| Mon 7 Feb 2011, 9:00 | | AMS - Anglo Platinum Limited - Abridged audited financial report for the year |
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AMS
ANANP
AMS - Anglo Platinum Limited - Abridged audited financial report for the year
ended 31 December 2010 and cash dividend declaration
AngloAmerican
Platinum
Anglo Platinum Limited
Anglo Platinum Limited and its Subsidiaries ("Platinum")
A member of the Anglo American plc group
(Incorporated in the Republic of South Africa)
(Registration number 1946/022452/06)
JSE Codes: AMS
ISIN: ZAE000013181
ABRIDGED AUDITED FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2010 AND CASH
DIVIDEND DECLARATION
PERFORMANCE HIGHLIGHTS 2010
Continued strong improvement in safety performance with LTIFR down to 1.17 from
1.37; tragically eight employees lost their lives during the year
Resumption of dividend payments; final dividend declared of R1.8 billion, R6.83
per share
Excellent rebound in profitability: headline earnings up 595% to R4 931 million
Refined platinum production of 2.57 million ounces; refined platinum sold of
2.52 million ounces
Cash operating costs of R11 730 per equivalent refined platinum ounce, up 4%
compared to 2009
Net debt of R4.1 billion, down from R19.3 billion due to successful rights
issue, improved cash flow from stronger metals prices and strict working capital
management
Anglo Platinum received new order mineral right grant letters on 21 July 2010
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
Year Year
ended ended
31 December % 31 December
R millions 2010 Change 2009
GROSS SALES REVENUE 46 352 25 36 947
Commissions paid (327) 26 (260)
NET SALES REVENUE 46 025 25 36 687
COST OF SALES (37 991) 9 (34 715)
GROSS PROFIT ON METAL SALES 8 034 307 1 972
Other net expenditure (405) 39 (659)
Market development and promotional (376) 4 (392)
expenditure
OPERATING PROFIT 7 253 688 921
Profit on disposal of 37% interest 788 -
in Western Bushveld Joint Venture
Gain on listing of Bafokeng 4 466 -
Rasimone Platinum Mine (BRPM) (Note
7)
Profit on disposal of investment in - 1 982
Booysendal Joint Venture
Profit on disposal of 51% interest - 536
in Bokoni Platinum Mines
Interest expensed (318) 40 (532)
Interest received 248 (16) 296
Remeasurements of loan and 302 (93)
receivables
Dividends received - 64
Loss from associates (426) (114) (199)
PROFIT BEFORE TAXATION 12 313 314 2 975
Taxation (2 197) 153
PROFIT FOR THE YEAR 10 116 223 3 128
OTHER COMPREHENSIVE INCOME
Deferred foreign exchange (240) (85)
translation losses
Share of other comprehensive 14 (19)
income/(losses) of associates
Gain on available for sale 129 -
investments
TOTAL COMPREHENSIVE INCOME FOR THE 10 019 231 3 024
YEAR
PROFIT ATTRIBUTABLE TO:
Owners of the Company 9 959 231 3 012
Non-controlling interests 157 35 116
10 116 223 3 128
TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO:
Owners of the Company 9 862 239 2 908
Non-controlling interests 157 35 116
10 019 231 3 024
RECONCILIATION BETWEEN PROFIT AND
HEADLINE EARNINGS
Profit attributable to shareholders 9 959 3 012
Less: Declared and undeclared - (5)
cumulative preference share
dividends and related STC
Basic earnings attributable to 9 959 3 007
ordinary shareholders
Adjustments
Profit on disposal of 37% interest (788) -
in Western Bushveld Joint Venture
Tax effect thereon 17 -
Gain on listing of BRPM (4 466) -
Tax effect thereon 111 -
Profit on disposal of investment in - (1 982)
Booysendal Joint Venture
Profit on disposal of 51% interest - (536)
in Bokoni Platinum Mines
Profit on sale of other mineral (14) (64)
rights and investments
Tax effect thereon 2 -
Loss on disposal and scrapping of 153 389
property, plant and equipment
Tax effect thereon (43) (109)
Headline earnings attributable to 4 931 705
ordinary shareholders
Add: Declared and undeclared - 5
cumulative preference share
dividends and related STC
Headline earnings 4 931 595 710
Number of ordinary shares in issue 261.6 236.8
(millions)
Weighted average number of ordinary 254.8 243.7*
shares in issue (millions)
Headline earnings per ordinary
share (cents)
Headline 1 935 570 289*
Diluted 1 929 567 289*
Earnings per ordinary share (cents)
Basic 3 909 217 1 234*
Diluted 3 896 217 1 230*
* The figures for 2009 have been restated for the impact of the bonus element of
the rights offer. (Refer to note 50 in the 2010 annual report for full details).
