Anglo American Plc · LSE:AAL
Anglo American — FY2006 Earnings Presentation
44 slides from Anglo American's earnings presentation, Feb 21, 2007
Slide 1: Delivering Our Strategic Goals – Annual Results
DELIVERING OUR STRATEGIC GOALS Annual Results 21 February 2007 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: Highlights
Highlights • Record performance: – EBIT up 54% at $9.8bn – underlying earnings up 46% at $5.5bn • Total dividend up 20% to 108c per share • Record production from key mining businesses • Cash generation (EBITDA) up 36% at $12.2bn • Cost savings and efficiencies exceeded target at $583m • Further $3b
Slide 3: Strong six year performance
Strong six year performance EBIT margins Underlying EPS 3.73 25.4% US$ 2.58 18.5% 17.1% 16.3% 14.7% 1.87 11.6% 1.25 1.20 1.14 2001 2002 2003 2004 2005 2006 2001 2002 2003 2004 2005 2006 +27% CAGR Years 2004-2006 are prepared under IFRS. Years 2001-2003 are prepared under UK GAAP 3 2006 Annual Result
Slide 4: Capital return
Capital return Dividend per share Capital return programme (announced) • Share buybacks totalling $9bn • Special dividends totalling $1.5bn $10.5bn $5bn US$ 1.08 0.90 $3bn 0.70 4.00 $2.5bn 0.51 0.54 0.49 Share buybacks 2.0 3.00 Special dividends 1.00 0.50 2001 2002 2003 2004 2005 2006 H1 2006 H2 200
Slide 5: Production growth
Production growth Production increases despite tough industry conditions 15% 4% 3% 2% 1% 1% Platinum Coal Copper Nickel Zinc Iron ore *Coal production variance excludes Dartbrook 5 2006 Annual Results
Slide 6: Mining highlights
Mining highlights $3,876m Base Metals Platinum $2,398m $1,678m $854m 2005 2006 2005 2006 • Record operating profit - up 131% on the • Anglo Platinum profit up 181% to record back of increased prices and higher $2,398m copper, nickel and zinc volumes • Increased prices and higher sales volumes • Cont
Slide 7: Mining highlights
Mining highlights $1,456m Ferrous Metals Coal $1,360m $1,019m $864m 2005 2006 2005 2006 • Kumba and Scaw records strong • Increased domestic sales tonnage helped performance on the back of higher iron ore offset lower export prices and volumes prices and expansions • Australian output impacted by Da
Slide 8: Mining highlights
Mining highlights $583m Diamonds Industrial Minerals $463m $370m $336m 2005 2006 2005 2006 • Operating profit at $463m • Tarmac UK profits impacted by lower • Production up 4% at 51m carats volumes in challenging markets and high energy costs • DTC sales down 6% at $6.15bn reflecting reduced Russian
Slide 9: Gold and Paper and Packaging highlights
Gold and Paper and Packaging highlights Paper and Packaging Gold $495m $477m $467m $332m 2005 2006 2005 2006 • Operating profit declined slightly with • Operating profit up 41% to $467m on the stronger H2 reflecting improved market back of stronger gold price conditions • Average price received incr
Slide 10: Delivering Our Strategic Goals – René Médori
DELIVERING OUR STRATEGIC GOALS Annual Results 21 February 2007 René Médori 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 (Fina
Slide 11: Financial Performance
Financial Performance $bn 2006 2005 change EPS ($) Operating profit 9.8 6.4 +54% 2006 3.73 (+45%) Effective tax rate (%) 32.7 26.5 2005 2.03 Underlying earnings 5.5 3.7 +46% 2.58 1.70 Capex 3.7 3.3 +11% 1.40 1.18 EBITDA 12.2 9.0 +36% ROCE (%) 32.4 19.2 Net debt 3.3 5.0 H1 2005 H2 2005 H1 2006 H2 200
Slide 12: Operating profit variances
