| Wed 20 Feb 2008, 9:00 | | AGL - Anglo American Plc - News Release - Anglo American announces record |
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AGL
ANAAL
AGL - Anglo American Plc - News Release - Anglo American announces record
underlying earnings of $5.8 billion
Anglo American Plc
(Incorporated in the United Kingdom)
Registration number: 3564138
Share code: AGL
ISIN: GB0004901517
(the "Company")
News Release
20 February 2008
Anglo American announces record underlying earnings of $5.8 billion
Financial results
- Record total Group operating profit(1) of $10.1 billion, with operating
profit from core operations (2) up 12% to $8.9 billion
- Highest ever total Group underlying earnings (3) of $5.8 billion, up 5%
- Underlying earnings per share up 18% to $4.40
- Strong performances from Base Metals, Platinum, Ferrous Metals and
Industrial Minerals
- Value Based Management being rolled out across the Group:
- $1 billion initial estimate of annualised procurement and shared
services savings in 3 years
- $380 million achieved in cost savings in 2007
- Total Group profit for the year attributable to equity shareholders up 18%
at $7.3 billion
Uplifting our unique portfolio and driving significant growth
Expediting projects for significant near and medium term growth (PPRust,
Sishen, Dawson, Lake Lindsay, Barro Alto, Los Bronces, Zondagsfontein)
Creating new growth through acquisitions (Minas-Rio / Amapa, Michiquillay,
Foxleigh, Pebble)
$12 billion of projects currently under development; additional projects
under consideration estimated at $29 billion
Demerger of Mondi and reduction of AngloGold Ashanti shareholding
Dividend
Final dividend up 15% to 86 cents per share, bringing total normal dividends
for the year to 124 cents per share - a 15% increase on 2006
HIGHLIGHTS FOR THE YEAR TO 31
DECEMBER 2007 Year ended Year ended %
31 Dec 2007 31 Dec 2006 change
US$ million, except per share amounts
Total Group revenue including
associates (4) 35,674 38,637 (7.7)%
Operating profit including
associates before special items and
remeasurements 8,894 7,974 11.5%
- core continuing operations (1)(2)
Operating profit including
associates before special items and
remeasurements 10,116 9,832 2.9%
- total Group (1)
Underlying earnings for the year -
total Group (3) 5,761 5,471 5.3%
EBITDA - total Group (5) 12,132 12,197 (0.5)%
Net cash inflows from operating
activities - total Group 7,264 8,310 (12.6)%
Profit for the year attributable to
equity shareholders - total Group 7,304 6,186 18.1%
Earnings per share (US$):
Basic earnings per share - total Group 5.58 4.21 32.5%
Underlying earnings per share -
total Group 4.40 3.73 18.0%
Interim dividend (US cents per share) 38 33 15.2%
Recommended final dividend 86 75 14.7%
Total normal dividends for the year 124 108 14.8%
Special dividend previously paid - 67
Total dividends for the year
including special dividend 124 175 (29.1)%
Total Group includes both continuing and discontinued operations.
(1) Operating profit includes share of associates` operating profit (before
share of associates` tax and finance charges) and is before special items and
remeasurements, unless otherwise stated. See note 4 to the financial
information for operating profit on a total Group basis. For definition of
special items and remeasurements see note 6 to the financial information and
see note 14 for information on discontinued operations.
(2) Operations considered core to the Group are Base Metals, Platinum, Ferrous
Metals` core businesses (Kumba Iron Ore, Scaw Metals, Samancor and Minas-Rio),
Coal and Diamonds. See the operating profit table in the financial review of
Group results for a reconciliation of operating profit from core operations to
total operating profit.
(3) See note 9 to the financial information for basis of calculation of
underlying earnings and see note 14 for information on discontinued operations.
(4) Represents total Group revenue (including the revenue of discontinued
operations) and includes the Group`s share of associates` revenue of $6,142
million (2006: $5,565 million). See note 3 to the financial information.
(5) EBITDA is operating profit before special items and remeasurements,
depreciation and amortisation in subsidiaries and joint ventures and share of
EBITDA of associates. See note 13 for analysis of EBITDA by continuing and
discontinued operations.
Cynthia Carroll, Chief Executive, said:
"In my first year as Chief Executive, I am pleased to report a record financial
performance by Anglo American. We achieved our highest ever operating profit of
$10.1 billion and underlying earnings of $5.8 billion, with continued strong
cash generation. The strength of our performance was due to improved production
volumes of ferrous metals, copper and zinc, an increased focus on operational
discipline and a continuation of the supportive trading environment.
The year under review has seen a combination of strategic restructuring and a
period of building from a position of strength, including the identification
and execution of opportunities to drive new growth and value.
We have a tremendous $41 billion pipeline of projects approved and under
consideration across our three commodity businesses - precious, base metals and
bulks - which, with our leading track record of delivery, will generate
significant profitable growth for Anglo American, both in the near and medium
term. 2008 will also see our planned expansions delivering significant new
production in iron ore and coal.
We have made good strategic progress in 2007. The demerger of Mondi was
successfully completed in early July and in August we announced our decision to
sell Tarmac, our construction materials business. We also realised in excess of
$2.9 billion by reducing our stake in AngloGold Ashanti to 16.6% by the year
end.
We approved a number of significant projects during the year, including the
$1.7 billion Los Bronces copper expansion in Chile and the $505 million
Zondagsfontein coal project in South Africa. In addition, we made several
substantial acquisitions, further extending our geographic reach - the 50%
stake in the Pebble copper project in Alaska, the Michiquillay copper project
in Peru, 70% of the Foxleigh coal mine in Australia and 49% of the Minas-Rio
iron ore project in Brazil. As we announced in January, we are now in
negotiations to acquire control of the Minas-Rio project and a 70% stake in the
Amapa iron ore mine, marking a major advancement in our iron ore growth
strategy.
Our restructuring programme is almost complete and we are focused on the
operational improvements that will be delivered by our asset optimisation
programme and the cultural change that we are implementing across the Group.
Together, these initiatives are beginning to drive superior operating
performance, substantial procurement benefits and Group-wide cost savings.
The Group achieved cost savings of $380 million in synergies, efficiencies and
procurement. The mining industry continues to experience significant cost
pressures across the supply chain, including freight, transportation, fuel and
consumables. In spite of these cost pressures, growth in cash costs for the
total Group was limited to 4% above inflation. Two major cost saving exercises
were launched in the year; the introduction of three regional shared service
centres each covering finance, information technology and human resources
located in South Africa, Latin America and Asia Pacific and the move to a
centralised procurement programme to maximise the benefits of being a global
operator - initial estimates are that $1 billion in annualised procurement and
shared services savings will be achieved in 3 years.
2007 also marked a turning point in our approach to safety. Our historic
fatality and injury record has been unacceptable and I believe strongly that
optimally run businesses have good safety records. We have launched a series of
initiatives to drive consistent safety messages and practices across our
business. Significant early progress is being made and I expect our operations
to build on this momentum in 2008.
In terms of the outlook, Anglo American`s position as a focused mining company
with a clear strategy and unique position in platinum group metals and diamonds
enables us to benefit from the ongoing strong global environment for
commodities as we accelerate the realisation of our exciting growth prospects."
Review of 2007
Financial results
Anglo American`s total Group underlying earnings were a record $5.8 billion for
the year as continued strong metal prices reflected the favourable trading
environment for the Group`s key commodities and volumes improved in most
commodities. Operating profit from the Group`s core operations was 12% higher
than in 2006 at $8.9 billion.
Strong contributions came from Base Metals, Platinum, Ferrous Metals` core
businesses and Industrial Minerals, which all achieved record operating profit
in the year. Coal recorded lower operating profit due to a sharp reduction in
contribution from Coal Australia, due to port and rail infrastructure
constraints experienced in the industry, necessitating stockpiles and slowing
of production resulting in higher demurrage charges, the impact of the
appreciation of local currency against the US dollar and lower sales prices.
The contributions from both Paper and Packaging and Gold were lower than the
prior year due to the demerger of Mondi in early July and the reduction of the
Group`s shareholding in AngloGold Ashanti from 41.6% to 16.6% during October.
Base Metals generated a record operating profit of $4,338 million (49% of Anglo
American`s total operating profit from core operations), up 11%, due to
increased copper, zinc and phosphate fertiliser production and higher nickel,
lead, niobium and fertiliser prices.
Platinum reported record operating profit of $2,697 million (30% of Anglo
American`s total operating profit from core operations), up 12%, due to a
significantly higher price achieved for the basket of metals sold and the
weaker average rand in relation to the US dollar, partially offset by higher
costs and lower refined production.
Ferrous Metals` operating profit increased 5% to $1,432 million, with operating
profit from its core businesses increasing by 59% to $1,210 million, (14% of
Anglo American`s total operating profit from core operations), mainly due to
higher iron ore and manganese prices, partially offset by the loss of
contribution, following their disposal, from Kumba non-iron ore and Highveld.
Coal recorded operating profit of $614 million (7% of Anglo American`s total
operating profit from its core operations), 29% lower than the prior year, due
to a significant reduction in Australia`s contribution, with port and rail
constraints which reduced sales, the adverse impact of the appreciation of
local currency against the US dollar and lower average metallurgical coal
prices. Despite the port and rail constraints experienced in Australia,
production at the Australian mines was over 25 million tonnes, 3% above the
prior year.
Diamonds recorded attributable operating profit of $484 million (5% of Anglo
American`s total operating profit from core operations), up 5% on 2006,
principally due to higher earnings from joint ventures and a modest increase in
the price of diamonds.
Industrial Minerals saw a significant improvement in its operating profit, up
38% (excluding benefit from exchange rate movements) at $474 million due in
part to disciplined margin management and favourable demand in certain sectors.
Gold`s contribution to total Group operating profit declined 57% to $202
million due to the reduction of the Group`s shareholding in AngloGold Ashanti
from 41.6% to 17.3% on 2 October, combined with the benefit of consolidating
AngloGold Ashanti as a subsidiary for four months in 2006. At 31 December 2007
the Group`s shareholding in AngloGold Ashanti was 16.6%.
Paper and Packaging`s contribution to total Group operating profit declined to
$324 million, a decrease of 32%, due to the demerger of Mondi in early July
2007.
Production
Production volumes were up for copper, zinc, iron ore and aggregates despite
challenging operating conditions at some of the base metals mines. Platinum
production volumes from mining operations were down on the prior year due to
the interventions to improve safety combined with reduced production efficiency
following a shortage of skilled labour, and lower grades at Potgietersrust.
Challenging operating conditions and the safety interventions resulted in a
decrease in total nickel production compared with the prior year.
Capital structure and increased return to shareholders
At 31 December 2007 the Group`s net debt position has increased by $1.9 billion
to $5.2 billion, reflecting the impact of the share buyback, increased planned
capital expenditure and the acquisition of MMX Minas-Rio, partly offset by
strong operating cashflows, proceeds from disposals and the impact of the Mondi
demerger. The $3 billion share buyback programme announced in February was
completed in October 2007 and the additional share buyback programme of
$4 billion, announced in August, is 33% complete, with around $1.3 billion of
shares having been repurchased at 19 February 2008. Over the last two years,
Anglo American has returned a total of $14.5 billion capital to shareholders.
Dividends
In line with the Group`s progressive dividend policy, the final dividend has
been raised 15% to 86 cents per share, to be paid on 30 April 2008 subject to
shareholder approval at the Annual General Meeting to be held on 15 April 2008.
Total dividends for the year amount to 124 cents per share (2006: 175 cents per
share including the interim special dividend of 67).
Progress on strategic objectives
Anglo American made good progress in 2007 in line with its objective of
becoming a leading focused mining company. To achieve the goal of focusing on
its three commodity businesses - precious, base metals and bulks, further steps
in the Group`s restructuring were completed successfully during the year.
The Company disposed of its remaining 29% holding in Highveld Steel and
Vanadium in May and Hulett Aluminium (Hulamin) was unbundled from
Tongaat-Hulett in June, together with related empowerment transactions, and
listed on the Johannesburg Stock Exchange (JSE), resulting in Anglo American`s
holding in Tongaat-Hulett falling to 37% from 50%.
Mondi, the paper and packaging business, was demerged in July and established
as a dual-listed company on the London and Johannesburg stock exchanges. In
line with the intention to ultimately exit AngloGold Ashanti, Anglo American
reduced its holding from 41.6% to 16.6% by the year end, realising in excess of
$2.9 billion.
Following a strategic review and as announced in August, the decision was taken
to sell Tarmac, the construction materials business. Tarmac, which enjoys a
leading position in the UK construction materials industry and is well
positioned in certain key markets in continental Europe and the Middle East,
had a very strong operational performance in 2007, with a number of its
business improvement initiatives starting to make a significant impact. It is
expected that the performance of Tarmac will continue to underpin a competitive
sale process, however it has been decided not to launch the marketing phase of
the sale process until current credit market conditions improve. It is
therefore unlikely that a sale will be completed within the originally
envisaged timetable. Tarmac continues to be managed to maximise shareholder
value and this includes active reviews of its portfolio; for example, Tarmac
recently increased its ownership of United Marine Holdings, a significant UK
marine dredged aggregates business, to 100%.
Anglo American is bringing greater rigour to its operating platform by
introducing a value based management (VBM) methodology in all its business
units. A pilot project has been completed in Anglo Coal and VBM is now being
rolled out into all of the businesses. In addition, an asset optimisation
initiative will maximise operational efficiencies at site level and allow
benchmarking of performance and the spread of best practices.
The company also made significant progress during 2007 in meeting the
employment equity and black economic empowerment requirements of the South
African Mining Charter - culminating in ground-breaking equity participation
arrangements in Anglo Platinum`s assets.
Project expertise driving profitable growth
Anglo American has one of the strongest and highest quality project pipelines
in the entire mining sector. These projects will build on the Group`s unique
portfolio of existing assets and deliver considerable organic growth potential.
Several major projects spanning a variety of countries are currently under
development, totalling $12 billion. Looking further out, an additional
$29 billion of projects are under consideration.
Several projects were approved at Anglo Platinum during the year, in particular
the $279 million expansion at the base metals refinery, the $139 million
Townlands ore replacement project and the $188 million Mainstream inert grind
projects. The $692 million PPRust North expansion project is in progress with
the mine expected to reach full capacity in 2009, when it will mill an
additional 600,000 tonnes of ore per month. In addition, the $224 million East
Upper UG2 project at Amandelbult is progressing on schedule and will increase
that mine`s output by 100,000 ounces per annum by 2012.
Anglo American`s coal business has approved expansion programmes in both South
Africa and Australia. The recently approved $505 million 6.6 Mtpa
Zondagsfontein project will form an important component of Anglo Coal`s plans
to increase its South African coal production by 50% to around the 90 Mtpa
level by 2015. The expansions at Lake Lindsay and Dawson will increase Anglo
American`s coal production at these mines by approximately 9.7 Mtpa and the
approved expansion at Cerrejon in Colombia to 32 Mtpa is on schedule for 2008,
with further expansion potential being examined.
In addition to several major base metals project acquisitions, the approval of
the $1.7 billion expansion of Los Bronces in Chile was announced in November.
On completion in 2011, production of copper will increase by an average of
170,000 tpa to an initial production level exceeding 400,000 tpa, making Los
Bronces one of the 10 largest copper mines in the world. Also in Chile, a two
phase expansion at Collahuasi is being considered. The $1.5 billion Barro Alto
expansion in Brazil is making good progress and, when fully on stream from
2011, is expected to increase Anglo American`s total attributable nickel
production to an average of around 100,000 tpa. In Peru, the Quellaveco copper
project, currently the subject of a revised feasibility study, is scheduled to
be submitted for Board approval in 2008 and, if approved, would produce around
200,000 tpa of copper.
At Kumba Iron Ore, the commissioning of the $754 million, 13 Mtpa Sishen
Expansion project commenced during the year, with ramp up to design capacity
expected to be achieved in 2009.
De Beers has two significant projects, both in Canada. Snap Lake, the country`s
first underground diamond mine, delivered its first diamonds in October 2007
and is expected to produce approximately 1.6 million carats per year at full
production. A second mine, Victor, is expected to enter production by mid-2008
and produce 0.6 million carats of high quality diamonds per year at full
production. In Botswana, Debswana is reviewing a number of potential expansion
opportunities, predominantly at Jwaneng, one of the world`s great diamond
mines.
In February 2008, Anglo American announced that it had entered into a
memorandum of understanding ("MOU") with China Development Bank. The MOU
represents a long term commitment to establish a strategic relationship to
identify and develop a pipeline of natural resources projects in China, Africa
and elsewhere.
Acquisitions to fuel further growth
During 2007, Anglo American was active in identifying and successfully
acquiring major new projects, particularly in iron ore and copper.
In iron ore, considerable progress was made towards achieving the aim of
becoming a significant player in the global seaborne iron ore trade through the
acquisition, in July, of a 49% stake the MMX Minas-Rio iron ore project in
Brazil, for an effective price of $1.15 billion, plus a potential payment of up
to $600 million if certain criteria are met. Furthermore, in January 2008,
Anglo American announced that it was in negotiations over a transaction in
which it would acquire control of the Minas-Rio project and a 70% stake in the
Amapa iron ore mine, for approximately $5.5 billion, if we acquire 100% of the
interests held by MMX in these assets. The resource statements for Minas-Rio
and Amapa are currently being updated.
In April, the acquisition of the Michiquillay copper project in northern Peru
for a staged cash investment of $403 million was announced, with potential
production of up to 300,000 tpa. Michiquillay is one of the largest undeveloped
copper deposits in the world. This is Anglo American`s second major investment
in Peru where the feasibility study for Quellaveco copper deposit in the south
of the country is at an advanced stage.
In July, a 50% stake in the Pebble copper project in Alaska was acquired for a
staged cash investment of $1.425 billion. The key assets of the project, which
is co-owned by Northern Dynasty Minerals, are its open-pit Pebble West
copper-gold-molybdenum deposit and the deeper and higher-grade Pebble East
deposit.
In both Peru and Alaska, a key priority is to build supportive relationships
with local communities, consistent with Anglo American`s policy of developing
and operating projects to the highest social and environmental standards and to
promote development that is truly sustainable.
Close to year end, the acquisition of a 70% interest in the Foxleigh coal mine
in Australia, for $620 million was announced, further supporting Anglo
American`s coal ambitions.
Further out still, Anglo American is studying several energy schemes in
alliance with various international partners. Prominent among these are the
Monash project in Australia to convert brown coal to ultra-clean diesel and the
Xiwan project in China that is examining the feasibility of converting coal to
gas, fuels and chemicals.
Outlook
The global economic outlook for 2008 is clouded by uncertainty. While it seems
clear that US economic activity will be weaker in 2008 than in recent years, it
is less clear how economic growth will be affected in the rest of the world,
especially in those emerging markets whose growth has been largely responsible
for the strong demand that has underpinned commodity prices. In South Africa,
the electrical power supply problems are causing disruption to mining
operations across the country. At present, it is difficult to accurately
forecast the medium term impact of power shortages on Anglo American`s
businesses. Anglo American is working with Eskom and the South African
government to implement solutions.
Global commodity demand remains strong and seems likely to remain so throughout
2008. Global commodity supply continues to be constrained by skills shortages,
rising capital and operating costs, longer permitting processes and strong
exchange rates in many of the countries where key operations are located.
Industry inventories are therefore likely to remain low and continue to
underpin prices.
For further information, please contact:
United Kingdom
Anna Poulter, Investor Relations
Tel: +44 (0)20 7968 2155
James Wyatt-Tilby, Media Relations
Tel: +44 (0)20 7968 8759
South Africa
Pranill Ramchander, Media Relations
Tel: +27 (0)11 638 2592
Notes to editors:
Anglo American plc is one of the world`s largest mining and natural resource
groups. With its subsidiaries, joint ventures and associates, it is a global
leader in platinum group metals and diamonds, with significant interests in
coal, base and ferrous metals, as well as an industrial minerals business and a
stake in AngloGold Ashanti. The Group is geographically diverse, with
operations in Africa, Europe, South and North America, Australia and Asia.
(www.angloamerican.co.uk)
Webcast of presentation:
A live webcast of the annual results presentation, starting at 10.00am UK time
on 20 February, can be accessed through the Anglo American website at
www.angloamerican.co.uk
Pictures:
High resolution images can be downloaded by the media at www.vismedia.co.uk
Note: Throughout this press release `$` denotes United States dollars and
`cents` refers to United States cents; operating profit includes associates`
operating profit, is before special items and remeasurements and refers to
continuing operations unless otherwise stated; special items and remeasurements
are defined in note 6, results of discontinued operations are presented in note
14 and underlying earnings are calculated as set out in note 9 to the financial
information. Underlying earnings refers to continuing operations unless
otherwise stated. EBITDA is operating profit before special items and
remeasurements, depreciation and amortisation in subsidiaries and joint
ventures and share of EBITDA of associates and refers to continuing operations
unless otherwise stated. EBITDA is reconciled to cash inflows from operations
and to total profit from operations and associates in note 13 to the financial
information.
Financial review of Group results*
Group underlying earnings per share on a continuing basis for the year were
$4.18, an increase of 22% compared with 2006. On a total Group basis, including
results from discontinued operations, underlying earnings per share were $4.40.
Group underlying earnings on a continuing basis totalled $5,477 million, with
record contributions from Base Metals, Platinum, Ferrous Metals` core
businesses and Industrial Minerals as well as a strong contribution from De
Beers. Higher prices realised in the year, in particular for the platinum group
metals (PGM`s), nickel, lead, niobium and iron ore, were the main driver for
the increase in Group underlying earnings. Increased volumes at copper, zinc
and iron ore operations also contributed to the increase. Underlying earnings
at De Beers were higher than the prior year, principally reflecting higher
income from joint ventures and a modest increase in diamond prices in 2007.
Coal recorded lower underlying earnings due to a significant reduction in
Australia`s contribution. This was driven by the impact of port and rail
constraints necessitating stockpiles and slowing of production, resulting in
higher demurrage charges, as well as the impact of the weak US dollar relative
to local currency and lower sales prices. The contributions from both Paper and
Packaging and AngloGold Ashanti were lower than the prior year due to the
demerger of Mondi in early July and the reduction of the Group`s shareholding
in AngloGold Ashanti from 41.6% to 17.3% on 2 October. At 31 December 2007 the
Group`s shareholding in AngloGold Ashanti was 16.6%. The results of both
AngloGold Ashanti and Paper and Packaging are shown as discontinued operations.
Underlying earnings Year ended Year ended
(1)
$ million 31 Dec 2007 31 Dec 2006
Profit for the financial year attributable to
equity shareholders 5,294 5,149
Operating special items including associates 713 458
Operating remeasurements including associates (2) (35)
Net profit on disposals including associates (484) (447)
Financing special items - 4
Financing remeasurements including associates:
Exchange loss/(gain) on De Beers preference shares 3 (40)
Unrealised net gains on non-hedge derivatives (28) (4)
Tax on special items and remeasurements
including associates 15 (58)
Related minority interests on special items and
remeasurements including associates (34) (8)
Underlying earnings - continuing operations 5,477 5,019
Underlying earnings - discontinued operations 284 452
Underlying earnings - total Group 5,761 5,471
Underlying earnings per share ($) - continuing
operations 4.18 3.42
Underlying earnings per share ($) -
discontinued operations 0.22 0.31
Underlying earnings per share ($) - total Group 4.40 3.73
(1) Comparatives have been adjusted to reclassify amounts relating to
discontinued operations
Profit for the year after special items and remeasurements increased by 2.8% to
$5,294 million compared with $5,149 million in the prior year. The increase
relates mainly to strong operational results, as discussed above and in the
Chief Executive`s statement, and an increase in net profit on disposals, partly
offset by higher operational special charges, particularly in the Group`s
associates.
Net profit on disposals of $484 million which, including associates, was
$37 million higher than 2006, includes the net profit of $140 million on
disposal of the remaining 29.2% shareholding in Highveld and the part-disposal
of the investment in shares of Exxaro, generating a $234 million profit on
disposal.
* Throughout the financial review, the Group results are presented on a
continuing basis unless otherwise stated
The Group`s results are influenced by a variety of currencies owing to the
geographic diversity of the Group. The South African rand on average weakened
slightly against the US dollar compared with the prior year, with an average
exchange rate of R7.05 compared with R6.77 in 2006. Currency movements
positively impacted underlying earnings by $27 million. Operating results
benefited from weaker average rates for the rand, although this was offset by
the stronger Chilean peso, Brazilian real and Australian dollar. Industrial
Minerals` operations benefited from the strength of certain European currencies
against the US dollar. There was a significant beneficial effect on underlying
earnings from increased prices amounting to $1,302 million, particularly in
respect of nickel and PGM`s.
