Anglo American plc · LSE:AAL
Anglo American — FY2004 Earnings Presentation
60 slides from Anglo American's earnings presentation, May 9, 2005
Slide 1: Anglo American IFRS Restatement 2004 Results
ANGLO AMERICAN IFRS RESTATEMENT 2004 RESULTS 9 MAY 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) Or
Slide 2: IFRS Restatement Presenters
IFRS Restatement Presenters Tony Lea Financial Director Juliet Wall Head of Financial Accounting and Planning Rachel Rhodes IAS Project Manager 2 2004 IFRS RESTATEMENT
Slide 3: Agenda
Agenda • Transition programme • Headlines • Presentation of results • First-time accounting choices • Accounting policy changes • Impact on profit and net assets • Pro forma impact from IAS 32 and IAS 39 3 2004 IFRS RESTATEMENT
Slide 4: Transition programme
Transition programme June 2002 All EU listed companies to report under IFRS in 2005 April 2003 Anglo established global IFRS team Feb 2004/05 Disclosure of qualitative impact in UK annual report June 2004 Substantial completion of global training programme Aug 2004 Implementation of IFRS reporting s
Slide 5: Headlines
Headlines Change IFRS Total profit from operations and associates* +$105 m $4.3 bn Profit attributable to shareholders +$588 m $3.5 bn Headline earnings ($117 m) $2.6 bn Cash generation (EBITDA) ($79 m) $7.03 bn Operating cash flow +$518 m $5.3 bn Net operating assets +$2.5 bn $40.1 bn * Group opera
Slide 6: Presentation of results
Presentation of results • Headline earnings remains a key performance indicator • Exceptional items are consistent with UK GAAP • Joint venture entities are proportionally consolidated • Net income from associates is shown on one line • Minority Interests are classified within equity • Some unrealis
Slide 7: First time accounting choices
First time accounting choices • Acquisitions prior to 1 January 2004 have not been restated • Actuarial losses on defined benefit schemes are recognised in full • Prospective translation of non US dollar goodwill arising post 1 January 2004 • Currency translation differences are deemed to be zero at
Slide 8: Accounting policy changes
Accounting policy changes Significant changes Other changes • De Beers USD preference • Biological assets (eg. forests) shares • Share options • Deferred tax • Inclusion of CTA in profits on • Goodwill disposal of foreign operations • Unrealised gains • Proposed dividends • Defined benefit schemes 8
Slide 9: Impact on Profit
IMPACT ON PROFIT 2004 IFRS RESTATEMENT
Slide 10: Headline Earnings for the year
Headline Earnings for the year $m 3,000 2,689 2,500 2,000 1,500 1,000 500 0 UK GAAP De Beers Deferred Biological Share Other IFRS tax assets options 10 2004 IFRS RESTATEMENT
Slide 11: Headline Earnings for the year
Headline Earnings for the year $m 3,000 2,689 2,500 112 2,000 1,500 1,000 500 0 UK GAAP De Beers Deferred Biological Share Other IFRS tax assets options 11 2004 IFRS RESTATEMENT
Slide 12: Treatment of DBI shares
Treatment of DBI shares Key policy change • US dollar preference shares are not considered quasi-equity • Return on the shares is now shown within interest, not operating profit • As a financial asset, held in a Rand entity, they are translated each reporting period through the income statement • Re
Slide 13: Headline Earnings for the year
Headline Earnings for the year $m 3,000 2,689 41 2,500 112 2,000 1,500 1,000 500 0 UK GAAP De Beers Deferred Biological Share Other IFRS tax assets options 13 2004 IFRS RESTATEMENT
Slide 14: Headline Earnings for the year
Headline Earnings for the year $m 3,000 2,689 41 2,500 112 20 2,000 1,500 1,000 500 0 UK GAAP De Beers Deferred Biological Share Other IFRS tax assets options 14 2004 IFRS RESTATEMENT
Slide 15: Biological assets
Biological assets Key policy change • Afforestation and crops are disclosed separately on the face of the balance sheet (previously within fixed assets) • They are recorded at fair value with fair value changes recorded through the income statement until the assets are harvested Key policy impact •
Slide 16: Headline Earnings for the year
Headline Earnings for the year $m 3,000 2,689 41 2,500 112 20 21 2,000 1,500 1,000 500 0 UK GAAP De Beers Deferred Biological Share Other IFRS tax assets options 16 2004 IFRS RESTATEMENT
