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AMS
ANANP
AMS - Anglo Platinum Limited - Abridged reviewed interim financial Results for
the six months ended 30 June 2010
ANGLO PLATINUM
A member of the Anglo American plc group
Anglo Platinum Limited and its Subsidiaries
(Incorporated in the Republic of South Africa)
(Registration number 1946/022452/06)
JSE Code: AMS ISIN: ZAE000013181
("Anglo Platinum")
ABRIDGED REVIEWED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE
2010
- Major improvement in safety performance with a decrease in LTIFR of 16%
year-on-year to 1.20; tragically five employees lost their lives during the
period
- Strong financial recovery with headline earnings of R2 559 million, up 532%
on the first half of last year, in line with significantly higher metal
prices
- Cash operating costs held to R11 493 per equivalent refined platinum ounce,
in a high inflation environment; a decrease of 2.1% compared with R11 736
in the second half of last year
- Equivalent refined platinum production of 1 196 million and refined
platinum production of 1.001 million ounces
- Productivity increased to an average of 6.92 m2 per total operating
employee, an increase of 11% year-on-year
- Successful R12.5 billion Rights Issue; leading to a significant reduction
in net debt to R8.245 billion as at 30 June 2010
- Letters of conversion for Anglo Platinum`s mining rights were granted by
the DMR on 21 July 2010; execution has commenced with 3 executed to date
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Restated
Reviewed Reviewed Audited
Six Six Year
months months
ended ended ended
30 June 30 June %
31December
R millions Notes 2010 2009 2009
Change
GROSS SALES REVENUE 20 929 17 182 36 947
Commissions paid (146) (116) (260)
NET SALES REVENUE 20 783 17 066 22 36 687
COST OF SALES (16 817) (16 389) (3) (34 715)
GROSS PROFIT ON 3 966 677 486 1 972
METAL SALES
Other net 3 5 27 (659)
income/(expenditure)
Market development (194) 179) (392)
and promotional
expenditure
OPERATING PROFIT 3 777 525 619 921
Profit on disposal 788 - -
of 37% interest in
Western Bushveld
Joint Venture
Profit on disposal - 1 982 1 982
of investment in
Booysendal Joint
Venture
Profit on disposal 8 - 536 536
of 51% in Bokoni
Platinum Mines
Interest expensed (242) (170) (532)
Interest received 130 68 296
Remeasurement of 163 - (93)
loan and receivables
Dividends received - 68 64
Losses from (144) (13) (199)
associates
PROFIT BEFORE 4 472 2 996 49 2 975
TAXATION
Taxation (1 110) (5) 153
PROFIT FOR THE 3 362 2 991 12 3 128
PERIOD/YEAR
OTHER COMPREHENSIVE
INCOME
Deferred foreign 22 (71) 85)
exchange translation
gains/(losses)
Share of other - - 19)
comprehensive income
of associates
TOTAL COMPREHENSIVE 3 384 2 920 3 024
INCOME FOR THE
PERIOD/YEAR
Profit attributable
to:
Minority interest 90 65 116
Owners of the 3 272 2 926 12 3 012
Company
3 362 2 991 3 128
Total comprehensive
income attributable
to:
Minority interest 90 65 116
Owners of the 3 294 2 855 2 908
Company
3 384 2 920 3 024
RECONCILIATION
BETWEEN PROFIT AND
HEADLINE EARNINGS
Profit attributable 3 272 2 926 3 012
to owners of the
company
Less: Declared and - (3) (5)
undeclared
cumulative
preference share
dividends and
related STC
Basic earnings 3 272 2 923 3 007
attributable to
ordinary
shareholders
Adjustments
Profit on disposal (788) - -
of 37% interest in
Western Bushveld
Joint Venture
Tax effect thereon 17 - -
Profit on disposal - (1 982) (1 982)
of investment in
Booysendal Joint
Venture
Profit on disposal - (536) (536)
of 51% of Bokoni
Platinum Mines
Profit on sale of - (2) (64)
other mineral rights
and investments
Net loss/(profit) on 81 (2) 389
disposal and
scrapping of
property, plant and
equipment
Tax effect thereon (23) 1 (109)
Headline earnings 2 559 402 705
attributable to
ordinary
shareholders
Add: Declared and - 3 5
undeclared
cumulative
preference share
dividends and
related STC
HEADLINE EARNINGS 2 559 405 710
Attributable
headline earnings
per ordinary share
(cents)
- Headline 9 1 028 164 289
- Diluted 9 1 024 164 289
Number of ordinary 261.4 238.2 236.8
shares in issue
(millions)
Weighted average 249.0 244.9 243.7
number of ordinary
shares in issue
(millions)
Attributable
earnings per
ordinary share
(cents)
- Basic 9 1 314 1 193 10 1 234
- Diluted (basic) 9 1 309 1 191 10 1 230
CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Reviewed Audited
Six Six Year
months months
ended ended ended
30 June 30 June 31 December
R millions 2010 2009 2009
CASH FLOWS FROM OPERATING
ACTIVITIES
Cash receipts from customers 19 784 15 999 36 763
Cash paid to suppliers and (16 561) (14 832) (31 246)
employees
Cash from operations 3 223 1 167 5 517
Interest paid (net of (285) (53) (424)
interest capitalised)
Taxation paid (345) (472) (396)
Net cash from operating 2 593 642 4 697
activities
CASH FLOWS USED IN INVESTING
ACTIVITIES
Purchase of property, plant (3 304) (6 267) (11 301)
and equipment (includes
interest capitalised)
Proceeds from sale of plant 4 16 16
and equipment
Distribution from/(investment 9 - (38)
in) associates
Proceeds on disposal of 37% 186 - -
interest in Western Bushveld
Joint Venture
Subscription of preference (273) - -
shares in Newshelf 848
(Proprietary) Limited, a
company owned by Afripalm
Disposal of subsidiary (net - - (170)
of cash disposed)
Disposal of 51% in Bokoni - 23 27
Platinum Mines (net of cash
disposed)
Proceeds on redemption of "A" - - 7
preference shares in Plateau
Resources (Proprietary)
Limited (Plateau)
Acquisition of Unki Mines - (174) (174)
Zimbabwe (net of cash
acquired)
Repayment by Plateau - - 72
Loans to associates (195) - (181)
Advances made to Plateau for (77) - (190)
