| Wed 23 Jul 2008, 10:48 | | AGL - Anglo American Plc - De Beers SociEtE Anonyme interim results for the six |
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AGL
ANAAL
AGL - Anglo American Plc - De Beers SociEtE Anonyme interim results for the six
months ended 30 June 2008
De Beers SociEtE Anonyme
(Incorporated under the laws of Luxembourg)
DE BEERS SOCIETE ANONYME INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2008
DIRECTORS` COMMENTS
De Beers posts solid first half results
Financial Summary - half year to 30 June 2008
US Dollar millions
Half year Half year % Change
30 June 2008 30 June 2007
Total Sales 3 740 3 402 +10%
Underlying 350 324 +8%
Earnings
EBITDA 831 632 +31%
Cash 455 522 -13%
available from
operating
activities
2008 H1 SNAPSHOT
* Earnings Growth: strong growth in EBITDA is related to expansion projects
coming on stream in the period. These projects are in a phase of
commissioning with the result that growth in underlying earnings and cash
generation are not similarly matched due to higher finance charges, and
losses on which deferred tax has not been accounted for, and funding for
increased working capital.
* DTC Sales: sales of rough diamonds in H1 (including those through joint
ventures) were US$3.3 billion, 10% higher than H1 2007, as demand from our
clients has enabled the DTC to steadily increase prices during the period.
The DTC completed its Sightholder selection process, appointing 78 clients
for the new three-year contract period.
* Diamond Production: in spite of energy challenges in southern Africa, carat
production at 24.2 million was only marginally behind 2007.
* New Mines: in Canada, Victor Mine has been completed and commissioned eight
months ahead of schedule and Snap Lake Mine, in the Northwest Territories,
commenced commercial production in early 2008. The commissioning of
Voorspoed in South Africa is underway and its first diamonds were recovered
in June. Accordingly, capital expenditure has declined by 58% as the
expansion projects have come on line during the period.
* Russia: Archangel Diamond Corporation (Archangel), 58 percent owned by De
Beers, announced an agreement with LUKoil whereby Archangel would purchase
49.9 percent of Arkhangelskoe Geologodobychnoe Predpriyatie (AGD) which
holds the Verkhotina licence in Russia. The Verkhotina licence area
contains the Grib pipe, which is one of the world`s largest known
undeveloped diamond deposits. Archangel has raised US$175 million for the
project which has been held in escrow since the end of June pending
completion of the transaction, which is subject to Russian Government
approval.
* Exploration: exploration activities, focused primarily in Angola, the DRC,
Botswana, Canada, and South Africa, resulted in the discovery of an
additional 12 kimberlites in H1.
* Beneficiation in Action: De Beers completed the construction and handover
of a new US$83 million diamond valuing and sorting facility in Gaborone,
the largest and most sophisticated of its kind in the world, home to DTC
Botswana. In H1 2008 the DTC supplied approximately US$637million worth of
rough diamonds to 16 clients operating in Botswana, 11 in Namibia and 17 in
South Africa and approximately US$13 million to the State Diamond Trader in
South Africa. Following an agreement in principle reached with the
Government of Ontario, 10 percent of Victor Mine`s production, by value,
will be made available for local cutting and polishing in Canada, an
arrangement which mirrors that for Snap Lake in the Northwest Territories.
* Downstream initiatives: De Beers Diamond Jewellers (DBDJ) has seen high
double digit sales growth on 2007, driven by the Bridal and High-End
diamond categories, and network expansion to 32 stores worldwide. The
Forevermark brand announced plans to launch in selected jewellers in Hong
Kong and China in Q4 2008 and in South Africa, Japan, India and Taiwan in
H1 2009. Forevermark will also open its own independent grading operations
(exclusively for Forevermark diamonds) in Belgium and the UK, with further
new locations planned for 2009/10.
* Progress on U.S. Class Actions: on 22 May, Judge Chesler entered an order
in the United States Federal District Court in New Jersey approving in all
respects the Settlement in the Diamond Class Actions, which addresses
historical De Beers legal issues in the US. Certain appeals have been noted
against the order, which will be addressed in accordance with ordinary
legal processes.
* Board Changes: after 34 years with the Group, Mr G M Ralfe will be stepping
down from the De Beers sa board with immediate effect and will be replaced
by Mr B A Cleaver. Dr A R Tombale, a nominee of the Government of the
Republic of Botswana, resigned from the board with effect from 6 May 2008
to be replaced by Mr G Gabaake with effect from 7 May 2008; Mr Gabaake was
also appointed a member of the Environment, Community, Health and Safety
Committee.
* Outlook: economic conditions require a more cautious outlook for the second
half of 2008. Mass market retail diamond jewellery sales have been impacted
by economic issues in the most important market, the United States. While
strong growth in China, India, Russia and the Middle East has helped to
mitigate the impact of the U.S. slowdown, the overall retail market is
likely to be challenging. While demand for high-end diamonds is likely to
remain robust, the smaller, lower qualities, which are more dependent upon
US demand, are expected to remain subdued.
