Anglo American Plc · LSE:AAL
Anglo American — FY2002 Earnings Presentation
58 slides from Anglo American's earnings presentation, Feb 28, 2003
Slide 1: Anglo American: Adding Value to Natural Resources
ANGLO AMERICAN ADDING VALUE TO NATURAL RESOURCES 28 February 2003 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 Pro
Slide 2: Key Financials
Key Financials Record headline EPS of $1.25, up 10% Headline EPS on 2001 Headline earnings for the year $1,759m $1.25 Cost & efficiency improvements of $279m $1.14 Total dividend increased to 51 US cents per share Strong EBITDA of $4.8bn: EBITDA interest cover 20.0x* Net Debt/Total Capit
Slide 3: SA Mining Legislation Update
SA Mining Legislation Update 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
Slide 4: Balanced Asset Mix
Balanced Asset Mix Australasia Australasia 1% 6% Americas 16% Americas 21% South Africa Europe 31% South 14% Africa 67% Rest of Africa Rest of 2% Africa Europe 7% 35% 30 June 1999 31 December 2002 Net attributable operating assets, including investment in associates & JVs 2002 Annual Results
Slide 5: Headline Earnings
Headline Earnings Australasia Australasia Americas 4% Americas 4% 3% 9% Europe 15% South Rest of Africa South Europe Mining Africa Africa 6% Mining 22% 42% SA 54% Other 18% SA Other 12% Rest of Africa 11% 2001 2002 2002 Annual Results
Slide 6: Acquisitions
Acquisitions Flexing Our Balance Sheet: $3.7bn in Acquisitions Durox & La Rochette other UK $110m $89m Syktyvkar $252m Mavike & other Europe Moly Cop $101m $105m Cerrejón Key: Moura & Base Metals Jellinbah East Ferrous Metals Disputada Anglo Plat. Forest Products $1.3bn $847m Industrial Minerals Pla
Slide 7: Acquisition Track Record
Acquisition Track Record 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 - M
Slide 8: Internal Growth: A Well-balanced $5.8bn Project Portfolio
Internal Growth A Well-balanced $5.8bn Project Portfolio Key: Buxton Goiás $173m RPM Tailings Base Metals $147m $186m Finsch $107m Diamonds Polokwane Forest Products $190m Twickenham Industrial Minerals $343m CC&V Collahuasi Capcoal Platinum $194m $286m $107m Coal HBMS 777 Gold $276m RPM Ph 2 Ruzomb
Slide 9: Operating Margins
Operating Margins A Steady Performance 16.9% 17.1% 16.3% 11.1% 1999 2000 2001 2002 Total operating profit before exceptional items divided by turnover 2002 Annual Results
Slide 10: Social Responsibility
Social Responsibility Leading the way in anti-retroviral treatment provision for HIV/AIDS employees Strong focus on safety leading to 39% reduction in fatal injury frequency rate & 42% reduction in LTIFR Launch of ‘Good Citizenship: Our Business Principles’ across managed operations Group co
Slide 11: Review of Financials
Review of Financials Tony Lea 2002 Annual Results
Slide 12: Highlights 2002
Highlights 2002 2002 2001 Headline EPS ($) 1.25 1.14 Headline earnings ($m) 1,759 1,681 Total dividend (US cents) 51 49 Average shares in issue 1,411m 1,474m EBITDA ($m) 4,792 4,647 2 2002 Annual Results
Slide 13: Headline Earnings
Headline Earnings $m 2002 2001 Profit 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 th
Slide 14: Headline Earnings Variances
Headline Earnings Variances 1,900 280 1,759 1,681 1,700 (36) 25 1,500 206 10 1,300 (296) $m (69) (42) 1,100 900 700 500 2001 Price Inflation Exchange Cost Interest Volume DBI Structural 2002 & Other 4 2002 Annual Results
Slide 15: Headline Variance: Price
Headline Variance: Price Group Total: -$36m 200 22 2 150 24 (5) 30 100 (41) 70 $m 50 0 Industrial Forest Ferrous Industries Gold Base Coal Platinum Minerals Products Metals Metals -50 (138) 5 2002 Annual Results
Slide 16: Headline Variance: Volume
Headline Variance: Volume Group Total: +$206m 250 14 3 2 200 21 30 150 34 $m 102 100 50 0 Forest Platinum Coal Gold Industries Ferrous Base Products Metals Metals 6 2002 Annual Results
