Anglo American plc · LSE:AAL
Anglo American — FY2003 Earnings Presentation
58 slides from Anglo American's earnings presentation, Feb 25, 2004
Slide 1: Anglo American: A World of Difference, 2003 Annual Results
ANGLO AMERICAN A WORLD OF DIFFERENCE 25 February 2004 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) Orde
Slide 2: Review of 2003
Review of 2003 A year of political and economic uncertainty Significant decline of the US dollar and strength of the South African rand Strong recovery for a number of commodities in H2 Robust overall performance from the Group 2 2003 Annual Results
Slide 3: Key Financials
Key Financials Headline EPS of $1.20 down 4% Headline EPS Headline earnings for the year $1,694m Strong EBITDA unchanged at $4.79bn $1.25 $1.20 Net adverse impact of exchange rates/prices of $178m Pre-tax cost savings & efficiency improvements of $335m DPS DPS 51c 54c Net Debt/Total Capi
Slide 4: Diversified Profile
Diversified Profile Headline earnings by business unit Platinum Industrial 12% Minerals 16% Paper and Diamonds Packaging 23% Geographic headline 22% Asset Mix earnings mix As at 31/12/2003 Ferrous & Gold Industries Base 10% 6% Metals Rest of Coal Rest of World 12% World Europe 14% 22% 14% Europe 26%
Slide 5: 5 year EBITDA history
5 year EBITDA history Consistent cash delivery 4,688 4,647 4,792 4,785 3,113 1999 2000 2001 2002 2003 $m 5 2003 Annual Results
Slide 6: Currency & commodity impact
Currency & commodity impact 900 850 10.00 9.50 Negative 800 750 Average price: 692 $/oz 9.00 8.50 Average ZAR/US$: 7.55 impact of 700 650 8.00 7.50 weaker US$: 600 550 Platinum +28% 7.00 6.50 ZAR/US$ 28% stronger $578m 500 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 6.00 Jan Feb Mar Apr May Jun
Slide 7: Currency impact: Rand strongest
Currency impact: Rand strongest performing key currency over two years 200 190 180 R +79% 170 160 150 A$ +47% 140 € +42% 130 120 £ +23% 110 100 90 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 7 2003 Annual Results
Slide 8: Anglo's path to growth
Anglo’s path to growth Pre-tax cost savings and efficiency improvements Targeted Achieved 2002 $250m $279m 9 2003 $200m $335m 9 8 2003 Annual Results
Slide 9: Pre-tax Cost Savings: $335m
Pre-tax Cost Savings: $335m Maintenance Admin & Overhead Labour $217m Materials & Supplies $12m $30m $34m $100m $3m $3m $18m $141m $7m $94m $9m $2m Restructuring Procurement Operating & synergies efficiencies 9 2003 Annual Results
Slide 10: Procurement Savings 2003
Procurement Savings 2003 ¾ Total Procurement savings 2003: $100 million Part of three year programme to upgrade Procurement and generate in excess of $250 million savings Record result - more than double previous year’s totals More effective leveraging of Business Unit volumes All Business U
Slide 11: Anglo's path to growth
Anglo’s path to growth A balanced $6bn approved Project Portfolio Kleinkopje Merebank Kriel South W.L. Tailings Buxton $56m $150m $65m $186m Key: $173m Base Metals Skorpion Ticor Diamonds Richards Bay Finsch $454m Moab Khot. $191m Paper & Packaging $221m $130m $690m Industrial Minerals Cerrejón Plat
Slide 12: Review of Operations: Diamonds
Review of Operations Diamonds ¾ Key Developments - 2003 Strong performance on the back of sustained retail demand $1.6bn of cashflow Stock reduced by $700m Debt reduced to $906m EU approval for Supplier of Choice Total cash dividends to Anglo increase from $106m to $238m ¾ Targets - 2004