SEGMENTAL INFORMATION
Net sales Operating
Revenue contribution Depreciation
Audited Audited Audited Audited Audited Audited
Year Year Year Year Year Year
ended ended ended Ended ended ended
31 31 31 31 31 31
December December December December December December
R millions 2010 2009 2010 2009 2010 2009
OPERATIONS
Bathopele 2 526 1 950 701 305 299 274
Mine
Khomanani 1 709 1 489 129 14 182 183
Mine
Thembelani 1 735 1 170 292 (28) 165 124
Mine
Khuseleka 2 275 2 273 299 50 209 228
Mine
Siphumelele 1 590 1 566 178 (102) 200 243
Mine
Tumela Mine 5 162 4 173 1 831 1 171 460 363
Dishaba Mine 2 634 2 126 609 451 260 170
Union Mine 5 099 4 135 1 331 816 488 445
Mogalakwena 6 187 4 540 1 927 428 1 321 1 307
Mine
Twickenham 70 127 (155) (111) 34 69
Platinum Mine
Modikwa 1 304 1 054 270 (109) 156 246
Platinum Mine
Kroondal 2 202 1 564 730 301 67 59
Platinum Mine
Marikana 636 637 128 122 30 28
Platinum Mine
Mototolo 983 727 325 182 81 81
Platinum Mine
Bafokeng-
Rasimone
Platinum 1 019 1 184 176 198 121 90
Mine
Bokoni - 557 - (207) - 11
Platinum Mine
35 131 29 272 8 771 3 481 4 073 3 921
Western Limb
Tailings
Retreatment 672 452 179 84 85 73
(WLTR)
Masa Chrome 376 247 356 231 2 2
Total - mined 36 179 29 971 9 306 3 796 4 160 3 996
Purchased 9 846 6 716 913 236 161 130
metals
46 025 36 687 10 219 4 032 4 321 4 126
Other costs (2 185) (2 060)
Gross profit 8 034 1 972
on metal
sales
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign
currency Available
Share Share translation for sale
R millions capital premium reserve reserve
Balance as at 31 December 24 * 9 373 (53) -
2008
Total comprehensive income (85)
for the year
Deferred tax charged
directly to equity
Preference dividends paid
in cash
Excess of net asset value
over purchase price on
acquisition of Unki Mines
from fellow subsidiary
Cash distributions to
minorities
Ordinary share capital - * 34
issued
Conversion of preference (-) * (6)
shares
Redemption of preference (-) * (84)
shares
Shares acquired in terms (-) * (185)
of the BSP - treated as
treasury shares
Shares vested in terms of - * 11
the BSP
Equity-settled share based
compensation
Shares purchased for
employees
Balance at 31 December 24 * 9 143 (138) -
2009
Total comprehensive income (240) 129
for the year
Deferred tax charged
directly to equity
Proceeds from rights offer 2 * 12 402
(net of costs)
Transfer of prior year (121)
translation differences on
net investment in foreign
subsidiary
Rights offer shares (30)
subscribed for by the
Group ESOP - treated as
treasury shares
Cash distributions to
minorities
Issue of shares to certain - * 88
former preference
shareholders (Note 9)
Ordinary share capital - * 18
issued
Shares acquired in terms (-) * (270)
of the BSP - treated as
treasury shares
Shares vested in terms of - * 30
the BSP
Equity-settled share-based
compensation
Shares purchased for
employees
Balance at 31 December 26 * 21 381 (499) 129
2010
* Less than R500 000
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
Non-
Retained controlling
R millions earnings interests Total
Balance as at 31 December 2008 19 691 461 29 496
Total comprehensive income for the year 2 993 116 3 024
Deferred tax charged directly to equity 31 31
Preference dividends paid in cash (6) (6)
Excess of net asset value over purchase 69 69
price on acquisition of Unki Mines from
fellow subsidiary
Cash distributions to minorities (82) (82)
Ordinary share capital issued 34
Conversion of preference shares (6)
Redemption of preference shares (84)
Shares acquired in terms of the BSP - (185)
treated as treasury shares
Shares vested in terms of the BSP (11) -
Equity-settled share based compensation 363 363
Shares purchased for employees (21) (21)
Balance at 31 December 2009 23 109 495 32 633
Total comprehensive income for the year 9 973 157 10 019
Deferred tax charged directly to equity (28) (28)
Proceeds from rights offer (net of 12 404
costs)
Transfer of prior year translation 121 -
differences on net investment in
foreign subsidiary
Rights offer shares subscribed for by 30 -
the Group ESOP - treated as treasury
shares
Cash distributions to minorities (192) (192)
Issue of shares to certain former (88) -
preference shareholders (Note 9)
Ordinary share capital issued 18
Shares acquired in terms of the BSP - (270)
treated as treasury shares
Shares vested in terms of the BSP (30) -
Equity-settled share based compensation 475 475
Shares purchased for employees (41) (41)
Balance at 31 December 2010 33 521 460 55 018
* Less than R500 000
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
Year Year
ended ended
31 December 31 December
R millions 2010 2009
ASSETS
Non-current assets 65 408 57 778
Property, plant and equipment 37 438 35 283
Capital work-in-progress 17 065 18 074
Investment in associates 7 339 3 301
Investments held by environmental trusts 569 78
Other financial assets 2 904 941
Other non-current assets` 93 101
Current assets 18 393 18 043
Inventories 12 558 11 292
Trade and other receivables 2 988 2 891
Other assets 305 328
Other current financial assets 8 -
Cash and cash equivalents 2 534 3 532
TOTAL ASSETS 83 801 75 821
EQUITY AND LIABILITIES
Shareholders` equity 55 018 32 633
Non-current liabilities 19 774 34 830
Interest bearing borrowings (Note 4) 6 622 22 773
Obligations due under finance leases 1 2
Other financial liabilities 148 175
Environmental obligations 1 388 1 196
Employees` service benefit obligations - * 6
Deferred taxation 11 615 10 678
Current liabilities 9 009 8 358
Current interest bearing borrowings (Note 4) 22 18
Trade and other payables 6 190 5 409
Other liabilities 2 042 2 119
Other current financial liabilities 183 158
Share-based payment provision 108 162
Taxation 464 492
TOTAL EQUITY AND LIABILITIES 83 801 75 821
*Less than R500 000
CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
Year Year
ended ended
31 December 31 December
R millions 2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers 45 617 36 763
Cash paid to suppliers and employees (34 261) (31 246)
Cash generated from operations 11 356 5 517
Interest paid (net of interest capitalised) (220) (424)
Taxation paid (905) (396)
Net cash from operating activities 10 231 4 697
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of property, plant and equipment (7 989) (11 301)
(includes interest capitalised)
Stay-in-business capital (3 573) (3 741)
Project capital (3 671) (5 991)
Interest capitalised (745) (1 569)
Net proceeds on disposal of 13% of Royal 1 323 -
Bafokeng Platinum Limited (RBPlat)
(Note 7)
Proceeds on disposal of interest in Western 186 -
Bushveld Joint Venture
Subscription for "N" preference shares in (273) -
Newshelf 848 (Proprietary) Limited
Loans to associates (260) (181)
Advances made to Plateau Resources (141) (190)
(Proprietary) Limited (Plateau) for the
operating cash shortfall facility
Receipt of funds in escrow regarding the 537 -
Booysendal deal
Proceeds on rights in preferences shares - 1 610
Increase in investments held by environmental (507) (27)
trusts
Other 83 (175)
Net cash used in investing activities (7 041) (10 264)
CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES
Proceeds from the issue of ordinary share 18 28
capital
Proceeds from the rights offer (net of costs) 12 404 -
Redemption of preference shares - (84)
Purchase of treasury shares for the Bonus (270) (185)
Share Plan (BSP)
(Repayment of)/proceeds on interest-bearing (16 147) 6 971
borrowings
Repayment of finance lease obligation (1) (507)
Preference dividends paid - (6)
Cash distributions to minorities (192) (82)
Net cash (used in)/from financing activities (4 188) 6 135
Net (decrease)/increase in cash and cash (998) 568
equivalents
Cash and cash equivalents at beginning of year 3 532 2 870
Transfer from assets held for sale - 94
Cash and cash equivalents at end of year 2 534 3 532
MOVEMENT IN NET DEBT
Net debt at beginning of year (19 261) (13 459)
Net cash from operating activities 10 231 4 697
Net cash used in investing activities (7 041) (10 264)
Other 11 960 (235)
Net debt at end of year (4 111) (19 261)
NOTES TO THE ANNUAL RESULTS
1. The abridged financial information has been prepared in accordance with the
conceptual framework and the measurement and recognition requirements of
International Financial Reporting Standards (IFRS), South African Generally
Accepted Accounting Practice (SA GAAP) and the information as required by IAS
34: Interim Financial Reporting.