Slide 17: Rand/US$ Exchange Rate
Rand/US$ Exchange Rate 14 13 11.96 12 11 R/$ 10 8.58 9 7.58 8 7 6 5 Jan Jan- Mar Mar- May Jul May- Jul- Sep Sep- Nov Nov- Jan Jan- Mar Mar- May Jul May- Jul- Sep Sep- Nov Nov- Jan Jan- 01 01 01 2001 01 01 01 02 02 02 2002 02 02 02 03 7 2002 Annual Results
Slide 18: Headline Variance: Exchange
Headline Variance: Exchange $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 8 2002 Annual Results
Slide 19: Pre-tax Cost Savings: $279m
Pre-tax Cost Savings: $279m Maintenance $154m Admin & Overhead Labour Materials & Supplies $21m $4m $33m $77m $3m $48m $12m $2m $1m $96m $42m $45m $20m Operating Restructuring Procurement efficiencies & synergies 9 2002 Annual Results
Slide 20: Balance Sheet
Balance Sheet $m 31/12/2002 31/12/2001 Shareholders’ Funds 16,261 12,856 Net Debt/(Funds): South Africa 12 (1,571) Rest of World 5,566 5,578 3,589 2,018 Minority Interests 2,304 1,607 Total 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% 0 2
Slide 21: Cash Flow Analysis
Cash Flow Analysis 2002 2001 Net cash inflow from operating activities 3,618 3,539 Net interest & dividend income 335 321 Taxation (722) (637) Disposal of fixed assets 313 263 Available cash flow 3,544 3,486 Dividend paid - company & minorities (1,107) (1,168) Net acquisitions & disposals (3,717) 1,
Slide 22: Cash Flow Analysis
Cash Flow Analysis Inflow Outflow $722m Taxation AA plc $732m Dividend $3,618m SIB capital $810m expenditure Expansionary $1,329m capital expenditure 1 Cash flow for Cash flow from subsidiaries, excludes associates & JVs operations1 2 2002 Annual Results
Slide 23: Effective Tax Rate
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:
Slide 24: Review of Operations
Review of Operations Tony Trahar 2002 Annual Results
Slide 25: Highlights - Platinum
Highlights - Platinum Headline earnings: $351m Headline earnings down 27% Weaker results primarily due to lower palladium & rhodium prices Refined Pt production up 7% to $478m 2.25m ounces $351m Revised project suite on track to produce 3.5m refined platinum ounces per annum by end 2006 70
Slide 26: Highlights - Gold
Highlights - Gold Headline earnings: $205m Headline earnings Cash costs reduced by 10% to up 27% $161/oz Stake in Cerro Vanguardia $205m (Argentina) doubled to 92.5% Hedge book reduced by 4.3m $162m ounces to 10.3m ounces Gold production down 15% to 5.9m ozs due to sale of Free State asset
Slide 27: Highlights - Diamonds
Highlights - Diamonds Headline earnings: $324m Headline earnings DTC sales of $5.2bn up 16% up 38% Stocks reduced by nearly $1bn Solid Thanksgiving/Christmas retail $324m sales in the US $234m EU approves Supplier of Choice Free cash flow of $1,549m; net debt reduced by 46% to $1,716m in
Slide 28: Highlights - Coal
Highlights - Coal Headline earnings: $266m Headline earnings down 31% Lower export thermal coal prices offset by higher export coking coal prices (net impact -$41m) $387m Significantly impacted by stronger rand at 31 December 2002 $266m Sales volumes increased 9% to 84.5m tonnes 2001 2002 8
Slide 29: Highlights - Base Metals
Highlights - Base Metals Headline earnings: $69m $87m turnaround in performance Improved financial performance despite lower copper & zinc prices Acquisition of Disputada for $1.3bn $69m completed in November 2002 Significant progress made in restructuring the business: Disposal of KCM, Ta
Slide 30: Highlights - Industrial Minerals
Highlights - Industrial Minerals Headline earnings: $231m Headline earnings up 44% EBITDA up by $89m to $468m Tarmac improved margins despite $231m mixed market conditions. Improved performance at Copebrás $160m Buxton cement ($173m) & Copebrás phosphates ($147m) commissioning in 2003 2001
Slide 31: Highlights - Forest Products