Slide 13: Review of Operations: Platinum
Review of Operations Platinum ¾ Key Developments - 2003 Refined platinum production up 2.5% at 2.3m ozs Earnings impacted by strong SA rand Projects reviewed R4bn ($570m) convertible preference share offer announced New CEO appointed AA plc stake increased to 74.1% ¾ Targets - 2004 Ang
Slide 14: Review of Operations: Gold
Review of Operations Gold ¾ Key Developments - 2003 Performance impacted by stronger currencies, lower grades at some mines offset by higher gold price Ashanti deal to make AngloGold one of the world’s largest producers AA plc stake increased to 54.5% Successful bond issue raised $1bn ¾ Targ
Slide 15: Review of Operations: Coal
Review of Operations Coal ¾ Key Developments - 2003 Lower costs partially offset impact of stronger local currencies in Australia and South Africa Production up 8% to 87m tonnes Improved performances at Moranbah North and Dartbrook First coal produced at Theodore Phase I in September ¾ Targe
Slide 16: Review of Operations: Base Metals
Review of Operations Base Metals ¾ Key Developments - 2003 Major turnaround on back of strong base metals prices and Minera Sur Andes (formerly Disputada) Minera Sur Andes successfully integrated – synergy targets exceeded Skorpion zinc mine commissioned under budget, ramping up to full produc
Slide 17: Review of Operations: Base Metals
Review of Operations Base Metals ¾ Minera Sur Andes Integration: annual cost savings and synergies of $17.4m achieved, including 10% reduction in combined headcount Operating profit of $128m and EBITDA/total capital of 16% achieved in 2003 at average copper price of 81 c/lb Additional proven a
Slide 18: Review of Operations: Industrial Minerals
Review of Operations Industrial Minerals ¾ Key Developments - 2003 EBITDA up 19% to $557m Tarmac benefits from efficiency improvements in UK Strong performance at Copebrás - operating profit up 46% to $35m New phosphate fertilizer plant at Goias ($128m) operating at full capacity (455,000 ad
Slide 19: Review of Operations: Paper and Packaging
Review of Operations Paper and Packaging ¾ Key Developments - 2003 EBITDA up 7% to $976m Lower prices in Europe: compensated by incremental volumes and strong Euro Corrugated business successfully repositioned with acquisition of Bauernfeind SA results benefited from volume growth but impact
Slide 20: Review of Operations: Ferrous Metals and Industries
Review of Operations Ferrous Metals and Industries ¾ Key Developments - 2003 Significant interest in iron ore sector secured Stake in Kumba increases to 66.6% following SA Competition Tribunal approval in September 2003 Scaw Metals operating profit, including Molycop, up 37% to $70m Boart op
Slide 21: Review of Financials
Review of Financials Tony Lea 2003 Annual Results
Slide 22: Headline Earnings
Headline Earnings $m 2003 2002 Profit for the financial year 1,592 1,563 Exceptional items (87) 17 Amortisation of goodwill 203 189 Related tax & minority interests (14) (10) Headline earnings for the year 1,694 1,759 EPS (cents per share) down 4% 120 125 DPS (cents per share) up 6% 54 51 22 2003 An
Slide 23: Headline Earnings Variances
Headline Earnings Variances 2,500 400 2,000 1,759 294 1,694 81 19 62 1,500 (578) $m (39) (203) (101) 1,000 500 0 2002 Price Exchange Inflation Volum e Cash Non-cash Interest DBI Structural 2003 cost cost & Other 23 2003 Annual Results