De Beers announces interim results as follows:
De Beers SociEtE Anonyme
Consolidated Income Statement
for the half-year ended 30 June 2008
(Abridged)
US Dollar millions
Half-year Half-year Year 31
30 June 30 June December
2008 2007 2007
3 740 3 402 6 836
Total sales (Note 1)
Less: cost of sales 2 967 2 739 5 461
Gross profit 773 663 1 375
Less: operating costs (Note 2) 410 426 1 035
Operating profit 363 237 340
Add: other non-operating and 299 280 608
trade investment income
Income before finance charges and 662 517 948
taxation
Less: net finance charges (Note 100 50 154
3)
Income before taxation 562 467 794
Less: taxation 231 139 308
Income after taxation 331 328 486
Less : interests of outside 47 46 92
shareholder in subsidiaries
Own earnings 284 282 394
Add: share of retained income of 39 45 42
joint ventures
Net earnings before once-off 323 327 436
items
Once-off items (Note 4) (7) 23 (957)
Net earnings 316 350 (521)
Underlying earnings (Note 5) 350 324 483
EBITDA 831 632 1 216
Consolidated Balance Sheet
30 June 2008
(Abridged)
US Dollar millions
30 June 30 June 31
2008 2007 December
2007
Share capital and reserves 3 047 3 869 3 013
Interests of outside shareholders 326 328 379
Total shareholders` equity 3 373 4 197 3 392
Net interest bearing debt* 4 099 3 319 4 057
Other non-current liabilities 824 839 932
8 296 8 355 8 381
Fixed assets 3 746 4 078 3 884
Other non-current assets and 3 219 3 200 3 333
investments
Net current assets 1 331 1 077 1 164
8 296 8 355 8 381
* Interest bearing debt includes short-term borrowings and is net of cash
De Beers SociEtE Anonyme
Summary of cash flows
for the half-year ended 30 June 2008
US Dollar millions
6 Months 6 Months Year 31
30 June 30 June December
2008 2007 2007
Cash available from operating 455 522 844
activities
Less: investing activities
Fixed assets - stay-in-business 97 164 383
- expansion 230 554 1 120
Investments 30 25 109
357 743 1 612
Less: financing activities
Ordinary dividends 135 62 125
54
Less : Debt acquired on
acquisition of subsidiaries
Movements attributable to changes 5 92 166
in exchange rates
Increase in net interest bearing 42 375 1 113
debt
Notes
1. Total sales of natural rough 3 288 2 987 5 920
diamonds (including joint
ventures)
2. Operating costs include:
- Exploration, research and 133 114 288
development
- Sorting and marketing 105 129 339
- Group technical services 172 183 408
and corporate overheads
410 426 1 035
3. Net finance charges include 8 11 21
preference dividends amounting to
4. Once-off items comprise:
Costs in respect of a class 7 6 10
action settlement agreement
Impairment net of sales and (29) 947
gains on exploration interests
7 (23) 957
5. Underlying earnings* is
calculated as follows:
Net earnings before once-off 323 327 436
items
Adjusted for special items
and re-measurements:
Impairment and restructuring (4) 30
charges net of asset disposals
Re-measurement gains on 31 (3) 17
financial instruments
Underlying earnings 350 324 483
* Underlying earnings comprise net earnings attributable to shareholders
adjusted for the effect of any once-off or special items and re-measurements,
less any tax and minority interests. Special items include closure costs,
exceptional legal provisions and profits and losses on the disposal of or
impairments of assets. Special items which are considered to be significant
relative to the results are categorised as being once-off. Re-measurements are
recorded in underlying earnings in the same period as the underlying transaction
against which these instruments provide an economic, but not formally
designated, hedge.
De Beers SociEtE Anonyme
Other information
US Dollar millions
6 Months 6 Months Year 31
30 June 30 June December
2008 2007 2007
Exchange rates
US$ / ZAR average 7.49 7.14 7.02
US$ / ZAR period end 8.09 7.18 6.76
US$ / C$ average 1.00 1.13 1.08
US$ / C$ period end 0.98 1.07 0.98
Ordinary dividends paid
2007 - Interim 39 39
- Final 100
2008 - Interim 77
- Special Interim 88
Production summary
Tons Treated 000`s:
DBCM 11 358 15 119 29 586
Debswana 17 147 17 235 35 612
De Beers Canada 902 - 113
Namdeb 9 119 12 537 24 224
Williamson Diamonds 1 233 1 573 3 205
39 759 46 464 92 740
Carats recovered 000`s
DBCM 6 373 7 567 14 998
Debswana 16 171 16 407 33 638
De Beers Canada 616 - 81
Namdeb 998 1 184 2 176
Williamson Diamonds 68 116 220
24 226 25 274 51 113
Contacts:
De Beers London:
Lynette Gould +44 20 7 430 3509/+44 (0) 7740 393260
De Beers South Africa
Tom Tweedy +27 11 374 7173/+27 (0) 83 308 0083
De Beers Botswana
Charmaine Revaka +267 361 5231/+267 713 21785
Visit the official De Beers group website for more information on the Company
and where you can view and download a selection of images - www.debeersgroup.com
Date: 23/07/2008 10:48:06 Produced by the JSE SENS Department.
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