Anglo American Plc · LSE:AAL
Anglo American — FY2004 Earnings Presentation
55 slides from Anglo American's earnings presentation, Feb 23, 2005
Slide 1: Anglo American: Meeting the World's Needs – 2004 Annual Results
ANGLO AMERICAN MEETING THE WORLD’S NEEDS 23 February 2005 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)
Slide 2: Highlights
Highlights • Record results: - Headline earnings up 59% at $2,689m • Cash generation (EBITDA) up by $2.3bn to $7,110m • Total dividend up 30% at 70c per share • Record performances from Base and Ferrous Metals • $1.5bn of projects completed: $4.7bn project pipeline on track • Ongoing optimisation of
Slide 3: Headline earnings by business unit
Headline earnings by business unit 6% 12% 9% 18% 6% 25% 10% 14% 14% 23% 13% 10% 16% 12% 14% 39% 2003 2004 Platinum Gold Diamonds Coal Base Metals Industrial Minerals Paper and Packaging Ferrous and Industries 3 2004 Annual Results
Slide 4: Geographic headline earnings mix
Geographic headline earnings mix 15% 22% 26% 34% 18% 14% 45% 26% 2003 2004 Europe South Africa Americas Rest of World 4 2004 Annual Results
Slide 5: EBITDA – up 49%
EBITDA – up 49% Strong cash generation continues $7,110 $m $4,647 $4,792 $4,785 $3,677 H2 $2,270 $2,555 $2,341 $3,433 H1 $2,377 $2,237 $2,444 2001 2002 2003 2004 5 2004 Annual Results
Slide 6: EBITDA increases across the Group
EBITDA increases across the Group $1,626m 1,600 1,400 $1,249m 1,200 $996m 1,000 $867m 800 $686m $688m $701m $624m 600 400 +12% +36% +8% +9% +29% +2% +183% +186% 200 0 Industrial Coal Diamonds Gold Platinum Paper and Ferrous Base 2003 Minerals Packaging Metals and Metals 2004 Industries 6 2004 Annual
Slide 7: 2004: Improved cashflow returns
2004: Improved cashflow returns Cash flow return 35.0% 30.0% 31.8% 25.0% Group: 20.4% 24.9% 20.0% 23.3% Group: 17.3% 20.5% 18.8% 15.0% 16.2% 16.8% 14.6% 10.0% 5.0% 0.0% Platinum Industrial Gold Paper and Ferrous Diamonds Coal Base Minerals Packaging Metals and Metals Industries 2004 2003 Cash flow r
Slide 8: Our strategy for growth
Our strategy for growth GROWTH THROUGH GROWTH THROUGH VALUE FROM COST PROJECTS ACQUISITIONS CUTTING AND EFFICIENCIES Grow shareholder value Invest where Invest in NPV+ we have core opportunities competence Ability to identify, acquire and develop world-class asset positions Business Cost of World-cl
Slide 9: Successful project execution
Successful project execution GROWTH THROUGH PROJECTS • Commenced commissioning in March 2004 • Under budget Skorpion Collahuasi Rosario • Expected to achieve design Zinc capacity (800,000tpa) well Copper ahead of schedule $454m $288m Buxton • World’s first solvent extraction • Commissioned in April
Slide 10: Successful project execution
Successful project execution GROWTH THROUGH PROJECTS Ruzomberok • Fully commissioned ahead of schedule during 2004 Pulp and Paper • Improved smelting recoveries and unit cost reduction $233m ACP • $233m paper and pulp expansion completed end 2004 Platinum • Additional 110,000t of paper and 105,000t
Slide 11: Substantial long term project portfolio
Substantial long term project portfolio GROWTH THROUGH APPROVED: UNAPPROVED: PROJECTS $4.7bn $8bn QUELLAVECO SISHEN SOUTH Copper Iron ore MEREBANK COLLAHUASI OBUASI DEEPS SIGUIRI EXPANSION $174m ISIBONELO Gold $52m Copper $65m RICHARDS BAY W.L. TAILINGS GAMSBERG MORRO SEM $235m INYANDA TICOR 2 $186m