Slide 24: Headline Variance: Exchange
Headline Variance: Exchange Group Total: -$578m Corporate Base and Paper and Ferrous Industrial Platinum AngloGold Coal Metals Exploration Packaging Metals Industries Minerals Total - (100) (200) (218) (300) (110) (400) (101) (500) (82) 11 (29) (600) (24) (20) (5) (578) (700) 24 2003 Annual Results
Slide 25: Headline Variance: Price
Headline Variance: Price Group Total: +$400m 450 2 28 35 400 400 (12) 75 (12) 350 300 133 $m 250 200 151 150 100 50 0 Base AngloGold Platinum Industrial Ferrous Paper and Industries Coal Total metals Minerals Metals Packaging 25 2003 Annual Results
Slide 26: Balance Sheet
Balance Sheet $m 31/12/2003 31/12/2002 Shareholders’ Funds 20,394 16,261 Net Debt: South Africa 3,145 12 Rest of World 5,488 8,633 5,566 5,578 Minority Interests 3,396 2,304 Total Capital 32,423 24,143 Net Debt/Total Capital 26.6% 23.1% ROCE 10.7% 17.5% EBITDA/Total Capital 16.9% 23.6% 26 2003 Annua
Slide 27: Cash Flow Analysis
Cash Flow Analysis 2003 2002 EBITDA 4,785 4,792 Share of EBITDA JVs & associates (1,425) (1,303) Increase in working capital (200) (2) Provisions & other non cash 24 131 Operating cash flow 3,184 3,618 Dividends from JVs & associates 426 258 Operating cash flow including dividends from JVs & associa
Slide 28: Strategic overview
Strategic overview Tony Trahar 2003 Annual Results
Slide 29: Strategy
Strategy A WORLD LEADER IN MINING AND NATURAL RESOURCES Unique precious metals and minerals portfolio with leadership positions in diamonds, gold and platinum Diversity of portfolio has produced stable profit & cash flows despite major currency and commodity swings Significantly improved asset
Slide 30: Strategy: Shareholder value increase
Strategy Significant increase in shareholder value since 1999¹ 200 175 150 125 100 75 50 May 99 Sep 99 Jan 00 May 00 Sep 00 Jan 01 May 01 Sep 01 Jan 02 May 02 Sep 02 Jan 03 May 03 Sep 03 Jan 04 AAL TSR Rebased FTSE100 TSR Rebased ¹Total Shareholder Return (TSR) with dividends reinvested 30 2003 An
Slide 31: Production: Topline growth
Production: Topline growth m ozs ’000 tonnes 2.36 2,4 800 709 2,2 2,0 2.02 600 424 1,8 Through 400 1,6 1,4 organic 200 1,2 1,0 Platinum +17% growth and 0 Copper +67% 1999 2000 2001 2002 2003 acquisition 1999 2000 2001 2002 2003 m tonnes 105 AA plc has ’000 tonnes 50 47 85 87 shown 40 30 65 62 signif
Slide 32: Production: Topline growth
Production: Topline growth m tonnes 000 tonnes 80 3000 70 67.2 2500 2,381 60 26.7 2000 50 40 Through 1500 923 30 20 organic 1000 500 10 Aggregates +152% growth and 0 Packaging Papers +158% 0 1999 2000 2001 2002 2003 1999 2000 2001 2002 2003 acquisition m tonnes Units m 1,5 AA plc has 3000 2,723 1.04
Slide 33: Delivery on Strategy
Delivery on Strategy SUBSTANTIAL VALUE CREATED FOR SHAREHOLDERS OVER LAST FIVE YEARS Significant restructuring of a complex Group $12bn of acquisitions and $7bn of disposals Elimination of the De Beers cross holding Balanced geographic product diversity achieved EBITDA growth of 11.3% CAGR
Slide 34: Key acquisitions: Delivering value
Key acquisitions: Delivering value Mondi Europe Acquired: since 1999 Price: $1.7bn Tarmac EBITDA/Total Cap: 23% Acquired: Mar 2000 Price: $1.1bn EBITDA/Total Cap: 16% Syktyvkar Coal Colombia & Acquired: Mar 2002 CDG Price: $0.3bn Acquired: 1997- 2002 EBITDA/Total Cap: 23% Price: $0.5bn EBITDA/Total
Slide 35: Outlook