the operating cash shortfall
facility
Repayment of/(advance made 17 - (132)
to) ARM Mining Consortium
Limited
Other advances (30) - -
Proceeds on sale of mining - - 35
rights and other investments
Proceeds on rights in - 1 610 1 610
preference shares
Disposal of cash and cash - - (11)
equivalents relating to 17%
of BRPM
Increase in investments held (1) (6) (27)
by environmental trusts
Interest received 58 45 86
Growth in environmental 14 23 43
trusts
Dividends received - 110 64
Net cash used in investing (3 592) (4 620) (10 264)
activities
CASH FLOWS (USED IN)/FROM
FINANCING ACTIVITIES
Proceeds from the issue of 12 12 28
ordinary share capital
Proceeds from rights offer 12 404 - -
(net of transaction costs)
Redemption of preference - - (84)
shares
Purchase of treasury shares (270) (185) (185)
for the Bonus Share Plan
(BSP)
(Repayment of)/proceeds on (12 127) 2 945 6 971
interest-bearing borrowings
Repayment of finance lease - - (507)
obligation
Preference dividends paid - (3) (6)
Cash distributions to (129) (58) (82)
minorities
Net cash (used in)/from (110) 2 711 6 135
financing activities
Net (decrease)/increase in (1 109) (1 267) 568
cash and cash equivalents
Cash and cash equivalents at 3 532 2 870 2 870
beginning of period/year
Transfer from assets held for - - 94
sale
Cash and cash equivalents at 2 423 1 603 3 532
end of period/year
MOVEMENT IN NET DEBT
Net debt at beginning of (19 261) (13 459) (13 459)
period/year
Net cash from operating 2 593 642 4 697
activities
Net cash used in investing (3 592) (4 620) (10 264)
activities
Other (including inflow from 12 015 (520) (235)
rights offer)
Net debt at end of (8 245) (17 957) (19 261)
period/year
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Restated
Reviewed Reviewed Audited
as at as at as at
30 June 30 June 31
December
R millions Notes 2010 2009 2009
ASSETS
Non-current assets 60 098 55 135 57 778
Property, plant and 35 592 32 425 35 283
equipment
Capital work-in-progress 18 949 19 371 18 074
Investment in associates 3 947 2 368 3 301
Investments held by 79 73 78
environmental trusts
Other financial assets 1 414 826 941
Other non-current assets 117 72 101
Current assets 20 525 16 550 18 043
Inventories 13 438 11 151 11 292
Trade and other 4 471 3 703 2 891
receivables
Other assets 193 92 328
Other current financial - 1 -
assets
Cash and cash equivalents 2 423 1 603 3 532
Total assets 80 623 71 685 75 821
EQUITY AND LIABILITIES
Share capital and
reserves
Share capital - ordinary 26 24 24
and preference
Share premium - ordinary 21 293 9 200 9 143
and preference
Foreign currency (116) (124) (138)
translation reserve
Retained earnings 26 574 22 830 23 109
Minority interests 456 468 495
Shareholders` equity 48 233 32 398 32 633
Non-current liabilities 23 630 27 516 34 830
Interest-bearing 4 10 647 15 176 22 773
borrowings
Obligations due under 2 4 2
finance leases
Other financial 164 142 175
liabilities
Environmental obligations 1 279 1 148 1 196
Employees` service - 6 6
benefit obligations
Deferred taxation 11 538 11 040 10 678
Current liabilities 8 760 11 771 8 358
Current interest-bearing 4 19 4 380 18
borrowings
Trade and other payables 5 709 4 963 5 409
Other liabilities 2 301 2 011 2 119
Other current financial 177 140 158
liabilities
Share based payment 129 105 162
provision
Taxation 425 172 492
Total equity and 80 623 71 685 75 821
liabilities
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign
currency
Share Share translati Retained Minority
on
R millions capital premium reserve earnings interests Total
Balance as 24 9 373 (53) 19 691 461 29 496
at 31
December
2008
(audited)
Total (71) 2 926 65 2 920
comprehensiv
e income for
the period
Excess of 69 69
net asset
value over
purchase
price on
acquisition
of Unki
Mines from
fellow
subsidiary
Cash (58) (58)
distribution
to
minorities
Preference (3) (3)
dividends
paid in cash
Ordinary - * 18 18
share
capital
issued
Conversion (-)* (6) (6)
of
preference
shares
Shares
acquired in
terms of BSP
- treated (-)* (185) (185)
as treasury
shares
Equity- 157 157
settled
share-based
compensation
Shares (10) (10)
purchased
for
employees
Balance as 24 9 200 (124) 22 830 468 32 398
at 30 June
2009
(reviewed)
Total (14) 67 51 104
comprehensiv
e income for
the period
Deferred tax 31 31
charged
directly to
equity
Preference (3) (3)
dividends
paid in cash
Cash (24) (24)
distribution
s to
minorities
Ordinary - * 16 16
share
capital
issued
Redemption (-)* (84) (84)
of
preference
shares
Shares - * 11 (11) -
vested in
terms of BSP
Equity- 206 206
settled
share-based
compensation
Shares (11) (11)
purchased
for
employees
Balance as 24 9 143 (138) 23 109 495 32 633
at 31
December
2009
(audited)
Total 22 3 272 90 3 384
comprehensiv
e income for
the period
Deferred tax (18) (18)
charged
directly to
equity
Cash (129) (129)
distribution
s to
minorities
Ordinary - * 12 12
share
capital
issued
Proceeds of 2 12 12 404
rights offer 402
(net of
transaction
costs)
Shares (-)* (270) (270)
acquired in
terms of BSP
- treated as
treasury
shares
Shares - * 6 (6) -
vested in
terms of the
BSP
Equity- 223 223
settled
share-based
compensation
Shares (6) (6)
purchased
for
employees
Balance as 26 21 293 (116) 26 574 456 48 233
at 30 June
2010
(reviewed)
* Less than
R500 000
SEGMENTAL INFORMATION
Net sales revenue Operating contribution
Reviewed Reviewed Audited Reviewed Reviewed Audited
Six Six Year Six Six Year
months months months months
ended ended ended ended ended ended
30 June 30 June 31 30 June 30 June 31
December December
R millions 2010 2009 2009 2010 2009 2009
Operations
Bathopele 1 162 900 1 950 400 191 305
Mine
Khomanani 743 682 1 489 70 56 14
Mine
Thembelani 726 499 1 170 138 (18) (28)
Mine
