| Mon 28 Jul 2008, 9:00 | | AMS/AMSP - Anglo Platinum - Abridged Interim Financial Results For The Six |
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AMS AMSP
ANANP
AMS/AMSP - Anglo Platinum - Abridged Interim Financial Results For The Six
Months Ended 30 June 2008
Anglo Platinum Limited and its Subsidiaries
("Anglo Platinum")
(Incorporated in the Republic of South Africa)
(Registration number 1946/022452/06)
JSE Codes: AMS; AMSP
ISIN: ZAE000013181; ZAE000054474
A member of the Anglo American plc group
ABRIDGED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2008
KEY FEATURES
* Conversion of mining rights confirmed
* Record headline earnings of R8,44 billion, up 22%
* Interim dividend up 21% to 3 500 cents per share
* Significantly lower effective tax rate
* Rand basket price per platinum ounce increased by 28% to R23 989
* Rhodium contract sales terms successfully renegotiated
* ESOP implemented
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
30 June 30 June % 31 December
R millions 2008 2007 Change 2007
GROSS SALES REVENUE 27 559 23 646 46 961
Mined 22 159 20 933 40 749
Purchased metals 5 400 2 713 6 212
Commissions paid (189) (179) (345)
--------- --------- ---------
NET SALES REVENUE 27 370 23 467 17 46 616
COST OF SALES (16 081) (12 654) (27) (27 519)
--------- --------- ---------
GROSS PROFIT ON 11 289 10 813 4 19 097
METAL SALES
Mined 11 354 10 542 18 470
Purchased metals (65) 271 627
Other net 365 (114) (119)
income/(expenditure)
Market development (195) (151) (324)
and promotional
expenditure
--------- --------- ---------
OPERATING PROFIT 11 459 10 548 9 18 654
Interest expensed (67) (140) (182)
Interest received 130 279 403
Net income from 77 322 448
associates
--------- --------- ---------
PROFIT BEFORE 11 599 11 009 5 19 323
TAXATION
Taxation (2 749) (3 938) 30 (6 656)
--------- --------- ---------
PROFIT FOR THE 8 850 7 071 25 12 667
PERIOD/YEAR
OTHER COMPREHENSIVE
INCOME
Deferred foreign - - (57)
exchange translation
losses
--------- --------- ---------
TOTAL COMPREHENSIVE 8 850 7 071 12 610
INCOME FOR THE
PERIOD/YEAR
--------- --------- ---------
Profit attributable
to:
Minority interest 450 171 337
Owners of the Company 8 400 6 900 22 12 330
--------- --------- ---------
8 850 7 071 12 667
--------- --------- ---------
Total comprehensive
income attributable
to:
Minority interest 450 171 337
Owners of the Company 8 400 6 900 12 273
--------- --------- ---------
8 850 7 071 12 610
--------- --------- ---------
RECONCILIATION
BETWEEN PROFIT AND
HEADLINE EARNINGS
Profit attributable 8 400 6 900 12 330
to owners of the
Company
Less: Declared and (4) (7) (15)
undeclared cumulative
preference share
dividends and related
STC
Less: Deemed dividend (5) (16) (16)
to preference
shareholders
(Note 8)
--------- --------- ---------
Basic earnings 8 391 6 877 12 299
attributable to
ordinary
shareholders
Adjustments:
Loss/(profit) on 54 (4) (7)
disposal and
scrapping of
property, plant and
equipment
Tax effect of (15) 1 2
adjustments
--------- --------- ---------
Headline earnings 8 430 6 874 23 12 294
attributable to
ordinary
shareholders
Add: Declared and 4 7 15
undeclared
cumulative
preference share
dividends and
related STC
Add: Deemed dividend 5 16 16
to preference
shareholders
(Note 8)
--------- --------- ---------
Headline earnings 8 439 6 897 12 325
--------- --------- ---------
Number of ordinary 237.0 236.0 236.4
shares in issue
(millions)
Weighted average 236.6 233.6 234.7
number of ordinary
shares in issue
(millions)
Attributable
earnings per
ordinary share
(cents)
- Basic 3 547 2 944 21 5 241
- Diluted 3 531 2 926 21 5 203
Attributable headline
earnings per ordinary
share (cents)
- Headline 3 563 2 943 21 5 239
- Diluted 3 548 2 925 21 5 201
Dividends per 3 500 2 900 21 5 200
ordinary share
(cents)
- Interim 3 500* 2 900 2 900
- Final 2 300
Dividends per 320 318 638
preference share
(cents)
Dividend cover per 1.0 1.0 1.0
ordinary share
(headline earnings)
* Proposed ordinary dividend
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Reviewed Audited
as at as at as at
30 June 30 June 31
December
R millions 2008 2007 2007
ASSETS
Non-current assets 40 970 34 434 36 964
Property, plant 21 282 20 485 20 697
and equipment
Capital work-in- 18 961 12 730 15 561
progress
Investment in 463 1 022 391
associates
Investments held 67 - 120
by environmental
trusts
Other financial 120 115 116
assets
Other non-current 77 82 79
assets
Current assets 19 283 13 999 14 832
Inventories 8 996 5 793 6 370
Accounts 5 653 4 216 4 246
receivable
Other assets 166 260 134
Derivative 2 - 3
financial assets
Cash and cash 4 466 3 730 4 079
equivalents
Assets classified 2 720 - 2 254
as held for sale
--------- --------- ---------
Total assets 62 973 48 433 54 050
--------- --------- ---------
EQUITY AND LIABILITIES
Equity attributable to
owners of the parent
Share capital - ordinary 24 24 24
and preference
Share premium - ordinary 9 368 9 268 9 295
and preference
Accumulated profits 21 939 20 398 18 988
before proposed
dividends and related
Secondary Tax on
Companies (STC)
Accumulated profits 12 915 12 802 13 111
after proposed dividends
and related STC
Proposed ordinary 9 023 7 594 5 876
dividend and related STC
Undeclared cumulative 1 2 1
preference share
dividend and related STC
Minority shareholders` 676 453 466
interest
--------- --------- ---------
Total equity 32 007 30 143 28 773
Non-current liabilities 11 144 9 196 10 108
Deferred taxation 9 749 8 098 8 748
Environmental 884 569 840
obligations
Employees` service 13 25 24
benefit obligations
Share based payment - 23 6
provision
Obligations due under 498 481 490
