| Fri 20 Feb 2009, 9:00 | | AGL - Anglo American plc - Anglo American announces underlying earnings of $5.2 |
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AGL
ANAAL
AGL - Anglo American plc - Anglo American announces underlying earnings of $5.2
billion
Anglo American plc
(Incorporated in the United Kingdom)
Registration number: 3564138
Share code: AGL
ISIN: GB00B1XZS820
(the "Company")
Anglo American announces underlying earnings of $5.2 billion
Financial results
Group operating profit(1) of $10.1 billion, with operating profit from core
operations(2) up 10% to $9.8 billion
Total Group underlying earnings(3) of $5.2 billion, down 9%
Total Group underlying earnings per share of $4.36, down 1%
Strong performances from Coal and Ferrous Metals, with increased production
of coal and iron ore
Total Group profit attributable to equity shareholders down 29% at $5.2
billion
Significant input cost pressures partially mitigated by cost savings of $348
million
Year end net debt(4) of $11.0 billion
Committed undrawn bank facilities and cash(5) of over $7 billion at 31
December 2008
Decisive action and superior performance to position Anglo American through the
cycle
$2 billion target from cost saving and efficiency initiatives:
- Asset optimisation to deliver $1 billion contribution to operating profit by
2011
- Procurement and shared services savings on track for $1 billion by 2011
2009 capital expenditure reduced by more than 50% to $4.5 billion
- Major strategic world-class projects preserved (Los Bronces, Barro Alto,
Minas-Rio)
- Flexible growth options retained
Production growth from certain operations scaled back to meet lower demand
outlook
- ready to make further cuts, as required
Global headcount reduction of 19,000 under way, in line with revised growth
plans
Share buyback suspended
Dividend
Dividend payments suspended; total dividend for the year of 44 cents per
share
Safeguarding balance sheet flexibility to preserve growth options
Commitment to resume dividend payments as soon as market conditions allow
Delivering safe production
Safety - good progress, with changes to safety practices delivering results:
- 17% improvement in Lost Time Injury rates, with trend continuing
- 33% reduction in the number of fatalities
HIGHLIGHTS FOR THE YEAR ENDED 31
DECEMBER 2008 Year ended Year ended
US$ million, except per share
amounts 31 Dec 2008 31 Dec 2007 Change
Total Group revenue including
associates (6) 32,964 35,674 (7.6)%
Operating profit including
associates before special items and
remeasurements - core continuing
operations (1)(2) 9,765 8,894 9.8%
Operating profit including
associates before special items and
remeasurements - total Group (1) 10,085 10,116 (0.3)%
Underlying earnings for the year -
total Group (3) 5,237 5,761 (9.1)%
EBITDA - total Group (7) 11,847 12,132 (2.3)%
Net cash inflows from operating
activities - total Group 8,065 7,264 11.0%
Profit for the year attributable to
equity shareholders - total Group 5,215 7,304 (28.6)%
Earnings per share (US$): (3)
Basic earnings per share - total
Group 4.34 5.58 (22.2)%
Underlying earnings per share -
total Group 4.36 4.40 (0.9)%
Interim dividend (US cents per share) 44 38 15.8%
Recommended final dividend - 86
Total dividend for the year 44 124 (64.5)%
In 2007, total Group included the results of AngloGold Ashanti and the Paper
and Packaging business (Mondi).
(1) Operating profit includes share of associates` operating profit (before
share of associates` interest, tax and minority interests) and is before
special items and remeasurements, unless otherwise stated. See note 4 to the
condensed financial statements for operating profit on a total Group basis. For
the definition of special items and remeasurements see note 6 to the condensed
financial statements and see note 17 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 Manganese and
Anglo Ferrous Brazil), Coal and Diamonds. See the summary income statement 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 condensed financial statements for basis of calculation
of underlying earnings and see note 17 for information on discontinued
operations (which contributed $284 million to underlying earnings in 2007).
(4) Net debt excludes hedges but includes the net debt in disposal groups. See
note 11 to the condensed financial statements.
(5) After taking account of commercial paper maturing throughout 2009 of $1.1
billion.
(6) Represents total Group revenue (including the revenue of discontinued
operations) and includes the Group`s share of associates` revenue of $6,653
million (2007: $6,142 million). See note 3 and note 17 (for discontinued
operations) to the condensed financial statements. Discontinued operations
contributed revenue of $5,115 million in 2007.
(7) EBITDA is operating profit before special items, remeasurements,
depreciation and amortisation in subsidiaries and joint ventures and share of
EBITDA of associates. See note 12 to the condensed financial statements for
analysis of EBITDA by continuing and discontinued operations.
Cynthia Carroll, chief executive, said:
"Overall, Anglo American delivered a solid performance in 2008 - a year that
saw the end of a lengthy period of highly supportive commodity prices as the
trajectory of the global economy turned sharply downwards during the second
half. We achieved operating profit of $10.1 billion and underlying earnings of
$5.2 billion, with strong performances from our coal, iron ore and manganese
businesses.
The breadth and severity of the global economic downturn and its impact on
growth rates in key sectors and economies are difficult to overstate. From
global automotive production to construction activity in emerging markets,
there was a marked contrast between the first and second halves of 2008, when
commodity prices fell sharply. As we begin 2009, the economic outlook remains
weak, with limited visibility and we are continuing to experience volatility
and downward pressure on commodity prices. Against this backdrop, we have acted
decisively to position the Group through the downturn, including pulling back
planned production growth, reducing the size of our workforce by 19,000 by the
end of 2009 in line with our revised production and growth plans and further
cost cutting throughout the Group. These actions are necessary to ensure that
Anglo American is well positioned through the cycle, both operationally and
financially, to continue to deliver long term value to our shareholders.
In December, we announced that capital expenditure plans for 2009 would be
scaled back by some 50% in response to the changed economic outlook. We
nevertheless remain committed to our long term strategy and will continue to
allocate capital to our existing businesses and the advancement of our
portfolio of high quality development projects. Despite the current economic
environment, we have confidence in the fundamentals and long term outlook for
our core commodities. We therefore believe that our projects remain a key
driver of future value creation for shareholders, with several projects well
timed to enter production from 2011 onwards.
The three key cost-saving and efficiency initiatives that we have put in place
over the last 18 months are well advanced and are already beginning to make an
important contribution to our financial and operating performance. Such
disciplines are particularly valuable during these times. The asset
optimisation programme has been rolled out across the Group and is expected to
contribute a significant uplift to operating profit of some $1 billion over the
next three years. This is in addition to the expected $1 billion in savings by
2011 we have announced from our procurement and shared services initiatives,
which have already delivered value of over $200 million in savings in 2008.
While the global economy continues to face unprecedented challenges and, with
severely constrained financing markets, it is critical for us to safeguard
balance sheet flexibility as far as possible. Notwithstanding the other
measures we have taken, the Board has decided to suspend dividend payments in
order to preserve the Group`s strategic growth options.
We made further strategic progress during 2008, including the significant
achievement of securing `new order` mineral rights across our mining businesses
in South Africa. We made further disposals of non-core assets, including the
sale of the Group`s investment in China Shenhua Energy for $704 million, the
sale of Tarmac Iberia for $186 million and the sale of Namakwa Sands and 26% of
both Black Mountain and Gamsberg to Exxaro Resources for a total of $353
million. During the year, we also advanced our long term iron ore growth
strategy by securing control of the Minas-Rio project and the Amapa iron ore
system in Brazil. Minas-Rio has multi-phase expansion potential, the first
phase of which is due to begin production in 2012. In recent weeks, we have
also reduced our shareholding in AngloGold Ashanti to 11.8%, realising total
proceeds of $434 million.
I am encouraged by the much improved safety record of the Group over the last
year. Of particular note was the significant reduction in the number of fatal
incidents, though there is much work still to do. The changes we have made
across Anglo American and in collaboration with the South African government,
unions and the mining industry, are saving lives and reducing injury rates and
we must continue to do all we can to progress towards our ultimate goal of Zero
Harm.
Anglo American has a world class asset base with long life, low cost mines and
a strong and geographically diverse project pipeline across the most attractive
commodity segments. In light of the many challenges faced by the global economy
and by the mining sector during the second half of 2008 and expected to
continue during 2009, we have taken decisive action to position Anglo American
through the downturn and to emerge in robust shape, ready to capitalise on the
next phase of economic growth."
Review of 2008
Financial results
Anglo American`s Group underlying earnings were $5.2 billion. Strong
performances came from Ferrous Metals and Coal which achieved significantly
higher operating profit in the year. Operating profit from the Group`s core
operations was 10% higher than for the prior year at $9.8 billion. Platinum
recorded lower operating profit due to lower sales volumes and higher costs;
Base Metals` operating profit was impacted by lower achieved prices; and
Industrial Minerals suffered from the downturn in the UK housing market.
Base Metals generated an operating profit of $2,505 million (26% of Anglo
American`s total operating profit from core operations), down 42% due to
sharply lower copper, nickel, zinc and lead prices, lower overall sales volumes
and rises in input costs.
Platinum reported operating profit of $2,226 million (23% of Anglo American`s
total operating profit from core operations), down 17%, due to lower metal
sales and higher key input costs, partially offset by a higher achieved basket
price of metals sold and a weaker average rand against the US dollar.
Ferrous Metals reported a record operating profit of $2,935 million, up 105%,
with operating profit from core businesses up 135% to $2,843 million (29% of
Anglo American`s total operating profit from core operations), mainly due to
higher iron ore sales volumes and higher iron ore, manganese ore and alloy
prices.
Coal had record operating profit of $2,240 million (23% of Anglo American`s
total operating profit from core operations), 265% higher, mainly due to higher
prices for both thermal and metallurgical export coal, higher production and
the benefits of tighter operational discipline.
Diamonds recorded attributable operating profit of $508 million (5% of Anglo
American`s total operating profit from core operations), up 5%, principally due
to the steady increase in the price of diamonds during the first seven months
of the year.
Industrial Minerals` operating profit fell 52% to $228 million, reflecting the
difficult trading conditions in the UK, particularly in the second half of the
year, as well as the impact of significant cost increases.
Production
Record production of coal and iron ore was achieved. Platinum production
volumes from mining operations were lower than the prior year due to flooding
at the Amandelbult mine, suspension of operations to rehabilitate shaft
steelwork at Turffontein, electricity supply constraints and throughput
challenges at Mogalakwena. Refined platinum met its mid year production
targets, though was below 2007 levels due to run-outs at the Polokwane and
Waterval smelters. Base Metals` production was down for all key products, with
nickel production significantly lower following strike action and knock-on
operational difficulties and power outages at Loma de Niquel and copper
production impacted by lower ore grades and challenging rock stability
conditions at El Soldado.
Capital structure
Net debt, excluding hedges but including net cash of $8 million in disposal
groups, increased by $5,804 million in the year and at 31 December 2008
amounted to $11,043 million, reflecting $5.3 billion funding the acquisition of
the controlling interest and subsequently the acquisition of 97% of the
remaining minorities in Anglo Ferrous Brazil SA, the purchase of additional
shares in Anglo Platinum Limited and an increase in planned capital
expenditure. This was partly offset by proceeds from disposal of the equity
interest in China Shenhua Energy for $704 million. The $4 billion share buyback
programme announced in August 2007 has been suspended with around $1.7 billion
of shares having been repurchased.
In addition to the Group`s existing funding requirements, the shareholders of
De Beers have agreed to provide loans to De Beers, proportionate to their
shareholdings, totalling $500 million in 2009. Anglo American holds a 45%
interest in De Beers and will therefore provide a loan of $225 million.
Dividends
In light of the abrupt decline in commodity prices, the unprecedented
challenges facing the global economy and the critical importance of preserving
sufficient balance sheet flexibility in order to fund the Group`s strategic
growth projects in the context of the current challenging financing
environment, the Group has suspended dividend payments and will not pay a final
dividend for 2008. Total dividends for the year will therefore be 44 cents per
share (2007: 124 cents per share). The Board will continue to review the
Group`s financial position and is committed to the resumption of dividend
payments as soon as market conditions allow.
Positioning Anglo American through the cycle
In response to the worsening economic conditions during the second half of
2008, Anglo American completed a thorough review of its capital expenditure
programme. Planned capital expenditure for 2009 was reduced by more than 50% to
$4.5 billion. This substantial reduction will be achieved principally by
rescheduling capital expenditure on many of the Group`s major development
projects. The $3.2 billion of capital expenditure that will be spent on the
Group`s projects in 2009 will enable their continuing development without
incurring undue delays or penalties that may impact their investment cases,
balancing necessary short term action in the context of the long term nature of
the mining industry. These projects are a key driver of Anglo American`s long
term growth and several are well timed to enter production from 2011 onwards.
Stay-in-business capital expenditure for 2009 was reduced to $1.3 billion,
equal to 64% of depreciation.
In line with the Group`s revised production, growth and project development
plans, worldwide headcount will be reduced by 19,000 by the end of 2009,
achieved predominantly through a combination of natural attrition, scaling back
contractor arrangements and redundancies. Cuts to production growth at existing
operations reflect the weaker demand prospects, while further cost initiatives
are under way at the corporate offices to reduce ongoing costs.
The Group`s pipeline of high quality growth and development projects is focused
on the most attractive commodity segments of iron ore, metallurgical coal and
copper, in addition to further expansion options in platinum and diamonds.
While much reduced capital investment is planned during 2009 and many projects
have seen the timing of their development adjusted to reflect the current weak
conditions, a high degree of flexibility of project timing will be retained in
order to enable appropriate reactions to changing market conditions. Anglo
American is ensuring that it is positioned optimally for the next period of
upward momentum in the cycle.
Delivering operational excellence and safe production
Anglo American is well advanced with a number of Group-wide initiatives to
deliver superior operating performance. Excellent early progress has been made
in terms of operational efficiencies and performance benchmarking through the
asset optimisation programme and it is expected that these will deliver
approximately $1 billion of uplift to operating profit by 2011. This uplift is
in addition to Anglo American`s shared services and supply chain performance,
which has delivered over $200 million of cost savings during 2008 and are on
track to achieve savings of $1 billion by 2011.
The changes made to the Group`s safety practices in 2007 and a renewed
commitment to a new level of safety performance have delivered results in 2008
and Anglo American is helping to lead the way, particularly in South Africa, to
achieve a safer, more productive mining industry. In April, the Anglo
Tripartite Safety Summit was held in Johannesburg, bringing together
government, unions and the industry to unlock and leverage potential in working
together to tackle some of the critical issues around mining safety in South
Africa.
The Group has achieved a year-on-year reduction of 17% in lost time incidents
at its operations, with extended periods of incident free, safe production.
2008 also saw an improvement in terms of a 33% reduction in the number of
fatalities at our operations. During the year 27 people died while on company
business, compared with 40 fatalities during 2007; this is a significant step
in the right direction, but there is still a long way to go. Of particular note
is Anglo Platinum`s Union Mine in South Africa, which has achieved more than
six million Fatality Free Shifts, and the Barro Alto nickel project and Anglo
Ferrous Brazil which achieved 966 days and 3.5 million hours respectively
without a Lost Time Injury. The implementation of global Fatal Risk Standards
and the successful roll-out of the global safety risk management programme are
helping to ensure a systematic approach to managing safety and preventing
incidents as Anglo American continues on its journey towards "Zero Harm".
As part of the extensive cultural change that has been implemented throughout
Anglo American, several senior management changes have been made during 2008,
marking a significant strengthening of the leadership team, involving a
combination of internal and external appointments. These have included new CEOs
for Anglo Platinum, Anglo Coal and Kumba Iron Ore.
Delivering strategic objectives
In pursuit of Anglo American`s ambition of becoming the leading global mining
company, further strategic progress has been made to focus the business on its
core mining portfolio, by making disposals of non-core assets, securing new
order mining rights across its businesses in South Africa and positioning the
Group for profitable growth.
In April, Anglo American was granted its new order mining rights conversions by
the South African Department of Minerals and Energy. The conversions relate to
the mineral rights across Anglo American`s South African businesses. This
significant achievement provides an ever stronger platform for the Group`s long
term development projects in South Africa, its employees and contractors, as
well as for the many black empowered businesses with which it is partnered.
In May, the Company disposed of its interest in China Shenhua Energy, realising
cash proceeds of $704 million and in June, the sale of Tarmac Iberia to Holcim
was announced for a consideration of $186 million. The Tarmac group continues
to be managed to maximise shareholder value while options for its sale continue
to be explored, recognising that the sale of a business of its scale is
unlikely in the near term.
In August, following a series of transactions in 2007 and 2008, Anglo American
acquired control of the Minas-Rio iron ore project and the Amapa iron ore
system. The Minas-Rio project has considerable expansion potential and is a key
element in the Group`s long term iron ore growth ambitions.
In October, the sale of the Namakwa Sands mineral sands business was completed
and, in November, the sale of 26% interests in both the Black Mountain zinc,
lead and copper operation and the Gamsberg zinc project to Exxaro Resources
were completed for a total consideration of approximately $353 million.
After the year end, Anglo American reduced its shareholding in AngloGold
Ashanti to 11.8%, realising total proceeds of $434 million.
Early in the year, mining production in South Africa was severely disrupted for
a short time due to national electricity supply problems. While the crisis was
averted through collaboration and consensus across the mining industry,
resulting in reduced power usage, Anglo American is continuing to play an
important role, working in partnership with the South African government and
Eskom to develop and implement long term solutions to guarantee electricity
supply.
Outlook
As a result of the global economic slowdown, the second half of 2008 saw
markedly lower commodity prices, following several years of highly supportive
prices. Across the industry, there has been curtailment of some high cost
operations in markets where prices and demand have declined significantly, for
example in nickel, platinum, iron ore and coking coal, while the difficult
financing environment is expected to continue to impact the funding and timing
of many potential new mines and expansions by both major and junior miners,
thereby having the potential to further constrain future supply when economic
growth returns.
The world economy faces an unprecedented level of uncertainty and the outlook
remains poor in the near term, with expectations for continuing volatility and
weakness in commodity prices. It is against this backdrop that Anglo American
has taken a series of measures to ensure that the Group`s operating and cost
profiles are appropriate and that its balance sheet and capital structure have
sufficient flexibility through the current downturn. However, over the medium
to long term, Anglo American believes that the fundamentals of its core
commodities remain attractive, with significant value to be created by the
Group`s long life, low cost growth projects, several of which are timed to
enter production from 2011. The economic recovery of the OECD member countries
and the ongoing industrialisation of the world`s major developing markets are
expected to drive long term demand for commodities, stimulated further by
government spending programmes in many major economies, including the US and
China.
Selected major projects
Completed in 2008
Completion
Sector Project Country date
Base Metals Collahuasi Chile Q4 2008
debottlenecking
Diamonds Snap Lake Canada Q4 2008
Victor Canada Q3 2008
Voorspoed South Africa Q4 2008
Coal Dawson Australia Q4 2008
Capex
Sector Project $m (1) Production volume (2)
Base Metals Collahuasi 66 31 ktpa copper (3)
debottlenecking
Diamonds Snap Lake 796 1.6 million carats pa
Victor 834 0.6 million carats pa
Voorspoed 185 0.7 million carats pa
Coal Dawson 839 5.7 Mtpa coking, emi-soft and
thermal
Approved
First Full
production production
Sector Project Country date date
Platinum (4) Mototolo JV South Africa Q4 2006 Q2 2009
Marikana JV South Africa Q1 2006 Q1 2009
Mogalakwena North South Africa Q4 2007 Q2 2010
expansion(5)
Mogalakwena North South Africa Q4 2007 Q2 2010
replacement(5)
MC plant capacity South Africa Q3 2009 Q3 2009
expansion - phase 1
Mainstream inert grind South Africa Q4 2009 Q3 2010
projects
Lebowa Brakfontein South Africa Q2 2008 Q1 2011
Merensky
Slag cleaning furnace 2 South Africa Q4 2009 Q4 2010
Base metals refinery South Africa Q3 2009 Q3 2010
expansion
Amandelbult East Upper South Africa Q3 2007 Q4 2012
UG2
Townlands ore South Africa Q4 2007 Q4 2015
replacement
Paardekraal South Africa Q2 2010 Q2 2015
Twickenham South Africa Q4 2011 Q4 2016
Amandelbult No 4 shaft South Africa Q1 2012 Q1 2019
project
Styldrift Merensky phase 1 South Africa Q2 2017 Q2 2018
Base Metals Barro Alto Brazil Q1 2011 Q3 2012
Los Bronces expansion Chile Q4 2011 Q4 2012
Ferrous Sishen expansion South Africa Q4 2007 Q4 2009
Metals (7)
Minas-Rio phase 1 Brazil Q2 2012 Q3 2013
Sishen South South Africa H1 2012 Q1 2013
Coal Lake Lindsay Australia Q4 2007 Q1 2009
Mafube South Africa Q4 2007 Q2 2008
Cerrejon Colombia Q1 2007 Q1 2009
MacWest South Africa Q3 2008 Q1 2009
Zondagsfontein South Africa Q2 2009 Q4 2010
Capex
Sector Project $m (1) Production volume (2)
Platinum (4) Mototolo JV 200 130 kozpa refined platinum
Marikana JV 36 145 kozpa refined platinum
692 230 kozpa refined platinum
Mogalakwena North
expansion(5)
Mogalakwena North 230 Replace 200 kozpa refined
replacement(5) platinum
MC plant capacity 80 11 ktpa waterval converter
expansion - phase 1 matte
Mainstream inert grind 188 Improve process recoveries
projects
Lebowa Brakfontein 179 Replace 108 kozpa refined
Merensky platinum
Slag cleaning furnace 2 134 650 tpd increased slag
cleaning capacity
Base metals refinery 279 11 ktpa nickel
expansion
Amandelbult East Upper 224 100 kozpa refined platinum
UG2
Townlands ore 139 Replace 70 kozpa refined
replacement platinum
Paardekraal 316 Replace 120 kozpa refined
platinum
Twickenham 800 180 kozpa refined platinum
Amandelbult No 4 shaft 1,602 Replace 271 kozpa refined
project platinum
Styldrift Merensky phase 1 1,621 245 kozpa refined platinum
Base Metals Barro Alto 1,600 - 36 ktpa nickel
1,800
Los Bronces expansion 2,200 - 173 ktpa copper (3)(6)
2,500
Ferrous Sishen expansion 588 13.0 Mtpa iron ore
Metals (7)
Minas-Rio phase 1 3,627 26.5 Mtpa iron ore pellet feed
(wet basis)
Sishen South 924 9.0 Mtpa iron ore
Coal Lake Lindsay 726 4.0 Mtpa coking & semi-soft
Mafube 214 5.4 Mtpa thermal
Cerrejon 134 3.0 Mtpa (2nd stage) thermal
MacWest 49 2.7 Mtpa thermal
Zondagsfontein 473 6.6 Mtpa thermal
Future unapproved
First Full
production production
Sector Project Country date date
Base Metals Goias II Brazil 2013 2014
Quellaveco Peru 2014 2016
Gamsberg South Africa 2016 2018
Jacare Phase I Brazil 2015 2017
Collahuasi expansion phase 1 Chile 2010 2011
Morro Sem Bone Brazil 2016 2018
Michiquillay Peru TBD TBD
Pebble US TBD TBD
Ferrous Sishen Expansion Project
Metals (7) phase 1B South Africa 2010 2010
Sishen Expansion Project 2 South Africa 2013 2014
Sishen C Grade South Africa 2013 2014
Sishen Pellet South Africa 2014 2015
Minas-Rio phase 2 Brazil TBD TBD
Coal Heidelberg opencast South Africa 2010 2010
Elders opencast South Africa 2011 2011
Elders underground South Africa 2011 2012
Cerrejon P40 Colombia 2012 2014
New Largo South Africa 2012 2015
Heidelberg underground South Africa 2013 2014
Sector Project Capex $m Production volume (2)
Base Metals Goias II 1,915 Fertiliser (8)
Quellaveco 2,500-3,000 225 ktpa copper(3)
Gamsberg 1,930 400 ktpa zinc
Jacare Phase I 2,200 40 ktpa nickel
Collahuasi expansion phase 1 450 485 ktpa copper(3)
Morro Sem Bone 1,670 32 ktpa nickel (9)
Michiquillay TBD 300 ktpa copper(3)
Pebble TBD 350 ktpa copper(3)
Ferrous Sishen Expansion Project
Metals (7) phase 1B 60 0.4 Mtpa iron ore
Sishen Expansion Project 2 1,180 10.0 Mtpa iron ore
Sishen C Grade TBD 10.0 Mtpa iron ore
Sishen Pellet 590 2.0 Mtpa iron ore
pellets
Minas-Rio phase 2 TBD 26.5 Mtpa pellet
feed (wet basis)
Coal Heidelberg opencast 30 0.9 Mtpa thermal
Elders opencast 475 6.4 Mtpa thermal
Elders underground 225 3.2 Mtpa thermal
Cerrejon P40 1,065 8.0 Mtpa thermal
New Largo 660 14.7 Mtpa thermal
Heidelberg underground 290 4.2 Mtpa thermal
The Group has a number of other projects under evaluation including Der
Brochen, Waterval Phase 5, Frank Ore Replacement UG2, Turffontein Ore
Replacement UG2, Union Deep Shaft Project, BRPM Phase 3 UG2 and MR North shaft,
Pandora JV and Ga-Phasa JV in Platinum, Cerreon P50 in Coal and Gahcho Kue in
Diamonds.
