting policies applied in
preparing the financial information are consistent with those adopted and
disclosed in the Group's statutory accounts for the year ended 31 December 2002.
The financial information for the year ended 31 December 2002 has been derived
from the Group's statutory accounts for that period as filed with the Registrar
of Companies. The auditors' report on the statutory accounts for the year ended
31 December 2002 was unqualified and did not contain statements under section
237(2) of the Companies Act 1985 (regarding adequacy of accounting records and
returns) or under section 237(3) (regarding provision of necessary information
and explanations). The financial information in respect of the six months ended
30 June 2003 is unaudited but has been reviewed by the auditors and their report
is set out on page 27. The interim financial information does not constitute
statutory accounts as defined under section 240 of the Companies Act 1985.
2 Segmental information
Turnover Operating profit(1) Net operating assets(2)
6 months 6 months Year 6 months 6 months Year 6 months 6 months Year
ended ended ended ended ended ended ended ended ended
US$ million 30.06.03 30.06.02 31.12.02 30.06.03 30.06.02 31.12.02 30.06.03 30.06.02 31.12.02
By business segment
Platinum 935 912 2,004 204 389 802 4,803 2,623 3,580
Gold 982 779 1,769 180 197 463 2,675 2,018 2,511
Diamonds 1,559 1,503 2,746 378 242 541 - - -
Coal 868 826 1,710 172 232 427 1,904 1,680 1,658
Base Metals 973 663 1,378 98 127 82 3,933 1,939 3,617
Industrial Minerals 1,645 1,361 2,912 136 113 277 3,978 3,532 3,848
Paper and Packaging 2,937 2,189 4,805 357 291 649 4,374 3,474 3,897
Ferrous Metals 929 517 1,250 74 66 150 530 361 461
Industries 1,064 817 1,757 30 52 114 1,508 1,006 1,235
Exploration - - - (50) (40) (93) - - -
Corporate 184 - 166 (45) (88) (161) 307 440 315
Activities
12,076 9,567 20,497 1,534 1,581 3,251 24,012 17,073 21,122
By geographical segment (by origin)
South Africa 3,768 3,285 6,943 548 864 1,790 9,841 6,213 7,712
Rest of Africa 1,187 1,400 1,979 299 262 439 666 356 555
Europe 4,789 3,149 7,676 409 210 583 7,408 6,388 7,001
North America 614 496 1,174 (33) (18) (19) 997 998 934
South America 1,043 672 1,459 220 189 320 3,118 1,380 3,196
Australia and Asia 675 565 1,266 91 74 138 1,982 1,738 1,724
12,076 9,567 20,497 1,534 1,581 3,251 24,012 17,073 21,122
(1) Operating profit is stated after deducting the following operating
exceptional items, as disclosed in note 3:
6 months ended 6 months Year
ended ended
30.06.03 30.06.02 31.12.02
US$ million
Operating profit before operating exceptional items 1,546 1,565 3,332
Group subsidiaries:
Gold (12) - -
Base Metals - 46 (17)
Corporate Activities - (30) (30)
Joint ventures - Base Metals - - (34)
Operating profit after operating exceptional items 1,534 1,581 3,251
(2) Net operating assets consist of tangible ($18,977m) and intangible
($2,269m) assets, stocks ($2,224m) and operating debtors ($3,072m) less
non-interest bearing current liabilities ($2,530m).