2. The abridged report has been prepared using accounting policies that comply
with IFRS and SA GAAP. The accounting policies are consistent with those applied
in the financial statements for the year ended 31 December 2009, except for the
adoption of various new and revised accounting standards/interpretations. Other
than the adoption of IAS 28 - Investments in Associates and IAS 31 - Interests
in Joint Ventures, none of these accounting standards and interpretations had an
impact on the Group`s results. For the full impact of these changes please refer
to the annual report.
Audited Audited
Year Year
ended ended
31 December 31 December
2010 2009
% %
3. Taxation
A reconciliation of the standard rate of
South African normal taxation compared
with that charged in the income statement is
set out in the following table:
South African normal taxation 28.0 28.0
STC 0.1 0.5
28.1 28.5
Disallowable items (0.3) (0.8)
Capital profits (11.1) (23.8)
UK Group relief - (12.1)
Prior year underprovision 0.6 3.3
Other 0.5 (0.2)
Effective taxation rate 17.8 (5.1)
Audited Audited
Year Year
ended ended
31 December 31 December
R millions 2010 2009
4. Interest-bearing borrowings
The Group has the following borrowing
facilities:
Committed facilities 21 491 33 009
Uncommitted facilities 4 730 4 769
Total facilities 26 221 37 778
Less : Facilities utilised (6 644) (22 791)
Interest-bearing borrowings (6 622) (22 773)
Current interest-bearing borrowings (22) (18)
Available 19 577 14 987
Weighted average borrowing rate per annum (%) 6.31 8.59
5. Commitments
Mining and process property, plant and
equipment*
Contracted for 1 553 2 317
Not yet contracted for 27 028 32 298
Authorised by the directors 28 581 34 615
Project capital 24 380 30 917
- within one year 3 565 4 209
- thereafter 20 815 26 708
Stay-in-business capital 4 201 3 698
- within one year 2 998 3 469
- thereafter 1 203 229
Capital commitments relating to the Group`s
share in associates*
Contracted for 362 105
Not yet contracted for 3 185 2 369
3 547 2 474
* The figures for 31 December 2009 have been reclassified to reflect the
associates` share of capital commitments separately.
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 Bokoni Platinum Mine`s free cash
flows up to a maximum of R500 million plus accrued interest. Calls on this
facility are expected in 2013 and 2014.
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 Mine`s cash flows, and call on this facility is considered a
remote possibility.
The Group has also provided Lexshell 36 with a project capital expenditure
facility to fund their 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 spend on the shaft. At 31 December 2010, this facility had
not been drawn upon.
6. Contingent liabilities
Letters of comfort have been issued to financial institutions to cover certain
banking facilities. There are no encumbrances of Group assets, other than the
assets held under finance leases by the Group.
The Group is the subject of various claims, which are individually immaterial
and are not expected, in aggregate, to result in material losses.
The Group has in the case of some of its mines provided the Department of
Mineral Resources with guarantees that cover the difference between closure
costs and amounts held in the environmental trusts. At 31 December 2010 these
guarantees amounted to R2 493 million (2009: R3 082 million).
7. Disposal of interest in Royal Bafokeng Platinum Limited
On 7 December 2009, the Group exchanged its direct interest of 17% in BRPM for a
25.4% interest in RB Plat which was to be listed within twenty four months,
subject to favourable market conditions. The BRPM restructuring transaction
involved a change in the participation interests of the joint venture from that
of joint control and management by Anglo Platinum to RB Plat holding a majority
interest and operating the joint venture. Until listing on 8 November 2010, the
Group retained an effective 50% economic interest in BRPM and continued to exert
joint control over its operations. As a result of the primary listing of RB Plat
and the subsequent disposal by the Group of a portion of its shareholding in RB
Plat, the Group retained an interest of 12.6% in the company. As the Group no
longer exerts significant influence over RB Plat, the investment in RB Plat is
accounted for as an available for sale investment in terms of IAS 39.