(1) Capital expenditure shown on 100% basis in nominal terms. Platinum projects
reflect approved capex.
(2) Represents 100% of average incremental or replacement production, at full
production, unless otherwise stated.
(3) Pebble will produce molybdenum and gold by-products, Michiquillay will
produce molybdenum, gold and silver by-products and other projects will produce
molybdenum and silver by-products.
(4) Anglo Platinum has rescheduled the timing of projects to match the 2009
production volume of 2.4 million ounces and project expenditure of $600
million. The impact of spending beyond 2009 is currently under review.
(5) Mogalakwena was formerly known as PPRust.
(6) Production represents average over first 10 years of the project.
(7) Ferrous Metals projects, shown in the table above on a nominal basis, were
expressed in real terms at the interim. Had they been expressed in nominal
terms the capex forecasts would have been:
$m $m
Approved
Sishen Expansion 754 797
Minas-Rio Phase 1 3,456 3,543
Sishen South 782 1,017
Future unapproved
Sishen Expansion Project 2 775 819
Sishen Pellet 338 359
(8) Incremental production of 70 ktpa DCP, 88 ktpa low analysis fertiliser and
414 ktpa high analysis fertiliser. The project will also produce sulphuric
acid, phosphoric acid and niobium.
(9) Total production of mine when project has ramped up to full production.
Further phased expansions have the potential to increase production to 1 Mtpa.
For further information, please contact:
United Kingdom
Anna Poulter, Investor Relations
Tel: +44 (0)20 7968 2155
Caroline Metcalfe, Investor Relations
Tel: +44 (0)20 7968 2192
James Wyatt-Tilby, Media Relations
Tel: +44 (0)20 7968 8759
South Africa
Pranill Ramchander, Media Relations
Tel: +27 (0)11 638 2592
Notes to editors:
Anglo American plc is one of the world`s largest mining groups. With its
subsidiaries, joint ventures and associates, it is a global leader in platinum
group metals and diamonds, with significant interests in coal, base and ferrous
metals, as well as an industrial minerals business. The Group is geographically
diverse, with operations in Africa, Europe, South and North America, Australia
and Asia. (www.angloamerican.co.uk)
Webcast of presentation:
A live webcast of the annual results presentation, starting at 10.00am UK time
on 20 February, can be accessed through the Anglo American website at
www.angloamerican.co.uk.
Note: Throughout this results announcement, `$` 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 and results of discontinued operations are
presented in note 17. Underlying earnings refers to continuing operations
unless otherwise stated and is calculated as set out in note 9 to the condensed
financial statements. 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 `Total profit from continuing
operations and associates` in note 12 to the condensed financial statements and
to `Cash inflows from operations` in the primary statements. Tonnes are metric
tons, `Mt` denotes million tonnes and `kt` denotes thousand tonnes unless
otherwise stated.
Financial review of Group results*
Group operating profit was $10,085 million, with operating profit from core
operations of $9,765 million, 10% higher than 2007. Operating profit was driven
by higher prices realised in the year, particularly for coal, iron ore,
manganese ore and alloy, platinum, rhodium, and diamonds. Higher sales volumes
of coal and iron ore also contributed, as did the favourable exchange rate of
the South African rand against the US dollar. Coal and Ferrous Metals saw very
significant increases in operating profit, to record levels, on the back of
stronger prices, increased volumes and operational efficiencies. Operating
profit from Platinum and Base Metals was lower than 2007. At Platinum, this was
due to a decrease in metal sales and higher key input costs, which were only
partly offset by the higher realised platinum and rhodium prices. The Base
Metals results were impacted by sharply lower base metals prices, particularly
in the fourth quarter as the LME copper price fell to 132 c/lb at the end of
December. The impact of prices, as well as lower overall production and sales
volumes and increased input costs, resulted in lower operating profit from the
Base Metals division.
Group underlying earnings were $5,237 million, 4% lower than the prior year on
a continuing basis. Underlying earnings from core operations were in line with
2007. Underlying earnings reflect the operational results discussed above, an
increase in net finance costs due to higher interest as the result of an
increase in debt levels, as well as an increase in the effective tax rate.
Group underlying earnings per share were $4.36 compared with $4.18 in 2007 on a
continuing basis, reflecting the lower weighted average number of shares as a
result of the share buyback programme.
Underlying earnings Year ended Year ended
$ million 31 Dec 2008 31 Dec 2007
Profit for the financial year attributable to
equity shareholders of the
Company - continuing operations 5,215 5,294
Operating special items including associates 477 713
Operating remeasurements including associates 880 (2)
Net profit on disposals including associates (1,027) (484)
Financing remeasurements including associates:
Exchange (gain)/loss on De Beers preference shares (28) 3
Unrealised net gains on non-hedge derivatives
related to net debt (8) (28)
Tax remeasurements 153 -
Tax on special items and remeasurements
including associates (264) 15
Minority interests on special items and
remeasurements including (161) (34)
associates
Underlying earnings - continuing operations 5,237 5,477
Underlying earnings - discontinued operations - 284
Underlying earnings - total Group 5,237 5,76
Underlying earnings per share ($) - continuing
operations 4.36 4.18
Underlying earnings per share ($) -
discontinued operations - 0.22
Underlying earnings per share ($) - total Group 4.36 4.40
Profit for the year after special items and remeasurements decreased by 1% to
$5,215 million compared with $5,294 million in the prior year. The decrease
reflects the results discussed above and in the chief executive`s statement, in
particular a reduction in the operational results of non core businesses, as
well as a charge of $880 million for operating remeasurements including a $760
million loss on non-hedge derivatives. This is partly offset by an increase in
net profit on disposals, lower operating special items charges, particularly in
the Group`s associates, and a net tax credit on special items and
remeasurements compared with a charge in 2007.
* Throughout the financial review, Group results are presented on a continuing
basis unless otherwise stated and therefore exclude Mondi and AngloGold Ashanti
in 2007.
The Group`s results are influenced by a variety of currencies owing to the
geographic diversity of the Group. In 2008, there was a positive exchange
variance in underlying earnings of $725 million. Results benefited from the
weaker South African rand against the US dollar with an average exchange rate
of R8.27 compared with R7.05 in 2007 as well as from the slightly weaker
Australian dollar and Chilean peso, although these were partly offset by the
overall strengthening of the Brazilian real over the year. There was a positive
impact on underlying earnings from increased prices amounting to $1,311
million, reflecting better prices for coal, iron ore, manganese ore and alloys,
platinum, rhodium and a range of Tarmac`s products, partly offset by
significantly lower base metals prices.
Summary income statement Year ended Year ended
$ million 31 Dec 2008 31 Dec 2007
Operating profit before special items and
remeasurements -
continuing operations 7,981 8,518
Operating special items (352) (251)
Operating remeasurements (779) 5
Operating profit from subsidiaries and joint
ventures 6,850 8,272
Net profit on disposals 1,009 460
Share of net income from associates -
continuing operations(1) 1,113 197
Total profit from operations and associates 8,972 8,929
Net finance costs before remeasurements (452) (137)
Financing remeasurements 51 29
Profit before tax 8,571 8,821
Income tax expense (2,451) (2,693)
Profit for the financial year - continuing
operations 6,120 6,128
Minority interests (905) (834)
Profit for the financial year attributable to
equity shareholders -
continuing operations 5,215 5,294
Profit for the financial year attributable to
equity shareholders -
discontinued operations - 2,010
Profit for the financial year attributable to
equity shareholders - total
Group 5,215 7,304
Basic earnings per share ($) - continuing
operations 4.34 4.04
Basic earnings per share ($) - discontinued
operations - 1.54
Basic earnings per share ($) - total Group 4.34 5.58
Group operating profit including associates
before special items and
remeasurements - continuing operations 10,085 9,590
Group operating profit including associates
before special items and
remeasurements - discontinued operations - 526
Group operating profit including associates
before special items and
remeasurements - total Group 10,085 10,116
(1) Operating profit from associates before
special items and remeasurements -
continuing operations 2,104 1,072
Operating special items and remeasurements (2) (226) (465)
Net profit on disposals (2) 18 24
Net finance costs (before remeasurements) (147) (85)
Financing remeasurements (2) (15) (4)
Income tax expense (after special items and
remeasurements) (606) (303)
Minority interests (after special items and
remeasurements) (15) (42)
Share of net income from associates -
continuing operations 1,113 197
(2) See note 6 to the condensed financial
statements.
Towards the beginning of this document, reference has been made to core
operations. Operations considered core to the Group are Base Metals, Platinum,
Ferrous Metals` core businesses (Kumba Iron Ore, Scaw Metals, Samancor
Manganese and Anglo Ferrous Brazil), Coal and Diamonds. The table below
reconciles operating profit from core operations to total Group operating
profit.
Operating profit Year ended Year ended
$ million 31 Dec 2008 31 Dec 2007
Base Metals 2,505 4,338
Platinum 2,226 2,697
Ferrous Metals - core businesses(1) 2,843 1,210
Coal 2,240 614
Diamonds 508 484
Corporate Activities and Exploration (557) (449)
Operating profit including associates before
special items and
remeasurements - core continuing operations 9,765 8,894
Industrial Minerals 228 474
Ferrous Metals - other businesses(1) 92 222
Operating profit including associates before
special items and
remeasurements - continuing operations 10,085 9,590
Operating profit including associates before
special items and
remeasurements - discontinued operations - 526
Operating profit including associates before
special items and
remeasurements - total Group 10,085 10,116
Underlying earnings - core continuing operations 5,011 5,031
(1)See the Ferrous Metals operations review.
Special items and remeasurements
Year ended 31 Dec 2008
Excluding
$ million associates Associates Total
Operating special
items (352) (125) (477)
Operating
remeasurements (779) (101) (880)
Operating special
items and
remeasurements (1,131) (226) (1,357)
Year ended 31 Dec 2007
Excluding
$ million associates Associates Total
Operating special
items (251) (462) (713)
Operating
remeasurements 5 (3) 2
Operating special
items and
remeasurements (246) (465) (711)
Operating special items and remeasurements, including associates, amounted to a
charge of $1,357 million. Included in operating special items of $477 million
was $393 million in respect of impairments and restructuring including a $140
million impairment relating to Base Metals assets, $91 million impairment and
restructuring relating to Tarmac assets and $79 million relating to the Group`s
share of De Beers` impairment. Also included in special items and
remeasurements were one-off costs associated with `One Anglo` initiatives of
$72 million. Operating remeasurements of $880 million principally related to
net losses on non-hedge capital expenditure derivatives held by Anglo Ferrous
Brazil and Los Bronces and an unrealised loss on an embedded derivative at
Minera Loma de Niquel.
Net profit on disposals of $1,027 million which, including associates, was $543
million higher than 2007, includes the net profit of $551 million relating to
the sale of the Group`s interest in China Shenhua Energy, $142 million relating
to the disposal of the interest in Minera Santa Rosa SCM and $101 million
relating to the disposal of Northam Platinum Limited.
Financing remeasurements including associates are made up of an unrealised net
gain of $8 million on non- hedge derivatives and a $28 million foreign exchange
gain on retranslating De Beers US dollar preference shares held by a rand
denominated entity.
Tax remeasurements amounted to a charge of $153 million related to foreign
currency translation of deferred tax balances.
Net finance costs
Net finance costs from continuing operations, excluding net remeasurement gain
of $51 million (2007: $29 million), increased to $452 million (2007: $137
million). The increase reflects higher interest costs due to the increase in
debt and higher net foreign exchange losses on net debt monetary items,
principally at Anglo Ferrous Brazil and Base Metals, partly offset by higher
interest capitalised.
Taxation
Year ended 31 Dec 2008
Associates`
Before special tax and
items and minority Including
remeasurements interests associates
$ million
(unless otherwise stated)
Profit before tax 8,832 654 9,486
Tax (2,545) (623) (3,168)
Profit for the financial
year 6,287 31 6,318
Effective tax rate
including associates (%) 33.4
Year ended 31 Dec 2007
Associates`
Before special tax and
items and minority Including
remeasurements interests associates
$ million
(unless otherwise stated)
Profit before tax 9,021 347 9,368
Tax (2,676) (305) (2,981)
Profit for the financial
year 6,345 42 6,387
Effective tax rate
including associates (%) 31.8
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 2008 was $623 million (2007:
$305 million).
The effective rate of tax before special items and remeasurements, including
share of associates` tax, on a continuing basis was 33.4%. This was an increase
from the equivalent effective rate of 31.8% in the year ended 31 December 2007.
The main reasons for this net increase are tax losses not recognised for
deferred tax purposes and changes in the geographic mix of profits around the
Group, partially offset by changes in statutory tax rates and the impact of
prior year adjustments. In addition, the 2007 rate benefited from the
availability of enhanced tax depreciation on certain assets.
Discontinued operations
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.
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 presented as discontinued.
Refer to note 17 for financial information on discontinued operations.
Balance sheet
Equity attributable to equity shareholders of the Company was $20,221 million
compared with $22,461 million at 31 December 2007. This decrease resulted
primarily from the balance sheet impact of weakening exchange rates relative to
the US dollar (in particular the rand) partly offset by the consolidation of
Amapa iron ore system and additional effective interest in the Minas-Rio iron
ore project, the proportionate consolidation of the Foxleigh joint venture and
the additional interest acquired in Anglo Platinum.
The $4 billion buyback programme announced in August 2007 was suspended, with
around $1.7 billion of shares having been repurchased.
Cash flow
Net cash inflows from operating activities were $8,065 million compared with
$6,800 million in 2007. EBITDA was $11,847 million, an increase of 6% from
$11,171 million in 2007.
Acquisition expenditure accounted for an outflow (net of cash acquired) of
$7,907 million (including settlement of related derivative instruments)
compared with $1,934 million in 2007. This included $5,282 million in respect
of the Group`s acquisition of the controlling interest and subsequent
acquisition of 97% of the remaining minorities in Anglo Ferrous Brazil SA and
$1,113 million in respect of the Group`s investment in ordinary shares in Anglo
Platinum Limited.
Proceeds from disposals totalled $1,524 million including net cash inflows on
the sale of the Namakwa Sands mineral sands operation to Exxaro of $311
million, $704 million from the sale of the Group`s holding in China Shenhua
Energy, $155 million on the sale of Tarmac Iberia and $205 million on the sale
of Northam Platinum Limited by Anglo Platinum.
Purchases of tangible assets amounted to $5,146 million, an increase of $1,215
million. Planned increases in capital expenditure by Platinum, Base Metals,
Ferrous Metals and Industrial Minerals were partly offset by lower expenditure
by Coal.
Net cash received from financing activities was $3,542 million compared with
net cash used in 2007 of $5,661 million. This primarily arose from the receipt
of $6,616 million of additional borrowings (an increase in the year of $3,495
million) together with a $5,507 million reduction in cash outflow in respect of
share purchases.
Liquidity and funding
Net debt, excluding hedges but including net debt of disposal groups (net cash
of $8 million), was $11,043 million, an increase of $5,804 million from 31
December 2007. The increase reflects planned capital expenditure on projects in
Platinum, Base Metals, Ferrous Metals and Industrial Minerals, debt taken on to
fund the acquisition of the controlling interest and subsequent acquisition of
97% of the remaining minorities in Anglo Ferrous Brazil SA and to increase the
stake in Anglo Platinum Limited. This was partly offset by operating cash
inflows and $1.5 billion proceeds from disposals.
Net debt at 31 December 2008 comprised $13,960 million of debt, partly offset
by $2,744 million of cash and cash equivalents (net of bank overdrafts) and
$173 million current financial asset investments. Net debt to total capital(1)
at 31 December 2008 was 37.8%, compared with 20.0% at 31 December 2007.
Over the last 12 months, Anglo American has issued medium and long term debt in
the Euro and sterling bond markets, in addition to arranging new bank financing
in both Europe and South Africa.
At 31 December 2008, Anglo American had undrawn bank facilities of $6.1
billion, cash deposits of $2.7 billion and commercial paper maturing throughout
2009 of $1.1 billion. Anglo American`s only significant debt repayment in the
next year is a $3 billion revolving bank facility (of which $1.1 billion was
drawn at 31 December 2008) which matures in December 2009. In addition, a GBP300
million ($500 million) Euro bond matures in December 2010.
With respect to the $3 billion facility, the intention is to refinance part or
all of the facility, subject to requirements, taking into consideration
proceeds from disposal of assets and cash flow from operations, using a variety
of sources which may include the issue of public bonds in the European and US
markets and new bank facilities.
The Group`s forecasts and projections, taking account of reasonably possible
changes in trading performance and the refinancing of the facilities above,
show that the Group will be able to operate within the level of its current
facilities.
(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.
Weighted average number of shares
The weighted average number of shares used to determine earnings per share in
2008 was 1,202 million compared to 1,309 million in 2007. This reduction
reflects the effect of the share buyback programme and the share consolidation
following the demerger of the Paper and Packaging business in July 2007.
Dividends
The Board has decided to suspend dividend payments.
Analysis of dividends
US cents per share 2008 2007
Interim dividend 44 38
Recommended final dividend - 86
Total dividends 44 124
Operations review 2008
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 2008 and 2007 are based on continuing
operations and therefore, in 2007, exclude the contribution from Mondi and
AngloGold Ashanti.
BASE METALS
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2008 31 Dec 2007
Operating profit 2,505 4,338
Copper 2,017 2,983
Nickel, Niobium, Mineral Sands and Phosphates 507 786
Zinc 136 654
Other (155) (85)
EBITDA 2,845 4,683
Net operating assets 5,474 4,989
Capital expenditure 1,494 610
Share of Group operating profit 25% 45%
Share of Group net operating assets 17% 19%
Operating profit at Base Metals of $2,505 million was some 42% lower than the
previous year. This followed sharply lower copper, nickel, zinc and lead
prices, including a significant $591 million adverse mark to market and final
liquidation adjustment due to lower realised copper prices on revenue initially
recognised on provisionally priced sales, as well as lower copper prices at the
end of 2008. Of the negative mark to market and final liquidation adjustment,
there was a positive impact of $265 million in the first half, offset by a
negative impact of $856 million in the second half. Lower overall sales volumes
and continued rises in input costs also contributed to the reduction in
operating profit. The sale of Namakwa Sands was completed on 1 October 2008,
with that operation therefore only contributing for nine months of the year.
Markets
Average market prices (c/lb) 2008 2007
Copper 315 323
Nickel 953 1,686
Zinc 85 147
Lead 95 118
During the first nine months of 2008, the copper market continued to be tight,
with prices rising to an all time record level of 407 c/lb in July. However,
concerns about future global economic growth in the latter half of the year led
to a sharp drop in prices, with copper ending the year at 132 c/lb. Weakness in
the nickel market continued into 2008, with rising inventories (LME stocks
closing the year at a 13-year high) and declining economic sentiment, leading
to a material drop in prices. Zinc prices continued to weaken materially for
similar reasons.
Operating performance
Copper division 2008 2007
Operating profit ($m) 2,017 2,983
Attributable production (tonnes) 641,300 655,000
Los Bronces, Collahuasi and Mantoverde all increased production in 2008,
partially offsetting lower production at both El Soldado and, less so, at
Mantos Blancos. Record production was achieved at Los Bronces and Mantoverde.
Los Bronces increased output by 2% principally due to higher ore grades. The
Group`s share of Collahuasi`s production was 3% higher than for 2007 as a
result of significantly improved grades, somewhat offset by pipeline and
pumping constraints and a SAG mill motor stator failure in September.
Production at El Soldado was 32% lower as a consequence of lower ore grades,
largely owing to challenging rock stability conditions impacting sequencing in
the underground and open pit mines. Output from Mantoverde was 2% higher
following recoveries from the heap leach operations, achieving a record level.
At Mantos Blancos, production fell by 3%; while improved throughput and grades
lifted concentrate production, this was offset by lower cathode production
resulting from lower volumes of ore and enriched solution purchased from third
parties. Chagres` output fell by 11%, mainly due to the lower average grade of
concentrate treated.
Nickel, Niobium, Mineral Sands and Phosphates 2008 2007
Operating profit ($m) 507 786
Attributable nickel production (tonnes) 20,000 25,600
At Codemin, output fell 8% owing to a scheduled stoppage to reline one of the
furnaces. Sales fell 15%, reflecting the lower production and also a slowdown
in stainless steel producer offtake. At Catalao, niobium production reduced by
2% as a result of lower recoveries on ore from the Boa Vista mine. Performance
at Copebras during 2008 can be divided into two distinct phases: from January
to August, demand for all products was extremely strong and the company sold
its entire production at rising prices; from September onwards, sales volumes
and prices reduced sharply as farmers were forced to reduce or even curb
fertiliser usage completely owing to the reduced availability of credit arising
from the global economic downturn.
Loma de Niquel`s production declined by 31% following strike action and a
consequential series of operational difficulties on restarting the plant, as
well as two nationwide power outages. Sales fell 33%, partly reflecting lower
production, but also because of congestion and delays at the port, compounded
by the bankruptcy of the main shipper and a number of cancellations from
customers towards the year end.
In January 2008, Minera Loma de Niquel (MLdN) was notified of the intention of
the Venezuelan Ministry of Basic Industries and Mining (MIBAM) to cancel 13 of
its exploration and exploitation concessions due to MLdN`s alleged failure to
fulfil certain conditions of the concessions. These concessions do not include
the concessions where the current mining operations and metallurgical
facilities are located. MLdN believes that it has complied with the conditions
of these concessions and has lodged administrative appeals against the notices
of termination and is waiting for a response from MIBAM. MLdN may in the future
undertake further appeals, including with Venezuela`s Supreme Court, if MIBAM`s
ruling does not adequately protect its interests.
