Anglo American Plc · LSE:AAL
Anglo American — H1 2003 Earnings Presentation
50 slides from Anglo American's earnings presentation, Aug 8, 2003
Slide 1: Anglo American: Adding Value to Natural Resources
ANGLO AMERICAN ADDING VALUE TO NATURAL RESOURCES 8 August 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 Promot
Slide 2: Key Financials
Key Financials Headline earnings up 2% at $856m Headline EPS despite stronger rand Outstanding contribution from Diamonds, strong performances from European Paper and Packaging and $0.61 $0.60 Industrial Minerals offset lower Platinum, Gold and Coal Interim dividend maintained at 15 US cents p
Slide 3: Rand/US$ Exchange Rate
Rand/US$ Exchange Rate 13 13 SA Rand 27% 12 12 stronger vs. US$ 11.96 Average 10.99 11 11 R/$ 10.37 10 10 9 9 Average 8.58 8.03 8 8 7.48 7 7 6 6 JanFeb Jan FebMar MarApr AprMay MayJun Jun JanFebFeb Jan MarMar AprApr MayMay JunJun H1 2002 H1 2003 2003 Interim Results
Slide 4: Headline Earnings - Diversity (Geographic)
Geographic Headline Earnings - Diversity Rest of World 18% Rest of World Europe 28% Europe Americas 21% 30% 7% South South Africa Americas Africa 54% 12% 30% H1 2002 H1 2003 2003 Interim Results
Slide 5: Headline Earnings - Diversity (Product)
Product Headline Earnings - Diversity Ferrous & Ferrous & Industries Industries 6% 5% Platinum Platinum 13% Paper and 19% Paper and Packaging Packaging 18% 21% Gold 10% Gold Industrial 12% Minerals Industrial 11% Minerals Diamonds Diamonds 13% 29% Base Coal 20% Coal Metals 17% Base 13% 4% Metals 7%
Slide 6: Balanced Asset Mix - Diversity
Geographic Balanced Asset Mix - Diversity Rest of World 14% Europe 30% Americas 20% South Africa 36% 30 June 2003 Net attributable operating assets, including investment in associates & JVs 2003 Interim Results
Slide 7: Internal Growth: A Well-balanced $6bn Project Portfolio
Internal Growth A Well-balanced $6bn Project Portfolio Buxton RPM Tailings Key: $173m Kleinkopje $186m Base Metals $56m Goiás Finsch Diamonds $147m $126m Black Mtn Richards Bay Kriel Paper & Polokwane $110m $221m $65m Packaging $190m Industrial Minerals Collahuasi Capcoal CC&V $106m Platinum $203m $
Slide 8: Social Responsibility
Social Responsibility Safety performance continues to show encouraging improvements LTIFR improves 22% from 2002 total Fatal incidents levels unchanged from equivalent period last year – area for intensive focus Good progress made in rolling out ART for HIV/AIDS infected employees - around 5
Slide 9: Review of Financials
Review of Financials Tony Lea 2003 Interim Results
Slide 10: Headline Earnings
Headline Earnings $m H1 ‘03 H1 ‘02 Profit for the financial period 760 767 Exceptional items 7 (11) Amortisation of goodwill 98 82 Related tax & minority interests (9) 2 Headline earnings for the period 856 840 0 2003 Interim Results
Slide 11: Headline Earnings Variances
Headline Earnings Variances 1,200 1,000 127 840 159 856 800 (112) 30 82 28 $m 600 (21) (231) (46) 400 200 0 H1 2002 Price Inflation Exchange V olum e Cas h Non-cas h Inte re s t DBI Structural H1 2003 cos t cos t & Othe r 1 2003 Interim Results
Slide 12: Headline Variance: Exchange
Headline Variance: Exchange Group Total: -$231m Corporate Pape r & Bas e & Fe rrous Indus trial Platinum Coal AngloGold Pack aging M e tals Exploration M e tals Indus trie s M ine rals Total - (50) (65) (100) (44) (150) (44) (25) (200) (23) 14 (19) (250) (16) (231) (9) (300) 2 2003 Interim Results
Slide 13: Pre-tax Cost Savings: $127m