Slide 12: Transforming the asset base
Transforming the asset base GROWTH THROUGH ACQUISITIONS $15bn acquired M an Fr Co to an s al An 99- ts au me Bl An (19 Co glo 20 ch er x an Ass be gl 99- lo Go 04) co ac nfe B o m (1 s Pl 200 h Ru e ll C La b i ld 9 C m ack Sh ma at 4 Di he a m nd Sy op a De ties As ity zo oa in Ro N Ku ar in ) an T
Slide 13: 2004: Optimising the asset base
2004: Optimising the asset base GROWTH THROUGH ACQUISITIONS • Key acquisitions in 2004: - Ashanti ($1.8bn) - Frantschach minority ($390m) - Bauernfeind ($433m) • Recent acquisitions performing well: - Minera Sur Andes – EBITDA return of 48% - Kumba – strong operating performance in 2004 13 2004 Annu
Slide 14: 2004: Optimising the asset base
2004: Optimising the asset base $2.1bn Other • $2.1bn of disposals made in 2004: Nkomati FirstRand Mondi Shanduka - Gold Fields stake ($1.18bn) Terra - Hudson Bay ($257m) Hudson Bay - Terra Industries ($255m) - Mondi Shanduka ($176m) Gold Fields - FirstRand ($47m) - Nkomati Nickel ($37m) 2004 14 200
Slide 15: Record cost savings and efficiencies
Record cost savings and efficiencies VALUE FROM COST CUTTING AND EFFICIENCIES $1.2bn since 2002 TARGETED $250m 2002 ACHIEVED $279m TARGETED $200m 2003 ACHIEVED $335m TARGETED $250m 2004 ACHIEVED $554m 2005 TARGETED $350m 15 2004 Annual Results
Slide 16: 2004: Cost savings from all operations
2004: Cost savings from all operations VALUE FROM COST CUTTING AND EFFICIENCIES $554m….. Offsetting real cash cost increases $m 160 $144m 140 120 $103m 100 $80m 80 $63m $51m $64m 60 $47m 40 20 0 Platinum Gold Coal Base Metals Industrial Paper and Ferrous and Materials & Supplies Labour Minerals Pack
Slide 17: Executive Board
Executive Board • Formation of Executive Board • Role: key coordinating management body – Implementing strategies approved by plc board – Prioritising allocation of capital, technical and human resources – Establishing best management practice • Members: – CEO of Anglo plc – Heads of Finance, Techni
Slide 18: Review of Financials
REVIEW OF FINANCIALS Tony Lea 2004 Annual Results
Slide 19: Headline earnings
Headline earnings $m 2004 2003 %ch Profit for the financial period 2,913 1,592 83% Exceptional items (428) (87) Amortisation of goodwill 221 203 Related tax & minority interests (17) (14) Headline earnings for the financial period 2,689 1,694 59% EPS (cents per share) 188 120 57% DPS (cents per shar
Slide 20: Headline earnings variances
Headline earnings variances $m 4,000 1,661 3,500 257 3,000 2,689 (385) (43) 2,500 (236) (143) (80) (5) (31) 2,000 1,694 1,500 1,000 500 0 2003 Price Exchange Inflation Volume Cash Non-cash Interest DBI Structural 2004 cost cost & Other 20 2004 Annual Results
Slide 21: Headline variance: Price
Headline variance: Price Group total = +$1,661m $m 2,000 72 48 1,800 143 1,661 260 1,600 1,400 292 (158) 1,200 1,004 1,000 800 600 400 200 0 Base Metals Platinum Coal Ferrous and Gold Industrial Paper and Total Industries Minerals Packaging 21 2004 Annual Results
Slide 22: Headline variance: Exchange
Headline variance: Exchange Group total = -$385m Base Corporate & Paper and Ferrous and Industrial Platinum Gold Metals Coal Exploration Packaging Industries Minerals Total - (50) (100) (150) (200) (176) (250) (300) (72) (350) (55) 18 (400) (55) (25) (385) (11) (9) (450) $m 22 2004 Annual Results
