2002 annual results
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ANGLO AMERICAN ADDING VALUE TO NATURAL RESOURCES 28 February 2003. - PowerPoint PPT PresentationTRANSCRIPT
2002 Annual Results
This presentation is being made only to and is directed only at (a) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (the “Order”) or (b) high net worth entities, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(1) of the Order (all such persons together being referred to as “relevant persons”). Any person who is not a relevant person should not act or rely on this presentation or any of its contents.
ANGLO AMERICANADDING VALUE TO
NATURAL RESOURCES
28 February 2003
2002 Annual Results2
Record headline EPS of $1.25, up 10% on 2001
Headline earnings for the year $1,759m Cost & efficiency improvements of $279m Total dividend increased to 51 US cents
per share Strong EBITDA of $4.8bn: EBITDA
interest cover 20.0x*
Net Debt/Total Capital of 23.1% Obtained strong, single “A” credit ratings
All prior year figures restated for FRS19
Key Financials
2002
$1.25
2001
$1.14
Headline EPS
* Annualised
2002 Annual Results3
Minerals & Petroleum Resources Development Act signed and promulgated, will be effective at a future date
Empowerment Charter & Scorecard finalised
Money Bill still to be published
Anglo making good progress towards 5 year target of 15% HDSA involvement
To date Anglo American has undertaken› Over $1.8bn of black empowerment transactions in SA› Over $800m of procurement from black-owned businesses
SA Mining Legislation Update
2002 Annual Results4
Europe35%
SouthAfrica31%
31 December 200230 June 1999
Americas16%
SouthAfrica67%
Balanced Asset Mix
Net attributable operating assets, including investment in associates & JVs
Rest ofAfrica
2%
Europe14%
Australasia1%
Rest ofAfrica
7%
Americas21%
Australasia6%
2002 Annual Results5
SouthAfricaMining
42%
2002
SAOther12%
2001
SouthAfricaMining
54%SAOther18%
Headline Earnings
Australasia4%Americas
3%
Europe15%
Rest ofAfrica
6%
Rest of Africa11%
Europe22%
Americas9%
Australasia4%
2002 Annual Results6
Key:
Base Metals
Ferrous Metals
Forest Products
Industrial Minerals
Platinum
Coal
Gold
Gold Fields$252m
Moura & Jellinbah East
Syktyvkar$252m
La Rochette$110m
Mavike &other Europe
$101m
Kumba &Avmin$365m
Moly Cop$105m
Durox &other UK
$89m
Flexing Our Balance Sheet: $3.7bn in Acquisitions
Anglo Plat.$847m
Cerrejón
Acquisitions
Disputada$1.3bn
CerroVanguardia
$105m
2002 Annual Results7
Industrial Minerals - Tarmac acquired in November 1999 Fully integrated & delivering strong cash flows EBITDA/Total Capital: 16%1
Australian/South American Coal Acquisitions - since 2000 Global coal asset base established EBITDA/Total Capital: 21%
Syktyvkar - March 2002 Low cost producer integrated into European marketing network EBITDA/Total Capital: 33%2
Disputada - 13 November 2002 World class, low cost integrated copper producer Corporate offices integrated
Acquisition Track Record
1 EBITDA/Total Capital shown for Industrial Minerals as calculation for original Tarmac acquisition is not possible due to integration with previously held Industrial Minerals assets in the UK. Total Capital adjusted for projects in progress.2 Annualised.
2002 Annual Results8
2003 2004 2005 2006 2007 2008
Twickenham$343m
Major authorised projects. Full project list included in appendix. 100% of subsidiaries and AA plc’s share of JV’s and associates. Full production dates.
