December 31 2003 for the six months ended Interim Results BID Vest.
2003 Interim Results
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Transcript of 2003 Interim Results
2003 Interim Results
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) Order 2001 (the “Order”) or (b) high net worth entities, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(1) of the Order (all such persons together being referred to as “relevant persons”). Any person who is not a relevant person should not act or rely on this presentation or any of its contents.
ANGLO AMERICANADDING VALUE TO
NATURAL RESOURCES
8 August 2003
2 2003 Interim Results
H1 ‘03
$0.61
Headline earnings up 2% at $856m despite stronger rand
Outstanding contribution from Diamonds, strong performances from European Paper and Packaging and Industrial Minerals offset lower Platinum, Gold and Coal
Interim dividend maintained at 15 US cents per share
Strong EBITDA of $2.4bn up 9%: EBITDA interest cover 14x
Cost savings & efficiency gains: $127m
Key Financials
H1 ‘02
$0.60
Headline EPS
3 2003 Interim Results
6
7
8
9
10
11
12
13
Jan Feb Mar Apr May Jun6
7
8
9
10
11
12
13
Jan Feb Mar Apr May Jun
Rand/US$ Exchange Rate
R/$
Average8.03
Average10.99
SA Rand 27% stronger vs. US$
Jan Feb Mar Apr May Jun Jan Feb Mar Apr May Jun
H1 2002 H1 2003
11.96
10.37
8.58
7.48
4 2003 Interim Results
Europe30%
H1 2003H1 2002
SouthAfrica54%
Headline Earnings -
Rest ofWorld18%
Americas7%
Europe21%
SouthAfrica30%
Americas12%
Rest ofWorld28%
Geographic Diversity
5 2003 Interim Results
H1 2003H1 2002
Platinum19%
Ferrous &Industries
6%
BaseMetals
4%
Gold12%
Diamonds20%Coal
17%
IndustrialMinerals
11%
Paper andPackaging
18%
Platinum13%
Ferrous &Industries
5%
BaseMetals
7%
Gold10%
Diamonds29%
Coal13%
IndustrialMinerals
13%
Paper andPackaging
21%
Headline Earnings - ProductDiversity
6 2003 Interim Results
Europe30%
SouthAfrica36%
30 June 2003
Balanced Asset Mix -
Net attributable operating assets, including investment in associates & JVs
Americas20%
Rest ofWorld14%
Geographic Diversity
7 2003 Interim Results
2003 2004 2005 2006 2007 2008Major authorised projects. Full project list included in appendix. 100% of subsidiaries and AA plc’s share of JV’s and associates. Full production dates.
Key:
Base Metals
Diamonds
Paper & Packaging
Industrial Minerals
Platinum
Coal
Gold
Cerrejón$50m Moab Khot.
$690m
Polokwane$190m
Modikwa$311m
2009
CC&V$203m
Collahuasi$288m
ACP Project$250m
Skorpion$454m
Finsch$126m
Buxton$173m
Internal Growth
A Well-balanced $6bn Project Portfolio
RPM Ph 2$444m
HBMS 777$276m
RPM Ph 1$210m
RPM Tailings$186m
Mponeng$191m
Goiás$147m
Capcoal$106m
BRPM$317m
TauTona$169m
PMR Expan.$99m
Kleinkopje$56m
Kriel$65m
Dartbrook$55m
Black Mtn$110m
Ruzomberok$233m
Richards Bay$221m
8 2003 Interim Results
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 500 employees already receiving ART - with encouraging results
Social Responsibility
Review of FinancialsTony Lea
2003 Interim Results
10 2003 Interim Results
$m H1 ‘03 H1 ‘02Profit 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
Headline Earnings
11 2003 Interim Results
Headline Earnings Variances
30 82
(231) (46)
159
(112)
127
(21)
840 856
28
0
200
400
600
800
1,000
1,200
H1 2002 Price Inflation Exchange Volum e Cashcost
Non-cashcost
Interest DBI Structural& Other
H1 2003
$m
12 2003 Interim Results
Headline Variance: Exchange
Group Total: -$231m
(231)(9)
(25)
(19)(16)
(65)
(44)
(44)
14(23)
(300)
(250)
(200)
(150)
(100)
(50)
-Platinum Coal AngloGold
Paper &Packaging
Base M etals
Corporate&
ExplorationFerrousM etals Industries
IndustrialM inerals Total
13 2003 Interim Results
Pre-tax Cost Savings: $127m
