Anglo American plc · LSE:AAL
Anglo American — De Beers — Corporate Update (March 2006)
45 slides from Anglo American's corporate update, Mar 29, 2006
Slide 1: Visit by Anglo Analysts to Namibia: De Beers strategy and vision
Visit by ANGLO ANALYSTS TO NAMIBIA De Beers strategy and vision presentation 29th March 2006
Slide 2: Key Messages
KEY MESSAGES ¶Several major achievements in 2005 ¶De Beers Sales continue to grow year on year 2006 looking positive for demand growth ¶De Beers has developed a new approach to drive De Beers performance through chapter 2 ¶Several prospective projects coming online through to 2009 and beyond.
Slide 3: Cumulative threshold cashflow
We said ‘well done’ in Chapter 1 for Cash flow generation….. CUMULATIVE THRESHOLD CASHFLOW ACTUAL TO 31 DECEMBER 2004 5 000 4 591 4 500 4 500 4 000 4 010 3 500 3 500 US $ Millions 3 000 2 500 2 000 Threshold 1 500 Stretch Original Plan 1 000 Actual to 2003 (Ave R7,64) Actual to 2004 (Ave R6,51) 500
Slide 4: A reminder of the 2005 Milestones
a reminder of the 2005 Milestones ¶ Record Group production - 49m carats ¶ DBCM / Ponahalo Partnership ¶ New capital projects ¶ Angola and DRC exploration agreements ¶ Record DTC sales ¶ Value Added Services ¶ Legal developments ¶ Re-financing of DBsa ¶ Safety record
Slide 5: De Beers completed Chapter One and opened Chapter Two
DE BEERS HAS RECENTLY successfully completed CHAPTER ONE AND OPENED CHAPTER TWO of our strategy…..
Slide 6: Our new approach: purpose, vision, values and principles
Our new approach... PURPOSE, VISION VALUES AND PRINCIPLES
Slide 7: Our Purpose
Qe Our Purpose WE ARs DRIVEN L@: TERN DIAMOND DREAMS LINGOMLASLING REALITY
Slide 8: Our Vision
Our Vision We also have big dreams for the De Beers family. An ambitious growth vision focused on: ‘unlocking the full economic value of our leadership position across the diamond pipeline’ We will make it a reality by maximising the potential of our global partnerships, the skills and commitment of
Slide 9: Our Values
Our Values In everything we do, we strive to reflect the unique qualities of our product — we call this It means we will…
Slide 10: Be Passionate
Be Passionate We will be exhilarated by the product we sell, the challenges we face and the opportunities we create
Slide 11: Pull Together
Pull Together Being united in purpose and action, we will turn the diversity of our people, skills and experience into an unparalleled source of strength
Slide 12: Build Trust
Build Trust We will always listen first, then act with openness, honesty and integrity so that our relationships flourish
Slide 13: Show We Care
Show We Care The people whose lives we touch, their communities and nations and the environment we share, all matter deeply to us. We will always think through the consequences of what we do so that our contribution to the world is real, lasting and makes us proud
Slide 14: Shape the Future
Shape the Future We will find new ways. We will set demanding targets and take both tough decisions and considered risks to achieve them. We will insist on executional excellence and reward those who deliver
Slide 15: Principles
PRINCIPLES ¶Economics and business ethics ¶Social ¶Environment
Slide 16: De Beers Strategic Drivers – plans for 2006
De Beers Strategic Drivers – plans for 2006 Drive returns on capital Sustainable ¶Demand growth ¶Partnerships ¶Profitable production growth ¶Reputation issues ¶Value creation through the DTC ¶Organisation effectiveness ¶Cost efficiencies To reach our target of + US$2 BILLION EBIDTA BY 2009
Slide 17: Demand Growth
Qe DEMAND GROWTH SS THIS CHRISTMAS MAKE HER BELIEVE ALL OVER AGAIN IN(@) ASSEM BLY REQUIRED. SHE FALLS TO PIECES.
