| Tue 10 Sep 2002, 0:00 | | Anglo American Plc - Announcement |
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Anglo American plc
(Incorporated in England and Wales)
Registered Number: 3564138
JSE Code: AGL
ISIN Code: GB0004901517
News Release
10 September 2002
Anglo American plc reports a solid first half performance despite
difficult market conditions
Headline earnings per share up 9% to US 60 cents.
Headline earnings reflect improved geographic diversity: South Africa
54%, Rest of world 46%.
Good performances from gold, base metals, coal, diamonds, forest
products, industrial minerals and ferrous metals, more than offsetting
sharply lower earnings from platinum.
Strong improvement in the Base Metals division - headline earnings of
$37 million compared with a loss of $30 million in the first half of
2001.
Contribution from Diamonds up by 16% on better than expected sales.
Further cost savings and efficiency improvements of $133 million
achieved.
Strong cash generation: EBITDA(1) interest cover of 15.5 times;
EBITDA(1) return on total capital 24%.
$1.9 billion of acquisitions.
Interim dividend maintained at 15 US cents per share.
HIGHLIGHTS FOR THE SIX MONTHS TO 30 6 6 Change
JUNE 2002 months months
ended ended
30.06.0 30.06.0
2 1
Restate
d (2)
US$ million except per share amounts
Group turnover & share of turnover of 9,567 9,807 (2)%
joint ventures & associates
Total operating profit for the period 1,581 1,694 (7)%
Profit for the period 767 2,640 (71)%
Profit for the period before 762 765 (0.4)%
exceptional items
Headline earnings for the period (3) 840 847 (0.8)%
Earnings per share (US$):
Headline earnings for the period 0.60 0.55 9 %
Profit for the period 0.54 1.72 (69)%
Profit for the period before 0.54 0.50 8 %
exceptional items
Dividend for the period (US cents per 15 15 -
share)
(1) Annualised.
(2) The profit and loss account for the six months ended 30 June
2001 has been restated to reflect the implementation of
Financial
Reporting Standard (FRS) 19, "Deferred Tax".
(3) See note 7 for basis of calculation of headline earnings.
Tony Trahar, Chief Executive, said:
"The first half of 2002 has been another challenging period for Anglo
American. However, despite continuing unfavourable economic conditions
and weak commodity markets, our first half results demonstrate a very
solid performance. Improved earnings were recorded for the majority of
our businesses reflecting the ongoing emphasis on reducing costs and
improving efficiencies.
We have made further progress in implementing our strategy of adding
value for shareholders by:
seeking growth in our natural resource businesses, both organically and
through acquisitions
maintaining our product diversity and broadening our geographic spread.
The leaked draft Mining Charter has done great damage to investor
confidence in South Africa. This damage can only be repaired when a
final Charter and the related Money Bill are publicly available. The
imperative is to achieve black economic empowerment in a way that
enhances rather than undermines investment sentiment towards the mining
sector, which has always been a major vehicle for international capital
inflows into South Africa. With political wisdom it is clearly possible
to create a mining industry in South Africa that benefits all, proudly
reflects the South African people and continues to be internationally
competitive.
The settlement reached between Anglo Platinum and the Department of
Minerals and Energy concerning that company`s six applications for
mining authorisations indicates that the imperatives of industry
security, stability and growth and black economic empowerment can be
reconciled.
The outlook for most of our commodities is heavily dependent on global
economic growth. With the United States, Europe and Japan continuing to
show signs of low economic growth, the consensus outlook for global GDP
growth this year is little changed from the relatively depressed level
of 2001. The recent significant declines in equity markets have raised
some concerns that the wealth effect of these declines may affect
consumer confidence, thereby impacting growth. On the back of these
uncertainties we remain cautious about the outlook for commodity prices,
although our product and geographic diversity, coupled with our
continuing cost and efficiency improvement programme, will continue to
underpin our performance going forward."
First Half Results - Overview
It is pleasing to report that headline earnings per share for the first
half of 2002 increased by 9% to 60 US cents. The marginal decline of $7
million in headline earnings to $840 million was more than offset by the
cancellation of some 163 million shares in June 2001 as part of the De
Beers transaction. Six of the Group`s operating businesses and
associates, including gold, base metals, diamonds, forest products,
industrial minerals and ferrous metals, reported increased headline
earnings during the first half - a strong performance that compensated
for lower earnings from platinum and coal.
Once again, the Group`s performance reflects the benefits of its product
diversity and the successful integration of its recent acquisitions,
with 46% of headline earnings being derived from non-South African
operations, compared with 26% in the first half of 2001. Over the past
six months $1.9 billion of acquisitions have been completed, of which
49% were in South Africa and 51% outside South Africa. This further
reflects the progress that Anglo American has made in its strategy to
pursue global diversification.