Audited
Year
ended
31 December
R millions 2010
33% direct interest in BRPM
Property, plant and equipment 905
Capital work-in-progress 705
Investments held by environmental trusts 29
Inventories 5
Trade and other receivables 382
Taxation 4
Cash and cash equivalents 93
Deferred taxation (526)
Environmental obligations (16)
Trade and other payables (45)
Other liabilities (70)
Net asset value of 33% interest in BRPM at effective date 1 466
Revaluation of 33% interest in BRPM to fair value 2 928
Fair value of 33% interest in BRPM 4 394
Transferred to investment in associates (4 394)
-
25% direct interest in RB Plat (obtained in exchange for 17%
direct interest in BRPM)
Investment in associate - RB Plat 1 131
Transferred from investment in associate 1 044
Transferred from mining property, plant and equipment and 87
capital work-in-progress
Carrying value of interest disposed of in RB Plat (568)
Total carrying value of investment retained at effective date 563
Revaluation of interest in RB Plat to fair value 690
Fair value of 12.6% interest in RB Plat 1 253
Transferred to available for sale investments (1 253)
-
Consideration received for disposal of 13% in RB Plat (net of 1 416
transaction costs)
Carrying value of interest disposed of in RB Plat (568)
Revaluation of 33% interest in BRPM to fair value 2 928
Revaluation of interest in RB Plat to fair value 690
Gain on listing of BRPM 4 466
Consideration received in cash 1 416
Less: cash and cash equivalent balances disposed of (93)
1 323
8. Changes in accounting estimates 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
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).
9. Issue of ordinary shares to certain former preference shareholders
On 31 May 2004, Anglo Platinum issued 40 million preference shares in terms of a
circular dated 10 May 2004. The preference shares were convertible into ordinary
shares at certain dates over a period of five years from the date of issue. The
final conversion date of the preference shares was 31 May 2009. All preference
shares not converted by 31 May 2009 were redeemed for cash on the redemption
date, being 30 November 2009.
The Board acknowledged the fact that certain former preference shareholders
missed the opportunity to convert their preference shares into ordinary shares
prior to the final conversion date and decided to accommodate these shareholders
by making an offer to them to subscribe for the number of ordinary shares that
they would have been entitled to on the redemption date, had they converted
their preference shares to ordinary shares. The offer was fully subscribed for
and resulted in the issue of 189 864 ordinary shares amounting to R88 million.
The impact on earnings per share was immaterial.
10. Corporate governance
The Board considers that the Company and its subsidiaries applied the King Code
on Governance Principles (King III) during the year, except with regard to the
appointment of the chairman who is not independent, as explained in the 2010
annual report.
11. Auditors` review
The auditors, Deloitte & Touche, have issued their opinion on the Group`s
financial statements for the year ended 31 December 2010.The audit was conducted
in accordance with International Standards on Auditing. They have issued an
unqualified audit opinion. A copy of their audit report is available for
inspection at the Company`s registered office. These abridged financial
statements have been derived from the Group financial statements and are
consistent in all material respects, with the Group financial statements
COMMENTARY
SAFETY
Anglo Platinum achieved a further decrease in its Lost-Time Injury Frequency
Rate (LTIFR) during 2010 to a record low of 1.17 hours per 200 000 hours worked,
a decrease of 15% year on year.
Tragically, eight 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 harm 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 43% in the number
of fatalities we have seen in 2010 compared with 2009 appears to herald such a
step change.
MINERALS LEGISLATION, TRANSFORMATION AND COMMUNITIES
Anglo Platinum is fully committed to the Minerals and Petroleum Resources
Development (MRPD) 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, compared with the 10% requirement;
50% historically disadvantaged South Africans in management positions,
compared to the 40% requirement;
HDSA procurement of 40%, up from 39% reported for 1H10, equating to R8.2
billion spent with HDSA suppliers in 2010 from procurable spend; and
Plans in place to build 20 000 houses in the next 10 years.
The Company also tracks sustainability targets and our notable achievements
include reductions in our water consumption and no level 2 or 3 environmental
incidents reported during the year.
A total of 894 families have been resettled at the Mogalakwena Mine to date. The
remaining 62 families are not opposed to relocation but to the terms of
relocation. Engagement is continuing with these families through a Government-
led task-team. Permission was granted by the community in 2010 to slightly
extend the mine boundary, thereby giving Anglo Platinum additional access to
land while the issues preventing the remaining 62 families from relocating are
resolved.
Anglo Platinum received letters of conversion for mineral rights granted by DMR
on 21 July 2010.
Furthermore, Anglo Platinum announces its commitment to a multi-billion rand
(c.1-2% of market capitalisation) economic empowerment transaction designed to
promote long term sustainable development in our host communities and key labour
sending areas that have not yet benefitted from Anglo Platinum`s extensive Black
Economic Empowerment (BEE) programme to date. The Company has been exploring
ways of enhancing and optimising the benefits that accrue to its host
communities. The transaction is an important element of this work and a catalyst
to its full realisation. We expect the transaction to be concluded within two
years, depending on community engagement.
The exact terms and final structure of the transaction will be determined
following an extensive community engagement process, with the objective of
jointly exploring the development aspirations of the host communities and
reaching a collective agreement. The ultimate ambition of the Company is to make
a meaningful and sustainable contribution to the ability of those communities to
thrive well beyond the life of Anglo Platinum`s mining operations.
FINANCIAL REVIEW
Anglo Platinum`s earnings increased in the year ended 31 December 2010 boosted
by higher metal prices.
Headline earnings increased to R4.9 billion in 2010, an increase of 595% over
2009. Headline earnings per share attributable to ordinary shareholders
increased by 570% to 1 935 cents (2009: 289 cents). The weighted average number
of ordinary shares in issue during 2010 was 254.8 million, compared with 243.7
million shares in 2009. The prior year weighted average number of shares and
headline earnings per share have been restated due to the proforma increase in
the number of shares in issue at 31 December 2009 resulting from the discount at
which the rights were offered to shareholders. Headline earnings exclude an
after tax profit of R771 million realised on the disposal of Anglo Platinum`s
37% interest in the Western Bushveld joint venture and an after-tax gain of R4.4
billion on the listing of Bafokeng-Rasimone Platinum Mine (BRPM). The gain on
the listing of BRPM consists of the profit realised on the disposal of a 13%
interest in Royal Bafokeng Platinum Limited (RB Plat), as well as the impact of
revaluing the retained interest in both RB Plat and BRPM to fair value. The
increase in basic earnings per share was 217% to 3 909 cents (2009: 1 234
cents).