Key:
Base Metals
Diamonds
Forest Products
Industrial Minerals
Platinum
Coal
Gold
Cerrejón$50m
Styldrift$344m
Moab Khot.$419m
Polokwane$190m
Modikwa$311m
2009
CC&V$194m
Collahuasi$286m
ACP Project$250m
Skorpion$454m
Finsch$107m
Buxton$173m
Internal Growth
A Well-balanced $5.8bn Project Portfolio
RPM Ph 2$444m
HBMS 777$276m
RPM Ph 1$203m
RPM Tailings$186m
Mponeng$152m
Goiás$147m
Capcoal$107m
Ruzomberok$233m
BRPM$317m
2002 Annual Results9
A Steady Performance
Operating Margins
Total operating profit before exceptional items divided by turnover
2002
16.3%
1999
11.1%
2000
16.9%
2001
17.1%
2002 Annual Results10
Leading the way in anti-retroviral treatment provision for HIV/AIDS employees
Strong focus on safety leading to 39% reduction in fatal injury frequency rate & 42% reduction in LTIFR
Launch of ‘Good Citizenship: Our Business Principles’ across managed operations
Group continues to maintain significant corporate social investments & has strengthened management of relations with communities
Participation in international policy debates - WSSD, Global Mining Initiative, Extractive Industries Review, Extractive Industries Transparency Initiative
Social Responsibility
Review of FinancialsTony Lea
2002 Annual Results
2002 Annual Results12
2002 2001Headline EPS ($) 1.25 1.14
Headline earnings ($m) 1,759 1,681
Total dividend (US cents) 51 49
Average shares in issue 1,411m1,474m
EBITDA ($m) 4,792 4,647
Highlights 2002
2002 Annual Results13
$m 2002 2001Profit for the financial year 1,563 3,085
Operating exceptional items 81 513
Non-operating exceptional items (64) (2,148)
Profit for the year pre exceptionals 1,580 1,450
Amortisation of goodwill 189 167
Related tax & minority interests (10) 64
Headline earnings for the year 1,759 1,681
Headline Earnings
2002 Annual Results14
25
10206
(42)
(36)
(296)
1,759
(69)
2801,681
500
700
900
1,100
1,300
1,500
1,700
1,900
2001 Price Inflation Exchange Cost Interest Volume DBI Structural& Other
2002
$m
Headline Earnings Variances
2002 Annual Results15
22
24
30
(138)
2
(5)
(41)70
-50
0
50
100
150
200
IndustrialMinerals
ForestProducts
FerrousMetals
Industries Gold BaseMetals
Coal Platinum
$m
Headline Variance: Price
Group Total: -$36m
2002 Annual Results16
102
2314
34
30
21
0
50
100
150
200
250
ForestProducts
Platinum Coal Gold Industries FerrousMetals
BaseMetals
$m
Headline Variance: Volume
Group Total: +$206m
2002 Annual Results17
5
6
7
8
9
10
11
12
13
14
Jan-01
Mar-01
May-01
Jul-01
Sep-01
Nov-01
Jan-02
Mar-02
May-02
Jul-02
Sep-02
Nov-02
Jan-03
Rand/US$ Exchange Rate
R/$
11.96
8.58
Jan JanMar May Jul Sep Nov Mar May Jul Sep Nov Jan
2001 2002
7.58
2002 Annual Results18
$m
Conversion of local currency costs 273(weaker average rand – 10.48 vs 8.62)
Exchange losses on non-rand monetary assets(263)
(stronger closing rand – 8.58 vs 11.96)
Net exchange variance 10
Headline Variance: Exchange
2002 Annual Results19
Pre-tax Cost Savings: $279m
Operatingefficiencies
$154m
$96m
$33m
$21m
$4m
MaintenanceAdmin & Overhead
LabourMaterials & Supplies
Restructuring& synergies
$77m
$20m
$42m
$12m$3m
Procurement
$48m
$45m
$1m$2m
2002 Annual Results20
Balance Sheet
$m 31/12/2002 31/12/2001Shareholders’ Funds 16,261 12,856Net Debt/(Funds): South Africa 12 (1,571) Rest of World 5,566 5,578 3,589 2,018
Minority Interests 2,304 1,607Total Capital 24,143 16,481
Net Debt/Total Capital 23.1% 12.2%ROCE 17.5% 19.0%EBITDA/Total Capital 23.6% 25.0%