First Half Developments
Good progress has been made with the restructuring of the Base Metals
division, focusing on long-life, low-cost operations. A major
development in this regard was the agreement to acquire the Disputada
copper operation in Chile, from Exxon Mobil Corporation. Finalisation of
the acquisition is subject to the
approval of the Chilean government and agreement with the state owned
mining company, ENAMI, which it is hoped will be obtained shortly. The
acquisition of Disputada will consolidate Anglo American`s position as a
significant, low-cost copper producer.
In January, Anglo American announced its withdrawal from the Konkola
Copper Mines (KCM) operations in Zambia, based on KCM`s high production
costs and inability to raise non-recourse external finance for the
Konkola Deep Mining Project. The final terms of the withdrawal from KCM
will result in Anglo American making available an additional amount of
$34 million over and above the $353 million already provided, which will
help to secure the future of KCM as a going concern, in accordance with
the objectives of the Zambian government.
In May, Anglo American announced the sale of its 43% stake in Tati
Nickel and 18% interest in BCL in Botswana to LionOre Mining
International Limited for $76 million and the sale of its 50% interest
in the Salobo copper deposit in Brazil to CVRD for $51 million.
In February, Anglo Coal, as part of a consortium with BHP Billiton and
Glencore, acquired the remaining 50% interest in Cerrej"n Zona Norte
from Exxon Mobil Corporation. The consortium is now the largest producer
of thermal coal in Colombia. In April, joint venture plans with Mitsui
Coal were announced to expand the Moura mine and to develop the Dawson
Valley projects in Australia.
In Ferrous Metals, the acquisition of a 20.1% stake in Kumba and a 34.9%
stake in Avmin for a total of $365 million formed the basis of a broader
strategic objective of securing a meaningful interest in the iron ore
sector in South Africa. Discussions are now underway with a number of
parties, including the government and black economic empowerment
groupings, with a view to unlocking the potential of this resource in
the Northern Cape. The South African Competition Commission has
recommended to the Competition Tribunal that the proposed acquisition be
approved.
Scaw Metals acquired Moly-Cop, the grinding media businesses of GS
Industries of the United States, for $105 million in May. Scaw Metals is
now a leader in the production of grinding media worldwide.
In March, as part of Anglo Forest Products` stated objective of growing
its position in the corrugated packaging market, the division
successfully completed the joint acquisition, with Spanish group Saica,
of the French paper and packaging company, La Rochette. Subsequent to
this transaction the businesses of La Rochette have been divided between
Mondi and Saica, which will result in the division retaining ownership
of significant corrugated packaging businesses in France and the United
Kingdom. In addition, the division acquired a further 68.5% interest in
the Syktyvkar Forest Enterprise business for a cash consideration of
$252 million. Syktyvkar is a low-cost Russian producer of A4 copy paper
and supplies an important component of Mondi`s product mix in European
markets.
Anglo Industrial Minerals, through Tarmac, agreed to acquire the
aggregates and ready-mixed concrete assets of the Mavike Group in Spain
for a cash consideration of $55 million. The acquisition, which was
announced in May, establishes Tarmac as the largest ready-mixed concrete
supplier on the Spanish Mediterranean coast and consolidates its
position as the leading supplier in the Madrid region.
During the period, through market purchases, the Group increased its
stake in Anglo Platinum to 63.8% and in Gold Fields Limited to 20%.
In April, as part of a repositioning of its treasury portfolio, Anglo
American placed a five year convertible bond of $1.1 billion at an
interest rate of 3 3/8 % per annum, one of the largest convertible bonds
to date in the United Kingdom. The proceeds were used to pay down more
expensive existing debt.
HIV/AIDS
The provision of anti-retroviral therapy (ART) for HIV/AIDS has been the
subject of intense discussion and research at Anglo American over the
last 18 months. In August, it was announced that operating companies
would be encouraged to enhance their HIV/AIDS wellness programmes by
making ART available at company expense to HIV positive employees who do
not have an ART benefit through a medical aid scheme and who have
progressed to a stage of HIV infection where ART is clinically
indicated. Operations will continue to promote their substantial
education and prevention programmes, keeping Anglo American in the
forefront of advanced HIV/AIDS programmes for its employees.
South Africa`s Minerals and Petroleum Bill
The leaked draft Mining Charter has done great damage to investor
confidence in South Africa. This damage can only be repaired when a
final Charter and the related Money Bill are publicly available. The
imperative is to achieve black economic empowerment in a way that
enhances rather than undermines investment sentiment towards the mining
sector, which has always been a major vehicle for international capital
inflows into South Africa. With political wisdom it is clearly possible
to create a mining industry in South Africa that benefits all, proudly
reflects the South African people and continues to be internationally
competitive.