Operatingefficiencies
$84m
$55m
$19m
$3m$7m
MaintenanceAdmin & Overhead
LabourMaterials & Supplies
Procurement
$29m
$26m
$2m
Restructuring& synergies
$4m$8m
$1m$14m
$2m
14 2003 Interim Results
Balance Sheet
$m 30/06/2003 31/12/2002Shareholders’ Funds 18,371 16,261Net Debt: South Africa 1,062 12 Rest of World 5,927 6,989 5,566 5,578
Minority Interests 2,454 2,304Total 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%
15 2003 Interim Results
Cash Flow Analysis
H1 ‘03 H1 ‘02Operating cash flow 1,286 1,381Dividends from JVs & assocs. 203 115Operating cash flow including
dividends from JVs & assocs. 1,489 1,496Net interest & other dividend income (75) 55Taxation (413) (567)Disposal of fixed assets 40 272Available cash flow 1,041 1,256Dividend paid - company & minorities (739) (724)Net acquisitions & disposals (315) (1,752)Capital expenditure - maintenance (547) (271)
- expansionary (625) (579)Other (226) (128)Movements in net debt (1,411) (2,198)Net debt at start of the period (5,578) (2,018)Net debt at end of the period (6,989) (4,216)
Review of OperationsTony Trahar
2003 Interim Results
17 2003 Interim Results
Highlights - Diamonds
Record headline earnings - up 49% to $248m
DTC sales of $2.92bn up 3%
Operating cash flow of $1,115m
Anglo total dividends for 2002: $126m (2001: $71m)
De Beers net debt reduced by $2,225m to $927m in 1½ years
De Beers debt refinanced at attractive rates H1 ‘03
$248m
H1 ‘02
$166m
Headline earnings up 49%
18 2003 Interim Results
Headline earnings: $107m
Lower earnings primarily due to strong SA rand/dollar exchange rate
Mine production up 10%
Temporary increase in pipeline stock levels result in reduced production of refined metal
AA plc holding in Anglo Platinum at 72.25%
3.5m oz target remains in place
Continued rand strength: Project timing & funding under review
Highlights - Platinum
H1 ‘03
$107m
H1 ‘02
$158m
Headline earnings down 32%
19 2003 Interim Results
Highlights - Gold
H1 ‘03
$82m
H1 ‘02
$100m
Headline earnings down 18%
Headline earnings: $82m
Gold production steady at 2.8m ozs despite lower grades
Lower contribution due to stronger rand
Hedge book continues to reduce - down 17% to 8.7m oz
AngloGold/Ashanti merger proposal under consideration by Government of Ghana
$117m new expansion projects at TauTona will deliver 1.8m oz over the next 10 years
20 2003 Interim Results
Highlights - Coal
Headline earnings: $107m
Lower export thermal coal prices and stronger rand & Australian dollar drive earnings lower
Sales volumes increased 5% to 43.0 mtpa
Australia operating profit increases by 29% to $74m, helped by steady coking coal prices and production
Cerrejón commences expansion to 28 mtpa from 22 mtpa
H1 ‘03
$107m
H1 ‘02
$142m
Headline earnings down 25%
21 2003 Interim Results
Highlights - Base Metals
Headline earnings: $60m
Disputada performs well - initial headline contribution $39m
Losses in zinc offset by higher contribution from copper, nickel & niobium
Skorpion zinc project commissioning; first metal produced in May
Restructuring continues: Anaconda Nickel and Bindura Nickel sold
H1 ‘03
$60m
H1 ‘02
$37m
Headline earnings up 62%
22 2003 Interim Results
Highlights - Industrial Minerals
Headline earnings: $113m
EBITDA up by 23% to $250m
Increased earnings on the back of higher UK margins and improved European performance
New Copebrás phosphate plant performing well
$173m Buxton cement plant to be completed end 2003
H1 ‘03
$113m
H1 ‘02
$89m
Headline earnings up 27%
23 2003 Interim Results
Highlights - Paper and Packaging
Headline earnings: $178m
Strong performance from Mondi Europe despite economic downturn