Anglo American and MLdN continue to strive to resolve the matter by way of
constructive dialogue; however, 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 such, Anglo American
anticipates restoration of these 13 concessions and renewal of all concessions
that expire in 2012. As a result, the Group continues to consolidate MLdN and
no impairment has been recorded for the year ended 31 December 2008.
In a separate development, the environmental permit for slag deposition expired
on 23 November 2008. Pending reissuance of the permit, MLdN implemented a short
term contingency plan to allow operations to continue by storing the slag in
various locations in the plant area. On 23 December, MLdN suspended operations,
but a satisfactory temporary alternative operating and deposition approach was
developed which enabled operations to restart on 28 January 2009.
At 31 December 2008, Anglo American`s interest in the book value of MLdN,
including its mineral rights, was $443 million (as included in the Group`s
balance sheet). In the 12 months to December 2008, MLdN`s production and
contribution to Group operating profits were respectively 10,900 tonnes of
nickel in ferronickel and $30 million. The average price of nickel in 2008 was
953 c/lb. As of 19 February 2009, the price of nickel was 447 c/lb.
Anglo American is proud of its record in Venezuela, where it has invested
substantial amounts in exploration and subsequently the construction of the
country`s only primary nickel producer. It is a major contributor to and
employer in the Venezuelan economy as well as a significant tax payer. The
operation continues, as it has always done, to work constructively with all
stakeholders - employees, local communities and government - and to the highest
sustainable development, social and environmental standards.
Zinc division 2008 2007
Operating profit ($m) 136 654
Attributable zinc production (tonnes) 340,500 343,100
Attributable lead production (tonnes) 62,900 62,100
At Skorpion, production was 3% lower owing to electricity supply constraints in
southern Africa in the first quarter, mechanical failure of a cathode crane in
the electrowinning cellhouse and industrial action. Despite tight cost control,
mine operating unit costs rose following lower production volumes and rising
input costs. At Lisheen, zinc production increased by 2% primarily as a result
of higher feed grades and improved metallurgical recoveries, but lead output
was down 21% due to lower grades and recoveries. Improvements in stope
availability and underground infrastructure at Black Mountain resulted in a 13%
increase in tonnage mined, despite the week-long unplanned stoppage of the mine
and plant in January following a power shortage in South Africa. Lower zinc
grades and recoveries resulted in zinc production decreasing by 1% to 27,900
tonnes, although lead production increased by 12% to 47,000 tonnes. The sale of
26% of Black Mountain and Gamsberg to Exxaro Resources was completed on 3
November 2008, following the successful conversion of old order to new order
mining rights.
Impairments of $78 million and $62 million were provided at Lisheen and Black
Mountain respectively.
Projects
Base Metals has a strong project pipeline which provides significant scope for
organic growth in the medium and long term. Anglo American`s review of its
capital expenditure programmes in late 2008 resulted in the decision to slow
the rate of development of the two major projects under construction, Barro
Alto and the Los Bronces expansion project.
The Barro Alto nickel project in Brazil has been delayed by a year and first
production is now planned for early 2011. Owing to pressure on project costs
and exchange rate fluctuations, total capital expenditure for the project is
now estimated at $1.6 - 1.8 billion, of which $1.2 billion has been spent and
committed.
Construction progress on the $2.2 - 2.5 billion Los Bronces expansion project
in Chile was in line with plan. Targeted commissioning has, however, now been
pushed out by eight months to late 2011. Cost pressures remain and will be
managed closely under the revised project schedule and in the context of the
changing global economic environment.
At Collahuasi, further progress was made on the 140,000 tonne per day
concentrator throughput de- bottlenecking project, which has now been
commissioned.
The revised feasibility for the Quellaveco project in Peru reached an advanced
stage of completion during the year. Resource development, community projects,
a technical review and project optimisation work are continuing. Also in Peru,
the Michiquillay project, acquired through a privatisation auction in 2007,
received the social licences from both the Michiquillay and La Encanada
communities, and will now proceed into the exploration phase.
Chagres, Mantoverde, Collahuasi and Gamsberg all have early-stage studies under
way, examining options for projects that will either increase production and/or
extend mine lives.
Outlook
In January 2009, Codelco, the Chilean mining company, did not exercise its
option to purchase up to a 49% minority interest in Anglo American Sur, the
wholly owned Group company that owns the Los Bronces and El Soldado copper
mines and the Chagres smelter. The window for exercising the option is limited
to once every three years in the month of January until January 2027. The next
such window is in January 2012.
Production of nickel, subject to operating difficulties in Venezuela, and
copper are forecast to increase in 2009, with zinc and phosphate production
remaining at similar levels to 2008. Operating margins are expected to start to
benefit from declining costs of certain key inputs, such as fuel, energy,
sulphur, sulphuric acid, ammonia and explosives.
For all base metals, a period of price weakness is anticipated due to the weak
outlook for global growth.
Across the industry, persistent supply side constraints in the case of copper
and, for nickel and zinc, the closure of operations or deferral of projects,
should support a price recovery once signs of a sustained improvement in demand
start to emerge.
PLATINUM
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2008 31 Dec 2007
Operating profit 2,226 2,697
EBITDA 2,732 3,155
Net operating assets 9,045 9,234
Capital expenditure 1,563 1,479
Share of Group operating profit 22% 28%
Share of Group net operating assets 27% 35%
Anglo Platinum`s operating profit declined by 17% to $2,226 million. This was
as a result of lower metal sales and significant increases in key input costs,
partly offset by a higher price achieved for the basket of metals sold and a
weaker average rand dollar exchange rate.
The average dollar price realised for the basket of metals sold equated to
$2,764 per platinum ounce, a 7% rise over 2007, with higher prices achieved for
platinum and rhodium making the largest contribution to the increase. The
average realised price for platinum of $1,570 per ounce was $268 or 21% above
the 2007 figure, while the achieved nickel price was sharply lower at $9.79 per
pound (2007: $17.04). Anglo Platinum successfully renegotiated the contract
sales terms for rhodium, resulting in the realised sales price of rhodium
moving closer to market prices during 2008. The average price achieved on
rhodium sales for the year was $5,174 per ounce.
Markets
2008 was a year of unprecedented price volatility in the platinum market with
platinum reaching a record of $2,276 per ounce in March before falling sharply
as economic conditions deteriorated. In the second half of the year, the global
economic downturn reduced credit availability for vehicle purchases. Anglo
Platinum estimates that demand from the autocatalyst segment decreased by more
than 8%, or 330,000 ounces, owing to the smaller number of vehicles produced
and a run-down of stock levels by major auto companies. Although not immune to
the global economic downturn, industrial demand held up reasonably well in
2008, with demand increasing in some areas such as the chemical sector as
investment in new capacity reached a peak. High prices in the first half of the
year discouraged consumer purchases of jewellery and increased the recycling of
old jewellery, thereby reducing demand for new metal. In the second half of the
year, the declining price of platinum encouraged purchases of metal by
jewellers and investors alike.
The global supply of platinum has decreased by 11%, or 740,000 ounces, over the
past two years and is not expected to increase in the current global economic
environment.
Anglo Platinum expects a balanced platinum market in 2009. It also anticipates
that the platinum price, which suffered `downside overcorrection` on negative
news flow in the second half of 2008, is likely to trade above $1,000 per ounce
on average during 2009.
Operating performance
Refined platinum production for the year of 2,386,600 ounces was 4% lower than
2007 but in line with the mid-2008 forecast.
Several factors impacted production at operations, including safety related
stoppages; the suspension of operations to rehabilitate shaft steelwork at the
Turffontein shaft of Rustenburg Mine; the disruption of operations at the
Amandelbult Mine as a result of a major flood event; electricity supply
constraints in January and the associated ramp up period when supply resumed;
commissioning delays at Mogalakwena North concentrator and lower throughput at
the Mogalakwena South concentrator; the overall expected reduction in built-up
head grade; and furnace run-outs at the Polokwane and Waterval smelters.
These reductions were largely offset by an increase in purchased ounces from
the new Eland Platinum mine, which commenced delivery to Anglo Platinum in
December 2007, together with increased output from the new Mogalakwena North
pit and the Modikwa and Kroondal Platinum mines.
The cash operating cost per equivalent refined platinum ounce (in respect of
Anglo Platinum`s own mines plus its share of joint ventures) increased by 36%
to R11,093 per ounce. The increase in unit costs is attributable primarily to
above inflation pressures experienced in key input costs including labour,
diesel, chemicals, steel grinding media, explosives and cement, compounded by
reduced production from Anglo Platinum`s attributable share of mining
operations.
Anglo Platinum`s focus on safety, based on Zero Harm and a change in safety
culture, has resulted in an improvement in the safety performance across the
operations with the lost-time injury frequency rate improving by 14% to 1.74
from 2.03 in 2007. Despite the improvement, 17 employees lost their lives at
Anglo Platinum`s managed operations during the year, compared with 25 in 2007.
Safety continues to be a focus area in the company`s aspiration towards Zero
Harm through the elimination of all unsafe incidents and conditions.
Projects
The rapid decrease in revenue in the second half of 2008 led to declining
margins, increased debt levels and confirmation that global economic events
would negatively influence short term demand. In line with the Anglo American
Group, a review of the company`s capital expenditure programme was completed,
resulting in the reduction of total expected capital expenditure for 2009 to
$900 million through the deferral of expenditure across several major and
numerous smaller projects.
The criteria used to determine project expenditure deferral were to maximise
short term reductions in expenditure and minimise the delay in reaching full
production. The expected reduction in short term production arising from the
deferral of capital projects is largely expected to match the reduced demand.
The commissioning of the Mogalakwena North expansion project concentrator is
complete. Capital expenditure planned for the accelerated removal of overburden
at the new North pit has been deferred. As a result, less ore will be exposed,
thereby reducing the level of mining output originally planned for 2009.
Outlook
Notwithstanding the current uncertainty in the global resources and platinum
sectors, Anglo Platinum`s long term strategy to develop the market for platinum
group metals, expand its production into that opportunity and to conduct its
business cost-effectively and competitively remains sound.
The long term prosperity of the business is considered when taking short term
action and Anglo Platinum will continue to respond to the challenges that face
the platinum industry. Whilst the planned level of refined platinum production
of 2.4 million ounces is currently expected to be appropriate for 2009, the
Company will take appropriate action should economic conditions affecting net
platinum demand deteriorate further. Production levels will be continually
monitored against global economic developments and revised production guidance
will be provided when appropriate.
In order to maintain positive operating margins at the planned 2009 production
level of 2.4 million ounces of refined platinum, the current cost of production
will be reduced. This will be achieved through active management of the supply
chain to realise, without delay, the benefits of the significant reduction of
input commodity prices; safely reducing units of consumption where possible;
managing labour more effectively to improve efficiencies through re-skilling
and re-deployment where required; avoiding recruitment of non- critical
positions; and reducing the number of contract employees at operations.
Every effort will be made to avoid the retrenchment of permanent employees.
However, should economic conditions deteriorate further, this may become
unavoidable.
FERROUS METALS AND INDUSTRIES
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2008 31 Dec 2007
Operating profit 2,935 1,432
Kumba Iron Ore 1,618 834
Scaw Metals 274 172
Samancor Manganese 980 225
Anglo Ferrous Brazil (8) (9)
Other (21) (12)
Core businesses 2,843 1,210
Tongaat-Hulett / Hulamin 92 114
Highveld Steel - 108
Other businesses 92 222
EBITDA 3,064 1,561
Net operating assets 11,167 3,987
Capital expenditure (including biological
assets) 832 471
Share of Group operating profit 29% 15%
Share of Group net operating assets 34% 15%
Operating profit at Anglo Ferrous Metals reached a record $2,935 million, with
operating profit from its core businesses increasing by 135% to $2,843 million,
mainly due to higher iron ore sales volumes and higher iron ore, manganese ore
and alloy prices.
Markets
World crude steel production decreased by 1.2% in 2008 to 1.33 billion tonnes.
China`s steel production grew by 2.6%, with its share of global production
rising to 37.8%. However, as a result of the decline in steel demand in the
final quarter of 2008, demand for iron ore has decreased significantly,
resulting in reduced production and delays to project capital spend from major
iron ore producers.
Similarly, the manganese ore and alloy market was characterised by increasing
stocks and falling prices towards the end of the year, as steel mills delayed
or cancelled their purchases. As a result, major suppliers announced plans to
reduce production in the fourth quarter of 2008. A return to production at full
capacity will depend on improved global economic conditions.
Operating performance
Kumba Iron Ore achieved a strong financial and operational performance for the
year, with operating profit increasing by 94% to $1,618 million, principally as
a result of higher export prices, higher export sales volumes and increased
revenue from shipping operations. These improvements were offset marginally by
a 20% increase in net operating expenses, mainly due to the shipping
operations, rising costs of fuels and lubricants and broad inflationary
pressures. Production increased by 13% to 36.7 million tonnes (Mt), principally
as a result of the Sishen jig plant (Sishen expansion), which achieved
production of 4.7 Mt for the year.
Scaw Metals delivered a record operating profit of $274 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 but
they were able to successfully pass this on to its customers.
Anglo Ferrous Brazil comprises the Group`s effective 99.4% interest in the
Minas-Rio iron ore project, the effective 69.2% interest in the Amapa iron ore
system and the 49% interest in LLX Minas-Rio. The Amapa system is at a
pre-operational phase while ramping up to design capacity of 6.5 Mtpa. In 2008,
the ramp-up of operations was significantly slower than previously envisaged,
with annual production totalling 1.2 Mt. Anglo American, together with its
partner at Amapa, Cliffs Natural Resources Inc., is studying all aspects of the
mine and taking proactive steps to ensure that production is ramped up to
design capacity.
Samancor Manganese delivered record results with operating profit of $980
million, more than four times its $225 million contribution in 2007, following
a sharp increase in manganese ore and alloy prices for most of 2008.
The Tongaat-Hulett and Hulamin contribution to operating profit declined by 19%
to $92 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 2007 and for the full 12 months of 2008.
Projects
Minas-Rio`s capital expenditure programme fell behind schedule during 2008,
mainly due to the delay in obtaining several environmental licences and permits
that prevented the initiation of works, particularly at the mine and
beneficiation plant. The project also experienced delays in negotiations with
groups of landowners, thereby slowing the progress on the pipeline,
transmission line and the access roads to the port. However, a number of other
key environmental licences were granted during the year, including the
Installation Licences for the port and pipeline and the Preliminary Licences
for the beneficiation plant and the mine.
The pace of construction at Minas-Rio is driven by the timing of the
Environmental Licence and other permits, and there is therefore expected to be
a 12 to 15 month commissioning delay to the first phase of the Minas-Rio iron
ore project, with first iron ore production now expected in the second quarter
of 2012. Planned annual capacity will be 26.5 Mtpa of iron ore pellet feed at
an anticipated cost of $3.6 billion which is currently being updated following
the announced delay.
Anglo American will continue to develop the Minas-Rio iron ore project during
2009, with planned capital expenditure for the year focusing on the port and
pipeline units. The timing of the capital expenditure will be further adjusted
in accordance with the granting of the Environmental Licence and other permits.
The pre- feasibility study for the second phase of the Minas-Rio iron ore
project was initiated during 2008, a phase which will further increase Anglo
American`s long term iron ore production capacity.
Sishen`s jig plant commenced commercial production during the year, having been
commissioned at the end of 2007. Ramp-up continues and full design capacity of
13 Mtpa is expected to be achieved in the fourth quarter of 2009.
The Sishen South project, which involves the development of an opencast mine
some 80 kilometres south of Sishen mine, was approved in July 2008. Earthworks
have commenced and bulk construction is scheduled to begin with the
establishment of the major civil contracts during the first quarter of 2009.
The mine is scheduled to start production in the first half of 2012, ramping up
to full capacity of 9 Mtpa in 2013.
The $183 million GEMCO expansion project in Australia`s Northern Territory is
expected to be completed in the first half of 2009. The project is on target to
increase GEMCO`s manganese ore production capacity from 3.0 million dry metric
tonnes per annum (mdmt pa) to 4.0 mdmt pa.
Outlook
The first half of 2009 is expected to be a challenging period for sales volumes
of iron ore and manganese ore and alloys.
Kumba Iron Ore plans to increase iron ore production by approximately 10% during
2009 as the ramp up of the jig plant continues. Kumba will continue to target
customers in China in order to redirect any lower contract sales volumes in
Europe or Japan. In the short term, minor production cutbacks may be
appropriate to produce a higher quality product. More substantial production
cutbacks are dependent on the scale of demand reductions from Europe and Japan
and the extent to which these can be offset by demand from China.
Iron ore price negotiations are a key area of uncertainty in the volatile
economic conditions, though Kumba`s high quality product range and the strength
of its longstanding customer relationships are expected to enable the company
to continue its successful performance. Iron ore market fundamentals remain
robust in the medium to long term.
The market for manganese ore and alloys is dependent on the carbon steel
industry and is therefore directly impacted by the current weak steel markets.
Should global steel production decline further during 2009, manganese ore and
alloy prices are expected to remain under pressure.
Demand for Scaw Metals` products is expected to remain strong, driven by demand
from the mining and infrastructure sectors. However, profitability is likely to
remain under pressure from increasing input costs.
COAL
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2008 31 Dec 2007
Operating profit 2,240 614
South Africa 736 414
Australia 1,144 9
South America 396 227
Canada 8 -
Projects and corporate (44) (36)
EBITDA 2,585 882
Net operating assets 3,962 3,984
Capital expenditure 933 1,052
Share of Group operating profit 22% 6%
Share of Group net operating assets 12% 15%
Coal delivered a record operating profit of $2,240 million, a 265% increase
over 2007. This resulted from higher metallurgical and thermal coal prices,
combined with increased coal production totalling 99.5 Mt, weaker exchange
rates and the early benefits of tighter operational discipline across the
businesses, partially offset by further rises in the costs of royalties, fuel,
rail, labour and most key consumables.
Markets
2008 began with a very tight international metallurgical coal market, with
supply falling into deficit as a result of bad weather in Queensland which had
the effect of reducing coal production and shipping volumes during the first
quarter. These events resulted in 2008 coal prices being settled at
historically high levels. By the end of the year, however, market conditions
had deteriorated significantly, with a collapse in global steel production
leaving the metallurgical coal market oversupplied.
Demand for thermal coal remained strong in 2008 with increased consumption,
particularly in the north Asia region. Prices continued to increase during the
first half of the year, reaching a peak in early July, driven by the cold
winter in China together with numerous coal production and logistics
difficulties, including electricity shortages in South Africa. The increase in
crude oil and natural gas prices during the same period allowed thermal coal to
maintain its price competitiveness against these fuels despite the significant
coal price increases. In the last quarter of the year, the global economic
downturn caused a sharp drop in oil prices and thermal coal prices declined in
line.
Operating performance
South Africa
Operating profit from South Africa sourced coal was 78% higher at $736 million,
mainly due to the increase in export thermal prices and a weaker exchange rate.
During January 2008, South African operations were affected by Eskom load
shedding, which evolved into a national electricity crisis. Despite this,
annual production remained constant at 59.4 Mt, driven mainly by operational
efficiency and equipment improvements, higher output at Kleinkopje, where
additional coal for Eskom was produced in order to alleviate the power crisis,
as well as at Mafube, which ramped up production.
Australia
Operating profit from Australia was a record $1,144 million, largely resulting
from the significant increase in metallurgical coal prices and production,
partly offset by cost and royalty increases. Production reached record levels
of 27.8 Mt despite the delays caused by abnormal levels of rainfall in the
first quarter. Such production was achieved through implementing higher cost
volume initiatives to take advantage of market conditions and the successful
negotiation of alternative port and rail corridors in order to alleviate
expansion constraints.
South America
Operating profit from South America was 74% higher than 2007 at $396 million,
driven primarily by 33.3% held Cerrejon in Colombia. Cerrejon`s significantly
increased operating profit was offset by higher fuel prices, the appreciation
of the Colombian peso and an increase in royalties arising from higher realised
sales prices. The mine`s total sales were 6% higher at 31.5 Mt as growth
continued as planned towards the 32 Mtpa profile. In Venezuela, total sales at
Carbones del Guasare were sharply lower at 4.6 Mt following a lack of
availability of equipment, spares and ongoing political, logistical and labour
disruptions.
Canada
Peace River Coal commenced commercial production of high quality coking coal in
January 2008 at its Trend Mine in British Columbia, delivering $8 million of
operating profit in the year. Total coal production for the year was 0.8 Mt.
Projects
In South Africa, the $473 million Zondagsfontein project is under construction
and includes a 50:50 joint venture plant with BHP Billiton Energy Coal South
Africa. The project is on track to deliver 6.6 Mtpa of export and Eskom coal
from 2010, with first production expected in the second quarter of 2009. The
Mafube project achieved production rates of 5.4 Mtpa in 2008, work continues on
the housing project and the conveyor system and completion is expected in early
2009. MacWest is nearly complete, with first production achieved in July 2008
and full production of 2.7 Mtpa expected in March 2009.
In Australia, the $726 million Lake Lindsay coking coal project is progressing
well; the coal handling and preparation plant has been commissioned, having
achieved milestones on or ahead of plan, while the dragline started operations
in January 2009. The $839 million Dawson expansion project was completed in
2008. The Foxleigh mine was acquired in February 2008, delivering additional
volumes and synergies with Anglo American`s adjacent operations.
In Canada, Peace River Coal is making good progress on a $95 million
capitalisation programme to acquire and operate its own mining equipment fleet.
In Colombia, the $42 million (attributable) expansion at Cerrejon to 32 Mtpa is
complete and full production is expected to be achieved early in 2009.
Feasibility studies are under review to expand the operation to around 40 Mtpa.
Outlook
Global economic weakness has led to a rapid decline in global steel production
following falling demand from the construction and automotive sectors in
particular. This continues to have a significant impact on the metallurgical
coal market. In the thermal coal market, underlying demand remains relatively
strong, although the decline in the oil price is having a significant impact.
The outlook for 2009 for both metallurgical and thermal coal remains uncertain
in a testing macro-economic environment where global energy prices are expected
to be highly volatile.
In response to weakening markets, Coal`s plans to grow metallurgical coal
production by 10% during 2009 were curtailed and output is expected to be
marginally below 2008 levels. Should conditions change materially, Coal will
respond with further adjustments to its metallurgical coal production.
DIAMONDS
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2008 31 Dec 2007
Share of associate`s operating profit 508 484
EBITDA 665 587
Group`s aggregate investment in De Beers 1,623 1,802
Share of Group operating profit 5% 5%
The Group`s share of operating profit from De Beers rose by 5% to $508 million.
De Beers` sales for 2008 at $6,888 million (attributable $3,096 million) were
marginally above the previous year (2007: $6,836 million (attributable $3,076
million)), though below expectation owing to the impact of the global economic
downturn. Over the first nine months, the Diamond Trading Company (DTC), which
represented 86% of De Beers` total sales, achieved record sales as buoyant
demand for diamonds translated into increased prices. Fourth quarter sales
slowed as a result of the downturn and the consequent liquidity squeeze in the
key global cutting centres.