3 Exceptional items
6 months 6 months Year
ended ended ended
US$ million 30.06.03 30.06.02 31.12.02
Operating exceptional items
Write-down of exploration assets (12) - -
Disposal of Salobo Metais SA - reversal of previous impairment - 46 46
Write-down of investments - (30) (30)
Other impairments or write-downs of assets - - (97)
Total operating exceptional items (12) 16 (81)
Exceptional finance charge
Share of associate's charge on early settlement of debt (13) - -
Total exceptional finance charge (13) - -
Non-operating exceptional items
Disposal of Anglovaal Mining Limited (13) - -
Disposal of Tati Nickel Mining Company (Pty) Limited - - 53
Disposal of Salobo Metais SA - 5 5
Further disposal of interest in FirstRand Limited - 7 7
Disposal of other fixed assets 17 (2) 14
Share of associates' exceptional items 14 19 19
Profit on disposal of fixed assets 18 29 98
KCM exit costs - (34) (34)
Total non-operating exceptional items 18 (5) 64
Total exceptional items (pre-tax and minority interests) (7) 11 (17)
Taxation 7 (8) (3)
Minority interests (2) 2 -
Total exceptional items (net of tax and minority interests) (2) 5 (20)
4 Tax on profit on ordinary activities
6 months 6 months Year
ended ended ended
US$ million 30.06.03 30.06.02 31.12.02
United Kingdom corporation tax at 30% - - (4)
South Africa corporation tax at 30% 47 219 435
Other overseas taxation 140 106 187
Share of joint ventures' taxation 12 11 43
Share of associates' taxation 151 79 221
Deferred taxation - subsidiaries 96 85 160
Tax (credit)/charge on exceptional items (7) 8 3
439 508 1,045
5 Profit for the financial period
The table below analyses the contribution of each business segment to the
Group's headline earnings.
6 months ended 30.06.03
Non Other Profit
Operating Operating Operating Goodwill Profit Interest Diluted Financial Interest Net Tax Equity for the
profit except- except- amorti- before Income Income Income expense invest- minority fin-
US ional ional sation Interest ment Interests ancial
$million items items income period
By
business
segment
Platinum 204 - - 8 212 9 - 20 (11) 18 (71) (52) 107
Gold 180 12 - 20 212 19 - 32 (19) 3 (80) (82) 82
Diamonds 378 - - 15 393 5 - - (33) (28) (112) (5) 248
Coal 172 - - 4 176 5 1 (23) (4) (21) (48) - 107
Base Metals 98 - - - 98 2 - (4) (20) (22) (14) (2) 60
Industrial 136 - - 26 162 3 1 (2) (7) (5) (38) (6) 113
Minerals
Paper and 357 - - 9 366 14 2 (11) (62) (57) (92) (39) 178
Packaging
Ferrous 74 - - 3 77 3 1 2 (18) (12) (23) - 42
Metals
Industries 30 - - 2 32 3 4 (8) (26) (27) (6) - (1)
Exploration (50) - - - (50) - - (1) - (1) - 12 (39)
Corporate (45) - - 11 (34) 11 6 (1) (59) (43) 38 (2) (41)
Activities
Headline 1,534 12 - 98 1,644 74 15 4 (259) (166) (446) (176) 856
earnings
for the
financial
period
Headline - (12) 18 (98) (92) - - - (13) (13) 7 2 (96)
earnings
adjustments
Profit 1,534 - 18 - 1,552 74 15 4 (272) (179) (439) (174) 760
for the
financial
period
6 months ended 30.06.02
Non Other Profit
Operating Operating Operating Goodwill Profit Interest Diluted Financial Interest Net Tax Equity for the
profit except- except- amorti- before Income Income Income expense invest- minority fin-
US ional ional sation Interest ment Interests ancial
$million items items income period
By business
segment
Platinum 389 - - 7 396 12 - - (3) 9 (143) (104) 158
Gold 197 - - 18 215 21 - 64 (23) 62 (80) (97) 100
Diamonds 242 - - 14 256 7 - 17 (49) (25) (62) (3) 166
