Anglo American Plc · LSE:AAL
Anglo American — H1 2002 Earnings Presentation
53 slides from Anglo American's earnings presentation, Sep 10, 2002
Slide 1: Adding Value to Natural Resources: Interim Results
Adding Value to Natural Resources Interim Results 10 September 2002 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 P
Slide 2: Summary
Summary • Strong operating performances in most businesses despite lower commodity prices • Significant improvement in the Base Metals division • Headline earnings from Diamonds up 16% on higher sales • $1.9bn of acquisitions and improved geographic diversity • Successfully launched $1.1bn convertib
Slide 3: Key Financials
Key Financials • Headline earnings for the half year $840m 60 55 • Headline EPS $0.60, up 9% on H1 2001 • Cost savings & efficiency improvements of $133m • Interim dividend maintained at 15 US cents per share • Strong EBITDA of $2.2bn: EBITDA interest cover 15.5x* H1 2001 H1 2002 * annualised 2001 r
Slide 4: SA: Minerals Bill & Draft Empowerment Charter
SA: Minerals Bill & Draft Empowerment Charter • Minerals Bill to be enacted; key aspects of draft Empowerment Charter and Money Bill still to be settled • Active engagement with SA government to resolve outstanding issues in a way that builds investor confidence • Anglo Platinum reached agreement wi
Slide 5: Net Attributable Operating Assets: SA v RoW
Net Attributable Operating Assets1: SA v RoW 30 June 1999 30 June 2002 Rest of South World Africa 33% South Rest of 35% Africa World 67% 65% • Over three years, Rest of World net attributable operating assets have doubled to 65% 1 Includes investment in associates & JV’s 2002 Interim Results
Slide 6: Headline Earnings: SA v Total Rest of World
Headline Earnings: SA v Total Rest of World H1 2001 H1 2002 Rest of South World South 26% Rest of Africa Africa World Mining SA Mining 46% 40% 51% Other SA 23% Other 14% 2002 Interim Results
Slide 7: Acquisitions: Flexing Our Balance Sheet
Acquisitions: Flexing Our Balance Sheet La Rochette Durox $110m Syktyvkar $252m Mavike Moly Cop $55m $105m Key: Mitsui JV CZN Base Metals net $11m Ferrous Metals Anglo Plat. Forest Products $530m Disputada Industrial Minerals $1.3bn Platinum Kumba & Gold Fields Coal $205m Avmin Gold $365m 2002 Inter
Slide 8: H1 Acquisitions: $1.9bn
H1 Acquisitions: $1.9bn Rest of World South Africa Forest Products Platinum Syktyvkar – Russia Anglo Platinum La Rochette – France Ferrous Metals Coal Kumba/Avmin Mitsui JV – Australia Gold CZN – Colombia Gold Fields Ferrous Metals Moly Cop – Chile Industrial Minerals Durox – UK Mavike – Spain 2002
Slide 9: Internal Growth: A Well-balanced $5.1bn Project Portfolio
Internal Growth: A Well-balanced $5.1bn Project Portfolio Key: Modikwa Base Metals $266m Diamonds Forest Products Buxton $173m Twickenham Industrial Minerals $343m Collahuasi Platinum Polokwane $286m Coal $190m Cerrejòn Gold CC&V Ruzomberok $166m $203m $214m HBMS 777 Bafokeng JV $276m $660m Skorpion
Slide 10: Operating Margins: A Steady Performance
Operating Margins: A Steady Performance 20% 17.3% 15% 16.4% 15.6% 10% 9.6% 5% 0% H1 1999 H1 2000 H1 2001 H1 2002 Total operating profit before exceptionals divided by turnover 2002 Interim Results
Slide 11: EBITDA Margins: A Steady Performance
EBITDA Margins: A Steady Performance 30% 25% 20% 24.2% 23.4% 15% 10% 5% 0% H1 2001 H1 2002 EBITDA divided by turnover 2002 Interim Results
Slide 12: Review of Financials
Review of Financials Tony Lea 2002 Interim Results
Slide 13: Highlights - 6 Months to 30 June
Highlights - 6 Months to 30 June H1 2002 H1 2001 Headline earnings 840 847 Headline EPS 0.60 0.55 Interim dividend (US cents) 15 15 Average shares in issue 1,410m 1,536m 2002 Interim Results
Slide 14: Headline Earnings