Khuseleka 1 033 1 164 2 273 217 68 50
Mine
Siphumelele 668 837 1 566 70 (105) (102)
Mine
Tumela Mine 2 313 1 921 4 173 810 577 1 171
Dishaba 1 214 930 2 126 280 188 451
Mine
Union Mine 2 301 1 948 4 135 765 477 816
Mogalakwena 2 766 2 109 4 540 1 016 319 428
Mine
Twickenham 35 60 127 (62) (43) (111)
Platinum
Mine
Modikwa 567 452 1 054 126 (93) (109)
Platinum
Mine
Kroondal 991 763 1 564 374 188 301
Platinum
Mine
Marikana 308 345 637 105 99 122
Platinum
Mine
Mototolo 471 312 727 175 80 182
Platinum
Mine
Bafokeng- 503 546 1 184 130 82 198
Rasimone
Platinum
Mine
Bokoni - 408 557 - (128) (207)
Platinum
Mine
15 801 13 876 29 272 4 614 1 938 3 481
Western 306 235 452 71 22 84
Limb
Tailings
Retreatment
(WLTR)
MASA 163 91 247 154 85 231
Total 16 270 14 202 29 4 839 2 045 3 796
Mined 971
Purchased 4 513 2 864 6 716 266 (373) 236
Metals
20 783 17 066 36 5 105 1 672 4 032
687
Other (1 139) (995) (2
costs 060)
Gross 3 966 677 1 972
profit on
metal
sales
The figures for the six months ended 30 June 2009 have been reclassified to
reflect the change in methodology of allocating certain costs. This revised
methodology was applied in the calculation of the segmental results for the year
ended 31 December 2009.
NOTES TO THE INTERIM RESULTS
1. This interim report complies with International Accounting Standard 34 -
Interim Financial Reporting and South African Statement of Generally
Accepted Accounting Practice, AC127, with the same title, as well as with
Schedule 4 of the South African Companies Act and the disclosure
requirements of the JSE Limited`s listings requirements.
2. The interim report has been prepared using accounting policies that comply
with International Financial Reporting Standards and South African
Statements of Generally Accepted Accounting Practice. The accounting
policies are consistent with those applied in the financial statements for
the year ended 31 December 2009, except for the following changes:
- IFRS 1 First time adoption of International Financial Reporting
Standards - (Amendment) Limited exemption from comparative IFRS 7
disclosures for first time adopters;
- IFRS 3 (Revised) Business Combinations;
- IAS 24 Related party disclosures - (Amendment) Revised definitions of
related parties;
- IAS 27 Consolidated and Separate Financial Statements - (Amendment)
Consequential amendments arising from amendments to IFRS 3;
- IAS 28 Investment in Associates - (Amendment) Consequential amendments
arising from amendments to IFRS 3;
- IAS 31 Investment in Joint Ventures - (Amendment) Consequential
amendments arising from amendments to IFRS 3;
- Adoption of annual improvements to IFRS published in May 2008 and
April 2009; and
- IFRIC 19 - Extinguishing Financial Liabilities with Equity
Instruments.
None of these changes had any impact on the results of the Group for the
period ended 30 June 2010.
Reviewed Reviewed Audited
Six Six Year
months months
ended ended ended
30 June 30 June 31
December
2010 2009 2009
R R R
millions millions millions
3. Other net
income/(expenditure)
Other net
income/(expenditure)
consists of the following
principal categories:
Project maintenance costs (90) (29) (415)
Consultation fees and other (76) (3) (261)
business optimisation costs
Net realised and unrealised 55 (449) (610)
foreign exchange
gains/(losses)
Profit on disposal of 12 - 53
plant, equipment and
conversion rights
Gains/(losses) on commodity 10 (27) (88)
sales contracts at fair
value
Amandelbult insurance claim - 488 563
payout
BEE costs - - (76)
Other - net 94 47 175
5 27 (659)
4. Interest-bearing
borrowings
The Group has the following
borrowing facilities:
Committed facilities 21 499 26 417 33 009
Uncommitted facilities 4 783 4 587 4 769
Total facilities 26 282 31 004 37 778
Less: Facilities utilised (10 666) (19 556) (22 791)
Interest bearing (10 647) (15 176) (22 773)
borrowings
Current interest bearing (19) (4 380) (18)
borrowings
Available 15 616 11 448 14 987
Weighted average borrowing 7.66 9.21 8.59
rate (%)
5. Commitments
Mining and process
property, plant and
equipment
Contracted for 2 508 3 585 2 244
Not yet contracted for 34 333 33 932 30 732
Authorised by the directors 36 841 37 517 32 976
Allocated for:
Project capital 32 428 30 720 29 294
- within one year 4 351 5 872 4 102
- thereafter 28 077 24 848 25 192
Stay in business capital 4 413 6 797 3 682
- within one year 3 622 4 084 3 453
- thereafter 791 2 713 229
Capital commitments
relating to the group`s
share in associates
Contracted for 109 80 105
Not yet contracted for 2 361 778 2 369
Authorised by the directors 2 470 858 2 474
These commitments will be funded from existing cash resources, future
operating cash flows, borrowings and any other funding strategies embarked
on by the Group.
The Group has provided Plateau, a company owned by Anooraq, with a facility
that covers their senior debt repayments should Plateau not be able to meet
its repayments. The facility is limited to 29% of 49% of the Bokoni
Platinum Mine`s free cash flows, and a call on this facility is considered
a remote possibility.
The Group has also provided Plateau with a facility to enable it to meet
its obligations in respect of the operating and capital expenditure for
Bokoni Platinum Mines. This facility is limited to R778 million, excluding
interest and fees, and is available to Plateau for three years from 1 July
2009. At 30 June 2010, R247 million (31 December 2009: R162 million) had
been drawn down on this facility.
The Group has provided Lexshell 36 General Trading (Proprietary) Limited
(Lexshell 36), a company owned by the Bakgatla-Ba-Kgafela traditional
community, with a facility that covers their outstanding hedge exposure.