The settlement reached between Anglo Platinum and the Department of
Minerals and Energy concerning that company`s six applications for
mining authorisations indicates that the imperatives of industry
security, stability and growth and black economic empowerment can be
reconciled.
Black Economic Empowerment
Since 1994, Anglo American in South Africa has concluded a number of
empowerment transactions with a market value of some R10 billion,
equivalent at current exchange rates to $964 million, with Historically
Disadvantaged South Africans (HDSAs). In addition, Anglo Platinum is
currently in the process of entering into further major empowerment
transactions, on a commercial basis, which will unlock significant value
for HDSAs. Moreover, during 2001, Group companies transacted R1.3
billion of procurement, equivalent at current exchange rates to $120
million, with HDSA companies, an increase of 23% over the prior year.
Excluding fuel and electricity, HDSA-owned businesses represented 20% of
the Group`s total procurement spend in South Africa.
Dividend
An unchanged interim dividend of 15 US cents has been declared. As
highlighted in the 2001 final results announcement, consideration of any
increase in the total dividend for the year will be assessed at the time
of the recommendation of the final dividend for the year.
Outlook
The outlook for most of the Group`s commodities is heavily dependent on
global economic growth. With the United States, Europe and Japan
continuing to show signs of low economic growth, the consensus outlook
for global GDP growth this year is little changed from the relatively
depressed level of 2001. The recent significant declines in equity
markets have raised some concerns that the wealth effect of these
declines may affect consumer confidence, thereby impacting growth. On
the back of these uncertainties Anglo American remains cautious about
the outlook for commodity prices, although its product and geographic
diversity, coupled with its continuing cost and efficiency improvement
programme, will continue to underpin performance going forward.
For further information:
Anglo American - London
Investor Relations Media Relations
Nick von Schirnding Kate Aindow
Tel: +44 207 698 8540 Tel: +44 207 698 8619
Anglo American - Johannesburg
Investor Relations Media Relations
Anne Dunn Marion Dixon
Tel: +27 11 638 4730 Tel: +27 11 638 3001
Notes to Editors:
Anglo American plc is one of the world`s largest mining and natural
resource groups. With its subsidiaries, joint ventures and associates,
it is a global leader in gold, platinum group metals and diamonds, with
significant interests in coal, base and ferrous metals, industrial
minerals and forest products. The Group is geographically diverse, with
operations in Africa, Europe, South and North America and Australia.
(www.angloamerican.co.uk)
OPERATIONS REVIEW
Highlights
Headline earnings per share for the six months to 30 June 2002 were
$0.60 per share, an increase of 9% from the prior year. The increase
reflects the good performance of many of the Group`s businesses as well
as the cancellation of 10% of the Company`s shares in issue in June 2001
as part of the De Beers transaction. Gold, base metals, diamonds, forest
products, industrial minerals and ferrous metals performed well. The
Group`s product and geographic diversity, with 46% of headline earnings
being derived from outside of South Africa, compared with 26% in the
first half of 2001, demonstrated its benefits during a period of
difficult market conditions.
In 2002, the Group adopted Financial Reporting Standard 19 `Deferred
Tax` (FRS 19), which requires deferred tax to be provided on all timing
differences arising from the different treatment of items for accounting
and taxation purposes that result in an obligation to pay more tax, or a
right to pay less tax, at a future date. Adoption of FRS 19 required a
restatement of the 2001 accounts, resulting in an increase in deferred
tax provisions of $933 million as at 31 December 2001, with a resulting
prior year adjustment of $570 million, after accounting for minority
interests. The prior year adjustment is taken as a write-off to
reserves. The restatement of the 2001 profit and loss account resulted
in a decrease in headline earnings of $37 million for the six months to
30 June 2001 and $89 million for the year to 31 December 2001. The
adoption of FRS 19 decreased first half headline earnings for 2002 by
$69 million.
Profit for the financial period was $767 million compared with $2,640
million in the prior year. The lower profit in the current year reflects
the significant exceptional gains in 2001 owing to the De Beers
transaction and the exchange of part of the Group`s interest in
FirstRand Limited for interests in Billiton Plc and Gold Fields Limited.
Excluding exceptional items, earnings per share were $0.54 for the six
months to June 2002 compared with $0.50 per share in the prior year.
Platinum
Anglo Platinum`s operating profit of $389 million was $365 million lower
than in the first half of 2001, primarily owing to lower platinum group
metals (PGM) prices.
The average realised price for platinum of $513 per ounce was $87 per
ounce lower than for the first half of 2001. Palladium and rhodium
prices per ounce realised were less than half those achieved a year
earlier at $371 per ounce (2001: $784 per ounce) and $946 per ounce
(2001: $1,976 per ounce), respectively.