Coal 232 - - 5 237 4 1 (31) (3) (29) (66) - 142
Base Metals 127 (46) - 1 82 8 - (1) (29) (22) (22) (1) 37
Industrial 113 - - 22 135 2 - - - 2 (42) (6) 89
Minerals
Paper and 291 - - 6 297 5 5 (2) (44) (36) (76) (32) 153
Packaging
Ferrous 66 - - 1 67 7 - 2 (9) - (20) (6) 41
Metals
Industries 52 - - 1 53 1 1 (1) (23) (22) (8) (14) 9
Exploration (40) - - (1) (41) - - - - - - 9 (32)
Corporate (88) 30 - 8 (50) 52 15 (8) (51) 8 19 - (23)
Activities
Headline 1,581 (16) - 82 1,647 119 22 40 (234) (53) (500) (254) 840
earnings
for the
financial
period
Headline - 16 (5) (82) (71) - - - - - (8) 6 (73)
earnings
adjustments
Profit 1,581 - (5) - 1,576 119 22 40 (234) (53) (508) (248) 767
for the
financial
period
5 Profit for the financial period continued
Year ended 31.12.02
Non Other Profit
Operating Operating Operating Goodwill Profit Interest Diluted Financial Interest Net Tax Equity for the
profit except- except- amorti- before Income Income Income expense invest- minority fin-
US ional ional sation Interest ment Interests ancial
$million items items income period
By business
segment
Platinum 802 - - 17 819 17 - - (5) 12 (265) (215) 351
Gold 463 - - 39 502 39 - 75 (47) 67 (157) (207) 205
Diamonds 541 - - 29 570 16 - - (95) (79) (159) (8) 324
Coal 427 - - 7 434 8 1 (65) (5) (61) (107) - 266
Base Metals 82 51 - 1 134 4 - (2) (43) (41) (22) (2) 69
Industrial 277 - - 46 323 6 - 7 (3) 10 (86) (16) 231
Minerals
Paper and 649 - - 15 664 12 9 18 (84) (45) (173) (70) 376
Packaging
Ferrous 150 - - 5 155 16 3 2 (23) (2) (53) (12) 88
Metals
Industries 114 - - 3 117 32 9 (17) (66) (42) (10) (27) 38
Exploration (93) - - - (93) - - (1) - (1) - 17 (77)
Corporate (161) 30 - 27 (104) 95 28 (8) (112) 3 (10) (1) (112)
Activities
Headline 3,251 81 - 189 3,521 245 50 9 (483) (179) (1,042) (541) 1,759
earnings
for the
financial
year
Headline - (81) 64 (189) (206) - - - - - (3) 13 (196)
earnings
adjustments
Profit 3,251 - 64 - 3,315 245 50 9 (483) (179) (1,045) (528) 1,563
for the
financial
year
6 Earnings per share
6 months 6 months Year
ended ended ended
30.06.03 30.06.02 31.12.02
Basic number of ordinary shares outstanding (million) 1,413 1,410 1,411
Ordinary shares issuable under employee share schemes (million) 14 20 15
Diluted number of ordinary shares outstanding (million) 1,427 1,430 1,426
Profit for the financial period:
Basic earnings per share (US$) 0.54 0.54 1.11
Diluted earnings per share (US$) 0.53 0.54 1.10
Headline earnings for the financial period:
Basic earnings per share (US$) 0.61 0.60 1.25
Diluted earnings per share (US$) 0.60 0.59 1.23
Basic and diluted number of shares outstanding represent the weighted average
for the period.
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares in issue on the assumption of conversion of all
dilutive potential ordinary shares. The only category of dilutive potential
ordinary shares is shares issuable under employee share schemes granted where
the exercise price is less than the average price of the Company's ordinary
shares during the period.
Basic and diluted earnings per share are also shown based on headline earnings,
which the directors believe to be a useful additional measure of the Group's
past performance. Headline earnings per share are calculated in accordance with
the definition issued by the Institute of Investment Management and Research
(now Society of Investment Professionals), in Statement of Investment Practice
No. 1, The Definition of IIMR Headline Earnings.