Summary income statement Year ended Year ended
31 Dec 2007 31 Dec 2006(1)
$ million
Operating profit before special items and
remeasurements 8,518 8,048
Operating special items (251) (424)
Operating remeasurements 5 18
Operating profit from
subsidiaries and joint ventures 8,272 7,642
Net profit on disposals 460 265
Share of net income from associates -
continuing operations (2) 197 607
Total profit from operations and associates 8,929 8,514
Net finance costs before special items and
remeasurements (137) (110)
Financing special items and remeasurements 29 39
Profit before tax 8,821 8,443
Income tax expense (2,693) (2,518)
Profit for the financial year - continuing
operations 6,128 5,925
Minority interests (834) (776)
Profit for the financial year attributable
to equity shareholders -
continuing operations 5,294 5,149
Profit for the financial year attributable
to equity shareholders -
discontinued operations 2,010 1,037
Profit for the financial year attributable
to equity shareholders - total Group 7,304 6,186
Basic earnings per share ($) - continuing
operations 4.04 3.51
Basic earnings per share ($) - discontinued
operations 1.54 0.70
Basic earnings per share ($) - total Group 5.58 4.21
Group operating profit including associates
before special items
and remeasurements - continuing operations 9,590 8,888
Group operating profit including associates
before special items
and remeasurements - discontinued operations 526 944
Group operating profit including associates
before special items
and remeasurements - total Group 10,116 9,832
(1) Comparatives have been adjusted to
reclassify amounts relating to
discontinued operations
(2) Operating profit from associates before
special items and remeasurements -
continuing operations 1,072 840
Operating special items and remeasurements (3) (465) (17)
Net profit on disposals (3) 24 182
Net finance costs (before remeasurements) (85) (70)
Financing remeasurements (3) (4) 1
Income tax expense (after special items
and remeasurements) (303) (300)
Minority interests (after special items
and remeasurements) (42) (29)
Share of net income from associates -
continuing operations 197 607
(3) See note 3 to the financial information.
Towards the front of this press release, reference has been made to core
continuing operations. Operations considered core to the Group are Base Metals,
Platinum, Ferrous Metals` core businesses (Kumba Iron Ore, Scaw Metals,
Samancor and Minas-Rio), Coal and Diamonds. The table below reconciles
operating profit from core and other operations to total Group operating
profit.
Operating profit Year ended Year ended
31 Dec 2007 31 Dec 2006(1)
$ million
Base Metals 4,338 3,897
Platinum 2,697 2,398
Ferrous Metals - core businesses(1) 1,210 763
Coal 614 862
Diamonds 484 463
Corporate and Exploration (449) (409)
Operating profit including associates before
special items and
remeasurements - core continuing operations 8,894 7,974
Industrial Minerals 474 317
Ferrous Metals - other businesses(1) 222 597
Operating profit including associates before
special items and
remeasurements - continuing operations 9,590 8,888
Operating profit including associates before
special items and
remeasurements - discontinued operations 526 944
Operating profit including associates before
special items and
remeasurements - total Group 10,116 9,832
(1) See Ferrous Metals and Industries operations review
Special items and remeasurement charges
Year ended
31 Dec 2007
Excluding
associates Associates Total
$ million
(251) (462) (713)
Operating special
items
Operating 5 (3) 2
remeasurements
Operating special
items and (246) (465) (711)
remeasurements
Year ended
31 Dec 2006(1)
Excluding
associates Associates Total
$ million
(424) (34) (458)
Operating special
items
Operating 18 17 35
remeasurements
Operating special
items and (406) (17) (423)
remeasurements
(1) Comparatives have been adjusted to exclude amounts relating to discontinued
operations
Operating special items and remeasurements, including associates, amounted to
$711 million, with $653 million operating special charges in respect of
impairments, restructurings and mine and operation closures, including a
$434 million impairment relating to the Group`s share of an impairment of De
Beers` Canadian assets, $153 million impairment against certain Coal Australia
assets, and a combined impairment and restructuring charge relating to certain
non-core assets to be sold and other assets to be restructured at Industrial
Minerals of $43 million.
Net profit on sale of operations, including associates, amounted to
$484 million (2006: $447 million), and is mainly a result of the profit on
disposal of the remaining 29.2% shareholding in Highveld ($140 million) and the
part-disposal of the investment in shares in Exxaro generating a $234 million
profit on disposal.
Financing remeasurements, including associates, are made up of unrealised net
gains of $28 million on non- hedge derivatives and a $3 million foreign
exchange loss on De Beers dollar preference shares held by a rand denominated
entity.
The De Beers US dollar preference shares held by a rand functional currency
entity are classified as `financial asset investments` and are retranslated at
each period end. The resulting rand:US dollar foreign exchange gains and losses
are reported through the income statement as a remeasurement charge.
Discontinued operations
On 2 July 2007 the Paper and Packaging business was demerged from the Group by
way of a dividend in specie paid to shareholders.
On 2 October 2007 the Group sold 67.1 million shares in AngloGold Ashanti which
reduced the Group`s shareholding from 41.6% to 17.3%. The remaining investment
is accounted for as a financial asset investment. The Group has subsequently
reduced its shareholding in AngloGold Ashanti which at 31 December 2007 was
16.6%.
Both of these operations are considered discontinued. Please refer to note 16
for further details on the demerger of Paper and Packaging and the disposal of
AngloGold Ashanti.
Year ended Year ended
$ million 31 Dec 2007 31 Dec 2006
Profit for the financial year - discontinued
operations 318 593
Special items and remeasurements (77) 404
Profit for the financial year after special
items and remeasurements-
discontinued operations 241 997
Net profit after tax on disposal and demerger
of discontinued operations 1,803 -
Total profit for the financial year -
discontinued operations 2,044 997
Minority interests - discontinued operations (34) 40
Profit for the financial year attributable to
equity shareholders -
discontinued operations 2,010 1,037
Net profit after tax on disposal and demerger of discontinued operations
amounted to $1,803 million and is principally as a result of the sale of
67.1 million shares in AngloGold Ashanti on 2 October 2007. Proceeds on sale of
these shares are the major contributor to net cash inflows from investing
activities of discontinued operations of $2.6 billion.
Net finance costs
Net finance costs from continuing operations, excluding special items and
remeasurements of $29 million gain (2006: gain of $39 million), increased from
$110 million in 2006 to $137 million. The increase reflects higher interest
costs due to the increase in net debt.
Taxation
Year ended
31 Dec 2007
Before special Associates` Including
items and tax and associates
remeasurements minority
$ million interests
Profit before 9,021 347 9,368
tax
Tax (2,676) (305) (2,981)
Profit for 6,345 42 6,387
financial year
Effective tax 31.8
rate including
associates %
Year ended
31 Dec 2006(1)
Before special Associates` Including
items and tax and associates
remeasurements minority
$ million interests
Profit before 8,401 307 8,708
tax
Tax (2,598) (278) (2,876)
Profit for 5,803 29 5,832
financial year
Effective tax 33.0
rate including
associates %
(1) Comparatives have been adjusted to exclude amounts relating to discontinued
operations
IAS 1 Presentation of Financial Statements requires income from associates to
be presented net of tax on the face of the income statement. Associates` tax is
therefore not included within the Group`s total tax charge on the face of the
income statement. Associates` tax before special items and remeasurements
included within `Share of net income from associates` for the year ended
31 December 2007 was $305 million (2006: $278 million).
The effective rate of tax before special items and remeasurements including
share of associates` tax on a continuing basis was 31.8%. This was a decrease
from the equivalent effective rate of 33.0% in the year ended 31 December 2006.
The main reasons for this net decrease are reduced levels of tax on
distributions, changes in statutory tax rates, prior year adjustments and the
availability of enhanced tax depreciation on certain assets.
Balance sheet
Equity attributable to equity shareholders of the Company was $22,461 million
compared with $24,271 million at 31 December 2006.
The $3 billion share buyback programme announced in February was completed in
October 2007 and the additional share buyback programme of $4 billion,
announced in August is 33% complete, with around $1.3 billion of shares having
been repurchased at 19 February 2008.
Net debt, excluding hedges but including balances that have been reclassified
as held for sale ($69 million) was $5,239 million, an increase of $1.9 billion
from 31 December 2006. The increase reflects the impact of the share buy back,
increased planned capital expenditure on projects in Platinum, Base Metals and
Coal and the acquisition of MMX Minas-Rio for $1.15 billion, partly offset by
strong operating cashflows, proceeds from disposals and the impact of the Mondi
demerger.
Net debt at 31 December 2007 comprised $8,313 million of debt, offset by
$3,074 million of cash and cash equivalents. Net debt to total capital(1) at
31 December 2007 was 20.0%, compared with 12.9% at 31 December 2006.
(1) Net debt to total capital is calculated as net debt divided by total
capital less investments in associates. Total capital is net assets excluding
net debt.
Cash flow
Year ended Year ended
$ million 31 Dec 2007 31 Dec 2006
Net cash inflows from operating activities -
continuing operations 6,800 7,337
Net cash inflows from operating activities -
discontinued operations 464 973
Net cash inflows from operating activities -
total Group 7,264 8,310
Net cash inflows from operating activities on a continuing operations basis
were $6,800 million compared with $7,337 million in 2006. EBITDA from
continuing operations was $11,171 million, an increase of 7% from
$10,431 million in 2006.
Acquisition expenditure from continuing operations accounted for an outflow of
$1,934 million compared with $197 million in 2006. This included $1.15 billion
in respect of the Group`s acquisition of a 49% interest in the MMX Minas-Rio
integrated iron ore project in Brazil and $658 million in respect of the
Group`s investment in 4.4 million ordinary shares in Anglo Platinum Limited.
Proceeds from disposals on a continuing basis totalled $711 million including
net proceeds on the sale of the remaining 29.2% shareholding in Highveld of
$182 million and $456 million proceeds from the part-disposal of the investment
of shares in Exxaro.
Repayment of loans and capital from associates on a continuing basis amounted
to $119 million, of which $43 million relates to the redemption of De Beers
preference shares. Purchases of tangible assets amounted to $3,931 million, an
increase of $1,022 million. Increased capital expenditure by Platinum, Coal and
Base Metals was partly offset by lower spend at Ferrous Metals and Industries
and Industrial Minerals.
Weighted average number of shares
The weighted average number of shares used to determine earnings per share in
2007 was 1,309 million compared to 1,468 million in 2006. This reflects the
effect of the share buyback programme as well as the Anglo American share
consolidation on demerger of Mondi which on 2 July 2007, resulted in
100 existing Anglo American ordinary shares being exchanged for 91 new Anglo
American ordinary shares.
Dividends
A final dividend of 86 US cents per share to be paid on 30 April 2008 has been
recommended.
Analysis of dividends
US cents per share 2007 2006
Interim dividend (US cents per share) 38 33
Recommended final dividend 86 75
Normal dividend for year 124 108
Special dividend previously paid - 67
Total dividends 124 175
Operations review 2007
In the operations review on the following pages, operating profit includes
associates` operating profit and is before special items and remeasurements
unless otherwise stated. Capital expenditure relates to cash expenditure on
tangible and biological assets. Share of Group operating profit and share of
Group net operating assets for both 2007 and 2006, is based on continuing
operations and therefore excludes the contribution of Mondi and AngloGold
Ashanti.
BASE METALS
$ million Year ended Year ended
31 Dec 2007 31 Dec 2006(1)
(unless otherwise stated)
Operating profit 4,338 3,897
Copper 2,983 3,019
Nickel, Niobium, Mineral Sands and Phosphates 786 426
Zinc 654 516
Other (85) (64)
EBITDA 4,683 4,255
Net operating assets 4,989 4,599
Capital expenditure 610 315
Share of Group operating profit 45% 44%
Share of Group net operating assets 19% 22%
(1) In 2007, Copebras was reclassified from Industrial Minerals to Base Metals
to align with internal management reporting
As such, the comparative data has been reclassified.
Operating profit at Anglo Base Metals reached an all time high of
$4,338 million, surpassing the previous year`s record of $3,897 million. This
resulted from increased copper, zinc and phosphate fertiliser production
combined with higher nickel, lead, niobium and fertiliser prices, partially
offset by adverse exchange rate movements and further rises in the costs of
energy, labour and most key consumables. Although the LME copper price was
higher than in 2006, a significant mark to market and final liquidation
adjustment as at 31 December 2007 resulted in realised copper prices being very
little changed from 2006.
Markets
Average prices (c/lb) 2007 2006
Copper 323 305
Nickel 1,686 1,095
Zinc 147 148
Lead 118 58
During 2007, the copper market was broadly in balance, with prices recovering
strongly in the first half as the Chinese restocked, but then moved lower in
the fourth quarter. Nickel had a buoyant first six months, with very tight
terminal market stocks, but weakened materially in the second half as ongoing
stainless steel production cutbacks, greater scrap availability, substitution
and increases in nickel pig-iron production all contributed to a material build
up of stock across the year. Zinc prices weakened, particularly in the second
half, owing to market concerns about the impact of increasing 2008 supply on
terminal market stocks.
Operating performance
Copper division 2007 2006
Operating profit ($m) 2,983 3,019
Attributable production (tonnes) 655,000 643,800
All of the division`s mines, with the exception of Mantos Blancos, increased
production. In addition, Mantos Blancos, Mantoverde and Collahuasi all
successfully renegotiated collective bargaining agreements without any
disruption to the operations.
Los Bronces increased output by 2% principally due to a 14% increase in cathode
production. Despite the attributable loss of 9,200 tonnes of production owing
to the shutdown of the SAG mill number 3 (for replacement of its stator motor)
and planned lower oxide and sulphide grades, Collahuasi increased its
attributable production by 3%. El Soldado lifted production by 6%. Output from
Mantoverde was marginally up, while Mantos Blancos was affected by planned and
unplanned maintenance shutdowns as well as an earthquake and was unable to
offset the impact of lower grades with higher throughputs, leading to a
marginal production decline. Molybdenum production rose 8% to 4,400 tonnes,
primarily as a result of increases at Collahuasi. Chagres` output fell by 5%
mainly due to the lower average grade of concentrate treated. Adverse exchange
rate movements and further rises in the costs of energy, labour and most key
consumables impacted all Chilean operations.
Nickel, Niobium, Mineral Sands and Phosphates 2007 2006
Operating profit ($m) 786 426
Attributable nickel production (tonnes) 25,600 26,400
At Codemin, output moved up marginally, but sales were 5% lower following a
slowdown in stainless steel producer offtake. At Catalao, niobium production
was flat, with higher mill throughput being offset by lower metallurgical
recoveries arising from a change in ore characterisation. Copebras had a
spectacular year, with much improved prices and fertiliser sales climbing by
14% to exceed 1 million tonnes for the first time. All of the Brazilian
operations saw costs increase as a consequence of adverse currency movements
and cost increases in fuel oil, aluminium powder and sulphur. Loma de Niquel`s
production declined by 5% due to heavy rains and strike action, while tonnage
processed was affected by a planned maintenance stoppage and a series of
refractory and equipment failures. These also had a bearing on operating costs
which were impacted further by numerous cost and indirect tax increases within
a fixed exchange rate and increasingly difficult operating environment. Sales
fell from 16,900 tonnes to 14,500 tonnes arising out of a combination of
administrative delays by the Venezuelan authorities and weakening stainless
steel customer demand.
The Venezuelan Ministry of Basic Industries and Mining ("MIBAM") commenced
administrative proceedings in January 2007 in relation to the sixteen nickel
exploration and exploitation concessions held by the Company`s subsidiary,
Minera Loma de Niquel ("MLdN") alleging that MLdN had failed to fulfil certain
conditions of its concessions. MLdN submitted a timely response to MIBAM`s
administrative writ in February 2007. By means of a series of resolutions
published in two Official Gazettes made available in January 2008, MIBAM
declared the termination of thirteen of MLdN`s nickel concessions. The thirteen
concessions do not include the concessions where the current mining operations
and the metallurgical facilities are located. MLdN is in the process of filing
administrative appeals seeking the annulment of all of these resolutions and
requesting that their effects be suspended pending a final decision by MIBAM.
At 31 December 2007 Anglo American`s interest in the book value of MLdN,
including its mineral rights, was $616 million (as included in the Group`s
balance sheet). In the 12 months to December 2007, MLdN`s production and
contribution to Group operating profits were respectively, 15,700 tonnes of
nickel in ferronickel and $370 million. The average price of nickel in 2007 was
1,686 c/lb. As of 19 February 2008 the price of nickel was 1,259 c/lb.
Anglo American is proud of its record in Venezuela where it has invested
substantial amounts in exploration and subsequently the construction of the
country`s only primary nickel producer. It is a major contributor to and
employer in the Venezuelan economy as well as a significant tax payer. The
operation continues, as it has always done, to work constructively with all
stakeholders - employees, local communities and government - and to the highest
sustainable development, social and environmental standards.
Anglo American and MLdN are seeking further clarification from MIBAM, with
which they have maintained a constructive working relationship in the past.
Anglo American and MLdN believe that there is a valid legal basis to reverse
the notices of termination and will pursue all appropriate legal and other
remedies and actions to protect their respective interests both under
Venezuelan and international law. As a result, the Group continues to
consolidate MLdN and no impairment has been recorded for the year ended
31 December 2007.
Zinc division 2007 2006
Operating profit ($m) 654 516
Attributable zinc production (tonnes) 343,100 334,700
Attributable lead production (tonnes) 62,100 71,400
Skorpion operated at design capacity throughout the year, producing a record
150,100 tonnes (2006: 129,900 tonnes). Mine operating unit costs fell,
reflecting tight cost control and higher volumes, partially offset by increases
in royalties and the costs of key consumables. At Lisheen, zinc production
decreased by 4%, and lead output was down 13%. Higher than anticipated water
inflows and poor ground conditions limited mining flexibility, resulting in
lower tonnages, grades and metallurgical recoveries. At Black Mountain, mining
difficulties related to limited stope availability were compounded by a slower
than anticipated ramp up of the infrastructure and ore handling systems of the
new Deeps shaft as well as seven weeks of industrial action. Overall, declining
mill throughput and lower grades were only partly offset by material
improvements in metallurgical recoveries and 28,300 tonnes of zinc and
41,900 tonnes of lead were produced (2006: 34,100 tonnes and 48,300 tonnes,
respectively). The previously announced sale of Namakwa Sands (R2.0 billion,
subject to contractual adjustments) and 26% of each of Black Mountain and
Gamsberg (combined R180 million, subject to contractual adjustments) to Exxaro
Resources has yet to be completed, awaiting the approval of the conversion of
old order to new order mining rights. The sale is expected to be completed in
2008.
Projects
Anglo Base Metals has a strong project pipeline which provides significant
scope for organic growth. The pipeline includes the Barro Alto nickel project
which is on track for first production in 2010 and is due to increase existing
nickel production by an average 36,000 tpa from 2011. To date, in excess of
$900 million of the $1.5 billion capital expenditure required has been
committed to this project and the strength of the Brazilian currency is putting
ongoing material upward pressure on the domestic component of capital
expenditure.
The $1.7 billion Los Bronces expansion project, which aims to increase sulphide
mill throughput from 61,000 tpd to 148,000 tpd and increasing copper production
by an average of 170,000 tpa to an initial production level exceeding
400,000 tpa has been approved. Construction is under way, with first production
scheduled for 2011.
A debottlenecking project at Collahuasi, which will increase sulphide mill
throughput from 130,000 tpd to 140,000 tpd, has been approved at a total cost
of $64 million, with ramp-up due to commence in the second half of 2008. The
first phase of a potential two phase expansion at Collahuasi, which will
increase throughput to 170,000 tpd, plus the addition of a separate 30,000 tpd
sulphide leach circuit (equivalent to around 650,000 tpa of copper on a 100%
basis), will be evaluated during 2008. Recent exploration success at Rosario
Oeste, suggests that there is the potential to further increase production to
around 1 million tpa by 2014.
The revised feasibility study on the Quellaveco project in Peru, which
contemplates an operation producing approximately 200,000 tpa of copper in
concentrate at a capital cost of approximately $1.7 billion, will be completed
in 2008.
In April 2007, Anglo American tendered $403 million and won the Michiquillay
privatisation auction in Peru. The consideration for this world class resource,
with a production potential of up to 300,000 tpa, will be payable over five
years. However , there is a right to exit the project, at any time after the
first year, by paying 30% of the difference between monies expended and the
$403 million. During the first year there is a minimum work commitment of
$1 million with no exit payment. The Peru-based team has been mobilised and the
primary focus of efforts in the first 12 months will be the development of a
productive relationship with the local communities.
In July 2007, Anglo American became a 50% partner with the Northern Dynasty
Partnership (a wholly owned affiliate of Northern Dynasty Minerals Ltd.) in the
Pebble Limited Partnership for a staged cash investment of $1.425 billion. The
partnership owns the Pebble Project, the key assets of which are the open pit
style Pebble West copper-gold-molybdenum deposit and the adjacent, deeper and
higher grade Pebble East deposit. The resources rank amongst the world`s most
important accumulations of copper, gold and molybdenum. The objective is to
complete a pre-feasibility study in 2008, a feasibility study around 2011 and
to have a world class mine in operation by 2015.
Chagres, Mantoverde, Mantos Blancos, El Soldado, Catalao, Gamsberg, Copebras,
Boyongan and Kalayaan have early-stage studies underway examining options for
projects that will either increase production and/or extend mine lives.
Outlook
Production of copper, zinc, lead, niobium and fertilisers are all forecast to
increase in 2008, while there is a risk that the nickel production profile will
be affected by uncertainties in Venezuela. With the base metals industry
operating at capacity and, on the assumption that the currencies of the
countries where the division produces continue to remain firm in relation to
the dollar, cost pressures will remain, with sulphur and sulphuric acid prices
forecast to rise dramatically. In Chile the energy supply situation in the
northern grid is very tight and the risk of periodic requests for load shedding
cannot be ruled out.
It seems likely that certain base metal markets will move into surplus in 2008,
with some modest build up of stock forecast (except in the case of zinc, which
is likely to see a material market surplus), the extent of which will be
dependent on the magnitude of any supply side disruptions. Notwithstanding
these shorter term uncertainties, medium and longer term fundamentals remain
positive.
PLATINUM
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2007 31 Dec 2006
Operating profit 2,697 2,398
EBITDA 3,155 2,845
Net operating assets 9,234 7,078
Capital expenditure 1,479 923
Share of Group operating profit 28% 27%
Share of Group net operating assets 35% 33%
Anglo Platinum`s operating profit rose by 12% to $2,697 million. This was
mainly due to a higher price achieved for the basket of metals sold and a
weaker average rand relative to the US dollar, offset by lower sales volumes on
the back of reduced production from mining operations.
The average dollar price realised for the basket of metals sold equated to
$2,579 per platinum ounce, 27% higher than in 2006, with firmer platinum,
rhodium and nickel prices making the largest contribution to the increase. The
average realised price for platinum was $162 higher than 2006 at $1,302 per
ounce, while nickel averaged $17.04 per pound against $10.73 in 2006. The
realised rhodium price averaged $4,344 per ounce, an increase of $802 per ounce
over 2006, and includes the effect of existing long term contractual
arrangements with some customers, entered into to support and develop the
rhodium market.
Anglo Platinum is at an advanced stage of negotiations to achieve mutual
recognition with its relevant customers of structural changes to the rhodium
market affecting the dollar price of the metal. The objective of the
negotiations is to move towards a contractual price for rhodium which is market
related. The year also saw a significant increase in the price of ruthenium
following strong growth in demand, driven by its use in hard disk drives. This
new use, and its relative price insensitivity, has resulted in a structural
change to the market.
Markets
Current high dollar PGM market prices partly reflect the up-cycle being enjoyed
by most commodities, but are supported by strong market fundamentals, in
particular for platinum, where metal supply has substantially been in deficit
for 11 years. Long term demand for the metal is expected to remain robust,
based on tightening automotive emissions legislation, buoyant demand in the
relatively price resilient Chinese jewellery market, growth in existing
applications and emerging fuel cell technology.
Supplies of and demand for platinum are expected to grow and the market is
expected to remain balanced over the medium term with short term deficits
associated with reduced South African output. Palladium demand is also expected
to grow but, against a backdrop of increasing supply from South African
expansions on higher palladium content UG2 ore, remains adequately supplied.
The increased supply of rhodium from expansionary activity should ease pressure
on current prices in the longer term.
Safety
Anglo Platinum remains committed to the principle of zero harm and has
implemented a major shift in its approach to safety. In addition, steps have
been implemented to align Anglo Platinum`s approach to employee safety to that
adopted by the Group.
The creation of a culture in which safety standards are paramount, with
effective learning from safety incidents to ensure `no repeats`, underlies this
new approach. This includes a visible, felt commitment from leadership to
eliminate harm and increase capacity to manage safety risks wherever they may
occur.
Safety as the overriding priority, clarity of personal and collective
responsibilities and rigid and consistent application of standards lie at the
heart of the new approach. This approach to safety is being implemented at all
Anglo Platinum operations.
A significant deterioration in safety performance occurred in the first half of
2007 with 18 fatal incidents, 12 of which occurred at Rustenburg mine.
A decision was taken to suspend production at all Rustenburg shafts on a
staggered basis. Following the temporary closure of Rustenburg, senior
management and other relevant stakeholders developed a comprehensive enhanced
safety improvement plan, which is being implemented over the next three years.
In the second half of 2007, following the initial intervention, the lost time
injury frequency rate at managed operations reduced to 1.71 compared to 2.37 in
the first half of the year.
Operating performance
Equivalent refined platinum production (equivalent ounces are mined ounces
converted to expected refined ounces) from the mines managed by Anglo Platinum
and its joint venture partners for 2007 decreased by 167,200 ounces or 6% when
compared to 2006. This was due to the intervention aimed at achieving a
significant improvement in employee safety as well as reduced production
efficiency following a shortage of skilled labour, strike action at joint
ventures, the unsettled labour situation associated with wage negotiations and
lower grades at Potgietersrust.
Refined platinum production for 2007 decreased by 12% to 2.47 million ounces.
The decrease is attributed to the reduced production experienced in 2007 as
well as the one-off release of 112,000 ounces from the process pipeline in 2006
due to the effect of the shutdown of the Polokwane smelter in 2005.
The cash operating cost per equivalent refined platinum ounce in rand terms
increased by 34% due to reduced production, substantial inflationary pressures
including above inflation increases in wages, diesel, tyres, chemicals and
steel grinding media, costs associated with the safety intervention, increased
support costs and ramp-up costs at Mototolo and Marikana. In addition, an
increase in labour complement to support a planned increase in production at
mining operations in 2007 further contributed to the increase in unit costs.