Despite these significant decreases, current PGM prices are at levels
which continue to yield substantial operating margins for Anglo
Platinum, and which enjoy consumer support.
Refined platinum production (including attributable Northam Platinum
output) of 1,064,500 ounces was 4.5% higher, reflecting the increased
output from new projects.
The Bafokeng-Rasimone mine has continued to build up ore reserves and
production, albeit more slowly than anticipated, while ongoing
optimisation at both Amandelbult and Lebowa mines yielded additional
ounces from their UG2 expansions commissioned in 2000. Rustenburg mine`s
new Waterval UG2 project commenced milling ore in February.
Recent market demand reviews confirm a significant growth opportunity
for Anglo Platinum, and the company remains committed to the expansion
programme to produce 3.5 million ounces of refined platinum per annum
from 2006. However, any delays in the processing of mining licence
applications may affect the timeous achievement of this target.
The new converting process project at Rustenburg has entered its
commissioning phase, and the new Modikwa (formerly Maandagshoek) mine in
North West Province commenced milling ore in July.
Anglo Platinum continues to support the process of black economic
empowerment (BEE) and is proud of the very significant contribution it
has made by facilitating the purchase of 22.5% of Northam Platinum by
Mvelaphanda Platinum, and by entering into a 50:50 joint venture with a
consortium led by African Rainbow Minerals in respect of the Modikwa
project.
Anglo Platinum`s commitment to fostering further BEE in projects has
been reaffirmed by the conclusion of the joint venture with the Royal
Bafokeng Nation in respect of the Bafokeng-Rasimone mine and the
Styldrift Project, as well as the agreement reached with the South
African government regarding BEE participation on portions of the
Eastern Limb expansion projects.
Gold
AngloGold`s operating profit for the first half of 2002 was 2% lower at
$197 million. Production decreased from 3.5 million ounces to 2.8
million ounces, mainly as a result of the sale of the Free State assets.
Total cash costs decreased from $189 per ounce to $156 per ounce as a
result of the South African rand`s weakening against the dollar and the
sale of the higher-cost assets.
Headline earnings increased by 27% to $100 million, mainly arising from
realised gains on non-hedge derivatives of $24 million, net of
minorities and taxation.
AngloGold`s own performance, its positive view of the gold market and
its willingness to manage its hedge book to take account of changing
market circumstances resulted in a significant reduction in its open
hedge book position. At the end of June, the hedge book had reduced by
4.0 million ounces to 10.5 million ounces.
During the half-year, AngloGold used $128 million of the $158 million
proceeds received on the sale of the investment in Normandy to settle
debt. The company also received a cash payment of $164 million for the
sale of the Free State assets.
In the United States, the $195 million Cripple Creek & Victor expansion
project in Colorado is progressing on schedule and a significant portion
of the leach pad additions has been completed.
In July 2002, AngloGold announced the acquisition of additional
production of 130,000 ounces per annum by doubling its stake to 92.5% in
the Cerro Vanguardia mine in Argentina for $98 million.
Diamonds
Attributable operating profit from De Beers of $242 million was 14%
higher than the prior year. Headline earnings of $166 million were 16%
higher.
The diamond industry began the year in a positive mood following better
than expected Christmas season retail sales of diamond jewellery, a
significant reduction in inventory of polished diamonds held by the
retail trade during 2001 and cautious optimism for recovery in the
global economy in 2002. Restocking by the retail trade in the first half
of the year meant that polished demand from the cutting centres exceeded
underlying retail demand in the consumer markets. As a result, polished
stocks financed by the cutting centres reduced over the period from
about $4.1 billion to $3.4 billion. Clients of the Diamond Trading
Company (DTC), the marketing arm of De Beers, benefited from receiving
consistent assortments of rough diamonds at competitive prices, which
facilitated further investment in marketing.
During the first six months of 2002, rough diamonds were in strong
demand and sales by the DTC for the period totalled $2,842 million, 8.5%
higher than for the equivalent period in 2001. Prospects for the
remainder of the year will depend on the state of the global economy and
consumer confidence, particularly in the United States, which will
determine consumer offtake and the level of stock the trade is prepared
to hold.
De Beers made further good progress with the European Commission on its
Supplier of Choice strategy and anticipates a favourable outcome during
the second half of the year.
The new five-year $4 billion trade agreement between De Beers and the
Russian diamond producer, Alrosa, was formally notified to the European
Commission for clearance in February. Both parties are committed to
engaging constructively with the Commission to address any concerns it
might raise.
In February, De Beers signed Heads of Agreement with Mvelaphanda
Diamonds (Proprietary) Limited, a black empowerment company, committing
both parties to a grassroots (early stage) joint venture exploring for
new world-class diamond deposits in the northern part of South Africa.
