| Fri 25 Jul 2003, 9:34 | | ANGLO AMERICAN PLC - ANNOUNCEMENT |
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ANGLO AMERICAN PLC - ANNOUNCEMENT
ANGLO AMERICAN PLC
JSE Code: AGL
ISIN Code: GB0004901517
De Beers Societe Anonyme ("Dbsa") today reported headline earnings for the six
months ended 30 June 2003 of US$414 million.
Anglo American plc ("AA plc") arrives at its headline earnings in respect of De
Beers by accounting for the interests arising from the ordinary shares and the
10% preference shares it holds in DB Investments ("DBI").
AA plc will therefore report headline earnings of US$248 million for the six
months ended 30 June 2003 from its investment in DBI, as reconciled in the table
below:
Reconciliation of headline earnings for the 6 months
ended 30 June 2003
US$ million Total Ordinary Preference
shares shares (3)
DBI headline earnings (100%) 414 - -
GAAP adjustments (1) 58 - -
DBI headline earnings - UK 472 417 55
GAAP (100%)
AA plc"s 45% ordinary share 188 188 -
interest
Additional 3.65% ordinary 15 15 -
share interest (2)
AA plc"s portion of the 45 - 45
preference shares (3)
AA plc headline earnings 248 203 45
(1) GAAP adjustments relate to mark-to-market adjustments which are recorded in
De Beers" earnings, principally the US$70 million in respect of the mark-to-
market of interest rate hedging contracts referred to in Dbsa"s press release,
but which are excluded from AA plc"s UK GAAP results, and associated tax
effects.
(2) As a result of the De Beers" partial interest in Debswana Diamond Company
(Proprietary) Limited (one of the shareholders in DBI), AA plc accounts for an
additional 3.65% of DBI"s post-tax earnings attributable to ordinary shares.
(3) AA plc grosses up its preference share income to the operating profit level
and accounts for its preference share interest in operating profit, exceptional
items, investment income and net interest, tax and minorities, in the same way
as it accounts for its ordinary share interest in these balances. This
treatment is in accordance with FRS9, paragraph 33, which indicates that where
preference shares are an integral part of the investor"s long-term interest, it
is appropriate to include the preference share interest with the ordinary share
interest in determining the investor"s overall share of an associate"s results.
The headline earnings attributable to AA plc"s US$35 million preference share
income are arrived at by adjusting for a proportion of exceptional items (+US$2
million) and goodwill amortisation (+US$8 million) in the same way as the
ordinary share interest is calculated.
In the six months ended 30 June 2003, AA plc received from DBI US$56 million
dividends on ordinary shares relating to FY 2002 and US$35 million dividends
representing the second US$35 million payment on preference shares for 2002. A
US$35 million interim dividend on preference shares for 2003 is scheduled for
payment on 31 July 2003.
In the six months ended 30 June 2002, AA plc received from DBI US$29 million
dividends on ordinary shares and US$42 million dividends on preference shares
(representing 7 months of 2001 following the De Beers transaction). A US$35
million interim dividend on preference shares for 2002 was received from DBI
during the second half of 2002.
Reconciliation of headline earnings for the 6 months
ended 30 June 2002
US$ million Total Ordinary Preference
shares shares
DBI headline earnings (100%) 308 - -
GAAP adjustments - - -
DBI headline earnings - UK 308 258 50
GAAP (100%)
AA plc"s 45% ordinary share 116 116 -
interest
Additional 3.65% ordinary 9 9 -
share interest
AA plc"s portion of the 41 - 41
preference shares
AA plc headline earnings 166 125 41
The above figures are unaudited.
De Beers Societe Anonyme
(Incorporated under the laws of Luxembourg)
25 July 2003
INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2003
Buoyed by good results in 2002, the diamond industry started this year in a
cautiously optimistic mood. Retail sales in the first two months were
encouraging but then lost momentum as the global economy slowed sharply. War in
the Middle East and the impact of the SARS virus on the Asian economies
undermined consumer confidence. More recently, retail sales have shown signs of
recovery in line with growing consumer confidence and global retail sales of
diamond jewellery for the first half of 2003 are anticipated to be flat to
slightly positive compared to the first half of last year.
Throughout the first half, demand for rough diamonds from the cutting centres
was strong largely due to a willingness to hold higher levels of inventory as
interest rates continued to decline. Sales by the DTC, the marketing arm of De
Beers, for the first six months of 2003 totalled US$2,920 million, 2.75% higher
than the equivalent period in 2002. De Beers" results for the six months ended
30 June 2003 include headline earnings of US$414 million, 34% higher than for
the first half of 2002, a reduction in diamond stocks of over US$600 million
during the period and operating cash flow generated of US$1.1 billion. If the
strong demand for rough diamonds continues through the second half, De Beers"
results for the year as a whole should be ahead of the previous year.
In view of the exceptionally strong operating cash flow generated in the two-
year period to June 2003, De Beers has decided to refinance its existing bank
facilities by replacing the existing term loan and revolving credit facilities,
arranged on leveraged buyout terms, with a five-year US$2.5 billion Syndicated
Multi-Currency Revolving Credit facility on standard commercial terms.
Syndication was launched on 26 June and has recently been successfully
completed.