Slide 23: Balance sheet
Balance sheet $m 31/12/2004 31/12/2003 Shareholders’ Funds 24,998 19,772 Net Debt: South Africa 3,337 3,145 Rest of World 4,784 8,121 5,488 8,633 Minority Interests 4,620 3,396 Total Capital 37,739 31,801 Net Debt/Total Capital 21.5% 27.1% ROCE 13.4% 10.7% EBITDA/Total Capital 20.4% 17.3% 23 2004 An
Slide 24: Cash flow analysis
Cash flow analysis 2004 2003 EBITDA 7,110 4,785 Share of EBITDA of JVs & associates (1,926) (1,425) Increase in working capital (592) (200) Provisions & other non-cash 181 24 Operating cash flow 4,773 3,184 Dividends from JVs & associates 408 426 Operating cash flow including dividends from JVs & as
Slide 25: IFRS Transition
IFRS Transition • The Group is on track to meet its reporting deadlines. • All significant project milestones, including system changes and training, are completed. • 2004 restated IFRS results will be published in May 2005. • Significant accounting policy changes and first-time choices made will be
Slide 26: Review of Operations
REVIEW OF OPERATIONS Tony Trahar 2004 Annual Results
Slide 27: Highlights: Base Metals, Ferrous Metals and Industries
Highlights Base Metals Ferrous Metals and Industries $1,042m $480m Headline Earnings $206m $107m 2003 2004 2003 2004 • Record earnings of $1,042m (2003: $206m) • Strong performances from Highveld, • Minera sur Andes contributes $430m, Scaw and Samancor; improved results EBITDA return of 48% from Boa
Slide 28: Highlights: Diamonds, Paper and Packaging
Highlights Diamonds Paper and Packaging $425m $386m $381m $381m 2003 2004 2003 2004 • Good performance from De Beers • Solid performance despite weak pricing • DTC sales of $5.69 billion, up 3% • European markets impacted by strong • 3% price rise in January Euro and slower growth • Botswana licence
Slide 29: Highlights: Coal, Industrial Minerals
Highlights Coal Industrial Minerals $351m $270m $267m $232m 2003 2004 2003 2004 • South African & South American earnings • Solid performance despite challenging UK up significantly (+101%) markets • Moranbah back at full production • Operating profit up by 6% offset by slightly higher tax charge •
Slide 30: Highlights: Platinum, Gold
Highlights Platinum Gold $167m $239m $158m $205m 2003 2004 2003 2004 • 2.45m oz produced in 2004 • Gold production increased to 6.05m oz • Higher US$ metal prices and increased (+8%) volumes partly offset by strong rand and higher costs • Good operating performances: SA, North & South America • 2005
Slide 31: Outlook
Outlook • Positive global environment for commodities • China growth story continues but OECD leading indicators point to a slower pace of growth • Weak US dollar: actively managing the cost base • Anglo’s product and geographic diversity, organic growth and strong cash generation to underpin perfor
Slide 32: Anglo American: Meeting the World's Needs
ANGLO AMERICAN MEETING THE WORLD’S NEEDS 23 February 2005 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)
Slide 33: Additional Information
ADDITIONAL INFORMATION Handout only 2004 Annual Results
Slide 34: Key Dates
Key Dates • Currency Conversion 18 February 2005 • Ex-dividend (JSE) 7 March 2005 • Ex-dividend (LSE) 9 March 2005 • Record date 11 March 2005 • Payment of Final Dividend 29 April 2005 • Interim Results 4 August 2005 34 2004 Annual Results