Economic conditions for platinum group metal (PGM) prices improved during 2010,
resulting in revenue increasing by 25% (or R9.3 billion) to R46 billion. The
impact of the stronger metal prices was R15.9 billion, while a stronger rand
compared with the US dollar reduced the increase by some R6.0 billion. At 2.52
million ounces, sales volumes were marginally lower compared with those in 2009,
negatively impacting revenue by R580 million.
The platinum price achieved by Anglo Platinum Limited on sales improved by 34%,
from $1 199 per ounce during 2009 to $1 611, while palladium, rhodium and nickel
improved by 97%, 61% and 48% respectively. The achieved dollar basket price per
platinum ounce sold improved from $1 715 in 2009 to $2 491 - an improvement of
45%.
The Rand/US dollar exchange rate for 2010 was on average 11% stronger than in
2009. During 2009 the exchange rate achieved on metal sales was R8.23 compared
with R7.29 in 2010. The impact of the stronger rand resulted in an achieved rand
basket price per platinum ounce of R18 159, an increase of 29% compared with the
2009 price of R14 115.
Cost of sales rose by 9% or R3.3 billion to R38.0 billion. The key drivers of
the increase were as follows:
- Costs for purchases of metal increased by 38% (or R2.5 billion) to R9.2
billion owing to increased metal prices and an increase in volumes purchased.
The latter was primarily the result of the successful conclusion of Anglo
Platinum Limited`s BEE transactions with Anooraq Resources Corporation (Anooraq)
for Bokoni Platinum Mine (previously Lebowa Mine) in July 2009; and with Royal
Bafokeng Resources (Proprietary) Limited (RB Resources) over the BRPM in
November 2010. Total production from these operations from the said dates was
fully subject to purchase agreements, whereas previously some or all of the
production was owned by Anglo Platinum
- Cash on-mine costs, smelting and refining costs increased by 1.5% or R348
million to R23.2 billion. Rand operating costs were well contained despite
inflationary increases.
- Other costs increased by R125 million or 6% to R2.2 billion. Royalty costs
were R74 million higher in 2010 (including the new state royalty of R163
million), while costs associated with the transport of metals increased by R23
million.
- Depreciation of operating assets rose by R195 million or 4.7%, to R4.3
billion.
- The movement in metal inventory included in cost of sales was 9% or R100
million lower than in 2009 and amounted to R995 million.
Cost of sales per platinum ounce sold increased to R14 986 per ounce, up by 12%
from the 2009 figure of R13 359. This increase is as a result of higher prices
paid for purchased metal and lower platinum sales volumes.
Cash operating costs per equivalent refined platinum ounce increased by 4.4% to
R11 730 per ounce, owing principally to lower mined volumes caused by the shift
in production explained in the earlier comment regarding purchases of metals.
Productivity for 2010 was at 7.06 mSquared per operating employee, an
improvement of 12% over productivity in 2009. This exceeds our strategic
objective of 7.00 mSquared per employee for 2010.
Asset optimisation, procurement and supply-chain programmes have effectively
contributed to our operating performances during 2010.
As a result, a much increased percentage of our production is now in the lower
half of the industry cost curve. This was enabled by decisive actions to curtail
non value-adding operations while replacing lost production from other areas.
This improvement was made possible by leadership`s commitment to productivity
and cost management principles; and our drive towards a culture of sustained
performance. All of these actions created the momentum required to achieve
better results in 2010 and we believe will support our performance into 2011.
The total number of employees as at 31 December 2010 was 54 022, down from 58
320 as at end 2009.
Cash generated from operations increased to R11.4 billion, up by 106% from the
R5.5 billion generated in 2009. This increase was mainly due to improved metal
prices during 2010 and robust cost management. Cash used in investing activities
consisted primarily of capital expenditure of R8 billion (including capitalised
interest of R745 million).
The net debt position at 31 December 2010 amounted to R4.1 billion rand,
compared with R19.3 billion net debt at 31 December 2009. The debt position
improved as a result of stronger cash generation by operations; the reduction of
capital expenditure to R8 billion; and, most significantly, the successful
completion of a R12.5 billion rights issue during the year.
Ordinary dividends are declared after consideration of current and future
funding requirements, and are paid out of cash generated from operations. Anglo
Platinum Limited did not pay an interim dividend in 2010, owing to the company`s
net debt position at 30 June 2010. Due to the cash flow generated through the
disposal of assets and an improved cash generation performance during the second
half of 2010, and considering the final debt position as at 31 December 2010,
the Board approved a dividend payment of R1.8 billion on 4 February 2011, which
will be paid on 14 March 2011. This translates into a cover of 2.8 times on
headline earnings.
Anglo Platinum Limited will continue to monitor its capital environment and its
ability to manage debt levels adequately, and will consider future dividend
payments as the situation allows. When paying dividends, Anglo Platinum will
target a dividend cover of between 2 and 3 times, subject to market conditions
and short to medium term capital requirements.
MARKETS
The PGM markets had a strong year in 2010, with a significant recovery in demand
from the autocatalyst and industrial markets, healthy demand from the jewellery
sector and increasing investor interest in the platinum and palladium markets
primarily via Exchange Traded Funds (ETFs).
Supply increases from the industry were largely delivered to plan and as a
result, the platinum and palladium markets remained essentially in balance. The
rhodium market saw a reduced surplus due to improved autocatalyst demand.
Anglo Platinum continued its commitment to the development of the PGM markets,
working with our industry partners and stakeholders in the maintenance of
existing and the development of new industrial applications for the metals, and
also maintaining the health of jewellery markets.