Operating profit variances $m 14,000 12,000 4,869 235 77 +5.4% (495) 9,832 10,000 (1,102) (49) (18) (61) 8,000 6,376 6,000 4,000 2,000 0 2005 Price Exchange Volume Inflation Cash cost Non-cash Associates Other 2006 cost Gold variance prior to 20 April has been included in Associates variance 12 2006
Slide 13: Operating profit variances – Price
Operating profit variances – Price Commodity price performance (indexed) $m 300 2005 2006 14,000 260 Copper 12,000 4,869 220 180 10,000 Platinum 140 8,000 100 6,376 Jan May Sep Jan May Sep Dec 6,000 $m Price variance breakdown 6,000 4,000 5,000 258 194 349 657 4,000 2,000 1,382 3,000 2,029 0 2,000 2
Slide 14: Operating profit variances - FX
Operating profit variances - FX $m Currency performance 14,000 2005 2006 8.00 12,000 235 Rand 4,869 7.50 10,000 7.00 8,000 avg: 6.77 6,376 6.50 avg: 6.37 6,000 6.00 4,000 5.50 2,000 5.00 0 Jan May Sep Jan May Sep Dec 2005 Price Exchange H2 2006 average: 7.23 Underlying earnings sensitivity: ± $66m S
Slide 15: Operating profit variances - Volume
Operating profit variances - Volume $m 14,000 Production increases 235 77 12,000 16% 15% Refined 4,869 production H2: 24.2% 14% 10,000 12% 8,000 10% 6,376 6,000 8% 6% Mined 4,000 5.4% production 4% 4% H2: 6.0% 2,000 2% 1% 1% H2: 7.8% H2: 3.6% 0 0% Platinum Copper Coal* Iron Ore 2005 Price Exchange V
Slide 16: Operating profit variances - Cost
Operating profit variances - Cost $m Cost and efficiency savings of $583m 14,000 $m 77 Cash cost increase: 235 281 279 12,000 4,869 +5.4% (495) 10,000 (1,102) Other 8,000 Admin 6,376 Maintenance Energy 6,000 Labour Materials 4,000 23 2,000 Operating Procurement Restructuring & efficiencies Synergies
Slide 17: Cash costs increase
Cash costs increase $m +5.4% 1,800 312 1,600 1,400 84 -2.8% 105 1,200 191 +0.5% 1,102 259 +0.9% 1,000 (567*) 800 +1.3% 718 600 400 +3.5% 200 - Materials Labour & TC/RC Energy Freight Other Cost Cash Costs Contractors Savings *Gold cost savings of $16m (prior to 20 April 2006) included in Associates
Slide 18: Net cashflow/net debt
Net cashflow/net debt $bn Full year Opening net debt 5.0 Capital expenditure Operating cashflows (10.1) $3.5bn 581 Capital expenditure 3.7 $2.6bn $2.6bn 298 Cash tax paid 2.0 Ferrous Metals 284 373 298 Industrial Minerals 304 274 AGA Base Metals 367 271 923 Deconsolidation of debt (1.9) Platinum 633
Slide 19: Evolution of net debt
Evolution of net debt Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Gearing¹ 27.9% 32.0% 25.4% 17.0% 12.9% 8.6 8.2 $bn 5.6 5.0 3.3 Net Debt 2002 2003 2004 2005 2006 Net (Acq)/Disposals (3.7) (0.7) 1.1 0.5 1.4 Capex (2.1) (3.0) (3.2) (3.3) (3.7) Fx impact on debt (0.1) (0.7) (0.7) 0.9 (0.3) ¹ Net debt/Net Debt+
Slide 20: Capital return
Capital return $m Total capital return of $10.5bn 4,000 2006 Annual Results 3,500 2006 Interim Results Further $3bn buyback Further $4bn buyback 3,000 $1.0bn special dividend 2,500 2005 Annual Results $2bn share buyback announced 2,000 $0.5bn special dividend 1,500 1,000 $2.0bn $3.2bn 500 to date 0
Slide 21: Delivering Our Strategic Goals – Tony Trahar
DELIVERING OUR STRATEGIC GOALS Annual Results 21 February 2007 Tony Trahar 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 (Fina
Slide 22: Strategic progress