2002 Annual Results21
Cash Flow Analysis
2002 2001Net cash inflow from operating activities 3,618 3,539Net interest & dividend income 335 321Taxation (722) (637)Disposal of fixed assets 313 263Available cash flow 3,544 3,486Dividend paid - company & minorities (1,107) (1,168)Net acquisitions & disposals (3,717) 1,672Capital expenditure (2,139) (1,787)Other (141) (631)Movements in net (debt)/funds (3,560) 1,572Net debt at start of the period (2,018) (3,590)Net debt at end of the period (5,578) (2,018)
2002 Annual Results22
Cash Flow Analysis
1 Cash flow for subsidiaries, excludes associates & JVs
$1,329m
Cash flow fromoperations1
$810m
Expansionary capital expenditure
SIB capital expenditure
AA plc Dividend
Taxation
$732m
$722m
$3,618m
Inflow Outflow
2002 Annual Results23
Effective Tax Rate
Effective tax rate (pre-exceptionals) decreased from 36.4% in 2001 to 33.0% in 2002
Reduction in tax is primarily due to changes in the mix of contributions by divisions with differing effective tax rates
Adoption of FRS19 decreased headline earnings in 2002 by $166m (2001: $89m taken as a prior year adjustment)
Review of OperationsTony Trahar
2002 Annual Results
2002 Annual Results25
Headline earnings: $351m
Weaker results primarily due to lower palladium & rhodium prices
Refined Pt production up 7% to 2.25m ounces
Revised project suite on track to produce 3.5m refined platinum ounces per annum by end 2006
70.0% stake in Anglo Platinum; average cost of R371 per share since January 2001
Highlights - Platinum
2002
$351m
2001
$478m
Headline earnings down 27%
2002 Annual Results26
Highlights - Gold
2002
$205m
2001
$162m
Headline earnings up 27%
Headline earnings: $205m
Cash costs reduced by 10% to $161/oz
Stake in Cerro Vanguardia (Argentina) doubled to 92.5%
Hedge book reduced by 4.3m ounces to 10.3m ounces
Gold production down 15% to 5.9m ozs due to sale of Free State assets
Average realised price*:2002: $303 /oz2001: $287 /oz
* Including realised non-hedge derivative gains
2002 Annual Results27
Highlights - Diamonds
2002
$324m
2001
$234m
Headline earnings up 38%
Headline earnings: $324m
DTC sales of $5.2bn up 16%
Stocks reduced by nearly $1bn
Solid Thanksgiving/Christmas retail sales in the US
EU approves Supplier of Choice
Free cash flow of $1,549m; net debt reduced by 46% to $1,716m in 2002
Further voluntary repayment of $355m in 2003
2002 Annual Results28
Highlights - Coal
2002
$266m
2001
$387m
Headline earnings down 31%
Headline earnings: $266m
Lower export thermal coal prices offset by higher export coking coal prices (net impact -$41m)
Significantly impacted by stronger rand at 31 December 2002
Sales volumes increased 9% to 84.5m tonnes
2002 Annual Results29
Highlights - Base Metals
2002
$69m
2001
($18m)
$87m turnaround in performance
Headline earnings: $69m
Improved financial performance despite lower copper & zinc prices
Acquisition of Disputada for $1.3bn completed in November 2002
Significant progress made in restructuring the business: Disposal of KCM, Tati Nickel, BCL,
Salobo and Kolwezi
Sale of stake in Anaconda Nickel in February 2003
Skorpion to be commissioned in 2003
2002 Annual Results30
Highlights - Industrial Minerals
2002
$231m
2001
$160m
Headline earnings up 44%
Headline earnings: $231m
EBITDA up by $89m to $468m
Tarmac improved margins despite mixed market conditions.