Projects
The implementation of the majority of Anglo Platinum`s mining and processing
projects to expand and maintain production continues on schedule. Marikana and
Mototolo (which delivered its first production in the last quarter of 2006)
both increased production in 2007, adding a combined 92,800 equivalent refined
platinum ounces.
Anglo Platinum approved capital expenditure totalling $1,520 million in 2007.
Major items include the expansion of the base metals refinery plant to 33,000
tonnes per annum of contained nickel by the end of 2010, the Townlands ore
replacement project, at a capital cost of $139 million, which will replace
70,000 ounces of refined platinum per annum from 2014, with production expected
from the new Merensky and UG2 areas at the Rustenburg Townlands shaft.
The $188 million Mainstream inert grind projects were approved in November
2007. These projects will improve mineral liberation and metallurgical
performance within the process flow of the current concentrators, and will
result in an increase in PGM recovery.
The PPRust North expansion project, which will mill an additional 600,000
tonnes of ore per month, is progressing. Commissioning of the new concentrator
has commenced. The relocation of the Ga-Puka and Ga-Sekhaolelo communities
commenced in July 2007 under the guidance of a representative task team
facilitated by the office of the Premier of Limpopo.
The Amandelbult East Upper UG2 project, which will contribute an additional
100,000 ounces of refined platinum per annum by 2012, is progressing on
schedule. The Rustenburg Paardekraal 2 shaft replacement project is in progress
and is expected to produce 120,000 ounces of refined platinum annually by 2015,
replacing decreasing production as a result of continuing Merensky ore reserve
depletion.
The strong global demand for resources is placing material inflationary
pressure on capital expenditure and the ability to meet project schedules, the
effect of which was experienced in the latter part of 2007. These pressures are
likely to continue in the foreseeable future.
Outlook
Anglo Platinum`s commitment to safety including the principle of zero harm will
continue to be an area of focus in 2008. The new approach to safety, together
with operational difficulties, has had a material impact on performance in
2007, which is likely to continue in 2008. Production disruptions arising from
Eskom`s inability to supply sufficient power have been experienced in 2008.
Consequently, refined platinum production for 2008 is expected to be
2.4 million ounces.
A combination of a weak dollar, robust demand for platinum and slower than
anticipated supply growth is supportive of higher US dollar prices. The
autocatalyst sector remains buoyant, driven by rising European demand for
diesel vehicles and their associated catalyst and filter requirements, as well
as growing Asian automotive production. Purchases of newly mined platinum for
jewellery manufacturing in China are holding up well in the face of record
prices, but new metal demand is declining in the Japanese and US jewellery
markets as recycling of old jewellery is encouraged by the higher price levels.
Industrial demand remains firm, particularly in the electrical and petroleum
sectors.
Palladium demand for autocatalyst and industrial applications continues to
grow, supported by the low price relative to platinum. Jewellery demand is
expected to take increasing market share from white gold as palladium prices
have lagged the recent significant increase in the gold price. Palladium prices
continue to trade in a narrow band and remain vulnerable to a change in
investor and fund sentiment.
Prices for rhodium are anticipated to stay strong as the market remains finely
balanced.
FERROUS METALS AND INDUSTRIES
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2007 31 Dec 2006
Operating profit 1,432 1,360
Kumba Iron Ore 834 565
Scaw Metals 172 160
Samancor Group 225 52
Other (21) (14)
Core businesses 1,210 763
Highveld Steel 108 230
Tongaat-Hulett/Hulamin 114 154
Kumba Resources - 213
Other businesses 222 597
EBITDA 1,561 1,560
Net operating assets 3,987 2,796
Capital expenditure (including biological
assets) 471 582
Share of Group operating profit 15% 15%
Share of Group net operating assets 15% 13%
Ferrous Metals` operating profit of $1,432 million was up by 5% on 2006, though
operating profit from core businesses increased by 59%. The iron ore and
manganese markets experienced favourable market conditions and stronger prices.
Markets
Demand for iron ore and manganese ore continues to be robust, driven by healthy
demand by steel manufacturers in China and other markets. The American,
European and Asian manganese alloy markets all remain generally strong, driven
by continuing buoyant demand for manganese alloys and ongoing concerns around
security of supply.
Operating performance
The unbundled Kumba Iron Ore achieved its highest ever operating profit of
$834 million, 48% up on 2006, on the back of strong iron ore prices. Global
demand for iron ore in 2007 rose by 5.7% to 1.89 billion tonnes, fuelled by
increasing demand for seaborne iron ore in China and other developing markets.
The company produced 32.4 million tonnes of iron ore, an increase of 4% on 2006
production volumes. Operating costs, however, remained under pressure owing to
above inflation cost increases, particularly in energy, labour, contractors and
raw materials.
Scaw Metals delivered a record operating profit of $172 million, with strong
demand for most of its products. Margins remained under pressure owing to
significant price increases in key raw materials and import competition for
certain South African product lines.
Anglo American`s attributable share of Samancor`s operating profit increased
more than four fold to $225 million as strong global demand for both manganese
ore and alloys, together with constrained global manganese ore production,
resulted in surging ore prices during the second half of the year. Higher ore
and alloy sales volumes also contributed to the strong performance.
The Tongaat-Hulett and Hulamin contribution to operating profit declined by 26%
to $114 million following the unbundling of Hulamin from Tongaat-Hulett and
related empowerment transactions in June 2007. These businesses, which were
consolidated for the first six months of 2007, were equity accounted in the
second half of the year.
The sale of the remaining 29% stake in Highveld to Evraz was completed in April
2007.
Projects
In July, a 49% stake in the MMX Minas-Rio iron ore project in Brazil was
acquired for an effective price of $1.15 billion plus a potential payment of up
to $600 million if certain criteria are met. On 17 January 2008, Anglo American
announced that it had entered into a period of exclusive discussions with the
controlling shareholder of MMX Mineracao e Metalicos S.A. (MMX) to acquire a
63.6% shareholding in a new company ("Newco") which will be demerged from MMX
and will own MMX`s current 51% interest in the Minas-Rio iron ore project and
70% interest in the Amapa iron ore mine. After the acquisition of the 63.6%
stake, Anglo American will offer to purchase the Newco shares held by the
minority shareholders of Newco at the same price per share, for a total of
approximately $5.5 billion on a 100% basis or approximately $361.12 per Newco
share (assuming one Newco share for each current MMX share), as well as royalty
payments to MMX beginning in 2025 for the Minas-Rio project and 2023 for the
Amapa mine.
In October 2007, the $754 million, 13 Mtpa Sishen Expansion Project commenced
commercial production, with ramp up to full design capacity expected to be
achieved in 2009.
The Sishen South Project, which involves the development of a new opencast
operation some 70 kilometres south of Sishen mine, is currently being
considered for development. A decision to proceed with this 9 Mtpa new mine is
imminent, and is dependent on finalising logistical arrangements and the
granting of mining rights. A pre-feasibility study on a further expansion at
Sishen mine of 10 Mtpa by beneficiating lower grade resources is due to be
completed during 2008.
The $183 million GEMCO expansion project in Australia`s Northern Territory is
on target to increase the company`s annual manganese ore production capacity
from 3.0 dry metric tonne units (dmtu) to 4.0 dmtu by the first half of 2009.
Outlook
Global demand for steel is expected to remain strong through 2008, underpinning
demand for iron ore and manganese products. 2008 also promises to be a year of
healthy steel production growth, with year on year global output forecast to
rise by 6.8%. With iron ore producers struggling to bring on new capacity,
China and other major steel producing regions remain under-supplied. As a
result, the annual iron ore price increase with effect from 1 April 2008 is
expected to be significant.
Demand for manganese ore and alloy is forecast to remain firm which, together
with supply constraints in manganese ore, should result in the record ore
prices seen in the latter part of 2007 continuing well into 2008.
Manganese alloy prices will be supported by higher iron ore and other
production costs. Scaw Metal`s volumes in the South African market are expected
to grow, driven by infrastructural expansion and construction and mining
industry activity.
Demand for Scaw`s products is forecast to remain strong, driven by mining
demand and infrastructure growth. Increasing input costs will, however, place
further pressure on margins.
COAL
$ million Year ended Year ended
31 Dec 2006(1)
(unless otherwise stated) 31 Dec 2007
Operating profit 614 862
South Africa 414 380
Australia 9 279
South America 227 227
Projects and corporate (36) (24)
EBITDA 882 1,082
Net operating assets 3,984 2,870
Capital expenditure 1,052 782
Share of Group operating profit 6% 10%
Share of Group net operating assets 15% 13%
(1) In 2007, Yang Quarry was reclassified from Industrial Minerals to Coal to
align with internal management reporting. As such, the comparative data has
been reclassified.
Anglo Coal`s operating profit decreased by 29% to $614 million. This was mainly
brought about by a disappointing performance from Australian operations, where
port and rail infrastructure constraints across the industry, lower sales
prices and a 11% appreciation of the local currency against the US dollar,
resulted in significantly lower earnings.
During the period under review, Anglo Coal Australia has recorded an impairment
of $153 million against certain Australian operations to reflect the latest
commercial and operational conditions relating to those operations.
Markets
An increase in global thermal coal demand, buoyed by the influential Indian and
Chinese markets and coupled with periods of significant supply disruptions in
key producing countries, resulted in a particularly strong market in the second
half of 2007. In addition to the supply fundamentals, competing energy oil and
gas prices further supported the renaissance of coal. Recently, thermal coal
price indices have set new historical highs.
In Australia, 2007 opened with a strengthened market for thermal coal on the
back of strong Asia Pacific demand, particularly from China, which experienced
a reduction in export tonnage and a rise in domestic prices. Continued port
congestion at Newcastle throughout the year and storm and flood events kept
supply tight and further strengthened the export thermal market. Prices
steadily increased throughout the year and are likely to remain high
into 2008. Export performance from South Africa and Colombia was steady.
Metallurgical coal prices turned lower at the start of the year in the wake of
the high 2006 prices that were driven by increasing global steel demand.
However, supply constraints from Australia`s congested Dalrymple Bay port,
declining Russian exports, and China`s net importer status, resulted in a
steady price increase from April, with prices remaining high at year end.
As most sales in respect of both thermal and metallurgical coal are concluded
for delivery some months hence, the full value of the rising market will only
be felt next year.
Operating performance
Operating profit from South African sourced coal was 9% higher at $414 million,
mainly because of a 10% rise in export prices and despite a decrease of nearly
1% in export sales volumes.
Production was maintained at around 59 Mt with a reduction of 0.6 Mt for the
trade mines being offset by a modest increase from Eskom and domestic
production. Total sales, however, declined by just over 1% to 58.7 Mt, mainly
because export sales volumes were below 2006 due to poor rail performance,
adverse weather conditions at the Richards Bay Coal Terminal, together with
some production issues.
Capital expenditure was $150 million higher than in 2006, the Mafube Macro and
New Vaal MacWest projects being the primary contributors of the significant
increase in expansionary capital expenditure of $121 million.
Operating profit from the Australia operation fell to $9 million. This was
primarily due to lower realised prices, unfavourable exchange rate and higher
port demurrage charges. Port and rail infrastructure constraints limited the
ability to then offset through volume increases.
Delays in the port and rail infrastructure programme have affected the
operations. Significantly, high value metallurgical coal capacity allocation
was reduced by 2.7 Mt, on a 100% basis, and material additional costs were
suffered owing to lengthening port queues. Mitigating actions have included
building stockpiles, adjusting production profiles, securing coal sales via
alternative routes, rescheduling high rate vessels and renegotiating demurrage
rates. Thermal coal prices strengthened by 7% over 2006, however, the 2007
coking coal settlement was below the high levels of 2006.
Operational performance improvements were limited by infrastructure constraints
for all export mines except Dawson. The Dawson expansion project will ramp up
production to achieve design rates by the end of 2008. It incurred an operating
loss during 2007 following transitional issues and a change in the mine plan.
The Grasstree project at Capcoal became operational in 2007 and delivered an
increase in volumes over 2006. The full benefits of this could not be realised
owing to the port constraints and operating shifts were reduced here and at
existing operations. The Lake Lindsay project to expand operations at Capcoal
will be completed in late 2008.
Operating profit from South America was in line with 2006 at $227 million. Coal
sales at CerrejACubedn increased by 4% to 29.8 Mt as the expansion project to
32 Mtpa progressed, however operating costs also rose as a result of the
appreciation of the Colombian peso and high fuel prices. In Venezuela, sales
volumes at Carbones del Guasare were marginally ahead of 2006.
The 66%-held Peace River Coal operation in Canada began producing high quality
coking coal from the Trend Mine at the end of 2007.
Projects
In South Africa, the $505 million Zondagsfontein project has been approved,
expected to deliver 6.6 Mtpa from 2010. The $292 million development of the
Mafube Macro project is progressing well, with plant commissioning commencing
in mid-December 2007. Mafube will supply coal to Eskom and to the export market
and it is anticipated that the mine will increase thermal coal production by a
total of 5.4 Mtpa, the attributable share being 2.7 Mtpa.
In Australia, the expansion of the Dawson Complex to increase production by
5.7 Mtpa (100%) is operational and ramping up to full design capacity and is
expected to achieve design rates by the end of 2008. At Capcoal, the Lake
Lindsay development is progressing with estimated completion during the second
half of 2008. The additional production from both Dawson and Lake Lindsay will
increase coal production at these mines by approximately 9.7 Mtpa. In addition
to the current developments, Anglo Coal is reviewing a number of studies for
key future development prospects including Moranbah South, Grosvenor, Dartbrook
and Saddlers Creek.
In Colombia, the approved expansion at CerrejACubedn to 32 Mtpa is on schedule
and
should be achieved in 2008. Feasibility studies are currently under way
reviewing possibilities of expanding the CerrejACubedn operation beyond 32 Mtpa.
Outlook
The increasing demand for thermal coal from China continues to demonstrate
coal`s strategic importance within the global energy mix. Compared to oil and
gas, coal`s security of supply from widely distributed reserves make it one of
the world`s most reliable energy sources. This together with the development
and implementation of clean coal technologies will, over time, provide coal the
opportunity to make a significant contribution towards satisfying future global
energy demand while addressing environmental concerns.
In South Africa, the rand/dollar exchange rate and coal prices will continue to
be the two main variables in 2008. Export spot coal prices have doubled over
the past six months, reaching record highs. Globally, the high demand for
electricity and increased economic activity are expected to continue into 2008,
which will have a positive impact on earnings.
In Australia, port and rail expansions and related constraints are set to
continue in 2008. Alternative sales routes have been secured, enabling the
large stockpiles built in 2007 to be reduced. Infrastructure related supply
constraints will result in a return to higher prices in the current contract
negotiations for delivery later in 2008. Growth from projects will deliver
higher volumes in 2008.
DIAMONDS
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2007 31 Dec 2006
Share of associate`s operating profit 484 463
EBITDA 587 541
Group`s aggregate investment in De Beers 1,802 2,062
Share of Group operating profit 5% 5%
The Group`s share of operating profit from De Beers increased by 5% to $484
million. Earnings from joint ventures were higher than in 2006 and there was a
modest rise in diamond prices in 2007, although the weakening of the dollar in
the second half of the year had an impact on costs and margins. Diamond sales
were lower than prior year, resulting from diminishing supplies of rough
diamonds to Diamond Trading Company International (DTCI) from the Russian state
producer Alrosa.
Underlying earnings at De Beers were higher than prior year, principally
reflecting an increased share of earnings from joint ventures and a tax refund
to De Beers Consolidated Mines Limited (DBCM), which offset lower preference
share income arising as a result of the June 2006 redemptions and higher
minorities due to the Ponahalo BEE transaction which was completed in April
2006.
In the US, a preliminary agreement was reached in March 2006 with all of the
plaintiffs, which resolved all outstanding class actions in the US and
settlement funds were paid into an escrow account pending conclusion of the
settlement process. The matter is proceeding according to the timetable of the
Court and De Beers anticipates that a Fairness Hearing will occur in the first
half of 2008.
The Court of First Instance in Luxembourg announced in July 2007 that it had
annulled the European Commission`s decision to accept commitments offered by De
Beers to cease all purchase of rough diamonds from Alrosa from 1 January 2009.
De Beers will continue to purchase goods from Alrosa, up to the agreed levels
and within the proposed timeframe set out in the prior commitments.
De Beers was informed by the South African Department of Minerals and Energy
(DME) on 4 February 2008 that it has granted a New Order Mining Right in
respect of the Venetia mine, to be executed in March. De Beers has already been
granted New Order Mining Rights for Voorspoed and Cullinan and conversions for
Namaqualand, Kimberley and Finsch mines are being processed by the DME.
De Beers has made an impairment charge of $965 million ($434 million
attributable) against its Canadian assets. This non-cash valuation adjustment
has been brought about by the strengthening of the Canadian dollar against the
US dollar, revised long term crude oil prices, labour cost pressures and the
effect of capital expenditure overruns at Snap Lake.
Markets
Early estimates indicate that the all important Thanksgiving to Christmas
period in the US has seen sales of jewellery, including diamond jewellery,
underperform against analysts` and retailers` expectations - despite a surge in
the week before Christmas - with the result that sales are likely to have
declined in comparison with prior years.
Retail experts point to the 2007 holiday season having started well, but
consumers reduced spending amid financial concerns in the worsening economic
environment, resulting in soft sales across the board, particularly for diamond
jewellery. The majority of chains also reported lacklustre sales, with Tiffany,
a benchmark for higher end branded jewellers, reporting negative sales growth
in the US for November and December. Notwithstanding this, diamond jewellery
sales growth was positive in the US for the first three quarters of 2007 and it
is likely that full year results will show positive growth, though in low
single digits.
Operating performance
In 2007, De Beers production was 51.1 million carats, maintaining the record
production achieved in 2006. Output from the South African operations increased
by 3% to 15.0 million carats mainly due to improvements made to the diamond
recovering process at Venetia mine which increased carats recovered by 9%.
Output in Namibia rose by 4% to 2.2 million carats, reflecting increased
production from off-shore operations. This offset a 2% decline in production
from Debswana to 33.6 million carats. The industrial diamond arm, Element Six,
continued to expand and recorded sales growth of 18% and organic growth of 10%.
Projects
Snap Lake in the Northwest Territories of Canada was brought into production in
the fourth quarter of 2007. The mine is currently being commissioned, full
production of 1.6 million carats per year is expected to be achieved during
2008. By mid-2008, the Victor mine in Ontario is planned to enter production -
expected to be 0.6 million carats of high quality diamonds per year.
In Botswana, Debswana is reviewing expansion opportunities, the most
significant of which is for Jwaneng which will result in open-pit operations
until 2022, after which the transition to underground mining is planned.
In mid-2007, the mv Peace in Africa, De Beers` latest marine mining vessel,
started operations off South Africa`s Atlantic coastline. It is expected to
yield approximately 0.2 million carats per year. Also in South Africa, the
Voorspoed mine in the Free State is scheduled to commence production in the
fourth quarter of 2008, reaching full production in 2009. Voorspoed is expected
to produce 0.7 million carats per year.
Outlook
The outlook for 2008 is tempered by uncertainty over global economic growth.
The economic conditions in the US could continue to impact consumer diamond
jewellery sales through the first half, particularly at the lower end.
Nevertheless, strong demand from China, India and the Middle East is expected,
sustaining pricing for larger and better quality diamonds.
Looking beyond 2008, De Beers is confident about the diamond market
fundamentals. With strong growth in the emerging markets of China, India and
Russia, demand should exceed new supply with the opportunity for future price
growth. In this environment, De Beers continues to focus on transforming itself
to ensure it remains the leading company in an increasingly competitive diamond
industry.
INDUSTRIAL MINERALS
$ million Year ended Year ended (1)
(unless otherwise stated) 31 Dec 2007 31 Dec 2006
Operating profit 474 317
EBITDA 732 539
Net operating assets 4,509 4,185
Capital expenditure 274 279
Share of Group operating profit 5% 4%
Share of Group net operating assets 17% 20%
(1) In 2007, Copebras and Yang Quarry were reclassified from Industrial
Minerals to Base Metals and Coal respectively to align with internal management
reporting. As such, the comparative data has been reclassified.
In 2007, Tarmac`s operating profit climbed by 38% (excluding benefit from
exchange rate movements) to $474 million. Although the year was characterised
by high cost pressures and volatile energy prices in a tight and highly
competitive market, disciplined margin management, procurement initiatives and
healthy demand from certain sectors had a major positive bearing on results. In
the UK, operating profits grew by 41%, with sales growing ahead of the market.
At Tarmac International, operating profits were 32% higher, benefiting from
milder weather and buoyant markets in France, Poland and the Czech Republic.
Markets
The construction industry has experienced challenging market conditions over
the past few years, and some weakness could continue, particularly with roads
and housing. The volatility of energy prices and the impact on cement and
distribution costs will also continue to affect the industry.
Operating performance
The year was marked by a range of initiatives to drive and unlock further
shareholder value from the current portfolio of businesses.
Overall, within the UK market, volumes in aggregates and concrete products were
in line with growth in the construction markets, with lower demand in housing
and roads being offset by improved demand in the commercial and infrastructure
sectors.
In the UK Aggregate Products business, operating profits were 21% up on 2006,
mainly as a consequence of the business being well placed to capitalise on
benign markets as well as successful cost saving initiatives aimed at ensuring
aggregates and asphalt deliveries come from the lowest cost source available.
The UK Building Products business saw operating profits climb by 27%. Its
commercial strategy was focused around offering customers comprehensive
building solutions. Cement achieved a record turnover in 2007, driven by
increased output from new plant in a favourable market environment. Project
Gryphon, for example, involved a thorough review of the operational and
commercial structure of Buxton Lime and Cement, a process that is now largely
complete, with the consequent improvements expected to contribute $10 million
of additional cost savings during the period 2008 to 2010.
Tarmac International`s higher operating profits were partially offset by market
weaknesses and high cost pressures in Spain and Romania. The year witnessed a
re-balancing of the company`s international activities, with a $20 million
expansion programme in growth areas such as Dubai and the benefits coming
through in 2007 from the disposal of non-core or under performing businesses in
2006.
Outlook
A three year business plan is now in place that will deliver performance gains
through to 2010, driven by efficiency improvements and targeted capital
expenditure. In the UK, a predicted downturn in the housing markets and low
investment levels in road building are expected to have a modest effect in the
short term. The outlook for non-residential and civil construction is stable,
with further demand support in the London area from the 2012 Olympics and other
major infrastructure projects such as the widening of the M25 and the potential
Crossrail east-west rail link. Internationally, Tarmac has a presence in
attractive markets with strong fundamentals and compelling growth prospects. At
a time when industrial minerals are in high demand, Tarmac has access to
substantial reserves (3.2 billion tonnes of quarry reserves worldwide) and has
direct and stable routes to end markets.
DISCONTINUED OPERATIONS
ANGLOGOLD ASHANTI
$ million Year ended Year ended
31 Dec 2007 31 Dec 2006
Share of associate`s operating profit (1) 202 467
EBITDA 401 843
(1) The results for 2007 are reported as an associate up to 2 October 2007.
After this date the remaining investment is accounted for as a financial asset
investment. The results for 2006 are reported as a subsidiary up to 20 April
2006 and thereafter as an associate at 42% attributable.
Attributable operating profit from AngloGold Ashanti of $202 million
represented a 57% decrease against the prior year. The decrease is due to the
Group accounting for AngloGold Ashanti as an associate until 2 October 2007,
when the Group sold 67.1 million shares in AngloGold Ashanti which reduced the
Group`s shareholding from 41.6% to 17.3%, as well as four months of
contribution as a subsidiary in 2006. The Group`s shareholding in AngloGold
Ashanti was 16.6% at 31 December 2007. The remaining investment is accounted
for as a financial asset investment. The AngloGold Ashanti business is
presented in the Group`s financial statements as a discontinued operation.
PAPER AND PACKAGING
$ million Year ended Year ended
31 Dec 2007 31 Dec 2006
Operating profit (1) 324 477
Mondi Packaging 195 287
Mondi Business Paper 105 130
Other 24 60
EBITDA 560 923
(1) On 2 July 2007, the Paper and Packaging business was demerged from the
Group by way of a dividend in specie paid to shareholders. The results for 2007
are reported up to the date of demerger.
Attributable operating profit from Paper and Packaging of $324m represented a
32% decrease against the prior year. The decrease was due to the demerger of
the Paper and Packaging business from the Group by way of a dividend in specie
on 2 July 2007. The results for the year ended 31 December 2007 are therefore
reported up to the date of demerger.
For the six months to the date of demerger, Mondi experienced a substantial
improvement in performance compared to the same period in the prior year, with
operating profit up 53% to $324 million. There was a significant pick-up in the
trading environment, particularly in Mondi Packaging, with price increases
across all major paper grades. Mondi Business Paper also benefited from better
operability of the PM31 paper machine in Merebank, South Africa, complemented
by modest increases in uncoated woodfree paper pricing. These positive
developments were partially offset by significant cost inflation in fibre costs
as a result of Chinese fibre demand and alternative uses for wood in Europe.