Autocatalysts
Demand for platinum in autocatalysts had another year of solid recovery in 2010,
as global production and sales of vehicles increased from lows of 59 and 66
million vehicles in 2009 to reach 73 and 71 million respectively. In particular,
vehicle sales in the BRIC countries saw strong growth year on year, with Chinese
production of light duty vehicles surpassing that of the traditionally largest
market, the US, at close to 16 million. In Europe, the diesel proportion of
sales rebounded to 50% in 2010 after declining to 47% in 2009, driven mainly by
increased fleet sales.
US vehicle inventories have returned to historic averages in 2010 and reached 67
days in December of last year, compared to an average of 62 days in 2009 and a
high of 118 seen in February 2008.
Industrial
Demand from the industrial sector continued to recover from 2009 lows, with
capacity utilisation rates in the chemical and petroleum sectors having improved
and all major indices seeing significant recovery. New capacity build in the
glass sector contributed strongly to this recovery.
Jewellery
Despite the increase in the platinum price over the year, the jewellery market
remained resilient and achieved approximately 1.5 million ounces of new metal
demand in 2010. This represents a 30% decline compared with the record demand
seen in 2009 when inventory rebuilding took place.
Investment
2010 started with strong investor inflows into the platinum and palladium ETFs,
particularly into the new ETFs launched in the US. By the end of the year, the
aggregate holdings in the platinum ETFs were a record 1.23 million ounces, and a
record 2.21 million ounces were held across the palladium ETFs. The investment
`sector` is now firmly established as a key source of demand for PGMs, making up
10% and 15% of platinum and palladium 2010 demand respectively.
OPERATIONS
Equivalent refined platinum production (equivalent ounces are mined ounces
expressed as refined ounces) from the mines managed by Anglo Platinum Limited,
and its joint venture and associate mines for the year ended 31 December 2010
amounted to 2.484 million, an increase of 1% when compared to 2009.
Wholly owned mines (including Union Mine) produced 1.557 million equivalent
refined platinum ounces. Western Limb Tailings retreatment increased production
by 22% to 41 800 ounces. Purchased equivalent refined ounces from third parties
reduced to 92 300 ounces down 20% from 2009 while attributable ounces from joint
venture and associate operations increased by 6% to 790 300 ounces.
The 4E built up head grade reduced by 2% to 3.23g/t from 2009. The grade was
affected by lower planned grades from Mogalakwena Mine and the increased
treatment of lower grade surface material supplementing for decreased
underground production. The 4E built-up head grade for Merensky and UG2
increased by 2% and 4% respectively.
Tonnes milled decreased by 2% to 42.2 million in 2010. This decrease when
compared to 2009 was as a result of the successful conclusion of Anglo
Platinum`s BEE transactions with Anooraq, regarding Bokoni in July 2009, and
with RB Resources regarding the BRPM in November 2010.
During 2010, the major focus areas in Process operations were: improving process
safety, making asset optimisation a core management process, improving furnace
reliability and cost management.
Recoveries at managed concentrators increased by 3% despite a decrease of 3% in
the built up head grade.
Planned furnace maintenance was carried out at the Polokwane and Waterval
smelters during the first quarter of 2010, with both smelters resuming normal
operations from the second quarter.
Refined platinum production increased 5% year on year to 2.57 million ounces.
Pipeline inventory was reduced by 119 900 ounces during the year. The reduction
was primarily due to the milling and floating of converter slag which had been
stockpiled due to deferment of the new slag cleaning furnace project. The
intermediate stocks at the RBMR continue to be high as planned, and should start
to come down once the new expansion is commissioned.
On a mine by mine basis, our equivalent refined platinum ounce performance for
the year was as follows:
Wholly owned Mines (including Union)
Bathopele
The mine performed well and production increased 5% to 138 700 ounces compared
with 2009.
Khomanani
The mine intersected five major potholes on the UG2 horizon during the first
quarter of 2010. This affected production, which decreased 5% year-on-year to 99
100 ounces.
The mine responded with an aggressive development programme to re-establish
mining around the potholes and UG2 production should be back to full capacity by
the end of the first quarter of 2011.
Thembelani
Production increased by 22% to 95 600 ounces due to the planned increase in
tonnes milled, up 23%, as the mine ramps up.
Khuseleka
Production of 129 000 ounces represented a decrease of 17% compared with 2009
when Khuseleka 2 shaft was placed onto `care and maintenance`. Production from
Khuseleka 1 shaft increased 3% year on year.
Siphumelele
Production decreased 14% in 2010 to 94 200 ounces compared with 2009 when
Siphumelele 2 and 3 shafts were placed onto `care and maintenance`. Production
from Siphumelele 1 shaft increased 29% year on year.
Tumela
Production increased 0.3% compared with 2009 to 295 300, with a 7% increase
tonnes milled offset by an 11% reduction in the 4E built up head grade.
Dishaba
Production of increased by 1% to 152 500 ounces. Tonnes milled increased by 2%
but the mine`s 4E built up head grade decreased by 3% largely due to the loss of
mining in the Merensky section of the mine caused by geological disturbances
associated with intrusive fissure water.
Union
Production recovered from a weak first half in 2010 to decrease only 2%, to 292
000 ounces, compared with 2009.
Mogalakwena
Production increased 10% to 260 300 ounces due to a 7% increased in milled
volumes to 10.4 million tonnes.
Project Mines
Twickenham
In 2010, Twickenham Mine was handed over to the Anglo Platinum Projects team. A
new investment proposal for the project will be submitted for approval in the
third quarter of 2011. Equivalent refined ounces reduced to 2 900 ounces from 7
700 ounces.
Unki
The concentrator at Unki Mine was commissioned in the fourth quarter of 2010.
Tonnes mined during the year reached 391 594 compared with 71 750 tonnes in
2009. The mine is now in ramp-up phase and is expected to reach its steady state
of 120 000 tonnes milled per month in the third quarter of 2011.
