Anglo American plc · LSE:AAL
Anglo American — H1 2005 Earnings Presentation
40 slides from Anglo American's earnings presentation, Aug 4, 2005
Slide 1: Anglo American: Meeting the World's Needs – 2005 Interim Results
ANGLO AMERICAN MEETING THE WORLD’S NEEDS 4 August 2005 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) Ord
Slide 2: Highlights
Highlights Record First Half: - Headline earnings up 43% at $1,784m Interim dividend rebased to 28c up 47% Cash generation (EBITDA) up 25% at $4,249m Strong performances from Base and Ferrous Metals; increased contributions from Platinum and Coal Cost cutting and efficiencies up 22% at $30
Slide 3: A robust first half performance
A robust first half performance Headline earnings 1,784 $m 1,248 Headline earnings more 840 856 than doubled since H1 2002….. H1 2002 H1 2003 H1 2004 H1 2005 …underpinned by EBITDA 4,249 continued strong cashflow $m 3,400 2,237 2,444 generation H1 2002 H1 2003 H1 2004 H1 2005 3 2005 Interim Resu
Slide 4: Headline earnings
Headline earnings Business unit H1 2004 H1 2005 11% 7% 15% 18% 5% 4% 23% 14% 17% 15% 12% 8% 10% 15% 35% 29% Platinum Base Metals Gold Industrial Minerals Diamonds Paper and Packaging Coal Ferrous and Industries 4 2005 Interim Results
Slide 5: Margins and returns rising
Margins and returns rising Operating margin EBITDA return on capital 17.4% 24.5% 14.7% 21.2% 11.6% 17.3% 2003¹ 2004 H1 2005 2003¹ 2004 H1 2005² ¹2003 figures are UK GAAP ²annualised basis 5 2005 Interim Results
Slide 6: Portfolio optimisation
Portfolio optimisation Disposals $2.1bn H1 Disposals: $1.2bn - Boart Longyear, including Wendt sold ($635m) - Samancor Chrome sold ($188m) $1.2bn - Mondi Shanduka packaging ($155m) - Acerinox/Columbus sold ($161m) Further portfolio optimisation 2004 H1 '05 6 2005 Interim Results
Slide 7: Portfolio developments
Portfolio developments Project pipeline strengthened - Sishen iron ore expansion ($365m) approved - Snap Lake diamond project ($230m) approved - Victor diamond project ($356m) approved (subject to EA approval ) - Mototolo JV ($100m) and Lebowa Merensky ($179m) projects announced - Barro Alto nicke
Slide 8: Substantial long term project portfolio
Substantial long term project portfolio APPROVED: UNAPPROVED: $5.1bn $8.0bn QUELLAVECO SISHEN SOUTH ISIBONELO Copper Iron ore MEREBANK $65m SIGUIRI $174m MOAB 2 RICHARDS BAY $52m CERREJÓN 2 COLLAHUASI Gold $235m INYANDA $43m EXPANSION TICOR 2 Copper OBUASI DEEPS RPM PH 2 $30m $54m Gold $169m GAMSBER
Slide 9: Cost savings and efficiency improvements: $303m
Cost savings and efficiency improvements: $303m 184 554 $m Materials & supplies $m 40 Labour Admin & overhead Maintenance 16 Energy 306 101 335 6 58 279 5 208 146 H2 33 82 303 248 22 18 H1 133 127 9 2 15 3 7 2 3 Procurement Operating Restructuring & efficiencies synergies 2002 2003 2004 2005 9 2005
Slide 10: Financial Performance
Financial Performance $m H1 ‘05 H1 ‘04 %ch Revenue 17,145 15,299 12% Operating profit 2,975 2,325 28% EBITDA 4,249 3,400 25% Headline earnings 1,784 1,248 43% EPS (cents per share) 124 87 43% DPS (cents per share) 28 19 47% Results shown include share of associates 10 2005 Interim Results
Slide 11: Headline earnings variances
Headline earnings variances $m 2,500 887 44 62 2,000 (137) 15 31 (233) (83) (40) (10) 1,784 1,500 1,248 1,000 500 0 H1 '04 Price Exchange Inflation Volume Cash cost Non-cash Interest IAS 39 Associates Structural H1' 05 cost & other 11 2005 Interim Results
Slide 12: Headline variance: Price
Headline variance: Price Group total = +$887m $m 1,200 46 1,000 53 68 229 800 (68) 887 600 263 400 296 200 0 Base Metals Coal Ferrous and Platinum Industrial Gold Paper and Total Industries Minerals Packaging 12 2005 Interim Results
Slide 13: Balance sheet
Balance sheet $m 30/6/2005 31/12/2004 AA plc Equity Holders’ Funds 22,067 23,125 Minority Interests 4,182 4,588 Net Debt: South Africa 2,620 3,381 Rest of World 4,410 7,030 4,862 8,243 Total Capital 33,279 35,956 Net Debt/Total Capital 21.1% 22.9% ROCE 17.6% 14.6% EBITDA/Total Capital 24.5% 21.2% 13
Slide 14: Cash flow analysis