Headline Earnings* US$m H1 2002 H1 2001 Profit for the financial period 767 2,640 Exceptional gains (11) (1,931) Amortisation of goodwill 82 89 Related tax and minority interests 2 49 Headline earnings for the financial period 840 847 *Based on IIMR Definition 2002 Interim Results
Slide 15: Total Headline Earnings Variances
Total Headline Earnings Variances 900 847 15 840 850 80 800 147 29 US$m 750 700 (126) (38) 650 600 (114) 550 500 H1 2001 Price Inflation Exchange Cost Interest Volum e Structural H1 2002 & Other 2002 Interim Results
Slide 16: Headline Earnings Variance: Price
Headline Earnings Variance: Price 100 9 1 19 50 29 (14) (18) US$m 0 Industrial Coal Industries Ferrous Forest Gold Base Metals Platinum Minerals Metals Products (22) -50 -100 (130) -150 2002 Interim Results
Slide 17: Headline Earnings Variance: Volume
Headline Earnings Variance: Volume 90 5 2 80 17 (2) 70 60 28 US$m 50 40 30 30 20 10 0 Coal Forest Base Metals Platinum Industrial Industries Products Minerals 2002 Interim Results
Slide 18: Balance Sheet – 30 June
Balance Sheet – 30 June US$ 30/06/2002 31/12/ 2001* Shareholders’ Funds 14,410 12,856 Net Debt 4,216 2,018 Minority Interests 2,014 1,607 Total Capital 20,640 16,481 Net Debt/Total Capital 20.4% 12.2% ROCE 18.2% 19.0% EBITDA/Total Capital 24.1% 25.0% Net Debt: South Africa 507 1,571 Rest of World (4
Slide 19: Cash Flow Analysis
Cash Flow Analysis US$m H1 2002 H1 2001 Net cash inflow from operating activities 1,381 1,506 Net interest and dividend income 170 154 Taxation (567) (347) Disposal of fixed assets 272 199 Available cash flow 1,256 1,512 Dividends paid – company and minorities (724) (790) Net acquisitions and dispos
Slide 20: Accounting Standards
Accounting Standards FRS19: Deferred Tax (implemented in 2002) • Increase in deferred tax provision of $933m as at 1 January 2002, resulting in prior year adjustment of $570m (after minority interest) charged against reserves • Headline earnings restated for 2001 - $37m decrease for H1 2001, $89m de
Slide 21: Effective Tax Rate
Effective Tax Rate • Effective tax rate for full year 2001 (pre-exceptionals) increased from 32% to 36% because of FRS 19 • Effective tax rate for H1 2002 (pre-exceptionals) of 33%, decreased from 35% for equivalent period in 2001 (adjusted for FRS 19) 2002 Interim Results
Slide 22: Review of Operations
Review of Operations Tony Trahar 2002 Interim Results
Slide 23: Highlights - Platinum
Highlights - Platinum • Headline earnings: $158m Headline earnings • Weaker results primarily due to down 39% lower PGM prices $261m • Refined Pt production up 5% • Agreement with SA government $158m regarding expansion plans • 63.8% stake in Anglo Platinum; average cost of R466 per share H1 2001 H1
Slide 24: Highlights - Gold
Highlights - Gold • Headline earnings: $100m Headline earnings • Cash costs fall by 17% to $156/oz up 27% $100m • Significant reduction in hedging position to 10.5m oz $79m • Stake in Cerro Vanguardia (Argentina) doubled to 92.5% at a cost of $98m H1 2001 H1 2002 Headline Earnings 2002 Interim Resul
Slide 25: Highlights - Diamonds
Highlights - Diamonds • Headline earnings: $166m Headline earnings • DTC sales of $2.8bn in H1 up 9% from DBI up 16% $166m • Significant restocking by retail trade $143m • Further good progress with EU on Supplier of Choice strategy • Free cash flow of $1.1bn; net debt reduced by 36% to $2.1bn H1 20
Slide 26: Highlights - Forest Products
Highlights - Forest Products • Headline earnings: $153m Headline earnings • Strong performance in flat markets up 3% • Acquired additional 68.5% stake in $148m $153m Syktyvkar for $252m • La Rochette acquisition significantly strengthens corrugated packaging position in France for $110m H1 2001 H1 2
Slide 27: Highlights - Coal