Improved performance at Copebrás
Buxton cement ($173m) & Copebrás phosphates ($147m) commissioning in 2003
2002 Annual Results31
Highlights - Forest Products
2002
$376m
2001
$272m
Headline earnings up 38%
Headline earnings: $376m
Strong performance in challenging markets
Successful integration of Syktyvkar and La Rochette acquisitions
Increased volumes from European and South African operations
2002 Annual Results32
2002
$88m
2001
$48m
Headline earnings up 83%
Headline earnings: $88m
Strong operating performances from Scaw, Highveld & Samancor
Memorandum of Understanding signed in December 2002 with SA Government on iron ore strategy
Stimela option over 10.5% of Kumba implemented
Accordingly, stake in Kumba increased to 20.1%, further 10% awaits SA Competition Tribunal approval
Highlights - Ferrous Metals
2002 Annual Results33
Outlook remains mixed
Current global political, economic and currency uncertainties
Possible military action in Iraq could see short term volatility
Anglo’s commodity & geographic asset mix and strong project pipeline will underpin performance in years ahead
Outlook
2002 Annual Results34
Ongoing focus on efficiencies & cost savings
Seeking acquisitions that meet our investment criteria, including new markets
Developing the value chain in our businesses & to improve focus on marketing & customer relationships
Continuing with a balanced portfolio of greenfield & brownfield projects - project pipeline of $5.8bn
Strategy
2002 Annual Results
ANGLO AMERICANADDING VALUE TO
NATURAL RESOURCES
28 February 2003
Additional Information Handout Only
2002 Annual Results
2002 Annual Results37
Key Dates
Currency Conversion
Ex-dividend (JSE)
Ex-dividend (LSE)
AGM
Payment of Final Dividend
Forest Products Site Visit
Interim Results
25 February 2003
10 March 2003
12 March 2003
25 April 2003
30 April 2003
18 - 20 June 2003
8 August 2003
2002 Annual Results38
2002 2001
Gold 310 272
Platinum 541 531
Palladium 336 597
Rhodium 838 1,606
Copper 71 72
Nickel 307 267
Zinc 35 41
Coal: thermal (RSA)* 26 30
Coal: coking (Aus)* 45 40
Market Prices
*Thermal & metallurgical coal prices are strictly indicative as wide variations occur in relation to region, product quality, contract volume and timing.
2002 Annual Results39
US$m
10% change in gold price ± 34
10% change in platinum price ± 51
10% change in palladium price ± 15
10% change in coal price ± 98
10% change in copper price ± 65
10% change in nickel price ± 16
10% change in zinc price ± 16
10% change in pulp price ± 6
10% movement in SA rand/US$ ± 124
10% movement in AUD/US$ ± 26
10% movement in Euro/US$ ± 44
Headline Earnings Sensitivities
Excludes the impact of translation of monetary assets & liabilities and the effect of any hedging activities. Stated after tax at marginal rate. Pulp sensitivity depends on recoveries.
2002 Annual Results40
1 Gold incremental production is total additional capacity over life of project. Capex converted to US$ on date of project approval.2 Incremental production is a per year amount once full production is reached. Capex converted at date of project approval.
Projects
Gold Total additional Production FullApproved
Approved production1 commences prod. capex $m
Mponeng 2.8m oz 2004 2005 152TauTona 2.7m oz 2004 2005 48Cripple Creek & Victor 2.8m oz 2002 2003 194Moab Khotsong 4.5m oz 2003 2008 419
Total 12.8m oz 813
Industrial Minerals Total additional Production FullApproved
Approved production2 commences prod. capex $m
Goiás (completed under budget) 455,000 t 2002 2003 147Buxton Cement Plant 425,000 t 2003 2004 173
Total 320
2002 Annual Results41
1 Incremental production is a per year amount once full production is reached. Capex converted at date of project approval.2 RPM - Rustenburg Platinum Mines
Projects
Platinum Total additional Production Full Approved
Approved production1 commences prod. capex $m
ACP Project Meet 2003 2004 250PMR Plant Expansion expansion 2002 2006 97Slag Cleaning Furnace requirements 2002 2003 30Rustenburg UG2 Phase 1 395,000 oz 2002 2005 203Rustenburg UG2 Phase 2 260,000 oz 2003 2007 444
RPM Tailings Treatment2
110,000 oz 2004 2005 186Styldrift Mine 245,000 oz 2006 2008 344Bafokeng Rasimone Mine (BRPM) 254,000 oz 1999 2004 317Modikwa Mine 162,000 oz 2002 2003 311Twickenham Mine 160,000 oz 2005 2005 343
Total 2,525
Polokwane Smelter 650,000 t 2003 2003 190 concentrate
Total 2,715
2002 Annual Results42
1 Incremental production is a per year amount once full production is reached. Capex converted at date of project approval. Capcoal project to maintain current production levels.2 Extends HBMS life to 2018
Projects
Coal Total additional Production Full Approved
Approved production1 commences prod. capex $m
SACE Expansion 1.3m tpa 2003 2004 50Greenside Expansion 1.0m tpa 2001 2003 17Cerrejón Sur feasibility 8Cerrejón 2.0m tpa 2004 2007 50Kriel South Project 5.1m tpa 2002 2007 70Capcoal 5.5m tpa 2005 2007 107
Total 14.9m tpa 302
Base Metals Total additional Production Full Approved
Approved production commences prod. capex $m
HBMS 777 Project2 2003 2004 276Black Mountain Deeps 45,000 t Zn 2004 2005 110Collahuasi Rosario Project 2002 2004 286Skorpion 150,000 t Zn 2003 2003 454
Total 1,126
2002 Annual Results43
1 Incremental production is a per year amount once full production is reached. Capex converted at date of project approval.