Earnings (US$ million) Basic earnings per share (US$)
6 months 6 months Year 6 months 6 months Year
ended ended ended ended ended ended
30.06.03 30.06.02 31.12.02 30.06.03 30.06.02 31.12.02
Profit for the financial period 760 767 1,563 0.54 0.54 1.11
Operating exceptional items 12 (16) 81 0.01 (0.01) 0.06
Exceptional finance charge 13 - - 0.01 - -
Non-operating exceptional items (18) 5 (64) (0.01) - (0.05)
Amortisation of goodwill:
Subsidiaries 75 63 139 0.05 0.04 0.10
Joint ventures and associates 23 19 50 0.02 0.02 0.04
Related tax and minority interests:
Exceptional items (5) 6 3 (0.01) 0.01 -
Goodwill amortisation (4) (4) (13) - - (0.01)
Headline earnings for the 1,759 1.25
financial period 856 840 0.61 0.60
7 Exploration expenditure
6 months 6 months Year
ended ended ended
US$ million 30.06.03 30.06.02 31.12.02
Platinum 11 7 13
Gold 18 13 27
Base Metals 20 18 47
Other 3 3 6
52 41 93
8 Reconciliation of Group operating profit to net cash flow from
operating activities
6 months 6 months Year
ended ended ended
US$ million 30.06.03 30.06.02 31.12.02
Group operating profit - subsidiaries 924 1,164 2,341
Depreciation and amortisation charges 708 501 1,101
Increase in stocks (246) (12) (117)
(Increase)/decrease in debtors (222) (299) 67
Increase in creditors 93 21 48
Provisions and impairments 32 - 162
Other items (3) 6 16
Net cash inflow from operating activities 1,286 1,381 3,618
9 Capital expenditure
6 months 6 months Year
ended ended ended
US$ million 30.06.03 30.06.02 31.12.02
Platinum 394 229 586
Gold 117 107 246
Coal 74 41 142
Base Metals 155 146 346
Industrial Minerals 136 159 363
Paper and Packaging 233 132 365
Ferrous Metals 22 8 32
Industries 37 25 53
Other 4 3 6
1,172 850 2,139
10 Reconciliation of net cash flow to movement in net debt
6 months 6 months Year
ended ended ended
US$ million 30.06.03 30.06.02 31.12.02
Increase in cash in the period 43 226 60
Cash inflow from debt financing (1,038) (1,593) (2,418)
Cash inflow from management of liquid resources (251) (848) (1,021)
Change in net debt arising from cash flows (1,246) (2,215) (3,379)
Loans and current asset investments acquired with subsidiaries (70) (72) (212)
Loans and current asset investments disposed with subsidiaries 3 1 4
Cessation of consolidation of KCM(1) - 148 148
Exchange adjustments (98) (60) (121)
Movement in net debt (1,411) (2,198) (3,560)
Net debt at start of the period (5,578) (2,018) (2,018)
Net debt at end of the period (6,989) (4,216) (5,578)
(1) KCM ceased to be consolidated with effect from February 2002.
11 Movement in net debt
Acquisitions Disposals
excluding excluding Overdrafts Other
cash and cash and Exchange included non-cash
As at overdrafts overdrafts movements in debt movements As at
31.12.02 30.06.03
Cash flow
US$ million
Cash at bank and in hand 1,040(1) 43 - - 81 32 - 1,196
Debt due after one year (5,873) (95) - 1 (148) - 446 (5,669)
Debt due within one year (1,888) (943) (73) 2 (62) (32) (446) (3,442)
(7,761) (1,038) (73) 3 (210) (32) - (9,111)
Current asset investments 1,143 (251) 3 - 31 - - 926
(5,578) (1,246) (70) 3 (98) - - (6,989)
(1) Net of bank overdrafts.
Independent review report to Anglo American plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 June 2003 which comprises the consolidated profit and
loss account, consolidated profit and loss account: headline earnings analysis,
consolidated balance sheet, consolidated statement of total recognised gains and
losses, combined statement of movement in shareholders' funds and movement in
reserves, consolidated cash flow statement and the related notes 1 to 11. We
have read the other information contained in the interim report and considered
whether it contains any apparent misstatements or material inconsistencies with
the financial information.
This report is made solely to the company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority, which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial
data, and based thereon, assessing whether the accounting policies and
presentation have been consistently applied unless otherwise disclosed. A
review excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially less in scope than an
audit performed in accordance with United Kingdom Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly, we do
not express an audit opinion on the financial information.