Highlights - Coal • Headline earnings: $142m • Volumes reflected increased Headline earnings demand in SA/Australia, down 4% acquisitions in Australia/Colombia, offset by production cuts in $148m $142m Colombia • Joint venture arrangements with Mitsui in Australia - Moura, German Creek and Dawson Va
Slide 28: Highlights - Industrial Minerals
Highlights - Industrial Minerals • Headline earnings: $89m Headline earnings • Stronger performance on back of up 29% higher prices & efficiency improvements $89m • Improved trading conditions in UK, $69m Spain & France • Acquisition of Durox & Mavike ($55m) • Operating cash flow up by 22% to $203m
Slide 29: Highlights - Ferrous Metals
Highlights - Ferrous Metals • Headline earnings: $41m Headline earnings • Good operating performances from up 173% Scaw, Highveld & Samancor $41m • Acquisition of Moly Cop grinding media business for $105m $15m • Progressing iron ore strategy H1 2001 H1 2002 Headline Earnings 2002 Interim Results
Slide 30: Highlights - Base Metals
Highlights - Base Metals • Headline earnings: $37m Headline earnings • Major restructuring progress, up by $67m turnaround in operating $37m performance • KCM exit finalised • Sale of Tati Nickel, Salobo, Kolwezi announced H1 2001 H1 2002 • Disputada acquisition to be finalised ($30m) Headline Earni
Slide 31: Improving the Way We Work
Improving the Way We Work • Major restructuring process completed • Head Offices rationalised • Focus now on: – Optimisation of shared services – Further procurement efficiencies – Continued cost improvements – Talent management 2002 Interim Results
Slide 32: Outlook
Outlook • Continuing low economic growth in US, Europe & Japan • Renewed concerns about consumer confidence impacting growth • Cautious outlook for commodity prices • Anglo’s robust product & geographic diversity should continue to underpin performance 2002 Interim Results
Slide 33: Interim Results 10 September 2002
Interim Results 10 September 2002 2002 Interim Results
Slide 34: Additional Information Handout Only
Additional Information Handout Only 2002 Interim Results
Slide 35: Key Dates
Key Dates Ex-dividend (JSE) 16 September 2002 Ex-dividend (LSE) 18 September 2002 Base Metals Seminar 9 October 2002 Payment of Interim Dividend 11 October 2002 Annual Results 28 February 2003 AGM 25 April 2003 2002 Interim Results
Slide 36: Market Prices
Market Prices H1 2002 H1 2001 Gold (Realised) 272 290 Gold (Market) 302 266 Platinum 515 599 Palladium 370 794 Rhodium 952 1,994 Copper 72 78 Nickel 298 300 Zinc 36 44 2002 Interim Results
Slide 37: Estimated Sensitivities – Headline Earnings
Estimated Sensitivities – Headline Earnings US$m • 10% change in gold price ± 29 • 10% change in platinum price ± 23 • 10% change in palladium price ± 7 • 10% change in coal price ± 52 • 10% change in copper price ± 30 • 10% change in nickel price ± 8 • 10% change in zinc price ± 9 • 10% change in p
Slide 38: Projects
Projects Gold Total additional Production Full Approved Approved/Under construction: production1 commences production Capex US$m Mponeng 3.00m oz 2004 2005 124 TauTona 2.70m oz 2004 39 Cripple Creek & Victor 4.13m oz 2002 2002 203 Moab Khotsong 4.50m oz 2003 2008 343 Total 14.33m oz 709 Forest Produ
Slide 39: Projects
Projects Platinum Total Production Full Approved Approved/Under construction: production1 commences production Capex US$m ACP Project Meet 2002 2004 242 PMR Plant Expansion expansion 2002 2005 27 Slag Cleaning Furnace requirements 2002 2003 30 Bafokeng Rasimone Joint Venture 485,000 oz Pt 2001 2007
Slide 40: Projects
Projects Coal Total additional Production Full Approved Approved/Under construction: production1 commences production Capex US$m Capcoal 2005 2007 107 Dartbrook 2004 2005 44 Cerrejòn Expansion 2.3Mt 2004 2006 166 SACE Expansion 2.3Mt 2003 2004 73 Total 4.6Mt 390 Industrial Minerals Total additional