finance leases
Current liabilities 18 794 9 094 14 012
Interest-bearing 9 604 600 7 465
borrowings
Accounts payable 5 967 4 333 3 508
Other liabilities 2 043 1 778 2 212
Share based payment 429 512 474
provision
Taxation 751 1 871 353
Liabilities directly 1 028 - 1 157
associated with assets
classified as held for
sale
--------- --------- ---------
Total equity and 62 973 48 433 54 050
liabilities
--------- --------- ---------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Accumulated Minority
R millions capital premium profits interests Total
Balance as at 23 5 568 22 590 511 28 692
31 December
2006 (audited)
Total 6 900 171 7 071
comprehensive
income for the
period
Dividend paid (229) (229)
to minorities
Ordinary and 1 3 627 (9 048) (5 420)
preference
dividends paid
Paid in cash (5 420) (5 420)
Dividends 1 3 627 (3 628) -
reinvested
Ordinary share -* 73 73
capital issued
Equity-settled (44) (44)
share based
compensation
------- ------- ------- ------- -------
Balance as at 24 9 268 20 398 453 30 143
30 June 2007
(reviewed)
Total 5 373 166 5 539
comprehensive
income for the
period
Dividend paid (153) (153)
to minorities
Ordinary and (6 856) (6 856)
preference
dividends paid
Unclaimed -* -*
dividends
Ordinary share -* 780 780
capital issued
Conversion of -* (753) (753)
preference
shares
Equity-settled 101 101
share based
compensation
Shares issued (28) (28)
to employees
------- ------- ------- ------- -------
Balance as at 24 9 295 18 988 466 28 773
31 December
2007 (audited)
Total 8 400 450 8 850
comprehensive
income for the
period
Dividend paid (240) (240)
to minorities
Ordinary and (5 448) (5 448)
preference
dividends paid
Ordinary share -* 166 166
capital issued
Conversion of -* (93) (93)
preference
shares
Equity-settled 42 42
share based
compensation
Shares issued (43) (43)
to employees
------- ------- ------- ------- -------
Balance as at 24 9 368 21 939 676 32 007
30 June 2008
(reviewed)
------- ------- ------- ------- -------
* Less than R500 000
CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Reviewed Audited
Six months Six Year
months
ended ended ended
30 June 30 June 31 December
R millions 2008 2007 2007
CASH FLOWS FROM
OPERATING ACTIVITIES
Cash receipts from 26 818 23 518 46 380
customers
Cash paid to suppliers (15 559) (11 689) (25 715)
and employees
--------- --------- ---------
Cash from operations 11 259 11 829 20 665
Interest (paid)/received (40) (79) 5
(net of interest
capitalised)
Taxation paid (1 244) (3 729) (6 821)
--------- --------- ---------
Net cash from operating 9 975 8 021 13 849
activities
--------- --------- ---------
CASH FLOWS USED IN
INVESTING ACTIVITIES
Purchase of property, (5 810) (4 653) (10 653)
plant and equipment
(including interest
capitalised)
To maintain operations (2 079) (1 534) (5 137)
To expand operations (3 286) (3 068) (5 241)
Interest capitalised (445) (51) (275)
Proceeds from sale of plant 3 - 81
and equipment
Investment in associates - - (11)
(Increase)/decrease in (2) 32 (120)
investments held by
environmental trusts
Interest received 113 268 379
Growth in environmental 17 11 24
trusts
Dividends received 77 130 279
Other - 10 -
--------- --------- ---------
Net cash used in investing (5 602) (4 202) (10 021)
activities
--------- --------- ---------
CASH FLOWS USED IN
FINANCING ACTIVITIES
Proceeds from the issue of 73 73 100
ordinary share capital
Raising of current interest- 2 201 500 7 575
bearing borrowings
Distributions to minority (240) (229) (382)
shareholders
Ordinary and preference (5 448) (5 421) (12 276)
dividends paid, net of
reinvestment
--------- --------- ---------
Net cash used in financing (3 414) (5 077) (4 983)
activities
--------- --------- ---------
Net increase/(decrease) in 959 (1 258) (1 155)
cash and cash equivalents
Cash and cash equivalents 4 079 4 988 4 988
at beginning of period/year
Transfer to assets held for (572) - 246
sale
--------- --------- ---------
Cash and cash equivalents 4 466 3 730 4 079
at end of period/year
--------- --------- ---------
MOVEMENT IN NET (DEBT)/CASH
Net (debt)/cash at (3 876) 4 413 4 413
beginning of period/year
Net cash from operating 9 975 8 021 13 849
activities
Net cash used in investing (5 602) (4 202) (10 021)
activities
Other (6 133) (5 583) (12 117)
--------- --------- ---------
Net (debt)/cash at end of (5 636) 2 649 (3 876)
period/year
--------- --------- ---------
Made up as follows:
Cash and cash equivalents 4 466 3 730 4 079
Interest-bearing (9 604) (600) (7 465)
borrowings
Obligations due under (498) (481) (490)
finance leases
--------- --------- ---------
(5 636) 2 649 (3 876)
--------- --------- ---------
NOTES TO THE INTERIM RESULTS
1. This interim report complies with International Accounting Standard 34 -
Interim Financial Reporting and South African Statement of Generally Accepted
Accounting Practice, AC127, with the same title, as well as with Schedule 4 of
the South African Companies Act and the disclosure requirements of the JSE
Limited`s listings requirements.
2. The interim report has been prepared using accounting policies that comply
with International Financial Reporting Standards and South African Statements of
Generally Accepted Accounting Practice. The accounting policies are consistent
with those applied in the financial statements for the year ended 31 December
2007, except for the changes described in note 3.
3. New accounting policies adopted
Amendment to IAS 1 - Presentation of Financial Statements
On 1 January 2008, the Group early adopted the disclosure requirements for
presentation of financial statements and the consequential amendments to IAS 34.