Review conclusion
On the basis of our review, we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2003.
Deloitte & Touche
Chartered Accountants
London
United Kingdom
7 August 2003
Notice of interim dividend
Notice is hereby given that an interim dividend on the Company's ordinary share
capital in respect of the year to 31 December 2003 will be payable as follows:
Amount (United States currency) 15 cents per ordinary share (see notes)
Currency conversion date Tuesday 5 August 2003
Last day to trade on the JSE Securities Exchange, South Africa Friday 15 August 2003
(JSE) to qualify for the dividend
Ex-dividend on the JSE from the commencement of trading on Monday 18 August 2003
Ex-dividend on the London Stock Exchange from the commencement of Wednesday 20 August 2003
trading on
Record date (applicable to both the United Kingdom principal Friday 22 August 2003
register and South African branch register)
Last date for receipt of Dividend Reinvestment Plan ('DRIP') Friday 22 August 2003
Mandate Forms by Computershare or Central Securities Depositary
Participants ('CSDPs')
Dividend warrants posted Friday 12 September 2003
Payment date of dividend Monday 15 September 2003
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 shareholders with
an address in European countries which have adopted the euro will be paid in
that currency. Such shareholders may, however, elect to be paid in US dollars,
provided all such elections are received by the United Kingdom Registrar by
Friday 22 August 2003. Shareholders with addresses elsewhere (except South
Africa) will be paid in United States dollars. The equivalent of the dividend in
sterling will be 9.29775 pence per ordinary share based on an exchange rate of
$1= £0.61985. The equivalent in euros will be 13.21005 euro cents per ordinary
share based on an exchange rate of $1 = € 0.88067.
2 Shareholders on the South African branch register will be paid in
South African rand, at R1.12238 per ordinary share based on an exchange rate of
$1 = R7.48250.
3 Dematerialisation and rematerialisation of registered share
certificates in South Africa will not be effected by CSDPs during the period
Friday 15 August to Friday 22 August 2003 (both days inclusive).
4 Share certificates/CREST Notifications are expected to be mailed and
CSDP investor accounts credited in respect of shares purchased in terms of the
DRIP on 30 September 2003, subject to the acquisition of shares in the open
market.
5 Copies of the terms and conditions of the DRIP are available from the
Company's Registrar or the Registrar's Agent in South Africa.
Production statistics
6 months 6 months Year
ended ended ended
30.06.03 30.06.02 31.12.02
Anglo Platinum (troy ounces)
Platinum 933,300 1,064,500 2,294,300
Palladium 479,200 526,000 1,136,500
Rhodium 100,200 84,300 215,900
Nickel (tonnes) 10,300 9,400 19,700
AngloGold (gold in troy ounces)
South Africa 1,612,000 1,687,000 3,412,000
North and South America 513,000 415,000 940,000
Australia and Asia 226,000 251,000 502,000
Rest of the World 485,000 450,000 1,085,000
2,836,000 2,803,000 5,939,000
Gold Fields (gold in troy ounces)
Gold(1) 441,800 - 464,600
Anglo Coal (tonnes)
South Africa
Eskom 14,911,000 13,442,000 28,649,000
Trade 10,008,000 9,467,000 19,570,000
Australia 13,120,000 12,198,000 25,020,000
South America 4,294,000 3,297,000 6,937,000
42,333,000 38,404,000 80,176,000
Anglo Base Metals
Copper (tonnes)
Collahuasi 90,400 95,900 190,800
Mantos Blancos 71,600 78,600 153,500
Disputada(2) 131,300 - 39,000
Hudson Bay 43,800 42,700 83,400
Other 12,900 15,300 30,800
350,000 232,500 497,500
Nickel (tonnes)
Loma de Niquel 8,200 7,500 15,500
Codemin 3,200 2,900 6,000
Tati - 1,500 2,800
Other 600 2,500 1,300
12,000 14,400 25,600
Zinc (tonnes)
Hudson Bay 60,200 47,400 108,100
Black Mountain 12,100 13,500 27,600
Skorpion(3) 6,700 - -
Lisheen(4) 80,500 37,900 75,700
159,500 98,800 211,400
Lead (tonnes)
Black Mountain 22,500 20,000 45,300
Lisheen(4) 10,500 5,400 11,000
33,000 25,400 56,300
The figures above include the entire output of consolidated entities and the
Group's share of joint ventures and associates where applicable.