Joint Venture Mines
Modikwa
Production decreased 4% to 129 600 ounces compared with 2009, being adversely
affected by safety stoppages and geological conditions at South Shaft and
Onverwacht Hill.
Kroondal
Production increased by 9% to 252 800 ounces as a result of increased
productivity and an increase in the 4E measured head grade to 3.80 grams per
tonne.
Marikana
Production from the mine`s open pit was replaced by ore transfer from the
Kroondal mine and an increase in underground production. Production increased to
52 600 ounces, up 32% year on year.
Mototolo
Production declined by 1% year on year to 108 000 ounces, largely due to
production interruptions from industrial action in the fourth quarter of 2010.
Associate Mines
BRPM
Production increased by 7% to 184 600 ounces primarily due to the early mining
of UG2 ore.
Bokoni
Production increased by 3% to 62 700 with tonnes milled up 11% offset by a 4%
decline in the mine`s 4E built up head grade.
CAPITAL EXPENDITURE AND PROJECTS
Total capital expenditure excluding capitalised interest for 2010 was R7.2
billion, a decrease of 26% or R2.5 billion from 2009. Stay-in-business capital
expenditure amounted to R3 billion - some R500 million lower than in 2009 -
while waste-stripping capitalisation expenses at our Mogalakwena operation
increased to R599 million from R240 million in 2009. Project capital expenditure
was R3.7 billion, down by 39% or R2.3 billion from the 2009 figure. Interest
capitalised in terms of international accounting standards was R745 million,
down by 53% or R824 million from the previous year.
Project capital expenditure for 2010 was spent mostly on the Twickenham Platinum
Mine project, the Thembelani 2 shaft replacement project, the Unki Platinum Mine
project, and the Khuseleka ore replacement project and the base metal refinery
33 000 tonne nickel expansion project.
As it did in 2010, in 2011 Anglo Platinum Limited will pursue the detailed
prioritisation of capital projects and stay-in-business expenditure, to ensure
that capital funding requirements are aligned with expected production profiles.
Consequently, total capital expenditure planned for 2011 is R8 billion,
excluding capitalised interest.
MINERAL RESOURCES AND RESERVES
Anglo Platinum`s total Ore Reserves 4E content decreased by 3% from 170.5
million ounces to 165.5 million ounces primarily owing to:
- Reallocation of Ore Reserves back to Mineral Resources (-10.1 million
ounces) due to changes in mine designs and scheduling;
- The BEE transactions with RB Resources on BRPM and with Wesizwe Platinum
Limited (Wesizwe) on the Western Bushveld Joint Venture (-4.7 million ounces)
The decrease in Ore Reserves is partly offset by the additional conversion of
Mineral Resources to Ore Reserves due to higher confidence mainly at the UG2
Reef (+8.6 million ounces) and to a lesser extent at the Merensky Reef (+1.5
million ounces) and due to a change in the pay limit at Mogalakwena North and
Central pits (+4.4 million ounces).
The Mineral Resources 4E content decreased by 2.0% from 632.3 million ounces to
619.5 million ounces primarily owing to:
- The BEE transactions with RB Resources on BRPM, with Wesizwe on the Western
Bushveld Joint Venture and with the Bakgatla-Ba-Kgafela and Pallinghurst on the
Magazynskraal project (-23.5 million ounces)
- The conversion of Mineral Resources to Ore Reserves at Union and Bafokeng-
Rasimone Platinum Mine (-7.0 million ounces)
- And a change in the pay limit at Mogalakwena Platreef due to a change in
the pay limit (-6.9 million ounces)
The decrease in the Mineral Resources is partly offset by the:
- Reallocation of previously reported Ore Reserves back to Mineral Resources
(+18.5 million ounces) due to:
- Changes in mine designs and scheduling, mainly at Tumela and Dishaba Mines
and;
- Additional geological information mainly at Ga-Phasha and Der Brochen
projects and at Bokoni
- Acquisition of a 26.6% stake in Wesizwe (+4.6. million ounces)
CHANGES IN DIRECTORATE
Appointments in 2010
Brian Beamish was appointed non-executive director on 7 May 2010.
Godfrey Gomwe was appointed as non-executive director on 1 September 2010.
Cynthia Carroll was appointed chairman effective 1 September 2010. Valli Moosa
was appointed as lead independent non-executive director effective 1 September
2010.
Resignations in 2010
David Weston resigned as non-executive director on 27 January 2010.
Fred Phaswana resigned as non-executive director and chairman on 31 August 2010.
Other directorate changes
Valli Moosa replaced Tom Wixley as deputy chairman effective 1 September 2010
but Tom Wixley remained as an independent non-executive director on the Board.
OUTLOOK
Anglo Platinum plans to refine and sell 2.6 million ounces of platinum in 2011,
100 000 ounces more than the 2010 plan and which it believes is an appropriate
level to meet forecast demand. Anglo Platinum plans to increase equivalent
refined platinum production to 2.6 million ounces also, which is just over 100
000 ounces more than in 2010.
The additional ounces will come mainly from Khomanani Mine, Tumela Mine and
Mogalakwena Mine. Growth will also be supplemented by fresh ounces from the
newly commissioned mine in Zimbabwe, Unki, which should supply up to 30 000
ounces of refined platinum in 2011. Given the sustained higher Platinum price
since the second half of 2010, Anglo Platinum has reopened Khuseleka Mine`s
number 2 shaft, which was placed onto `care and maintenance` during 2009 - this
will also add ounces to the production profile from 2011 onwards.
Building on the momentum gathered over the past three years, costs will continue
to be managed as a priority. In 2011, Anglo Platinum aims to keep cash operating
costs per equivalent refined platinum ounce around the same level achieved in
2010. This will be achieved primarily through a further increase in
productivity, which is expected to reach 7.30m2 on average per month per
employee in 2011, and through the production of 100 000 additional ounces of
refined platinum without any material increase in the cost base. An improvement
in productivity to 7.30m2 will result in an increase of 27% since the recent low
of 5.73m2 in 2008. In addition, cash operating costs per ounce should also be
positively impacted by an improved built-up head grade. On average, the group`s
average grade of 3.23 g/t achieved in 2010 should increase to 3.3 g/t in 2011.