Cost reductions, profit-improvement initiatives and strong Euro boost performance
$221m expansion of Richards Bay mill announced
$600m in expansionary projects underway H1 ‘03
$178m
H1 ‘02
$153m
Headline earnings up 16%
24 2003 Interim Results
Headline earnings: $42m
Difficult trading conditions with weaker SA domestic markets and impact of strong SA rand
Avmin stake disposed of for $231m
Stake in Kumba 20.1%, right to acquire further shares subject to SA Competition Tribunal approval
Highlights - Ferrous Metals
H1 ‘03
$42m
H1 ‘02
$41m
Headline earnings up 2%
25 2003 Interim Results
Outlook remains challenging
While geopolitical tensions have reduced somewhat following Iraq war, low growth forecasts for US, Japan and Europe
Prospect of a continued strong rand/US$ exchange rate concerning
Continued focus on cost savings and efficiency improvements
Anglo’s product & geographic asset mix and strong project pipeline will continue to underpin performance in years ahead
Outlook
ANGLO AMERICANADDING VALUE TO
NATURAL RESOURCES
8 August 2003
2003 Interim Results
Additional Information Handout Only
2003 Interim Results
28 2003 Interim Results
Key Dates
Currency Conversion
Ex-dividend (JSE)
Ex-dividend (LSE)
Record date
Payment of Interim Dividend
Annual Results
5 August 2003
18 August 2003
20 August 2003
22 August 2003
15 September 2003
25 February 2004
29 2003 Interim Results
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
Market Prices
30 2003 Interim Results
US$m
10% change in gold price ± 31
10% change in platinum price ± 32
10% change in palladium price ± 4
10% change in coal price ± 54
10% change in copper price ± 55
10% change in nickel price ± 10
10% change in zinc price ± 17
10% movement in diamond revenue ± 45
10% change in pulp price ± 4
10% movement in SA rand/US$ ± 109
10% movement in AUD/US$ ± 18
10% movement in Euro/US$ ± 11
Headline Earnings Sensitivities
Estimated sensitivities represent 6 month outlook. Excludes the impact of translation of monetary assets & liabilities and the effect of any hedging activities. Stated after tax at marginal rate. Pulp sensitivity depends on recoveries. Diamond sensitivity dependent on consistent volumes, mixes and pricing.
31 2003 Interim Results
1 Gold incremental production is total additional capacity over life of project. Capex converted to US$ on date of project approval.2 Nominal 3 Incremental production is a per year amount once full production is reached. Capex converted at date of project approval.
Projects
Gold Total additional Production FullApproved
Approved production1 commences prod. capex $m2
Mponeng 4.0m oz 2004 2005 191TauTona - Expansion project 2.3m oz 2004 2005 52TauTona - VCR A & Pillar & CLR <120L 1.8m oz 2005 2008 117Cripple Creek & Victor 2.8m oz 2002 2002 203Moab Khotsong 4.1m oz 2003 2008 690
Total 15.0m oz 1,253
Industrial Minerals Total additional Production FullApproved
Approved production3 commences prod. capex $m
Goiás (completed under budget) 455,000 t 2002 2003 147Buxton Cement Plant 425,000 t 2003 2004 173
Total 320
32 2003 Interim Results
Platinum Total additional Production Full ApprovedApproved production1 commences prod. capex
$m2
ACP Convertor Phase 1 Meet 2003 2004 250PMR Plant Expansion expansion 2002 2005 99Slag Cleaning Furnace requirements 2003 2003 34Rustenburg UG2 Phase 1 395,000 oz 2002 2006 210
Rustenburg UG2 Phase 23
306,000 oz 2003 2007 444RPM Tailings Retreatment 120,000 oz 2004 2006 186Bafokeng-Rasimone Mine (BRPM) 254,000 oz 1999 2004 317Modikwa Mine 162,000 oz 2002 2003 311Polokwane Smelter 650,000 t 2003 2003 190
concentrate
Total 2,041
1 Incremental production is a per year amount once full production is reached.2 Capex converted at date of project approval.3 Replacement ounces