The joint venture agreement was finalised and signed in July.
Coal
Anglo Coal`s operating profit was $232 million, 27% higher than for the
first six months of 2001. Headline earnings of $142 million were 4%
lower, mainly owing to exchange losses arising from the rand`s
strengthening since December 2001.
Attributable sales volumes at 39.8 million tonnes reflected organic
growth in Australia and higher trade sales in South Africa, as well as
contributions of Colombian and Australian acquisitions, offset by
production cuts in response to deteriorating thermal coal market
conditions. Sales prices for export thermal coals were lower than
anticipated and are expected to remain under pressure during the second
half. Export metallurgical prices exceeded expectations and are expected
to remain firm.
In South Africa, operating profit was 27% higher. Total sales revenue
rose by 8% and was accompanied by higher profits on exchange due to a
weaker average exchange rate. This increase was negatively impacted by
marginally lower export sales prices.
In Australia, despite significant operational difficulties experienced
at Dartbrook where high gas levels restricted production, operating
profit increased by 24%. Production at Moranbah has been restricted by a
slower than anticipated longwall move and ongoing strata issues.
Production at the other Australian operations met or exceeded
expectations for the period.
In April, Anglo Coal Australia (ACA) entered into joint venture
arrangements with Mitsui Coal Holdings Pty Limited, a subsidiary of
Mitsui and Co. Ltd of Japan (Mitsui). Mitsui exercised its pre-emptive
right in relation to Coal & Allied`s 55% interest in the Moura mine in
May, and then sold a 51% interest to ACA. In July, ACA divested its 30%
interest in the German Creek mine and 49% of its interests in the
Theodore, Dawson and Taroom prospects to Mitsui. ACA also secured entry
into the pulverised coal injection (PCI) market, by acquiring a 23%
interest in the Jellinbah mine. Work continues on the development of
Grasstree.
The consortium of Anglo American, BHP Billiton and Glencore completed
the acquisition of the remaining 50% of Cerrej"n Zona Norte (CZN) in
Colombia from Exxon Mobil Corporation in February. CZN has been
operationally merged by the consortium with the adjoining Carbones del
Cerrej"n, to form a single complex, named Cerrej"n, capable of producing
22 million tonnes of coal per annum. Production and sales forecasts for
2002 have been cut back to approximately 18 million tonnes owing to
current market weakness. Carbones del Guasare in Venezuela continues to
perform satisfactorily, although the current weak thermal market has
necessitated cutbacks in production and sales.
Base Metals
Operating profit was $127 million, against a $12 million loss recorded
for the first half of 2001. The $139 million turnaround arose primarily
as a result of: operating cost reductions and volume increases ($47
million); the exceptional reversal of the 2000 impairment against Salobo
following its sale ($46 million); the de-consolidation of Konkola Copper
Mines (KCM) in Zambia ($42 million); the transfer of Catalao in Brazil
to the Base Metals division ($12 million); and cost accounting of the
investment in Anaconda Nickel in Australia ($11 million). These
improvements were partially offset by lower zinc and copper prices.
Copper operations generated operating profit of $66 million (2001: $11
million, which included a $42 million loss at KCM) despite the average
copper price being lower by 7% at 72 US cents/lb. In Chile, Mantos
Blancos and Collahuasi benefited from good cost control and a weaker
peso. Attributable copper production was 232,500 tonnes, compared with
312,700 tonnes in 2001, of which 90,500 tonnes related to KCM.
Zinc operations reduced their operating loss to $20 million (2001: $25
million loss), despite a 19% reduction in the average zinc price to 36
US cents/lb. Attributable zinc production increased from 73,500 tonnes
to 98,800 tonnes with Lisheen in Ireland now operating at full capacity
and higher output at Hudson Bay in Canada.
Operating profit for the nickel operations rose to $14 million (2001: $2
million) with the commencement of commercial production at Loma de
N!quel in Venezuela in January of this year. Attributable production at
14,400 tonnes was 3,500 tonnes higher than the first half of 2001. The
average nickel price was $2.98/lb (2001: $3.00/lb).
At Namakwa Sands in South Africa, operating profit increased to $17
million (2001: $14 million) as a result of stronger zircon sales and a
weaker rand, whilst Catalao generated operating profits of $12 million
broadly in line with the previous year.
The $454 million Skorpion zinc project in Namibia, the $110 million
Black Mountain Deeps Project in South Africa and the $276 million 777
project at Hudson Bay all remain on schedule and on budget. The $320
million Rosario transition project to maintain production at Collahuasi
was approved and development is now underway.