Projects
Forest Products Total additional Production Full Approved
Approved production1 commences prod. capex $m
Frantschach: Evap. Plant 8,000 t 2002 2003 10Frantschach: Steti PM3 20,000 t 2002 2003 20Ruzomberok: Mill Reconstruct. 105,000 t 2004 2005 129Ruzomberok: PM18 Expansion 100,000 t 2003 2004 104Neusiedler: PM4 5,000 t 2002 2003 8Merebank PM2 Rebuild 40,000 t 2003 2003 26
Total 297
Total converting Production FullApproved
Approved capacity commences prod. capex $m
Frantschach: Inncoat Foils 2003 2003 11Neusiedler: Sykt. Cutter 150,000 t 2003 2003 15Merebank A4 Cutter 92,000 t 2002 2003 12
Total 38
2002 Annual Results44
Projects
Diamonds Total additional Production Full Approved
Current projects production1
commences prod. capex $m
2
CTP Kimberley 20m carats 2002 2003 44!Gariep 3m carats 2004 2004 27Finsch Block 4 16m carats 2003 2006 107Venetia Upgrade 1.5m carats pa 2003 2004 3BB1E Premier 3m carats 2004 2007 10
Total 42m carats 191+1.5m pa Venetia
Under review
C-Cut Premier 110m carats 2007 2011 632Elizabeth Bay Upgrade 2m carats 2004 2004 21Finsch Tailings 6m carats 2004 2005 12Snap Lake 19m carats 2007 2008 207Victor 6m carats 2007 2008 272
Total 143m carats 1,144
1 Total additional production shown for the life of the project. Shown on a 100% basis.2 Approved capex is AA plc’s effective attributable share (48.65%), converted to US$ at R9.15=US$1, C$1=US$0.68
2002 Annual Results45
$m 2002 2001
Platinum 351 478Gold 205 162Diamonds 324 234Coal 266 387Base Metals 69 (18)Industrial Minerals 231 160Forest Products 376 272Ferrous Metals 88 48Industries 38 38Exploration (77) (85)Corporate Activities1 (112) (60)DB Investments - 65
Headline Earnings 1,759 1,681
Analysis of Headline Earnings
1 Includes Gold Fields earnings in 2002 of $27m. Prior to equity accounting dividends were included in Corporate
2002 Annual Results46
Headline Variance: Exchange
$mPlatinum 99 (131) (32)Gold 49 - 49Coal 28 (109) (81)Base Metals 21 (23) (2)Industrial Minerals 5 - 5Forest Products - 14 14Ferrous Metals 73 - 73Industries (4) (14) (18)Corporate Activities 2 - 2
273 (263) 10
Conversion of local currency results/costs
Translation of monetary
assets/liabilitiesActual
variance
2002 Annual Results47
$m 2002 2001
Platinum 802 1,345Gold 463 443Diamonds 541 373Coal 427 493Base Metals 82 (510)Industrial Minerals 277 201Forest Products 649 520Ferrous Metals 150 77Industries 114 114Exploration (93) (101)Corporate Activities1 (161) (170)
Operating Profit 3,251 2,785
Analysis of Operating Profit
1 Includes Gold Fields $41m in 2002 & Financial Services $2m in 2001.Operating profit after operating exceptional items
2002 Annual Results48
$m 2002 2001
Platinum 586 391Gold 246 243Coal 142 93Base Metals 346 446Industrial Minerals 363 205Forest Products 365 283Ferrous Metals 32 28Industries 53 65Other 6 33
Total 2,139 1,787
Capital Expenditure
2002 Annual Results49
Operating Profit Variance
184
188
168405
(518)
(250)
3,332
(143)
3,298
500
1,000
1,500
2,000
2,500
3,000
3,500
2001 Inflation Price Exchange Cost Volume DBI Structural& Other
2002
$m
Operating profit before operating exceptional items