Projects
33 2003 Interim Results
1 Incremental production is a per year amount once full production is reached. Capex converted at date of project approval. 2 To maintain & expand production levels at German Creek & Dartbrook. Incremental tonnes - German Creek (1.6m tpa) & Dartbrook (0.9m tpa).3 Extends HBMS life to 2018
Projects
Coal Total additional Production Full Approved
Approved production1 commences prod. capex $m
Kleinkopje Expansion 1.3m tpa 2003 2005 56Greenside Expansion 1.0m tpa 2003 2005 17Cerrejón Sur exploration 8Cerrejón 2.0m tpa 2004 2007 50Kriel South Project 5.0m tpa 2005 2007 65German Creek - Capcoal (Grasstree)2 3.9m tpa 2006 2007 106Dartbrook (Kayuga) 3.6m tpa 2004 2005 55Lake Lindsay exploration 35
Total 16.8m tpa 392
Base Metals Total additional Production Full Approved
Approved production commences prod. capex $m
HBMS 777 Project3 2003 2004 276Black Mountain Deeps 45,000 t Zn 2004 2005 110Collahuasi Rosario Project 2002 2004 288Skorpion 150,000 t Zn 2003 2004 454
Total 1,128
34 2003 Interim Results
1 Incremental production is a per year amount once full production is reached. Capex converted at date of project approval2 60,000 t increase in cut size capacity plus 16,000t additional production of UCWF paper
Projects
Paper and Packaging Total additional Production Full Approved
Approved production1 commences prod. capex $m
Frantschach: Steti PM3 20,000 t 2003 2003 20Frantschach: Swiecie Pulp Mill 50,000 t 2004 2004 13Ruzomberok: Pulp Mill 103,000 t 2004 2005 129Ruzomberok: PM18 Expansion 100,000 t 2003 2004 104Richards Bay: BEKP Line 145,000 t 2005 2005 221Merebank: PM2 Rebuild 40,000 t 2003 2003 26
Total 513
Total converting Production Full Approved
Approved capacity commences prod. capex $m
Ybbstal: Flex 05 60,000 t2 2004 2005 51Frantschach: Inncoat Foils - 2003 2003 11Syktyvkar: A4 Cutter 150,000 t 2003 2003 15Merebank: A4 Cutter 92,000 t 2002 2003 12
Total 89
35 2003 Interim Results
Projects
Diamonds Total additional Production Full Approved
Current projects production1
commences prod. capex $m
2
!Gariep 3m carats 2003 2004 32Finsch Block 4 16m carats 2003 2007 126Venetia Upgrade 1.5m carats pa 2003 2004 1BB1E Premier 3m carats 2004 2007 12Elizabeth Basy Upgrade 2m carats 2004 2004 24
Total 24m carats 195 +1.5m carats pa Venetia
Under review
C-Cut Premier 110m carats 2007 2011 454Finsch Tailings 6m carats 2004 2004 16Snap Lake 19m carats 2007 2008 315Victor 6m carats 2007 2008 305
Total 141m carats 1,090
1 Total additional production shown for the life of the project. Shown on a 100% basis.2 Approved capex is AA plc’s effective attributable share (48.65%), converted to US$ at R7.80=US$1, C$1=US$0.74
36 2003 Interim Results
$m H1 ‘03 H1 ‘02
Platinum 107 158Gold 82 100Diamonds 248 166Coal 107 142Base Metals 60 37Industrial Minerals 113 89Paper and Packaging 178 153Ferrous Metals 42 41Industries (1) 9Exploration (39) (32)Corporate Activities1 (41) (23)
Headline Earnings 856 840
Analysis of Headline Earnings
1 includes Gold Fields
37 2003 Interim Results
$m H1 ‘03 H1 ‘02
Platinum 204 389Gold 180 197Diamonds 378 242Coal 172 232Base Metals 98 127Industrial Minerals 136 113Paper and Packaging 357 291Ferrous Metals 74 66Industries 30 52Exploration (50) (40)Corporate Activities1 (45) (88)
Operating Profit2 1,534 1,581
Analysis of Operating Profit
1 includes Gold Fields
2 after operating exceptional items
38 2003 Interim Results
$m H1 ‘03 H1 ‘02
Platinum 394 229Gold 117 107Coal 74 41Base Metals 155 146Industrial Minerals 136 159Paper and Packaging 233 132Ferrous Metals 22 8Industries 37 25Other 4 3