The final terms of the agreed withdrawal from KCM resulted in an
additional provision of $34 million, over and above the $353 million
provided at year end 2001, in full and final settlement of all
liabilities. Base Metals disposed of its 50% interest in the Salobo
project for $51 million and its 30% interest in the Kolwezi project for
$3.5 million. Base Metals also reached agreement to sell its 43%
interest in Tati Nickel and 18% interest in BCL in Botswana, for $76
million. Negotiations continue with Exxon Mobil Corporation on
completing the acquisition of Disputada in Chile.
Industrial Minerals
Operating profit was $113 million, 51% higher than for the first six
months of 2001. The performance of the Tarmac Group businesses continued
to improve, with operating profit up by over 40%. This was principally
due to higher prices and efficiency improvements, reflecting stronger
market conditions as well as a continued focus on cost reduction. This,
together with an improved performance by Copebr s in Brazil, resulted in
Anglo Industrial Minerals` operating profit increase.
The first half of 2002 saw several significant developments. In January,
the acquisition of Durox, a leading producer of aircrete blocks in the
United Kingdom, from RMC was completed. RMC`s concrete products business
in France was also acquired. In May, an agreement was reached to acquire
the aggregates and ready-mixed concrete assets of Mavike in Spain for
$55 million. Approval has been received from the Spanish competition
authorities and completion is expected later in the year. A number of
smaller acquisitions were also made in the south of England and Poland.
In addition, the sale of Cleveland Potash was completed in April.
In the United Kingdom, trading conditions were stronger than in the
first six months of 2001, with sales volumes up in most product areas.
In particular, the asphalt business benefited from increased activity
resulting from higher infrastructure investment and concrete block
volumes showed a strong recovery. Prices also increased and the
Aggregates Levy, introduced in April, has been passed on in full to
customers. With the synergies from the acquisition of Tarmac having been
fully effected, a further cost-reduction programme is underway and this
is generating additional savings. Work continues on the new cement plant
at Buxton and the project remains on schedule for completion in 2003.
Strong trading in Spain and France, along with a first-time contribution
from the business acquired from RMC, were responsible for a 17% increase
in operating profit in continental Europe. In central Europe, results
remained flat, with difficult market conditions in Germany also
affecting Poland and the Czech Republic.
Copebras benefited from the continued increase in demand for phosphate
fertilisers in Brazil and lower costs, although prices were impacted by
weaker international market conditions. The new plant at Goias, which
will significantly increase capacity, is expected to be completed by the
end of 2002.
Forest Products
The Forest Products division recorded an operating profit of $291
million, marginally higher than in the corresponding period last year.
Mondi Europe`s operating profit of $191 million was 6% higher,
reflecting the sustained focus on cost reductions and production
efficiencies, which generated savings of $27 million. Mondi South Africa
maintained operating profit at $100 million.
Mondi Europe continued its expansion with the completion of two further
strategic acquisitions: an additional 68.5% interest in Russian pulp and
paper group Syktyvkar Forest Enterprise and, jointly with Spanish group
Saica, the businesses of the French corrugated packaging group, La
Rochette.
The La Rochette transaction will see Mondi retaining ownership of three
integrated plants and six sheet plants and strengthen its corrugated
packaging position in France and the UK. This has developed critical
mass for Mondi Packaging in France.
Packaging results improved, reflecting additional output from the
recently rebuilt paper machine No. 5 in Poland and synergy benefits
arising from the integration of the Danisco Pack UK corrugated
operations. While packaging paper prices trended lower, volumes
increased. The order position in industrial packaging improved from a
weak fourth quarter in 2001.
In uncoated woodfree papers, demand from the office communication sector
has been firm and prices relatively stable. An expansion programme at
SCP Ruzomberok was approved, which will increase capacity to 430,000
tonnes by late 2003. With Mondi Europe`s acquisition of the controlling
interest in Syktyvkar, Neusiedler is now the leading producer in Europe
of uncoated woodfree paper.
Market conditions in newsprint deteriorated following decreased
advertising expenditure.
In South Africa, some price recovery from the low levels at the
beginning of 2002 contributed to earnings being maintained.
Bleached eucalyptus pulp prices averaged $418 per tonne for the period
and the list price had reached $480 per tonne by June.
The South African market for both graphic papers and packaging grades
was healthy. The combination of increased volumes and improved prices
contributed to higher profits in rand terms. The increase was reduced on
translation by the substantially weaker rand when compared with the
prior year.
Ferrous Metals and Industries
The performance of the Ferrous Metals division improved significantly in
comparison with the first six months of 2001, with operating profit of
$66 million, an increase of $32 million. This reflected solid underlying
performance and the positive impact of the acquisitions made during the
first half of 2002. World crude steel production was 3.4% higher and the
steel market is now generally perceived to be at the bottom of the
cycle.