Production statistics continued
6 months 6 months Year
ended ended ended
30.06.03 30.06.02 31.12.02
Anglo Base Metals (continued)
Mineral sands (tonnes)
Slag tapped 73,800 73,700 162,700
Pig iron 38,900 43,900 94,600
Zircon 53,200 58,100 112,400
Rutile 11,500 13,600 26,000
Niobium (tonnes)
Catalao 1,700 1,700 3,300
Anglo Industrial Minerals (tonnes)
Aggregates 32,192,000 30,522,000 63,928,400
Lime products 443,000 439,000 871,000
Concrete (m3) 4,038,100 3,289,900 6,955,700
Sodium tripolyphosphate 37,400 48,900 88,200
Phosphates 407,400 322,400 734,600
Anglo Paper and Packaging (tonnes)
South Africa
Pulp 200,900 163,300 320,160
Graphic papers 272,700 264,300 518,200
Packaging papers 319,800 299,500 572,900
Corrugated board (000 m2) 144,300 147,200 300,050
Lumber (m3) 31,000 60,900 126,500
Wood chips (green metric tonnes) 1,152,600 813,200 1,647,700
Mining timber 77,600 67,600 143,100
Europe
Pulp 86,300 92,700 181,800
Graphic papers 833,160 630,970 1,475,700
Packaging papers 848,400 769,200 1,506,800
Corrugated board (000 m2) 762,300 447,500 1,121,100
Paper sacks (000 units) 1,596,200 1,461,600 2,963,790
Anglo Ferrous Metals (tonnes)
Chrome ore 560,000 485,000 1,055,588
Vanadium slag 37,100 36,700 68,100
Chrome alloys 190,100 145,200 310,900
Manganese ore (mtu m) 37 31 62
Manganese alloys 169,800 150,000 306,100
Steel (billets) 647,700 675,800 1,348,000
Iron ore 2,914,500 377,800 916,000
The figures above include the entire output of consolidated entities and the
Group's share of joint ventures and associates where applicable.
(1) Share in Gold Fields was equity accounted with effect from 1 July 2002.
(2) Results to December 2002 represent 49 days of operations since date of
acquisition of Compania Minera Disputada de Las Condes Limitada.
(3) Skorpion commenced production in May 2003.
(4) Lisheen's production to June 2003 represents 100% share following the
recent restructuring.
Exchange rate and commodity prices
US dollar exchange rates 6 months 6 months Year
ended ended ended
30.06.03 30.06.02 31.12.02
Average spot prices for the period
South African rand 8.03 10.99 10.48
Sterling 0.62 0.69 0.67
Euro 0.90 1.11 1.06
Australian dollar 1.62 1.89 1.84
Period end spot prices
South African rand 7.48 10.37 8.58
Sterling 0.61 0.65 0.62
Euro 0.87 1.01 0.95
Australian dollar 1.49 1.77 1.79
Commodity prices 6 months 6 months Year
Average market prices for the period ended ended ended
30.06.03 30.06.02 31.12.02
Gold - US$/oz 349 302 310
Platinum - US$/oz 654 515 541
Palladium - US$/oz 207 370 336
Rhodium - US$/oz 557 952 838
Copper - US cents/lb 75 72 71
Nickel - US cents/lb 379 298 307
Zinc - US cents/lb 35 36 35
Lead - US cents/lb 21 22 21
European eucalyptus pulp price (CIF) - US$/tonne 480 427 452
This information is provided by RNS
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