Net interest bearing debt fell to $3.55 billion (2007: $4.06 billion) as a
result of the benefits of a stronger dollar, the repayment of debt and
shareholder support. In light of the weak outlook for diamond sales, the
shareholders of De Beers have agreed to provide loans to De Beers,
proportionate to their shareholdings, totalling $500 million in 2009. Anglo
American holds a 45% interest in De Beers and will therefore provide a loan of
up to $225 million. De Beers is an associate company of Anglo American and its
debt is therefore not consolidated onto Anglo American`s balance sheet.
Markets
Global retail sales showed steady growth during the first half of 2008 driven
principally by the emerging markets of China, India and the Middle East.
However in 2008, the all important holiday period took place amidst significant
weakness in US economic sentiment, with American consumers, the world`s major
diamond purchasers, cutting back sharply on spending. The luxury goods sector
appears to have been particularly impacted, with jewellery retailers in the US
reporting double digit year-on-year declines over the traditional key buying
season between Thanksgiving and Christmas. As a result, we estimate that global
diamond retail sales were down, in the low single digits, for the year as a
whole.
Operating performance
During the year, De Beers produced 48.1 million carats (2007: 51.1 million
carats). Production from Debswana was 32.3 million carats (2007: 33.6 million
carats), Namdeb yielded 2.1 million carats (2007: 2.2 million carats), while
the output from South African operations fell to 12.0 million carats (2007:
15.0 million carats). The new Canadian operations at Snap Lake and Victor
produced 1.6 million carats (2007: 81,000 carats).
Element Six recorded total annual sales of almost $500 million for the year and
growth of 25% as a result of the inclusion of a full year`s trading in respect
of E6 Hard Materials (Barat Carbide), acquired in 2007, as well as organic
growth.
De Beers has made an impairment to goodwill of $176 million ($79 million
attributable) as well as a $82 million charge ($37 million attributable) in
relation to restructuring and retrenchment as a result of current trading
conditions.
Projects
For the first time in its history, De Beers opened three new mines in one year.
In Canada, Victor mine in northern Ontario was completed and commissioned eight
months ahead of schedule, while Snap Lake mine in the Northwest Territories
commenced commercial production in early 2008, with both mines achieving full
production in the second half. De Beers` Voorspoed mine in South Africa was
officially opened in November and is expected to produce 8.3 million carats at
an average value of $120 per carat over the next 12 to 16 years.
Outlook
The global economic crisis is having a significant impact on sales of retail
diamond jewellery, liquidity and demand for rough diamonds in the cutting
centres. This, in turn, has resulted in a reduction in sales of rough diamonds
by the DTC. Trading conditions are expected to remain challenging throughout
2009. De Beers has taken steps to significantly reduce production levels, costs
and capital expenditure across all operations. These actions, together with the
business restructuring initiatives already completed, including the disposal of
the marginal Cullinan and Williamson mines, have positioned De Beers to weather
this tough economic environment.
Recent market research from the US and China confirm that consumers` desire for
diamonds remains strong. As economic conditions improve, emerging demand,
coupled with the decline in long term diamond supply, is expected to form a
positive foundation for future increases in diamond prices.
INDUSTRIAL MINERALS
$ million Year ended Year ended
(unless otherwise stated) 31 Dec 2008 31 Dec 2007
Operating profit 228 474
EBITDA 487 732
Net operating assets 3,335 4,509
Capital expenditure 301 274
Share of Group operating profit 2% 5%
Share of Group net operating assets 10% 17%
Tarmac`s operating profit fell by 52% to $228 million compared with 2007,
mainly due to the impact of significant cost increases as well as a decline in
the UK volumes of around 20% in the second half of the year. Tarmac accelerated
cost reductions and generated operating savings of $101 million, while
maintaining its market share. As a result, Tarmac continued to make a positive
cash flow contribution with net cash inflow from operating activities of $398
million.
In the UK, operating profits fell by 65% on a like-for-like basis, with sales
falling in line with the overall market. At Tarmac International, operating
profits (excluding the positive impact of exchange rates and on a like-for-like
basis) were broadly in line with 2007, benefiting from previous expansionary
investment and relative resilience in certain markets such as Poland.
Markets
The construction industry in the UK experienced challenging market conditions
during 2008, particularly in the second half of the year with the rapid
deterioration in UK house-building activity. The volatility of energy prices
and the impact on cement and distribution costs also continued to affect the
industry. Overall in continental Europe, the decline in construction activity
has been less severe to date than in the UK.
Operating performance
Volumes in the UK aggregates and concrete products were 15-20% lower than the
prior year, with significantly reduced demand from the housing and commercial
sectors, while asphalt volumes showed more resilience, with similar volumes to
2007. Tarmac showed declines in line with the market as it maintained its
leadership positions in key areas.
The significant decline in volumes from UK Aggregate Products in the second
half prompted a portfolio right- sizing exercise. 45 operating sites have been
mothballed and further cost savings of $63 million were achieved through an
increased focus on capacity and cost reduction. Underlying operating profit for
this business fell by 42% compared with 2007 (after adjusting for the United
Marine Aggregates (UMA) acquisition and the impact of exchange). During 2008,
the remaining 50% of the UMA business was acquired from Hanson.
Within Tarmac, the UK Building Products business was affected by the economic
downturn to the greatest extent and saw underlying operating profits fall by
69% (before the impact of exchange). Mothballing six operating sites and
further cost savings of $21 million reduced the effect of weakening demand on
the business`s operating profit.
Tarmac International`s underlying operating profit (on a like-for-like basis)
was in line with 2007, with favourable market conditions in Poland and cost
savings of $17 million offsetting emerging weakness in France. Tarmac Iberia
was sold in August 2008 to Holcim for $186 million.
Following a structural review of the Industrial Mineral business by management,
as a result of trading conditions in the construction sector, restructuring and
impairments charges totalling $91 million have been recorded.
Outlook
The outlook in the short to medium term is for continued demand weakness in UK
and international markets. Tarmac will continue to take steps to adapt to
market changes through capacity reductions. Additional cost saving and a
continued focus on cash generation, while maintaining existing market
leadership, will ensure that the business remains both resilient and well
positioned for the future.
Consolidated income statement
for the year ended 31 December 2008
Before Special
special items and
items and remeasurements
remeasurements (note 6)
US$ million Note 2008 2008 2008
Group revenue 3 26,311 - 26,311
Total operating
costs (18,330) (1,131) (19,461)
Operating profit
from subsidiaries
and
joint ventures 3 7,981 (1,131) 6,850
Net profit on
disposals 6 - 1,009 1,009
Share of net income
from associates 3 1,303 (190) 1,113
Total profit from
operations and
associates 3 9,284 (312) 8,972
Investment income 589 - 589
Interest expense (850) - (850)
Other financing
(losses)/gains (191) 51 (140)
Net finance costs 7 (452) 51 (401)
Profit before tax 8,832 (261) 8,571
Income tax expense 8 (2,545) 94 (2,451)
Profit for the
financial year -
continuing
operations 6,287 (167) 6,120
Profit for the
financial year -
discontinued
operations 17 - - -
Profit for the
financial year -
total Group 6,287 (167) 6,120
Attributable to
(continuing
operations):
Minority interests 1,050 (145) 905
Equity shareholders
of the Company 4 5,237 (22) 5,215
Attributable to
(discontinued
operations):
Minority interests - - -
Equity shareholders
of the Company 4 - - -
Attributable to
(total Group):
Minority interests 1,050 (145) 905
Equity shareholders
of the Company 4 5,237 (22) 5,215
Earnings per share
(US$)
Basic - continuing
operations 9 4.34
Basic -
discontinued
operations 9 -
Basic - total Group 9 4.34
Diluted -
continuing
operations 9 4.29
Diluted -
discontinued
operations 9 -
Diluted - total
Group 9 4.29
Dividends
Proposed ordinary
dividend per share
(US cents) -
Proposed ordinary
dividend (US$
million) -
Ordinary dividends
paid during the
year
per share (US cents) 130
Ordinary dividends
paid during the
year
(US$ million) 1,538
Dividend in specie
(US$ million) -
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 616 - 616
Interest expense (797) - (797)
Other financing
(losses)/gains 44 29 73
Net finance costs 7 (137) 29 (108)
Profit before tax 9,021 (200) 8,821
Income tax expense 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 17 318 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
(US$ million) 3,718
Underlying earnings and underlying earnings per share are set out in note 9.
Consolidated balance sheet
as at 31 December 2008
US$ million Note 2008 2007
Intangible assets 3,006 1,556
Tangible assets 29,545 23,534
Environmental rehabilitation trusts 244 252
Investments in associates 3,612 3,341
Financial asset investments 3,115 4,780
Trade and other receivables 94 159
Deferred tax assets 258 474
Other financial assets (derivatives) 4 -
Other non-current assets 167 105
Total non-current assets 40,045 34,201
Inventories 2,702 2,344
Trade and other receivables 2,929 3,572
Current tax assets 471 223
Other current financial assets (derivatives) 372 535
Current financial asset investments 173 -
Cash and cash equivalents 11b 2,771 3,129
Total current assets 9,418 9,803
Assets classified as held for sale 16 275 758
Total assets 49,738 44,762
Trade and other payables (4,770) (3,950)
Short term borrowings 11b (6,784) (5,895)
Short term provisions (168) (142)
Current tax liabilities (804) (992)
Other current financial liabilities
(derivatives) (1,436) (501)
Total current liabilities (13,962) (11,480)
Medium and long term borrowings 11b (7,211) (2,404)
Retirement benefit obligations (401) (444)
Other financial liabilities (derivatives) (61) (85)
Deferred tax liabilities (4,555) (4,650)
Provisions for liabilities and charges (1,317) (1,082)
Other non-current liabilities (395) -
Total non-current liabilities (13,940) (8,665)
Liabilities directly associated with assets
classified as held for sale 16 (80) (287)
Total liabilities (27,982) (20,432)
Net assets 21,756 24,330
Equity
Called-up share capital 10 738 738
Share premium account 10 2,713 2,713
Other reserves 10 (2,057) 3,155
Retained earnings 10 18,827 15,855
Equity attributable to equity shareholders
of the Company 20,221 22,461
Minority interests 10 1,535 1,869
Total equity 21,756 24,330
The financial statements were approved by the Board of directors on 19 February
2009.
Cynthia Carroll Rene Medori
Chief executive Finance director
Consolidated cash flow statement
for the year ended 31 December 2008
US$ million Note 2008 2007
Cash inflows from continuing operations 11a 9,579 9,375
Dividends from associates 609 275
50 36
Dividends from financial asset investments
(2,173) (2,886)
Income tax paid
Net cash inflows from operating activities -
continuing operations 8,065 6,800
Net cash inflows from operating activities -
discontinued operations - 464
8,065 7,264
Net cash inflows from operating activities -
total Group
Cash flows from investing activities
Acquisition of subsidiaries, net of cash and
cash equivalents acquired(1) 14 (5,887) (772)
Investment in joint ventures 14 (609) (1,114)
Investment in associates (9) (1)
Cash flows from derivatives related to
acquisitions (661) -
Purchase of tangible assets 13 (5,146) (3,931)
Purchase of financial asset investments (741) (47)
Investment of advance received in
anticipation of disposal(2) (281) -
Loans granted (108) (108)
Interest received and other investment income 291 228
Disposal and demerger of subsidiaries, net of
cash and cash equivalents disposed 15 468 110
Sale of interests in associates 205 -
Repayment of loans and capital by associates 42 119
Proceeds from disposal of tangible assets 30 111
Proceeds from sale of financial asset
investments 851 601
Other cash flows from derivatives not related
to net debt (166) (2)
Other investing activities (29) (30)
Net cash used in investing activities -
continuing operations (11,750) (4,836)
Net cash inflows from investing activities -
discontinued operations - 2,575
Net cash used in investing activities - total
Group (11,750) (2,261)
Cash flows from financing activities
Issue of shares by subsidiaries to minority
interests 62 29
Sale of treasury shares to employees 40 134
Purchase of treasury shares (710) (6,217)
Interest paid (741) (483)
Dividends paid to minority interests (796) (728)
Dividends paid to Company shareholders (1,550) (1,538)
Receipt of short term borrowings 1,432 2,780
Receipt of medium and long term borrowings 5,184 341
Cash flows from derivatives related to net
debt 380 -
Advance received in anticipation of
disposal(2) 307 -
Other financing activities (66) 21
Net cash inflows from/(used in) financing
activities - continuing operations 3,542 (5,661)
Net cash inflows from financing activities -
discontinued operations - 692
Net cash inflows from/(used in) financing
activities - total Group 3,542 (4,969)
Net (decrease)/increase in cash and cash
equivalents (143) 34
Cash and cash equivalents at start of year 11c 3,074 2,980
Cash movements in the year (143) 34
Effects of changes in foreign exchange rates (187) 60
Cash and cash equivalents at end of year 11c 2,744 3,074
(1) Includes amounts paid to acquire minority interests in subsidiaries.
(2) Advance received in respect of anticipated disposal of the Group`s 50%
interest in the Booysendal joint venture, invested in unlisted preference
shares (guaranteed by Nedbank Limited and Nedbank Group Limited) and an escrow
account, pending completion of the transaction.
Consolidated statement of recognised income and expense
for the year ended 31 December 2008
US$ million 2008 2007
Net (loss)/gain on revaluation of available for sale
investments (888) 2,326
Net gain on revaluation of available for sale
investments - associates - 10
Net loss on cash flow hedges (874) (286)
Net gain/(loss) on cash flow hedges - associates 4 (41)
Net exchange loss on translation of foreign operations (4,514) (303)
Actuarial net loss on post retirement benefit schemes (129) (37)
Actuarial net loss on post retirement benefit schemes -
associates (7) (6)
Deferred tax 167 (123)
Net (expense)/income recognised directly in equity (6,241) 1,540
Transferred to income statement: sale of available for
sale investments (476) (298)
Transferred to income statement: cash flow hedges 380 315
Transferred to initial carrying amount of hedged items:
cash flow hedges 637 -
Transferred to income statement: exchange differences on
disposal of foreign operations 2 337
Tax on items transferred from equity (94) 3
Total transferred from equity 449 357
Profit for the financial year 6,120 8,172
Total recognised income and expense for the financial
year(1) 328 10,069
Attributable to:
Minority interests 487 844
Equity shareholders of the Company (159) 9,225
(1) Total recognised income and expense for the financial year of nil (2007:
$2,026 million) relates to discontinued operations.
Reconciliation from EBITDA(1) to cash inflows from continuing operations
for the year ended 31 December 2008
US$ million 2008 2007
EBITDA - continuing operations 11,847 11,171
Share of operating profit of associates before special
items and remeasurements (2,104) (1,072)
Depreciation and amortisation in associates (253) (183)
Share-based payment charges 155 138
Operating fair value gains before special items and
remeasurements (1) (12)
Provisions 46 77
Increase in inventories (999) (352)
Decrease/(increase) in operating receivables 80 (389)
Increase in operating payables 896 53
Other adjustments (88) (56)
Cash inflows from continuing operations 9,579 9,375
(1) EBITDA is operating profit before special items, remeasurements,
depreciation and amortisation in subsidiaries and joint ventures and share of
EBITDA of associates.
US$ million 2008 2007
Operating profit, including associates, before special
items and remeasurements - continuing operations(2) 10,085 9,590
Depreciation and amortisation
Subsidiaries and joint ventures 1,509 1,398
Associates 253 183
EBITDA - continuing operations 11,847 11,171
(2) `Operating profit, including associates, before special items and
remeasurements - continuing operations` is reconciled to `Profit for the
financial year - continuing operations` in note 3.
Notes to the financial information
1. General information
Investors should consider non-GAAP financial measures in addition to, and not
as a substitute for or as superior to, measures of financial performance
reported in accordance with International Financial Reporting Standards (IFRS).
The IFRS results reflect all items that affect reported performance and
therefore it is important to consider the IFRS measures alongside the non-GAAP
measures. Reconciliations of key non-GAAP data to directly comparable GAAP
financial measures are presented in notes 3, 4, 9 and 12 to this report.
The financial information for the year ended 31 December 2008 does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985. Statutory accounts for the year ended 31 December 2007 have been
delivered to the Registrar of Companies and those for 2008 will be delivered
following the Company`s annual general meeting convened for 15 April 2009. The
auditors have reported on these accounts; their reports were unqualified, did
not include a reference to any matters to which the auditors drew attention by
way of emphasis of matter and did not contain a statement under section 237 (2)
or (3) of the Companies Act 1985.
2. Basis of preparation
General
Whilst the preliminary announcement (the condensed financial statements) has
been prepared in accordance with IFRS and International Financial Reporting
Interpretation Committee (IFRIC) interpretations adopted for use by the
European Union, with those parts of the Companies Act 1985 applicable to
companies reporting under IFRS and with the requirements of the United Kingdom
Listing Authority Listing rules, these condensed financial statements do not
contain sufficient information to comply with IFRS. The Group will publish full
financial statements that comply with IFRS in March 2009.
The financial statements have been prepared under the historical cost
convention as modified by the recording of pension assets and liabilities 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 2007,
with the exception of the adoption of IFRIC 14 IAS 19 - The Limit on a Defined
Benefit Asset, Minimum Funding Requirements and their Interaction and IFRIC 11
IFRS 2 - Group and Treasury Share Transactions.
The Group has also adopted with effect from 1 July 2008, Reclassification of
Financial Assets (Amendments to IAS 39 Financial Instruments: Recognition and
Measurement and IFRS 7 Financial Instruments: Disclosures).
The adoption of these statements has not had a material impact from a Group
perspective.
Discontinued operations
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.
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 presented as discontinued.
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.
The Corporate Activities and Unallocated Costs segment includes insurance costs.
Discontinued operations comprise the Paper and Packaging and Gold segments. The
results for discontinued operations are disclosed in note 17.
Primary reporting format - by business segment
Segment revenue
US$ million 2008 2007
Subsidiaries and joint ventures
Platinum 6,288 6,673
Base Metals 5,878 7,129
Ferrous Metals and Industries 4,455 4,207
Coal 5,319 2,880
Industrial Minerals 4,371 4,581
Exploration - -
Corporate Activities and Unallocated Costs - -
Total subsidiaries and joint ventures - continuing
operations 26,311(2) 25,470(2)
Revenue and net income from associates
Platinum 39 116
Diamonds 3,096 3,076
Ferrous Metals and Industries 2,394 1,193
Coal 1,117 694
Industrial Minerals 7 10
Total associates - continuing operations 6,653 5,089
Total operations including net income from
associates
- continuing operations 32,964 30,559
Net profit on disposals - continuing operations
Total profit from operations and associates -
continuing operations
Segment result before
special items and
remeasurements(1)
US$ million 2008 2007
Subsidiaries and joint ventures
Platinum 2,206 2,635
Base Metals 2,505 4,338
Ferrous Metals and Industries 1,857 1,155
Coal 1,742 365
Industrial Minerals 228 474
Exploration (212) (157)
Corporate Activities and Unallocated Costs (345) (292)
Total subsidiaries and joint ventures - continuing
operations 7,981 8,518
Revenue and net income from associates
Platinum 13 38
Diamonds 237 223
Ferrous Metals and Industries 724 189
Coal 329 190
Industrial Minerals - -
Total associates - continuing operations 1,303 640
Total operations including net income from associates
- continuing operations 9,284 9,158
Net profit on disposals - continuing operations
Total profit from operations and associates -
continuing operations
Segment result after
special items and
remeasurements(1)
US$ million 2008 2007
Subsidiaries and joint ventures
Platinum 2,187 2,635
Base Metals 2,153 4,338
Ferrous Metals and Industries 1,242 1,158
Coal 1,723 224
Industrial Minerals 137 407
Exploration (162) (157)
Corporate Activities and Unallocated Costs (430) (333)
Total subsidiaries and joint ventures - continuing
operations 6,850 8,272
Revenue and net income from associates
Platinum 13 38
Diamonds 47 (229)
Ferrous Metals and Industries 724 198
Coal 329 190
Industrial Minerals - -
Total associates - continuing operations 1,113 197
Total operations including net income from associates
- continuing operations 7,963 8,469
Net profit on disposals - continuing operations 1,009 460
Total profit from operations and associates -
continuing operations 8,972 8,929
(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) This represents segment revenue; the Group`s share of associates` revenue
is 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 $32,964 million (2007:
$35,674 million) being $32,964 million (2007: $30,559 million) from continuing
operations and nil (2007: $5,115 million) from discontinued operations. See
note 17 for summarised segmental disclosures relating to discontinued
operations.
3. Segmental information (continued)
Primary reporting format - by business segment (continued)
For information, a segmental analysis of associates` operating profit is set
out below to show operating profit for the Group`s continuing operations
including associates.