Consolidated income statement
for the year ended 31 December 2007
Before Special
special items and
items and remeasurements
remeasurements (note 6)
US$ million Note 2007 2007 2007
Group revenue 3 25,470 - 25,470
Total operating costs (16,952) (246) (17,198)
Operating profit
from subsidiaries and
joint ventures 3 8,518 (246) 8,272
Net profit on
disposals 6 - 460 460
Share of net income
from associates 3 640 (443) 197
Total profit from
operations and
associates 3 9,158 (229) 8,929
Investment income 684 58 742
Interest expense (821) (29) (850)
Net finance costs 7 (137) 29 (108)
Profit before tax 9,021 (200) 8,821
Income tax
(expense)/income 8 (2,676) (17) (2,693)
Profit for the
financial year -
continuing
operations 6,345 (217) 6,128
Profit for the
financial year -
discontinued
operations 14 318 1,726 2,044
Profit for the
financial year -
total Group 6,663 1,509 8,172
Attributable to
(continuing
operations):
Minority interests 868 (34) 834
Equity shareholders
of the Company 4 5,477 (183) 5,294
Attributable to
(discontinued
operations):
Minority interests 34 - 34
Equity shareholders
of the Company 4 284 1,726 2,010
Attributable to
(total Group):
Minority interests 902 (34) 868
Equity shareholders
of the Company 4 5,761 1,543 7,304
Earnings per share (US$)
Basic - continuing
operations 9 4.04
Basic - discontinued
operations 9 1.54
Basic - total Group 9 5.58
Diluted - continuing
operations 9 3.99
Diluted - discontinued
operations 9 1.51
Diluted - total
Group 9 5.50
Dividends
Proposed ordinary
dividend per share
(US cents) 86
Proposed ordinary
dividend (US$ million) 1,031
Ordinary dividends
paid during the year
per share (US cents) 113
Ordinary dividends
paid during the
year (US$ million) 1,527
Dividend in specie 3,718
Special dividends
paid during the
year per
share (US cents) -
Special dividends
paid during the
year (US$ million) -
Before Special
special items and
items and remeasurements
remeasurements (note 6)
US$ million 2006 (1) 2006 (1) 2006 (1)
Group revenue 24,991 - 24,991
Total operating costs (16,943) (406) (17,349)
Operating profit from
subsidiaries and
joint ventures 8,048 (406) 7,642
Net profit on disposals - 265 265
Share of net income from
associates 463 144 607
Total profit from operations
and associates 8,511 3 8,514
Investment income 559 50 609
Interest expense (669) (11) (680)
Net finance costs (110) 39 (71)
Profit before tax 8,401 42 8,443
Income tax (expense)/income (2,598) 80 (2,518)
Profit for the financial
year - continuing
operations 5,803 122 5,925
Profit for the financial
year - discontinued operations 593 404 997
Profit for the financial
year - total Group 6,396 526 6,922
Attributable to (continuing
operations):
Minority interests 784 (8) 776
Equity shareholders of the Company 5,019 130 5,149
Attributable to
(discontinued operations):
Minority interests 141 (181) (40)
Equity shareholders of the Company 452 585 1,037
Attributable to (total Group):
Minority interests 925 (189) 736
Equity shareholders of the Company 5,471 715 6,186
Earnings per share (US$)
Basic - continuing operations 3.51
Basic - discontinued
operations 0.70
Basic - total Group 4.21
Diluted - continuing
operations 3.43
Diluted - discontinued
operations 0.69
Diluted - total Group 4.12
Dividends
Proposed ordinary dividend
per share (US cents) 75
Proposed ordinary dividend
(US$ million) 1,107
Ordinary dividends paid
during the year
per share (US cents) 95
Ordinary dividends paid
during the year (US$
million) 1,391
Dividend in specie -
Special dividends paid
during the year per
share (US cents) 100
Special dividends paid
during the year (US$
million) 1,448
(1) Comparatives have been adjusted to reclassify amounts relating to
discontinued operations.
Underlying earnings and underlying earnings per share are set out in note 9.
Consolidated balance sheet
as at 31 December 2007
US$ million Note 2007 2006
Intangible assets 1,556 2,134
Tangible assets 23,534 23,498
Biological assets 3 324
Environmental rehabilitation trusts 252 197
Investments in associates 3,341 4,780
Financial asset investments 4,780 1,973
Deferred tax assets 474 372
Other non-current assets 102 173
Total non-current assets 34,042 33,451
Inventories 2,344 2,974
Trade and other receivables 3,731 5,312
Current tax assets 223 225
Other current financial assets (derivatives) 535 329
Cash and cash equivalents 12 3,129 3,004
Total current assets 9,962 11,844
Assets classified as held for sale 17 758 1,188
Total assets 44,762 46,483
Trade and other payables (3,950) (5,040)
Short term borrowings 12 (5,895) (2,028)
Short term provisions (142) (62)
Current tax liabilities (992) (1,453)
Other current financial liabilities
(derivatives) (501) (216)
Total current liabilities (11,480) (8,799)
Medium and long term borrowings 12 (2,404) (4,220)
Retirement benefit obligations (444) (775)
Other financial liabilities (derivatives) (85) (304)
Deferred tax liabilities (4,650) (3,687)
Provisions for liabilities and charges (1,082) (1,024)
Total non-current liabilities (8,665) (10,010)
Liabilities directly associated with assets
classified as held
for sale 17 (287) (547)
Total liabilities (20,432) (19,356)
Net assets 24,330 27,127
Equity
Called-up share capital 11 738 771
Share premium account 11 2,713 2,713
Other reserves 11 3,155 1,049
Retained earnings 11 15,855 19,738
Equity attributable to equity shareholders
of the Company 22,461 24,271
Minority interests 11 1,869 2,856
Total equity 24,330 27,127
The financial statements were approved by the Board of directors on 19 February
2008.
Cynthia Carroll Rene Medori
Chief executive Finance director
Consolidated cash flow statement
for the year ended 31 December 2007
US$ million Note 2007 2006 (1)
Cash inflows from continuing operations 12 9,375 9,012
Dividends from associates 275 241
Dividends from financial asset investments 36 10
Income tax paid (2,886) (1,926)
Net cash inflows from operating activities -
continuing operations 6,800 7,337
Net cash inflows from operating activities -
discontinued operations 464 973
Net cash inflows from operating activities -
total Group 7,264 8,310
Cash flows from investing activities
Acquisition of subsidiaries, net of cash and
cash equivalents acquired 15 (772) (142)
Investment in associates (1) (8)
Investment in joint ventures 15 (1,114) (7)
Purchase of tangible assets 10 (3,931) (2,909)
Investment in biological assets 10 (1) (1)
Purchase of financial asset investments (47) (40)
External loans granted (108) -
Loans granted to related parties - (65)
Interest received and other investment income 228 193
Disposal of subsidiaries, net of cash and
cash equivalents disposed 16 110 786
Sale of interests in associates - 40
Repayment of loans and capital from associates 119 394
Proceeds from disposal of tangible assets 111 100
Proceeds from sale of financial asset
investments 601 72
Other investing activities (31) (33)
Net cash used in investing activities -
continuing operations (4,836) (1,620)
Net cash inflows from/(used in) investing
activities - discontinued
operations 2,575 (185)
Net cash used in investing activities - total
Group (2,261) (1,805)
Cash flows from financing activities
Issue of shares by subsidiaries to minority
interests 29 73
Sale of treasury shares to employees 134 259
Purchase of treasury shares (6,217) (3,922)
Interest paid (483) (294)
Dividends paid to minority interests (728) (311)
Dividends paid to Company shareholders (1,538) (2,888)
Receipt of short term borrowings 2,780 421
Receipt of medium and long term borrowings 341 267
Capital element of finance leases - (16)
Other financing activities 21 51
Net cash used in financing activities -
continuing operations (5,661) (6,360)
Net cash inflows from/(used in) financing
activities - discontinued
operations 692 (315)
Net cash used in financing activities - total
Group (4,969) (6,675)
Net increase/(decrease) in cash and cash
equivalents 34 (170)
Cash and cash equivalents at start of year 12 2,980 3,319
Cash movements in the year 34 (170)
Effects of changes in foreign exchange rates 60 (169)
Cash and cash equivalents at end of year 12 3,074 2,980
(1) Comparatives have been adjusted to reclassify amounts relating to
discontinued operations.
Consolidated statement of recognised income and expense
for the year ended 31 December 2007
US$ million 2007 2006
Net gains on revaluation of available for sale investments 2,326 492
Net gains on revaluation of available for sale investments
- associates 10 -
Impairment of available for sale investments - (13)
Loss on cash flow hedges (286) (502)
Loss on cash flow hedges - associates (41) (117)
Exchange losses on translation of foreign operations (303) (439)
Actuarial net (losses)/gains on post retirement benefit
schemes (37) 102
Actuarial net (losses)/gains on post retirement benefit
schemes - associates (6) 3
Deferred tax (123) 60
Net income/(expense) recognised directly in equity 1,540 (414)
Transferred to income statement: sale of available for
sale investments (298) (27)
Transferred to income statement: impairment of available
for sale investments - 13
Transferred to income statement: cash flow hedges 315 148
Transferred to income statement: exchange differences on
disposal of foreign operations 337 9
Tax on items transferred from equity 3 (33)
Total transferred to equity 357 110
Profit for the year 8,172 6,922
Total recognised income and expense for the year(1) 10,069 6,618
Attributable to:
Minority interests 844 603
Equity shareholders of the Company 9,225 6,015
(1) Total recognised income and expense for the year of $2,026 million (2006:
$987 million) relates to discontinued operations.
Reconciliation from EBITDA to cash inflows from continuing operations
for the year ended 31 December 2007
US$ million 2007 2006 (1)
EBITDA - continuing operations (2) 11,171 10,431
Share of operating profit of associates before special
items and remeasurements (1,072) (840)
Underlying depreciation and amortisation in associates (183) (129)
Share-based payment charges 138 182
Fair value gains before special items and
remeasurements (12) (13)
Additional pension contributions - (188)
Provisions 77 14
Increase in inventories (352) (299)
Increase in operating receivables (389) (602)
Increase in operating payables 53 511
Other adjustments (56) (55)
Cash inflows from continuing operations 9,375 9,012
(1) Comparatives have been adjusted to exclude amounts relating to discontinued
operations.
(2) EBITDA is operating profit before special items, remeasurements,
depreciation and amortisation in subsidiaries and joint ventures and share of
EBITDA of associates:
US$ million 2007 2006 (1)
Operating profit including associates` operating profit
before special items and remeasurements - continuing
operations(3) 9,590 8,888
Depreciation and amortisation
Subsidiaries and joint ventures 1,398 1,414
Associates 183 129
EBITDA - continuing operations 11,171 10,431
(3) `Operating profit including associates` operating profit before special
items and remeasurements` is reconciled to `Profit for the financial year` in
note 3.
Notes to the financial information
1. General information
The financial information for the year ended 31 December 2007 does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985. Statutory accounts for the year ended 31 December 2006 have been
delivered to the Registrar of Companies and those for 2007 will be delivered
following the Company`s annual general meeting convened for Tuesday 15 April
2008. The auditors have reported on these accounts; their reports were
unqualified and did not contain statements under Section 237 (2) or (3) of the
Companies Act 1985.
2. Basis of preparation
Whilst the preliminary announcement has been prepared in accordance with
International Financial Reporting Standards (IFRS) and International Financial
Reporting Interpretation Committee (IFRIC) interpretations adopted for use by
the European Union and with those parts of the Companies Act 1985 applicable to
companies reporting under IFRS, this announcement does not itself contain
sufficient information to comply with IFRS. The Group will publish full
financial statements that comply with IFRS in March 2008. The financial
statements have been prepared under the historical cost convention as modified
by the recording of pension assets and liabilities and the revaluation of
biological assets and certain financial instruments.
The accounting policies applied are consistent with those adopted and disclosed
in the Group`s annual financial statements for the year ended 31 December 2006,
with the exception of adopting the revision to IAS 23 Borrowing Costs. This did
not have any impact on the Group.
On 2 July 2007 the Paper and Packaging business was demerged from the Group by
way of a dividend in specie paid to shareholders.
On 2 October 2007 the Group sold 67.1 million shares in AngloGold Ashanti
Limited which reduced the Group`s shareholding from 41.6% to 17.3%. The Group`s
representation on the company`s board was also withdrawn at this time. The
remaining investment is accounted for as a financial asset investment.
Both of these operations are considered discontinued and therefore the prior
period Consolidated income statement and Consolidated cash flow statement have
been adjusted in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations.
3. Segmental information
Based on risks and returns the directors consider the primary reporting format
is by business segment and the secondary reporting format is by geographical
segment.
The analysis of associates` revenue by business segment is provided here for
completeness and consistency.
In 2007 Copebras and Yang Quarry have been reclassified from Industrial
Minerals to Base Metals, and from Industrial Minerals to Coal, respectively.
This is to align with internal management reporting.
As such, the comparative data has been reclassified.
Discontinued operations comprise the Paper and Packaging and Gold segments.
The Paper and Packaging segment was demerged from the Group on 2 July 2007 and
following a partial disposal on 2 October 2007 (which reduced the Group`s
shareholding from 41.6% to 17.3%) the Group ceased to equity account for the
Gold segment. The results for discontinued operations are disclosed in note 14.
3. Segmental information (continued)
Primary reporting format - by business segment
Segment result
before
Segment special items and
revenue remeasurements(1)
US$ million 2007 2006(2) 2007 2006(2)
Subsidiaries and joint
ventures
Platinum 6,673 5,766 2,635 2,337
Coal 2,880 2,757 365 605
Base Metals 7,129 6,534 4,338 3,897
Ferrous Metals and Industries 4,207 5,973 1,155 1,303
Industrial Minerals 4,581 3,961 474 315
Exploration - - (157) (132)
Corporate Activities - - (292) (277)
Total subsidiaries and joint
ventures -
continuing operations 25,470(3) 24,991(3) 8,518 8,048
Revenue and net income from
associates
Platinum 116 95 38 40
Diamonds 3,076 3,148 223 199
Coal 694 607 190 185
Ferrous Metals and Industries 1,193 546 189 38
Industrial Minerals 10 17 - 1
Total associates - continuing
operations 5,089 4,413 640 463
Total Group operations
including net income
from associates - continuing
operations 30,559 29,404 9,158 8,511
Net profit on disposals -
continuing operations
Total profit from operations
and associates -
continuing operations
Segment result
after
special items and
remeasurements(1)
US$ million 2007 2006(2)
Subsidiaries and joint ventures
Platinum 2,635 2,337
Coal 224 452
Base Metals 4,338 3,905
Ferrous Metals and Industries 1,158 1,324
Industrial Minerals 407 46
Exploration (157) (132)
Corporate Activities (333) (290)
Total subsidiaries and joint ventures -
continuing operations 8,272 7,642
Revenue and net income from associates
Platinum 38 40
Diamonds (229) 337
Coal 190 185
Ferrous Metals and Industries 198 44
Industrial Minerals - 1
Total associates - continuing operations 197 607
Total Group operations including net income
from associates - continuing operations 8,469 8,249
Net profit on disposals - continuing operations 460 265
Total profit from operations and associates -
continuing operations 8,929 8,514
(1) Segment result is defined as being segment revenue less segment expense;
that is operating profit. In addition `Share of net income from associates` is
shown by segment. There are no material inter-segment transfers or transactions
that would affect the segment result.
Special items and remeasurements are set out in note 6.
(2) Comparatives have been adjusted to exclude amounts relating to discontinued
operations.
(3) This represents segment revenue; the Group`s share of associates` revenue
figures are provided for additional information.
The table above represents continuing operations only, as disclosed in the
income statement. Total Group revenue including share of revenue from
associates and revenue from discontinued operations is $35,674 million (2006:
$38,637 million) being $30,559 million (2006: $29,404 million) from continuing
operations and $5,115 million (2006: $9,233 million) from discontinued
operations. See note 14 for summarised segmental disclosures relating to
discontinued operations.
3. Segmental information (continued)
Primary reporting format - by business segment (continued)
For information, a segmental analysis of associates` operating profit is set
out below to show operating profit for the Group`s continuing operations
including associates.
Operating profit
before
special items and
remeasurements(1)
US$ million 2007 2006(2)
Total subsidiaries and joint ventures - continuing
operations 8,518 8,048
Associates
Platinum 62 61
Diamonds 484 463
Coal 249 257
Ferrous Metals and Industries 277 57
Industrial Minerals - 2
Total associates - continuing operations 1,072 840
Total Group operations including operating profit from
associates - continuing operations 9,590 8,888
Operating profit
after
special items and
remeasurements(1)
US$ million 2007 2006(2)
Total subsidiaries and joint ventures - continuing
operations 8,272 7,642
Associates
Platinum 62 61
Diamonds 19 446
Coal 249 257
Ferrous Metals and Industries 277 57
Industrial Minerals - 2
Total associates - continuing operations 607 823
Total Group operations including operating profit from
associates - continuing operations 8,879 8,465
(1) Associates` operating profit is reconciled to `Share of net income from
associates` as follows:
US$ million 2007 2006 (2)
Operating profit from associates before special items
and remeasurements - continuing operations 1,072 840
Operating special items and remeasurements (465) (17)
Operating profit from associates after special items and
remeasurements - continuing operations 607 823
Net profit on disposals 24 182
Net finance costs (before remeasurements) (85) (70)
Financing remeasurements (4) 1
Income tax expense (after special items and
remeasurements) (303) (300)
Minority interests (after special items and
remeasurements) (42) (29)
Share of net income from associates - continuing
operations 197 607
(2) Comparatives have been adjusted to exclude amounts relating to discontinued
operations.
3. Segmental information (continued)
Primary reporting format - by business segment (continued)
The segment result and associates` operating profit before special items and
remeasurements, as shown in the previous table, is reconciled to `Profit for
the financial year` as follows:
US$ million 2007 2006 (1)
Operating profit, including associates, before special
items and remeasurements
- continuing operations 9,590 8,888
Operating special items and remeasurements:
Subsidiaries and joint ventures (246) (406)
Coal (141) (153)
Base Metals - 8
Ferrous Metals and Industries 3 21
Industrial Minerals (67) (269)
Corporate Activities (41) (13)
Associates (465) (17)
Diamonds (465) (17)
Operating profit, including associates, after special
items and remeasurements -
continuing operations 8,879 8,465
Net profit on disposals
Subsidiaries and joint ventures 460 265
Associates 24 182
Associates` net finance costs (85) (70)
Associates` financing remeasurements (4) 1
Associates` income tax expense (305) (278)
Associates` tax on special items and remeasurements 2 (22)
Associates` minority interests (42) (29)
Total profit from operations and associates -
continuing operations 8,929 8,514
Net finance costs before special items and
remeasurements (137) (110)
Financing special items - (4)
Financing remeasurements 29 43
Profit before tax - continuing operations 8,821 8,443
Income tax expense (2,693) (2,518)
Profit for the financial year - continuing operations 6,128 5,925
(1) Comparatives have been adjusted to exclude amounts relating to discontinued
operations.
3. Segmental information (continued)
Primary reporting format - by business segment (continued)
Primary segment disclosures for segment assets, liabilities and capital
expenditure are as follows:
Segment assets(1) Segment liabilities(2)
US$ million 2007 2006 2007 2006
Platinum 9,926 7,721 (692) (643)
Coal 4,987 3,661 (1,003) (791)
Base Metals 5,897 5,291 (908) (692)
Ferrous Metals and Industries 4,517 3,529 (530) (733)
Industrial Minerals 5,370 5,080 (861) (895)
Exploration 1 1 - (2)
Corporate Activities 225 200 (346) (404)
Continuing operations 30,923 25,483 (4,340) (4,160)
Gold - - - -
Paper and Packaging - 8,113 - (1,094)
Discontinued operations - 8,113 - (1,094)
Total Group 30,923 33,596 (4,340) (5,254)
Unallocated
Investments in associates 3,341 4,780 - -
Financial asset investments 4,780 1,973 - -
Deferred tax
assets/(liabilities) 474 372 (4,650) (3,687)
Cash and cash equivalents 3,129 3,004 - -
Other financial
assets/(liabilities) -
derivatives 535 329 (586) (520)
Other non-operating assets/
(liabilities) 1,580 2,429 (2,264) (3,308)
Other provisions - - (293) (339)
Borrowings - - (8,299) (6,248)
Net assets 44,762 46,483 (20,432) (19,356)
Net segment assets Capital expenditure(3)
US$ million 2007 2006 2007 2006
Platinum 9,234 7,078 2,512 935
Coal 3,984 2,870 1,052 791
Base Metals 4,989 4,599 582 315
Ferrous Metals and Industries 3,987 2,796 2,412 660
Industrial Minerals 4,509 4,185 352 383
Exploration 1 (1) - -
Corporate Activities (121) (204) 44 29
Continuing operations 26,583 21,323 6,954 3,113
Gold - - - 196
Paper and Packaging - 7,019 198 704
Discontinued operations - 7,019 198 900
Total Group 26,583 28,342 7,152 4,013
Unallocated
Investments in associates 3,341 4,780
Financial asset investments 4,780 1,973
Deferred tax assets/(liabilities) (4,176) (3,315)
Cash and cash equivalents 3,129 3,004
Other financial
assets/(liabilities) -
derivatives (51) (191)
Other non-operating assets/
(liabilities) (684) (879)
Other provisions (293) (339)
Borrowings (8,299) (6,248)
Net assets 24,330 27,127
(1) Segment assets at 31 December 2007 are operating assets and consist of
tangible assets of $23,534 million (2006: $23,498 million), intangible assets
of $1,556 million (2006: $2,134 million), biological assets of $3 million
(2006: $324 million), environmental rehabilitation trusts of $252 million
(2006: $197 million), inventories of $2,344 million (2006: $2,974 million),
pension and post retirement healthcare assets of $52 million (2006:
$110 million) and operating receivables of $3,182 million (2006:
$4,359 million).
(2) Segment liabilities at 31 December 2007 are operating liabilities and
consist of non-interest bearing current liabilities of $2,965 million (2006:
$3,732 million), restoration and decommissioning provisions of $931 million
(2006: $747 million) and retirement benefit obligations of $444 million (2006:
$775 million).
(3) Capital expenditure reflects cash payments and accruals in respect of
additions to tangible assets of $4,129 million (2006: $3,702 million),
intangible assets of $9 million (2006: $9 million) and additions resulting from
acquisitions through business combinations of $3,014 million (2006: $302
million).
3. Segmental information (continued)
Primary reporting format - by business segment (continued)
Other primary segment items included in the income statement are as follows:
Depreciation and (Impairments)/ Other non-cash
amortisation reversal(1)(2) expense(3)
US$ million 2007 2006 2007 2006 2007 2006
Platinum 455 444 - - 8(4) 72
Coal 221 173 (153) (143) 42 27
Base Metals 344 357 - - 94 124
Ferrous Metals and
Industries 100 199 - 11 48 37
Industrial Minerals 258 224 (43) (255) 55 20
Exploration - - - - - 2
Corporate Activities 20 17 - (13) 45 40
Continuing operations 1,398 1,414 (196) (400) 292 322
Gold - 183 - - 32 12
Paper and Packaging 234 439 (5) (100) 12 21
Discontinued
operations 234 622 (5) (100) 44 33
Total Group 1,632 2,036 (201) (500) 336 355
(1) See operating special items in note 6.
(2) Amounts include negative goodwill in 2006.
(3) Other non-cash expenses include share-based payment charges and charges in
respect of environmental rehabilitation provisions and other provisions.
(4) Includes the reversal of a share-based payment over provision of $30
million relating to prior periods.
Secondary reporting format - by geographical segment
The Group`s geographical analysis of revenue, allocated based on the country in
which the customer is located, is as follows. The geographical analysis of the
Group`s attributable revenue from associates is provided for completeness and
consistency.
Revenue
2006(1)
US$ million 2007
Subsidiaries and joint ventures
South Africa 4,014 4,767
Rest of Africa 178 276
Europe 10,71 9,142
8
North America 1,686 1,817
South America 2,545 2,797
Australia and Asia 6,329 6,192
Total subsidiaries and joint ventures - continuing
operations 25,47 24,991
0
Associates
South Africa 796 467
Rest of Africa 82 40
Europe 1,498 1,532
North America 520 421
South America 52 41
Australia and Asia 2,141 1,912
Total associates - continuing operations 5,089 4,413
Total Group operations including associates - continuing
operations 30,55 29,4049
(1) Comparatives have been adjusted to exclude amounts relating to discontinued
operations.
3. Segmental information (continued)
Secondary reporting format - by geographical segment (continued)
The Group`s geographical analysis of segment assets, liabilities and capital
expenditure, allocated based on where assets and liabilities are located, is as
follows:
Segment assets Segment liabilities
US$ million 2007 2006 2007 2006
South Africa 13,879 14,144 (1,661) (2,056)
Rest of Africa 526 732 (32) (82)
Europe 5,658 11,208 (1,057) (1,858)
North America 465 388 (106) (108)
South America 7,212 4,594 (935) (646)
Australia and Asia 3,183 2,530 (549) (504)
30,923 33,596 (4,340) (5,254)
Net segment assets Capital expenditure
US$ million 2007 2006 2007 2006
South Africa 12,218 12,088 3,303 1,935
Rest of Africa 494 650 64 75
Europe 4,601 9,350 526 927
North America 359 280 151 202
South America 6,277 3,948 2,436 301
Australia and Asia 2,634 2,026 672 573
26,583 28,342 7,152 4,013
Additional disclosure of secondary segmental information by origin (including
attributable revenue and operating profit from associates) is as follows:
Revenue
US$ million 2007 2006(2)
Subsidiaries and joint ventures
South Africa 12,003 11,693
Rest of Africa 540 417
Europe 4,995 5,395
North America 230 185
South America 6,234 5,687
Australia and Asia 1,468 1,614
Total subsidiaries and joint ventures - continuing
operations 25,470 24,991
Associates
South Africa 1,374 943
Rest of Africa 2,160 2,094
Europe 872 469
North America 63 38
South America 96 542
Australia and Asia 524 327
Total associates - continuing operations 5,089 4,413
Total Group operations including associates - continuing
operations 30,559 29,404
Operating profit/(loss)
before special items
and remeasurements(1)
US$ million 2007 2006(2)
Subsidiaries and joint ventures
South Africa 4,043 3,692
Rest of Africa 351 213
Europe 425 476
North America 30 29
South America 3,697 3,389
Australia and Asia (28) 249
Total subsidiaries and joint ventures - continuing
operations 8,518 8,048
Associates
South Africa 248 162
Rest of Africa 342 295
Europe 88 98
North America 17 25
South America 198 190
Australia and Asia 179 70
Total associates - continuing operations 1,072 840
Total Group operations including associates - continuing
operations 9,590 8,888
Operating profit/(loss)
after special items
and remeasurements(1)
US$ million 2007 2006(2)
Subsidiaries and joint ventures
South Africa 4,044 3,704
Rest of Africa 351 214
Europe 320 193
North America 31 43
South America 3,697 3,389
Australia and Asia (171) 99
Total subsidiaries and joint ventures - continuing
operations 8,272 7,642
Associates
South Africa 222 170
Rest of Africa 342 295
Europe 88 98
North America (422) -
South America 198 190
Australia and Asia 179 70
Total associates - continuing operations 607 823
Total Group operations including associates - continuing
operations 8,879 8,465
(1) Special items and remeasurements are set out in note 6.