The facility is limited to Union Section`s cash flows, and a call on this
facility is considered a remote possibility.
The Group has also provided Lexshell 36 with a project capital expenditure
facility to fund its proportionate share of any specific new project
capital incurred for the development of a new shaft, other than the 5 South
Decline Project at Union Mine. This facility expires on 31 March 2015 and
is limited to 15% of the capital spent on the shaft. At balance sheet date,
this facility had not been drawn upon.
The Group has agreed, upon certain conditions being met, to guarantee bank
funding that will be extended to Newshelf 848 (Proprietary) Limited, an
Afripalm company, to re-finance some of Afripalm`s present obligations to
the value of R 406 million (plus funding charges). At 30 June 2010, the
conditions have not been met.
6. Contingent assets
On 13 February 2008 a slag and matte run-out occurred at the Polokwane
Smelter, resulting in damage to both the furnace itself and ancillary
equipment. After a successful repair, the furnace resumed operation and
processed the majority of concentrate stocks that had accumulated during
the repair period. Insurers were notified of the incident and a material
damage and business interruption claim was initiated. The claim was subject
to a 24 month indemnity period which duly expired on 13 February 2010.
Based on discussions with the insurers, a final formulated claim has been
submitted. The quantum of the claim has been set at USD 13 million after
application of all applicable deductibles. Anglo Platinum expects cash
settlement of the loss by insurers no later than 15 August 2010. The
proceeds on the insurance settlement will be accounted for once the final
claim has been agreed to by the insurers.
7. Changes in accounting estimate for inventory
During the year, the Group changed its estimate of the quantities of
inventory based on the outcome of a physical count of in-process metals.
The Group runs a theoretical metal inventory system based on inputs, the
results of previous physical counts and outputs. Due to the nature of in-
process inventories being contained in weirs, pipes and other vessels,
physical counts only take place once per annum, except in the PMR which
takes place once every two years.
This change in estimate has had the effect of decreasing the value of
inventory disclosed in the financial statements by R520 million (2009: R161
million). This results in the recognition of an after tax loss of R374
million (2009: R116 million).
8. Restatement of comparative figures
The profit arising on the disposal of 51% of Bokoni Platinum Mines and 1%
of the Ga-Phasha, Boikgantsho and Kwanda projects has been restated from
the initial amount of R336 million, published in the interim results of the
period ended 30 June 2009. The revised profit is R536 million. The
difference is due to management refining and finalising its valuation of
the various financial instruments and commitments that arose on initial
recognition of the transaction, subsequent to publishing of the 2009
interim results. This was reflected correctly in the results for the year
ended 31 December 2009.
Six months
ended
R millions 30 June 2009
Profit attributable to Owners of the Company 2 726
as reported previously
Restatement of profit on disposal of 51% in 200
Bokoni Platinum Mines
Restated profit attributable to Owners of 2 926
the Company
Attributable basic earnings per ordinary 1 144
share as reported (cents)
Restatement of profit on disposal of 51% in 84
Bokoni Platinum Mines (cents)
Restated attributable basic earnings per 1 228
ordinary share (cents)
Attributable diluted earnings per ordinary 1 141
share as reported (cents)
Restatement of profit on disposal of 51% in 84
Bokoni Platinum Mines (cents)
Restated attributable diluted earnings per 1 225
ordinary share (cents)
As at
R millions 30 June 2009
Trade and other receivables as reported 3 772
Restatement of profit on disposal of 51% in (69)
Bokoni Platinum Mines
Restated trade and other receivables 3 703
Other current financial liabilities as 355
reported
Restatement of profit on disposal of 51% in (215)
Bokoni Platinum Mines
Restated other current financial liabilities 140
Trade and other payables as reported 5 017
Restatement of profit on disposal of 51% in (54)
Bokoni Platinum Mines
Restated trade and other payables 4 963
9. Rights offer
On 5 February 2010, the Board approved Anglo Platinum pursuing an equity
raising through a rights offer of R12.5 billion. The purpose of the equity
raising was to improve the Group`s capital structure. A rights offer in
respect of 24 891 473 Anglo Platinum ordinary shares was made to Anglo
Platinum shareholders in the ratio of 10.3823 new rights offer shares for
every 100 shares held as at 5 March 2010. The subscription price of R502.18
per rights offer share amounted to a 25% discount to the theoretical ex-
rights price of an Anglo Platinum share at 5 February 2010. The rights
offer opened on Monday, 8 March 2010 and closed on Friday, 26 March 2010.
The rights offer was fully subscribed for and the R12.5 billion received
net of transaction costs, was used to repay long-term debt. Due to the fact
that the rights offer was oversubscribed, there were no shares that had to
be taken up by the underwriter, Anglo American plc.
In terms of IAS 33 Earnings per share, the weighted average number of
shares outstanding during the period should be adjusted for the bonus
element of the rights offer. As a result, the following adjustments were
made to the weighted average and diluted weighted average number of shares
in issue:
Six Year
months
ended ended
30 June 31
December
2009 2009
Weighted average number of shares in 238.1 236.9
issue as reported
Adjusted for impact of the bonus 6.8 6.8
element of the rights offer
Adjusted weighted average number of 244.9 243.7
shares in issue
Diluted weighted average number of 238.6 237.6
shares in issue as reported
Adjusted for impact of the bonus 6.8 6.8
element of the rights offer
Adjusted diluted weighted average 245.4 244.4
number of shares in issue
Attributable basic earnings per 1 228 1 269
ordinary share as reported
Adjusted for impact of the bonus (35) (35)
element of the rights offer
Adjusted attributable basic earnings 1 193 1 234
per ordinary share
Attributable diluted earnings per 1 225 1 266
ordinary share as reported
Adjusted for impact of the bonus (34) (36)
element of the rights offer
Adjusted attributable diluted earnings 1 191 1 230
per ordinary share
Attributable headline earnings per 169 298
ordinary share as reported
Adjusted for impact of the bonus (5) (9)
element of the rights offer
Adjusted attributable headline 164 289
earnings per ordinary share
Attributable diluted headline earnings 169 297
per ordinary share as reported
Adjusted for impact of the bonus (5) (8)
element of the rights offer
Adjusted attributable diluted headline 164 289
earnings per ordinary share
10. Post balance sheet event
The Board agreed on 22 July 2010 to provide the former preference
shareholders of Anglo Platinum Limited, who missed the opportunity to
convert their preference shares to ordinary shares, with the opportunity to
subscribe for ordinary shares. The terms and conditions of the offer will
be included in a circular to certain former Anglo Platinum Limited
preference shareholders. It is expected that this circular will be mailed
to the affected former preference shareholders during early August 2010.