Operating profit before special
items and remeasurements(1)
US$ million 2008 2007
Total subsidiaries and joint ventures - continuing
operations 7,981 8,518
Associates
Platinum 20 62
Diamonds 508 484
Ferrous Metals and Industries 1,078 277
Coal 498 249
Total associates - continuing operations 2,104 1,072
Operating profit including associates - continuing
operations 10,085 9,590
Operating profit after special
items and remeasurements(1)
US$ million 2008 2007
Total subsidiaries and joint ventures - continuing
operations 6,850 8,272
Associates
Platinum 20 62
Diamonds 282 19
Ferrous Metals and Industries 1,078 277
Coal 498 249
Total associates - continuing operations 1,878 607
Operating profit including associates - continuing
operations 8,728 8,879
(1) Associates` operating profit is reconciled to `Share of net income from
associates` as follows:
US$ million 2008 2007
Operating profit from associates before special items and
remeasurements - continuing operations 2,104 1,072
Operating special items and remeasurements (226) (465)
Operating profit from associates after special items and
remeasurements - continuing operations 1,878 607
Net profit on disposals 18 24
Net finance costs (before remeasurements) (147) (85)
Financing remeasurements (15) (4)
Income tax expense (after special items and remeasurements) (606) (303)
Minority interests (after special items and remeasurements) (15) (42)
Share of net income from associates - continuing operations 1,113 197
`Operating profit, including associates, before special items and
remeasurements - continuing operations` is reconciled to `Profit for the
financial year - continuing operations` as follows:
US$ million 2008 2007
Operating profit, including associates, before special
items and remeasurements - continuing
10,085 9,590
operations
Operating special items and remeasurements
Subsidiaries and joint ventures (1,131) (246)
Platinum (19) -
Base Metals (352) -
Ferrous Metals and Industries (615) 3
Coal (19) (141)
Industrial Minerals (91) (67)
Exploration 50 -
Corporate Activities and Unallocated Costs (85) (41)
Associates (226) (465)
Diamonds (226) (465)
Operating profit, including associates, after special
items and remeasurements - continuing
operations 8,728 8,879
Net profit on disposals
Subsidiaries and joint ventures 1,009 460
Associates 18 24
Associates` net finance costs (before remeasurements) (147) (85)
Associates` financing remeasurements (15) (4)
Associates` income tax expense (before special items
and remeasurements) (623) (305)
Associates` tax on special items and remeasurements 17 2
Associates` minority interests (before special items
and remeasurements) (31) (42)
Associates` minority interests on special items and
remeasurements 16 -
Total profit from operations and associates -
continuing operations 8,972 8,929
Net finance costs (before remeasurements) (452) (137)
Financing remeasurements 51 29
Profit before tax - continuing operations 8,571 8,821
Income tax expense (after special items and
remeasurements) (2,451) (2,693)
Profit for the financial year - continuing operations 6,120 6,128
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)
US$ million 2008 2007
Platinum 9,713 9,926
Base Metals 6,783 5,897
Ferrous Metals and Industries 11,823 4,517
Coal 5,300 4,987
Industrial Minerals 3,935 5,370
Exploration 3 1
Corporate Activities and Unallocated
Costs 225 225
Continuing operations 37,782 30,923
Paper and Packaging - -
Discontinued operations - -
Total Group 37,782 30,923
Unallocated assets and liabilities
Investments in associates 3,612 3,341
Financial asset investments 3,288 4,780
Deferred tax assets/(liabilities) 258 474
Cash and cash equivalents 2,771 3,129
Other financial assets/(liabilities) -
derivatives 376 535
Other non-operating assets/(liabilities) 1,651 1,580
Other provisions - -
Borrowings - -
Net assets 49,738 44,762
Segment liabilities(2)
US$ million 2008 2007
Platinum (668) (692)
Base Metals (1,309) (908)
Ferrous Metals and Industries (656) (530)
Coal (1,338) (1,003)
Industrial Minerals (600) (861)
Exploration (7) -
Corporate Activities and Unallocated
Costs (298) (346)
Continuing operations (4,876) (4,340)
Paper and Packaging - -
Discontinued operations - -
Total Group (4,876) (4,340)
Unallocated assets and liabilities
Investments in associates - -
Financial asset investments - -
Deferred tax assets/(liabilities) (4,555) (4,650)
Cash and cash equivalents - -
Other financial assets/(liabilities) -
derivatives (1,497) (586)
Other non-operating assets/(liabilities) (2,515) (2,264)
Other provisions (544) (293)
Borrowings (13,995) (8,299)
Net assets (27,982) (20,432)
Net segment assets
US$ million 2008 2007
Platinum 9,045 9,234
Base Metals 5,474 4,989
Ferrous Metals and Industries 11,167 3,987
Coal 3,962 3,984
Industrial Minerals 3,335 4,509
Exploration (4) 1
Corporate Activities and Unallocated
Costs (73) (121)
Continuing operations 32,906 26,583
Paper and Packaging - -
Discontinued operations - -
Total Group 32,906 26,583
Unallocated assets and liabilities
Investments in associates 3,612 3,341
Financial asset investments 3,288 4,780
Deferred tax assets/(liabilities) (4,297) (4,176)
Cash and cash equivalents 2,771 3,129
Other financial assets/(liabilities) -
derivatives (1,121) (51)
Other non-operating assets/(liabilities) (864) (684)
Other provisions (544) (293)
Borrowings (13,995) (8,299)
Net assets 21,756 24,330
Capital expenditure(3)
US$ million 2008 2007
Platinum 3,026 2,512
Base Metals 1,874 582
Ferrous Metals and Industries 7,688 2,412
Coal 1,705 1,052
Industrial Minerals 479 352
Exploration 1 -
Corporate Activities and Unallocated
Costs 42 44
Continuing operations 14,815 6,954
Paper and Packaging - 198
Discontinued operations - 198
Total Group 14,815 7,152
Unallocated assets and liabilities
Investments in associates
Financial asset investments
Deferred tax assets/(liabilities)
Cash and cash equivalents
Other financial assets/(liabilities) -
derivatives
Other non-operating assets/(liabilities)
Other provisions
Borrowings
Net assets
(1) Segment assets at 31 December 2008 are operating assets and consist of
intangible assets of $3,006 million (2007: $1,556 million), tangible assets of
$29,545 million (2007: $23,534 million), biological assets of $3 million (2007:
$3 million), environmental rehabilitation trusts of $244 million (2007: $252
million), inventories of $2,702 million (2007: $2,344 million), retirement
benefit assets of $32 million (2007: $52 million) and operating receivables of
$2,250 million (2007: $3,182 million).
(2) Segment liabilities at 31 December 2008 are operating liabilities and
consist of non-interest bearing current liabilities of $3,534 million (2007:
$2,965 million), restoration and decommissioning provisions of $941 million
(2007: $931 million) and retirement benefit obligations of $401 million (2007:
$444 million).
(3) Capital expenditure reflects cash payments and accruals in respect of
additions to intangible assets of $24 million (2007: $9 million), tangible
assets of $5,726 million (2007: $4,129 million) and additions resulting from
acquisitions of interests in subsidiaries and joint ventures of $9,065 million
(2007: $3,014 million).
Other primary segment items included in the income statement are as follows:
Depreciation and amortisation
US$ million 2008 2007
Platinum 507 455
Base Metals 340 344
Ferrous Metals and Industries 87 100
Coal 293 221
Industrial Minerals 259 258
Exploration - -
Corporate Activities and Unallocated Costs 23 20
Continuing operations 1,509 1,398
Paper and Packaging - 234
Discontinued operations - 234
Total Group 1,509 1,632
(Impairments)/reversals(1)
US$ million 2008 2007
Platinum - -
Base Metals (140) -
Ferrous Metals and Industries (6) -
Coal (40) (153)
Industrial Minerals (71) (43)
Exploration 45 -
Corporate Activities and Unallocated Costs (2) -
Continuing operations (214) (196)
Paper and Packaging - (5)
Discontinued operations - (5)
Total Group (214) (201)
Other non-cash expenses(2)
US$ million 2008 2007
Platinum 7 8
Base Metals 113 94
Ferrous Metals and Industries 63 48
Coal 110 42
Industrial Minerals 44 55
Exploration - -
Corporate Activities and Unallocated Costs 54 45
Continuing operations 391 292
Paper and Packaging - 12
Discontinued operations - 12
Total Group 391 304
(1) See operating special items in note 6.
(2) Other non-cash expenses include share-based payment charges, fair value
movements relating to cash-settled share-based payment provisions and charges
in respect of environmental rehabilitation provisions and other provisions.
3. Segmental information (continued)
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
US$ million 2008 2007
Subsidiaries and joint ventures
South Africa 3,009 4,014
Rest of Africa 97 178
Europe 9,966 10,718
North America 1,476 1,686
South America 2,923 2,545
Australia and Asia 8,840 6,329
Total subsidiaries and joint ventures - continuing
operations 26,311 25,470
Associates
South Africa 942 796
Rest of Africa 225 82
Europe 1,985 1,498
North America 896 520
South America 84 52
Australia and Asia 2,521 2,141
Total associates - continuing operations 6,653 5,089
Total operations including associates - continuing
operations 32,964 30,559
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 2008 2007 2008 2007
South Africa 13,540 13,879 (1,633) (1,661)
Rest of Africa 364 526 (30) (32)
Europe 4,045 5,658 (910) (1,057)
North America 629 465 (119) (106)
South America 15,688 7,212 (1,431) (935)
Australia and Asia 3,516 3,183 (753) (549)
37,782 30,923 (4,876) (4,340)
Net segment assets Capital expenditure
US$ million 2008 2007 2008 2007
South Africa 11,907 12,218 3,841 3,303
Rest of Africa 334 494 16 64
Europe 3,135 4,601 474 526
North America 510 359 195 151
South America 14,257 6,277 9,035 2,436
Australia and Asia 2,763 2,634 1,254 672
32,906 26,583 14,815 7,152
3. Segmental information (continued)
Additional disclosure of secondary segmental information by origin (including
attributable revenue and operating profit from associates) is as follows:
Revenue
US$ million 2008 2007
Subsidiaries and joint ventures
South Africa 11,708 12,003
Rest of Africa 280 540
Europe 4,545 4,995
North America 451 230
South America 5,825 6,234
Australia and Asia 3,502 1,468
Total subsidiaries and joint ventures - continuing
operations 26,311 25,470
Associates
South Africa 2,078 1,374
Rest of Africa 2,250 2,160
Europe 260 872
North America 254 63
South America 918 96
Australia and Asia 893 524
Total associates - continuing operations 6,653 5,089
Total operations including associates - continuing
operations 32,964 30,559
Operating profit/(loss)
before special items
and remeasurements(1)
US$ million 2008 2007
Subsidiaries and joint ventures
South Africa 4,468 4,043
Rest of Africa 78 351
Europe (226) 425
North America (33) 30
South America 2,612 3,697
Australia and Asia 1,082 (28)
Total subsidiaries and joint ventures - continuing
operations 7,981 8,518
Associates
South Africa 639 248
Rest of Africa 389 342
Europe 43 88
North America 4 17
South America 373 198
Australia and Asia 656 179
Total associates - continuing operations 2,104 1,072
Total operations including associates - continuing
operations 10,085 9,590
Operating profit/(loss)
after special items
and remeasurements(1)
US$ million 2008 2007
Subsidiaries and joint ventures
South Africa 4,363 4,044
Rest of Africa 78 351
Europe (460) 320
North America (25) 31
South America 1,787 3,697
Australia and Asia 1,107 (171)
Total subsidiaries and joint ventures - continuing
operations 6,850 8,272
Associates
South Africa 417 222
Rest of Africa 385 342
Europe 43 88
North America 4 (422)
South America 373 198
Australia and Asia 656 179
Total associates - continuing operations 1,878 607
Total operations including associates - continuing
operations 8,728 8,879
(1) Special items and remeasurements are set out in note 6.
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 attributable to equity shareholders of the
Company` to `Underlying earnings for the financial year` is given in note 9.
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 2,226 2,207
Diamonds 508 282
Base Metals 2,505 2,153
Ferrous Metals and Industries 2,935 2,320
Coal 2,240 2,221
Industrial Minerals 228 137
Exploration (212) (162)
Corporate Activities and
Unallocated Costs (345) (430)
Total/Underlying earnings -
continuing operations and total
Group 10,085 8,728
Underlying earnings
adjustments -
continuing operations
and total Group (1,357)
Profit for the financial year
attributable to
equity shareholders of the
Company -
continuing operations and
total Group
Operating special
items and Net profit on
remeasurements(2) disposals(2)
US$ million
By business segment
Platinum 19 -
Diamonds 226 -
Base Metals 352 -
Ferrous Metals and Industries 615 -
Coal 19 -
Industrial Minerals 91 -
Exploration (50) -
Corporate Activities and
Unallocated Costs 85 -
Total/Underlying earnings -
continuing operations and total
Group 1,357 -
Underlying earnings adjustments -
continuing operations
and total Group 1,027 36
Profit for the financial year
attributable to
equity shareholders of the Company -
continuing operations and total Group
Net interest,
Financing tax and
special items and minority 2008
remeasurements(2) interests Total
US$ million
By business segment
Platinum - (913) 1,313
Diamonds - (252) 256
Base Metals - (1,136) 1,369
Ferrous Metals and Industries - (1,539) 1,396
Coal - (659) 1,581
Industrial Minerals - (55) 173
Exploration - 12 (200)
Corporate Activities and
Unallocated Costs - (306) (651)
Total/Underlying earnings -
continuing operations and
total
Group - (4,848) 5,237
Underlying earnings
adjustments -
continuing operations
and total Group 272 (22)
Profit for the financial year
attributable to
equity shareholders of the
Company -
continuing operations and
total Group 5,215
(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.
Operating Operating
profit/(loss) before profit/(loss) after
special items and special items and
US$ million remeasurements(1) remeasurements
By business segment
Platinum 2,697 2,697
Diamonds 484 19
Base Metals 4,338 4,338
Ferrous Metals and Industries 1,432 1,435
Coal 614 473
Industrial Minerals 474 407
Exploration (157) (157)
Corporate Activities and
Unallocated Costs (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
US$ million remeasurements(2) disposals(2)
By business segment
Platinum - -
Diamonds 465 -
Base Metals - -
Ferrous Metals and Industries (3) -
Coal 141 -
Industrial Minerals 67 -
Exploration - -
Corporate Activities and
Unallocated Costs 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
US$ million remeasurements(2) interests Total
By business segment
Platinum - (1,398) 1,299
Diamonds - (245) 239
Base Metals - (1,238) 3,100
Ferrous Metals and Industries - (827) 605
Coal - (124) 490
Industrial Minerals - (90) 384
Exploration - 12 (145)
Corporate Activities and
Unallocated Costs - (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 for continuing operations are set out in
note 6. Special items and remeasurements for discontinued operations are set
out in note 17.
5. Exploration expenditure
Exploration expenditure is stated before special items.
US$ million 2008 2007
By business segment
Platinum 36 36
Base Metals 123 77
Ferrous Metals and Industries 18 12
Coal 35 32
212 157
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. 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 financial 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 (if
the underlying transaction is recorded in the balance sheet, e.g. capital
expenditure, the realised amount remains in remeasurements on settlement
of the derivative). Such amounts are classified in the income statement
as financing when the underlying exposure is in respect of net debt and
otherwise as operating.
(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. This is classified as financing.
(iii)foreign exchange impact arising in USD functional currency entities where
tax calculations are generated based on local currency financial
information (and hence deferred tax is susceptible to currency
fluctuations). Such amounts are included within income tax expense.
Subsidiaries and joint ventures` special items and remeasurements
Operating special items
US$ million 2008 2007
Impairment of Tarmac assets and restructuring costs (91) (43)
Impairment of Lisheen (78) -
Impairment of Black Mountain (62) -
Impairment of Coal Australia assets (40) (153)
Reversal of impairment of Silangan exploration asset 45 -
Costs associated with `One Anglo` initiatives (72) -
Provisions for onerous contracts (39) -
Costs associated with proposed sale of Tarmac (3) (55)
Other (12) -
Total operating special items - continuing operations (352) (251)
Tax 42 60
Minority interests 1 -
Net total attributable to equity shareholders of the
Company - continuing operations (309) (191)
6. Special items and remeasurements (continued)
Following structural review of the Industrial Minerals business by management
and as a result of trading conditions in the building industry, restructuring
and impairment charges totalling $91 million have been recorded. The impairment
brings the carrying value in line with fair value (less costs to sell).
Impairments have been recorded at Black Mountain and Lisheen resulting from a
reduction in the near term zinc and lead prices. These charges were based on a
value in use assessment of recoverable amount using a pre-tax, risk free
discount rate which equated to a post tax rate of 6%.
Costs associated with `One Anglo` initiatives principally comprise advisory
costs associated with procurement, shared services and information systems.
Operating remeasurements
US$ million 2008 2007
Net (loss)/gain on non-hedge derivatives (659) 5
Realised loss on derivatives relating to capital expenditure (120) -
Total operating remeasurements - continuing operations (779) 5
Tax 252 (1)
Minority interests 135 -
Net total attributable to equity shareholders of the Company
- continuing operations (392) 4
The net loss on non-hedge derivatives principally related to a net unrealised
loss on derivatives relating to capital expenditure held by Anglo Ferrous
Brazil and Los Bronces and an unrealised loss on an embedded derivative at
Minera Loma de NA-quel. Realised losses on derivatives relating to capital
expenditure were principally incurred on foreign currency instruments held by
Anglo Ferrous Brazil and Los Bronces.
Profits and (losses) on disposals
US$ million 2008 2007
Disposal of interest in China Shenhua Energy 551 -
Disposal of interest in Minera Santa Rosa SCM 142 -
Disposal of Northam Platinum Limited 101 -
Copebras property compensation 96 -
Disposal of Tarmac Iberia 65 -
Disposal of Namakwa Sands(1) 49 -
Part disposal of Exxaro (formerly Kumba Resources) - 234
Disposal of remaining interest in Highveld(1) - 140
Part disposal of AngloGold Ashanti - 67
Tongaat-Hulett and Hulamin BBBEE transactions(1) - (68)
Tarmac land sales - 25
Disposal of Boschendal Phase II - 21
Other 5 41
Net profit on disposals - continuing operations(2) 1,009 460
Tax (47) (71)
Minority interests (43) 34
Net total attributable to equity shareholders of the Company
- continuing operations 919 423
(1) See Disposals and demerger of subsidiaries and businesses note 15.
(2) Includes charges associated with IFRS 2 Share-based Payments on broad based
black economic empowerment (BBBEE) and black economic empowerment (BEE)
transactions of nil (2007: $68 million).
In April 2008 the Group sold its investment in China Shenhua Energy for $704
million, generating a profit on disposal of $551 million.
On 20 August 2008 the Group sold its 22.4% interest in Northam Platinum Limited
for cash proceeds of $205 million. This interest was transferred to a disposal
group in September 2007, where it was held until sale.
The sale of the Group`s 40% interest in Minera Santa Rosa SCM was completed in
December 2008 for consideration of $140 million. This investment had a nominal
carrying value.
6. Special items and remeasurements (continued)
Financing remeasurements
US$ million 2008 2007
Foreign exchange gain/(loss) on De Beers preference shares 28 (3)
Unrealised net gain on non-hedge derivatives related to net
debt 23 32
Total financing remeasurements - continuing operations 51 29
Tax - (5)
Net total attributable to equity shareholders of the Company
- continuing operations 51 24
The unrealised net gain on non-hedge derivatives related to net debt
principally comprises an unrealised gain on an embedded interest rate
derivative.
Tax remeasurements
US$ million 2008 2007
Foreign currency translation of deferred tax balances (153) -
Minority interests 52 -
Net total attributable to equity shareholders of the Company
- continuing operations (101) -
Total special items and remeasurements - continuing operations
US$ million 2008 2007
Total special items and remeasurements before tax and
minority interests - continuing operations (71) 243
Tax remeasurements (153) -
Tax on special items and remeasurements 247 (17)
Minority interests 145 34
Net total special items and remeasurements attributable to
equity shareholders of the Company -
continuing operations 168 260
Associates` special items and remeasurements
Associates` operating special items and remeasurements
US$ million 2008 2007
Impairment of De Beers` businesses (79) -
Impairment of De Beers` Canadian assets - (434)
Share of De Beers` restructuring costs (37) (15)
Share of De Beers` class action payment and related costs (3) (5)
Unrealised net loss on non-hedge derivatives (101) (3)
Other impairments (6) (8)
Total associates` operating special items and
remeasurements - continuing operations (226) (465)
Tax 17 2
Minority interests 16 -
Net total associates` operating special items and
remeasurements - continuing operations (193) (463)
Due to current trading conditions De Beers has recorded an impairment of $176
million (attributable share $79 million) in respect of certain of its
businesses. The impairment brings the carrying value of these assets in line
with fair value (less costs to sell), determined using discounted cash flow
techniques.
Associates` profits on disposals
US$ million 2008 2007
Disposal of interests in Williamson, Cullinan and
Koffiefontein 15 -
Disposal of interests in Acerinox - 12
Disposal of interest in Gope Exploration Company - 8
Other 3 4
Associates` net profit on disposals - continuing operations 18 24
6. Special items and remeasurements (continued)
Associates` financing remeasurements
US$ million 2008 2007
Unrealised net loss on non-hedge derivatives related to net
debt (15) (4)
Total associates` financing remeasurements - continuing
operations (15) (4)
Total associates` special items and remeasurements - continuing operations
US$ million 2008 2007
Total associates` special items and remeasurements before
tax and minority interests -
continuing operations (223) (445)
Tax 17 2
Minority interests 16 -
Net total associates` special items and remeasurements -
continuing operations (190) (443)
Operating special items and remeasurements - continuing operations
US$ million 2008 2007
Operating special items (352) (251)
Operating remeasurements (779) 5
Total operating special items and remeasurements
(excluding associates) - continuing operations (1,131) (246)
Associates` operating special items (125) (462)
Associates` operating remeasurements (101) (3)
Total associates` operating special items and
remeasurements - continuing operations (226) (465)
Total operating special items and remeasurements
(including associates) - continuing operations (1,357) (711)
Operating special items (including associates) (477) (713)
Operating remeasurements (including associates) (880) 2
Total operating special items and remeasurements
(including associates) - continuing operations (1,357) (711)
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.
The weighted average interest rate applicable to interest on general borrowings
capitalised for continuing operations was 12.0% (2007: 11.4%). Financing
remeasurements are set out in note 6.
Before special After special
items and items and
remeasurements remeasurements
US$ million 2008 2008
Investment income
Interest and other financial income 324 324
Expected return on defined benefit
arrangements 215 215
Dividend income from financial asset
investments 50 50
Total investment income - continuing
operations 589 589
Interest expense
Amortisation of discount relating to
provisions (33) (33)
Interest and other finance expense (815) (815)
Interest on defined benefit arrangements (201) (201)
Dividend on redeemable preference shares (16) (16)
(1,065) (1,065)
Less: interest capitalised 215 215
Total interest expense - continuing
operations (850) (850)
Other financing (losses)/gains
Net foreign exchange (losses)/gains (173) (145)
Fair value (losses)/gains on derivatives (2) 21
Net fair value gains/(losses) on fair
value hedges 2 2
Other net fair value (losses)/gains (18) (18)
Total other financing (losses)/gains -
continuing operations (191) (140)
Net finance costs - continuing operations (452) (401)
Before special After special
items and items and
remeasurements remeasurements
US$ million 2007 2007
Investment income
Interest and other financial income 323 323
Expected return on defined benefit
arrangements 257 257
Dividend income from financial asset
investments 36 36
Total investment income - continuing
operations 616 616
Interest expense
Amortisation of discount relating to
provisions (36) (36)
Interest and other finance expense (565) (565)
Interest on defined benefit arrangements (229) (229)
Dividend on redeemable preference shares (9) (9)
(839) (839)
Less: interest capitalised 42 42
Total interest expense - continuing
operations (797) (797)
Other financing (losses)/gains
Net foreign exchange (losses)/gains 59 56
Fair value (losses)/gains on derivatives (1) 12
Net fair value gains/(losses) on fair
value hedges (6) (6)
Other net fair value (losses)/gains (8) 11
Total other financing (losses)/gains -
continuing operations 44 73
Net finance costs - continuing operations (137) (108)
8. Tax on profit on ordinary activities
a) Analysis of charge for the year from continuing operations
US$ million 2008 2007
United Kingdom corporation tax at 28.5% 18 -
United Kingdom corporation tax at 30% - 163
South Africa tax 840 812
Other overseas tax 1,155 1,259
Prior year adjustments (78) (1)
Current tax (excluding special items and remeasurements tax)1,935 2,233
Deferred tax (excluding special items and remeasurements
tax) 610 443
Tax (excluding special items and remeasurements tax) 2,545 2,676
Special items and remeasurements tax (94) 17
Income tax expense - continuing operations 2,451 2,693
8. Tax on profit on ordinary activities (continued)
b) Factors affecting tax charge for the year
The effective tax rate for the year of 28.6% (2007: 30.5%) is approximately
equal to the applicable standard rate of corporation tax for the year ended 31
December 2008 in the United Kingdom (28.5%) (2007: 30%). The reconciling items
are:
US$ million 2008 2007(1)
Profit on ordinary activities before tax - continuing
operations 8,571 8,821
Tax on profit on ordinary activities calculated at United
Kingdom corporation tax rate of 28.5% 2,443 -
Tax on profit on ordinary activities calculated at United
Kingdom corporation tax rate of 30% - 2,646
Tax effect of share of net income from associates (317) (59)
Tax effects of:
Special items and remeasurements
Operating special items and remeasurements 28 15
Profits and losses on disposals and financing
remeasurements (255) (71)
Tax remeasurements 153 -
Items not taxable/deductible for tax purposes
Exploration expenditure 20 19
Non-deductible net foreign exchange loss 28 2
Non-deductible net interest expense 10 -
Other non-deductible expenses 127 83
Other non-taxable income (78) (41)
Temporary difference adjustments
Changes in tax rates (84) 12
Movements in tax losses 38 13
Enhanced tax depreciation (26) (91)
Other temporary differences 42 (14)
Other adjustments
Secondary tax on companies and dividend withholding taxes 634 644
Effect of differences between local and UK rates (181) (517)
Prior year adjustments to current tax (78) (1)
Other adjustments (53) 53
Income tax expense - continuing operations 2,451 2,693
(1) Comparatives have been reclassified to align with current year presentation.