Cash flow analysis H1 ‘05 H1 ‘04 EBITDA 4,249 3,400 Share of EBITDA of associates (642) (679) Increase in working capital (571) (521) Provisions & other non-cash 38 42 Cash inflow from operations 3,074 2,242 Dividends from associates and other investments 304 151 Taxation (447) (258) Net cash inflow
Slide 15: Metals and Minerals: highlights
Metals and Minerals: highlights Base Metals Ferrous Metals and Industries $721m $791m $568m $394m Operating profit Operating profit H1 H1 H1 H1 2004 2005 2004 2005 Highlights Highlights • Record H1 operating profit of $721m • Record H1 operating profit of $791m, • High metal prices offset by non- do
Slide 16: Metals and Minerals: highlights
Metals and Minerals: highlights Coal Industrial Minerals $374m $193m $181m $201m Operating profit Operating profit H1 H1 H1 H1 2004 2005 2004 2005 Highlights Highlights • South African operating profit up 120% • Tarmac operating profit up 13% due to due to higher export prices increased volumes and
Slide 17: Precious: highlights
Precious: highlights Platinum Gold Diamonds $410m $340m $156m $154m $314m $297m Operating profit Operating profit Operating profit H1 H1 H1 H1 H1 H1 2004 2005 2004 2005 2004 2005 Highlights Highlights Highlights • Refined platinum • Gold production at 3.14m oz • Operating profit down 13% production
Slide 18: Paper and Packaging highlights
Paper and Packaging highlights Paper and Packaging Index (Q1 1994 = 100) - EUR prices in real terms 170 160 Cyclical price lows … $328m 150 140 $233m 130 120 110 Price Mondi basket 100 Operating profit 90 H1 H1 80 1994 Q1 1995 Q1 1996 Q1 1997 Q1 1998 Q1 1999 Q1 2000 Q12001 Q1 2002 Q1 2003 Q1 2004 Q1
Slide 19: Summary
Summary • Strong first half: Record earnings and dividend • Record cash generation of $4,249m • Metal markets well underpinned – positive outlook for H2 earnings • Continued robust Chinese growth and prospects for OECD improvement • Further projects, growth opportunities and asset optimisations are
Slide 20: Anglo American: Meeting the World's Needs
ANGLO AMERICAN MEETING THE WORLD’S NEEDS 4 August 2005 This presentation is being made only to and is directed only at (a) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Ord
Slide 21: Additional Information
ADDITIONAL INFORMATION Handout only 21 2005 Interim Results
Slide 22: Key Dates
Key Dates • Currency Conversion 1 August 2005 • Ex-dividend (JSE) 15 August 2005 • Ex-dividend (LSE) 17 August 2005 • Record date 19 August 2005 • Payment of Interim Dividend 20 September 2005 • Final Results 22 February 2006 22 2005 Interim Results
Slide 23: Market Prices
Market Prices H1 ‘05 H1 '04 Gold 427 401 Platinum 867 850 Palladium 190 248 Rhodium 1,583 696 Copper 151 125 Nickel 720 619 Zinc 59 48 Coal: thermal (RSA - API 4 index average) 54.4 49.15 Ferrovanadium 70 17 Vanadium pentoxide 37 10 23 2005 Interim Results
Slide 24: Headline Earnings Sensitivities
Headline Earnings Sensitivities US$m 10% change in gold price ± 47 10% change in platinum price ± 58 10% change in palladium price ±6 10% change in coal price ± 122 10% change in copper price ± 80 10% change in nickel price ± 17 10% change in zinc price ± 23 10% movement in SA rand/US$ ± 332 10% mov
Slide 25: Substantial long term project portfolio
Substantial long term project portfolio Base Metals Platinum Gold Ferrous Paper and Coal Diamonds Packaging Approved: $300m Approved: $791m Approved: $1.3bn Approved: $700m Approved: $622m Approved: $646m Approved: $716m Grasstree ($106m) Finsch ($130m) Black Mountain ($110m) Lebowa ($179m) Moab Kho
Slide 26: Analysis of Headline Earnings
Analysis of Headline Earnings $m H1 ‘05 H1 ‘04 Platinum 259 137 Gold 73 67 Diamonds 270 169 Coal 263 148 Base Metals 525 434 Industrial Minerals 140 120 Paper and Packaging 132 223 Ferrous Metals and Industries 413 208 Exploration (50) (42) Corporate Activities (241) (216) Headline Earnings 1,784 1,
Slide 27: Analysis of Operating Profit
Analysis of Operating Profit $m H1 ‘05 H1 ‘04 Platinum 410 314 Gold 154 156 Diamonds 297 340 Coal 374 201 Base Metals 721 568 Industrial Minerals 193 181 Paper and Packaging 233 328 Ferrous Metals and Industries 791 394 Exploration (67) (56) Corporate Activities (131) (101) Operating Profit¹ 2,975 2