Pre-tax Cost Savings: $127m Maintenance Admin & Overhead $84m Labour Materials & Supplies $3m $7m $19m $29m $1m $2m $14m $55m $2m $26m $8m $4m Operating Procurement Restructuring efficiencies & synergies 3 2003 Interim Results
Slide 14: Balance Sheet
Balance Sheet $m 30/06/2003 31/12/2002 Shareholders’ Funds 18,371 16,261 Net Debt: South Africa 1,062 12 Rest of World 5,927 6,989 5,566 5,578 Minority Interests 2,454 2,304 Total Capital 27,814 24,143 Net Debt/Total Capital 25.1% 23.1% ROCE 12.7% 17.5% EBITDA/Total Capital 18.8% 23.6% 4 2003 Interi
Slide 15: Cash Flow Analysis
Cash Flow Analysis H1 ‘03 H1 ‘02 Operating cash flow 1,286 1,381 Dividends from JVs & assocs. 203 115 Operating cash flow including dividends from JVs & assocs. 1,489 1,496 Net interest & other dividend income (75) 55 Taxation (413) (567) Disposal of fixed assets 40 272 Available cash flow 1,041 1,2
Slide 16: Review of Operations
Review of Operations Tony Trahar 2003 Interim Results
Slide 17: Highlights - Diamonds
Highlights - Diamonds Record headline earnings - Headline earnings up 49% to $248m up 49% DTC sales of $2.92bn up 3% Operating cash flow of $1,115m $248m Anglo total dividends for 2002: $166m $126m (2001: $71m) De Beers net debt reduced by $2,225m to $927m in 1½ years De Beers debt refin
Slide 18: Highlights - Platinum
Highlights - Platinum Headline earnings: $107m Headline earnings Lower earnings primarily due to down 32% strong SA rand/dollar exchange rate Mine production up 10% Temporary increase in pipeline stock $158m levels result in reduced production of refined metal $107m AA plc holding in Anglo
Slide 19: Highlights - Gold
Highlights - Gold Headline earnings: $82m Headline earnings Gold production steady at 2.8m ozs down 18% despite lower grades Lower contribution due to stronger rand $100m Hedge book continues to reduce - $82m down 17% to 8.7m oz AngloGold/Ashanti merger proposal under consideration by Gove
Slide 20: Highlights - Coal
Highlights - Coal Headline earnings: $107m Headline earnings Lower export thermal coal prices down 25% and stronger rand & Australian dollar drive earnings lower Sales volumes increased 5% to $142m 43.0 mtpa $107m Australia operating profit increases by 29% to $74m, helped by steady coking c
Slide 21: Highlights - Base Metals
Highlights - Base Metals Headline earnings: $60m Headline earnings Disputada performs well - initial up 62% headline contribution $39m Losses in zinc offset by higher $60m contribution from copper, nickel & niobium $37m Skorpion zinc project commissioning; first metal produced in May Restr
Slide 22: Highlights - Industrial Minerals
Highlights - Industrial Minerals Headline earnings: $113m Headline earnings up 27% EBITDA up by 23% to $250m Increased earnings on the back of $113m higher UK margins and improved European performance $89m New Copebrás phosphate plant performing well $173m Buxton cement plant to be complet
Slide 23: Highlights - Paper and Packaging
Highlights - Paper and Packaging Headline earnings Headline earnings: $178m up 16% Strong performance from Mondi Europe despite economic downturn $178m Cost reductions, profit-improvement $153m initiatives and strong Euro boost performance $221m expansion of Richards Bay mill announced $60
Slide 24: Highlights - Ferrous Metals
Highlights - Ferrous Metals Headline earnings Headline earnings: $42m up 2% Difficult trading conditions with weaker SA domestic markets and impact of strong SA rand $42m $41m Avmin stake disposed of for $231m Stake in Kumba 20.1%, right to acquire further shares subject to SA Competition Tr
Slide 25: Outlook