IAS 1 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. Associates` tax included within `Share of net income
from associates` for the year ended 31 December 2008 is $606 million (2007:
$303 million). Excluding special items and remeasurements this becomes $623
million (2007: $305 million).
The effective rate of tax before special items and remeasurements including
share of associates` tax for the year ended 31 December 2008 was 33.4%. This
was an increase from the equivalent effective rate of 31.8% in the year ended
31 December 2007. The main reasons for this net increase are tax losses not
recognised for deferred tax purposes and changes in the geographical mix of
profits around the Group, partially offset by changes in statutory tax rates
and the impact of prior year adjustments. In addition, the 2007 rate benefited
from the availability of enhanced tax depreciation on certain assets. In future
periods it is expected that the effective tax rate, including associates` tax,
will remain at or above the UK statutory tax rate.
9. Earnings per share
2008
Continuing Discontinued Total
US$ operations operations Group
Profit for the financial year
attributable to equity
shareholders of the Company
Basic earnings per share 4.34 - 4.34
Diluted earnings per share 4.29 - 4.29
Headline earnings for the financial
year(1)
Basic earnings per share 3.78 - 3.78
Diluted earnings per share 3.74 - 3.74
Underlying earnings for the financial
year(1)
Basic earnings per share 4.36 - 4.36
Diluted earnings per share 4.31 - 4.31
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
(1) Basic and diluted earnings per share are shown based on headline earnings,
a Johannesburg stock exchange (JSE Limited) defined performance measure, and
underlying earnings, which the directors consider to be a useful additional
measure of the Group`s performance. Both earnings measures are further
explained below.
The calculation of the basic and diluted earnings per share is based on the
following data:
2008
Continuing Discontinued Total
US$ million (unless otherwise stated) operations operations Group
Basic and diluted earnings
Profit for the financial year
attributable to equity
shareholders of the Company 5,215 - 5,215
Number of shares (million)
Basic number of ordinary shares
outstanding(1) 1,202
Effect of dilutive potential ordinary
shares(2)
Share options and awards 13
1,215
2007
Continuing Discontinued Total
US$ million (unless otherwise stated) operations operations Group
Basic and diluted earnings
Profit for the financial year
attributable to equity
shareholders of the Company 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 and awards 18
1,327
Diluted number of ordinary shares outstanding(1)
(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 2008 (2007: nil).
The weighted average number of ordinary shares, and accordingly earnings per
share, of the Group have been impacted by the effect of the share buyback
programme as well as the Anglo American share consolidation which on 2 July
2007 resulted in 100 existing Anglo American ordinary shares being 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 JSE
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 2008 2007
Profit for the financial year attributable to equity
shareholders of the
Company - continuing operations 5,215 5,294
Operating special items 209 196
Operating special items - tax (27) (54)
Operating special items - minority interests (1) -
Net profit on disposals(1) (1,009) (528)
Net profit on disposals - tax 47 71
Net profit on disposals - minority interests 43 (34)
Associates` special items 67 418
Associates` special items - tax (1) -
Associates` special items - minority interests (2) -
Headline earnings for the financial year(2) - continuing
operations 4,541 5,363
Operating special items(3) 143 55
Operating special items - tax (15) (6)
Operating remeasurements 779 (5)
Operating remeasurements - tax (252) 1
Operating remeasurements - minority interests (135) -
Financing remeasurements (51) (29)
Financing remeasurements - tax - 5
Tax remeasurements 153 -
Tax remeasurements - minority interests (52) -
Associates` remeasurements 116 7
Associates` remeasurements - tax (9) -
Associates` remeasurements - minority interests (9) -
Associates` special items(4) 40 20
Associates` special items - tax (7) (2)
Associates` special items - minority interests (5) -
IFRS 2 charges on BBBEE and BEE transactions - 68
Underlying earnings for the financial year - continuing
operations 5,237 5,477
Underlying earnings for the financial year - discontinued
operations - 284
Underlying earnings for the financial year - total Group 5,237 5,761
Basic earnings per share (US$)
Continuing operations 2008 2007
Profit for the financial year attributable to equity
shareholders of the
Company - continuing operations 4.34 4.04
Operating special items 0.17 0.15
Operating special items - tax (0.02) (0.04)
Operating special items - minority interests - -
Net profit on disposals(1) (0.84) (0.40)
Net profit on disposals - tax 0.04 0.05
Net profit on disposals - minority interests 0.04 (0.02)
Associates` special items 0.05 0.32
Associates` special items - tax - -
Associates` special items - minority interests - -
Headline earnings for the financial year(2) - continuing
operations 3.78 4.10
Operating special items(3) 0.12 0.04
Operating special items - tax (0.01) -
Operating remeasurements 0.65 -
Operating remeasurements - tax (0.21) -
Operating remeasurements - minority interests (0.11) -
Financing remeasurements (0.04) (0.02)
Financing remeasurements - tax - -
Tax remeasurements 0.12 -
Tax remeasurements - minority interests (0.04) -
Associates` remeasurements 0.10 -
Associates` remeasurements - tax (0.01) -
Associates` remeasurements - minority interests (0.01) -
Associates` special items(4) 0.03 0.01
Associates` special items - tax (0.01) -
Associates` special items - minority interests - -
IFRS 2 charges on BBBEE and BEE transactions - 0.05
Underlying earnings for the financial year - continuing
operations 4.36 4.18
Underlying earnings for the financial year - discontinued
operations - 0.22
Underlying earnings for the financial year - total Group 4.36 4.40
(1) Excluding associated IFRS 2 charges on BBBEE and BEE transactions.
(2) Headline earnings for the financial year - total Group was $4,541 million
(2007: $5,467 million).
(3) Year ended 31 December 2008 includes costs associated with `One Anglo`
initiatives, Tarmac restructuring and proposed sale of Tarmac as well as
provisions for onerous leases. Year ended 31 December 2007 includes costs
associated with proposed sale of Tarmac.
(4) Includes restructuring costs and legal settlements.
9. Earnings per share (continued)
The calculation of basic and diluted earnings per share for discontinued
operations, based on headline and underlying earnings for discontinued
operations, uses the following earnings data:
Earnings (US$ million)
Discontinued operations 2008 2007
Profit for the financial year attributable to equity
shareholders of the
Company - discontinued operations - 2,010
Operating special items - 13
Operating special items - tax - (2)
Financing special items - 2
Financing special items - tax - (8)
Net profit on disposals - (2,079)
Net profit on disposals - tax - 165
Associates` special items - 1
Associates` special items - tax - 2
Headline earnings for the financial year - discontinued
operations - 104
Operating remeasurements - (3)
Operating remeasurements - tax - 1
Financing remeasurements - (2)
Associates` remeasurements - 204
Associates` remeasurements - tax - (20)
Underlying earnings for the financial year - discontinued
operations - 284
Basic earnings per share (US$)
Discontinued operations 2008 2007
Profit for the financial year attributable to equity
shareholders of the
Company - discontinued operations - 1.54
Operating special items - 0.01
Operating special items - tax - -
Financing special items - -
Financing special items - tax - (0.01)
Net profit on disposals - (1.59)
Net profit on disposals - tax - 0.13
Associates` special items - -
Associates` special items - tax - -
Headline earnings for the financial year - discontinued
operations - 0.08
Operating remeasurements - -
Operating remeasurements - tax - -
Financing remeasurements - -
Associates` remeasurements - 0.16
Associates` remeasurements - tax - (0.02)
Underlying earnings for the financial year - discontinued
operations - 0.22
10. Reconciliation of changes in equity
Attributable to equity shareholders of the Company
Share- Cumulative
Total based translation
share Retained payment adjustment
capital(1) earnings reserve reserve
US$ million
Balance at 1 January
2007 3,484 19,738 247 (38)
Total recognised income
and expense - 7,276 - 58
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 - - - -
Group reinvestment of
dividends in Anglo
Platinum - - - -
Minority conversion of
Anglo Platinum`s
preference shares - 45 - -
Exercise of share
options in Anglo
Platinum - - - -
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 schemes - 23 - -
Cancellation of
treasury shares (33) - - -
IFRS 2 charges arising
on BBBEE and BEE
transactions - 33 - -
Other - 3 (2) -
Balance at 1 January
2008 3,451 15,855 262 20
Total recognised income
and expense - 5,113 - (4,097)
Dividends paid - (1,538) - -
Dividends paid to
minority interests - - - -
Acquisition and
disposal of businesses
(including issue
of shares to minority
interests) - 6 - -
Minority conversion of
Anglo Platinum`s
preference shares - 6 - -
Share buybacks - (595) - -
Purchase of shares for
share schemes - (88) - -
Share-based payment
charges on equity
settled schemes - - 146 -
Issue of shares under
employee share schemes - 97 (70) -
Current tax on
exercised employee
share schemes - 10 - -
Treasury shares issued
in subsidiary entities - 6 - -
Other - (45) (50) -
Balance at 31 December
2008 3,451 18,827 288 (4,077)
Fair value
and
other Minority Total
reserves interests equity
US$ million
Balance at 1 January 2007 840 2,856 27,127
Total recognised income and expense 1,891 844 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 112 (1,196) (1,088)
Issue of shares to minority interests - 28 28
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
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 schemes - - 23
Cancellation of treasury shares 33 - -
IFRS 2 charges arising on BBBEE and
BEE transactions - 35 68
Other (3) (33) (35)
Balance at 1 January 2008 2,873 1,869 24,330
Total recognised income and expense (1,175) 487 328
Dividends paid - - (1,538)
Dividends paid to minority interests - (796) (796)
Acquisition and disposal of businesses
(including issue
of shares to minority interests) - (45) (39)
Minority conversion of Anglo
Platinum`s preference shares - (6) -
Share buybacks - - (595)
Purchase of shares for share schemes - - (88)
Share-based payment charges on equity
settled schemes - 11 157
Issue of shares under employee share
schemes - - 27
Current tax on exercised employee
share schemes - - 10
Treasury shares issued in subsidiary
entities - - 6
Other 34 15 (46)
Balance at 31 December 2008 1,732 1,535 21,756
(1) Total share capital comprises called-up share capital of $738 million
(2007: $738 million) and the share premium account of $2,713 million (2007:
$2,713 million).
Fair value and other reserves comprise:
Available for sale Cash flow hedge
US$ million reserve reserve
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 1 January 2008 2,373 (304)
Total recognised income and expense (1,285) 110
Other - -
Balance at 31 December 2008 1,088 (194)
Other Total fair value and other
US$ million reserves(1) reserves
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 1 January 2008 804 2,873
Total recognised income and
expense - (1,175)
Other 34 34
Balance at 31 December 2008 838 1,732
(1) Other reserves comprise $689 million (2007: $689 million) legal reserve,
$34 million (2007: nil) revaluation reserve and $115 million (2007: $115
million) capital redemption reserve.
11. Consolidated cash flow analysis
a) Reconciliation of profit before tax to cash inflows from continuing
operations
US$ million 2008 2007
Profit before tax - continuing operations 8,571 8,821
Depreciation and amortisation 1,509 1,398
Share-based payment charges 155 138
Special items and remeasurements of subsidiaries and
joint ventures 71 (243)
Net finance costs before remeasurements 452 137
Operating fair value gains before special items and
remeasurements (1) (12)
Share of net income from associates (1,113) (197)
Provisions 46 77
Increase in inventories (999) (352)
Decrease/(increase) in operating receivables 80 (389)
Increase in operating payables 896 53
Other adjustments (88) (56)
Cash inflows from continuing operations 9,579 9,375
b) Reconciliation to the balance sheet
Cash and cash
equivalents(1)
US$ million 2008 2007
Balance sheet 2,771 3,129
Balance sheet - disposal groups(2) 8 -
Bank overdrafts (35) (17)
Bank overdrafts - disposal groups(2) - (38)
Net debt classifications 2,744 3,074
Short term borrowings
US$ million 2008 2007
Balance sheet (6,784) (5,895)
Balance sheet - disposal groups(2) - (31)
Bank overdrafts 35 17
Bank overdrafts - disposal groups(2) - -
Net debt classifications (6,749) (5,909)
Medium and
long term
borrowings
US$ million 2008 2007
Balance sheet (7,211) (2,404)
Balance sheet - disposal groups(2) - -
Bank overdrafts - -
Bank overdrafts - disposal groups(2) - -
Net debt classifications (7,211) (2,404)
(1) `Short term borrowings` on the balance sheet include overdrafts which are
included within cash and cash equivalents in determining 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
Cash and Debt due Debt due
cash within after
US$ million equivalents(1) one year one year
Balance at 1 January 2007 2,980 (2,076) (4,228)
Cash flow(4) 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 1 January 2008 3,074 (5,909) (2,404)
Cash flow(4) (143) (1,432) (5,181)
Acquisition of businesses - (209) (461)
Reclassifications - 190 (190)
Movement in fair value - (11) (176)
Other non-cash movements - - (15)
Currency movements (187) 622 1,216
Balance at 31 December 2008 2,744 (6,749) (7,211)
Current Net debt Total net debt
financial asset excluding including
US$ million investments(2) hedges Hedges(3) hedges
Balance at 1
January 2007 - (3,324) 193 (3,131)
Cash flow(4) - (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 1
January 2008 - (5,239) 388 (4,851)
Cash flow(4) 210 (6,546) (380) (6,926)
Acquisition
of
businesses - (670) - (670)
Reclassifications - - - -
Movement in
fair value - (187) (305) (492)
Other
non-cash
movements - (15) - (15)
Currency
movements (37) 1,614 - 1,614
Balance at
31 December
2008 173 (11,043) (297) (11,340)
(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 ongoing obligations.
(2) Relates to amounts invested in unlisted preference shares (guaranteed by
Nedbank Limited and Nedbank Group Limited) pending completion of the
anticipated disposal of the Group`s 50% interest in the Booysendal joint
venture.
(3) 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. These consist of net current derivative
liabilities of $437 million (2007: $396 million net assets) and net non-current
derivative assets of $140 million (2007: $8 million net liabilities) and are
classified within other financial liabilities and other financial assets
respectively on the balance sheet.
(4) Cash flow on debt due within one year includes nil relating to discontinued
operations (2007: repayments of $162 million). Similarly, cash flow on debt due
after one year includes nil relating to discontinued operations (2007: receipts
of $993 million). Cash flow on debt due after one year includes repayment of
finance leases of $3 million (2007: nil) which is included within `Other
financing activities` in the Consolidated cash flow statement.
12. EBITDA by business segment
US$ million 2008 2007
By business segment
Platinum 2,732 3,155
Diamonds 665 587
Base Metals 2,845 4,683
Ferrous Metals and Industries 3,064 1,561
Coal 2,585 882
Industrial Minerals 487 732
Exploration (212) (157)
Corporate Activities and Unallocated Costs (319) (272)
EBITDA - continuing operations 11,847 11,171
EBITDA - discontinued operations - 961
EBITDA - total Group 11,847 12,132
EBITDA is stated before special items and remeasurements and is reconciled to
`Total profit from operations and associates` as follows:
US$ million 2008 2007
Total profit from operations and associates 8,972 8,929
Operating special items and remeasurements (including
associates) 1,357 711
Net profit on disposals (including associates) (1,027) (484)
Associates` financing remeasurements 15 4
Depreciation and amortisation: subsidiaries and joint
ventures 1,509 1,398
Share of associates` interest, tax, depreciation,
amortisation and minority interests 1,021 613
EBITDA - continuing operations 11,847 11,171
EBITDA - discontinued operations - 961
EBITDA - total Group 11,847 12,132
13. Capital expenditure on tangible assets and biological assets
US$ million 2008 2007
Platinum 1,563 1,479
Base Metals 1,494 610
Ferrous Metals and Industries 831 470
Coal 933 1,052
Industrial Minerals 301 274
Other 24 46
Purchase of tangible assets - continuing operations 5,146 3,931
Investment in biological assets 1 1
Capital expenditure on tangible assets and biological
assets - continuing operations 5,147 3,932
Paper and Packaging - 186
Investment in biological assets - 26
Capital expenditure on tangible assets and biological
assets - discontinued operations - 212
Capital expenditure on tangible assets and biological
assets - total Group 5,147 4,144
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, but
excludes expenditure on biological assets.
14. Acquisitions
Acquisition of subsidiaries
On 5 August 2008 the Group acquired a 63.3% shareholding in Anglo Ferrous
Brazil SA, which holds a 51% interest in the Minas-Rio iron ore project
(Minas-Rio) and a 70% interest in the Amapa iron ore system (Amapa) at a price
of R$28.147 ($18.056) per share. At that time the Group committed to extend the
offer to the minority shareholders of Anglo Ferrous Brazil SA. This offer was
formally made on 31 October 2008 and as a result, the Group`s shareholding in
Anglo Ferrous Brazil SA at 31 December 2008 was 98.9%. Total cash paid to
acquire a controlling interest was $3.5 billion. A further $2.0 billion was
paid (including cash settlement of a related derivative instrument ($0.7
billion)) to subsequently acquire minority interests.
This transaction followed on from the prior year acquisition of a 49% interest
in each of Minas-Rio and LLX Minas-Rio, which owns the Port of AAu (presented
as a comparative in the Acquisition of material joint ventures section).
As a result of these transactions the Group`s effective shareholding in each of
the operating entities at 31 December 2008 was 99.4% in Minas-Rio, 49% in LLX
Minas-Rio and 69.2% in Amapa.
In the year ended 31 December 2008 the Group purchased 7,941,964 shares (2007:
4,435,086 shares) in Anglo Platinum Limited for total consideration of $1,108
million (2007: $671 million). The cash paid in the year ended 31 December 2008,
was $1,113 million (2007: $658 million). In the year ended 31 December 2007,
the Group also acquired 3,353,108 shares in Anglo Platinum Limited through a
dividend reinvestment plan. The Group`s shareholding in Anglo Platinum Limited
increased from 76.5% at 31 December 2007 to 79.6% at 31 December 2008.
The carrying value and fair value of the net assets at the date of acquisition
of a controlling interest and related net cash outflows are shown below. The
fair values presented are provisional, and will be finalised in 2009 when the
final fair values arising from the fair value assessments are confirmed.
Anglo Ferrous Brazil SA(2)
Carrying Provisional
value fair value
US$ million
Net assets acquired
Tangible assets 930 930
Other non-current assets 57 96
Current assets 319 388
Current liabilities (278) (278)
Non-current liabilities (418) (534)
Minority interests (235) (230)
375 372
Add: Value attributable to reserves and resources
acquired, net of
deferred tax(4) 1,590
Less: Investments in associates previously recorded -
Less: Fair value of assets contributed -
Fair value of net assets acquired 1,962
Partial funding of partner cash calls -
Goodwill arising on acquisitions 1,556
Negative goodwill arising on acquisitions -
Total cost of acquisitions 3,518
Satisfied by
Net cash acquired 243
Cash paid in prior year -
3,275
Other(3)
Carrying Fair
value value
US$ million
Net assets acquired
Tangible assets 56 67
Other non-current assets 1 13
Current assets 69 69
Current liabilities (35) (36)
Non-current liabilities (7) (13)
Minority interests - -
84 100
Add: Value attributable to reserves and resources
acquired, net of
deferred tax(4) 59
Less: Investments in associates previously recorded -
Less: Fair value of assets contributed -
Fair value of net assets acquired 159
Partial funding of partner cash calls -
Goodwill arising on acquisitions 54
Negative goodwill arising on acquisitions -
Total cost of acquisitions 213
Satisfied by
Net cash acquired 12
Cash paid in prior year -
201
2008(1) 2007
Total
provisional Total fair
fair value value
US$ million
Net assets acquired
Tangible assets 997 314
Other non-current assets 109 12
Current assets 457 65
Current liabilities (314) (54)
Non-current liabilities (547) (66)
Minority interests (230) (80)
472 191
Add: Value attributable to reserves and
resources acquired, net of
deferred tax(4) 1,649 4
Less: Investments in associates previously
recorded - (9)
Less: Fair value of assets contributed - (59)
Fair value of net assets acquired 2,121 127
Partial funding of partner cash calls - (12)
Goodwill arising on acquisitions 1,610 51
Negative goodwill arising on acquisitions - (2)
Total cost of acquisitions 3,731 164
Satisfied by
Net cash acquired 255 11
Cash paid in prior year - 30
3,476 123
Net cash paid(5)(6)
(1) Had all these acquisitions of subsidiaries taken place at 1 January 2008,
the Group`s revenue would have been $26,367 million and the Group`s operating
profit before special items and remeasurements would have been $7,929 million
for the year ended 31 December 2008.
(2) Since the date of acquisition, Anglo Ferrous Brazil SA has contributed
revenue of nil and operating loss before special items and remeasurements of
$70 million to the Group.
(3) In total since the date of acquisition, these Other acquisitions have
contributed revenue of $179 million and operating profit before special items
and remeasurements of $16 million to the Group.
(4) Represents the Group`s share of value (implicit in the transaction) of
reserves and resources, capitalised within tangible assets.
(5) Includes net cash paid by discontinued operations of nil (2007: $9 million).
(6) $2,411 million (2007: $658 million) has been paid to acquire minority
interests in existing subsidiaries. In 2008 this related primarily to Anglo
Ferrous Brazil SA and Anglo Platinum (2007: Anglo Platinum). These payments are
not reflected in the above net cash paid amount. This resulted in total net
cash paid for the acquisition of subsidiaries in the year of $5,887 million.
14. Acquisitions (continued)
Acquisition of material joint ventures
The Group made one material acquisition of a joint venture in the year ended 31
December 2008 (2007: one).
On 29 February 2008 Anglo Coal Australia completed the acquisition of a 70%
interest in the Foxleigh joint venture (Foxleigh) in Queensland, Australia. The
total cost of acquisition was $606 million. The Group has proportionately
consolidated 70% of Foxleigh from 29 February 2008.
The carrying value and provisional fair value of the net assets at the date of
acquisition and related net cash outflow for material joint venture
acquisitions are shown below:
Foxleigh
Carrying Provisional
US$ million value fair value
Net assets acquired
Tangible assets
Value attributable to reserves and resources
acquired - 684
Other tangible assets 108 108
Other non-current assets - -
Current assets 41 41
Current liabilities (37) (37)
Non-current liabilities (47) (190)
Fair value of net assets acquired and total cost
of acquisitions 65 606
Satisfied by
Net cash acquired 1
Deferred consideration -
Costs accrued -
Net cash paid(2) 605
2008 2007
Minas-Rio Minas-Rio
49% interest(1) 49% interest
US$ million Fair value Fair value
Net assets acquired
Tangible assets
Value attributable to reserves and
resources acquired 151 1,770
Other tangible assets - 86
Other non-current assets - 16
Current assets - 52
Current liabilities - (84)
Non-current liabilities 93 (632)
Fair value of net assets acquired and
total cost of acquisitions 244 1,208
Satisfied by
Net cash acquired - 48
Deferred consideration 242 47
Costs accrued - 1
Net cash paid(2) 2 1,112
(1) During the year further consideration of $284 million (which is contingent
on certain criteria being met) was recognised (reduced from the $600 million
recognised in the first half of 2008, as a result of a change in the
assumptions with regards to payment and purchase of an additional interest in
Minas-Rio) together with an adjustment to the net deferred tax liability
recognised to reflect the future tax benefit from cash payments made on
acquisition. These adjustments resulted in amendments to the `Value
attributable to reserves and resources acquired` and deferred tax in the
acquisition balance sheet.