Outlook Commodity outlook encouraging Improved economic growth in US and Japan; strong industrial performance of China Continuing US dollar weakness:rising US dollar prices? Geographic and commodity diversity will underpin performance Strong EBITDA generation, good growth for 2004 35 2003
Slide 36: Key Dates
Key Dates Currency Conversion 20th February 2004 Ex-dividend (JSE) 8th March 2004 Ex-dividend (LSE) 10th March 2004 Record date 12th March 2004 Payment of Final Dividend 29th April 2004 Interim Results 5th August 2004 Seminars and Site Visits Industrial Minerals 16-18th June 2004 De Beers T.B.A. 36
Slide 37: Additional Information
Additional Information Handout Only 2003 Interim Results
Slide 38: Market Prices
Market Prices 24th Feb 2003 2002 Gold 403 363 310 Platinum 859 692 541 Palladium 235 201 336 Rhodium 600 530 838 Copper 131 81 71 Nickel 637 437 307 Zinc 50 38 35 Coal: thermal (South Africa) 43.1* 25.7 26.1 Coal: hard coking (Australia) 55-60** 44.3 44.8 *API4 FOB Richards Bay ** typical range of r
Slide 39: Headline Earnings Sensitivities
Headline Earnings Sensitivities US$m 10% change in gold price ± 72 10% change in platinum price ± 77 10% change in palladium price ± 11 10% change in coal price ± 102 10% change in copper price ± 120 10% change in nickel price ± 19 10% change in zinc price ± 26 10% change in pulp price ± 20 10% move
Slide 40: Projects
Projects Gold Life of Mine Production Full Approved Approved production1 commences prod. capex $m2 Mponeng 4.3m oz 2004 2005 191 TauTona - Expansion project 2.3m oz 2004 2006 52 TauTona - VCR A & Pillar & CLR <120L 1.8m oz 2005 2008 117 Moab Khotsong 4.1m oz 2003 2006 690 Total 12.5m oz 1,050 Indust
Slide 41: Projects
Projects Platinum Total additional Full Approved Approved production1 prod. capex $m2 ACP Convertor Phase 1 Meet 2004 250 PMR Plant Expansion expansion 2005 99 Rustenburg UG2 Phase 1 360,000 oz 2006 210 Bafokeng Rasimone Mine (BRPM) 250,000 oz 2005 317 Modikwa Mine 162,000 oz 2004 311 W. Limb Tailin
Slide 42: Projects
Projects Coal Total additional Production Full Approved Approved production1 commences prod. capex $m Kleinkopje Expansion 1.3m tpa 2003 2004 56 Greenside Expansion 1.0m tpa 2003 2004 17 Cerrejón Sur exploration 3 Cerrejón 2.0m tpa 2005 2007 17 Kriel South Project 5.0m tpa 2005 2006 65 German Creek
Slide 43: Projects
Projects Paper and Packaging Total additional Production Full Approved 1 Approved production commences prod. capex $m Ruzomberok: Pulp Mill 105,000 t 2004 2005 129 Ruzomberok: PM18 Expansion 100,000 t 2003 2004 104 Richards Bay: BEKP Line 145,000 t 2004 2005 221 Merebank: PM1 Rebuild 160,000 t 2005
Slide 44: Projects
Projects Diamonds Total additional Production Full Approved 1 2 Current projects production commences prod. capex $m Finsch Block 4 17m carats 2004 2006 130 BB1E Cullinan 5m carats 2004 2007 12 Elizabeth Bay Upgrade 2m carats 2004 2004 27 Total 24m carats 169 Estimated 2 Under review / Awaiting appr
Slide 45: Projects
Projects Ferrous Metals Total additional Production Full Approved Approved production1 commences prod. capex $m Sishen – efficiency improvements 360,000 tpa 2003 2004 12 Ticor: Mineral Sands Furnace 1 125 kt slag 2003 2006 137 Ticor: Mineral Sands Furnace 2 125 kt slag 2003 2007 54 Total 203 Estimat
Slide 46: Analysis of Headline Earnings