Strategic progress • Shareholding in AGA reduced to 42% • Phased exit strategy • Evaluating all options for value accretive reductions in stake • Approval in principle granted for Dual Listed Structure (DLC) of Mondi in Johannesburg and London • Tarmac in depth review completed; restructuring underw
Slide 23: Strategy update: Mondi
Strategy update: Mondi • Approval in principle granted for Dual Listed Structure (DLC) of Mondi in Johannesburg and London • Senior management team in place • Likely timing: mid year 23 2006 Annual Results
Slide 24: Future growth – strong project pipeline
Future growth – strong project pipeline Coal¹ Iron ore¹ mt mt Current 100 production Current 150 95.6mt production 80 31mt Faleme & other iron ore projects 130 Unapproved Aus projects Pellets 60 SEP 2 Phase 1 Phoenix 110 Unapproved SA projects Sishen South Thabazimbi 40 New projects in South America
Slide 25: Future growth – strong project pipeline
Future growth – strong project pipeline Copper¹ Nickel¹ ² ‘000 tonnes ‘000 tonnes Further expansion potential at 1,000 Collahuasi Current 120 Production 643,800t Quellaveco Further nickel projects³ Current 800 production: 80 Los Bronces expansion 26,400t Collahuasi debottleneck 600 Barro Alto 40 Bas
Slide 26: Strong project pipeline
Strong project pipeline Project pipeline $6.9bn of approved projects $10-15bn of future projects FALEME & OTHER Iron ore COLLAHUASI SASA marine debottlenecking $52m MACCAUVLEI Copper SADDLER’S WEST CREEK LEBOWA Coal TWICKENHAM $44m PAARDEKRAAL CERREJÓN 2 $179m Platinum $43m $316m MARIKANA JV SISHEN
Slide 27: Summary
Summary • Another strong year • Progress in delivering strategic goals • Additional $3bn buyback announced • Continued production growth underpinned by project pipeline • Supportive climate for commodities in 2007 27 2006 Annual Results
Slide 28: Delivering Our Strategic Goals
DELIVERING OUR STRATEGIC GOALS Annual Results 21 February 2007 28 2006 Annual Results
Slide 29: Key Dates
Key Dates • Currency Conversion (US$:Rand) 20 February 2007 • Currency Conversion (US$:£/€) 20 March 2007 • Ex-dividend (JSE) 12 March 2007 • Ex-dividend (LSE) 14 March 2007 • Record Date 16 March 2007 • Payment of Final Dividend 3 May 2007 • Interim Results 3 August 2007 29 2006 Annual Results
Slide 30: Market Prices
Market Prices Average Price 2006 2005 Gold - $/oz 604 445 Platinum - $/oz 1142 897 Palladium - $/oz 321 201 Rhodium - $/oz 4571 2056 Copper – cents/lb 305 167 Nickel – cents/lb 1095 668 Zinc – cents/lb 148 63 Coal: thermal (RSA - API 4 index average) - $/t 50.7 46.0 Ferrovanadium - $/kg V 39 64 30 2
Slide 31: Underlying Earnings Sensitivities
Underlying Earnings Sensitivities US$m 10% change in gold price ± 107 10% change in platinum price ± 159 10% change in palladium price ± 24 10% change in coal price ± 186 10% change in copper price ± 286 10% change in nickel price ± 37 10% change in zinc price ± 111 10% change in iron ore price ± 52
Slide 32: Approved projects
Approved projects Additional Production Approved Project name production Full production capex ($m) (attributable) commences (attributable) Dawson 2.9mtpa coking 2005 2007 426 Maccauvlei West 2.7mtpa for Eskom 2008 2009 44 Cerrejón 1 2mtpa 2004 2007 50 Cerrejón 2 1mtpa 2005 2008 43 Lake Lindsay 4 mp
Slide 33: Approved projects
Approved projects Additional Production Approved Project name production Full production capex ($m) (attributable) commences (attributable) Townlands ore Replacement 2014 139 Amandelbult UG2 100,000 oz pa 2012 224 Marikana JV 145,000 oz pa (100%) 2007 18 Mototolo JV 132,000 oz pa (100%) 2007 100 Unk