Slide 18: 2005 Sales: DTC Sales Comparison 1999-2005
2005 Sales DTC Sales Comparison 1999-2005 $m 7,000 +14.8% 6,539 6,500 6,000 5,689 5,695 5,518 5,500 5,278 5,167 5,000 4,472 4,500 4,000 3,500 3,000 2,500 2,000 1,500 99 '00 '01 '02 '03 '04 '05 Source: DTC Sales Planning
Slide 19: 2005 FY – Market Preliminary Estimates
2005 FY – market Preliminary Estimates ¶ DTC marketing countries growth estimates: É US$ Polished Wholesale Price: +6.9% É Local Currency Polished Wholesale Price: +6.5% USA 7% Japan 3% Italy 3% India 19% Gulf 3% China 4% Taiwan 1.0% Turkey 25% France 1% 2005
Slide 20: Marketing: Plans for 2006
Marketing: Plans for 2006 ¶ PWP value growth (US$) for 2005: +7% ¶ Development and launch of 5 new Flagships: Japan, USA, Gulf, India and South Africa: É ‘Journey’ concept launch to US consumers in Sept 2006 ¶ Forevermark: Launch planned in 4 of the largest markets in 2006 ¶ Consumer & trade confide
Slide 21: Slide 21
Slide 22: What do the markets in 2006 look like?
WHAT DO THE MARKETS IN 2006 LOOK LIKE? ¶ US – economic prospects improved post-January and economy is expected to grow sharply in Q1 2006 and level out across the second half. Strong consumer confidence means DJ demand likely to remain robust among high income groups ($100K+). However, rising oil pr
Slide 23: What do the markets in 2006 look like?
WHAT DO THE MARKETS IN 2006 LOOK LIKE? ¶ China - economic growth likely to slow. DJ demand will continue to come under competitive pressure from gold and luxury brands. Expected growth – low teens ¶ India – expect strong economic growth. DJ demand likely to be strong. Expected growth – high teens ¶
Slide 24: De Beers Strategic Drivers – plans for 2006
De Beers Strategic Drivers – plans for 2006 Drive returns on capital Sustainable ¶Demand growth ¶Partnerships ¶Profitable production growth ¶Reputation issues ¶Value creation through the DTC ¶Organisation effectiveness ¶Cost efficiencies To reach our target of + US$2 BILLION EBIDTA BY 2009
Slide 25: Profitable Production Growth in 2006
PROFITABLE PRODUCTION GROWTH in 2006 ¶$US94 million on direct exploration in strategic areas
Slide 26: Profitable Production Growth: 2006 production forecast
PROFITABLE PRODUCTION GROWTH in 2006 De Beers Group 2006 production forecast Production 2006 budget 2005 Actual DBCM 15 15.2 NAMDEB 2 1.7 DEBSWANA 31.5 31.9 WILLIAMSON 0.22 0.19 TOTAL 49 49
Slide 27: Profitable Production Growth: production projects
PROFITABLE PRODUCTION GROWTH in 2006 Production Projects Botswana Orapa 3 AK 6 (J.V.)* South Africa South African Sea Areas Finsch Plant upgrade Voorspoed (approved pending mining licence) Namibia Upgrade of marine mining fleet capacity Canada Snap Lake Victor Gahcho Kue* Tanzania Williamson mine ex
Slide 28: De Beers Strategic Drivers – plans for 2006
De Beers Strategic Drivers – plans for 2006 Drive returns on capital Sustainable ¶Demand growth ¶Partnerships ¶Profitable production growth ¶Reputation issues ¶Value creation through the DTC ¶Organisation effectiveness ¶Cost efficiencies To reach our target of + US$2 BILLION EBIDTA BY 2009
Slide 29: Value Creation through the DTC
VALUE CREATION THROUGH THE DTC
Slide 30: Value Creation through the DTC in 2006
VALUE CREATION THROUGH THE DTC in 2006 ¶Value Added Services and further development of Discretionary Value Added services ¶Continued cost reduction strategies ¶Move to Optimal inventory levels ¶Sorting migration to Southern Africa ¶Continued leverage of DTC tools and expertise.