Analysis of Headline Earnings $m 2003 2002 Platinum 205 351 Gold 167 205 Diamonds 386 324 Coal 232 266 Base Metals 206 69 Industrial Minerals 270 231 Paper and Packaging 368 376 Ferrous Metals 89 88 Industries 18 38 Exploration (83) (77) Corporate Activities1 (164) (112) Headline Earnings 1,694 1,75
Slide 47: Analysis of Operating Profit
Analysis of Operating Profit $m 2003 2002 Platinum 433 802 Gold 326 463 Diamonds 562 541 Coal 333 427 Base Metals 78 82 Industrial Minerals 325 277 Paper and Packaging 656 649 Ferrous Metals 156 150 Industries 52 114 Exploration (125) (93) Corporate Activities1 (190) (161) Operating Profit2 2,606 3,
Slide 48: Capital Expenditure
Capital Expenditure $m 2003 2002 Platinum 1,004 586 Gold 339 246 Coal 207 142 Base Metals 352 346 Industrial Minerals 316 363 Paper and Packaging 601 365 Ferrous Metals 107 32 Industries 88 53 Other 11 6 Total 3,025 2,139 48 2003 Annual Results
Slide 49: Headline Variance: Volume
Headline Variance: Volume Group Total: +$81m 140 20 120 (3) 31 100 (32) 81 $m 80 23 (11) 60 52 1 40 20 0 Paper & Coal Industries Platinum Industrial Ferrous AngloGold Base Total Packaging Minerals Metals Metals 49 2003 Annual Results
Slide 50: Operating Profit Variance
Operating Profit Variance 4,500 741 4,000 3,500 3,251 (385) 3,000 132 32 48 2,606 $m 2,500 (1128) (85) 2,000 1,500 1,000 500 2002 Price Inflation Exchange Volume Cash Cost Non-cash Structural 2003 Cost & Other Operating profit after operating exceptional items 50 2003 Annual Results
Slide 51: Regional Analysis
Regional Analysis Operating Profit $m 2003 2002 South Africa 981 1,790 Rest of Africa 492 439 Europe 739 583 Americas 245 301 Australasia 149 138 Total 2,606 3,251 Operating profit after operating exceptional items 51 2003 Annual Results
Slide 52: Operating Cost Reconciliation
Operating Cost Reconciliation Subsidiary & JV Operating Costs $m 2002 operating costs (13,685) Inflation (436) Exchange (2,350) Volume (202) Non-cash costs (79) Acquisitions & disposals (981) Operating impairments (205) Ramp up operations, costs higher than inflation & other (236) 2003 operating cos
Slide 53: Anglo Platinum Reconciliation
Anglo Platinum Reconciliation $m IAS headline earnings (published) 277 STC adjustment 17 Movement on unrealised profit on FEC 6 Exploration 11 Prior year stock adjustment change in AP accounting policy 29 Other 3 Weighted average exchange impact 5 348 Minority interest (95) Depreciation on assets re
Slide 54: AngloGold Reconciliation
AngloGold Reconciliation $m 1 IAS Headline earnings (published) 282 Exploration 36 318 Minority interest (150) Depreciation on assets revalued on acquisition (1) UK GAAP contribution to headline earnings 167 1 before unrealised non-hedge derivatives 54 2003 Annual Results
Slide 55: De Beers Reconciliation
De Beers Reconciliation Ordinary Preference $m Total shares shares DBI headline earnings (100%) 676 - - UK GAAP adjustments 40 - - DBI headline earnings - UK GAAP (100%) 716 599 117 AA plc’s 45% ordinary share interest 269 269 - Additional 3.65% ordinary share interest 22 22 - AA plc’s portion of pr
Slide 56: EBITDA by Business: 2003
EBITDA by Business: 2003 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 433 14 206 17 3 673 Gold 326 43 180 32 61 642 Diamonds 562 76 638 Coal 333 124
Slide 57: 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 36
Slide 58: Anglo American: A World of Difference
ANGLO AMERICAN A WORLD OF DIFFERENCE 25 February 2004 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) Orde