11. Corporate governance
The Board considers that the Company and its subsidiaries complied during
the period under review with the principles of the Code of Corporate
Practices and Conduct contained in the 2009 King Committee Report on
Corporate Governance (King III), and that these have been applied
appropriately and consistently, with the exception of the composition of
the Remuneration and Nomination committees that comprise non-executive
directors, not all of whom are independent non-executive directors. In
addition, in the light of the imminent introduction of a new Companies Act
and the King III Code as well as the recently announced appointment of the
CEO of the holding company as Chairman of Anglo Platinum with effect from 1
September 2010, the Corporate Governance Committee is in the process of
reconstituting, renaming and reviewing the functions of several Board
Committees.
12. Auditors` review
The interim report from which the abridged interim results have been
extracted has been reviewed by the Company`s auditors, Deloitte & Touche.
Their unqualified review report is available for inspection at the
Company`s registered office.
Commentary
SAFETY
Anglo Platinum achieved a further decrease in its Lost-Time Injury
Frequency Rate (LTIFR) during the first half of 2010. The LTIFR reduced to
1.20 per 200 000 hours worked, a decrease of 16% compared with the first
half of 2009 and a decrease of 41% since the implementation of our three
year Enhanced Safety Improvement Programme in the third quarter of 2007.
Tragically, five of our employees lost their lives during the period. We
extend our sincere condolences to their families, friends and colleagues.
Whilst we have not yet reached our target of zero harm to our employees, we
continue to believe that fatalities are unacceptable and that zero is
possible. We are striving to embed step changes in our safety performance
until we have reached zero harm across our operations. To this end, the
reduction of 50% in the number of fatalities we have seen in the first half
of 2010 compared with the same period in 2009 appears to herald such a step
change.
We are pleased that fatalities due to Falls of Ground in particular have
been reduced significantly during recent years. Our Fall of Ground
Management system aims to manage, reduce and eliminate this key risk in our
business. Of the five fatalities which occurred during the first half of
this year, two were caused by falls of ground. Since 2007, we have seen a
39% reduction in fall of ground fatalities.
Overall we believe we are reaping the benefits from our focus on improving
safety with regards to our operational performance. We have seen an 11%
increase in our productivity during the same period as the 16% decrease in
our LTIFR, suggesting a high degree of correlation between the two
performance measures.
MINERALS LEGISLATION, TRANSFORMATION AND COMMUNITIES
Anglo Platinum is fully committed to the Minerals and Petroleum Resources
Development Act and the mining charter to achieve the associated
sustainable economic and social transformation.
Anglo Platinum has made significant progress towards achieving its
transformation objectives as envisaged by the MPRD Act and the Mining
Charter. Noteworthy milestones achieved in support of Anglo Platinum`s
social and labour plan include:
- 12% women in mining;
- 49% historically disadvantaged South Africans in management positions;
- HDSA procurement of 39%; and
- Community and infrastructure development of R100 million to date
The Company also tracks sustainability targets and our notable achievements
include reductions in our electricity consumption and our CO2 and SO2
emissions. There were also no level 2 or 3 environmental incidents reported
in the period.
A total of 893 families have been resettled at the Mogalakwena Mine. The
remaining 63 families are not opposed to relocation but to the terms of
relocation. Anglo Platinum continues to engage these members and their
representatives to bring the matter to a close and to achieve 100%
relocation.
Anglo Platinum received letters of conversion for its mining rights which
were granted by the DMR on 21 July 2010. Execution of these rights has
commenced, with three executed to date.
FINANCIAL REVIEW
Anglo Platinum`s earnings were higher for the six months ended 30 June 2010
boosted by higher metal prices. Headline earnings of R2 559 million were R2 154
million higher than the same period in 2009. Factors contributing to the higher
earnings were a 67% increase in the US dollar price realised on the basket of
metals sold, offset by a stronger average rand/dollar exchange rate and lower
sales volumes.
Headline earnings per ordinary share increased 527% to 1 028 cents. Headline
earnings exclude profits of R771 million realised on the disposal of a 37%
interest in the Western Bushveld joint venture. The increase in basic earnings
per share was 10% year-on-year - 2009 earnings included gains in respect of the
conclusion of Anglo Platinum`s BEE transactions with Anooraq Resources
Corporation and Mvelaphanda Resources Limited.
Gross sales revenue increased by R3.7 billion to R20.9 billion. The increase was
the result of higher US dollar metal prices achieved on metals sold, which
accounted for R9.6 billion. The stronger average rand / US dollar exchange rate
achieved of R7.54, compared to R9.08 in 2009, offset the impact of the higher
prices by R4.3 billion, while lower volumes of metals sold decreased revenue by
R1.6 billion. Refined platinum sales for the six months ended 30 June 2010
amounted to 1.08 million ounces compared to 1.22 million ounces in the first
half of 2009.
The average US dollar price achieved for platinum was US$1 593 per ounce for the
period, an increase of 47% compared to US$1 085 for the first six months of
2009. The average prices achieved for palladium and nickel sales for the half
year were US$462 per ounce (1H 2009: US$212) and US$9.52 per pound (1H 2009:
US$5.14) respectively. The average price achieved on rhodium sales in the first
six months of 2010 was US$2 600 per ounce (1H 2009: US$1 255). The overall rand
basket price achieved for the first half of 2010 of R19 165 per platinum ounce
sold was 39% higher compared to the R13 826 achieved in the same period in 2009.
Cost of sales rose 3% or R428 million to R16.8 billion compared to the first
half of 2009 primarily due to a R1 806 million increase in the cost of purchased
metal, due to higher rand prices paid for the metal purchased and higher
volumes. Other costs at R1 139 million were R144 million higher due to R93
million in respect of the newly implemented Mineral Resource Royalty and R114
million voluntary separations cost. Cash mining, smelting and refining costs
reduced by R524 million or 5% to R10.9 billion while depreciation increased by
13% to R2.1 billion.