This standard affects the presentation of owner changes in equity and of
comprehensive income and does not impact on recognition, measurement and
disclosure of specific transactions as required by any other IFRSs. The Group
has presented a "statement of comprehensive income" which replaces the income
statement and also includes all non-owner changes in equity. All changes in
equity resulting from transactions with owners in their capacity as owners are
presented in the "statement of changes in equity".
IFRIC 12 - Service Concessions
On 1 January 2008, the Group adopted IFRIC 12 - Service Concession Arrangements.
This interpretation provides guidance to assist users in interpreting how IASB
literature is to be applied to arrangements where governments or other bodies
grant contracts for the supply of public services to private entities. This had
no impact on the financial results of the Group for the period.
IFRIC 13 - Customer Loyalty Programmes
On 1 January 2008, the Group early adopted IFRIC 13 - Customer Loyalty
Programmes. This interpretation addresses accounting by entities that grant
loyalty award credits to customers who buy other goods or services. This had no
impact on the financial results of the Group for the period.
IFRIC 14, IAS 19 - The Limit of a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction
On 1 January 2008, the Group adopted IFRIC 14, IAS 19 - The Limit on a Defined
Benefit Asset, Minimum Funding Requirements and their Interaction. IFRIC 14
addresses the interaction between a minimum funding requirement and the limit
placed by paragraph 58 of IAS 19 on the measurement of the defined benefit asset
or liability. This did not have any impact on the financial results of the Group
for the period.
IFRS 2 - Share based payment - Amendment relating to vesting conditions and
cancellations
On 1 January 2008, the Group early adopted the amendment of IFRS 2. The
amendment clarifies that the only vesting conditions are service conditions and
performance conditions. Other features of a share-based payment are not vesting
conditions. Consequently, under IFRS 2, features of a share-based payment that
are not vesting conditions should be included in the grant date fair value of
the share-based payment. The fair value also includes market-related vesting
conditions.
In addition, all cancellations, irrespective of the party cancelling, should
receive the same accounting treatment. Under IFRS 2, a cancellation of equity
instruments is accounted for as an acceleration of the vesting period. Therefore
any amount unrecognised that would otherwise have been charged is recognised
immediately. Any payments made with the cancellation (up to the fair value of
the equity instruments) are accounted for as the repurchase of an equity
interest. Any payment in excess of the fair value of the equity instruments
granted is recognised as an expense. The adoption of these amendments has not
had a material impact on the Group`s financial results for the period.
Reviewed Reviewed Audited
Six Six months Year
months
ended ended ended
30 June 30 June 31
December
2008 2007 2007
% % %
4. Taxation
A reconciliation of
the standard rate of
South African normal
taxation compared with
that charged in
profit/loss is set out
in the following
table:
South African normal 28.0 29.0 29.0
tax rate
STC 0.9 8.6 8.7
-------- -------- --------
28.9 37.6 37.7
Foreign income (3.3) (2.9) (3.3)
Exempt income (0.2) (0.8) -
Prior year - - (0.1)
overprovision
State`s share of 0.5 1.2 -
profits
Change in corporate (2.8) - -
tax rate
Other 0.6 0.7 0.1
-------- -------- --------
Effective tax rate 23.7 35.8 34.4
-------- -------- --------
R R R millions
millions millions
5. Commitments
Mining and process
property, plant and
equipment
Contracted for 5 042 3 776 4 224
Not yet contracted 19 991 15 751 13 085
for
--------- --------- ---------
Authorised by the 25 033 19 527 17 309
directors
--------- --------- ---------
Allocated for:
Expansion of capacity 14 800 10 619 6 281
- within remainder of 6 275 5 319 4 370
year/one year
- thereafter 8 525 5 300 1 911
Maintenance of 10 233 8 908 11 028
capacity
- within remainder of 6 836 4 417 5 787
year/one year
- thereafter 3 397 4 491 5 241
Other
Operating lease 604 469 575
rentals - buildings
- within remainder of 87 30 47
year/one year
- within two to five 252 158 213
years
- thereafter 265 281 315
Information 500 620 569
Technology Service
Providers
- within remainder of 93 153 147
year/one year
- thereafter 407 467 422
These commitments will be funded from existing cash resources, future operating
cash flows, borrowings and any other funding strategies embarked on by the
Group.
6. Contingent liabilities
Letters of comfort have been issued to financial institutions to cover certain
banking facilities. There are no encumbrances over Group assets, other than
houses held under finance leases by the Group.
Aquarius Platinum (South Africa) (Proprietary) Limited holds an option to put
its interest in the Kroondal pooling and sharing arrangement to the Group in the
case of termination of that relationship. The probability of the option being
exercised is considered remote. The amount of such an obligation is dependent on
a discounted cash flow valuation of its interest at that point in time.
The Group has, in the case of some of its mines, provided the Department of
Minerals and Energy with guarantees that cover the difference between the
closure costs and amounts held in the environmental trusts. At 30 June 2008,
these guarantees amounted to R1 990 million (30 June 2007: R453 million, 31
December 2007: R1 939 million).
The Group is the subject of various claims, the expected outcomes of which are
varied, but on a probability weighting the amount is estimated at R76 million
(30 June 2007: R8 million, 31 December 2007: R70 million).
The Group has provided Lexshell 36 General Trading (Pty) Limited, a company
indirectly owned by the Bakgatla-Ba-Kgafela traditional community, with a
facility that covers their minimum debt repayments should the company not be
able to meet its repayments. The facility is limited to Union Section`s cash
flows, and call on this facility is considered a remote possibility.
Rustenburg Platinum Mines Limited (RPM) has granted a R2 billion loan facility
to Royal Bafokeng Resources (Pty) Limited (RBR) for the purpose of funding its
contributions to the BRPM joint venture. The loan is repayable in full on 11
August 2012. The RBR has ceded and pledged its interest in the BRPM joint
venture to RPM as security for the loan. RPM also has the right to register a
notarial bond and a mortgage bond over RBR`s undivided share of the assets of
the BRPM joint venture.