Highlights - Forest Products Headline earnings: $376m Headline earnings up 38% Strong performance in challenging markets Successful integration of Syktyvkar $376m and La Rochette acquisitions Increased volumes from European $272m and South African operations 2001 2002 1 2002 Annual Results
Slide 32: Highlights - Ferrous Metals
Highlights - Ferrous Metals Headline earnings: $88m Headline earnings up 83% Strong operating performances from Scaw, Highveld & Samancor Memorandum of Understanding signed in December 2002 with SA $88m Government on iron ore strategy $48m Stimela option over 10.5% of Kumba implemented Acc
Slide 33: Outlook
Outlook Outlook remains mixed Current global political, economic and currency uncertainties Possible military action in Iraq could see short term volatility Anglo’s commodity & geographic asset mix and strong project pipeline will underpin performance in years ahead 3 2002 Annual Results
Slide 34: Strategy
Strategy Ongoing focus on efficiencies & cost savings Seeking acquisitions that meet our investment criteria, including new markets Developing the value chain in our businesses & to improve focus on marketing & customer relationships Continuing with a balanced portfolio of greenfield & brown
Slide 35: Anglo American: Adding Value to Natural Resources
ANGLO AMERICAN ADDING VALUE TO NATURAL RESOURCES 28 February 2003 2002 Annual Results
Slide 36: Additional Information: Handout Only
Additional Information Handout Only 2002 Annual Results
Slide 37: Key Dates
Key Dates Currency Conversion 25 February 2003 Ex-dividend (JSE) 10 March 2003 Ex-dividend (LSE) 12 March 2003 AGM 25 April 2003 Payment of Final Dividend 30 April 2003 Forest Products Site Visit 18 - 20 June 2003 Interim Results 8 August 2003 7 2002 Annual Results
Slide 38: Market Prices
Market Prices 2002 2001 Gold 310 272 Platinum 541 531 Palladium 336 597 Rhodium 838 1,606 Copper 71 72 Nickel 307 267 Zinc 35 41 Coal: thermal (RSA)* 26 30 Coal: coking (Aus)* 45 40 *Thermal & metallurgical coal prices are strictly indicative as wide variations occur in relation to region, product q
Slide 39: Headline Earnings Sensitivities
Headline Earnings Sensitivities US$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% movemen
Slide 40: Projects
Projects Gold Total additional Production Full Approved Approved production1 commences prod. capex $m Mponeng 2.8m oz 2004 2005 152 TauTona 2.7m oz 2004 2005 48 Cripple Creek & Victor 2.8m oz 2002 2003 194 Moab Khotsong 4.5m oz 2003 2008 419 Total 12.8m oz 813 Industrial Minerals Total additional Pr
Slide 41: Projects
Projects Platinum Total additional Production Full Approved Approved production1 commences prod. capex $m ACP Project Meet 2003 2004 250 PMR Plant Expansion expansion 2002 2006 97 Slag Cleaning Furnace requirements 2002 2003 30 Rustenburg UG2 Phase 1 395,000 oz 2002 2005 203 Rustenburg UG2 Phase 2 2
Slide 42: Projects
Projects Coal Total additional Production Full Approved Approved production1 commences prod. capex $m SACE Expansion 1.3m tpa 2003 2004 50 Greenside Expansion 1.0m tpa 2001 2003 17 Cerrejón Sur feasibility 8 Cerrejón 2.0m tpa 2004 2007 50 Kriel South Project 5.1m tpa 2002 2007 70 Capcoal 5.5m tpa 20
Slide 43: Projects
Projects Forest Products Total additional Production Full Approved Approved production 1 commences prod. capex $m Frantschach: Evap. Plant 8,000 t 2002 2003 10 Frantschach: Steti PM3 20,000 t 2002 2003 20 Ruzomberok: Mill Reconstruct. 105,000 t 2004 2005 129 Ruzomberok: PM18 Expansion 100,000 t 2003
Slide 44: Projects
Projects Diamonds Total additional Production Full Approved 1 Current projects production commences prod. capex 2 $m CTP Kimberley 20m carats 2002 2003 44 !Gariep 3m carats 2004 2004 27 Finsch Block 4 16m carats 2003 2006 107 Venetia Upgrade 1.5m carats pa 2003 2004 3 BB1E Premier 3m carats 2004 200
Slide 45: Analysis of Headline Earnings