Outlook Outlook remains challenging While geopolitical tensions have reduced somewhat following Iraq war, low growth forecasts for US, Japan and Europe Prospect of a continued strong rand/US$ exchange rate concerning Continued focus on cost savings and efficiency improvements Anglo’s produ
Slide 26: Anglo American: Adding Value to Natural Resources
ANGLO AMERICAN ADDING VALUE TO NATURAL RESOURCES 8 August 2003 2003 Interim Results
Slide 27: Additional Information (Handout Only)
Additional Information Handout Only 2003 Interim Results
Slide 28: Key Dates
Key Dates Currency Conversion 5 August 2003 Ex-dividend (JSE) 18 August 2003 Ex-dividend (LSE) 20 August 2003 Record date 22 August 2003 Payment of Interim Dividend 15 September 2003 Annual Results 25 February 2004 8 2003 Interim Results
Slide 29: Market Prices
Market Prices H1 ‘03 H1 ‘02 Gold 349 302 Platinum 654 515 Palladium 207 370 Rhodium 557 952 Copper 75 72 Nickel 379 298 Zinc 35 36 Coal: thermal (RSA - API 4 index average) 25.75 27 Coal: coking 45 44 9 2003 Interim Results
Slide 30: Headline Earnings Sensitivities
Headline Earnings Sensitivities US$m 10% change in gold price ± 31 10% change in platinum price ± 32 10% change in palladium price ±4 10% change in coal price ± 54 10% change in copper price ± 55 10% change in nickel price ± 10 10% change in zinc price ± 17 10% movement in diamond revenue ± 45 10% c
Slide 31: Projects: Gold and Industrial Minerals
Projects Gold Total additional Production Full Approved Approved production1 commences prod. capex $m2 Mponeng 4.0m oz 2004 2005 191 TauTona - Expansion project 2.3m oz 2004 2005 52 TauTona - VCR A & Pillar & CLR <120L 1.8m oz 2005 2008 117 Cripple Creek & Victor 2.8m oz 2002 2002 203 Moab Khotsong
Slide 32: Projects: Platinum
Projects Platinum Total additional Production Full Approved Approved production 1 commences prod. capex $m2 ACP Convertor Phase 1 Meet 2003 2004 250 PMR Plant Expansion expansion 2002 2005 99 Slag Cleaning Furnace requirements 2003 2003 34 Rustenburg UG2 Phase 1 395,000 oz 2002 2006 210 3 Rustenburg
Slide 33: Projects: Coal and Base Metals
Projects Coal Total additional Production Full Approved Approved production1 commences prod. capex $m Kleinkopje Expansion 1.3m tpa 2003 2005 56 Greenside Expansion 1.0m tpa 2003 2005 17 Cerrejón Sur exploration 8 Cerrejón 2.0m tpa 2004 2007 50 Kriel South Project 5.0m tpa 2005 2007 65 German Creek
Slide 34: Projects: Paper and Packaging
Projects Paper and Packaging Total additional Production Full Approved Approved production 1 commences prod. capex $m Frantschach: Steti PM3 20,000 t 2003 2003 20 Frantschach: Swiecie Pulp Mill 50,000 t 2004 2004 13 Ruzomberok: Pulp Mill 103,000 t 2004 2005 129 Ruzomberok: PM18 Expansion 100,000 t 2
Slide 35: Projects: Diamonds
Projects Diamonds Total additional Production Full Approved 1 Current projects production commences prod. capex 2 $m !Gariep 3m carats 2003 2004 32 Finsch Block 4 16m carats 2003 2007 126 Venetia Upgrade 1.5m carats pa 2003 2004 1 BB1E Premier 3m carats 2004 2007 12 Elizabeth Basy Upgrade 2m carats
Slide 36: Analysis of Headline Earnings
Analysis of Headline Earnings $m H1 ‘03 H1 ‘02 Platinum 107 158 Gold 82 100 Diamonds 248 166 Coal 107 142 Base Metals 60 37 Industrial Minerals 113 89 Paper and Packaging 178 153 Ferrous Metals 42 41 Industries (1) 9 Exploration (39) (32) Corporate Activities1 (41) (23) Headline Earnings 856 840 1 i
Slide 37: Analysis of Operating Profit
Analysis of Operating Profit $m H1 ‘03 H1 ‘02 Platinum 204 389 Gold 180 197 Diamonds 378 242 Coal 172 232 Base Metals 98 127 Industrial Minerals 136 113 Paper and Packaging 357 291 Ferrous Metals 74 66 Industries 30 52 Exploration (50) (40) Corporate Activities1 (45) (88) Operating Profit2 1,534 1,5