7. Change in accounting estimate
Metal inventories
During the year, the Group changed its estimate of the quantities of inventory
based on the outcome of a physical count of in-process metals. The Group runs a
theoretical metal inventory system based on inputs, the results of previous
physical counts and outputs. Due to the nature of in-process inventories being
contained in weirs, pipes and other vessels, physical counts only take place
once per annum. This change in estimate has had the effect of increasing the
value of inventory disclosed in the financial statements by R200 million (2007:
R148 million). This results in the recognition of an after tax gain of R144
million (2007: R105 million). The amount of the effect of future periods has not
been disclosed because estimation is impractible.
8. Revision of conversion price applicable to convertible preference shares
As the dividend cover in respect of the 2007 dividend was less than 1.4 times,
it was necessary, in accordance with the rights and privileges attaching to the
convertible perpetual cumulative preference shares ("convertible preference
shares"), to amend the conversion price to be used when the convertible
preference shares are converted into ordinary shares. The conversion price was
R284.24 or 35.18154 ordinary shares for each 100 convertible preference shares
converted. Based on the volume weighted average traded price of Anglo Platinum
ordinary shares on the JSE Limited for the five business days ended Friday, 7
March 2008 of R1 299.15, the conversion price was amended to R281.05 or 35.58086
shares for every 100 convertible preference shares converted.
This decrease in the conversion price has resulted in a deemed dividend for the
purpose of calculating earnings per share in terms of IAS 33 - Earnings per
share to the outstanding preference shareholders at the date of the adjustment.
Consequently, this deemed dividend of R3.19 per convertible preference share,
amounting to R5 million has been taken into account when calculating the basic
earnings attributable to ordinary shareholders. This amount has been included
with the preference dividends due to the preference shareholders of R4 million
in the total amount attributable to preference shareholders.
9. Assets held for sale (BEE transactions)
Disposal of investment in associate - Northam and disposal of 50% interest in
Booysendal joint venture
On 3 March 2008 binding agreements were signed for the disposal of Anglo
Platinum`s 22.3% interest in Northam and its 50% stake in the Booysendal project
to Mvelaphanda Resources Limited ("Mvelaphanda") for a cash consideration of
some R4 billion. This transaction will become effective shortly after all
remaining approvals have been obtained, which effective date is expected to be
during the second half of 2008. When the transaction becomes effective, Anglo
Platinum`s call option over Mvelaphanda`s 16.95% interest in Northam will have
fallen away.
Disposal of 51% in Lebowa Platinum Mines and 1% interest in Ga-Phasha,
Boikgantsho and Kwanda joint ventures
In September 2007, the board approved the disposal of 51% in Lebowa Platinum
Mines and a 1% interest in Ga-Phasha, Boikgantsho and Kwanda joint ventures, to
Anooraq Resources Corporation ("Anooraq") for a cash consideration of R3.6
billion. Legal agreements were signed in March 2008 and are subject to the
fulfilment of various conditions precedent. Several of the conditions precedent
have subsequently been met and the remaining conditions are primarily regulatory
in nature. Anooraq has made good progress in its fund raising process by virtue
of the conditional exercise of BEE warrants by Pelawan Investments (Pty) Limited
in December 2007, raising some R1.6 billion as well as procuring debt funding
from Standard Chartered Bank for some R2.2 billion. The transaction is expected
to be effective by the end of 2008.
10. Implementation of the Kotula Trust
The shareholders of the company approved the implementation of the Group
Employee Share Participation Scheme ("the scheme") at a combined general meeting
on 31 March 2008. The conditions precedent were subsequently met and the scheme
was implemented on 16 May 2008. The Kotula Trust, which was established to
facilitate the scheme on behalf of the beneficiaries, was issued with 1 008 519
ordinary shares and 1 512 780 "A" ordinary shares. The Kotula Trust is
consolidated by the Group. As the scheme is equity settled, the IFRS 2 - Share
based payments charge determined on grant date, i.e. 16 May 2008 amounted to R1
954 million. This charge is being spread over the seven year vesting period of
the scheme taking into consideration the various tranches vesting in 2013, 2014
and 2015.
11. Contingent asset
Amandelbult insurance claim
Due to a flash flood on 21 January 2008, the water inflow from the storm
together with the water inflows from several days of abnormal rainfall, exceeded
the installed dewatering capacity of the Amandelbult number 1 vertical shaft and
resulted in the flooding of the shaft bottom including the pump station. This
was recorded as a 1:200 year event. Production after the flood event was reduced
to around 25% of normal output. An emergency dewatering program was implemented
to return the shaft to normal production levels as soon as possible. The
insurers were immediately advised and Anglo Platinum has submitted a material
damage claim together with the business interruption claim for the period during
which the mine was not at full capacity. However, the quantum claimable in
respect of the business interruption claim under this policy can only be
determined once the indemnity period of 24 months has lapsed. The final quantum
of the claim is dependent on a number of variables which can only be determined
during or at the end of the 24 month indemnity period. Consequently, no
compensation for lost revenue in respect of the business interruption claim has
been recorded due to the uncertainty around the quantum of the claim.
12. Comparative figures
Amounts included in cash investments held by environmental trusts of R296
million at 30 June 2007 that meet the definition of cash and cash equivalents
have been reclassified from non-current assets to cash and cash equivalents. The
cash flow statement has been amended accordingly.
13. Corporate governance
The Board is of the view that the Company and its subsidiaries are compliant
with the recommendations as set out in the Code of Corporate Practices and
Conduct contained in King 2.
14. Auditors` review
The interim report from which the abridged interim results have been extracted
has been reviewed by the Company`s auditors, Deloitte & Touche. Their
unqualified review report is available for inspection at the Company`s
registered office.
Commentary
1. Financial results
Anglo Platinum achieved record earnings for the six months ended 30 June 2008.
Headline earnings of R8.44 billion were 22% higher than the same period in 2007.
Factors contributing to the increase were higher US dollar prices realised on
metals sold, which at a basket price of US$3,115 per platinum ounce represents a
19% increase over 2007, a rand/US dollar exchange rate that was on average 8%
weaker in the period under review as well as a lower effective tax rate which
reduced from 35.8% to 23.7%. These were offset by lower sales volumes on the
back of reduced production from mining and processing operations, higher
operating costs and a significant increase in the cost of purchasing metal from
joint venture partners, resulting from a volume increase and the increase in
contained metal prices. Headline earnings per ordinary share increased 21% to
3,563 cents. An interim dividend of 3,500 cents per ordinary share has been
declared, maintaining a dividend cover of one.
