| Tue 26 Jul 2011, 10:00 | | AGL - Anglo American plc - De Beers Interim results for the six months |
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AGL
ANAAL
AGL - Anglo American plc - De Beers Interim results for the six months
ended 30 June 2011
Anglo American plc
Incorporated in the United Kingdom
(Registration number: 3564138)
Short name: Anglo
Share code: AGL
ISIN number: GB00B1XZS820
De Beers Societe Anonyme
(Incorporated under the laws of Luxembourg)
-INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2011
-Strong price growth leads to record H1 DTC sales
-Sustained demand for diamond jewellery in retail markets of Far East
and US
Financial Summary - Half year to 30 June 2011
US Dollars millions Variance
Half year Half year
30 June 2011 30 June 2010
Total sales 3 887 2 979 30%
EBITDA 1 183 762 55%
Profit before 1 019 586
finance 74%
charges and
taxation
Free cash 469 620 -24%
flow
Net debt 1 450 1 983 27%
(excluding
shareholders`
loans)
2011 Interim Operating Performance
* Record EBITDA of almost US$1.2 billion is a 55% increase over 2010
(US$762 million), reflecting the impact of excellent price growth
during the period.
* Sales of rough diamonds by the Diamond Trading Company in H1 2011
were US$3.5 billion (including those through joint ventures) - a
33% increase compared with 2010 - driven by price growth of
approximately 35%. This is the highest ever sales figure recorded
for the first half of the year, buoyed by continued retail demand
from the Indian and Chinese consumer markets and stronger than
expected demand in America.
* Carats recovered during the period amounted to 15,53 million, in
line with H1 2010 (15,43 million carats).
* Free cash flow of US$469 million is a reduction of 24% on last year
due to the timing of stock purchases in the current period compared
with 2010.
DIRECTORS` COMMENT
Commitment to safety remains De Beers` most important priority. Sadly,
there have been three loss of life incidents in the Family of Companies
during the first half - two at Namdeb and one at Debswana. We extend our
sincere condolences to the families of all those concerned.
Comprehensive safety reviews are being carried out at all operations in
the Family of Companies.
Sales during the period have been exceptional, driven mainly by
continued growth in the Middle East, Indian and Asian retail markets and
their impact on rough price growth. De Beers has continued to focus on
efficiency improvements and on maintaining a lower sustainable level of
overhead base, which has resulted in a favourable impact on the bottom
line. In the first six months of 2011, De Beers` production totalled
15,53 million carats (H1 2010: 15,43 million) reflecting the impact of
maintenance and asset management difficulties and, to an extent,
excessive rainfall in southern Africa.
In downstream activities, Forevermark (a diamond brand owned by the De
Beers Group) continues its expansion into the core retail markets of
China, Hong Kong and Japan, and has recently launched in India,
Singapore and the Caribbean. The Forevermark brand is now available from
a small number of stores in the US, with further expansion planned later
this year. During H1, De Beers Diamond Jewellers (De Beers` joint
venture with LVMH) announced the strategic launch of the brand in China
with the opening of its first mainland store in Beijing, its first store
in Kazakhstan in Almaty and a new store in Dubai at Dubai Mall. The
company will continue its expansion in 2011 with the opening of further
stores in mainland China and a second store in Hong Kong.
Element Six recorded a good first half performance in respect of both
sales and profitability, with robust demand across its product ranges.
Operating performance was impacted by, inter alia, operating challenges
and a weak US dollar, but Element Six is well positioned for the
remainder of the year.
Debswana`s Jwaneng mine Cut-8 extension project is progressing
satisfactorily, on schedule and on budget. De Beers Canada recently
completed a six month optimisation study on the Snap Lake Mine to more
economically extract this complicated, but promising, ore body that has
a forecast 20-year life-of-mine.
Disposals of assets have continued in the period, and, in January, De
Beers Consolidated Mines (DBCM) announced that it had entered into an
agreement with Petra Diamonds to sell Finsch mine as a going concern for
a consideration of R1.425 billion (US$210 million), plus assumption of
rehabilitation liabilities. In May, DBCM announced that it had entered
into an agreement to sell Namaqualand Mines to Trans Hex in a
transaction valued at R225 million. This completes DBCM`s asset disposal
programme.
In May, De Beers and the Government of the Republic of Namibia (GRN)
announced a new agreement which will allow GRN to increase its effective
shareholding in De Beers Marine Namibia from 15% to 50% through the
establishment of a new 50/50 joint venture holding company. This will
not change marketing arrangements, and all diamond production from
Namdeb will continue to be sorted, valued and marketed exclusively by
the DTC together with Namibia Diamond Trading Company, which is also a
50/50 joint venture between the GRN and De Beers.
Outlook
Despite the ongoing turmoil with the global economy, we are encouraged
by the continued strong growth in price and demand during the first six
months of 2011. De Beers is confident that the exceptional growth in
retail markets in India and Asia will continue to drive demand for
diamonds. Reports from the recent JCK trade show indicate that the all-
important Christmas season in the US, and Diwali, are set to be strong.
Management Change
At a De Beers sa Board Meeting in Luxembourg on 19th July 2011, Philippe
Mellier was appointed CEO of the De Beers Group. After almost 20 years
with De Beers Group, Stuart Brown (Chief Financial Officer), announced
that he would be stepping down from the Board with effect from the end
of July.