The cash operating cost per equivalent refined platinum ounce increased by 6.7%
when compared to the first half of 2009 but decreased 2.1% compared to in the
second half of 2009. The cash on-mine cost per tonne was R441, a decrease of
2.9% compared to the first half of 2009 and 2.6% compared to the second half of
2009. We believe this steady reduction from a high of R475 in 2008 reflects our
successful cost management efforts across our mining operations.
Our cost management efforts focussed primarily on improving productivity during
the period. Measured as square metres per total operating employee per month,
the average for the period was 6.92m2 compared to 6.26m2 in the first half of
2009. Productivity reached an average of 7.08m2 in the second quarter of 2010
and we are therefore confident of achieving our target of an average of 7.0m2
for the full year in 2010.
We also continued to make full use of the centralised procurement facilities
provided by the Anglo American procurement programme to mitigate inflationary
pressures on our cost base; and we delivered further benefit through our asset
optimisation initiatives, focussing on cost management, with a particular focus
on our overhead costs, and operational efficiencies. Operating profit was
enhanced by some $261 million from asset optimisation initiatives, thus
exceeding our target of $250 million for the full year 2010. Through supply
chain management we delivered cost savings of $69 million in the period and we
are confident of meeting our target of $195 million for the full year.
The total number of employees as at 30 June 2010 was 56 246, compared to 58 320
as at 31 December 2009 and 64 051 as at 30 June 2009. Figures for 2009 have been
restated to exclude Bokoni and BRPM employees.
Net debt decreased to R8.245 billion from R19.261 billion at the end of December
2009 and R17.957 billion at the end of June 2009. The decrease was driven
primarily by the proceeds of the rights offer which resulted in a net inflow of
R12.4 billion. Cash from operating activities was R2.0 billion higher than last
year at R2.6 billion while capital expenditure reduced by R3.0 billion.
At the metal prices that Anglo Platinum anticipates will prevail for the
remainder of the year, net debt should continue to decrease as cash flow
generation and working capital management improve. Cash flow should be
positively impacted by the receipt of proceeds from the planned sell down of our
stake in BRPM as well as the release of monies held in escrow in respect of the
sale of our stake in the Booysendal Joint Venture in 2009.
However, until a sustainable improvement is seen in cash flow, the Board
considers it prudent to continue to suspend dividend payments.
MARKETS
Anglo Platinum expects the platinum market in 2010 to remain in balance due to
continued strength from the autocatalyst and industrial segments. Interest in
new applications for the PGM metals remains buoyant as global pressures on
environmental issues, energy security and diversification retain political and
consumer interest.
Anglo Platinum continues to support the development of markets to support the
maintenance of existing and the development of new industrial applications, and
also the maintenance of healthy jewellery markets. Maximisation of value from
our by-products remains a key strategic driver which is supported with joint
development programmes both locally and internationally.
Autocatalysts
Anglo Platinum supports auto production consensus forecasts which suggest a
return to 2008 levels in 2010. During the first half of the year, recovery in
diesel auto production in European markets supported platinum demand, which was
also supported by high growth rates in the Chinese and ROW markets. The market
has seen a shift towards smaller vehicles across most regions but this is more
than offset by the implementation of tighter legislation. Vehicle inventory
levels remain lower than historic averages due to higher than predicted sales
volumes. This continues to offer upside potential for PGM demand as rebuilding
continues. Sales volumes across all other major markets have been significantly
higher in the period compared with 2009 levels. We expect this trend to be
dampened somewhat in the second half of 2010 as scrappage schemes are phased out
and economic uncertainty keeps consumers from making expensive purchases, but we
do expect growth when compared with the second half of 2009.
Industrial
Demand for platinum in the industrial sector has recovered during the first half
with capacity utilisation rates in the chemical and petroleum sectors having
improved and all major indices seeing significant recovery. Demand for consumer
goods has shown a strong rebound in the period as improvements in economic
conditions led to greater demand for TVs and electronic goods. Continued focus
on cleaner and more sustainable technologies has seen more demand for fuel cell
technologies across portable, niche transport and stationery segments.
Jewellery
Jewellery purchases in China declined in the first half of 2010 compared with
the first half of 2009 as inventory levels in the supply chain were adequate
following the extra demand that rebuilt them in 2009. The sudden decrease in the
platinum price in the second quarter of 2010 saw significant increases in
purchases in most markets as jewellers took advantage of the price opportunity.
The increased demand was most notable in the unsaturated Chinese market. Mature
markets continue to recover as economic conditions have improved.
Investment
Exchange Traded Funds ("ETF"s) have changed the landscape of precious metal
investment. The launch of the US-based ETFs supported firm investment demand in
the first quarter of 2010 with over 200k ounces of additional demand. Despite
the recent price correction, ETF holdings for both platinum and palladium held
up well.
Anglo Platinum`s extensive knowledge of the market forms the base of our
operating strategy. This knowledge greatly enhances our ability to forecast the
PGM market needs and consequently the level of production required to ensure
long-term market sustainability.
OPERATIONS
Equivalent refined platinum production (equivalent ounces are mined ounces
expressed as refined ounces) from the mines managed by Anglo Platinum and its
joint venture partners for the first half of 2010 was 1.196 million ounces, a
decrease of 4% when compared to the first half of 2009.
The 73 100 ounce reduction in equivalent refined platinum ounces from Anglo
Platinum`s wholly owned mines (including Union Mine) were due to primarily to:
- A 58 000 ounce decrease as a result of placing three Rustenburg shafts onto
care and maintenance in 2009;
- A 15 000 ounce decrease due to:
- The simultaneous intersection of five major potholes at Khomanani Mine
during the first quarter of 2010;
- Geological conditions at Union Mine`s Richard shaft and the implementation
of a new shift cycle, cleaning method and the changeover to owner
maintenance of equipment at Union Mine`s Decline section;
- Shaft and haulage failures and safety stoppages at Tumela Mine; and
- A reduction in mining and stockpile grades at Mogalakwena as we move from
the Zwartfontein to the North pit.