Gross sales revenue increased by R3.91 billion to R27.6 billion. The increase
was the result of higher US dollar metal prices achieved, contributing R6.50
billion of the increase and a weaker average rand/US dollar exchange rate of
R7.70, compared to R7.16 achieved in 2007, increasing revenue by R1.92 billion.
This was offset by lower volumes of metals sold, which reduced revenue by R4.50
billion. To ensure that Anglo Platinum met contractual delivery of refined
platinum to its customers some 111,000 ounces were sold from normal working
levels of refined stock resulting in refined platinum sales for the six months
ended 30 June 2008 of 1.11 million ounces.
Strong demand together with constrained supply to the market by major producers
resulted in Anglo Platinum achieving significantly higher US dollar prices on
its sales. The average prices achieved on platinum, palladium and nickel sales
for the half year were US$1,906 per ounce, US$436 per ounce and US$12.14 per
pound respectively. The contract sales terms for rhodium were successfully
renegotiated in the first quarter of 2008. As a result of the revised contract
terms, the specific details of which are subject to contractual confidentiality,
the sales price of rhodium will move closer towards market prices during 2008
and 2009. Consequently the average price achieved on rhodium sales in the first
six months of 2008 increased to US$5,833 per ounce.
Cost of sales increased by R3.43 billion to R16.1 billion as a result of:
* The cost of purchases of metal increased to R6.12 billion. Higher metal prices
and the terms governing purchasing agreements contributed R2.40 billion of the
variance while an increase in the volume of metals purchased resulted in an
additional cost of R919 million. Leasing of palladium metal was required to meet
contractual commitments at an actual leasing cost of R1.7 million. The volumes
leased resulted in an increase in the liability for leased metal of R349 million
when marked to market;
* Cash mining, smelting and refining costs rose 17% to R9.95 billion with the
cash operating cost per equivalent refined platinum ounce rising by 46% to
R10,498. The increase in unit costs is attributable primarily to reduced
production and expected lower grades than achieved in the strong first half of
2007, intensified by above inflationary pressures experienced in key input costs
including labour, diesel, chemicals, steel grinding media, explosives and
cement;
* Depreciation increased by 9% to R1.47 billion as a result of the capital
expenditure programme and increased utilisation of new operating assets;
* The net value of metals in inventory increased by R2.54 billion in the first
half of 2008. This is attributed to an increase in pipeline stocks, associated
with smelter outages, and an increase in the value of metal in stock as a result
of the increase in the cost at which metal inventories are valued which includes
the impact of higher costs in respect of the purchase of metals, offset by a
reduction in refined metal stocks; and
* Other costs increased by R318 million to R1.08 billion. An adjustment for
share based payments costs of R215 million in the first half of 2007 has
resulted in the 2008 share based payments costs being comparatively higher.
The Group`s taxation charge decreased to R2.75 billion reflecting a reduction in
the effective tax rate from 35.8% in the first half of 2007 to 23.7% in 2008.
The reduction comprises:
* The reduction in the South African company tax rate from 29% to 28% (R92
million);
* Revaluation of the deferred tax liability due to the above change (R317
million);
* Reduced secondary tax on companies ("STC") on the lower 2007 final dividend
paid (R295 million);
* Reduction in the South African STC rate from 12.5% to 10.0% (R183 million);
and
* The election of an STC exemption in respect of the 2007 final dividend paid to
Anglo American (R339 million).
The Group`s net debt position at 30 June 2008 amounted to R5.64 billion,
compared to the R3.88 billion net debt position at 31 December 2007.
2. Safety
Anglo Platinum`s focus on safety, based on zero harm and a change in safety
culture, has resulted in an improvement in safety performance across the
operations. In the first half of 2008 the lost time injury frequency rate
improved significantly to 1.96 from 2.37 in the first half of 2007.
Regrettably eight employees lost their lives at Anglo Platinum`s managed
operations in the first half of 2008. Whilst this is a marked reduction from the
18 fatalities for the same period in 2007, these fatalities remain of great
concern.
A number of operations achieved significant milestones during the first half of
2008 in respect of safety, most notably:
* Union mine achieved five million fatality free shifts and 10 million `fall of
ground` fatality free shifts;
* Mortimer smelter has operated for three years without a single lost time
injury; and
* Mogalakwena and Lebowa mining operations have operated for five years and one
year respectively without a fatality.
Lessons learnt from these operations are being shared across Anglo Platinum to
enhance the safety improvement programme and improve the overall safety
performance.
3. Operations
Equivalent refined platinum production (equivalent ounces are mined ounces
expressed as refined ounces) from the mines managed by Anglo Platinum and its
joint venture partners for the first half of 2008 were 1,128,200 ounces, a
decrease of 11%, or 145,800 ounces when compared to the first half of 2007.
Factors contributing to the decrease include:
* The disruption of operations at the Amandelbult mine as a result of
underground working areas being flooded. Production has now been restored;
8 Lower throughput at the Mogalakwena South concentrator;
* The suspension of operations to rehabilitate shaft steelwork at the
Turffontein shaft of Rustenburg mine.
* An overall expected reduction in built-up head grade; and
* Severe electricity supply constraints in January and the associated ramp-up
period when supply resumed.
Mining operations
Performance at operations is summarised below:
* Rustenburg: The mine produced 282,600 equivalent refined platinum ounces, 27%
or 107,100 ounces less than that reported for the same period in 2007. The
reasons for the decreased performance were lower expected built-up head grades,
Turffontein shaft closure for shaft rehabilitation work, unexpected contractor
strikes, skilled labour shortages and safety stoppages.
* Amandelbult: Equivalent refined platinum production decreased by 91,100 ounces
to 195,200 ounces. The decrease in ounces is principally due to a major flood
event. Production has now been restored. The planned increases in UG2 mining has
resulted in the 4E built-up head grade reducing by 8% to 4.81g/t.