Slide 41: Projects
Projects Base Metals Total additional Production Full Approved Approved/Under construction: production1 commences production Capex US$m HBMS 777 Project2 2003 2004 276 Skorpion Zinc 150,000 tpa Zn 2003 2004 454 Black Mountain Deeps 45,000 tpa Zn 2004 2006 110 Collahuasi Rosario Project 2004 2004 286
Slide 42: Projects
Projects Diamonds Total additional Production Full Current projects: production1 commences production Capex US$m CTP Kimberley 21m carats 2002 80 !Gariep Conversion 2004 50 Snap Lake 30m carats 2006 144 Total 274 Under review C-Cut Premier 10m carats delayed 600 1 Total production over life of proje
Slide 43: Analysis of Headline Earnings
Analysis of Headline Earnings US$m H1 2002 H1 2001 Platinum 158 261 Gold 100 79 Diamonds 166 143 Forest Products 153 148 Coal 142 148 Industrial Minerals 89 69 Ferrous Metals 41 15 Base Metals 37 (30) Industries 9 17 De Beers Investments - 65 Exploration (32) (27) Corporate activities (23) (41) Head
Slide 44: Analysis of Total Operating Profit
Analysis of Total Operating Profit (operating profit after operating exceptional items) US$m H1 2002 H1 2001 Platinum 389 754 Gold 197 200 Diamonds 242 212 Forest Products 291 288 Coal 232 183 Industrial Minerals 113 75 Ferrous Metals 66 34 Base Metals 127 (12) Industries 52 64 Financial Services -
Slide 45: Capital Expenditure by Division
Capital Expenditure by Division US$m H1 2002 H1 2001 Gold 107 119 Platinum 229 126 Coal 41 31 Base Metals 146 196 Industrial Minerals 159 101 Ferrous Metals 8 16 Forest Products 132 150 Industries 25 31 Other 3 2 Total 850 772 2002 Interim Results
Slide 46: Total Operating Profit Variances
Total Operating Profit Variances 1,800 109 1,694 1,700 340 (70) 118 1,600 1,581 1,500 US$m (210) 1,400 1,300 (400) 1,200 1,100 1,000 H1 2001 Price Exchange Volum e Cost Inflation Structural & H1 2002 Other 2002 Interim Results
Slide 47: Regional Analysis - at 30 June
Regional Analysis - at 30 June (operating profit after operating exceptional items) US$ million H1 2002 H1 2001 South Africa 864 1,142 Rest of Africa 262 130 Europe 210 214 Americas 171 113 Australia & Asia 74 95 1,581 1,694 2002 Interim Results
Slide 48: Profit Reconciliation - AngloGold
Profit Reconciliation - AngloGold US$ m IAS Headline Earnings (published) 176 Exploration 13 Other 4 Minority interest (93) UK GAAP contribution to headline earnings 100 2002 Interim Results
Slide 49: Profit Reconciliation – Anglo Platinum
Profit Reconciliation – Anglo Platinum US$ m IAS net profit (published) 241 STC on 2001 final dividend accrued in 2001 under UK GAAP 21 Movement on unrealised profit on FEC 5 Exploration 7 Depreciation on assets revalued on acquisition (11) Exceptional items (3) Minority interest (107) Other 5 UK GA
Slide 50: EBITDA Reconciliation
EBITDA Reconciliation US$ m H1 2002 H1 2001 Operating profit 1,581 1,694 Less exceptional items (16) - Depreciation & amort. - subs. 501 518 Depreciation & amort. - assocs. & JV’s 171 165 EBITDA 2,237 2,377 2002 Interim Results
Slide 51: EBITDA by Division: H1 2002
EBITDA by Division: H1 2002 Operating Exclude Add back Add back JV & Profit exceptional subsidiaries associate (incl JV and items depreciation & depreciation & US$m associates) amortisation amortisation EBITDA Platinum 389 - 52 4 445 Gold 197 - 96 31 324 Diamonds 242 - - 24 266 Forest Products 291 -
Slide 52: EBITDA by Division: H1 2001
EBITDA by Division: H1 2001 Operating Exclude Add back Add back JV & Profit exceptional subsidiaries associate (incl JV and items depreciation & depreciation & US$m associates) amortisation amortisation EBITDA Platinum 754 - 44 5 803 Gold 200 - 110 20 330 Diamonds 212 - - 22 234 Forest Products 288
Slide 53: Interim Results 10 September 2002
Interim Results 10 September 2002 2002 Interim Results