Slide 34: Analysis of Underlying Earnings
Analysis of Underlying Earnings $m 2006 2005 Platinum 1,265 483 Gold 178 105 Diamonds 227 430 Coal 640 724 Base Metals 2,647 1,240 Industrial Minerals 266 267 Paper and Packaging 274 296 Ferrous Metals and Industries 583 757 Exploration (113) (115) Corporate Activities (496) (451) Underlying Earning
Slide 35: Analysis of Operating Profit
Analysis of Operating Profit $m 2006 2005 Platinum 2,398 854 Gold 467 332 Diamonds 463 583 Coal 864 1,019 Base Metals 3,876 1,678 Industrial Minerals 336 370 Paper and Packaging 477 495 Ferrous Metals and Industries 1,360 1,456 Exploration (132) (150) Corporate Activities (277) (261) Operating Profi
Slide 36: Capital Expenditure
Capital Expenditure $m 2006 2005 Platinum 923 616 Gold 196 722 Coal 780 331 Base Metals 298 271 Industrial Minerals 298 274 Paper and Packaging 581 691 Ferrous Metals and Industries 581 373 Other 29 28 Total 3,686 3,306 36 2006 Annual Results
Slide 37: Operating variance: Exchange
Operating variance: Exchange Group total = $235m 350 $m 300 27 6 3 66 (13) 235 250 (43) 200 189 150 100 50 - Platinum Ferrous Coal Corporate Industrial Paper & Base Total Metals Minerals Packaging Metals 37 2006 Annual Results
Slide 38: Underlying Earnings variance
Underlying Earnings variance $m 8,000 3,581 129 7,000 (344) 180 33 6,000 (823) (42) 5,471 (154) 5,000 (825) 4,000 3,736 3,000 2,000 1,000 0 2005 Price Exchange Inflation Volume Cash Cost Non-cash Interest Associates Structural & 2006 Cost other Gold variances treated as Associate for full period 38
Slide 39: Regional Analysis
Regional Analysis Operating profit¹ $m 2006 2005 South Africa 4,244 2,868 Rest of Africa 596 531 Europe 952 741 Americas 3,694 1,948 Australasia 346 288 9,832 6,376 1 Operating profit before special items and remeasurements. Includes share of associates. 39 2006 Annual Results
Slide 40: Operating Cost Reconciliation
Operating Cost Reconciliation $m 2005 Operating costs (subsidiaries and share of joint ventures) (24,090) Inflation (495) Exchange 366 Sales volume (565) Acquisitions, disposals and new operations 2,108 2005 Operating costs (restated) (22,676) Price linked costs (630) Structural and other1 126 Depre
Slide 41: Anglo Platinum Reconciliation
Anglo Platinum Reconciliation $m IFRS headline earnings (US$ equivalent) 1,771 Exploration 30 Exchange rate difference (40) Adjustment to profit on disposal¹ 16 Other adjustments (6) 1,771 Minority interest (454) Depreciation on assets fair valued on acquisition (net of tax) (52) Contribution to AA
Slide 42: De Beers Reconciliation
De Beers Reconciliation $m DBI underlying earnings¹ (100%) 425 Adjustments² 18 DBI underlying earnings – AA plc basis (100%) 443 AA plc’s 45% ordinary share interest 199 Income from preference shares 28 Contribution to AA plc underlying earnings 227 ¹DBI underlying earnings is stated before costs of
Slide 43: AngloGold Ashanti Reconciliation
AngloGold Ashanti Reconciliation $m IFRS adjusted headline earnings (published) 413 Exploration 16 Other adjustments 10 Depreciation on assets fair valued on acquisition (net of tax) (18) Minorities’ share of profit during subsidiary period up to 20/04/2006 (69) Share of earnings not attributable to
Slide 44: Delivering Our Strategic Goals
DELIVERING OUR STRATEGIC GOALS Annual Results 21 February 2007 44 2006 Annual Results