(2) Comparatives have been adjusted to exclude amounts relating to discontinued
operations.
4. Profit for the financial year
The table below analyses the contribution of each business segment to the
Group`s operating profit including operating profit from associates for the
financial year and its underlying earnings, which the directors consider to be
a useful additional measure of the Group`s performance. A reconciliation from
`Profit for the financial year` to `Underlying earnings for the financial year`
is given in note 9.
In 2007 Copebras and Yang Quarry have been reclassified from Industrial
Minerals to Base Metals and from Industrial Minerals to Coal, respectively.
This is to align with internal management reporting. The comparative data has
been reclassified.
Group operating profit including operating profit from associates is reconciled
to `Underlying earnings` and `Profit for the financial year attributable to
equity shareholders of the Company` in the table below:
Operating Operating
profit/(loss) before profit/(loss) after
special items and special items and
remeasurements(1) remeasurements
US$ million
By business segment
Platinum 2,697 2,697
Diamonds 484 19
Coal 614 473
Base Metals 4,338 4,338
Ferrous Metals and Industries 1,432 1,435
Industrial Minerals 474 407
Exploration (157) (157)
Corporate Activities (292) (333)
Total/Underlying earnings -
continuing operations 9,590 8,879
Underlying earnings
adjustments -
continuing operations
Profit for the financial year
attributable
to equity shareholders of the
Company - continuing operations
Total/Underlying earnings -
discontinued operations 526 291
Underlying earnings
adjustments -
discontinued operations
Profit for the financial year
attributable
to equity shareholders of the
Company - discontinued
operations
Total/Underlying earnings -
total
Group 10,116 9,170
Underlying earnings
adjustments - total Group
Profit for the financial year
attributable to
equity shareholders of the
Company - total Group
Operating special
items and Net profit on
remeasurements (2) disposals (2)
US$ million
By business segment
Platinum - -
Diamonds 465 -
Coal 141 -
Base Metals - -
Ferrous Metals and Industries (3) -
Industrial Minerals 67 -
Exploration - -
Corporate Activities 41 -
Total/Underlying earnings -
continuing operations 711 -
Underlying earnings adjustments -
continuing operations (711) 484
Profit for the financial year
attributable
to equity shareholders of the
Company - continuing operations
Total/Underlying earnings -
discontinued operations 235 -
Underlying earnings adjustments -
discontinued operations (235) 2,086
Profit for the financial year
attributable
to equity shareholders of the
Company - discontinued operations
Total/Underlying earnings - total
Group 946 -
Underlying earnings adjustments -
total Group (946) 2,570
Profit for the financial year
attributable to
equity shareholders of the Company -
total Group
Net interest,
Financing tax and
special items and minority 2007
remeasurements (2) interests Total
US$ million
By business segment
Platinum - (1,398) 1,299
Diamonds - (245) 239
Coal - (124) 490
Base Metals - (1,238) 3,100
Ferrous Metals and Industries - (827) 605
Industrial Minerals - (90) 384
Exploration - 12 (145)
Corporate Activities - (203) (495)
Total/Underlying earnings -
continuing operations - (4,113) 5,477
Underlying earnings
adjustments -
continuing operations 25 19 (183)
Profit for the financial
year attributable
to equity shareholders of the
Company - continuing
operations 5,294
Total/Underlying earnings -
discontinued operations - (242) 284
Underlying earnings
adjustments -
discontinued operations 13 (138) 1,726
Profit for the financial
year attributable
to equity shareholders of the
Company - discontinued
operations 2,010
Total/Underlying earnings -
total
Group - (4,355) 5,761
Underlying earnings
adjustments - total Group 38 (119) 1,543
Profit for the financial
year attributable to
equity shareholders of the
Company - total Group 7,304
(1) Operating profit includes associates` operating profit which is reconciled
to `Share of net income from associates` in note 3.
(2) Special items and remeasurements are set out in note 6.
4. Profit for the financial year (continued)
Operating Operating
profit/(loss) before profit/(loss) after
special items and special items and
remeasurements(1) remeasurements
US$ million
By business segment
Platinum 2,398 2,398
Diamonds 463 446
Coal 862 709
Base Metals 3,897 3,905
Ferrous Metals and Industries 1,360 1,381
Industrial Minerals 317 48
Exploration (132) (132)
Corporate Activities (277) (290)
Total/Underlying earnings -
continuing operations 8,888 8,465
Underlying earnings
adjustments -
continuing operations
Profit for the financial year
attributable
to equity shareholders of the
Company -
continuing operations
Total/Underlying earnings -
discontinued operations 944 376
Underlying earnings
adjustments -
discontinued operations
Profit for the financial year
attributable
to equity shareholders of the
Company -
discontinued operations
Total/Underlying earnings -
total
Group 9,832 8,841
Underlying earnings
adjustments - total Group
Profit for the financial year
attributable
to equity shareholders of the
Company -
total Group
Operating
special items
and Net profit on
remeasurements(2) disposals(2)
US$ million
By business segment
Platinum - -
Diamonds 17 -
Coal 153 -
Base Metals (8) -
Ferrous Metals and Industries (21) -
Industrial Minerals 269 -
Exploration - -
Corporate Activities 13 -
Total/Underlying earnings -
continuing operations 423 -
Underlying earnings adjustments -
continuing operations (423) 447
Profit for the financial year
attributable
to equity shareholders of the Company -
continuing operations
Total/Underlying earnings -
discontinued operations 568 -
Underlying earnings adjustments -
discontinued operations (568) 920
Profit for the financial year
attributable
to equity shareholders of the Company -
discontinued operations
Total/Underlying earnings - total
Group 991 -
Underlying earnings adjustments - total
Group (991) 1,367
Profit for the financial year
attributable
to equity shareholders of the Company -
total Group
Net interest,
Financing tax and
special items and minority 2006
remeasurements (2) interests Total
US$ million
By business segment
Platinum - (1,133) 1,265
Diamonds - (236) 227
Coal - (225) 637
Base Metals - (1,242) 2,655
Ferrous Metals and Industries - (777) 583
Industrial Minerals - (56) 261
Exploration - 19 (113)
Corporate Activities - (219) (496)
Total/Underlying earnings -
continuing operations - (3,869) 5,019
Underlying earnings
adjustments -
continuing operations 40 66 130
Profit for the financial
year attributable
to equity shareholders of
the Company -
continuing operations 5,149
Total/Underlying earnings -
discontinued operations - (492) 452
Underlying earnings
adjustments -
discontinued operations (14) 247 585
Profit for the financial
year attributable
to equity shareholders of
the Company -
discontinued operations 1,037
Total/Underlying earnings -
total
Group - (4,361) 5,471
Underlying earnings
adjustments - total Group 26 313 715
Profit for the financial
year attributable
to equity shareholders of
the Company -
total Group 6,186
(1) Operating profit includes associates` operating profit which is reconciled
to `Share of net income from associates` in note 3.
(2) Special items and remeasurements are set out in note 6.
5. Exploration expenditure
US$ million 2007 2006
By business segment
Platinum 36 30
Coal 32 24
Base Metals 77 53
Ferrous Metals and Industries 12 9
Gold - 16
157 132
6. Special items and remeasurements
`Special items` are those items of financial performance that the Group
believes should be separately disclosed on the face of the income statement to
assist in the understanding of the underlying financial performance achieved by
the Group and its businesses. Such items are material by nature or amount to
the year`s results and require separate disclosure in accordance with IAS 1
Presentation of financial statements paragraph 86. Special items that relate to
the operating performance of the Group are classified as operating special
items and include impairment charges and reversals and other exceptional items,
including significant legal provisions. Non-operating special items include
profits and losses on disposals of investments and businesses.
Remeasurements comprise other items which the Group believes should be reported
separately to aid an understanding of the underlying performance of the Group.
This category includes (i) unrealised gains and losses on `non-hedge`
derivative instruments open at year end (in respect of future transactions) and
the reversal of the historical marked to market value of such instruments
settled in the year. The full realised gains or losses are recorded in
underlying earnings in the same year as the underlying transaction for which
such instruments provide an economic, but not formally designated, hedge and
(ii) foreign exchange gains and losses arising on the retranslation of dollar
denominated De Beers preference shares held by a rand functional currency
subsidiary of the Group. Remeasurements are defined as operating, non-operating
or financing according to the nature of the underlying exposure.
Subsidiaries and joint ventures` special items and remeasurements
Operating special items
US$ million 2007 2006
Impairment of Coal Australia assets (153) -
Costs associated with proposed sale of Tarmac (55) -
Impairment of Tarmac assets and restructuring costs (43) (250)
Impairment of Yang Quarry - (28)
Impairment and closure costs of Dartbrook - (125)
Other - (21)
Total operating special items - continuing operations (251) (424)
Tax 60 88
Minority interests - 1
Net total attributable to equity shareholders of the
Company - continuing operations (191) (335)
Operating special items relate principally to impairment, restructuring and
closure costs.
Anglo Coal has recorded an impairment of $153 million against certain
Australian operations to reflect the latest commercial and operational
conditions relating to those operations. The impairment brings the carrying
value in line with value in use. Value in use was determined using discounted
cash flow models (with a discount rate of 6%).
6. Special items and remeasurements (continued)
Operating remeasurements
US$ million 2007 2006
Unrealised net gains on non-hedge derivatives 5 18
Tax (1) -
Net total attributable to equity shareholders of the Company
- continuing operations 4 18
Profits and (losses) on disposals
US$ million 2007 2006
Part disposal of Exxaro (formerly Kumba Resources) 234 -
Disposal of remaining interest in Highveld(1) 140 301
Part disposal of AngloGold Ashanti 67 -
Tongaat-Hulett and Hulamin BBBEE transactions (1) (68) -
Tarmac land sales 25 -
Disposal of Boschendal Phase II 21 -
Part disposal of Kumba non-iron ore (1) - (52)
Bakgatla-Ba-Kgafela BEE transaction (1) - (84)
Part disposal of Western Areas - 31
Disposal of mineral rights - Anglo American Brazil - 14
Disposal of interests in Eyesizwe - 17
Disposal of Ferroveld joint venture - 13
Other 41 25
Net profit on disposals - continuing operations (2) 460 265
Tax (71) (8)
Minority interests 34 7
Net total attributable to equity shareholders of the Company
- continuing operations 423 264
(1) See disposals and demerger of subsidiaries and businesses note 16.
(2) Includes associated IFRS 2 charges on BBBEE and BEE transactions of
$68 million (2006: $34 million).
In April 2007, the Group sold 19.0 million shares in Exxaro, generating a
profit on disposal of $68 million. A number of the shares sold were subject to
an option granted by the Group to Exxaro, whereby Exxaro could buy back
10.0 million shares at a discount to market value. The remaining shares were
sold at a market related price. On 5 and 6 September 2007, the Group sold a
further 29.5 million shares, generating a total profit on disposal of Exxaro
shares for the year of $234 million.
In May 2007, the Group disposed of the remaining 29.2% shareholding in Highveld
to the Evraz Group SA for $238 million. As such the Group has recorded a profit
on disposal of $140 million.
On 25 October 2007, the Group sold 2.0 million shares in AngloGold Ashanti,
generating a profit on disposal of $67 million. At 31 December 2007, the
Group`s shareholding in AngloGold Ashanti was 16.6%. Details of the sale of
AngloGold Ashanti shares on 2 October 2007 (which reduced the Group`s
shareholding in AngloGold Ashanti from 41.6% to 17.3%) are included in note 16.
The introduction of BBBEE credentials into the Tongaat-Hulett Group and Hulamin
resulted in the recognition of a $68 million associated share-based payment
charge which arose on the transaction.
6. Special items and remeasurements (continued)
Financing special items
US$ million 2007 2006
Financing special items - (4)
Net total attributable to equity shareholders of the Company
- continuing operations - (4)
Financing remeasurements
US$ million 2007 2006
Foreign exchange (loss)/gain on De Beers preference shares (3) 40
Unrealised net gains on non-hedge derivatives 32 3
Total financing remeasurements - continuing operations 29 43
Tax (5) -
Net total attributable to equity shareholders of the Company
- continuing operations 24 43
The Group holds US dollar preference shares issued by De Beers which are held
in a rand functional currency subsidiary of the Group. These shares are
classified as financial asset investments and are retranslated at each period
end. As a result, a loss of $3 million (2006: $40 million gain) has been
included in financing remeasurements.
Total special items and remeasurements - continuing operations
US$ million 2007 2006
Total special items and remeasurements before tax and
minority interests - continuing operations 243 (102)
Tax (17) 80
Minority interests 34 8
Net total special items and remeasurements attributable to
equity shareholders of the Company -
continuing operations 260 (14)
6. Special items and remeasurements (continued)
Associates` special items and remeasurements
Associates` operating special items and remeasurements
US$ million 2007 2006
Impairment of De Beers` Canadian assets (434) -
Share of De Beers` restructuring costs (15) -
Share of De Beers` class action payment and related costs (5) (25)
Unrealised net (losses)/gains on non-hedge derivatives (3) 17
Other impairments (8) (9)
Operating special items and remeasurements - continuing
operations (465) (17)
In accordance with an amended valuation methodology, De Beers now conducts
impairment reviews at a producing country level. This has been necessitated by
changes in the distribution model whereby a proportion of De Beers` sales are
now conducted in those producing countries.
Due to a combination of the strengthening of the Canadian dollar against the US
dollar during 2007, revised long term crude oil prices, labour cost pressures
and the effect of previously reported capital expenditure overruns at Snap
Lake, De Beers has recorded an impairment of $965 million (attributable share
$434 million) in respect of its Canadian asset portfolio. The impairment brings
the carrying value of the Canadian asset portfolio in line with fair value
(less costs to sell), determined using discounted cash flow techniques.
Associates` profits on disposals
US$ million 2007 2006
Disposal of interests in Acerinox 12 -
Disposal of interest in Gope Exploration Company 8 -
Gain on partial sale of De Beers Consolidated Mines - 103
Disposal of Fort a la Corne - 69
Other 4 10
Net profit on disposals - continuing operations 24 182
During the year Samancor Holdings disposed of its shareholding in Acerinox,
generating a gain of $12 million. On 16 April 2007, De Beers concluded an
agreement of sale in respect of its interest in Gope Exploration Company which
resulted in a profit on disposal of $17 million (attributable share
$8 million).
Associates` financing remeasurements
US$ million 2007 2006
Unrealised net (losses)/gains on non-hedge derivatives (4) 1
Total financing remeasurements - continuing operations (4) 1
Total associates` special items and remeasurements - continuing operations
US$ million 2007 2006
Total associates` special items and remeasurements before
tax and minority interests - continuing operations (445) 166
Tax 2 (22)
Net total associates` special items and remeasurements -
continuing operations (443) 144
6. Special items and remeasurements (continued)
Operating special items and remeasurements - continuing operations
US$ million 2007 2006
Operating special items (251) (424)
Operating remeasurements 5 18
Total operating special items and remeasurements (excluding
associates) - continuing operations (246) (406)
Associates` operating special items (462) (34)
Associates` operating remeasurements (3) 17
Total associates` operating special items and
remeasurements - continuing operations (465) (17)
Total operating special items and remeasurements (including
associates) - continuing operations (711) (423)
Operating special items (including associates) (713) (458)
Operating remeasurements (including associates) 2 35
Total operating special items and remeasurements (including
associates) - continuing operations (711) (423)
The above tables relate to continuing operations only. Refer to note 14 for an
analysis of special items and remeasurements for discontinued operations.
7. Net finance costs
Finance costs and exchange gains/(losses) are presented net of effective cash
flow hedges for respective interest bearing and foreign currency borrowings.
Fair value gains/(losses) on derivatives, presented below, include the mark to
market value changes of interest rate and currency derivatives designated as
fair value hedges, net of fair value changes in the associated hedged risk; and
fair value changes of non-hedge derivatives of non-operating items.
Before special After special items
items and and
remeasurements remeasurements
US$ million 2007 2007
Investment income
Interest and other financial
income 323 323
Expected return on defined
benefit arrangements 257 257
Foreign exchange gains 68 68
Dividend income from financial
asset investments 36 36
Fair value gains on derivatives - 34
Other fair value gains - 24
Total investment income -
continuing operations 684 742
Interest expense
Amortisation discount relating
to provisions (36) (36)
Interest and other finance
expense (565) (565)
Unwinding of discount on
convertible bonds - -
Interest on defined benefit
arrangements (229) (229)
Foreign exchange losses (9) (12)
Dividend on redeemable
preference shares (9) (9)
Fair value losses on derivatives (1) (22)
Other fair value losses (14) (19)
(863) (892)
Less: interest capitalised 42 42
Total interest expense -
continuing operations (821) (850)
Net finance costs - continuing
operations (137) (108)
Before special After special
items and items and
remeasurements (1) remeasurements (1)
US$ million 2006 2006
Investment income
Interest and other financial
income 266 266
Expected return on defined
benefit arrangements 234 234
Foreign exchange gains 38 78
Dividend income from financial
asset investments 13 13
Fair value gains on derivatives - 10
Other fair value gains 8 8
Total investment income -
continuing operations 559 609
Interest expense
Amortisation discount relating
to provisions (30) (30)
Interest and other finance
expense (378) (378)
Unwinding of discount on
convertible bonds (4) (4)
Interest on defined benefit
arrangements (226) (226)
Foreign exchange losses (19) (20)
Dividend on redeemable
preference shares (22) (22)
Fair value losses on derivatives (2) (8)
Other fair value losses - (4)
(681) (692)
Less: interest capitalised 12 12
Total interest expense -
continuing operations (669) (680)
Net finance costs - continuing
operations (110) (71)
(1) Comparatives have been adjusted to exclude amounts relating to discontinued
operations.
The weighted average interest rate applicable to interest on general borrowings
capitalised for continuing operations was 11.4% (2006: 7.8%). Financing special
items and remeasurements are set out in note 6.
8. Tax on profit on ordinary activities
a) Analysis of charge for the year from continuing operations
US$ million 2007 2006 (1)
United Kingdom corporation tax at 30% 145 37
South Africa tax 830 878
Other overseas tax 1,258 1,403
Current tax (excluding tax on special items and
remeasurements) 2,233 2,318
Total deferred tax (excluding tax on special items and
remeasurements) 443 280
Total tax (excluding tax on special items and
remeasurements) 2,676 2,598
Tax on special items and remeasurements 17 (80)
Total tax charge - continuing operations 2,693 2,518
(1) Comparatives have been adjusted to exclude amounts relating to discontinued
operations.
b) Factors affecting tax charge for the year
The effective tax rate for the year of 30.5% (2006: 29.8%) is marginally higher
than the standard rate of corporation tax in the United Kingdom (30%). The
differences are explained below:
US$ million 2007 2006 (1)
Profit on ordinary activities before tax - continuing
operations 8,821 8,443
Tax on profit on ordinary activities calculated at
United Kingdom corporation tax rate of 30% 2,646 2,533
Tax effect of share of net income from associates (59) (182)
Tax effects of:
Expenses not deductible for tax purposes
Operating special items and remeasurements 15 34
Exploration expenditure 19 17
Other non-deductible expenses 85 86
Non-taxable income
Profits and losses on disposals and financing
remeasurements (71) (83)
Other non-taxable income (41) (48)
Temporary difference adjustments
Changes in tax rates 12 -
Movements in tax losses 13 (86)
Enhanced tax depreciation (91) -
Other temporary differences (14) (9)
Other adjustments
South African secondary tax on companies 175 227
Effect of differences between local and UK rates (48) 69
Other adjustments 52 (40)
Tax charge for the year - continuing operations 2,693 2,518
(1) Comparatives have been adjusted to exclude amounts relating to discontinued
operations.
IAS 1 requires income from associates to be presented net of tax on the face of
the income statement. The associates` tax is therefore not included within the
Group`s total tax charge. Associates` tax included within `Share of net income
from associates` for the year ended 31 December 2007 is $303 million (2006:
$300 million). Excluding special items and remeasurements this becomes $305
million (2006: $278 million).
The effective rate of tax before special items and remeasurements including
share of associates` tax for the year ended 31 December 2007 was 31.8%. This
was a decrease from the equivalent effective rate of 33.0% in the year ended
31 December 2006. The main reasons for this net decrease are reduced levels of
tax on distributions, changes in statutory tax rates, prior year adjustments
and the availability of enhanced tax depreciation on certain assets. In future
periods it is expected that the effective tax rate, including associates` tax,
will remain at or above the UK statutory tax rate.
9. Earnings per share
2007
Continuing Discontinued Total
US$ operations operations Group
Profit for the financial year
attributable to equity
shareholders of the Company
Basic earnings per share 4.04 1.54 5.58
Diluted earnings per share 3.99 1.51 5.50
Headline earnings for the
financial year(1)
Basic earnings per share 4.10 0.08 4.18
Diluted earnings per share 4.04 0.08 4.12
Underlying earnings for the
financial year(1)
Basic earnings per share 4.18 0.22 4.40
Diluted earnings per share 4.13 0.21 4.34
2006
Continuing Discontinued Total
US$ operations operations Group
Profit for the financial year
attributable to equity
shareholders of the Company
Basic earnings per share 3.51 0.70 4.21
Diluted earnings per share 3.43 0.69 4.12
Headline earnings for the
financial year(1)
Basic earnings per share 3.42 0.15 3.57 (2)
Diluted earnings per share 3.34 0.15 3.49 (2)
Underlying earnings for the
financial year(1)
Basic earnings per share 3.42 0.31 3.73
Diluted earnings per share 3.34 0.30 3.64
(1) Basic and diluted earnings per share are shown based on headline earnings,
which is a Johannesburg Stock Exchange Limited defined performance measure and
underlying earnings, which the directors believe to be a useful additional
measure of the Group`s performance. Both earnings measures are further
explained below.
(2) Comparatives have been adjusted to comply with revised guidance on headline
earnings.
The calculation of the basic and diluted earnings per share is based on the
following data:
2007
Continuing Discontinued Total
US$ million (unless otherwise stated) operations operations Group
Earnings
Basic earnings, being profit for the financial
year attributable to equity
shareholders of the Company 5,294 2,010 7,304
Effect of dilutive potential
ordinary shares
Interest on convertible bonds
(net of tax) - - -
Unwinding of discount on convertible
bonds
(net of tax) - - -
Diluted earnings 5,294 2,010 7,304
Number of shares (million)
Basic number of ordinary shares
outstanding(1) 1,309
Effect of dilutive potential ordinary
shares(2)
Share options 18
Convertible bonds -
Diluted number of ordinary shares
outstanding(1) 1,327
2006
Continuing Discontinued Total
US$ million (unless otherwise stated) operations operations Group
Earnings
Basic earnings, being profit for the
financial year attributable to equity
shareholders of the
Company 5,149 1,037 6,186
Effect of dilutive potential ordinary
shares
Interest on convertible
bonds (net of tax) 4 - 4
Unwinding of discount on convertible bonds
(net of tax) 3 - 3
Diluted earnings 5,156 1,037 6,193
Number of shares (million)
Basic number of ordinary shares
outstanding(1) 1,468
Effect of dilutive potential ordinary
shares(2)
Share options 23
Convertible bonds 13
Diluted number of ordinary shares
outstanding(1) 1,504
(1) Basic and diluted number of ordinary shares outstanding represent the
weighted average for the year. The average number of ordinary shares in issue
excludes the shares held by the employee benefit trusts and other Anglo
American shares held by the Group.
(2) Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares in issue on the assumption of conversion of all
potentially dilutive ordinary shares. All outstanding share options and awards
are potentially dilutive and have been included in the calculation of diluted
earnings per share. No instruments are anti-dilutive for the year ended
31 December 2007 (2006: nil).
The weighted average number of ordinary shares and accordingly earnings per
share of the Group have been impacted by the Anglo American share consolidation
from 2 July 2007, when 100 existing Anglo American ordinary shares were
exchanged for 91 new Anglo American ordinary shares.
`Underlying earnings` is an alternative earnings measure, which the directors
believe provides a clearer picture of the underlying financial performance of
the Group`s operations. Underlying earnings is presented after minority
interests and excludes special items and remeasurements (see note 6).
Underlying earnings is distinct from `Headline earnings`, which is a
Johannesburg Stock Exchange Limited defined performance measure.