* Union: Union performed well with equivalent refined platinum production of
152,700 ounces, meeting expectations.
* Mogalakwena: The mine produced 71,800 equivalent refined platinum ounces for
the first half of 2008. This was 19% below the same period in 2007. The
unexpected high number of breakdowns and a safety stoppage, following a fatality
at the South concentrator resulted in lower milled throughput. This, combined
with the planned lower grades at the existing Sandsloot and Zwartfontein South
pits, reduced platinum output by 33,400 equivalent refined ounces. This loss was
offset by the new Mogalakwena North concentrator, delivering its first
production in 2008, producing some 17,000 equivalent refined ounces. From
current indications the combined output from the existing Sandsloot and
Zwartfontein South pits is likely to remain at approximately 150,000 ounces per
year in 2008 and 2009. Total refined platinum production at Mogalakwena in 2008
is expected to be 190,000 ounces.
* Kroondal: Equivalent refined platinum production from the Kroondal joint
venture increased by 42% to 92,500 ounces. The sale of 7,700 ounces to Impala
Platinum in the first quarter in terms of the Aquarius off-take agreement marked
its conclusion resulting in the expected increase in production attributable to
Anglo Platinum.
* Bafokeng-Rasimone: Equivalent refined platinum production decreased to 85,500
ounces, 15% lower than that reported for the first half of 2007. The decrease
was due to high absenteeism, skilled labour shortages and safety related
stoppages.
* Modikwa: Exceptional performance from Modikwa resulted in equivalent refined
platinum production increasing by 27% to 65,800 ounces.
* Mototolo: The joint venture maintained its output level in the first six
months of 2008 contributing 42,800 ounces of equivalent refined platinum
production.
* Lebowa: Equivalent refined platinum production decreased by 17% to 40,100
ounces. This lower output was due to safety stoppages and labour related issues.
* Marikana: Equivalent refined platinum production attributable to Anglo
Platinum increased by 81% to 14,500 ounces. Marikana remains in ramp-up and is
expected to continue increasing production towards its steady state production
level of 74,000 equivalent refined platinum ounces in 2009.
* Twickenham: The mine produced 3,700 equivalent refined platinum ounces in the
first half of 2008.
The first half of 2008 saw an increase in purchased ounces from the new Eland
Platinum mine which commenced delivery to Anglo Platinum in December 2007.
Process operations
Concentrator operations performed well during the first half of 2008 and the
ongoing optimisation of concentrator recoveries assisted in offsetting the lower
recovery potential associated with the planned increase in UG2 and Platreef
volumes. Concentrators were operated to match mining volumes.
In order to meet the Eskom requirement of a 10% reduction in electricity usage,
Anglo Platinum mining and concentrating operations were operated at as high a
level as possible. This was achieved by selectively reducing power to other
major loads, the most significant of which are smelters. This has increased the
thermal cycling of smelters and is believed to be a factor contributing to the
increased frequency of smelter run-out failures.
Three such failures occurred during the first half of 2008 at Polokwane in
February and at the Waterval slag cleaning furnace in May and June. The failures
together with the scheduled re-build of the Mortimer smelter resulted in a
significant build-up of pipeline stock.
To ameliorate the effects of ongoing thermal cycling and given that Anglo
Platinum`s smelting capacity exceeds current requirements, the slag cleaning
furnace and number two furnace at the Waterval complex will be shut down for
lining replacements. Pipeline stocks will continue to build-up in the third
quarter but will reduce by year-end.
Refining operations performed well over the period.
Smelting and refining cash costs per refined platinum ounce increased by 24%
when compared to the same period last year due to lower economies of scale and
additional maintenance and repair costs incurred.
The factors mentioned above have contributed to reduced production of refined
platinum, which at 1,001,100 ounces for the first half of 2008 represents a
decrease of 16% when compared to the same period in 2007.
4. Projects
Anglo Platinum remains confident of continued robust demand for platinum and is
continuing with its expansion programme. In the first half of 2008 the Board
approved projects totalling R24.8 billion, in nominal terms. These approvals
include:
* R16.0 billion Amandelbult Number 4 Shaft: The project will replace 271,000
ounces of refined platinum per annum from 2019. The Project will co-extract the
Merensky and UG2 reefs and will partially replace diminishing Merensky reserves
whilst providing a moderate increase in UG2 production. The lengthy process of
shaft sinking and build up to steady state volumes results in an overall project
duration of 12 years. The R16 billion (R11.7 billion in 2008 money terms)
capital cost will be spent over this 12 year period;
* R7.1 billion Twickenham Platinum Mine: At steady state will contribute an
additional 180,000 ounces of refined platinum from 2016. The project will expand
current operations and exploit the UG2 reef horizon;
* R1.0 billion number 2 slag cleaning furnace: This project will double the
existing Waterval Converter Slag smelting capacity during 2010. The increased
capacity requirement is a direct result of Anglo Platinum`s expansion strategy
and the requirement to maintain current recoveries; and
* R0.7 billion MC Plant capacity expansion: Phase 1 of the project will increase
the current MC Plant capacity from 64ktpa Waterval Converter Matte to 75ktpa
during 2009.
The following major projects are progressing:
* The R1.0 billion Rustenburg Townlands Ore Replacement project will contribute
70,000 refined platinum ounces per annum from 2014 with production expected from
the new Merensky and UG2 areas;
* R1.9 billion Base Metals Refinery project to expand the capacity of the
existing plant to 33ktpa of contained nickel to deliver by the end of 2010;
* R1.5 billion Amandelbult East Upper UG2 project, which will contribute an
additional 100,000 ounces of refined platinum per annum by 2012;
* R1.4 billion Mainstream Inert Grind projects approved in November 2007 to
improve mineral liberation and PGM recovery are on schedule with the exception
of the Bafokeng-Rasimone project which had a late start due to a constraint in
engineering and project management resources;
* The R2.3 billion Rustenburg Paardekraal 2 shaft replacement project to produce
120,000 ounces of refined platinum per annum by 2015; and
* Development of the Unki Mine in Zimbabwe continues as planned.