Slide 35: Market Prices
Market Prices 2004 2003 Gold 409 363 Platinum 847 692 Palladium 231 201 Rhodium 991 530 Copper 130 81 Nickel 628 437 Zinc 48 38 Coal: thermal (RSA - API 4 index average) 54.4 25.7 Iron ore – lumpy 26 20 Ferrovanadium 20 10 Mc - ferromanganese 1,207 707 35 2004 Annual Results
Slide 36: Headline Earnings Sensitivities
Headline Earnings Sensitivities US$m 10% change in gold price ± 90 10% change in platinum price ± 104 10% change in palladium price ± 14 10% change in coal price ± 127 10% change in copper price ± 187 10% change in nickel price ± 22 10% change in zinc price ± 36 10% change in iron ore price ±17 10%
Slide 37: Projects: Gold and Industrial Minerals
Projects Gold Life of mine Production Full Approved Approved production1 commences prod. capex $m2 Mponeng 4.8m oz 2004 2007 191 TauTona CLR <120L 2.0m oz 2007 2010 98 Moab Khotsong 4.9m oz 2003 2008 690 Siguiri - CIP project 2.1m oz 2005 2005 52 Cuiabá 1.9m oz 2006 2007 121 Total 15.7m oz 1,152 Ind
Slide 38: Projects: Platinum
Projects Platinum Total additional Full Approved Approved production1 prod. capex $m2 PMR Plant Expansion Meet expansion 2005 121 Rustenburg UG2 Phase 14 360,000 oz 2007 210 W. Limb Tailings Retreatment4 120,000 oz 2008 186 Rustenburg UG2 Phase 23 4 306,000 oz 2009 444 Twickenham4 160,000 oz 2009 34
Slide 39: Projects: Coal and Base Metals
Projects Coal Total additional Production Full Approved Approved production1 commences prod. capex $m2 Cerrejón 2.0m tpa 2004 2007 50 Isibonelo 5.0m tpa 2005 2006 65 German Creek - Capcoal (Grasstree)2 3.9m tpa 2006 2006 106 Dawson 2.9m tpa3 2005 2007 333 Total 13.8m tpa 554 Base Metals Total additi
Slide 40: Projects: Paper and Packaging
Projects Paper and Packaging Total additional Production Full Approved Approved production1 commences prod. capex $m1 Richards Bay: BEKP Line 145,000 t 2005 2005 235 Merebank: PM31 Rebuild 160,000 t 2005 2006 174 Total 409 1 Incremental production is a per year amount once full production is reached
Slide 41: Projects: Diamonds
Projects Diamonds Total additional Production Full Approved Current projects production1 commences prod. capex $m2 Finsch Block 4 17m carats 2004 2006 130 BB1E Cullinan 5m carats 2004 2007 12 Total 22m carats 142 Estimated Under review / awaiting approval capex $m2 C-Cut Cullinan 97m carats 2009 201
Slide 42: Projects: Ferrous Metals and Industries
Projects Ferrous Metals and Industries Total additional Production Full Approved Approved production1 commences prod. capex $m1 Ticor: Mineral Sands Furnace 1 125 ktpa slag 2003 2006 137 Ticor: Mineral Sands Furnace 2 125 ktpa slag 2003 2007 54 Grootegeluk2 750ktpa 2005 2006 55 Inyanda 1Mtpa 2005 20
Slide 43: Analysis of Headline Earnings
Analysis of Headline Earnings $m 2004 2003 Platinum 239 205 Gold 158 167 Diamonds 381 386 Coal 351 232 Base Metals 1,042 206 Industrial Minerals 267 270 Paper and Packaging¹ 381 425 Ferrous Metals and Industries 480 107 Exploration (91) (83) Corporate Activities¹ ² (519) (221) Headline Earnings 2,68
Slide 44: Analysis of Operating Profit
Analysis of Operating Profit $m 2004 2003 Platinum 537 447 Gold 263 369 Diamonds 586 562 Coal 487 333 Base Metals 1,275 286 Industrial Minerals 346 325 Paper and Packaging 559 656 Ferrous Metals and Industries 895 208 Exploration (120) (105) Corporate Activities¹ (256) (189) Operating Profit² 4,572