9. Earnings per share (continued)
The calculation of basic and diluted earnings per share for continuing
operations, based on headline and underlying earnings for continuing
operations, uses the following earnings data:
Earnings (US$ million)
Continuing operations
2007 2006(1)
Profit for the financial year attributable to equity
shareholders of the
Company - continuing operations 5,294 5,149
Operating special items 196 409
Operating special items - tax (54) (86)
Operating special items - minority interests - (1)
Financing special items - 4
Net profit on disposals(2) (528) (299)
Net profit on disposals - tax 71 8
Net profit on disposals - minority interests (34) (7)
Associates` special items 418 (182)
Associates` special items - tax - 22
Headline earnings for the financial year - continuing
operations 5,363 5,017
Operating special items(3) 55 15
Operating special items - tax (6) (2)
Operating remeasurements (5) (18)
Operating remeasurements - tax 1 -
Financing remeasurements (29) (43)
Financing remeasurements - tax 5 -
Associates` remeasurements 7 (18)
Associates` special items(4) 20 34
Associates` special items - tax (2) -
IFRS 2 charges on BBBEE and BEE transactions 68 34
Underlying earnings for the financial year - continuing
operations 5,477 5,019
Basic earnings per share (US$)
Continuing operations
2007 2006(1)
Profit for the financial year attributable to equity
shareholders of the
Company - continuing operations 4.04 3.51
Operating special items 0.15 0.28
Operating special items - tax (0.04) (0.06)
Operating special items - minority interests - -
Financing special items - -
Net profit on disposals(2) (0.40) (0.20)
Net profit on disposals - tax 0.05 -
Net profit on disposals - minority interests (0.02) -
Associates` special items 0.32 (0.12)
Associates` special items - tax - 0.01
Headline earnings for the financial year - continuing
operations 4.10 3.42
Operating special items(3) 0.04 0.01
Operating special items - tax - -
Operating remeasurements - (0.01)
Operating remeasurements - tax - -
Financing remeasurements (0.02) (0.03)
Financing remeasurements - tax - -
Associates` remeasurements - (0.01)
Associates` special items(4) 0.01 0.02
Associates` special items - tax - -
IFRS 2 charges on BBBEE and BEE transactions 0.05 0.02
Underlying earnings for the financial year - continuing
operations 4.18 3.42
(1) Comparatives have been reclassified to comply with revised guidance on
headline earnings.
(2) Excluding associated IFRS 2 charges on BBBEE and BEE transactions.
(3) Includes costs associated with proposed sale of Tarmac and restructuring
costs.
(4) Includes restructuring costs and legal settlements.
The calculation of basic and diluted earnings per share for discontinued
operations, based on headline and underlying earnings for discontinued
operations, uses the following earnings data:
Earnings (US$ million)
2007 2006
Discontinued operations
Profit for the financial year attributable to equity
shareholders of the
Company - discontinued operations 2,010 1,037
Operating special items 13 100
Operating special items - tax (2) (26)
Operating special items - minority interests - (1)
Financing special items 2 -
Financing special items - tax (8) -
Net profit on disposals (2,079) (903)
Net profit on disposals - tax 165 24
Associates` special items 1 (13)
Associates` special items - tax 2 3
Headline earnings for the financial year - discontinued
operations 104 221
Operating remeasurements (3) 362
Operating remeasurements - tax 1 (42)
Operating remeasurements - minority interests - (159)
Financing remeasurements (2) 39
Financing remeasurements - tax - 1
Financing remeasurements - minority interests - (21)
Associates` remeasurements 204 77
Associates` remeasurements - tax (20) (26)
Underlying earnings for the financial year -
discontinued operations 284 452
Basic earnings per share (US$)
2007 2006
Discontinued operations
Profit for the financial year attributable to equity
shareholders of the
Company - discontinued operations 1.54 0.70
Operating special items 0.01 0.07
Operating special items - tax - (0.02)
Operating special items - minority interests - -
Financing special items - -
Financing special items - tax (0.01) -
Net profit on disposals (1.59) (0.62)
Net profit on disposals - tax 0.13 0.02
Associates` special items - -
Associates` special items - tax - -
Headline earnings for the financial year - discontinued
operations 0.08 0.15
Operating remeasurements - 0.25
Operating remeasurements - tax - (0.03)
Operating remeasurements - minority interests - (0.11)
Financing remeasurements - 0.03
Financing remeasurements - tax - -
Financing remeasurements - minority interests - (0.01)
Associates` remeasurements 0.16 0.05
Associates` remeasurements - tax (0.02) (0.02)
Underlying earnings for the financial year -
discontinued operations 0.22 0.31
10. Capital expenditure on tangible assets and biological assets
US$ million 2007 2006
Platinum 1,479 923
Coal 1,052 782
Base Metals 610 315
Ferrous Metals and Industries 470 581
Industrial Minerals 274 279
Other 46 29
Purchase of tangible assets - continuing operations 3,931 2,909
Investment in biological assets 1 1
Capital expenditure on tangible assets and biological
assets - continuing operations 3,932 2,910
Gold - 196
Paper and Packaging 186 581
Purchase of tangible assets - discontinued operations 186 777
Investment in biological assets 26 63
Capital expenditure on tangible assets and biological
assets - discontinued operations 212 840
Capital expenditure on tangible assets and biological
assets - total Group 4,144 3,750
Capital expenditure shown above comprises cash expenditure on tangible assets
and biological assets. Segmental capital expenditure shown in note 3 also
includes accruals and expenditure on acquisitions and intangible assets and
capitalised interest, but excludes expenditure on biological assets.
11. Reconciliation of changes in equity
Attributable to equity shareholders of the Company
Share-
Total based
share Retained payment
US$ million capital(1) earnings reserve
Balance at 1 January 2006 2,384 19,907 155
Total recognised income and expense - 6,256 -
Dividends paid - (2,839) -
Dividends paid to minority interests - -
Shares issued and reclassification on
conversion of bond 1,100 - -
Convertible debt reserve transfer to
retained earnings - 109 -
Acquisition and disposal of businesses - - -
Issue of shares to minority interests - - -
Share buybacks - (3,951) -
Purchase of shares for share schemes - (19) -
Current tax on exercised employee share
awards - 34 -
Share-based payment charges on equity
settled schemes - - 94
Issue of shares under employee share
schemes - 286 (31)
IFRS 2 charges arising on BBBEE and BEE
transactions - 28 -
Transfer between legal reserve and
retained earnings - (3) -
Revaluation reserve arising from
acquisition of
minority interests - - -
Conversion of Anglo Platinum`s
preference shares - (62) -
Tax charge directly to equity relating
to transactions
with shareholders - (8) -
Tax credit on transactions with equity
holders - - 29
Other - - -
Balance at 1 January 2007 3,484 19,738 247
Total recognised income and expense - 7,276 -
Dividends paid - (1,527) -
Dividends paid to minority interests - - -
Dividend in specie relating to Mondi
demerger - (3,718) -
Acquisition, disposal and demerger of
businesses - 41 (45)
Issue of shares to minority interests - - -
Share buybacks - (6,167) -
Purchase of shares for share schemes - (23) -
Share-based payment charges on equity
settled
schemes - - 156
Issue of shares under employee share
schemes - 131 (94)
Current tax on exercised employee share
awards - 23 -
Group reinvestment of dividends in
Anglo Platinum - - -
Minority conversion of Anglo Platinum`s
preference
shares - 45 -
Exercise of share options in Anglo
Platinum - - -
Cancellation of treasury shares (33) - -
IFRS 2 charges arising on BBBEE and BEE
transactions - 33 -
Other - 3 (2)
Balance at 31 December 2007 3,451 15,855 262
Attributable to equity shareholders of the Company
Cumulative Fair value
translation and
adjustment other
US$ million reserve reserves
Balance at 1 January 2006 339 836
Total recognised income and expense (377) 136
Dividends paid - -
Dividends paid to minority interests - -
Shares issued and reclassification on conversion
of bond - (32)
Convertible debt reserve transfer to retained
earnings - (109)
Acquisition and disposal of businesses - -
Issue of shares to minority interests - -
Share buybacks - -
Purchase of shares for share schemes - -
Current tax on exercised employee share awards - -
Share-based payment charges on equity settled
schemes - -
Issue of shares under employee share schemes - -
IFRS 2 charges arising on BBBEE and BEE
transactions - -
Transfer between legal reserve and retained
earnings - 3
Revaluation reserve arising from acquisition of
minority interests - (4)
Conversion of Anglo Platinum`s preference shares - -
Tax charge directly to equity relating to
transactions
with shareholders - -
Tax credit on transactions with equity holders - 10
Other - -
Balance at 1 January 2007 (38) 840
Total recognised income and expense 58 1,891
Dividends paid - -
Dividends paid to minority interests - -
Dividend in specie relating to Mondi demerger - -
Acquisition, disposal and demerger of businesses - 112
Issue of shares to minority interests - -
Share buybacks - -
Purchase of shares for share schemes - -
Share-based payment charges on equity settled
schemes - -
Issue of shares under employee share schemes - -
Current tax on exercised employee share awards - -
Group reinvestment of dividends in Anglo Platinum - -
Minority conversion of Anglo Platinum`s
preference
shares - -
Exercise of share options in Anglo Platinum - -
Cancellation of treasury shares - 33
IFRS 2 charges arising on BBBEE and BEE
transactions - -
Other - (3)
Balance at 31 December 2007 20 2,873
Minority Total
US$ million interests equity
Balance at 1 January 2006 3,957 27,578
Total recognised income and expense 603 6,618
Dividends paid - (2,839)
Dividends paid to minority interests (383) (383)
Shares issued and reclassification on conversion of
bond - 1,068
Convertible debt reserve transfer to retained earnings - -
Acquisition and disposal of businesses (1,454) (1,454)
Issue of shares to minority interests 37 37
Share buybacks - (3,951)
Purchase of shares for share schemes - (19)
Current tax on exercised employee share awards - 34
Share-based payment charges on equity settled
schemes 14 108
Issue of shares under employee share schemes - 255
IFRS 2 charges arising on BBBEE and BEE
transactions 6 34
Transfer between legal reserve and retained earnings - -
Revaluation reserve arising from acquisition of
minority interests - (4)
Conversion of Anglo Platinum`s preference shares 62 -
Tax charge directly to equity relating to transactions
with shareholders (3) (11)
Tax credit on transactions with equity holders - 39
Other 17 17
Balance at 1 January 2007 2,856 27,127
Total recognised income and expense 844 10,069
Dividends paid - (1,527)
Dividends paid to minority interests (757) (757)
Dividend in specie relating to Mondi demerger - (3,718)
Acquisition, disposal and demerger of businesses (1,196) (1,088)
Issue of shares to minority interests 28 28
Share buybacks - (6,167)
Purchase of shares for share schemes - (23)
Share-based payment charges on equity settled
schemes - 156
Issue of shares under employee share schemes - 37
Current tax on exercised employee share awards - 23
Group reinvestment of dividends in Anglo Platinum 86 86
Minority conversion of Anglo Platinum`s preference
shares (45) -
Exercise of share options in Anglo Platinum 51 51
Cancellation of treasury shares - -
IFRS 2 charges arising on BBBEE and BEE
transactions 35 68
Other (33) (35)
Balance at 31 December 2007 1,869 24,330
(1) Total share capital comprises called-up share capital $738 million (2006:
$771 million) and the share premium account $2,713 million (2006:
$2,713 million).
11. Reconciliation of changes in equity (continued)
Fair value and other reserves comprise:
Convertible Available Cash flow
debt for sale hedge
US$ million reserve reserve reserve
Balance at 1 January 2006 131 54 (121)
Total recognised income and expense - 437 (301)
Reclassification on conversion of
bond (32) - -
Convertible debt reserve transfer
to retained earnings (109) - -
Transfer between legal reserve and
retained earnings - - -
Revaluation reserve arising from
acquisition of minority - - -
interests
Tax credit on transactions with
equity holders 10 - -
Balance at 1 January 2007 - 491 (422)
Total recognised income and expense - 1,889 2
Acquisition, disposal and demerger
of businesses - (7) 116
Cancellation of treasury shares - - -
Other - - -
Balance at 31 December 2007 - 2,373 (304)
Total fair
value and
Other other
US$ million reserves(1) reserves
Balance at 1 January 2006 772 836
Total recognised income and expense - 136
Reclassification on conversion of bond - (32)
Convertible debt reserve transfer to retained
earnings - (109)
Transfer between legal reserve and retained
earnings 3 3
Revaluation reserve arising from acquisition of
minority interests (4) (4)
Tax credit on transactions with equity holders - 10
Balance at 1 January 2007 771 840
Total recognised income and expense - 1,891
Acquisition, disposal and demerger of businesses 3 112
Cancellation of treasury shares 33 33
Other (3) (3)
Balance at 31 December 2007 804 2,873
(1) Other reserves comprise $689 million (2006: $693 million) legal reserve and
$115 million (2006: $82 million) capital redemption reserve. In 2006, these
balances were partially offset by a negative revaluation reserve of $4 million.
12. Consolidated cash flow analysis
a) Reconciliation of profit before tax to cash inflows from
continuing operations
US$ million 2007 2006(1)
Profit before tax - continuing operations 8,821 8,443
Depreciation and amortisation 1,398 1,414
Share-based payment charges 138 182
Special items and remeasurements of subsidiaries and joint
ventures (243) 102
Net finance costs before remeasurements 137 110
Fair value gains before special items and remeasurements (12) (13)
Share of net income from associates (197) (607)
Additional pension contributions - (188)
Provisions 77 14
Increase in inventories (352) (299)
Increase in operating receivables (389) (602)
Increase in operating payables 53 511
Other adjustments (56) (55)
Cash inflows from continuing operations 9,375 9,012
(1) Comparatives have been adjusted to exclude amounts relating to
discontinued operations.
12. Consolidated cash flow analysis (continued)
b) Reconciliation to the balance sheet
Cash and cash Short term borrowings(1)
equivalents
US$ million 2007 2006 2007 2006
Balance sheet 3,129 3,004 (5,895) (2,028)
Balance sheet - Disposal groups(2) - 63 (31) (135)
Bank overdrafts (17) (87) 17 87
Bank overdrafts - Disposal groups(2) (38) - - -
Net debt classifications 3,074 2,980 (5,909) (2,076)
Medium and long term
borrowings
US$ million 2007 2006
Balance sheet (2,404) (4,220)
Balance sheet - Disposal groups(2) - (8)
Bank overdrafts - -
Bank overdrafts - Disposal groups(2) - -
Net debt classifications (2,404) (4,228)
(1) Short term borrowings on the balance sheet include overdrafts which are
included within cash and cash equivalents for net debt.
(2) Disposal group balances are shown as `Assets classified as held for sale`
and `Liabilities directly associated with assets classified as held for sale`
on the balance sheet.
c) Movement in net debt
Current
Cash and Debt due Debt due financial
cash within after asset
US$ million equivalents(1) one year one year investments
Balance at 1 January 2006 3,319 (1,965) (6,363) 16
Cash flow(3) (170) (193) (374) (5)
Acquisition and disposal of
businesses(4) - 224 1,480 (1)
Conversion to equity - 311 757 -
Unwinding of discount on convertible
debt - - (13) -
Reclassifications - (509) 438 -
Movement in fair value - - 5 -
Other non-cash movements - 6 (13) (14)
Currency movements (169) 50 (145) 4
Balance at 1 January 2007 2,980 (2,076) (4,228) -
Cash flow(3) 34 (2,618) (1,334) -
Acquisition, disposal and demerger of
businesses - 468 1,858 -
Reclassifications - (1,394) 1,420 -
Movement in fair value - (7) 10 -
Other non-cash movements - - 18 -
Currency movements 60 (282) (148) -
Balance at 31 December 2007 3,074 (5,909) (2,404) -
Total
Net debt net debt
excluding including
US$ million hedges Hedges(2) hedges
Balance at 1 January 2006 (4,993) 13 (4,980)
Cash flow(3) (742) - (742)
Acquisition and disposal of
businesses(4) 1,703 - 1,703
Conversion to equity 1,068 - 1,068
Unwinding of discount on convertible
debt (13) - (13)
Reclassifications (71) - (71)
Movement in fair value 5 180 185
Other non-cash movements (21) - (21)
Currency movements (260) - (260)
Balance at 1 January 2007 (3,324) 193 (3,131)
Cash flow(3) (3,918) - (3,918)
Acquisition, disposal and demerger of
businesses 2,326 - 2,326
Reclassifications 26 - 26
Movement in fair value 3 195 198
Other non-cash movements 18 - 18
Currency movements (370) - (370)
Balance at 31 December 2007 (5,239) 388 (4,851)
(1) The Group operates in certain countries (principally South Africa and
Venezuela) where the existence of exchange controls may restrict the use of
certain cash balances. These restrictions are not expected to have any material
effect on the Group`s ability to meet its ongoing obligations.
(2) Derivative instruments that provide an economic hedge of assets and
liabilities in net debt are included above to reflect the true net debt
position of the Group at the year end. This consists of net current derivative
assets of $396 million (2006: $6 million) and net non-current derivative
liabilities of $8 million (2006: $187 million net assets) and are classified
within other financial assets and liabilities on the balance sheet.
(3) Cash flow on debt due within one year includes repayments of $162 million
which relate to discontinued operations (2006: $228 million). Similarly, cash
flow on debt due after one year includes receipts of $993 million (2006: $107
million) which relate to discontinued operations.
(4) Includes net debt of $1,917 million which was transferred to `Investments
in associates`.
13. EBITDA by business segment
US$ million 2007 2006
By business segment
Platinum 3,155 2,845
Diamonds 587 541
Coal(1) 882 1,082
Base Metals(1) 4,683 4,255
Ferrous Metals and Industries 1,561 1,560
Industrial Minerals(1) 732 539
Exploration (157) (132)
Corporate Activities (272) (259)
EBITDA - continuing operations 11,171 10,431
EBITDA - discontinued operations 961 1,766
EBITDA - total Group 12,132 12,197
(1) In 2007 Copebras and Yang Quarry have been reclassified from Industrial
Minerals to Base Metals, and from Industrial Minerals to Coal respectively.
This is to align with internal management reporting. The comparative data has
been reclassified accordingly.
EBITDA is stated before special items and remeasurements and is reconciled to
`Total profit from operations and associates` as follows:
US$ million 2007 2006
Total profit from operations and associates 8,929 8,514
Operating special items and remeasurements (including
associates) 711 423
Net profit on disposals (including associates) (484) (447)
Associates` financing remeasurements 4 (1)
Depreciation and amortisation: subsidiaries and joint
ventures 1,398 1,414
Share of associates` interest, tax, depreciation,
amortisation
and minority interests 613 528
EBITDA - continuing operations 11,171 10,431
EBITDA - discontinued operations 961 1,766
EBITDA - total Group 12,132 12,197
14. Discontinued operations
On 2 July 2007 the Paper and Packaging business was demerged from the Group by
way of a dividend in specie paid to shareholders.
On 2 October 2007 the Group sold 67.1 million shares in AngloGold Ashanti
Limited which reduced the Group`s shareholding from 41.6% to 17.3%. The Group`s
representation on the company`s board was also withdrawn at this time. The
remaining investment is accounted for as a financial asset investment.
Both of these operations are considered discontinued.
14. Discontinued operations (continued)
The results of the discontinued businesses are shown below:
Before special items and Special items and
remeasurements remeasurements
US$ million 2007 2006 2007 2006
Revenue 4,062 8,081 - -
Total operating costs (3,741) (7,387) (10) (462)
Operating profit from subsidiaries
and joint ventures - 321 694 (10) (462)
discontinued operations
Net profit on disposals - - 119 903
Share of net income from associates 97 119 (187) (41)
Total profit from discontinued
operations and associates 418 813 (78) 400
Net finance costs (19) (55) - (39)
Profit before tax - discontinued
operations 399 758 (78) 361
Income tax (expense)/income (81) (165) 1 43
Profit for the financial year -
discontinued operations 318 593 (77) 404
Profit on partial disposal of
AngloGold Ashanti(1) - - 1,970 -
Transaction costs relating to the
demerger of Mondi(1) - - (10) -
Tax on net profit on disposal and
demerger of
discontinued operations - - (157) -
Net profit after tax on disposal
and demerger of
discontinued operations - - 1,803 -
Total profit for the financial year
- discontinued
operations 318 593 1,726 404
US$ million 2007 2006
Revenue 4,062 8,081
Total operating costs (3,751) (7,849)
Operating profit from subsidiaries and joint ventures - 311 232
discontinued operations
Net profit on disposals 119 903
Share of net income from associates (90) 78
Total profit from discontinued operations and associates 340 1,213
Net finance costs (19) (94)
Profit before tax - discontinued operations 321 1,119
Income tax (expense)/income (80) (122)
Profit for the financial year - discontinued operations 241 997
Profit on partial disposal of AngloGold Ashanti(1) 1,970 -
Transaction costs relating to the demerger of Mondi(1) (10) -
Tax on net profit on disposal and demerger of
discontinued operations (157) -
Net profit after tax on disposal and demerger of
discontinued operations 1,803 -
Total profit for the financial year - discontinued
operations 2,044 997
(1) For further details of the demerger of the Paper and Packaging business
and disposal of AngloGold Ashanti refer to note 16.
Summary discontinued segment information
Segment revenue and segment result by discontinued business segment were:
Segment result before
Segment special items and
revenue(1) remeasurements(2)
US$ million 2007 2006 2007 2006
Subsidiaries and joint ventures
Gold - 857 - 228
Paper and Packaging 4,062 7,224 321 466
Total subsidiaries and joint
ventures 4,062(3) 8,081(3) 321 694
Revenue and net income from
associates
Gold 1,004 883 95 113
Paper and Packaging 49 269 2 6
Total associates 1,053 1,152 97 119
Total discontinued operations
including net income from
associates 5,115 9,233 418 813
Net profit on disposals - -
Total profit from discontinued
operations and associates 418 813
Segment result after
special items and
remeasurements(2)
US$ million 2007 2006
Subsidiaries and joint ventures
Gold - (142)
Paper and Packaging 311 374
Total subsidiaries and joint ventures 311 232
Revenue and net income from associates
Gold (92) 72
Paper and Packaging 2 6
Total associates (90) 78
Total discontinued operations including net income from
associates 221 310
Net profit on disposals 119 903
Total profit from discontinued operations and associates 340 1,213
(1) By-product revenue credited to Group cost of sales for the year ended
31 December 2006 was $34 million and relates to AngloGold Ashanti`s contribution
as a subsidiary; AngloGold Ashanti credit sales of uranium, silver and acid to
cost of sales in accordance with the Gold Industry Standard on production cost.
(2) Segment result is defined as being segment revenue less segment expense;
that is operating profit.
(3) This represents segment revenue; the Group`s share of associates of
discontinued operations and discontinued associates` revenue figures are
provided for additional information.
14. Discontinued operations (continued)
Summary discontinued special items and remeasurements
The following tables provide an analysis of special items and remeasurements
for discontinued operations:
Subsidiaries and joint ventures special items and remeasurements
- discontinued operations
US$ million 2007 2006
Operating special items(1) (13) (100)
Operating remeasurements(2) 3 (362)
Total operating special items and remeasurements
- discontinued operations (10) (462)
Tax 1 68
Minority interests - 160
Net total attributable to equity shareholders of the Company
- discontinued operations (9) (234)
(1) Includes impairment of Mondi Packaging assets of nil (2006: $80 million)
and Mondi Business Paper assets of $5 million (2006: $24 million).
(2) 2006 relates to unrealised net gains/(losses) on non-hedge derivatives of
AngloGold Ashanti incurred during the period it was held as a subsidiary.
US$ million 2007 2006
Net profit on disposals - discontinued operations(1) 119 903
Tax (8) (24)
Net total attributable to equity shareholders of the Company
- discontinued operations 111 879
(1) Net profit on disposals in 2007 includes part disposal of Mondi Packaging
Paper Swiecie ($77 million) and disposal of Bischof + Klein ($26 million).
In 2006 the net profit includes part and deemed disposals of AngloGold
Ashanti (totalling $896 million).
US$ million 2007 2006
Financing special items (2) -
Financing remeasurements(1) 2 (39)
Total financing special items - discontinued operations - (39)
Tax 8 (1)
Minority interests - 21
Net total attributable to equity shareholders of the Company
- discontinued operations 8 (19)
(1) Financing remeasurements include fair value movements of nil (2006:
$43 million loss) on the AngloGold Ashanti convertible bond.
US$ million 2007 2006
Total special items and remeasurements before tax and
minority interests
- discontinued operations
109 402
Tax 1 43
Minority interests - 181
Net total special items and remeasurements attributable to
equity shareholders of the Company -
discontinued operations 110 626
14. Discontinued operations (continued)
Associates` special items and remeasurements - discontinued operations
US$ million 2007 2006
Associates` operating special items and remeasurements (1) (225) (106)
Associates` net profit on disposals 7 17
Associates` financing remeasurements (2) 13 25
Total associates` special items and remeasurements before
tax and minority interests - discontinued operations (205) (64)
Tax 18 23
Net total associates` special items and remeasurements
- discontinued operations (187) (41)
(1) Includes net losses of $217 million (2006: $102 million) on non-hedge
derivatives of AngloGold Ashanti incurred in the period it was held as an
associate.
(2) Relates to fair values gains of $13 million (2006: $25 million) on the
AngloGold Ashanti convertible bond incurred in the period it was held as an
associate.
15. Acquisitions
Acquisition of subsidiaries
The Group made no material acquisitions of subsidiaries in the year ended
31 December 2007.
In November 2006, Anglo Coal, Hillsborough Resources and North Energy Mining
Incorporated formed Peace River Coal Partnership, of which Anglo Coal held a
60% interest. Peace River Coal began production in 2007. The total
consideration was $89 million which consisted of contribution of assets to the
partnership of $59 million and cash paid of $30 million. Anglo Coal held a
65.9% interest at 31 December 2007.