These events were partly offset by higher output from Bathopele and Thembelani
mines, our joint venture mines BRPM, Mototolo, Kroondal and Marikana and Bokoni,
our associate.
The overall 4E built-up head grade for the first half of 2010 was down to
3.07g/t compared to 3.43g/t in the same period in 2009. Concentrator recoveries
at managed concentrators increased by 1% to 79%.
In the six months to 30 June 2010 purchases of platinum in concentrate increased
by 54 000 ounces or 24% to 276 000 equivalent refined ounces.
Planned furnace maintenance at the Polokwane and Waterval smelters was carried
out during the first quarter of 2010. The Polokwane smelter furnace was rebuilt
and the hearth extended, resulting in a shut down from late December 2009, until
first tap in early April. The rebuild was completed within budget and on
schedule. Repairs at Waterval smelter were carried out between February and May,
with the first slag tapped in late June.
Both smelters resumed normal operations in the second quarter. Higher than
normal refined metal stocks at the start of the period provided the flexibility
to carry out the furnace maintenance.
Refined platinum production at 1 million ounces for the first half of 2010
represents a decrease of 5% when compared to the same period in 2009. The target
of 2.5 million ounces of refined platinum production for the full year remains
in place.
The increase in equivalent refined in-process inventory in the period was 161
000 platinum ounces. The increase occurred primarily within the smelter
operations due to the natural refilling of the smelter pipeline which was low at
the start of the year due to the December mine shutdowns and the subsequent
Polokwane Smelter`s planned furnace rebuild in the first quarter. The full
release of the subsequent build up will only occur during quarter 3 2010. In
addition, some in-process build up has occurred within the RBMR. The
intermediate stockpiles within RBMR are high, as planned, and these will be
released through current toll contracts and once the ongoing expansion of the
BMR is completed and commissioned.
On a mine by mine basis, our equivalent refined platinum ounce performance for
the period was as follows:
Wholly owned Mines (including Union Mine)
Bathopele
The mine performed well and production increased 3.8% compared with the first
half of 2009.
Khomanani
Production was down 12.1% in the period compared with the first half of 2009.
The decrease was due primarily to the intersection at Khomanani 1 shaft of five
major potholes at the same time.
An aggressive development programme is underway to re-establish mining around
the potholes, which should be complete by early 2011.
Thembelani
Production increased 16.8% in the first half of 2010 compared with the first
half of 2009, in line with the planned production ramp up.
Khuseleka
Production decreased 27.7% in the first half of 2010 compared with the same
period in 2009 due to the closure in the first half of 2009 of Khuseleka 2
shaft. Production at Khuseleka 1 shaft was marginally higher compared with the
first half of 2009.
Siphumelele
Production decreased 33.3% in the first half of 2010 compared with the same
period in 2009 due to the closure in the first half of 2009 of Siphumelele 2 and
3 shafts. Production at Siphumelele 1 shaft increased by 23% year-on-year.
Tumela
Production decreased by 8.7%. The decrease was due to:
1. Stoppage in the second quarter due to a partial shaft barrel failure;
2. Haulage failure at two levels in the second quarter which impacted
production by 6%;
3. Production stopped in May to deal with the impact of a fatality at the
mine.
Lower grade surface ore sources were milled to partially offset the decrease in
underground production.
Dishaba
Production was marginally down by 0.7% year-on-year. Tonnes hoisted were lower
than planned for the period, as a result of a reduction in sweeping and vamping
crews after the dismissal of contractors who did not adhere to Anglo Platinum`s
safety standards in January.
Production was also affected at Dishaba when operations were halted in May due
to a fatality.
Union
Production was down 5.8% in the period compared with the first half of 2009.
Production was adversely affected by:
1. Geotechnical and geological issues at Richard shaft;
2. The transition to a new cluster mining method and a new cleaning
method at the mechanised Decline section, as well as the changeover to owner
maintenance of equipment.
The new shift cycle implemented to ensure optimal mining sequences with regards
to the new mining method will be fully embedded by the end of the year.
Lower grade surface ore sources were milled to partially offset the decrease in
underground production.
Mogalakwena
Production decreased by 7.6% in the period compared with the first half of 2009.
Despite a 6% increase in tonnes milled, grade decreased by 15% in the period as
a result of mining moving from the deeper, and therefore higher grade,
Zwartfontein pit, to the new, shallower North pit. We expect grades to improve
during the second half of the year.
In addition, 30% of tonnes milled came from stockpiles which are at a lower
grade this year compared with last year.
Comparing the first half of 2010 with the second half of 2009, good progress has
been made on grades and recoveries:
- The mine`s built up head grade of 2.53 g/t compares with 2.47 g/t for 2H09
- Total concentrator recovery was 69% compared with 62% for 2H09
Due to the above issues, we expect production of around 260 000 equivalent
refined platinum ounces from Mogalakwena this year.
Project Mines
Twickenham
Twickenham Mine was handed over to our Projects team during the period to ensure
the successful ramp up of the new 250ktpm operation.
Joint Venture Mines
Modikwa
Production decreased 7.4% in the period compared with the first half of 2009.
Key issues affecting production included safety stoppages at South shaft in
quarter one and an unprotected strike in the last month of the first quarter
resulting in a loss of two working days.
Kroondal
Production increased by 4.3% when compared to the first six months in 2009 due
to increased productivity.
Marikana
Production attributable to Anglo Platinum from Marikana Mine increased by 135%
compared with the first half of 2009, due to increased production from the
underground section, offset by lower volumes of concentrate from the opencast
section sold to Impala Refining Services.
Mototolo
Production increased by 11.3% as a result of operating at steady state
production for the full half year.
BRPM
Production increased 6.5% at BRPM as a result of productivity improvements.
Bokoni
Production of equivalent refined platinum improved by 5.2% or 1 530 ounces in
the first half of 2010 compared with the first half of 2009 as reorganisation of
the labour force was completed and production crews were settled into their new
working places.
CAPITAL EXPENDITURE AND PROJECTS
Capital expenditure for the first half of 2010, excluding capitalised interest,
amounted to R2.840 billion of which R1 449 million was spent on projects, R1 094
million on stay in business capital and R297 million on waste stripping at
Mogalakwena Mine. Capital expenditure for the year, excluding capitalised
interest, is expected to be R8 billion.