Slide 17: Share options
Share options Key policy change • Options granted to employees are fair valued at grant date using an option pricing model • Fair value is charged through the income statement over the vesting period, the opposite entry taken through “share based payment” reserve Key policy impact • Headline earning
Slide 18: Headline Earnings for the year
Headline Earnings for the year $m 3,000 2,689 41 2,500 112 20 21 5 2,000 1,500 1,000 500 0 UK GAAP De Beers Deferred Biological Share Other IFRS tax assets options 18 2004 IFRS RESTATEMENT
Slide 19: Headline Earnings for the year
Headline Earnings for the year $m 3,000 2,689 41 2,572 2,500 112 20 21 5 2,000 1,500 1,000 500 0 UK GAAP De Beers Deferred Biological Share Other IFRS tax assets options 19 2004 IFRS RESTATEMENT
Slide 20: Total profit for the year
Total profit for the year $m 4,000 3,500 2,913 3,000 2,500 2,000 1,500 1,000 500 0 UK GAAP De Beers Deferred Biological Share Unrealised Goodwill Recycle Other IFRS tax assets options gains CTA 20 2004 IFRS RESTATEMENT
Slide 21: Total profit for the year
Total profit for the year $m 4,000 3,500 2,913 41 3,000 2,500 69 21 21 2,000 1,500 1,000 500 0 UK GAAP De Beers Deferred Biological Share Unrealised Goodwill Recycle Other IFRS tax assets options gains CTA 21 2004 IFRS RESTATEMENT
Slide 22: Total profit for the year
Total profit for the year $m 4,000 3,500 427 2,913 41 3,000 2,500 69 21 21 2,000 1,500 1,000 500 0 UK GAAP De Beers Deferred Biological Share Unrealised Goodwill Recycle Other IFRS tax assets options gains CTA 22 2004 IFRS RESTATEMENT
Slide 23: Unrealised gains
Unrealised gains Key policy change • There is no distinction between unrealised and realised gains for financial reporting • Unrealised gains, with limited exceptions, will be recorded through the income statement Key policy impact • Headline earnings: $nil • Total profit: +$427 million • Net assets
Slide 24: Total profit for the year
Total profit for the year $m 4,000 205 3,500 427 2,913 41 3,000 2,500 69 21 21 2,000 1,500 1,000 500 0 UK GAAP De Beers Deferred Biological Share Unrealised Goodwill Recycle Other IFRS tax assets options gains CTA 24 2004 IFRS RESTATEMENT
Slide 25: Goodwill
Goodwill Key policy change • Goodwill amortisation is replaced by an annual impairment test • No negative goodwill • Non US dollar goodwill arising on post 1 January 2004 acquisitions is translated to closing rate each reporting period Key policy impact • Headline earnings and Total profit: $nil; an
Slide 26: Total profit for the year
Total profit for the year $m 4,000 205 30 3,500 427 2,913 41 3,000 2,500 69 21 21 2,000 1,500 1,000 500 0 UK GAAP De Beers Deferred Biological Share Unrealised Goodwill Recycle Other IFRS tax assets options gains CTA 26 2004 IFRS RESTATEMENT
Slide 27: Recycling of CTA
Recycling of CTA Key policy change • Cumulative currency translation adjustments (“CTA”) arising on translation of a foreign operation are “recycled” from the CTA reserve through the income statement when that entity is disposed of • CTA reserve as at 1 January 2004 was deemed to be zero Key policy
Slide 28: Total profit for the year
Total profit for the year $m 4,000 205 30 3,500 427 2,913 41 4 3,000 2,500 69 21 21 2,000 1,500 1,000 500 0 UK GAAP De Beers Deferred Biological Share Unrealised Goodwill Recycle Other IFRS tax assets options gains CTA 28 2004 IFRS RESTATEMENT
Slide 29: Total profit for the year
Total profit for the year $m 4,000 30 3,501 205 3,500 427 2,913 41 4 3,000 2,500 69 21 21 2,000 1,500 1,000 500 0 UK GAAP De Beers Deferred Biological Share Unrealised Goodwill Recycle Other IFRS tax assets options gains CTA 29 2004 IFRS RESTATEMENT
Slide 30: Impact on Net Assets
IMPACT ON NET ASSETS 2004 IFRS RESTATEMENT
Slide 31: Net Assets at 31 December 2004
Net Assets at 31 December 2004 $m 35,000 33,000 31,000 29,000 27,000 24,998 25,000 23,000 21,000 19,000 17,000 15,000 UK GAAP Minority Deferred De Beers Goodwill Proposed Defined Other IFRS interest tax dividends benefit schemes 31 2004 IFRS RESTATEMENT
Slide 32: Net Assets at 31 December 2004