Slide 31: De Beers Strategic Drivers – plans for 2006
De Beers Strategic Drivers – plans for 2006 Drive returns on capital Sustainable ¶Demand growth ¶Partnerships ¶Profitable production growth ¶Reputation issues ¶Value creation through the DTC ¶Organisation effectiveness ¶Cost efficiencies To reach our target of + US$2 BILLION EBIDTA BY 2009
Slide 32: Cost Efficiencies
COST EFFICIENCIES
Slide 33: Cost Efficiencies in 2006
COST EFFICIENCIES in 2006 ¶ Accelerated New diamond delivery project to halve project construction from 12 to 6 years. ¶ Ongoing restructuring taking place in DTC & DBCM. ¶ Obtaining benefits from better utilisation of existing investments ¶ Productivity gains from organisational effectiveness
Slide 34: De Beers Strategic Drivers – plans for 2006
De Beers Strategic Drivers – plans for 2006 Drive returns on capital Sustainable ¶Demand growth ¶Partnerships ¶Profitable production growth ¶Reputation issues ¶Value creation through the DTC ¶Organisation effectiveness ¶Cost efficiencies To reach our target of + US$2 BILLION EBIDTA BY 2009
Slide 35: Partnerships
PARTNERSHIPS
Slide 36: Partnerships in 2006
PARTNERSHIPS in 2006 ¶ Finalisation of Botswana Jwaneng lease renewal by mid 2006. ¶ Formation of DTC Botswana (50:50 joint venture with Botswana government) ¶ Completion of Namibian Sales contract negotiation ¶ Continued liaison with South African government to establish a sustainable South African
Slide 37: De Beers Strategic Drivers – plans for 2006
De Beers Strategic Drivers – plans for 2006 Drive returns on capital Sustainable ¶Demand growth ¶Partnerships ¶Profitable production growth ¶Reputation issues ¶Value creation through the DTC ¶Organisation effectiveness ¶Cost efficiencies To reach our target of + US$2 BILLION EBIDTA BY 2009
Slide 38: Reputation Issues
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Slide 39: Reputation Issues in 2006
REPUTATION ISSUES in 2006 ¶"Conflict diamonds" film Alluvial diamond - development issues (Kimberley Process) ¶Continued engagement with Botswana stakeholders to resolve CKGR issues ¶HIV/AIDS response ¶Diamond contribution to African economic development
Slide 40: De Beers Strategic Drivers – plans for 2006
De Beers Strategic Drivers – plans for 2006 Drive returns on capital Sustainable ¶Demand growth ¶Partnerships ¶Profitable production growth ¶Reputation issues ¶Value creation through the DTC ¶Organisation effectiveness ¶Cost efficiencies To reach our target of + US$2 BILLION EBIDTA BY 2009
Slide 41: Organisation Effectiveness
ORGANISATION EFFECTIVENESS
Slide 42: Organisation Effectiveness in 2006
ORGANISATION EFFECTIVENESS in 2006 ¶Embedding clear accountabilities across Group ¶Building and hiring exceptional skills and talent ¶Entrenching plug and play processes across projects and mines ¶Developing a culture of excellence ¶Enhancing the use of key information for optimal production
Slide 43: Most effective operating structure to address these challenges
WE BELIEVE WE HAVE CHOSEN the most effective operating structure TO ADDRESS THESE CHALLENEGES AND OPPORTUNITIES OPPORTUNITIES…… Executive Chairman Office of the Chairman Nicky Oppenheimer Jonathan Oppenheimer MD De Beers Gareth Penny Botswana / Namibia / De Beers De Beers Head of Head of Head of Ext
Slide 44: 2009 Targets
2009 tARGETS EBITDA $2bn ROCE 20%
Slide 45: De Beers Purpose
Qe De BEERS Purpose WE ‘A Rees DeRPV EIN L@: TERN DIAMOND DREAMS LINGOMASILING REALITY