Slide 38: Capital Expenditure
Capital Expenditure $m H1 ‘03 H1 ‘02 Platinum 394 229 Gold 117 107 Coal 74 41 Base Metals 155 146 Industrial Minerals 136 159 Paper and Packaging 233 132 Ferrous Metals 22 8 Industries 37 25 Other 4 3 Total 1,172 850 8 2003 Interim Results
Slide 39: Headline Variance: Price
Headline Variance: Price Group Total: +$127m 180 8 19 160 (1) 22 140 127 120 26 (37) $m 100 28 80 62 60 40 20 0 AngloGold Fe rrous Base Industrial Paper & Platinum Industries Coal Tota l Me tals Me tals Minerals Packaging 9 2003 Interim Results
Slide 40: Headline Variance: Volume
Headline Variance: Volume Group Total: +$28m 60 2 1 3 8 50 12 (10) 40 $m 31 30 28 (19) 20 10 0 Paper & Coal Industries Platinum Industrial Ferrous AngloGold Ba se Tota l Pa cka ging Minera ls Me ta ls Metals 0 2003 Interim Results
Slide 41: Operating Profit Variance
Operating Profit Variance 2,100 284 1,900 1,700 1,581 (211) 123 1,534 1,500 136 $m 62 47 1,300 (49) (439) 1,100 900 700 500 H1 2002 Price Inflation Exchange Volume Cash Non-cash DBI Structural H1 2003 Cost Cost & Other Operating profit after operating exceptional items 1 2003 Interim Results
Slide 42: Regional Analysis
Regional Analysis Operating Profit $m H1 ‘03 H1 ‘02 South Africa 548 864 Rest of Africa 299 262 Europe 409 210 Americas 187 171 Australasia 91 74 1,534 1,581 Operating profit after operating exceptional items 2 2003 Interim Results
Slide 43: Operating Cost Reconciliation
Operating Cost Reconciliation Subsidiary & JV Operating Costs $m H1 2002 operating costs Subsidiaries (5,756) JVs (share of turnover less operating profit) (401) (6,157) Inflation (235) Exchange (1,222) Volume (260) Depreciation & amortisation (49) Acquisitions & disposals (414) Operating impairment
Slide 44: Anglo Platinum Reconciliation
Anglo Platinum Reconciliation $m IAS net profit (published) 148 STC adjustment 12 Movement on unrealised profit on FEC 2 Exploration 11 Prior year stock adjustment change in AP accounting policy 13 Exceptional items (8) Weighted average exchange impact 2 180 Minority interest (51) Depreciation on as
Slide 45: AngloGold Reconciliation
AngloGold Reconciliation $m 1 IAS Headline earnings (published) 140 Exploration 18 Minority interest (76) UK GAAP contribution to headline earnings 82 1 before unrealised non-hedge derivatives 5 2003 Interim Results
Slide 46: De Beers Reconciliation
De Beers Reconciliation Ordinary Preference $m Total shares shares DBI headline earnings (100%) 414 - - UK GAAP adjustments 58 - - DBI headline earnings - UK GAAP (100%) 472 417 55 AA plc’s 45% ordinary share interest 188 188 - Additional 3.65% ordinary share interest 15 15 - AA plc’s portion of pre
Slide 47: EBITDA Reconciliation
EBITDA Reconciliation $m H1 ‘03 H1 ‘02 Net cash inflow from operating activities1,286 1,381 Share of EBITDA of JVs & associates 800 588 Working capital adjustments 375 290 Differences in adjustments for (17) (22) exceptionals & non-cash EBITDA 2,444 2,237 7 2003 Interim Results
Slide 48: EBITDA by Business: H1 '03
EBITDA by Business: H1 ‘03 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 204 90 8 1 303 Gold 180 12 87 16 28 323 Diamonds 378 - - 33 411 Coal 172 64
Slide 49: EBITDA by Business: H1 '02
EBITDA by Business: H1 ‘02 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 389 44 8 4 445 Gold 197 81 15 31 324 Diamonds 242 - - 24 266 Coal 232 51 2 1
Slide 50: Anglo American: Adding Value to Natural Resources
ANGLO AMERICAN ADDING VALUE TO NATURAL RESOURCES 8 August 2003 2003 Interim Results