South African-based Scaw Metals` operating profit was $6 million higher
at $21 million, including $2 million from Moly-Cop, the grinding media
business of GS Industries in the United States, which was acquired in
the second quarter for $105 million. Scaw`s operations have a profitable
mix of product, generally driven by increased domestic consumption of
rolled steel and cast steel products.
Highveld Steel`s operating profit improved materially to $14 million.
This was mainly due to improved export prices, a strong South African
steel market, the weakening of the rand against the dollar and the sale
of Columbus, which made a loss last year. Vanadium prices have improved
over the past six months from historically low levels of around $6 per
kilogram for ferrovanadium to the current level of just over $9 per
kilogram.
Samancor, in which the Group holds a 40% interest, improved on the back
of higher ore and alloy sales volumes and higher alloy sales prices.
Chrome operations continued to be affected by low ferrochrome prices,
which averaged 25 cents/lb against 30 cents/lb a year earlier, although
losses were reduced.
Good progress was made towards the strategic objective of securing a
meaningful interest in the iron ore sector. An interest of 20.1% was
acquired in Kumba, along with 34.9% in Avmin, of which 10.5% and 9.9%,
respectively, are still subject to approval by South Africa`s
Competition Commission.
Boart Longyear`s operating profit declined from $16 million to $10
million. The results reflect a very slow start to 2002, with a recovery
in the second quarter, which should be sustained for the rest of the
year.
Tongaat-Hulett`s operating profit was $12 million lower at $43 million.
Sugar performed satisfactorily and strong performances were recorded by
African Products and Hulett Aluminium, with the latter increasing its
revenue by 20% to a record first-half level of $138 million. This was
achieved under difficult market conditions, with levels of international
demand and margins in dollar terms being at the lowest level for many
years.
The Group`s 49% share of Terra`s attributable operating loss of $0.7
million was lower than for the same period last year mainly owing to
lower natural gas costs and higher sales volumes.
Dividend
Anglo American will pay an unchanged interim dividend of 15 US cents per
share on 11 October 2002 to shareholders on the register at the close of
business on 20 September 2002.
Cash flow
Cash flow from operations was $1,381 million compared with $1,506
million during the prior period. This inflow was after a $290 million
increase in working capital (2001: $419 million). On an annualised
basis, interest cover remains well covered by EBITDA at 15.5 times.
Acquisition expenditure accounted for an outflow of $1,869 million
during the period. The principal acquisitions were Mondi Europe`s
additional 68.5% interest in Syktyvkar and the joint acquisition of La
Rochette, Anglo Coal`s participation in the purchase of the remaining
50% in Cerrej"n Zona Norte, Ferrous Metals` acquisition of a 9.6% stake
in Kumba, a 25% stake in Avmin and a 100% interest in Moly-Cop as well
as increased stakes in Anglo Platinum and Gold Fields.
Purchases of tangible fixed assets amounted to $850 million, an increase
of $78 million from 2001. The major components of expansion were in Base
Metals, Anglo Platinum, and Industrial Minerals.
Tax payments were $567 million compared with $347 million in the prior
year.
Balance sheet
As at 30 June 2002, shareholders` funds were $14,410 million compared
with $12,856 million at 31 December 2001, due mainly to changes in
exchange rates contributing $992 million and retained profit of $556
million. The increase in the value of the South African rand by 13%
since 31 December had a significant impact on the Group`s reserves.
Net debt was $4,216 million, an increase of $2,198 million from the
prior year. The increase principally reflects the acquisitions during
the period.
Net debt comprises $6,681 million of debt, offset by $2,465 million of
cash and short-term investments.
Net debt to total capital at 30 June 2002 was 20.4% compared with 12.2%
at 31 December 2001.
The Group`s reserves include the impact of the cancellation, on 11 June
2001, of 163,212,568 ordinary shares of $0.50 each as part of the De
Beers transaction.