(2) In addition, during the year there was further net cash paid of $2 million
(2007: $2 million) for other joint venture acquisitions. This resulted in total
net cash paid for investments in joint ventures of $609 million (2007: $1,114
million).
15. Disposals and demerger of subsidiaries and businesses
US$ million 2008 2007
Net assets disposed
Tangible assets 479 6,197
Other non-current assets 43 1,208
Current assets 210 4,194
Current liabilities (83) (2,416)
Non-current liabilities (113) (3,064)
Net assets(1) 536 6,119
Minority interests (116) (1,200)
Group`s share of net assets immediately prior to disposal 420 4,919
Less: Retained investments in associates - (393)
Less: Retained financial asset investments - (318)
Net assets disposed 420 4,208
Cumulative translation differences recycled from reserves (2) (334)
Fair value losses arising on transactions - 68
Dividend in specie relating to Mondi demerger - (3,718)
Other - 3
Net gain on disposals 119 157
Net sale proceeds 537 384
Net cash and cash equivalents disposed (4) (437)
Costs accrued 4 4
Deferred consideration (56) -
Realised foreign exchange (13) -
468 (49)
Net cash inflow/(outflow) from disposals and demerger(2)
(1) 2008 includes net assets of $79 million no longer consolidated following
loss of control of a subsidiary.
(2) 2008 includes nil in relation to discontinued operations (2007: net cash
outflow of $159 million).
Disposals of businesses in the year ended 31 December 2008
The disposal of Namakwa Sands was the only material disposal of a business in
the year.
Namakwa Sands
On 1 October 2008 Namakwa Sands was sold to Exxaro Resources Limited (Exxaro)
for consideration of $330 million including deferred consideration.
The net asset position at the date of disposal, together with the resulting
profit on disposal and related cash inflow, is shown below:
US$ million 2008
Tangible assets 296
Other non-current assets 4
Current assets 91
Current liabilities (15)
Non-current liabilities (84)
Net assets disposed 292
Cumulative translation differences recycled from reserves 1
Net gain on disposal 49
Net sale proceeds 342
Deferred consideration (19)
Realised foreign exchange (12)
Net cash inflow from disposal of Namakwa Sands 311
On 3 November 2008 as part of the same transaction, the Group completed the
sale of a 26% interest in both the Black Mountain zinc, lead and copper
operation and the Gamsberg zinc project for consideration of $23 million.
15. Disposals and demerger of subsidiaries and businesses (continued)
Disposals and demerger of subsidiaries and associates in the year ended 31
December 2007
Significant disposals and demerger of subsidiaries and associates recorded
during the year ended 31 December 2007 are summarised below. For further
details refer to the Group`s financial statements for the year ended 31
December 2007.
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 of $3,718 million.
The Paper and Packaging business is presented as a discontinued operation.
Refer to note 17 for financial information on discontinued operations. The
Group held a 5.3% interest in Mondi at 31 December 2008 and 31 December 2007
through Epoch Investment Holdings Limited, Epoch Two Investment Holdings
Limited and Tarl Investment Holdings Limited.
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.
Tongaat-Hulett Group
In December 2006 the Tongaat-Hulett Group announced the proposed unbundling and
listing of Hulamin and simultaneous introduction of 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 Tongaat-Hulett at 31 December 2008 was 37.1%
(2007: 37.2%). The Group`s legal interest in Hulamin at 31 December 2008 was
38.4% (2007: 38.4%).
AngloGold Ashanti
On 2 October 2007 the Group sold 67.1 million shares in AngloGold Ashanti
Limited for $2.9 billion. This reduced the Group`s shareholding from 41.6% to
17.3%. The Group`s representation on the company`s board was also withdrawn at
this time. The remaining investment is accounted for as a financial asset
investment. The Gold business is presented as a discontinued operation. Refer
to note 17 for financial information on discontinued operations. The Group`s
shareholding at 31 December 2008 was 16.2% (2007: 16.6%).
16. Disposal groups and non-current assets held for sale
Net assets relating to Namakwa Sands, which were previously classified as held
for sale at 31 December 2007, were disposed of on 1 October 2008 as disclosed
in note 15.
The following assets and liabilities relating to disposal groups were
classified as held for sale. The Group expects to complete the sale of these
businesses within 12 months of the year end.
2008 2007
US$ million Platinum disposal groups(1) Total(2)
Intangible assets - 3
Tangible assets 257 589
Investments in associates - 74
Other non-current assets 2 4
Total non-current assets 259 670
Inventories - 38
Trade and other receivables 8 50
Cash and cash equivalents 8 -
Total current assets 16 88
Total assets 275 758
Trade and other payables (21) (53)
Short term borrowings - (69)
Other current liabilities - (4)
Total current liabilities (21) (126)
Retirement benefit obligations - (4)
Deferred tax liabilities (56) (148)
Provisions for liabilities and
charges (3) (9)
Total non-current liabilities (59) (161)
Total liabilities (80) (287)
Net assets 195 471
(1) This reflects the reclassification of operations to be sold under
previously announced BEE deals. Due to the significant deterioration in global
market conditions, coupled with a material decline in platinum group metal
prices and constrained debt and equity markets, in the fourth quarter of 2008,
the Lebowa mine plan and project pipeline, including the Middelpunt Hill UG2
expansion project, were placed under critical review in conjunction with
Anooraq. Anglo Platinum and Anooraq remain committed to concluding the
transaction as soon as practically possible and have extended the date for
fulfilment of the conditions until 30 April 2009, thus it remains appropriate
to classify these entities as held for sale. Northam Platinum Limited was sold
on 20 August 2008 to Mvelaphanda Resources Limited. The cash inflow from the
disposal was $205 million. In the event ministerial approval is not received,
the sale of Northam Platinum Limited would be unwound. The split of the total
assets, total liabilities and net assets for the Platinum disposal groups is as
follows:
2008
US$ million Total assets Total liabilities Net assets
Lebowa Platinum Mines
Limited 265 (78) 187
Northam Platinum Limited - - -
Other 10 (2) 8
275 (80) 195
2007
US$ million Total assets Total liabilities Net assets
Lebowa Platinum Mines
Limited 243 (166) 77
Northam Platinum Limited 74 - 74
Other 11 (2) 9
328 (168) 160
(2) Disposal groups at 31 December 2007 related to Namakwa Sands and Platinum
disposal groups.
The net carrying amount of assets and associated liabilities classified as held
for sale during the year was not written down in 2008 or 2007.
17. Discontinued operations
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.
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 presented as discontinued.
17. Discontinued operations (continued)
The results of the discontinued businesses are shown below:
Before special items and
remeasurements
US$ million 2008 2007
Revenue - 4,062
Total operating costs - (3,741)
Operating profit from subsidiaries and joint ventures -
discontinued operations - 321
Net profit on disposals - -
Share of net income from associates - 97
Total profit from discontinued operations and associates - 418
Net finance costs - (19)
Profit before tax - discontinued operations - 399
Income tax expense - (81)
Profit for the financial year - discontinued operations - 318
Profit on partial disposal of AngloGold Ashanti(1) - -
Transaction costs relating to the demerger of Mondi(1) - -
Tax on net profit on disposal and demerger of discontinued
operations - -
Net profit after tax on disposal and demerger of
discontinued
operations - -
Total profit for the financial year - discontinued
operations - 318
Special items and
remeasurements
US$ million 2008 2007
Revenue - -
Total operating costs - (10)
Operating profit from subsidiaries and joint ventures -
discontinued operations - (10)
Net profit on disposals - 119
Share of net income from associates - (187)
Total profit from discontinued operations and associates - (78)
Net finance costs - -
Profit before tax - discontinued operations - (78)
Income tax expense - 1
Profit for the financial year - discontinued operations - (77)
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 - 1,726
US$ million 2008 2007
Revenue - 4,062
Total operating costs - (3,751)
Operating profit from subsidiaries and joint ventures -
discontinued operations - 311
Net profit on disposals - 119
Share of net income from associates - (90)
Total profit from discontinued operations and associates - 340
Net finance costs - (19)
Profit before tax - discontinued operations - 321
Income tax expense - (80)
Profit for the financial year - discontinued operations - 241
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
(1) For further details of the demerger of the Paper and Packaging business and
disposal of AngloGold Ashanti refer to note 15.
Summary discontinued segment information
Segment revenue and segment result by discontinued business segment were:
Segment revenue
US$ million 2008 2007
Subsidiaries and joint ventures
Paper and Packaging - 4,062(2)
Revenue and net income from associates
Gold - 1,004
Paper and Packaging - 49
Total associates - 1,053
Total discontinued operations including net income from
associates - 5,115
Net profit on disposals
Total profit from discontinued operations and associates
Segment result before
special items and
remeasurements(1)
US$ million 2008 2007
Subsidiaries and joint ventures
Paper and Packaging - 321
Revenue and net income from associates
Gold - 95
Paper and Packaging - 2
Total associates - 97
Total discontinued operations including net income from
associates - 418
Net profit on disposals - -
Total profit from discontinued operations and associates - 418
Segment result after
special items and
remeasurements(1)
US$ million 2008 2007
Subsidiaries and joint ventures
Paper and Packaging - 311
Revenue and net income from associates
Gold - (92)
Paper and Packaging - 2
Total associates - (90)
Total discontinued operations including net income from
associates - 221
Net profit on disposals - 119
Total profit from discontinued operations and associates - 340
(1) Segment result is defined as being segment revenue less segment expense;
that is operating profit.
(2) This represents segment revenue; the Group`s share of associates of
discontinued operations and discontinued associates` revenue figures are
provided for additional information.
17. 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 2008 2007
Operating special items - (13)
Operating remeasurements - 3
Net profit on disposals - 119
Financing special items - (2)
Financing remeasurements - 2
Total special items and remeasurements before tax -
discontinued operations - 109
Tax - 1
Net total special items and remeasurements attributable to
equity shareholders of the Company -
discontinued operations - 110
Associates` special items and remeasurements - discontinued operations
US$ million 2008 2007
Associates` operating special items and remeasurements - (225)
Associates` net profit on disposals - 7
Associates` financing remeasurements - 13
Total associates` special items and remeasurements before
tax - discontinued operations - (205)
Tax - 18
Net total associates` special items and remeasurements -
discontinued operations - (187)
18. Contingent liabilities and contingent assets
(i) Contingent liabilities
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 believes that the likelihood of a material liability arising
is remote. At 31 December 2008 contingent liabilities in respect of the Group`s
subsidiaries comprise aggregate amounts of $548 million (2007: $488 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.
No contingent liabilities were secured on the assets of the Group at 31
December 2008 or 31 December 2007.
(ii) Contingent assets
There were no significant contingent assets in the Group at 31 December 2008 or
31 December 2007.
18. Contingent liabilities and contingent assets (continued)
(iii) Other
Minera Loma de NA-quel
In January 2008 Minera Loma de NA-quel (MLdN) was notified of the intention of
the Venezuelan Ministry of Basic Industries and Mining (MIBAM) to cancel 13 of
its exploration and exploitation concessions due to MLdN`s alleged failure to
fulfil certain conditions of the concessions. These concessions do not include
the concessions where the current mining operations and metallurgical
facilities are located. MLdN believes that it has complied with the conditions
of these concessions and has lodged administrative appeals against the notices
of termination and is waiting for a response from MIBAM. MLdN may in the future
undertake further appeals, including with Venezuela`s Supreme Court, if the
MIBAM`s ruling does not adequately protect its interests.
Anglo American and MLdN continue to strive to resolve the matter by way of
constructive dialogue; however, 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 such, Anglo American
anticipates restoration of these concessions and renewal of those that expire
in 2012. As a result, the Group continues to consolidate MLdN and no impairment
has been recorded for the year ended 31 December 2008.
At 31 December 2008 the Group`s interest in the book value of MLdN, including
its mineral rights, was $443 million (2007:
$616 million), as included in the Group`s balance sheet. In the 12 months to 31
December 2008 MLdN`s contribution to Group operating profit was $30 million
(2007: $370 million).
Anglo American Sur
Anglo American inherited a 1978 agreement with Codelco, the Chilean state
mining company, when it acquired Disputada de Las Condes (since renamed Anglo
American Sur) in 2002. The agreement grants Codelco the right, subject to
certain conditions and limitations, to acquire up to a 49% minority interest in
Anglo American Sur, the wholly owned Group company that owns the Los Bronces
and El Soldado copper mines and the Chagres smelter. These conditions include
limiting the window for exercising the right to once every three years in the
month of January until January 2027. The right was not exercised in 2009. The
calculations of the price at which Codelco can exercise its right are complex
and confidential but do, inter alia, take account of company profitability over
a five year period.
19. Related party transactions
The Group has a related party relationship with its subsidiaries, associates
and joint ventures.
At 31 December 2008 the Group held $88 million (2007: $131 million) of 10%
non-cumulative redeemable preference shares in DB Investments, the holding
company of De Beers Societe Anonyme. The Group has also made loans to De Beers
during the year totalling $118 million. The loans are interest free for two
years, at which point they revert to a market rate of interest, and are
convertible into ordinary shares. These loans are included within Financial
asset investments.
In addition to the Group`s normal funding requirements, the shareholders of De
Beers have agreed to provide loans to De Beers, proportionate to their
shareholdings, totalling $500 million. Anglo American holds a 45% interest in
De Beers and will therefore provide a loan of $225 million.
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 $609 million (2007:
$275 million), excluding nil (2007:
$52 million) from discontinued operations, as disclosed in the Consolidated
cash flow statement.
At 31 December 2008 the directors of the Company and their immediate relatives
controlled 3% (2007: 3%) of the voting shares of the Company.
20. Events occurring after end of year
Subsequent to the year end, the Group disposed of 15.5 million shares in
AngloGold Ashanti for proceeds of $434 million.
As a result, the Group`s shareholding in AngloGold Ashanti has reduced to 11.8%.
With the exception of the above there have been no material reportable events
since 31 December 2008.
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.
2008 2007
Anglo Platinum (troy ounces) (1)(2)
Platinum 2,386,600 2,474,000
Palladium 1,318,800 1,389,700
Rhodium 299,300 328,800
4,004,700 4,192,500
Nickel (tonnes)(3) 15,500 19,200
Copper (tonnes)(3) 8,800 11,000
Gold 78,500 97,900
Anglo Coal (tonnes)
South Africa
Eskom 36,158,100 34,064,000
Trade - Thermal 22,286,800 23,952,400
Trade - Metallurgical 971,900 1,143,700
59,416,800 59,160,100
Australia
Thermal 14,696,300 15,059,300
Metallurgical 13,144,900 10,145,400
27,841,200 25,204,700
South America
Thermal 11,484,500 11,259,800
Canada
Thermal 140,100 -
Metallurgical 632,300 -
772,400 -
Total 99,514,900 95,624,600
Anglo Coal (tonnes)
South Africa
Bank - 51,900
Greenside 3,401,100 3,314,900
Goedehoop 7,449,400 8,456,200
Isibonelo 5,152,100 5,001,000
Kriel 10,344,400 11,210,100
Kleinkopje 4,545,600 3,490,700
Landau 4,089,300 4,058,200
New Denmark 5,272,500 5,134,700
New Vaal 17,034,400 17,119,500
Nooitgedacht 454,600 565,700
Mafube 1,673,400 757,200
59,416,800 59,160,100
Australia
Callide 9,582,700 10,031,100
Drayton 3,711,500 3,902,700
German Creek (Capcoal) 5,621,900 4,115,700
Jellinbah East 1,033,900 891,800
Moranbah 3,181,500 3,211,600
Dawson Complex 3,537,200 3,051,800
Foxleigh 1,172,500 -
27,841,200 25,204,700
South America
Carbones del Guasare 1,074,200 1,384,400
Carbones del CerrejACubedn 10,410,300 9,875,400
11,484,500 11,259,800
Canada
Peace River Coal 772,400 -
Total 99,514,900 95,624,600
(1) See the published results of Anglo Platinum Limited for further analysis of
production information.
(2) Northam Platinum Limited was transferred to a disposal group in September
2007. Production information excludes Northam Platinum Limited and 2007
information has been adjusted accordingly. Northam Platinum Limited was sold on
20 August 2008.
(3) Also disclosed within total attributable nickel and copper production.
2008
De Beers
(diamonds
recovered -
carats)
100% basis
(Anglo
American 45%)
Debswana 32,276,000
Namdeb 2,122,000
De Beers
Consolidated
Mines 11,960,000
Williamson 134,000
Canada 1,640,000
48,132,000
Anglo Base
Metals
Copper
Collahuasi
100% basis
(Anglo
American 44%)
Ore mined tonnes 57,699,800
Ore processed Oxide tonnes 7,317,400
Sulphide tonnes 42,377,400
Ore grade
processed Oxide % Cu 0.6
Sulphide % Cu 1.1
Production Copper concentrate dry metric tonnes 1,574,000
Copper cathode tonnes 49,400
Copper in concentrate tonnes 415,000
Total copper
production for
Collahuasi tonnes 464,400
Anglo American
Sur
Los Bronces
mine
Ore mined tonnes 21,045,100
Marginal ore
mined tonnes 36,008,900
Las Tortolas
concentrator Ore processed tonnes 20,012,700
Ore grade processed % Cu 1.1
Average recovery % 84.9
Production Copper concentrate dry metric tonnes 677,900
Copper cathode tonnes 45,800
Copper in concentrate tonnes 190,000
Total tonnes 235,800
El Soldado mine
Ore mined Open pit - ore mined tonnes 5,305,800
Open pit - marginal ore
mined tonnes 21,700
Underground (sulphide) tonnes 1,312,700
Total tonnes 6,640,200
Ore processed Oxide tonnes 821,800
Sulphide tonnes 7,179,700
Ore grade
processed Oxide % Cu 1.3
Sulphide % Cu 0.8
Production Copper concentrate dry metric tonnes 174,100
Copper cathode tonnes 6,700
Copper in concentrate tonnes 43,100
Total tonnes 49,800
Chagres Smelter
Copper concentrate
smelted tonnes 148,400
Production Copper blister/anodes tonnes 146,100
Acid tonnes 486,600
Total copper
production for
Anglo
American Sur tonnes 285,600
Anglo American
Norte
Mantos Blancos
mine
Ore processed Oxide tonnes 4,694,800
Sulphide tonnes 4,311,100
Marginal ore mined tonnes 5,003,000
Ore grade
processed Oxide % Cu (soluble) 0.7
Sulphide % Cu (insoluble) 1.2
Marginal ore % Cu (soluble) 0.3
2007
De Beers
(diamonds
recovered -
carats)
100% basis
(Anglo
American 45%)
Debswana 33,638,000
Namdeb 2,176,000
De Beers
Consolidated
Mines 14,998,000
Williamson 220,000
Canada 81,000
51,113,000
Anglo Base
Metals
Copper
Collahuasi
100% basis
(Anglo
American 44%)
Ore mined tonnes 61,969,800
Ore processed Oxide tonnes 7,129,200
Sulphide tonnes 43,679,900
Ore grade
processed Oxide % Cu 0.8
Sulphide % Cu 1.0
Production Copper concentrate dry metric tonnes 1,346,000
Copper cathode tonnes 58,100
Copper in concentrate tonnes 393,900
Total copper
production for
Collahuasi
tonnes 452,000
Anglo American
Sur
Los Bronces
mine
Ore mined tonnes 26,503,300
Marginal ore
mined tonnes 35,744,000
Las Tortolas
concentrator Ore processed tonnes 21,125,300
Ore grade processed % Cu 1.0
Average recovery % 85.3
Production Copper concentrate dry metric tonnes 607,400
Copper cathode tonnes 48,300
Copper in concentrate tonnes 182,900
Total tonnes 231,200
El Soldado mine
Ore mined Open pit - ore mined tonnes 6,283,000
Open pit - marginal ore
tonnes 76,600
mined
Underground (sulphide) tonnes 1,514,900
Total tonnes 7,874,500
Ore processed Oxide tonnes 791,900
Sulphide tonnes 7,400,900
Ore grade
processed Oxide % Cu 1.4
Sulphide % Cu 1.1
Production Copper concentrate dry metric tonnes 229,700
Copper cathode tonnes 7,500
Copper in concentrate tonnes 65,300
Total tonnes 72,800
Chagres Smelter
Copper concentrate
smelted tonnes 168,100
Production Copper blister/anodes tonnes 164,100
Acid tonnes 493,400
Total copper
production for
Anglo
American Sur tonnes 304,000
Anglo American
Norte
Mantos Blancos
mine
Ore processed Oxide tonnes 4,587,900
Sulphide tonnes 3,879,800
Marginal ore mined tonnes 5,862,900
Ore grade
processed Oxide % Cu (soluble) 0.7
Sulphide % Cu (insoluble) 1.1
Marginal ore % Cu (soluble) 0.3
Production statistics (continued)
2008
Anglo Base
Metals
(continued)
Anglo American
Norte
(continued)
Mantos Blancos
mine (continued)
Production Copper concentrate dry metric tonnes 132,300
Copper cathode tonnes 39,600
Copper in concentrate tonnes 46,800
Total tonnes 86,400
Mantoverde mine
Ore processed Oxide tonnes 9,556,900
Marginal ore tonnes 4,300,400
Ore grade
processed Oxide % Cu (soluble) 0.7
Marginal ore % Cu (soluble) 0.4
Production Copper cathode tonnes 62,500
Total copper
production Anglo
American Norte tonnes 148,900
Black Mountain tonnes 2,500
Total Anglo Base
Metals copper
production tonnes 641,300
Anglo Platinum
copper
production
Production(1) tonnes 8,800
Total
attributable
copper
production tonnes 650,100
Nickel, Niobium,
Mineral Sands
and Phosphates
Nickel
Codemin
Ore mined tonnes 498,400
Ore processed tonnes 475,900
Ore grade
processed % Ni 2.1
Production tonnes 9,100
Loma de NA-quel
Ore mined tonnes 811,000
Ore processed tonnes 676,800
Ore grade
processed % Ni 1.6
Production tonnes 10,900
Total Anglo Base
Metals nickel
production tonnes 20,000
Anglo Platinum
nickel
production
Production(1) tonnes 15,500
Total
attributable
nickel
production tonnes 35,500
Niobium
CatalAGBPo
Ore mined tonnes 768,100
Ore processed tonnes 818,100
Ore grade
processed Kg Nb/tonne 11.1
Production tonnes 4,600
Mineral Sands
Namakwa Sands
Ore mined tonnes 13,418,600
Production Ilmenite tonnes 240,900
Rutile tonnes 19,100
Zircon tonnes 97,400
Smelter
production Slag tapped tonnes 118,500
Iron tapped tonnes 78,800
Phosphates
CopebrAs
Sodium
tripolyphosphate tonnes 10,200
Phosphates tonnes 982,100
Zinc and Lead
Black Mountain
Ore mined tonnes 1,199,800
Ore processed tonnes 1,204,800
Ore grade
processed Zinc % Zn 3.0
Lead % Pb 4.2
Copper % Cu 0.4
Production Zinc in concentrate tonnes 27,900
Lead in concentrate tonnes 47,000
Copper in concentrate tonnes 2,500
2007
Anglo Base
Metals
(continued)
Anglo American
Norte
(continued)
Mantos Blancos
mine (continued)