In the prior year, the Group also acquired a 100% interest in AltaSteel,
including the remaining 50% of Moly- Cop Canada, on 1 February 2006, for a
total cash consideration of $84 million (including transaction costs).
The carrying value and fair value of the net assets at the date of acquisition
and related net cash outflows are shown below:
Peace River
Coal(1) Other
US$ million Fair value Carrying value Fair value
Net assets acquired
Tangible assets 166 70 148
Other non-current assets 1 13 11
Current assets 12 48 53
Current liabilities (3) (47) (51)
Non-current liabilities (14) (29) (52)
Minority interests (65) (11) (15)
97 44 94
Add: Value attributable to
reserves and
resources acquired(2) 4 -
Less: Associate investment
previously
recorded - (9)
Less: Fair value of assets
contributed (59) -
Fair value of net assets
acquired 42 85
Partial funding of partner
cash calls (12) -
Goodwill arising on
acquisitions - 51
Negative goodwill arising on
acquisitions - (2)
Total cost of acquisitions 30 134
Satisfied by
Net cash acquired - 11
Deferred consideration - -
Cash paid in prior period 30 -
- 123
Total fair Total fair
value value
US$ million 2007 2006
Net assets acquired
Tangible assets 314 257
Other non-current assets 12 48
Current assets 65 172
Current liabilities (54) (114)
Non-current liabilities (66) (98)
Minority interests (80) 7
191 272
Add: Value attributable to reserves and
resources acquired(2) 4 -
Less: Associate investment previously
recorded (9) -
Less: Fair value of assets contributed (59) -
Fair value of net assets acquired 127 272
Partial funding of partner cash calls (12) -
Goodwill arising on acquisitions 51 41
Negative goodwill arising on acquisitions (2) (10)
Total cost of acquisitions 164 303
Satisfied by
Net cash acquired 11 (1)
Deferred consideration - 18
Cash paid in prior period 30 -
Net cash paid(3) 123 286
(1) Since 1 January 2007, the operating loss for Peace River Coal was
$12 million. There was no profit or loss in the period from its creation to 31
December 2006. There has been no revenue in the year ended 31 December 2007 or
in the period since its creation to 31 December 2006. As the entity was formed
as part of a business combination, there were no carrying values immediately
prior to the combination. Owing to the timing and size of the acquisition,
consolidation into the Group balance sheet only occurred in 2007.
(2) Represents the Group`s share of value (implicit in the transaction) of
reserves and resources, capitalised within tangible assets.
(3) Includes net cash paid by discontinued operations of $9 million
(2006: $144 million).
In the first half of the year the Group acquired 3,353,108 shares in Anglo
Platinum Limited through a dividend reinvestment plan. From 4 September 2007 to
31 December 2007, the Group purchased a further 4,435,086 shares for total
consideration of $671 million. Of this, $658 million had been paid before the
year end. The Group`s percentage holding has increased to 76.5% at 31 December
2007.
15. Acquisitions (continued)
Acquisition of material joint venture
The Group made one material acquisition of a joint venture in the year ended 31
December 2007.
On 18 July 2007, the Group completed its acquisition of a 49% interest in the
MMX Minas-Rio integrated iron ore project in Brazil (Minas-Rio). The
acquisition was effected through the purchase of a 30% interest in the project
companies - MMX Minas-Rio Mineracao SA and LLX Minas-Rio Logistica SA - from
Centennial Asset Mining Fund LLC and the subscription for shares in the project
companies equivalent to a 19% interest. The total acquisition cost of
$1.2 billion comprises $1.15 billion plus transaction costs and provision for
post closing adjustments. The Group`s 49% interest in Minas-Rio is accounted for
as a joint venture entity and, hence, has been proportionately consolidated with
effect from 18 July 2007.
The fair values of the acquired assets and liabilities in the table below are
provisional, and will be finalised in 2008 when the final values arising from
the fair value assessment are confirmed.
The carrying value and provisional fair value of the net assets at the date of
acquisition and related net cash outflow are shown below:
Minas-Rio(1)
Carrying Provisional
US$ million value fair value
Net assets acquired
Tangible assets:
Value attributable to reserves and resources
acquired - 1,770
Other tangible assets 84 86
Other non-current assets 16 16
Current assets 52 52
Current liabilities (84) (84)
Non-current liabilities (28) (632)
40 1,208
Fair value of net assets acquired and total cost
of acquisition(2)
Satisfied by
Net cash acquired 48
Deferred consideration 47
Costs accrued 1
Net cash paid 1,112
(1) Minas-Rio had no revenue for the year ended 31 December 2007. Since
acquisition, it has contributed an operating loss of $15 million to the Group`s
operating profit. Had the acquisition date been at 1 January 2007, the
operating loss contributed would have been approximately double.
(2) A further potential payment of up to $600 million has not been included in
the above as it is contingent on certain criteria being met. Payment of this
amount was considered possible at 31 December 2007.
16. Disposals and demerger of subsidiaries and businesses
Disposals and demerger of subsidiaries
US$ million 2007 2006
Net assets disposed
Tangible assets 6,197 7,925
Other non-current assets 1,208 1,027
Current assets 4,194 3,115
Current liabilities (2,416) (2,878)
Non-current liabilities (3,064) (4,683)
Net assets 6,119 4,506
Minority interests (1,200) (1,679)
Group`s share of net assets immediately prior to
disposal 4,919 2,827
Less: Retained investments in associates (393) (1,451)
Less: Retained financial asset investments (318) (370)
Less: Movement in share of assets arising on deemed
disposal - (170)
Add: Purchase price adjustment - 10
Net assets disposed 4,208 846
Cumulative translation differences recycled from
reserves (334) (9)
Increase in minority share - 220
Fair value losses arising on transactions 68 52
Other 3 13
Net gain on disposals 157 1,072
Dividend in specie relating to Mondi demerger (3,718) -
Net sale proceeds 384 2,194
Net cash and cash equivalents disposed (437) (283)
Non-cash proceeds - (393)
Other - 2
Costs accrued 4 -
Net cash (outflow)/inflow from disposals and demerger(1) (49) 1,520
(1) Includes net cash outflow from disposals in relation to discontinued
operations of $159 million (2006: inflow of $734 million).
Disposals of subsidiaries recorded during the year principally include the
demerger of Mondi, the completion of the disposal of Highveld and the dilution
of an effective 12% and 6% interest in Tongaat-Hulett and Hulamin,
respectively. Details of these disposals are included below.
a) Mondi
On 2 July 2007, the Paper and Packaging business, Mondi, was demerged from the
Group by way of a dividend in specie paid to shareholders.
The Paper and Packaging business has been presented as a discontinued
operation. Refer to note 14 for further details of discontinued operations.
16. Disposal and demerger of subsidiaries and businesses (continued)
The net asset position at the date of disposal, together with the resulting
dividend in specie paid to shareholders, is shown below:
US$ million 2007
Tangible assets 4,861
Other non-current assets 1,126
Current assets 3,072
Current liabilities (1,533)
Non-current liabilities (2,656)
Net assets 4,870
Minority interest (476)
Group`s share of net assets immediately prior to disposal 4,394
Less: Retained financial asset investments(1) (318)
Net assets disposed 4,076
Cumulative translation differences recycled from reserves (358)
Dividend in specie relating to Mondi demerger (3,718)
Net loss on disposal (10)
Net sale costs (10)
Net cash and cash equivalents disposed (297)
Costs accrued 4
Net cash outflow from demerger of Mondi (303)
(1) This relates to the dividend in specie paid to the investment companies
Epoch, Epoch Two and Tarl and the shares paid to the Butterfield Trust.
The Butterfield Trust shares were sold immediately.
b) Highveld Steel and Vanadium Corporation (Highveld)
On 4 May 2007, the Group announced the disposal of the remaining 29.2%
shareholding in Highveld to the Evraz Group SA (Evraz) for $238 million. Evraz
was granted an option, subject to regulatory approvals, over this stake as part
of the original transaction in which the Group sold 49.8% of Highveld to Evraz
and Credit Suisse (in July 2006). Evraz exercised their option on 26 April 2007
following requisite regulatory approvals.
The net asset position of Highveld at 4 May 2007, together with the resulting
profit on disposal of shares and related net cash inflow, is shown below:
US$ million 2007
Tangible assets 335
Other non-current assets 13
Current assets 360
Current liabilities (338)
Non-current liabilities (89)
Net assets 281
Minority interests (211)
Net assets disposed 70
Cumulative translation differences recycled from reserves 25
Other 3
Net gain on disposal 140
Net sale proceeds 238
Net cash and cash equivalents disposed (56)
Net cash inflow from disposal of Highveld 182
16. Disposal and demerger of subsidiaries and businesses (continued)
c) Tongaat-Hulett Group
In December 2006 the Tongaat-Hulett Group announced the proposed unbundling and
listing of Hulamin and simultaneous introduction of broad based black economic
empowerment (BBBEE) into both companies.
This transaction was effected on 25 June 2007, and empowerment parties acquired
25% of Tongaat-Hulett and 15% of Hulamin`s operations. The Group commenced
equity accounting both Tongaat-Hulett and Hulamin as of 25 June 2007. However,
in accordance with SIC 12 Consolidation - Special Purpose Entities,
Tongaat-Hulett and Hulamin are required to consolidate the entities housing the
empowerment interests (as they supplied significant funding to these parties to
effect the transaction). This has the effect, in accounting terms, of
cancelling the shares issued to these parties. As a result, the Group has
equity accounted 49.8% and 44.9% of Tongaat-Hulett and Hulamin, respectively.
The Group`s legal interest in these companies at 31 December 2007 was 37.2% and
38.4%, respectively.
Therefore from 25 June 2007 the Group ceased to account for Tongaat-Hulett and
Hulamin as subsidiaries and began accounting for them as associates under the
equity method.
The net asset position at the date of disposal, together with the
reclassification to investments in associates and related net cash outflow, is
shown below:
US$ million 2007
Tangible assets 959
Other non-current assets 49
Current assets 709
Current liabilities (490)
Non-current liabilities (305)
Net assets 922
Minority interests (529)
Group`s share of Tongaat-Hulett`s and Hulamin`s net assets
immediately prior to disposal 393
Less: Retained investments in associates immediately after disposal(1)(393)
Net assets disposed -
Fair value loss arising on transaction 68
Net loss on disposal (68)
Net sale proceeds -
Net cash and cash equivalents disposed (84)
Net cash outflow from partial disposal of Tongaat-Hulett and Hulamin (84)
(1) This relates to investments in associates of $176 million and $217 million
in Tongaat-Hulett and Hulamin respectively.
16. Disposal and demerger of subsidiaries and businesses (continued)
Disposal of associates
There has been one material disposal of an associate in the year ended 31
December 2007, which was the partial disposal of AngloGold Ashanti Limited.
AngloGold Ashanti
On 2 October 2007, the Group sold 67.1 million shares in AngloGold Ashanti
Limited for $2.9 billion. This reduced the Group`s shareholding from 41.6% to
17.3%. The Group`s representation on the company`s board was also withdrawn at
this time. The remaining investment is accounted for as a financial asset
investment. The Gold business has been presented as a discontinued operation.
Refer to note 14 for further details of discontinued operations.
The Group`s shareholding has reduced to 16.6% at 31 December 2007.
The net asset position at the date of the disposal, together with the
reclassification to a `Financial asset investment` and related net cash inflow,
is shown below:
US$ million 2007
Investment in associate immediately prior to disposal 1,458
Less: Retained financial asset investment (606)
Net assets disposed 852
Cumulative translation differences recycled from reserves (3)
Other 29
1,970
Net gain on disposal
Net sale proceeds 2,848
Realised foreign exchange 15
Costs accrued 4
Net cash inflow from partial disposal of AngloGold Ashanti 2,867
Disposals of subsidiaries and businesses in the year ended 31 December 2006
Significant disposals recorded during the year ended 31 December 2006 are
summarised below. For details of these disposals refer to the 2006 Annual
Report.
AngloGold Ashanti
On 20 April 2006, the Group completed the sale of 19.7 million ordinary shares
held in AngloGold Ashanti Limited for cash of $978 million. This, together with
the Group`s non-participation in the issue of additional ordinary shares,
throughout the year, by AngloGold Ashanti, diluted the Group`s percentage
investment from 50.9% to 41.7%. With effect from that date, the Group ceased to
account for AngloGold Ashanti as a subsidiary and began accounting for it as an
associate under the equity method. The Group`s shareholding has subsequently
reduced to 16.6%.
Kumba (non-iron ore)
In November 2006, the Kumba Resources BEE transaction was effected. Kumba Iron
Ore was accordingly unbundled from Kumba Resources (leaving the non-iron ore
operations) which was renamed Exxaro. The Group retained a 64% interest in
Kumba Iron Ore. The Group disposed of part of its investment in Exxaro through
a share buyback and sale of shares. The Group retained an interest of 23% in
Exxaro over which it does not exercise significant influence and accordingly
this has been held as an available for sale financial asset since 28 November
2006. This interest has subsequently reduced to 10%.
16. Disposal and demerger of subsidiaries and businesses (continued)
Highveld Steel and Vanadium Corporation (Highveld)
In July 2006, the Group disposed of its 79% stake in Highveld to Evraz Group SA
and Credit Suisse for a total consideration of $678 million. Following the
disposal of the initial 49.8%, for which the Group received $412 million, and
subject to certain regulatory approvals Evraz had an option to acquire the
Group`s remaining 29.2% stake in Highveld for $266 million. This amount was to
be reduced by any dividends paid by Highveld prior to the Group selling its
remaining shares. The Group and Credit Suisse agreed that the Group would
retain the voting rights in respect of the shares acquired by Credit Suisse
until such time as the Group disposed of all its shares in Highveld. As a
result, the Group continued to consolidate Highveld (while recording an
increased minority interest) until the final disposal on 4 May 2007.
Anglo Platinum`s Rustenburg Platinum Mines
On 8 November 2006, Anglo Platinum announced the conclusion of the BEE
transaction with the Bakgatla- Ba-Kgafela (Bakgatla) traditional community. In
terms of this transaction the Bakgatla acquired a 15% interest in Anglo
Platinum`s Rustenburg Platinum Mines` Union section mining and concentrating
business and interests in prospecting rights of the Rooderand 46 JQ, portion 2
and Magazynskraal 3 JQ properties. The agreements became unconditional on
1 December 2006.
17. Disposal groups and non-current assets held for sale
Net assets relating to Highveld, which were previously classified as held for
sale at 31 December 2006, were disposed of on 4 May 2007 as disclosed in note
16.
The following assets and liabilities relating to disposal groups were
classified as held for sale. The Group expects to complete the sale of these
businesses within 12 months of the year end.
US$ million
Platinum 2007
Namakwa Sands(1) disposal groups(2) Total
Intangible assets 3 - 3
Tangible assets 337 252 589
Biological assets - - -
Environmental
rehabilitation trusts 2 2 4
Investments in associates - 74 74
Financial asset
investments - - -
Other non-current assets - - -
Total non-current assets 342 328 670
Inventories 38 - 38
Trade and other
receivables 50 - 50
Cash and cash equivalents - - -
Total current assets 88 - 88
Total assets 430 328 758
Short term borrowings - (69) (69)
Trade and other payables (25) (28) (53)
Other current liabilities - (4) (4)
Total current liabilities (25) (101) (126)
Medium and long term
borrowings - - -
Provisions for
liabilities and charges (6) (3) (9)
Deferred tax liabilities (84) (64) (148)
Retirement benefit
obligations (4) - (4)
Total non-current
liabilities (94) (67) (161)
Total liabilities (119) (168) (287)
Net assets 311 160 471
US$ million
2006
Highveld Namakwa Sands Other Total
Intangible assets - 2 4 6
Tangible assets 322 278 42 642
Biological assets - - 16 16
Environmental rehabilitation
trusts - 2 - 2
Investments in associates - - 47 47
Financial asset investments 15 - 5 20
Other non-current assets - 1 - 1
Total non-current assets 337 283 114 734
Inventories 116 38 12 166
Trade and other receivables 160 41 24 225
Cash and cash equivalents 60 - 3 63
Total current assets 336 79 39 454
Total assets 673 362 153 1,188
Short term borrowings (134) - (1) (135)
Trade and other payables (166) (21) (46) (233)
Other current liabilities (4) - - (4)
Total current liabilities (304) (21) (47) (372)
Medium and long term
borrowings (3) - (5) (8)
Provisions for liabilities
and charges (23) (5) (2) (30)
Deferred tax liabilities (43) (72) (4) (119)
Retirement benefit
obligations (15) (3) - (18)
Total non-current liabilities (84) (80) (11) (175)
Total liabilities (388) (101) (58) (547)
Net assets 285 261 95 641
(1) The Namakwa Sands disposal group is included in the Base Metals business.
Namakwa Sands continues to be held as a disposal group whilst awaiting the
approval of the conversion of old order to new order mining rights. The sale is
expected to complete in 2008.
(2) This reflects the reclassification of operations to be sold under
previously announced BEE deals. The split of the total assets, total
liabilities and net assets is as follows:
US$ million Total assets Total liabilities Net assets
Lebowa Platinum Mines Limited 243 (166) 77
Northam Platinum Mines Limited 74 - 74
Other 11 (2) 9
328 (168) 160
The net carrying amount of assets and associated liabilities classified as held
for sale during the year was written down by nil (2006: $28 million, after
tax).
Industrial Minerals has not been classified as held for sale as the criteria in
IFRS 5 were not met at 31 December 2007.
18. Contingent liabilities and assets
The Group is subject to various claims which arise in the ordinary course of
business. Additionally, and as set out in the demerger agreement, Anglo
American and Mondi have agreed to indemnify each other, subject to certain
limitations, against certain liabilities. Having taken appropriate legal
advice, the Group believe that the likelihood of a material liability arising
is remote. Contingent liabilities in respect of the Group`s subsidiaries
comprise aggregate amounts of $488 million (2006: $214 million) in respect of
loans and performance guarantees given to banks and other third parties and are
primarily in respect of environmental restoration and decommissioning
obligations.
At 31 December 2007, contingent liabilities of nil (2006: nil) were secured on
the assets of the Group.
There were no significant contingent assets in the Group at either 31 December
2007 or 31 December 2006.
The Venezuelan Ministry of Basic Industries and Mining (MIBAM) commenced
administrative proceedings in January 2007 in relation to the sixteen nickel
exploration and exploitation concessions held by the Company`s subsidiary,
Minera Loma de Niquel (MLdN) alleging that MLdN had failed to fulfil certain
conditions of its concessions. MLdN submitted a timely response to MIBAM`s
administrative writ in February 2007. By means of a series of resolutions
published in two Official Gazettes made available in January 2008, MIBAM
declared the termination of thirteen of MLdN`s nickel concessions. The thirteen
concessions do not include the concessions where the current mining operations
and the metallurgical facilities are located. MLdN is in the process of filing
administrative appeals seeking the annulment of all of these resolutions and
requesting that their effects be suspended pending a final decision by MIBAM.
At 31 December 2007 the Group`s interest in the book value of MLdN, including
its mineral rights, was $616 million (as included in the Group`s balance
sheet). In the 12 months to December 2007 MLdN`s contribution to Group
operating profit was $370 million.
Anglo American is proud of its record in Venezuela where it has invested
substantial amounts in exploration and subsequently the construction of the
country`s only primary nickel producer. It is a major contributor to and
employer in the Venezuelan economy as well as a significant tax payer. The
operation continues, as it has always done, to work constructively with all
stakeholders - employees, local communities and government - and to the highest
sustainable development, social and environmental standards.
Anglo American and MLdN are seeking further clarification from MIBAM, with
which they have maintained a constructive working relationship in the past.
Anglo American and MLdN believe that there is a valid legal basis to reverse
the notices of termination and will pursue all appropriate legal and other
remedies and actions to protect their respective interests both under
Venezuelan and international law. As a result, the Group continues to
consolidate MLdN and no impairment has been recorded for the year ended
31 December 2007.
19. Related party transactions
The Group has a related party relationship with its subsidiaries, associates
and joint ventures.
At 31 December 2007, the Group held $131 million (2006: $175 million) of 10%
non-cumulative redeemable preference shares in DB Investments, the holding
company of De Beers Societe Anonyme.
The Company and its subsidiaries, in the ordinary course of business, enter
into various sales, purchase and service transactions with joint ventures and
associates and others in which the Group has a material interest.
These transactions are under terms that are no less favourable than those
arranged with third parties. These transactions are not considered to be
significant.
Dividends received from associates during the year totalled $275 million (2006:
$241 million), excluding $52 million (2006: $35 million) from discontinued
operations, as disclosed in the Consolidated cash flow statement.
During 2007 Anglo Coal made payments of $8 million in respect of wharfage
charges to the Richards Bay Coal Terminal, an associate of Anglo Coal.
The directors of the Company and their immediate relatives control 3% (2006:
3%) of the voting shares of the Company.
19. Related party transactions (continued)
On 29 June 2007, the Group entered into a contract to sell the freehold
property and all fixtures and fittings of a property owned by the Group to
Mr A J Trahar, formerly Group Chief Executive, for total consideration of
GBP6,991,800 ($14,026,943). This transaction was carried out at full market
value and the proceeds were received by the Group following completion.
20. Events occurring after end of year
On 17 January 2008, the Group announced that it was in exclusive discussions
with the controlling shareholder of MMX Mineracao e Metalicos SA (MMX) to
acquire a 63.6% shareholding in a new company (`Newco`) which will be demerged
from MMX and will own MMX`s current 51% interest in the Minas-Rio iron ore
project and 70% interest in the AmapA iron ore mine. After the acquisition of
the 63.6% stake, Anglo American will offer to purchase the Newco shares held by
the minority shareholders of Newco at the same price per share, for a total of
approximately $5.5 billion on a 100% basis, or approximately $361.12 per Newco
share (assuming one Newco share for each current MMX share), as well as royalty
payments to MMX beginning in 2025 for the Minas-Rio project and 2023 for the
Amapa mine.
On 26 January 2008, the Group acquired the remaining 50% shareholding in United
Marine Holdings Limited from Hanson Quarry Products Europe Limited, a
subsidiary of HeidelbergCement AG, for $110 million.
With the exception of the above and the proposed final dividend for 2007 there
have been no material reportable events since 31 December 2007.
Production statistics
The figures below include the entire output of consolidated entities and the
Group`s share of joint ventures, joint arrangements and associates where
applicable, except for Collahuasi in Base Metals and De Beers which are quoted
on a 100% basis.
2007 2006
Anglo Platinum (troy ounces)(1)(2)
Platinum 2,508,800 2,863,900
Palladium 1,406,200 1,563,000
Rhodium 333,100 331,700
4,248,100 4,758,600
Nickel (tonnes)(3) 19,500 21,700
Copper (tonnes)(3) 11,100 11,400
Gold 99,000 115,400
Anglo Coal (tonnes)
South Africa
Eskom 34,064,000 34,821,200
Trade - Thermal 23,952,400 22,754,000
Trade - Metallurgical 1,143,700 1,768,200
59,160,100 59,343,400
Australia(4)
Thermal 15,059,300 15,258,400
Metallurgical 10,145,400 9,195,600
25,204,700 24,454,000
South America
Thermal 11,259,800 11,008,900
Total 95,624,600 94,806,300
Anglo Coal (tonnes)
South Africa
Bank 51,900 477,600
Greenside 3,314,900 2,778,100
Goedehoop 8,456,200 8,534,500
Isibonelo 5,001,000 4,020,100
Kriel 11,210,100 12,318,400
Kleinkopje 3,490,700 3,898,400
Landau 4,058,200 4,102,400
New Denmark 5,134,700 5,508,500
New Vaal 17,119,500 16,275,000
Nooitgedacht 565,700 711,000
Mafube 757,200 719,400
59,160,100 59,343,400
Australia
Callide 10,031,100 9,816,100
Drayton 3,902,700 4,136,300
German Creek (Capcoal) 4,115,700 3,165,400
Jellinbah East 891,800 887,400
Moranbah 3,211,600 2,928,500
Dawson Complex 3,051,800 3,520,300
25,204,700 24,454,000
South America
Carbones del Guasare 1,384,400 1,531,700
Carbones del Cerrejon 9,875,400 9,477,200
11,259,800 11,008,900
Total 95,624,600 94,806,300
(1) See the published results of Anglo Platinum Limited and Northam Platinum
Limited for further analysis of production information.
(2) Includes Anglo Platinum Limited`s 22.5% share of Northam Platinum Limited`s
production for 12 months in 2006 and 9 months to 30 September 2007 at which
time Anglo Platinum Limited`s investment in Northam Platinum Limited was
transferred to a disposal group.
(3) Also disclosed within total attributable nickel and copper production.
(4) 2006 excludes production at Dartbrook which was closed in the year.
Production for Dartbrook was 792,000 tonnes in 2006.