Analysis of Headline Earnings $m 2002 2001 Platinum 351 478 Gold 205 162 Diamonds 324 234 Coal 266 387 Base Metals 69 (18) Industrial Minerals 231 160 Forest Products 376 272 Ferrous Metals 88 48 Industries 38 38 Exploration (77) (85) Corporate Activities1 (112) (60) DB Investments - 65 Headline Ear
Slide 46: Headline Variance: Exchange
Headline Variance: Exchange Conversion of Translation of local currency monetary Actual $m results/costs assets/liabilities variance Platinum 99 (131) (32) Gold 49 - 49 Coal 28 (109) (81) Base Metals 21 (23) (2) Industrial Minerals 5 - 5 Forest Products - 14 14 Ferrous Metals 73 - 73 Industries (4)
Slide 47: Analysis of Operating Profit
Analysis of Operating Profit $m 2002 2001 Platinum 802 1,345 Gold 463 443 Diamonds 541 373 Coal 427 493 Base Metals 82 (510) Industrial Minerals 277 201 Forest Products 649 520 Ferrous Metals 150 77 Industries 114 114 Exploration (93) (101) Corporate Activities1 (161) (170) Operating Profit 3,251 2,
Slide 48: Capital Expenditure
Capital Expenditure $m 2002 2001 Platinum 586 391 Gold 246 243 Coal 142 93 Base Metals 346 446 Industrial Minerals 363 205 Forest Products 365 283 Ferrous Metals 32 28 Industries 53 65 Other 6 33 Total 2,139 1,787 8 2002 Annual Results
Slide 49: Operating Profit Variance
Operating Profit Variance 3,500 3,298 184 3,332 168 405 3,000 188 (518) 2,500 (250) (143) $m 2,000 1,500 1,000 500 2001 Inflation Price Exchange Cost Volume DBI Structural 2002 & Other Operating profit before operating exceptional items 9 2002 Annual Results
Slide 50: Regional Analysis
Regional Analysis Operating Profit $m 2002 2001 South Africa 1,790 2,269 Rest of Africa 439 (121) Europe 583 371 Americas 301 137 Australasia 138 129 3,251 2,785 Operating profit after operating exceptional items 0 2002 Annual Results
Slide 51: Operating Cost Reconciliation
Operating Cost Reconciliation Subsidiary & JV Operating Costs $m 2001 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 A
Slide 52: Anglo Platinum Reconciliation
Anglo Platinum Reconciliation $m IAS net profit (published) 548 STC adjustment 23 Movement on unrealised profit on FEC 8 Exploration 14 Exceptional items (10) Weighted average exchange impact 14 597 Minority interest (214) Depreciation on assets revalued on acquisition (29) Other (3) UK GAAP contrib
Slide 53: AngloGold Reconciliation
AngloGold Reconciliation $m 1 IAS Headline earnings (published) 368 Exploration 27 Other 3 398 Minority interest (193) UK GAAP contribution to headline earnings 205 1 before unrealised non-hedge derivatives 3 2002 Annual Results
Slide 54: De Beers Reconciliation
De Beers Reconciliation $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 headl
Slide 55: EBITDA Reconciliation
EBITDA Reconciliation $m 2002 2001 Net cash inflow from operating activities3,618 3,539 Share of EBITDA of JVs & associates 1,303 991 Working capital adjustments 2 138 Differences in adjustments for (131) (21) exceptionals & non-cash EBITDA 4,792 4,647 5 2002 Annual Results
Slide 56: EBITDA by Business: 2002
EBITDA by Business: 2002 Operating Profit Exclude Add Back Add Back Add Back JVs (incl JVs Exceptional Subsidiaries Subsidiaries & Associates $m & Associates) Items Depreciation Amortisation Depr. & Amort. EBITDA Platinum 802 107 16 1 926 Gold 463 182 31 71 747 Diamonds 541 - - 53 594 Coal 427 104 4
Slide 57: EBITDA by Business: 2001
EBITDA by Business: 2001 Operating Profit Exclude Add Back Add Back Add Back JVs (incl JVs Exceptional Subsidiaries Subsidiaries & Associates $m & Associates) Items Depreciation Amortisation Depr. & Amort. EBITDA Platinum 1,345 77 16 4 1,442 Gold 443 157 30 69 699 Diamonds 373 - - 55 428 Coal 493 10
Slide 58: Anglo American: Adding Value to Natural Resources
ANGLO AMERICAN ADDING VALUE TO NATURAL RESOURCES 28 February 2003 2002 Annual Results