Cost inflation will, however, continue to present the company with challenges
this year. `Mining inflation`, as measured by the Producers Price Index,
remained well above South African CPI during 2010, at 12.6%, compared to an
average inflation rate of 4.3% for the country; and a similar differential is
expected in the foreseeable future. During the first half of 2011, wage
negotiations with our key trade union contacts will commence in order to settle
salaries effective from 1st July 2011. April 2011 will see another 25% increase
in Eskom`s electricity tariffs.
Following the successful R12.5 billion rights issue, concluded in 1H10, the
company`s debt position has been rebased and net debt should reduce further in
2011 from a closing position of R4.1 billion in 2010.
Capital expenditure excluding capitalised interest will be R8 billion, R3.5
billion of which will be stay-in-business capital; R0.5 billion will be
allocated to waste stripping at Mogalakwena and the remaining R4.0 billion will
be allocated to projects capital.
A variable dividend policy has been adopted to govern decisions over any
dividend payments in future. In essence, consideration will be given to the
payment of dividends once Anglo Platinum has allowed for its capital
requirements each year and the outlook for the market has been taken into
account.
Anglo Platinum`s safety improvement plan will ensure that we continue to
demonstrate improvements on our journey to zero harm.
N F Nicolau B Nqwababa C B Carroll D J Alison
Chief Executive Finance Director Chairman Group Company
Officer Secretary
Johannesburg
4 February 2011
DECLARATION OF FINAL ORDINARY DIVIDEND (NO. 112)
Notice is hereby given that a final dividend of 683 cents per ordinary share, in
the currency of the Republic of South Africa, has been declared in respect of
the year ended 31 December 2010. The dividend is payable to shareholders
recorded in the books of the Company at the close of business on Friday, 11
March 2011.
Salient dates 2011
Last day to trade (cum dividend) Friday, 4
March
First day of trading (ex dividend) Monday, 7
March
Currency conversion date (for Sterling Monday, 7
payment to UK resident shareholders) March
Record date Friday, 11
March
Payment date Monday, 14
March
Share certificates may not be dematerialised or re-materialised between Monday,
7 March 2011 and Friday, 11 March 2011, both days inclusive.
On Monday, 14 March 2011 the dividend will be electronically transferred to the
bank accounts of all certificated shareholders, where electronic dividend
mandates have been provided to the transfer secretaries. Where electronic fund
transfer is either not available or not elected by the shareholder, cheques
dated 18 March 2011 will be posted on that date at the risk of shareholders.
Holders of dematerialised shares will have their accounts credited at their CSDP
or broker on 14 March 2011.
Shareholders registered with addresses in the United Kingdom will be paid the
dividend in Pounds Sterling at the rate of exchange determined on Monday, 7
March 2011 by Computershare in the UK, who act as the Company`s UK paying
agents.
SUPPLEMENTARY INFORMATION
CONSOLIDATED STATISTICS*
Year Year
ended ended
31 December 31 December
Total operations 2010 2009
Marketing statistics
Average market prices
achieved
Platinum US$/oz 1 611 1 199
Palladium US$/oz 507 257
Rhodium US$/oz 2 424 1 509
Gold US$/oz 1 259 1 002
Nickel US$/lb 9.70 6.54
Copper US$/lb 3.23 2.20
US$ Basket price (Net sales US$/oz Pt sold 2 491 1 715
revenue per Pt oz sold)
US$ Basket price (Net sales US$/oz PGM sold 1 336 926
revenue per PGM oz sold)
Platinum R/oz 11 733 9 893
Palladium R/oz 3 690 2 107
Rhodium R/oz 17 731 12 462
Gold R/oz 9 106 8 105
Nickel R/lb 71.23 52.85
Copper R/lb 23.62 17.76
R Basket price (Net sales R/oz Pt sold 18 159 14 115
revenue per Pt oz sold)
R Basket price (Net sales R/oz PGM sold 9 740 7 621
revenue per PGM oz sold)
Average exchange rate R/US$ 7.2890 8.2327
achieved on sales
Exchange rate at end of R/US$ 6.6031 7.3787
year
Financial statistics and
ratios
Gross profit margin % 17.5 5.4
Earnings before interest, R millions 11 271 4 936
taxation, depreciation and
amortisation (EBITDA)
Operating profit to average % 14.0 2.0
operating assets
Return on average % 23.1 10.1
shareholders` equity
Return on average capital % 12.3 1.5
employed
Interest cover - EBITDA 11.7 2.5
Net debt to total capital % 7.0 37.1
employed
Interest-bearing debt to % 12.1 69.8
shareholders` equity
Net asset value per R 210.3 137.8
ordinary share
Cost of sales per total Pt R 14 986 13 359
oz sold *
Cash operating cost per R 11 730 11 236
equivalent refined Pt oz
(excluding ounces from
purchased concentrate and
associated costs)
Cash operating cost per R 11 336 11 261
refined Pt ounce
Equivalent refined platinum 000 oz 2 484.0 2 464.3
production
Pipeline stock adjustment 000 oz (34.0) 8.5
Refined platinum production 000 oz (2 569.9) (2 451.6)
Mining 000 oz (1 989.3) (1 966.8)
Purchase of concentrate 000 oz (580.6) (484.8)
Platinum pipeline movement 000 oz (119.9) 21.2
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
REGISTRARS
Computershare Investor Services (Proprietary) 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
The 2010 annual report will be posted to shareholders on or about 21 February
2011.
Detailed results are available on the Internet at:
http://www.angloamericanplatinum.com
E-mail enquiries should be directed to: amulholland@angloplat.com
Date: 07/02/2011 09:00:01 Produced by the JSE SENS Department.
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