Production statistics (continued)
2007 2006
De Beers (diamonds recovered - carats)
100% basis (Anglo American 45%)
Debswana 33,638,000 34,293,000
Namdeb 2,176,000 2,084,800
De Beers Consolidated Mines 14,998,000 14,568,900
Williamson 220,000 189,400
Canada 81,000 -
Total 51,113,000 51,136,100
Anglo Base Metals
Copper(1)
Collahuasi
100% basis
(Anglo American 44%)
Ore mined tonnes 61,969,800 45,843,300
Ore processed Oxide tonnes 7,129,200 6,390,300
Sulphide tonnes 43,679,900 41,347,700
Ore grade
processed Oxide % Cu 0.8 1.0
Sulphide % Cu 1.0 1.0
Production Copper concentrate dry metric tonnes 1,346,000 1,312,400
Copper cathode tonnes 58,100 59,800
Copper in
concentrate tonnes 393,900 380,200
Total copper
production for
Collahuasi tonnes 452,000 440,000
Anglo American Sur
(formerly Minera
Sur Andes)
Los Bronces mine
Ore mined tonnes 26,503,300 22,346,200
Marginal ore mined tonnes 35,744,000 35,538,000
Las Tortolas
concentrator Ore processed tonnes 21,125,300 20,514,700
Ore grade processed % Cu 1.0 1.0
Average recovery % 85.3 88.1
Production Copper concentrate dry metric tonnes 607,400 555,900
Copper cathode tonnes 48,300 42,500
Copper in
concentrate tonnes 182,900 183,500
Total tonnes 231,200 226,000
El Soldado mine
Ore mined Open pit
- ore mined tonnes 6,283,000 5,812,300
Open pit
- marginal ore
mined tonnes 76,600 110,800
Underground
(sulphide) tonnes 1,514,900 2,028,600
Total tonnes 7,874,500 7,951,700
Ore processed Oxide tonnes 791,900 654,200
Sulphide tonnes 7,400,900 7,527,700
Ore grade
processed Oxide % Cu 1.4 1.4
Sulphide % Cu 1.1 1.0
Production Copper concentrate dry metric tonnes 229,700 222,900
Copper cathode tonnes 7,500 6,500
Copper in
concentrate tonnes 65,300 62,200
Total tonnes 72,800 68,700
(1) Copper production figures exclude Palabora.
Production statistics (continued)
2007 2006
Anglo Base Metals (continued)
Chagres Smelter
Copper concentrate smelted tonnes 168,100 183,200
Production Copper blister/anodes tonnes 164,100 173,400
Acid tonnes 493,400 499,200
Total copper production
for the Anglo
American Sur group tonnes 304,000 294,700
Anglo American Norte
(formerly Mantos Blancos)
Mantos Blancos mine
Ore processed Oxide tonnes 4,587,900 4,533,800
Sulphide tonnes 3,879,800 3,979,800
Marginal ore mined tonnes 5,862,900 6,307,300
Ore grade processed Oxide % Cu (soluble) 0.7 0.8
Sulphide % Cu (insoluble) 1.1 1.1
Marginal ore % Cu (soluble) 0.3 0.8
Production Copper concentrate dry metric tonnes 105,900 123,800
Copper cathode tonnes 48,700 49,100
Copper in concentrate tonnes 40,200 42,600
Total tonnes 88,900 91,700
Mantoverde mine
Ore processed Oxide tonnes 9,280,700 9,502,300
Marginal ore tonnes 5,511,100 4,879,900
Ore grade processed Oxide % Cu (soluble) 0.7 0.7
Marginal ore % Cu (soluble) 0.3 0.3
Production Copper cathode tonnes 61,000 60,300
Black Mountain tonnes 2,200 3,400
Total Anglo Base Metals copper production tonnes 655,000 643,800
Anglo Platinum copper production
Production(1) tonnes 11,100 11,400
Total attributable copper production tonnes 666,100 655,200
Nickel, Niobium, Mineral Sands and
Phosphates
Nickel
Codemin
Ore mined tonnes 539,300 487,600
Ore processed tonnes 522,600 518,600
Ore grade processed % Ni 2.1 2.1
Production tonnes 9,900 9,800
Loma de Ni-quel
Ore mined tonnes 1,183,200 1,324,300
Ore processed tonnes 1,096,100 1,205,000
Ore grade processed % Ni 1.6 1.6
Production tonnes 15,700 16,600
Total Anglo Base Metals nickel production tonnes 25,600 26,400
Anglo Platinum nickel production
Production(1) tonnes 19,500 21,700
Total attributable nickel production tonnes 45,100 48,100
(1) Includes Anglo Platinum Limited`s 22.5% share of Northam Platinum Limited`s
production for 12 months in 2006 and 9 months to 30 September 2007 at which
time Anglo Platinum Limited`s investment in Northam Platinum Limited was
transferred to a disposal group.
Production statistics (continued)
2007 2006
Anglo Base Metals (continued)
Niobium
Catalao
Ore mined tonnes 852,500 795,400
Ore processed tonnes 831,700 813,900
Ore grade processed Kg Nb/tonne 10.9 10.9
Production tonnes 4,700 4,700
Mineral Sands
Namakwa Sands
Ore mined tonnes 18,111,700 17,382,700
Production Ilmenite tonnes 300,300 272,200
Rutile tonnes 24,500 28,200
Zircon tonnes 114,800 128,400
Smelter production Slag tapped tonnes 151,300 133,900
Iron tapped tonnes 101,800 88,900
Phosphates
Copebras
Sodium tripolyphosphate tonnes 56,700 71,100
Phosphates tonnes 1,037,800 901,500
Zinc and Lead
Black Mountain
Ore mined tonnes 1,065,200 1,544,500
Ore processed tonnes 1,099,600 1,403,800
Ore grade processed Zinc % Zn 3.2 3.4
Lead % Pb 4.3 4.1
Copper % Cu 0.3 0.4
Production Zinc in concentrate tonnes 28,300 34,100
Lead in concentrate tonnes 41,900 48,300
Copper in concentrate tonnes 2,200 3,400
Lisheen
Ore mined tonnes 1,584,700 1,605,900
Ore processed tonnes 1,513,600 1,527,600
Ore grade processed Zinc % Zn 12.0 12.3
Lead % Pb 1.9 2.1
Production Zinc in concentrate tonnes 164,700 170,700
Lead in concentrate tonnes 20,200 23,100
Skorpion
Ore mined tonnes 1,402,300 1,456,500
Ore processed tonnes 1,379,600 1,311,800
Ore grade processed Zinc % Zn 11.7 11.8
Production Zinc tonnes 150,100 129,900
Total attributable
zinc production tonnes 343,100 334,700
Total attributable
lead production tonnes 62,100 71,400
Anglo Ferrous Metals
and Industries
Kumba Iron Ore Limited
Lump tonnes 19,043,000 18,639,800
Fines tonnes 13,357,000 12,470,300
Total iron ore 32,400,000 31,110,100
Scaw Metals
South Africa
- Steel Products tonnes 776,000 723,000
International
- Steel Products tonnes 803,000 696,000
Samancor(1)
Manganese ore mtu m 104 97
Manganese alloys tonnes 310,000 277,200
(1) Saleable production.
Production statistics (continued)
2007 2006
Anglo Industrial Minerals
Aggregates tonnes 95,393,300 92,268,200
Lime products tonnes 1,836,300 1,428,900
Concrete m3 8,858,400 8,526,800
Anglo Paper and Packaging
Mondi Packaging
Packaging papers tonnes 1,480,577 2,894,700
Corrugated board and boxes mm2 985 2,103
Paper sacks munits 1,910 3,606
Coating and release liners mm2 1,549 2,360
Pulp - external tonnes 91,834 180,200
Mondi Business Paper
Uncoated wood free paper tonnes 1,039,145 2,012,300
Newsprint tonnes 99,738 187,100
Pulp - external tonnes 84,563 114,100
Wood chips green metric tonnes 362,089 886,600
Mondi Packaging South Africa
Packaging papers tonnes 141,339 369,300
Corrugated board and boxes mm2 171 328
Newsprint Joint Ventures and other
Newsprint (attributable share) tonnes 156,103 320,900
Aylesford tonnes 94,354 196,865
Shanduka tonnes 61,749 124,012
Reconciliation of subsidiaries` and associates` reported earnings to the
underlying earnings included in the consolidated financial statements
For the year ended 31 December 2007
Note only key reported lines are reconciled
Anglo Platinum Limited US$ million
IFRS headline earnings (US$ equivalent of published) 1,748
Exploration 36
Exchange rate difference 4
Other adjustments (10)
1,778
Minority interests (443)
Depreciation on assets fair valued on acquisition (net of tax) (36)
Contribution to Anglo American plc underlying earnings 1,299
DB Investments (DBI) US$ million
De Beers underlying earnings (100%) 483
Difference in IAS 19 accounting policy 13
De Deers underlying earnings - Anglo American plc basis (100%) 496
Anglo American plc`s 45% ordinary share interest 223
Income from preference shares 16
Contribution to Anglo American plc underlying earnings 239
Kumba Iron Ore Limited (KIO) US$ million
IFRS headline earnings (US$ equivalent of published)(1) 434
Other adjustments 7
441
Minority interests (155)
Depreciation on assets fair valued on acquisition (net of tax) (12)
Contribution to Anglo American plc underlying earnings 274
Reconciliation of subsidiaries` and associates` reported earnings to the
underlying earnings included in the consolidated financial statements
(continued)
The Tongaat-Hulett Group Limited (THG) US$ million
IFRS headline earnings (US$ equivalent of published) (22)
IFRS 2 charge and unbundling cost(2) 47
25
Minority interests (12)
13
Add Anglo American plc`s share of Hulett Aluminium 2
Contribution to Anglo American plc underlying earnings (3) 15
AngloGold Ashanti Limited US$ million
IFRS headline earnings (published) 278
Earnings in period not equity accounted (18)
Other adjustments 5
265
Share of earnings not attributable to Anglo American`s 41.6%
shareholding to 2 October (155)
Depreciation on assets fair valued on acquisition (net of tax) (15)
Contribution to Anglo American plc underlying earnings 95
(1) The KIO IFRS headline earnings for the year ended 31 December 2007 assume a
minority interest of 20% in KIO`s underlying mining assets.
(2) In terms of the THG BEE transaction, THG issued shares comprising an
interest of 18% to a cane-grower BEE Special Purpose Vehicle (SPV) and an
infrastructure BEE SPV. The BEE cost in respect thereof is calculated in
accordance with IFRS 2 Share-based Payments and amounts to $45 million. This,
together with relevant unbundling transaction costs, are excluded from Anglo
American plc`s `Underlying earnings` on the basis that these one-off costs are
associated with the THG empowerment transaction and, thus, are not
representative of the ongoing earnings generation of the Group. The costs,
however, are included in THG`s `Headline earnings` as defined by the JSE
Limited.
(3) Relates to the period until 25 June 2007, when the Group ceased to account
for THG as a subsidiary and began accounting for Tongaat- Hulett and Hulamin as
associates under the equity method. For further details see note 16.
Exchange rates and commodity prices
US$ exchange rates 2007 2006
Average spot prices for the year
South African rand 7.05 6.77
Sterling 0.50 0.54
Euro 0.73 0.80
Australian dollar 1.19 1.33
Chilean peso 522 530
Closing spot prices
South African rand 6.84 7.00
Sterling 0.50 0.51
Euro 0.68 0.76
Australian dollar 1.14 1.27
Chilean peso 498 533
Commodity prices 2007 2006
Average market prices for the year
Platinum - US$/oz 1,304 1,142
Palladium - US$/oz 355 321
Rhodium - US$/oz 6,200 4,571
Copper - US cents/lb 323 305
Nickel - US cents/lb 1,686 1,095
Zinc - US cents/lb 147 148
Lead - US cents/lb 118 58
Gold - US$/oz 696 604
European eucalyptus pulp price (CIF) - US$/tonne 678(1) 638
(1) Average market price for the six months ended 30 June 2007.
Key financial data
US$ million (unless otherwise stated)
2007 2006(1) 2005(1) 2004(1)
Group revenue including
associates 30,559 29,404 24,872 22,610
Less: share of associates`
revenue (5,089) (4,413) (4,740) (5,429)
Group revenue 25,470 24,991 20,132 17,181
Operating profit including
associates before special items
and remeasurements 9,590 8,888 5,549 3,832
Special items and
remeasurements (excluding
financing special items and
remeasurements) (227) 24 16 556
Net finance costs (including
remeasurements), taxation
and minority interests of
associates (434) (398) (315) (391)
Total profit from operations
and associates 8,929 8,514 5,250 3,997
Net finance costs (including
special items and
remeasurements) (108) (71) (220) (385)
Profit before tax 8,821 8,443 5,030 3,612
Income tax expense (2,693) (2,518) (1,208) (765)
Profit for the financial year
- continuing operations 6,128 5,925 3,822 2,847
Profit for the financial year
- discontinued operations 2,044 997 111 1,094
Profit for the financial year
- total Group 8,172 6,922 3,933 3,941
Minority interests (868) (736) (412) (440)
Profit attributable to equity
shareholders of the Company 7,304 6,186 3,521 3,501
Underlying earnings(2)
- continuing operations 5,477 5,019 3,335 2,178
Underlying earnings(2)
- discontinued operations 284 452 401 506
Underlying earnings(2)
- total Group 5,761 5,471 3,736 2,684
Earnings per share ($)
- continuing operations 4.04 3.51 2.35 1.84
Earnings per share ($)
- discontinued operations 1.54 0.70 0.08 0.60
Earnings per share ($)
- total Group 5.58 4.21 2.43 2.44
Underlying earnings per share
($) - continuing operations 4.18 3.42 2.30 1.52
Underlying earnings per share
($) - discontinued operations 0.22 0.31 0.28 0.35
Underlying earnings per share
($) - total Group 4.40 3.73 2.58 1.87
Ordinary dividend per share
(US cents) 124.0 108.0 90.0 70.0
Special dividend per share
(US cents) - 67.0 33.0 -
Weighted average number of
shares outstanding (million) 1,309 1,468 1,447 1,434
EBITDA(3) - continuing
operations 11,171 10,431 7,172 5,359
EBITDA(3) - discontinued
operations 961 1,766 1,787 1,672
EBITDA(3) - total Group 12,132 12,197 8,959 7,031
EBITDA interest cover(4)
- total Group 42.0 45.5 20.0 18.5
Operating margin (before
special items and
remeasurements) - total Group 28.4% 25.4% 18.5% 14.7%
Ordinary dividend cover (based
on underlying earnings per
share) - total Group 3.5 3.5 2.9 2.7
US$ million (unless otherwise stated)
2007 2006(1) 2005(1) 2004(1)
Balance sheet
Intangible and tangible assets 25,090 25,632 33,368 35,816
Other non-current assets and
investments 8,952 7,819 5,375 5,375
Working capital 2,125 3,246 3,719 3,715
Other net current liabilities (877) (1,177) (1,492) (611)
Other non-current liabilities
and obligations (6,261) (5,790) (8,399) (8,339)
Cash and cash equivalents and
borrowings(5) (5,170) (3,244) (4,993) (8,243)
Net assets classified as held
for sale 471 641 - -
Net assets 24,330 27,127 27,578 27,713
Minority interests (1,869) (2,856) (3,957) (4,588)
Equity attributable to the
equity shareholders of the
Company 22,461 24,271 23,621 23,125
Total capital(6) 29,569 30,451 32,571 35,956
Cash inflows from operations
- continuing operations 9,375 9,012 5,963 3,857
Cash inflows from operations
- discontinued operations 470 1,045 1,302 1,434
Cash inflows from operations
- total Group 9,845 10,057 7,265 5,291
Dividends received from
associates and financial asset
investments
- continuing operations 311 251 468 380
Dividends received from
associates and financial asset
investments
- discontinued operations 52 37 2 16
Dividends received from
associates and financial asset
investments
- total Group 363 288 470 396
Return on capital employed(7)
- total Group 37.8% 32.4% 19.2% 14.6%
EBITDA/average total capital(6)
- total Group 40.4% 38.7% 26.0% 21.2%
Net debt to total capital(8) 20.0% 12.9% 17.0% 25.4%
(1) Comparatives have been adjusted to reclassify amounts relating to
discontinued operations where applicable.
(2) Underlying earnings is net profit attributable to equity shareholders,
adjusted for the effect of special items and remeasurements, and any related
tax and minority interests.
(3) EBITDA is operating profit before special items, operating remeasurements,
depreciation and amortisation in subsidiaries and joint ventures and share of
EBITDA of associates.
(4) EBITDA interest cover is EBITDA divided by net finance costs, excluding
other net financial income, exchange gains and losses on monetary assets and
liabilities, amortisation of discounts on provisions, special items and
financial remeasurements, but including share of associates` net interest
expense.
(5) This differs to the Group`s measure of net debt as it excludes the net debt
of Net assets classified as held for sale (2007: ($69) million; 2006:
($80) million), and excludes the impact of derivative instruments that provide
an economic hedge of assets and liabilities in net debt (2007: $388 million;
2006: $193 million). For more detail see note 31 Consolidated cash flow
analysis.
(6) Total capital is net assets excluding net debt (excluding the impact of
derivative instruments).
(7) Return on capital employed is calculated as total operating profit before
impairments for the year divided by the average of total capital less other
investments and adjusted for impairments.
(8) Net debt to total capital is calculated as net debt (excluding the impact
of derivative instruments) divided by total capital less investments in
associates.
Summary by business segment
Revenue(1) EBITDA(2)
US$ million 2007 2006 2007 2006
Continuing operations
Platinum 6,789 5,861 3,155 2,845
Diamonds 3,076 3,148 587 541
Coal(4) 3,574 3,364 882 1,082
South Africa 1,538 1,394 481 437
Australia 1,389 1,398 166 397
South America 627 541 271 271
Projects and corporate 20 31 (36) (23)
Base Metals(4) 7,129 6,534 4,683 4,255
Copper 4,507 4,537 3,192 3,238
Collahuasi 1,383 1,442 1,062 1,037
Anglo American Sur
(formerly Minera Sur Andes)(5) 2,273 2,219 1,630 1,640
Anglo American Norte
(formerly Mantos Blancos)(5) 851 876 507 563
Other - - (7) (2)
Nickel, Niobium, Mineral Sands
and Phosphates 1,583 1,081 842 492
Codemin 325 219 242 144
Loma de Niquel 553 334 390 229
Catalao 106 66 57 26
Namakwa Sands 184 180 44 52
Copebras 415 282 109 41
Zinc 1,039 916 729 588
Black Mountain 165 148 93 42
Lisheen 364 396 242 280
Skorpion 510 372 394 266
Other - - (80) (63)
Ferrous Metals and Industries 5,400 6,519 1,561 1,560
Kumba 1,635 2,259 879 879
Scaw Metals 1,432 1,233 204 188
Samancor Group 665 425 249 51
Highveld Steel 369 1,023 108 247
Tongaat-Hulett/Hulamin(6) 1,293 1,572 140 207
Other 6 7 (19) (12)
Industrial Minerals(4) 4,591 3,978 732 539
Exploration - - (157) (132)
Corporate Activities - - (272) (259)
Total continuing operations 30,559 29,404 11,171 10,431
Discontinued operations
Gold 1,004 1,740 401 843
Paper and Packaging 4,111 7,493 560 923
Mondi Packaging 2,296 4,132 316 528
Mondi Business Paper 1,204 2,215 198 297
Other 611 1,146 46 98
Total discontinued operations 5,115 9,233 961 1,766
Total Group 35,674 38,637 12,132 12,197
Operating profit/(loss)(3) Underlying earnings
US$ million 2007 2006 2007 2006
Continuing operations
Platinum 2,697 2,398 1,299 1,265
Diamonds 484 463 239 227
Coal(4) 614 862 490 637
South Africa 414 380 296 279
Australia 9 279 24 216
South America 227 227 175 163
Projects and corporate (36) (24) (5) (21)
Base Metals(4) 4,338 3,897 3,100 2,655
Copper 2,983 3,019 2,060 1,908
Collahuasi 998 962 701 586
Anglo American Sur
(formerly Minera Sur Andes)(5) 1,518 1,533 1,026 996
Anglo American Norte
(formerly Mantos Blancos)(5) 474 526 340 328
Other (7) (2) (7) (2)
Nickel, Niobium, Mineral Sands
and Phosphates 786 426 555 278
Codemin 234 136 178 96
Loma de Niquel 370 209 243 134
Catalao 55 25 60 15
Namakwa Sands 44 35 31 25
Copebras 83 21 43 8
Zinc 654 516 558 525
Black Mountain 83 31 65 38
Lisheen 227 265 174 287
Skorpion 344 220 319 200
Other (85) (64) (73) (56)
Ferrous Metals and Industries 1,432 1,360 605 583
Kumba 834 778 274 302
Scaw Metals 172 160 97 106
Samancor Group 225 52 169 38
Highveld Steel 108 230 18 79
Tongaat-Hulett/Hulamin(6) 114 154 44 55
Other (21) (14) 3 3
Industrial Minerals(4) 474 317 384 261
Exploration (157) (132) (145) (113)
Corporate Activities (292) (277) (495) (496)
Total continuing operations 9,590 8,888 5,477 5,019
Discontinued operations
Gold 202 467 95 178
Paper and Packaging 324 477 189 274
Mondi Packaging 195 287 137 208
Mondi Business Paper 105 130 62 51
Other 24 60 (10) 15
Total discontinued operations 526 944 284 452
Total Group 10,116 9,832 5,761 5,471
(1) Revenue includes the Group`s share of revenue of joint ventures and
associates. Base Metals` revenue is shown after deduction of treatment charges
and refining charges (TC/RCs).
(2) EBITDA is operating profit before special items, remeasurements,
depreciation and amortisation in subsidiaries and joint ventures and share of
EBITDA of associates.
(3) Operating profit includes operating profit before special items and
remeasurements from subsidiaries and joint ventures and share of operating
profit (before interest, tax, minority interests, special items and
remeasurements) of associates.
(4) Copebras has been reclassified from Industrial Minerals to Base Metals and
Yang Quarry has been reclassified from Industrial Minerals to Coal, to align
with internal management reporting. As such the comparative data has been
reclassified accordingly.
(5) Revenue in 2007 and 2006 includes intercompany sales between Anglo American
Norte and Anglo American Sur. The external revenue in 2007 is $2,266 million
(2006: $2,372 million) for Anglo American Sur and $858 million (2006:
$723 million) for Anglo American Norte.
(6) Includes 100% of the results of the Tongaat-Hulett Group from 1 January to
25 June 2007, and the Group`s equity accounted share of Tongaat-Hulett and
Hulamin since that date. For more detail see note 16 Disposal and demerger of
subsidiaries and businesses.
ANGLO AMERICAN plc
(Incorporated in England and Wales - Registered number 3564138)
(the `Company`)
Notice of Recommended Final Dividend
(Dividend No 18)
The directors have recommended that a dividend on the Company`s ordinary share
capital in respect of the year ended 31 December 2007 will, subject to approval
by shareholders at the Annual General Meeting to be held on Tuesday 15 April
2008 be paid as follows:
Amount (United States currency) 86 cents per ordinary share (note 1)
Amount (South African currency) R6.5461 per share
Last day to effect removal of shares
between the UK and SA registers Tuesday 19 February 2008
Last day to trade on the JSE Limited
(`JSE`) to qualify for the dividend Friday 7 March 2008
Ex-dividend on the JSE from the
commencement of trading on Monday 10 March 2008
Ex-dividend on the London Stock Exchange
from the commencement of trading on Wednesday 12 March 2008
Record date (applicable to both the
United Kingdom principal register and
South African branch register) Friday 14 March 2008
Currency conversion US$: GBP/rates
announced on Tuesday 18 March 2008
Removal of shares between the UK and
SA registers permissible from Tuesday 18 March 2008
Last day for receipt of Dividend
Reinvestment Plan (`DRIP`) Mandate Forms
by Central Securities Depository
Participants (`CSDPs`) (notes 3, 4 and 5) Tuesday 8 April 2008
Last day for receipt of DRIP Mandate
Forms by the UK Registrars or the
South African Transfer Secretaries
(notes 3, 4 and 5) Thursday 10 April 2008
Dividend warrants posted Tuesday 29 April 2008
Payment date of dividend Wednesday 30 April 2008
Notes:
1. Shareholders on the United Kingdom register of members with an address in
the United Kingdom will be paid in pounds sterling and those with an address
in a country in the European Union which has adopted the euro, will be paid
in euros. Such shareholders may, however, elect to be paid their dividends
in US dollars provided the UK Registrars receive such election by Friday
14 March 2008. Shareholders with an address elsewhere will be paid in US
dollars except those registered on the South African branch register who
will be paid in South African rand. The currency conversion rates and the
amounts per share in pounds sterling/euros will be announced on Tuesday
18 March 2008.
2. Dematerialisation and rematerialisation of registered share certificates in
South Africa will not be effected by CSDPs during the period from Monday
10 March 2008 to Friday 14 March 2008 (both days inclusive).
3. Those shareholders who already participate in the DRIP need not complete a
DRIP mandate form for each dividend as such forms provide an on-going
authority to participate in the DRIP until cancelled in writing.
Shareholders who wish to participate in the DRIP should obtain a mandate
form from the UK Registrars, the South African Transfer Secretaries or, in
the case of those who hold their shares through the STRATE system, their
CSDP.
4. In terms of the DRIP, and subject to the purchase of shares in the open
market, share certificates/Crest notifications are expected to be mailed on
Tuesday 6 May 2008 and CSDP investor accounts credited/updated on Wednesday
7 May 2008.
5. Copies of the terms and conditions of the DRIP are available from the
UK Registrars or the South African Transfer Secretaries.
By order of the Board
N Jordan
Secretary
19 February 2008
Registered office UK Registrars
20 Carlton House Terrace Equiniti
London The Causeway
SW1Y 5AN Worthing
England West Sussex
BN99 6DA
England
South African Transfer Secretaries
Link Market Services South Africa (Pty) Limited
11 Diagonal Street
Johannesburg 2001
PO Box 4844, Johannesburg 2000
South Africa
Date: 20/02/2008 09:00:08 Produced by the JSE SENS Department.
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