Production Copper concentrate dry metric tonnes 105,900
Copper cathode tonnes 48,700
Copper in concentrate tonnes 40,200
Total tonnes 88,900
Mantoverde mine
Ore processed Oxide tonnes 9,280,700
Marginal ore tonnes 5,511,100
Ore grade
processed Oxide % Cu (soluble) 0.7
Marginal ore % Cu (soluble) 0.3
Production Copper cathode tonnes 61,000
Total copper
production Anglo
American Norte tonnes 149,900
Black Mountain tonnes 2,200
Total Anglo Base
Metals copper
production tonnes 655,000
Anglo Platinum
copper
production
Production(1) tonnes 11,000
Total
attributable
copper
production tonnes 666,000
Nickel, Niobium,
Mineral Sands
and Phosphates
Nickel
Codemin
Ore mined tonnes 539,300
Ore processed tonnes 522,600
Ore grade
processed % Ni 2.1
Production tonnes 9,900
Loma de NA-quel
Ore mined tonnes 1,183,200
Ore processed tonnes 1,096,100
Ore grade
processed % Ni 1.6
Production tonnes 15,700
Total Anglo Base
Metals nickel
production tonnes 25,600
Anglo Platinum
nickel
production
Production(1) tonnes 19,200
Total
attributable
nickel
production tonnes 44,800
Niobium
CatalAGBPo
Ore mined tonnes 852,500
Ore processed tonnes 831,700
Ore grade
processed Kg Nb/tonne 10.9
Production tonnes 4,700
Mineral Sands
Namakwa Sands
Ore mined tonnes 18,111,700
Production Ilmenite tonnes 300,300
Rutile tonnes 24,500
Zircon tonnes 114,800
Smelter
production Slag tapped tonnes 151,300
Iron tapped tonnes 101,800
Phosphates
CopebrAs
Sodium
tripolyphosphate tonnes 56,700
Phosphates tonnes 1,037,800
Zinc and Lead
Black Mountain
Ore mined tonnes 1,065,200
Ore processed tonnes 1,099,600
Ore grade
processed Zinc % Zn 3.2
Lead % Pb 4.3
Copper % Cu 0.3
Production Zinc in concentrate tonnes 28,300
Lead in concentrate tonnes 41,900
Copper in concentrate tonnes 2,200
(1) Northam Platinum Limited was transferred to a disposal group in September
2007. Production information excludes Northam Platinum Limited and 2007
information has been adjusted accordingly. Northam Platinum Limited was sold on
20 August 2008.
Production statistics (continued)
Anglo Base Metals (continued)
2008 2007
Ore mined tonnes 1,561,900 1,584,700
Ore processed tonnes 1,516,900 1,513,600
Ore grade
processed Zinc % Zn 12.1 12.0
Lead % Pb 1.6 1.9
Production Zinc in concentrate tonnes 167,200 164,700
Skorpion Lead in concentrate tonnes 15,900 20,200
Ore mined tonnes 1,390,400 1,402,300
Ore processed tonnes 1,333,300 1,379,600
Ore grade
processed Zinc % Zn 11.7 11.7
Production Zinc tonnes 145,400 150,100
Total
attributable
zinc
production tonnes 340,500 343,100
Total
attributable
lead
production tonnes 62,900 62,100
Anglo Ferrous
Metals and
Industries
Kumba Iron Ore
Lump tonnes 22,042,000 19,043,000
Fines tonnes 14,657,000 13,357,000
AmapA(1)
Sinter feed tonnes 128,000 -
Pellet feed tonnes 584,000 -
Total iron ore
production tonnes 37,411,000 32,400,000
Scaw Metals
South Africa -
Steel Products tonnes 771,000 776,000
International
- Steel
Products tonnes 879,000 803,000
Samancor
Manganese(2)
Manganese ore tonnes 2,704,000 2,411,000
Manganese
alloys(3) tonnes 306,000 310,000
Anglo
Industrial
Minerals
Aggregates tonnes 93,095,000 95,393,300
Lime products tonnes 1,353,000 1,468,200
Concrete m3 6,312,000 8,858,400
(1) Production from AmapA is included from 5 August 2008. AmapA is not
currently in commercial production. Until commercial production is reached all
revenue and related costs are being capitalised. AmapA production for full year
2008 was 1.2 Mt.
(2) Saleable production.
(3) Production includes Medium Carbon Ferro Manganese.
Production statistics (continued)
Quarterly production statistics(1)
December 2008 September 2008 June 2008
Anglo Platinum(2)
Platinum (troy ounces) 842,300 543,200 572,500
Palladium (troy ounces) 450,500 321,700 300,800
Rhodium (troy ounces) 107,100 75,300 59,400
Nickel (tonnes) 4,100 4,000 3,700
Anglo Coal (tonnes)
Eskom 9,465,900 9,692,200 8,637,000
Thermal 12,247,300 12,377,600 12,819,800
Metallurgical 3,955,200 3,631,600 4,389,300
De Beers (diamonds
recovered - carats)
100% basis
(Anglo American 45%)
Diamonds 10,795,000 13,111,000 12,452,000
Anglo Base Metals
(tonnes)
Copper 172,000 148,600 161,000
Nickel 4,800 5,600 5,000
Zinc 82,900 86,500 88,200
Lead 14,400 16,700 14,700
Anglo Ferrous Metals
and Industries (tonnes)
Iron ore(3) 10,098,000 10,250,000 8,873,000
South Africa Steel
Products 167,000 187,000 211,000
International Steel
Products 215,000 230,000 221,000
Manganese ore(4) 565,000 732,000 741,000
Manganese alloys(4)(5) 72,000 81,000 76,000
Quarter ended
March 2008 December 2007
Anglo Platinum(2)
Platinum (troy ounces) 428,600 669,000
Palladium (troy ounces) 245,800 381,900
Rhodium (troy ounces) 57,500 87,400
Nickel (tonnes) 3,700 5,000
Anglo Coal (tonnes)
Eskom 8,363,000 8,193,800
Thermal 11,163,000 12,764,100
Metallurgical 2,773,000 2,599,200
De Beers (diamonds
recovered - carats)
100% basis
(Anglo American 45%)
Diamonds 11,774,000 12,143,000
Anglo Base Metals
(tonnes)
Copper 159,700 176,400
Nickel 4,600 6,500
Zinc 82,900 87,700
Lead 17,100 18,100
Anglo Ferrous Metals
and Industries (tonnes)
Iron ore(3) 8,190,000 8,992,000
South Africa Steel
Products 206,000 178,000
International Steel
Products 213,000 212,000
Manganese ore(4) 666,000 645,000
Manganese alloys(4)(5) 77,000 84,000
% Change
December Q08 v December Q08 v
September Q08 December Q07
Anglo Platinum(2)
Platinum (troy ounces) 55% 26%
Palladium (troy ounces) 40% 18%
Rhodium (troy ounces) 42% 23%
Nickel (tonnes) 3% (18)%
Anglo Coal (tonnes)
Eskom (2)% 16%
Thermal (1)% (4)%
Metallurgical 9% 52%
De Beers (diamonds
recovered - carats)
100% basis
(Anglo American 45%)
Diamonds (18)% (11)%
Anglo Base Metals
(tonnes)
Copper 16% (2)%
Nickel (14)% (26)%
Zinc (4)% (5)%
Lead (14)% (20)%
Anglo Ferrous Metals
and Industries (tonnes)
Iron ore(3) (1)% 12%
South Africa Steel
Products (11)% (6)%
International Steel
Products (7)% 1%
Manganese ore(4) (23)% (12)%
Manganese alloys(4)(5) (11)% (14)%
(1) Excludes Anglo Industrial Minerals.
(2) Northam Platinum Limited was transferred to a disposal group in September
2007. Production information excludes Northam Platinum Limited and 2007
information has been adjusted accordingly. Northam Platinum Limited was sold on
20 August 2008.
(3) Production from AmapA is included from 5 August 2008. AmapA is not
currently in commercial production. Until commercial production is reached all
revenue and related costs are being capitalised. AmapA production for full year
2008 was 1.2 Mt.
(4) Saleable production.
(5) Production includes Medium Carbon Ferro Manganese.
Reconciliation of subsidiaries` and associates` reported earnings to the
underlying earnings included in the consolidated financial statements
For the year ended 31 December 2008
Note only key reported lines are reconciled
Anglo Platinum Limited
US$ million 2008 2007
IFRS headline earnings (US$ equivalent of published) 1,607 1,748
Exploration 36 36
Exchange rate difference 64 4
Operating remeasurements (net of tax) 17 -
Other adjustments 6 (10)
1,730 1,778
Minority interests (376) (443)
Depreciation on assets fair valued on acquisition (net of
tax) (41) (36)
Contribution to Anglo American plc underlying earnings 1,313 1,299
DB Investments (DBI)
US$ million 2008 2007
De Beers underlying earnings (100%) 515 483
Difference in IAS 19 accounting policy 18 13
De Beers underlying earnings - Anglo American plc basis (100%) 533 496
Anglo American plc`s 45% ordinary share interest 240 223
Income from preference shares 13 16
Other 3 -
Contribution to Anglo American plc underlying earnings 256 239
Kumba Iron Ore Limited (KIO)
US$ million 2008 2007
IFRS headline earnings (US$ equivalent of published)(1) 872 434
Exploration 8 -
Other adjustments 12 7
892 441
Minority interests (328) (155)
Depreciation on assets fair valued on acquisition (net of
tax) (6) (12)
Contribution to Anglo American plc underlying earnings 558 274
(1) KIO IFRS headline earnings for the year ended 31 December 2008 assume a
minority interest of 20% in KIO`s underlying mining assets.
Exchange rates and commodity prices
US$ exchange rates 2008 2007
Average prices for the year
Rand 8.27 7.05
Sterling 0.54 0.50
Euro 0.68 0.73
Australian dollar 1.17 1.19
Chilean peso 524 522
Closing spot prices
Rand 9.30 6.84
Sterling 0.69 0.50
Euro 0.72 0.68
Australian dollar 1.44 1.14
Chilean peso 637 498
Commodity prices 2008 2007
Average market prices for the year
Platinum(1) US$/oz 1,585 1,304
Palladium(1) US$/oz 355 355
Rhodium(1) US$/oz 6,564 6,200
Copper(2) US cents/lb 315 323
Nickel(2) US cents/lb 953 1,686
Zinc(2) US cents/lb 85 147
Lead(2) US cents/lb 95 118
31 December spot prices
Platinum(1) US$/oz 922 1,537
Palladium(1) US$/oz 186 368
Rhodium(1) US$/oz 1,250 6,850
Copper(2) US cents/lb 132 303
Nickel(2) US cents/lb 490 1,170
Zinc(2) US cents/lb 51 104
Lead(2) US cents/lb 43 115
(1) Source: Johnson Matthey.
(2) Source: LME daily prices.
Key financial data
US$ million (unless otherwise stated) 2008 2007 2006(1)
Group revenue including associates 32,964 30,559 29,404
Less: Share of associates` revenue (6,653) (5,089) (4,413)
Group revenue 26,311 25,470 24,991
Operating profit including associates
before special items and
remeasurements 10,085 9,590 8,888
Special items and remeasurements (excluding
financing
special items and remeasurements) (330) (227) 24
Net finance costs (including financing
remeasurements),
tax and minority interests of associates (783) (434) (398)
Total profit from operations and associates 8,972 8,929 8,514
Net finance costs (including financing
special items and
remeasurements) (401) (108) (71)
Profit before tax 8,571 8,821 8,443
Income tax expense (2,451) (2,693) (2,518)
Profit for the financial year - continuing
operations 6,120 6,128 5,925
Profit for the financial year -
discontinued operations - 2,044 997
Profit for the financial year - total Group 6,120 8,172 6,922
Minority interests (905) (868) (736)
Profit attributable to equity shareholders
of the Company 5,215 7,304 6,186
Underlying earnings(2) - continuing
operations 5,237 5,477 5,019
Underlying earnings(2) - discontinued
operations - 284 452
Underlying earnings(2) - total Group 5,237 5,761 5,471
Earnings per share ($) - continuing
operations 4.34 4.04 3.51
Earnings per share ($) - discontinued
operations - 1.54 0.70
Earnings per share ($) - total Group 4.34 5.58 4.21
Underlying earnings per share ($) -
continuing operations 4.36 4.18 3.42
Underlying earnings per share ($) -
discontinued operations - 0.22 0.31
Underlying earnings per share ($) - total
Group 4.36 4.40 3.73
Ordinary dividend per share (US cents) 44.0 124.0 108.0
Special dividend per share (US cents) - - 67.0
Weighted average basic number of shares
outstanding (million) 1,202 1,309 1,468
EBITDA(3) - continuing operations 11,847 11,171 10,431
EBITDA(3) - discontinued operations - 961 1,766
EBITDA(3) - total Group 11,847 12,132 12,197
EBITDA interest cover(4) - total Group 28.3 42.0 45.5
Operating margin (before special items and
remeasurements) - total
Group 30.6% 28.4% 25.4%
Ordinary dividend cover (based on
underlying earnings per share) -
total Group 9.9 3.5 3.5
US$ million (unless otherwise stated) 2005(1) 2004(1)
Group revenue including associates 24,872 22,610
Less: Share of associates` revenue (4,740) (5,429)
Group revenue 20,132 17,181
Operating profit including associates before special
items and
remeasurements 5,549 3,832
Special items and remeasurements (excluding financing
special items and remeasurements) 16 556
Net finance costs (including financing remeasurements),
tax and minority interests of associates (315) (391)
Total profit from operations and associates 5,250 3,997
Net finance costs (including financing special items and
remeasurements) (220) (385)
Profit before tax 5,030 3,612
Income tax expense (1,208) (765)
Profit for the financial year - continuing operations 3,822 2,847
Profit for the financial year - discontinued operations 111 1,094
Profit for the financial year - total Group 3,933 3,941
Minority interests (412) (440)
Profit attributable to equity shareholders of the
Company 3,521 3,501
Underlying earnings(2) - continuing operations 3,335 2,178
Underlying earnings(2) - discontinued operations 401 506
Underlying earnings(2) - total Group 3,736 2,684
Earnings per share ($) - continuing operations 2.35 1.84
Earnings per share ($) - discontinued operations 0.08 0.60
Earnings per share ($) - total Group 2.43 2.44
Underlying earnings per share ($) - continuing
operations 2.30 1.52
Underlying earnings per share ($) - discontinued
operations 0.28 0.35
Underlying earnings per share ($) - total Group 2.58 1.87
Ordinary dividend per share (US cents) 90.0 70.0
Special dividend per share (US cents) 33.0 -
Weighted average basic number of shares outstanding
(million) 1,447 1,434
EBITDA(3) - continuing operations 7,172 5,359
EBITDA(3) - discontinued operations 1,787 1,672
EBITDA(3) - total Group 8,959 7,031
EBITDA interest cover(4) - total Group 20.0 18.5
Operating margin (before special items and
remeasurements) - total
Group 18.5% 14.7%
Ordinary dividend cover (based on underlying earnings
per share) -
total Group 2.9 2.7
See following page for footnotes.
US$ million (unless otherwise stated) 2008 2007 2006(1)
Balance sheet
Intangible and tangible assets 32,551 25,090 25,632
Other non-current assets and investments 7,494 9,111 7,969
Working capital 861 1,966 3,096
Other net current liabilities (1,565) (877) (1,177)
Other non-current liabilities and
obligations (6,729) (6,261) (5,790)
Cash and cash equivalents and borrowings(5)(11,051) (5,170) (3,244)
Net assets classified as held for sale 195 471 641
Net assets 21,756 24,330 27,127
Minority interests (1,535) (1,869) (2,856)
Equity attributable to the equity
shareholders of the Company 20,221 22,461 24,271
Total capital(6) 32,799 29,569 30,451
Cash inflows from operations - continuing
operations 9,579 9,375 9,012
Cash inflows from operations -
discontinued operations - 470 1,045
Cash inflows from operations - total Group 9,579 9,845 10,057
Dividends received from associates and
financial asset investments -
continuing operations 659 311 251
Dividends received from associates and
financial asset investments -
discontinued operations - 52 37
Dividends received from associates and
financial asset investments -
total Group 659 363 288
Return on capital employed(7) - total Group 36.8% 37.8% 32.4%
EBITDA/average total capital(6) - total
Group 38.0% 40.4% 38.7%
Net debt to total capital (Gearing)(8) 37.8% 20.0% 12.9%
US$ million (unless otherwise stated) 2005(1) 2004(1)
Balance sheet
Intangible and tangible assets 33,368 35,816
Other non-current assets and investments 5,556 5,547
Working capital 3,538 3,543
Other net current liabilities (1,492) (611)
Other non-current liabilities and obligations (8,399) (8,339)
Cash and cash equivalents and borrowings(5) (4,993) (8,243)
Net assets classified as held for sale - -
Net assets 27,578 27,713
Minority interests (3,957) (4,588)
Equity attributable to the equity shareholders of the
Company 23,621 23,125
Total capital(6) 32,571 35,956
Cash inflows from operations - continuing operations 5,963 3,857
Cash inflows from operations - discontinued operations 1,302 1,434
Cash inflows from operations - total Group 7,265 5,291
Dividends received from associates and financial asset
investments -
continuing operations 468 380
Dividends received from associates and financial asset
investments -
discontinued operations 2 16
Dividends received from associates and financial asset
investments -
total Group 470 396
Return on capital employed(7) - total Group 19.2% 14.6%
EBITDA/average total capital(6) - total Group 26.0% 21.2%
Net debt to total capital (Gearing)(8) 17.0% 25.4%
(1) Comparatives were adjusted in the 2007 Annual Report 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, 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 from the Group`s measure of net debt as it excludes the net
debt of disposal groups (2008: $8 million; 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 (2008: liabilities of $297
million; 2007: assets of $388 million; 2006: assets of $193 million). For more
detail see note 11 Consolidated cash flow analysis.
(6) Total capital is net assets excluding net debt (excluding the impact of
derivative instruments).
(7) Return on capital employed is calculated as total operating profit before
impairments for the year divided by the average of total capital less other
investments and adjusted for impairments.
(8) Net debt to total capital is calculated as net debt (excluding the impact
of derivative instruments) divided by total capital less investments in
associates.
Summary by business segment
Revenue(1) EBITDA(2)
US$ million 2008 2007 2008
Continuing operations
Platinum 6,327 6,789 2,732
Diamonds 3,096 3,076 665
Base Metals 5,878 7,129 2,845
Copper 3,907 4,507 2,226
Collahuasi 1,134 1,383 682
Anglo American Sur 1,965 2,273 1,265
Anglo American Norte 808 851 288
Other - - (9)
Nickel, Niobium, Mineral Sands
and Phosphates 1,381 1,583 563
Codemin 198 325 132
Loma de NA-quel 210 553 48
CatalAGBPo 141 106 80
Namakwa Sands 177 184 59
CopebrAs 655 415 244
Zinc 590 1,039 209
Black Mountain 115 165 37
Lisheen 196 364 40
Skorpion 279 510 132
Other - - (153)
Ferrous Metals and Industries 6,849 5,400 3,064
Kumba Iron Ore 2,573 1,635 1,667
Scaw Metals 1,927 1,432 309
Samancor Manganese 1,526 665 998
Tongaat-Hulett/Hulamin(4) 817 1,293 115
Anglo Ferrous Brazil - - (4)
Highveld Steel - 369 -
Other 6 6 (21)
Coal 6,436 3,574 2,585
South Africa 2,210 1,538 814
Australia 3,119 1,389 1,353
South America 947 627 446
Canada 139 - 15
Projects and corporate 21 20 (43)
Industrial Minerals 4,378 4,591 487
Exploration - - (212)
Corporate Activities and
Unallocated Costs - - (319)
Total continuing operations 32,964 30,559 11,847
Discontinued operations
Gold - 1,004 -
Paper and Packaging - 4,111 -
Mondi Packaging - 2,296 -
Mondi Business Paper - 1,204 -
Other - 611 -
Total discontinued operations - 5,115 -
Total Group 32,964 35,674 11,847
Operating profit/(loss)(3)
US$ million 2007 2008 2007
Continuing operations
Platinum 3,155 2,226 2,697
Diamonds 587 508 484
Base Metals 4,683 2,505 4,338
Copper 3,192 2,017 2,983
Collahuasi 1,062 613 998
Anglo American Sur 1,630 1,157 1,518
Anglo American Norte 507 255 474
Other (7) (8) (7)
Nickel, Niobium, Mineral Sands
and Phosphates 842 507 786
Codemin 242 123 234
Loma de NA-quel 390 30 370
CatalAGBPo 57 78 55
Namakwa Sands 44 59 44
CopebrAs 109 217 83
Zinc 729 136 654
Black Mountain 93 26 83
Lisheen 242 22 227
Skorpion 394 88 344
Other (80) (155) (85)
Ferrous Metals and Industries 1,561 2,935 1,432
Kumba Iron Ore 879 1,618 834
Scaw Metals 204 274 172
Samancor Manganese 249 980 225
Tongaat-Hulett/Hulamin(4) 140 92 114
Anglo Ferrous Brazil (9) (8) (9)
Highveld Steel 108 - 108
Other (10) (21) (12)
Coal 882 2,240 614
South Africa 481 736 414
Australia 166 1,144 9
South America 271 396 227
Canada - 8 -
Projects and corporate (36) (44) (36)
Industrial Minerals 732 228 474
Exploration (157) (212) (157)
Corporate Activities and
Unallocated Costs (272) (345) (292)
Total continuing operations 11,171 10,085 9,590
Discontinued operations
Gold 401 - 202
Paper and Packaging 560 - 324
Mondi Packaging 316 - 195
Mondi Business Paper 198 - 105
Other 46 - 24
Total discontinued operations 961 - 526
Total Group 12,132 10,085 10,116
Underlying
earnings
US$ million 2008 2007
Continuing operations
Platinum 1,313 1,299
Diamonds 256 239
Base Metals 1,369 3,100
Copper 1,171 2,060
Collahuasi 367 701
Anglo American Sur 699 1,026
Anglo American Norte 113 340
Other (8) (7)
Nickel, Niobium, Mineral Sands
and Phosphates 218 555
Codemin 94 178
Loma de NA-quel (97) 243
CatalAGBPo 70 60
Namakwa Sands 46 31
CopebrAs 105 43
Zinc 128 558
Black Mountain 28 65
Lisheen 15 174
Skorpion 85 319
Other (148) (73)
Ferrous Metals and Industries 1,396 605
Kumba Iron Ore 558 274
Scaw Metals 165 97
Samancor Manganese 658 169
Tongaat-Hulett/Hulamin(4) 53 44
Anglo Ferrous Brazil (30) 5
Highveld Steel - 18
Other (8) (2)
Coal 1,581 490
South Africa 543 296
Australia 797 24
South America 257 175
Canada 11 -
Projects and corporate (27) (5)
Industrial Minerals 173 384
Exploration (200) (145)
Corporate Activities and
Unallocated Costs (651) (495)
Total continuing operations 5,237 5,477
Discontinued operations
Gold - 95
Paper and Packaging - 189
Mondi Packaging - 137
Mondi Business Paper - 62
Other - (10)
Total discontinued operations - 284
Total Group 5,237 5,761
(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) 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 15 Disposals and demerger of
subsidiaries and businesses.
20 February 2009
Sponsor
UBS South Africa (Pty) Ltd
Date: 20/02/2009 09:00:02 Produced by the JSE SENS Department.
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