Total 1,172 850
Capital Expenditure
39 2003 Interim Results
Headline Variance: Price
Group Total: +$127m
62
(37)
22127
26
8
(1)
28
19
0
20
40
60
80
100
120
140
160
180
AngloGold FerrousMetals
BaseMetals
IndustrialMinerals
Paper &Packaging
Platinum Industries Coal Total
$m
40 2003 Interim Results
Headline Variance: Volume
Group Total: +$28m
31
(19)
3
28
8
1
(10)12
2
0
10
20
30
40
50
60
Paper &Packaging
Coal Industries Platinum IndustrialMinerals
FerrousMetals
AngloGold BaseMetals
Total
$m
41 2003 Interim Results
Operating Profit Variance
136
(439)
123
62
(49)
284
(211) 1,534
47
1,581
500
700
900
1,100
1,300
1,500
1,700
1,900
2,100
H1 2002 Price Inflation Exchange Volume CashCost
Non-cashCost
DBI Structural& Other
H1 2003
$m
Operating profit after operating exceptional items
42 2003 Interim Results
Regional Analysis
Operating profit after operating exceptional items
Operating Profit$m H1 ‘03 H1 ‘02
South Africa 548 864Rest of Africa 299 262Europe 409 210Americas 187 171Australasia 91 74
1,534 1,581
43 2003 Interim Results
Operating Cost Reconciliation
Subsidiary & JV Operating Costs $mH1 2002 operating costsSubsidiaries (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 impairments (28) Other costs recovered through revenues (62) Ramp up operations, costs higher than inflation & other (65)H1 2003 operating costs before cost savings (8,492) Cost saving initiatives 127H1 2003 Operating costs
Subsidiaries (7,979)JVs (share of turnover less operating profit) (386) (8,365)
44 2003 Interim Results
$m
IAS net profit (published) 148STC adjustment 12 Movement on unrealised profit on FEC 2Exploration 11Prior year stock adjustment change in AP accounting policy 13Exceptional items (8)Weighted average exchange impact 2
180Minority interest (51)Depreciation on assets revalued on acquisition (22)
UK GAAP contribution to headline earnings 107
Anglo Platinum Reconciliation
45 2003 Interim Results
$m
IAS Headline earnings (published)1
140Exploration 18Minority interest (76)
UK GAAP contribution to headline earnings 82
AngloGold Reconciliation
1 before unrealised non-hedge derivatives
46 2003 Interim Results
Ordinary Preference$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 preference shares 45 - 45
AA plc headline earnings 248 203 45
De Beers Reconciliation
47 2003 Interim Results
EBITDA Reconciliation
$m H1 ‘03 H1 ‘02Net cash inflow from operating activities1,286 1,381Share of EBITDA of JVs & associates 800 588Working capital adjustments 375 290Differences in adjustments for (17) (22)
exceptionals & non-cash EBITDA 2,444 2,237
48 2003 Interim Results
EBITDA by Business: H1 ‘03
$m
PlatinumGoldDiamondsCoalBase MetalsIndustrial MineralsPaper & PackagingFerrous MetalsIndustriesOther
Total
Operating Profit(incl JVs
& Associates)
204180378172
98136357
7430
(95)
1,534
EBITDA
303323411256235250523115
89 (61)
2,444
ExcludeExceptional
Items
12
12
Add Back SubsidiariesDepreciation
9087
-64
10986
1481429
6
633
Add Back JVs& Associates Depr. & Amort.
128331828
29
262817
190
Add Back SubsidiariesAmortisation
816
-2-
26912
11
75
49 2003 Interim Results
EBITDA by Business: H1 ‘02
$m
PlatinumGoldDiamondsCoalBase MetalsIndustrial MineralsPaper & PackagingFerrous MetalsIndustriesOther
Total
Operating Profit(incl JVs
& Associates)
389197242232127113291
6652
(128)
1,581
EBITDA
445324266302179203407
9595
(79)
2,237
ExcludeExceptional
Items
(46)
30
(16)
Add Back SubsidiariesDepreciation
4481
-515767
1049
178
438
Add Back JVs& Associates Depr. & Amort.
431241741
18
2025
-
171
Add Back SubsidiariesAmortisation
815
-2-
224-1
11
63
ANGLO AMERICANADDING VALUE TO
NATURAL RESOURCES
8 August 2003
2003 Interim Results