2002 Annual Results50
Regional Analysis
Operating profit after operating exceptional items
Operating Profit$m 2002 2001
South Africa 1,790 2,269Rest of Africa 439 (121)Europe 583 371Americas 301 137Australasia 138 129
3,251 2,785
2002 Annual Results51
Operating Cost Reconciliation
Subsidiary & JV Operating Costs $m2001 operating costs
Subsidiaries (12,638)JVs (share of turnover less operating profit) (931) (13,569) Inflation (484) Exchange 138 Volume (288) Depreciation & amortisation (45) Acquisitions & disposals (7) Operating impairments 432 Aggregates levy & coal purchases1 (180) Other 392002 Operating costs before cost savings (13,964) Cost reduction initiatives 2792002 Operating costs
Subsidiaries (12,804)JVs (share of turnover less operating profit) (881) (13,685)
1 recovered through increased prices at Tarmac & revenues at Coal
2002 Annual Results52
$m
IAS net profit (published) 548STC adjustment 23 Movement on unrealised profit on FEC 8Exploration 14Exceptional items (10)Weighted average exchange impact 14
597Minority interest (214)Depreciation on assets revalued on acquisition (29)Other (3)
UK GAAP contribution to headline earnings 351
Anglo Platinum Reconciliation
2002 Annual Results53
$m
IAS Headline earnings (published)1
368Exploration 27Other 3
398Minority interest (193)
UK GAAP contribution to headline earnings 205
AngloGold Reconciliation
1 before unrealised non-hedge derivatives
2002 Annual Results54
$m Total Equity Non-equity
DBI headline earnings 570 - -UK GAAP adjustments 23 - -DBI headline earnings - UK GAAP 593 486 107
AA plc’s 45% equity interest 219 219 -Additional 3.65% effective equity interest 18 18 -AA plc’s portion of preference shares 87 - 87
AA plc headline earnings 324 237 87
De Beers Reconciliation
2002 Annual Results55
EBITDA Reconciliation
$m 2002 2001Net cash inflow from operating activities3,618 3,539Share of EBITDA of JVs & associates 1,303 991Working capital adjustments 2 138Differences in adjustments for (131) (21)exceptionals & non-cash EBITDA 4,792 4,647
2002 Annual Results56
EBITDA by Business: 2002
$m
PlatinumGoldDiamondsCoalBase MetalsIndustrial MineralsForest ProductsFerrous MetalsIndustriesOther
Total
Operating Profit(incl JVs
& Associates)
802463541427
82277649150114
(254)
3,251
EBITDA
926747594571330468909207208
(168)
4,792
ExcludeExceptional
Items
51
30
81
Add Back SubsidiariesDepreciation
107182
-104124142228
214212
962
Add Back JVs& Associates Depr. & Amort.
171533672
317354922
359
Add Back SubsidiariesAmortisation
1631
-41
4615
13
22
139
2002 Annual Results57
EBITDA by Business: 2001
$m
PlatinumGoldDiamondsCoalBase MetalsIndustrial MineralsForest ProductsFerrous MetalsIndustriesOther
Total
Operating Profit(incl JVs
& Associates)
1,345443373493
(510)201520
77114
(271)
2,785
EBITDA
1,442699428627183379752139212
(214)
4,647
ExcludeExceptional
Items
488
25
513
Add Back SubsidiariesDepreciation
77157
-108130136193
2546
9
881
Add Back JVs& Associates Depr. & Amort.
469552274
-263651
2
339
Add Back SubsidiariesAmortisation
1630
-41
4213
11
21
129
2002 Annual Results
ANGLO AMERICANADDING VALUE TO
NATURAL RESOURCES
28 February 2003