The 64 kilometre effluent water pipeline from Polokwane to the Mogalakwena mine
was successfully commissioned. The expansion of the Eastern Limb water supply to
Mototolo was also completed. These projects also provide base infrastructure
which can expand to support future mine development.
5. Capital expenditure in 2008
Total capital expenditure amounted to R5.81 billion, an increase of R1.16
billion over the comparable period in 2007. Expansion expenditure was R3.29
billion with expenditure to maintain operations at R2.08 billion. Capitalised
interest amounted to R445 million.
The strong global demand for resources continues to place material inflationary
pressure on capital expenditure and the ability to meet project schedules. These
pressures are likely to continue in the foreseeable future.
Anglo Platinum expects full year capital expenditure for 2008 to be between R12
billion and R13 billion as a result of cost pressures and change of scope
requirements, including emergency generators.
6. Communities
The relocation of the Ga-Puka and Ga-Sekhaolelo communities (the Motlhohlo
community), which commenced in July 2007 has made significant progress since
last reported. To date some 865 of the 956 families have relocated to the new
villages. The new villages are supported by 52 community facilities such as
schools, clinics, shops, creches and churches. The relocations are being
conducted in line with World Bank resettlement guidelines. Anglo Platinum has
taken care to ensure that resettled communities are left better off after
resettlement than they were before. In this regard, Anglo Platinum has provided
the communities with quality housing, facilities and crop and grazing fields. In
addition Anglo Platinum has provided funding for community trusts to ensure that
benefits flow to these communities to assist them in building sustainable
development in areas such as infrastructure, education, health and enterprise.
In March 2008, Action Aid, an international NGO, published a report; "Precious
Metals, the impact of Platinum mining on poor communities". The report was
submitted to the South African Human Rights Commission ("SAHRC") to investigate
the allegations against Anglo Platinum. Two editions of a rebuttal document,
"The Facts", providing facts to refute Action Aid allegations were issued by
Anglo Platinum. The SAHRC is currently carrying on an investigation into the
allegations and Anglo Platinum has provided the SAHRC with all requested
information and are expecting a report to be issued in August 2008.
Following the Action Aid report Anglo Platinum has experienced increased
activism in the communities. The Benchmarks Foundation, a South African NGO,
published a report in May 2008 similar in focus to the Action Aid report.
However, it highlighted areas where they believed Anglo Platinum`s community
engagement process excelled including for example the high level of transparency
in reporting on community engagement and safety.
7. Minerals legislation and transformation
Anglo Platinum has made significant progress in its transformation programme.
The Anglo Platinum Kotula Trust, a R3.0 billion broad-based employee share
ownership scheme that will benefit some 46,000 employees, was launched in June
2008 and is now fully operational. The scheme represents the largest ownership
transaction in the mining industry in terms of value and number of beneficiaries
facilitating broad-based employee share participation.
During this period legal agreements relating to the previously announced Anooraq
Resources and Mvela Resources transactions were completed and signed. It is
anticipated that the Mvela Resources transaction will be effective shortly, and
the Anooraq transaction implementation will take place in the second half of
2008 following completion of the funding arrangements.
Satisfactory progress continues to be made on all other aspects of the mining
charter, details of which will be included in our annual sustainability report.
Anglo Platinum has received conversion of its mining rights as announced on 29
April 2008 and is progressing the applications relating to the Bafokeng-Rasimone
and Modikwa joint ventures.
8. Dividends
Ordinary dividends are declared after consideration of current and future
funding requirements and are paid out of cash generated from operations.
The Board has declared an interim ordinary dividend of 3,500 cents per share
resulting in a dividend cover of one on half-year headline earnings. A
preference dividend of 320 cents per preference share was paid in June 2008.
9. Market outlook
Adverse macroeconomic developments in the US and potentially in Europe, the
South African electricity constraints and rapidly rising global inflationary
trends have injected uncertainty into the PGM markets.
High platinum prices will continue to be supported by lower than anticipated
supplies from South Africa, the weak US dollar and investment demand.
Platinum auto and industrial demand remains firm with the switch to smaller cars
in the US impacting palladium more than platinum. Automobile growth in emerging
markets continues, offsetting some of the weakness in the major markets.
Consistently high prices coupled with severe price volatility this year have
reduced confidence in platinum jewellery at the trade level despite strong
consumer demand in China being increasingly satisfied by higher levels of
recycling.
Industrial demand remains steady although this sector will not escape a slowdown
in global economic growth.
Palladium auto demand is steady as growth in emerging economies ameliorates
declines in the USA. Palladium use in diesel catalysts continues to grow. Demand
for electronics will remain the mainstay of industrial demand. There is
continued interest in palladium as a jewellery metal, particularly as an
alternative to white gold.
The tightness in the rhodium market continues with constrained supply and strong
autocatalyst and industrial demand offsetting heightened thrifting activity.
10. Prospects
Management continues to vigorously address unit costs. The emphasis on
increasing volumes and improving operating efficiencies remains a driver of
performance at operations. Key risks affecting future output include the impact
of constrained electricity supply on production and expansion projects, the
ongoing skills shortage and production stoppages related to safety. Anglo
Platinum`s commitment to employee safety will continue to be an area of focus.
Mining output in the second half of 2008 will increase significantly as
Amandelbult and the Turffontein shaft have returned to full production and the
Mogalakwena North project ramp-up is almost complete. Smelter availability for
the balance of 2008 will assist in reducing pipeline stocks accumulated at the
half-year. Consequently the outlook for refined platinum production remains 2.4
million ounces in 2008.
T M F Phaswana N F Nicolau Johannesburg
(Chairman) (Chief Executive Officer) 25 July 2008
DECLARATION OF INTERIM ORDINARY DIVIDEND (NO. 111)
Notice is hereby given that an interim dividend of 3 500 cents per ordinary
share, in the currency of the Republic of South Africa, has been declared in
respect of the six months ended 30 June 2008. The dividend is payable to
shareholders recorded in the books of the Company at the close of business on
Friday, 22 August 2008.