Slide 45: Capital Expenditure
Capital Expenditure $m 2004 2003 Platinum 633 1,004 Gold 572 339 Coal 217 207 Base Metals 286 352 Industrial Minerals 299 316 Paper and Packaging 819 601 Ferrous Metals and Industries 284 195 Other 19 11 Total 3,129 3,025 45 2004 Annual Results
Slide 46: Headline variance: Volume
Headline variance: Volume Group total = +$257m $m 350 22 29 300 47 257 103 27 250 45 200 150 128 100 50 0 Base Paper and Platinum Ferrous Industrial Gold Coal Total Metals Packaging Metals and Minerals Industries 46 2004 Annual Results
Slide 47: Operating Profit Variance
Operating Profit Variance Operating profit before operating exceptional items $m 5,500 2,284 5,000 367 4,572 4,500 355 36 4,000 (724) (254) (384) 3,500 3,000 2,892 2,500 2,000 1,500 1,000 500 2003 Price Exchange Inflation Volume Cash Non-cash Structural 2004 Cost Cost & Other 47 2004 Annual Results
Slide 48: Regional Analysis
Regional Analysis Operating profit¹ $m 2004 2003 South Africa 1,535 1,030 Rest of Africa 394 492 Europe 827 739 Americas 1,587 454 Australasia 229 177 4,572 2,892 1 operating profit before operating exceptional items 48 2004 Annual Results
Slide 49: Operating Cost Reconciliation
Operating Cost Reconciliation $m 2003 Operating costs (subsidiaries and share of joint ventures) (17,839) Inflation (384) Exchange (2,104) Sales volume (400) Depreciation & amortisation (262) Price linked costs (184) New operations (103) Operating impairments 311 Structural and other1 (1,664) Cash c
Slide 50: Anglo Platinum Reconciliation
Anglo Platinum Reconciliation $m IAS headline earnings (published) 407 GAAP adjustments (16) Exploration 13 404 Minority interest (101) Depreciation on assets revalued on acquisition (64) UK GAAP contribution to headline earnings 239 50 2004 Annual Results
Slide 51: AngloGold Ashanti Reconciliation
AngloGold Ashanti Reconciliation $m IAS Headline earnings (published)1 263 Exploration (excluding joint ventures) 43 Amortisation on bond discount 13 Depreciation on assets revalued on acquisition (5) Other 3 Minority interest (159) UK GAAP contribution to headline earnings 158 1 Before unrealised n
Slide 52: De Beers Reconciliation
De Beers Reconciliation Ordinary Preference $m Total shares shares DBI headline earnings – IFRS (100%) 652 - - GAAP adjustments 65 - - DBI headline earnings - UK GAAP (100%) 717 622 95 AA plc’s 45% ordinary share interest 280 280 - Additional 3.65% ordinary share interest 23 23 - AA plc’s portion of
Slide 53: EBITDA by Business: 2004
EBITDA by Business: 2004 Operating Profit Exclude Add Back Add Back Add Back JVs $m (incl JVs Exceptional Subsidiaries Subsidiaries & Associates & Associates) Items Depreciation Amortisation Depr. & Amort. EBITDA Platinum 537 - 309 17 4 867 Gold 262 1 338 38 62 701 Diamonds 586 - - - 102 688 Coal 48
Slide 54: EBITDA by Business: 2003
EBITDA by Business: 2003 Operating Profit Exclude Add Back Add Back Add Back JVs $m (incl JVs Exceptional Subsidiaries Subsidiaries & Associates & 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 3
Slide 55: Anglo American: Meeting the World's Needs
ANGLO AMERICAN MEETING THE WORLD’S NEEDS 23 February 2005 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)