Consolidated profit and loss account
for the six months ended 30 June 2002
6 months 6 months Year
ended ended ended
Note 30.06.02 30.06.01 31.12.01
US$ million Restated(1) Restated(1)
Group and share of 2 9,567 9,807 19,282
turnover of joint
ventures and associates
Less: Joint ventures` (499) (475) (1,109)
turnover
Associates` turnover (2,148) (1,719) (3,387)
Group turnover - 6,920 7,613 14,786
subsidiaries
Operating costs (5,756) (6,288) (12,638)
Group operating profit - 1,164 1,325 2,148
subsidiaries
Share of operating profit 98 106 178
of joint ventures
Share of operating profit 319 263 459
of associates
Total operating profit 2 1,581 1,694 2,785
Profit on disposal of 4 29 1,931 2,148
fixed assets
Loss on termination of 4 (34) - -
operations
Profit on ordinary 1,576 3,625 4,933
activities before
interest
Investment income 181 411 799
Interest payable (234) (351) (669)
Profit on ordinary 1,523 3,685 5,063
activities before
taxation
Tax on profit on ordinary 6 (508) (697) (1,394)
activities
Profit on ordinary 1,015 2,988 3,669
activities after taxation
Equity minority interests (248) (348) (584)
Profit for the financial 767 2,640 3,085
period
Equity dividends to (211) (211) (690)
shareholders - paid and
proposed
Retained profit for the 556 2,429 2,395
financial period
Headline earnings for the 3 840 847 1,681
financial period
Basic earnings per share
(US$)
Profit for the financial 7 0.54 1.72 2.09
period
Headline earnings for the 7 0.60 0.55 1.14
financial period
Dividend per share (US 15.0 15.0 49.0
cents)
The profit and loss account for the six months ended 30 June 2001 and
for the year ended 31 December
2001 has been restated to reflect the implementation of Financial
Reporting Standard (FRS) 19, "Deferred
Tax" as disclosed in note 1.
All amounts included above relate to continuing operations.
Consolidated balance sheet
as at 30 June 2002
As at As at As at
30.06.02 30.06.01 31.12.01
US$ million Restated Restated(
(1) 1)
Fixed assets
Intangible assets 2,096 2,384 2,100
Tangible assets 12,767 11,447 10,770
Investments in joint ventures 5,151 4,918 3,996
and associates
Other investments 1,693 1,660 1,527
21,707 20,409 18,393
Net current assets
Stocks 1,469 1,627 1,383
Debtors 3,416 3,323 2,835
Current asset investments 1,234 3,226 2,003
Cash at bank and in hand 1,231 964 915
7,350 9,140 7,136
Short term borrowings (2,431) (2,658) (2,301)
Other current liabilities (3,661) (3,615) (3,936)
Net current assets 1,258 2,867 899
Total assets less current 22,965 23,276 19,292
liabilities
Long term liabilities (4,250) (3,299) (2,635)
Provisions for liabilities and (2,291) (2,649) (2,194)
charges
Equity minority interests (2,014) (2,085) (1,607)
Net assets 14,410 15,243 12,856
Capital and reserves
Share capital and premium 1,943 1,937 1,937
Reserves 1,352 1,352 1,352
Profit and loss account 11,115 11,954 9,567
Total shareholders` funds 14,410 15,243 12,856
(equity)
(1) Restated for the adoption of FRS 19 - see note 1.
The interim financial information was approved by the board of directors
on 9 September 2002.
Consolidated statement of total recognised gains and losses
for the six months ended 30 June 2002
6 months 6 months Year
ended ended ended
30.06.02 30.06.01 31.12.01
US$ million Restated( Restated
1) (1)
Profit for the financial 767 2,640 3,085
period
Currency translation
differences on foreign 992 (638) (2,986)
currency net
investments
Total recognised gains 1,759 2,002 99
for the financial period
Prior year adjustment (570)
(see note 1)
Total recognised gains 1,189
since last annual report
(1) Restated for the adoption of FRS 19 - see note 1.
Combined statement of movement in shareholders` funds and movement in
reserves
for the six months ended 30 June 2002
Issue Profi
d t
share Share Merge Other and
r loss
US$ million capit premi reser reser accou Total
al um ves ves nt
At 1 January 2002 as
previously 734 1,203 636 716 10,13 13,42
reported 7 6
Prior year adjustment (570) (570)
(see note 1) - - - -
At 1 January 2002 734 1,203 636 716 9,567 12,85
restated 6
Profit for the financial 767 767
period - - - -
Dividends proposed (211) (211)
- - - -
Shares issued 6 - 6
- - -
Currency translation 992 992
differences - - - -
Balance at 30 June 2002 734 1,209 636 716 11,11 14,41
5 0
Consolidated cash flow statement
for the six months ended 30 June 2002
6 months 6 months Year
ended ended ended
US$ million Note 30.06.02 30.06.01 31.12.01
Net cash inflow from operating 8 1,381 1,506 3,539
activities
Expenditure relating to - (20) (23)
fundamental reorganisation
Dividends from joint ventures 115 223 258
and associates
Returns on investments and
servicing of finance
Interest received and other 175 144 419
financial income
Interest paid (141) (254) (430)
Dividends received from fixed 21 41 74
asset investments
Dividends paid to minority (207) (281) (454)
shareholders
Net cash outflow from returns (152) (350) (391)
on investments and
servicing of finance
Taxes paid (567) (347) (637)
Capital expenditure and
financial investment
Payments for fixed assets 9 (850) (772) (1,787)
Proceeds from the sale of 272 199 263
fixed assets
Exit funding for Konkola (95) - -
Copper Mines (KCM)