Slide 28: Capital Expenditure
Capital Expenditure $m H1 ‘05 H1 ‘04 Platinum 243 292 Gold 311 234 Coal 126 64 Base Metals 100 176 Industrial Minerals 120 130 Paper and Packaging 392 383 Ferrous Metals and Industries 133 144 Other 8 5 Total 1,433 1,428 28 2005 Interim Results
Slide 29: Headline variance: Exchange
Headline variance: Exchange Group total = $44m Ferrous Corporate $m and Paper and Base & Industrial Coal Gold Industries Packaging Metals Platinum Exploration Minerals DBI Total 60 140 40 44 20 - (20) (40) (27) (17) (60) (16) (80) (16) 1 (9) (100) (7) (5) (120) 29 2005 Interim Results
Slide 30: Headline variance: Volume
Headline variance: Volume Group total = +$62m $m 80 4 70 14 60 14 (5) 62 16 (5) 50 40 24 30 20 10 0 Platinum Ferrous Industrial Gold Paper and Coal Base Total Metals and Minerals Packaging Metals Industries 30 2005 Interim Results
Slide 31: Operating Profit Variance
Operating Profit Variance Operating profit before special items $m 4,000 1,309 3,500 134 (153) (213) 23 3,000 (271) (142) (9) (28) 2,975 2,500 2,325 2,000 1,500 1,000 500 H1 '04 Price Exchange Inflation Volume Cash Cost Non-cash IAS 39 Associates Structural & H1 '05 Cost other 31 2005 Interim Result
Slide 32: Regional Analysis
Regional Analysis Operating profit¹ $m H1 ‘05 H1 ‘04 South Africa 1,295 770 Rest of Africa 207 244 Europe 430 486 Americas 876 731 Australasia 167 94 2,975 2,325 1 operating profit before special items. Includes share of associates. 32 2005 Interim Results
Slide 33: Operating Cost Reconciliation
Operating Cost Reconciliation $m 2004 Operating costs (subsidiaries and share of joint ventures) (10,588) Inflation (213) Exchange (482) Sales volume (401) Depreciation & amortisation (142) IAS 39 (9) Price linked costs (114) Operating impairments (55) Structural and other1 118 Cash cost variance: C
Slide 34: Anglo Platinum Reconciliation
Anglo Platinum Reconciliation $m IFRS headline earnings (published) 344 Exploration 9 Other adjustments (4) 349 Minority interest (88) Depreciation on assets revalued on acquisition (net of tax) (26) Impact of change in South African corporate tax rate on assets revalued on acquisition 24 Contributi
Slide 35: AngloGold Ashanti Reconciliation
AngloGold Ashanti Reconciliation $m IFRS Headline earnings (published) 143 Exploration (excluding joint ventures) 22 Depreciation on assets revalued on acquisition (net of tax) (11) Minority interest (81) Contribution to AA plc headline earnings 73 35 2005 Interim Results
Slide 36: De Beers Reconciliation
De Beers Reconciliation $m DBI headline earnings (100%) 336 Adjustments 5 DBI headline earnings – AA plc basis (100%) 341 AA plc’s 45% ordinary share interest 153 Income from preference shares 26 Exchange gains related to preference shares 91 Contribution to AA plc headline earnings 270 36 2005 Inte
Slide 37: EBITDA by Business: H1 '05
EBITDA by Business: H1 ‘05 Operating Profit Add Back Add Back Add Back $m (incl JVs Subsidiaries Subsidiaries Associates & Associates) Depreciation Amortisation Depr. & Amort. EBITDA Platinum 410 198 - 2 610 Gold 154 260 1 - 415 Diamonds 297 - - 40 337 Coal 374 85 - 17 476 Base Metals 721 154 - - 87
Slide 38: EBITDA by Business: H1 '04
EBITDA by Business: H1 ‘04 Operating Profit Add Back Add Back Add Back $m (incl JVs Subsidiaries Subsidiaries Associates & Associates) Depreciation Amortisation Depr. & Amort. EBITDA Platinum 314 149 - 2 465 Gold 156 162 1 - 319 Diamonds 340 - - 35 375 Coal 201 67 - 18 286 Base Metals 568 146 - 6 72
Slide 39: EBITDA by Business: FY '04
EBITDA by Business: FY ‘04 Operating Profit Add Back Add Back Add Back $m (incl JVs Subsidiaries Subsidiaries Associates & Associates) Depreciation Amortisation Depr. & Amort. EBITDA Platinum 536 313 - 4 853 Gold 296 396 2 - 694 Diamonds 573 - - 82 655 Coal 497 150 - 40 687 Base Metals 1,276 339 - 1
Slide 40: Anglo American: Meeting the World's Needs
ANGLO AMERICAN MEETING THE WORLD’S NEEDS 4 August 2005 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) Ord