Net Assets at 31 December 2004 $m 35,000 33,000 31,000 4,620 29,000 27,000 24,998 25,000 23,000 21,000 19,000 17,000 15,000 UK GAAP Minority Deferred De Beers Goodwill Proposed Defined Other IFRS interest tax dividends benefit schemes 32 2004 IFRS RESTATEMENT
Slide 33: Minority interest reclassification
Minority interest reclassification Key policy • Minority interest is classified within “equity” in accordance with IAS 1 • Format of consolidated balance sheet still reconciles to Net Assets • Cleary shows Total Net Assets contributing to Total Group Profit • Clear disclosure of Net Assets and Total
Slide 34: Net Assets at 31 December 2004
Net Assets at 31 December 2004 $m 35,000 33,000 31,000 4,620 29,000 27,000 24,998 1,655 25,000 23,000 21,000 19,000 17,000 15,000 UK GAAP Minority Deferred De Beers Goodwill Proposed Defined Other IFRS interest tax dividends benefit schemes 34 2004 IFRS RESTATEMENT
Slide 35: Deferred tax
Deferred tax Key policy change • Deferred tax is provided on additional temporary differences: • Fair value adjustments at acquisition • Where functional currency differs from the tax base currency • Some unremitted earnings of overseas investments Key policy impact • Headline earnings and Total pro
Slide 36: Net Assets at 31 December 2004
Net Assets at 31 December 2004 $m 35,000 33,000 31,000 4,620 29,000 28 27,000 24,998 1,655 218 25,000 23,000 21,000 19,000 17,000 15,000 UK GAAP Minority Deferred De Beers Goodwill Proposed Defined Other IFRS interest tax dividends benefit schemes 36 2004 IFRS RESTATEMENT
Slide 37: Net Assets at 31 December 2004
Net Assets at 31 December 2004 $m 35,000 33,000 31,000 4,620 28 815 29,000 27,000 24,998 1,655 218 25,000 23,000 21,000 19,000 17,000 15,000 UK GAAP Minority Deferred De Beers Goodwill Proposed Defined Other IFRS interest tax dividends benefit schemes 37 2004 IFRS RESTATEMENT
Slide 38: Proposed dividends
Proposed dividends Key policy change • Proposed dividends are recorded in the period they are approved for payment Key policy impact • Headline earnings and Total profit: $nil • Profit after dividends: +$180 million • Net assets at 1 January 2004: +$622 million • Net assets at 31 December 2004: +$81
Slide 39: Net Assets at 31 December 2004
Net Assets at 31 December 2004 $m 35,000 33,000 31,000 4,620 28 815 29,000 27,000 24,998 1,655 628 218 25,000 23,000 21,000 19,000 17,000 15,000 UK GAAP Minority Deferred De Beers Goodwill Proposed Defined Other IFRS interest tax dividends benefit schemes 39 2004 IFRS RESTATEMENT
Slide 40: Defined benefit schemes
Defined benefit schemes Key policy change • Full recognition of defined benefit scheme deficit (or surplus, subject to restrictions) on the balance sheet • Early adoption of the proposed amendment to IAS 19, subject to endorsement by EU before 31 December 2005 • All actuarial gains or losses taken d
Slide 41: Net Assets at 31 December 2004
Net Assets at 31 December 2004 $m 35,000 33,000 31,000 4,620 28 815 29,000 27,000 24,998 628 3 1,655 218 25,000 23,000 21,000 19,000 17,000 15,000 UK GAAP Minority Deferred De Beers Goodwill Proposed Defined Other IFRS interest tax dividends benefit schemes 41 2004 IFRS RESTATEMENT
Slide 42: Net Assets at 31 December 2004
Net Assets at 31 December 2004 $m 35,000 33,000 31,000 4,620 28 815 27,957 29,000 27,000 24,998 628 3 1,655 218 25,000 23,000 21,000 19,000 17,000 15,000 UK GAAP Minority Deferred De Beers Goodwill Proposed Defined Other IFRS interest tax dividends benefit schemes 42 2004 IFRS RESTATEMENT
Slide 43: Pro forma IAS 32 and 39
PRO FORMA IAS 32 and 39 2004 IFRS RESTATEMENT
Slide 44: Pro forma IAS 32 and 39
Pro forma IAS 32 and 39 • Adopted prospectively from 1 January 2005, however pro forma 2004 information is provided • In the pro forma 2004 information, the standards were not applied to • transactions within entities that were fully disposed of in 2004: or • to contracts containing embedded derivat
Slide 45: Significant policy changes
Significant policy changes • All derivatives (including embedded derivatives) are held at fair value • Fair value changes are taken through income statement or reserves depending on hedge accounting criteria • Convertible bonds are regarded as compound instruments • Equity investments previously hel
Slide 46: Pro forma IAS 32 and 39