Following clearance, in January, from the European Commission of its Supplier of
Choice strategy, the DTC embarked on a rigorous process of assessing prospective
and existing clients against diamonds they were applying for and the DTC"s own
availabilities. As a result of this process, applicants were recently advised
as to their future status as Sightholders of the DTC. All successful applicants
are being supplied by the DTC with effect from July. Existing clients who did
not qualify as Sightholders under Supplier of Choice are continuing to be
offered supplies by the DTC for the remainder of the year.
De Beers and the Russian diamond producer, Alrosa, have continued to engage in
constructive dialogue with the European Commission to address its concerns
relating to the five-year trade agreement jointly notified to the Commission for
clearance in March 2002.
De Beers announces interim results as follows:
De Beers Societe Anonyme
Consolidated Income Statement
for the half-year ended 30 June 2003
(Abridged)
US Dollar millions
6 months 6 months 12 months
to to to
30 June 30 June 31
2003 2002 December
2002
Diamond sales
-DTC 2 920 2 842 5 154
-Other 201 197 380
Trade investment and other 258 305 592
income
3 379 3 344 6 126
Deduct:
Cost of sales 2 469 2 518 4 444
Depreciation and amortisation 128 114 250
(Note 1)
Sorting and marketing 214 198 398
Exploration and research 64 47 126
Corporate expenses 23 18 42
Net diamond account 481 449 866
Add:
Surplus on realisation of 2
fixed assets and investments
481 451 866
Deduct:
Net interest paid 54 76 144
Costs related to 5 24 44
reorganisation and
restructuring
Net income before taxation 422 351 678
and debt redemption costs
Taxation 112 115 271
Net income after taxation but 310 236 407
before debt redemption costs
Attributable to outside 10 6 14
shareholders in subsidiaries
Own earnings before debt 300 230 393
redemption costs
Share of retained income of 103 31 41
joint ventures
Total net earnings before 403 261 434
debt redemption costs
Costs of early debt 95
redemption (Note 3)
Total net earnings 261 434
Headline earnings
Total net earnings 308 261 434
Adjusted for :
Amortisation of intangible 84 81 163
fixed assets
After tax surplus on (3) (34) (27)
realisation of fixed assets
less costs related to
restructuring and provisions
Facility fees (Note 3) 25
Headline earnings 414 308 570
Cash available from operating 1 115 1 144 1 611
activities
Consolidated Balance Sheet
30 June 2003
(Abridged)
US Dollar millions
30 June 30 June 31
2003 2002 December
2002
4 458 3 784 4 023
Shareholders" interests
Outside shareholders" 109 89 96
interests
4 567 3 873 4 119
Net interest bearing debt 927 2 081 1 716
(Note 2)
Other liabilities 1 031 850 958
6 525 6 804 6 793
Fixed assets 4 690 4 284 4 405
Investments and loans 49 25 33
Diamond stocks and other 1 786 2 495 2 355
assets
6 525 6 804 6 793
Notes and Comments
Amortisation amounting to US$72 million in respect of the goodwill attributable
to De Beers Consolidated Mines Limited and De Beers Centenary AG has been
expensed in the current period. US$144 million was expensed during the year
ended December 2002.
Cash has been offset against interest bearing debt.
A further repayment of US$355 million was made on the Senior Debt facility on 10
March 2003 which reduced the outstanding debt to US$2,130 million. The US$1
billion revolving credit facility was not utilised during the period under
review.
The Senior Debt and revolving credit facilities, arranged on leveraged buyout
terms, have been replaced with a US$2.5 billion revolving credit facility on
standard commercial terms with a five year tenor.
The costs associated with the early debt redemption referred to in note 2 have
been expensed in the current period. These costs comprise the balance of US$25
million of facility fees not yet amortised, and US$70 million in respect of the
mark-to-market of interest rate hedging contracts that were required to be
entered into under the terms of the original Senior Debt facility. These
contracts were being hedge accounted in terms of AC133 (Financial Instruments:
Recognition and Measurement).
US$2.5 billion Syndicated Multi-Currency Revolving Credit Facility
De Beers S.A. ("De Beers") is pleased to announce that a US$2.5 billion
Syndicated Multi-Currency Revolving Credit Facility (the "Facility") has been
successfully arranged by Barclays Capital, Citigroup Global Markets Limited
("Citigroup"), Dresdner Kleinwort Wasserstein ("DrKW"), Royal Bank of Scotland
and WestLB (the "Mandated Lead Arrangers") on its behalf. Barclays Capital,
Citigroup, and DrKW have been appointed Bookrunners and Dresdner Bank Luxembourg
S.A. has been appointed Agent.
Syndication was launched 26 June, 2003 and has recently been completed. The
transaction, which was aimed at a selected group of De Beers" relationship
banks, was oversubscribed raising in excess of US$ 3 billion. More than 25 banks
representing 11 different countries have joined the facility, which is expected
to be signed on 30 July, 2003.
The Facility has a tenor of five years. It will refinance the Company"s existing
US$4.55 billion syndicated loan facility signed in March 2001 and will also
serve for general corporate purposes.
Contacts:
De Beers London:
Lynette Hori +44 20 7430 3509/+44 7740 393260
De Beers South Africa
Brian Roodt +27 11 374 6582/+27 82 412 6133
Pride Mogorosi +27 11 374 7155/+27 83 391 7240
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.
25 July 2003