De Beers announces interim results as follows:-
Consolidated Income Statement for the half-year ended 30 June 2011
(Abridged)
US Dollar millions
Half- Half-year Year
year 30 June 31 December
30 June 2010 2010
2011
3 887 2 979 5 877
Total sales (Note 1)
Less: cost of sales 3 071 2 443 4 983
Gross profit 816 536 894
Less: operating costs (Note 2) 200 221 416
Operating (loss) profit 616 315 478
Add:
Trade investment income 403 291 517
Foreign exchange (losses) gains - (20) 44
Profit before finance charges and 1 019 586 1 039
taxation
Less: net interest charges (Note 68 102 176
3)
Profit before taxation 951 484 863
Less: taxation 236 136 225
Profit after taxation 715 348 638
Less: interests of outside 14 23 34
shareholder in subsidiaries
Own earnings 701 325 604
Less: share of retained losses of 16 24 6
joint ventures
Net earnings before once-off 685 301 598
items
Once-off items (Note 4) 9 (46) (52)
Net earnings 694 255 546
Underlying earnings (Note 5) 666 304 598
EBITDA 1 183 762 1 428
Consolidated Balance Sheet 30 June 2011(Abridged)
US Dollar millions
30 June 30 June 31 December
2011 2010 2010
Share capital and reserves 3 944 2 844 3 279
Interests of outside shareholders 152 125 144
Total shareholders` equity 4 096 2 969 3 423
Shareholders` loans 711 785 790
Other net interest bearing debt* 1 450 1 983 1 762
Other non-current liabilities 984 778 972
7 241 6 515 6 947
Fixed assets 2 891 2 687 2 908
Other non-current assets and 2 958 2 865 3 012
investments
Net current assets 1 392 963 1 027
7 241 6 515 6 947
*Other net interest bearing debt includes short-term borrowings and is
net of cash
Summary of cash flows for the half-year ended 30 June 2011
US Dollar millions
6 Months 6 Months Year
30 June 30 June 31 December
2011 2010 2010
Cash available from operating 592 711 1 160
activities
Less: investing activities
Fixed assets - stay-in-business 118 90 204
Investments 5 1 13
123 91 217
Free cash flow 469 620 943
Less: financing activities
Shareholder loans repaid 100
Ordinary dividends (including 49 - 6
payments to outside shareholders)
Cash flow 320 620 937
Add (Deduct):
Shareholder Equity 1 000 1 000
subscription/advances
Redemption of preference shares (107)
Non cash movements in debt and (8) (403) (392)
movements attributable to changes
in exchange rates
Decrease in other net interest 312 1 217 1 438
bearing debt
Notes
1. Total sales of natural rough 3 493 2 625 5 082
diamonds (including joint
ventures)
2. Operating costs include:
- Exploration, research and 48 43 96
development
- Sorting and marketing 65 53 133
- Group technical services 87 125 187
and corporate overheads
200 221 416
3. Net Interest charges include 5 11
preference dividends amounting to
4. Once-off items comprise:
Recovery (cost) in respect of 2 (1)
a class action settlement
Costs in respect of (29) (28)
restructuring of debt
Net recoveries (costs) in respect 7 (16) (24)
of restructuring
9 (46) (52)
5. Underlying earnings is
calculated as follows:
Net earnings before once-off 685 301 598
items
Adjusted for special items
and re-measurements:
Asset disposals (net) (3) (2)
Re-measurement gains on (19) 6 2
financial instruments
Underlying earnings 666 304 598
* Underlying earnings comprise net earnings attributable to shareholders
adjusted for the effect of any once-off or special items and re-
measurements, less any tax and minority interests. Special items include
closure costs, exceptional legal provisions and profits and losses on
the disposal of or impairments of assets. Special items which are
considered to be significant relative to the results are categorised as
being once-off. Re-measurements are recorded in underlying earnings in
the same period as the underlying transaction against which these
instruments provide an economic, but not formally designated, hedge.
Other information
6 Months 6 Months Year
30 June 30 June 31 December
2011 2010 2010
Exchange rates
US$ / ZAR average 6.86 7.52 7.37
US$ / ZAR period end 6.78 7.70 6.63
US$ / C$ average 0.98 1.04 1.03
US$ / C$ period end 0.97 1.03 1.01
Production summary
Tons Treated 000`s:
DBCM 8 218 7 867 17 069
Debswana 11 563 11 751 24 439
De Beers Canada 1 777 1 638 3 602
Namdeb 4 493 5 135 9 434
26 051 26 391 54 544
Carats recovered 000`s
DBCM 2 798 3 589 7 556
Debswana 11 320 10 267 22 218
De Beers Canada 817 782 1 751
Namdeb 599 794 1 472
15 534 15 432 32 997
Contacts:
De Beers UK
Lynette Gould +44 20 7 430 3509/ +44 (0) 7740 393260
De Beers South Africa
Tom Tweedy +27 (0)11 374 7173/ +27 (0) 83 308 0083
Tuesday, 26 July 2011
Sponsor: UBS South Africa (Pty) Ltd
Visit the official De Beers group website for more information on the
company and where you can view and download a selection of images -
www.debeersgroup.com .
About De Beers:De Beers, established in 1888, is the world`s leading
rough diamond company with unrivalled expertise in the exploration,
mining and marketing of diamonds. Together with its joint venture
partners, De Beers operates in more than 20 countries across six
continents employing more than 16,000 people, and is the world`s largest
diamond producer with mining operations across Botswana, Namibia, South
Africa and Canada. As part of the company`s operating philosophy, the
people of De Beers are committed to Living up to Diamonds by making a
lasting contribution to the communities in which they live and work. In
the countries in which we have mining operations, this means carrying
out profitable business, whilst at the same time helping Governments
achieve their aspirations of turning natural resources into shared
national wealth. De Beers encourages sustainable working to ensure long-
term positive development for Africa, and returns more than US$3.0
billion to the continent every year. For further information about De
Beers visit www.debeersgroup.com
Date: 26/07/2011 10:00:01 Produced by the JSE SENS Department.
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