Pro forma IAS 32 and 39 $m Total profit Headline earnings 4,000 3,501 3,362 3,500 3,000 139 2,500 2,000 1,500 1,000 500 0 Pre IAS 32/39 IAS 32/39 adj Pro forma post IAS 32/39 46 2004 IFRS RESTATEMENT
Slide 47: Pro forma IAS 32 and 39
Pro forma IAS 32 and 39 $m Total profit Headline earnings 4,000 3,501 3,362 3,500 3,000 2,572 2,514 139 2,500 2,000 58 1,500 1,000 500 0 Pre IAS 32/39 IAS 32/39 adj Pro forma post Pre IAS 32/39 IAS 32/39 adj Pro forma post IAS 32/39 IAS 32/39 47 2004 IFRS RESTATEMENT
Slide 48: Appendices
APPENDICES 2004 IFRS RESTATEMENT
Slide 49: Headline earnings
Headline earnings $m UK GAAP IFRS Total profit attributable to equity shareholders 2,913 3,501 Exceptional items (428) (933) Amortisation of goodwill 221 - Related tax & minority interests (17) 4 Headline earnings for the financial year 2,689 2,572 EPS (cents per share) 188 179 DPS (cents per share)
Slide 50: Analysis of Headline Earnings
Analysis of Headline Earnings $m UK GAAP adj. IFRS Platinum 239 1 240 Gold 158 (19) 139 Diamonds 381 (113) 268 Coal 351 6 357 Base Metals 1,042 (6) 1,036 Industrial Minerals 267 21 288 Ferrous Metals and Industries 480 (4) 476 Paper and Packaging¹ 381 (14) 367 Exploration (91) - (91) Corporate Activ
Slide 51: Reconciliation to total profit
Reconciliation to total profit $m UK GAAP adj IFRS Operating profit (pre exceptionals) 4,572 125 4,697 Operating exceptional items (incl. Assoc) (92) - (92) Operating profit (post exceptionals) 4,480 125 4,605 Associate - tax (296) 16 (280) Associate - finance charge (64) (36) (100) Associate - unde
Slide 52: Analysis of Operating Profit
Analysis of Operating Profit $m UK GAAP IFRS adj IFRS Platinum 537 (1) 536 Gold 263 33 296 Diamonds 586 (13) 573 Coal 487 10 497 Base Metals 1,275 1 1,276 Industrial Minerals 346 75 421 Ferrous Metals and Industries 895 (8) 887 Paper and Packaging 559 10 569 Exploration (120) - (120) Corporate Activ
Slide 53: Regional Analysis
Regional Analysis Operating profit¹ $m UK GAAP IFRS adj IFRS South Africa 1,535 (32) 1,503 Rest of Africa 394 6 400 Europe 827 122 949 Americas 1,587 17 1,604 Australasia 229 12 241 4,572 125 4,697 1 operating profit before operating exceptional items 53 2004 IFRS RESTATEMENT
Slide 54: Regional Analysis
Regional Analysis Operating profit¹ UK GAAP IFRS 5% 5% 34% 32% South Africa Rest of Africa Europe 34% 34% Americas Australasia 9% 9% 18% 20% 1 operating profit before operating exceptional items 54 2004 IFRS RESTATEMENT
Slide 55: Analysis of EBITDA
Analysis of EBITDA $m UK GAAP IFRS adj IFRS Platinum 867 (14) 853 Gold 701 (7) 694 Diamonds 688 (33) 655 Coal 686 1 687 Base Metals 1,626 (1) 1,625 Industrial Minerals 624 14 638 Ferrous Metals and Industries 1,249 (18) 1,231 Paper and Packaging 996 (18) 978 Exploration (120) - (120) Corporate Activ
Slide 56: Impact on opening net assets
Impact on opening net assets $m 30,000 28,000 26,000 3,396 24,000 622 38 22,000 21,423 19,772 1,485 20,000 130 214 576 18,000 16,000 14,000 12,000 10,000 UK GAAP Minority Deferred De Beers Goodwill Proposed Defined Other IFRS interest tax dividends benefit schemes 56 2004 IFRS RESTATEMENT
Slide 57: Presentation of JV entities
Presentation of JV entities Key policy change • Joint venture entities are proportionally consolidated Key policy impact on UK GAAP results • Group turnover* +$1,195 million • Group operating profit* +$446 million • Increase to Group cash (net of overdraft) +$294 million • Increase to Group borrowin
Slide 58: Presentation of associates
Presentation of associates Key policy change • Income from associates is presented on the face of the income statement, net of interest, tax and underlying minority interests Key policy impact on UK GAAP results • Group tax charge ($296 million) • Group finance charge ($64 million) • Group minority
Slide 59: Pro forma IAS 32 and 39
Pro forma IAS 32 and 39 Total Headline Net US$ million earnings earnings assets IFRS pre IAS 32 and 39 3,501 2,572 27,957 Derivatives (63) (63) 72 Impairment of assets (64) 2 (140) Cash flow hedges 15 15 (159) Convertible debt (12) (12) 60 Fair value of equity investments (46) (3) 57 Deemed disposal
Slide 60: Anglo American Meeting the World's Needs
ANGLO AMERICAN MEETING THE WORLD’S NEEDS 9 May 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) Order