The salient dates for the interim
ordinary dividend are as follows:
Salient Dates for South Africa and 2008
United Kingdom
Last day to trade (cum dividend) Friday, 15 August
First day of trading (ex dividend) Monday, 18 August
Currency conversion date (for sterling Tuesday, 19 August
payments from London)
Record date Friday, 22 August
Payment date Monday, 25 August
Share certificates may not be dematerialised or re-materialised and no
conversion of preference shares into ordinary shares will be permitted between
Monday, 18 August 2008 and Friday, 22 August 2008, both days inclusive, nor may
transfers take place between the South African and United Kingdom share
registers during this period.
On Monday, 25 August 2008, the dividend will be electronically transferred to
the bank accounts of all certificated shareholders where this facility is
available. Where electronic fund transfer is either not available or not elected
by the shareholder, cheques dated Monday, 25 August 2008 will be posted on that
date.
Holders of dematerialised shares will have their accounts credited at their CSDP
or broker on Monday, 25 August 2008.
Shareholders registered on the United Kingdom register will be paid the dividend
in pounds sterling at the rate of exchange determined on Tuesday, 19 August
2008.
A further announcement stating the rand/sterling conversion rate will be
released through the relevant South African and United Kingdom news services on
Wednesday, 20 August 2008.
The dividend is payable subject to payment conditions which may be inspected at
or obtained from the Company`s Johannesburg Office or from its London
Secretaries.
By order of the Board
J D Meyer Johannesburg
Group Company 25 July 2008
Secretary
SUPPLEMENTARY INFORMATION
CONSOLIDATED STATISTICS*
Six months Six months Year
ended ended ended
30 June 30 June 31 December
TOTAL OPERATIONS 2008 2007 2007
Marketing
statistics
Average market
prices achieved
Platinum (US$/oz) 1 906 1 233 1 302
Palladium (US$/oz) 436 355 355
Rhodium (US$/oz) 5 833 4 274 4 344
Nickel (US$/lb) 12.14 19.98 17.04
US$ Basket price (US$) 3 115 2 613 2 579
(Net sales
revenue per
refined Pt ounce
sold)
Platinum (R/oz) 14 678 8 825 9 149
Palladium (R/oz) 3 354 2 530 2 499
Rhodium (R/oz) 45 005 30 584 30 593
Nickel (R/lb) 92.78 143.64 121.13
R Basket price (R) 23 989 18 706 18 167
(Net sales
revenue per
refined Pt ounce
sold)
Average exchange (R : 7.7004 7.1579 7.0431
rate achieved on US$)
sales
Exchange rate at (R : 7.8280 7.0472 6.8360
end of US$)
period/year
Financial
statistics and
ratios
Gross profit (%) 41.2 46.1 41.0
margin
Earnings before (R millions) 13 044 12 270 21 946
interest,
taxation,
depreciation and
amortisation
(EBITDA)
Operating profit (%) 66.1 67.8 58.6
to average
operating assets
Return on (%) 58.2 48.1 44.1
average
shareholders`
equity
Return on (%) 65.3 84.0 66.6
average capital
employed
Interest cover - 27.4 75.2 54.6
EBITDA
Net asset value (R) 135.1 127.7 121.7
per ordinary
share
Net debt to (%) 14.8 - 13.1
total capital
employed
Interest-bearing (%) 32.4 3.6 28.4
debt to
shareholders`
equity
Cost of sales (R) 14 247 10 087 10 711
per total Pt oz
sold
Cash operating (R) 10 498 7 200 8 181
cost per
equivalent Pt oz
(excluding
ounces from
purchased
concentrate and
associated
costs)
Cash operating (R) 11 869 7 645 8 129
cost per refined
Pt oz
Equivalent (thousands) (oz) 1 128.2 1 274.0 2 471.4
refined
platinum
production
Gain in ounces (thousands) (oz) 46.8 9.8 9.8
indicated by
physical stock
count
Refined (thousands) (oz) (1 001.1) (1 193.7) (2 474.0)
platinum
production
Mining (thousands) (oz) (810.5) (1 062.7) (2 164.0)
Purchase of (thousands) (oz) (190.6) (131.0) (310.0)
concentrate
-------- -------- ---------
Platinum (thousands) (oz) 173.9 90.1 7.2
pipeline
movement
-------- -------- ---------
* Not reviewed or audited
REGISTERED OFFICE
55 Marshall Street, Johannesburg, 2001
(P.O. Box 62179, Marshalltown, 2107)
Facsimile +27 11 373-5111
Telephone +27 11 373-6111
SOUTH AFRICAN REGISTRARS
Computershare Investor Services (Pty) Limited
(Registration No. 2004/003647/07)
70 Marshall Street, Johannesburg, 2001
(P.O. Box 61051, Marshalltown, 2107)
Facsimile +27 11 688-5221
Telephone +27 11 370-5000
LONDON SECRETARIES
Anglo American Services (UK) Ltd,
20 Carlton House Terrace, London, SW1Y 5AN, England
Facsimile +44 207 968-8755
Telephone +44 207 968-8888
UNITED KINGDOM REGISTRARS
Capita Registrars Limited
The Registry, 34 Beckenham Road,
Beckenham, Kent, BR3 4TU, England
Facsimile +44 208 639-2142
Telephone +44 870 162-3100 (within UK)
+44 208 639-2157 (outside UK)
Detailed results are available on the Internet at: http://www.angloplatinum.com
E-mail enquiries should be directed to:
traymond@angloplat.com
DIRECTORS AND COMPANY SECRETARY
EXECUTIVE DIRECTORS: N F Nicolau (Chief Executive Officer), N B Mbazima
(Zambian).
NON-EXECUTIVE DIRECTORS: T M F Phaswana (Chairman), P M Baum, C B Carroll
(American), R J King (British),R Medori (French), A E Redman (British).
INDEPENDENT NON-EXECUTIVE DIRECTORS: T A Wixley (Deputy Chairman), R M W Dunne
(British), Dr B A Khumalo, M V Moosa, S E N Sebotsa.
ALTERNATE DIRECTORS: P G Whitcutt.
GROUP COMPANY SECRETARY: J D Meyer.
WORLD LEADER IN PLATINUM
Date: 28/07/2008 09:00:01 Produced by the JSE SENS Department.
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