The first phase of the MC Plant capacity expansion which will increase the
current MC Plant capacity from 64ktpa of Waterval Converter Matte to 75ktpa was
commissioned during the period and the Unki mine in Zimbabwe is on track to be
commissioned in the third quarter of this year. Both the R1.5 billion Dishaba
East Upper UG2 project and the R2.3 billion Thembelani 2 shaft replacement
project are on track to complete on time and within budget.
MINERAL RESOURCES AND ORE RESERVES
There have been no material changes to the ore reserves as disclosed in the 2009
Annual Report.
OUTLOOK
For the remainder of 2010, Anglo Platinum expects the platinum price to average
at least $1 500 per ounce, if economic recovery continues. At such a price, we
expect to refine and sell a total of 2.5 million ounces of platinum in 2010 -
thereby expecting a stronger second half to the year.
Anglo Platinum will continue to manage costs as a priority by improving
productivity, increasing efficiency and managing the supply chain and
procurement costs. We expect cost improvements achieved so far to be sustained
and we continue to aim to keep our unit cash costs per equivalent refined
platinum ounce for the year around the same level as in 2008 and 2009, just
above R11 000 per equivalent refined platinum ounce. Productivity is expected to
increase to an average of 7.0 m2 for 2010 and an average of 7.3 m2 for 2011.
Our strategic plan, based on our current view that the market will be adequately
supplied, should improve our cost position from the upper half to the lower half
of the cost curve. We are in the process of improving the reliability of our
production capacity and entrenching cost management as a long term and
sustainable culture in Anglo Platinum. This will ensure that we are well
positioned to extract full value from our assets as the market recovery
continues. Our safety improvement plan will ensure that we continue to
demonstrate improvements on our journey to zero harm.
T M F Phaswana N F Nicolau Johannesburg
(Chairman) (Chief Executive Officer) 23 July 2010
SUPPLEMENTARY INFORMATION
Consolidated Statistics*
Six months Six months Year
ended ended ended
30 June 30 June 31
December
Total operations 2010 2009 2009
Marketing statistics
Average market prices
achieved
Platinum US$/oz 1 593 1 085 1 199
Palladium US$/oz 462 212 257
Rhodium US$/oz 2 600 1 255 1 509
Gold US$/oz 1 191 950 1 002
Nickel US$/lb 9.52 5.14 6.54
Copper US$/lb 3.03 1.64 2.20
US$ Basket price (Net US$/oz Pt 2 540 1 522 1 715
sales revenue per Pt sold
ounce sold)
US$ Basket price (Net US$/oz Pt 1 293 833 926
sales revenue per PGM sold
ounce sold)
Platinum R/oz 12 021 9 877 9 893
Palladium R/oz 3 483 1 904 2 107
Rhodium R/oz 19 593 11 399 12 462
Gold R/oz 9 057 8 503 8 105
Nickel R/lb 71.95 45.89 52.85
Copper R/lb 22.84 14.84 17.76
R Basket price (Net R/oz Pt sold 19 165 13 826 14 115
sales revenue per Pt
ounce sold)
R Basket price (Net R/oz PGM 9 757 7 567 7 621
sales revenue per PGM sold
ounce sold)
Average exchange rate R/US$ 7.5439 9.0832 8.2327
achieved on sales
Exchange rate at end R/US$ 7.6543 7.7400 7.3787
of year
Financial statistics
and ratios
Gross profit margin % 19.1 4.0 5.4
Earnings before R millions 5 834 2 457 4 936
interest, taxation,
depreciation and
amortisation
(EBITDA)
Operating profit to % 14.6 2.3 2.0
average operating
assets
Return on average % 16.6 19.3 10.1
shareholders` equity
Return on average % 13.4 2.2 1.5
capital employed
Interest cover - % 8.9 2.1 2.5
EBITDA
Net debt to capital % 14.6 35.7 37.1
employed
Interest -bearing % 22.1 60.3 69.8
debt to
shareholders` equity
Net asset value per R 184.5 136.0 137.8
ordinary share
Cost of sales per R 15 516 13 289 13 359
total Pt ounce sold
Cash operating cost R 11 493 10 775 11 236
per equivalent
refined Pt ounce
(excluding ounces
from purchased
concentrate and
associated costs)
Cash operating cost R 13 752 12 734 11 261
per refined Pt ounce
Equivalent refined 000 oz 1 195.7 1 243.9 2 464.3
platinum production
Pipeline stock 000 oz (34.0) - 8.5
adjustment
Refined platinum 000 oz (1 000.5) (1 056.4) (2 451.6)
production
Mining 000 oz (768.3) (865.8) (1 966.8)
Purchase of 000 oz (232.2) (190.6) (484.8)
concentrate
Platinum Pipeline 000 oz 161.2 187.5 21.2
movement
* Not reviewed or
audited
REGISTERED OFFICE
55 Marshall Street, Johannesburg, 2001
P.O. Box 62179, Marshalltown, 2107
Telephone +27 11 373-6111
Facsimile +27 11 373-5111
SOUTH AFRICAN REGISTRARS
Computershare Investor Services (Pty) Limited
(Registration No. 2004/003647/07)
70 Marshall Street, Johannesburg, 2001
P.O. Box 61051, Marshalltown, 2107
Telephone +27 11 370-5000
Facsimile +27 11 688-5200
Detailed results are available on the Internet at: http://www.angloplatinum.com
E-mail enquiries should be directed to:
amulholland@angloplat.com
DIRECTORS AND COMPANY SECRETARY
executive directors: N F Nicolau (Chief Executive Officer),
B Nqwababa (Executive Finance Director).
NON-EXECUTIVE DIRECTORS: T M F Phaswana (Chairman), C B Carroll (American), B R
Beamish, R Medori (French).
INDEPENDENT NON-EXECUTIVE DIRECTORS: T A Wixley (Deputy Chairman),
R M W Dunne (British), Dr B A Khumalo, W E Lucas-Bull, M V Moosa,
S E N Sebotsa.
ALTERNATE DIRECTOR: P G Whitcutt.
Company Secretary: D J Alison.
Date: 26/07/2010 08:00:03 Produced by the JSE SENS Department.
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