| Wed 30 Jul 2003, 9:30 | | Interim Report for the six months ended 30 June 2 |
|
Anglo Platinum -
Anglo American Platinum Corporation Limited
(Incorporated in the Republic of South Africa)
(Registration No. 1946/022452/06)
("Anglo Platinum")
JSE Share Code: AMS
ISIN: ZAE000013181
A Member of the Anglo American plc Group
Interim Report for the six months ended 30 June 2003
Main features for the six months ended 30 June 2003
- Earnings per share(cents) 550,2
- Interim dividend per share(cents) 370,0
- Pt production from mines + 9,6%
- Cash on-mine cost per ton milled at steady-state operations* +9,4%
* Includes all operations except Bafokeng-Rasimone Platinum Mine,Rustenburg UG2
Project and Modikwa Platinum Mine all which are in a production ramp-up phase.
Consolidated income statement
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
30 June 30 June % 31 December
R millions Notes 2003 2002 Change 2002
Gross sales revenue 7 349,6 9 697,6 20 285,7
Commissions paid 203,5 433,2 733,0
Net sales revenue 7 146,1 9 264,4 (23) 19 552,7
Cost of sales 5 266,6 4 463,6 (18) 10 129,9
Cash operating costs 5 087,4 3 960,6 8 883,9
On-mine - steady 3 025,4 2 640,0 5 733,3
state operations
On-mine - projects in 1 140,1 676,8 1 636,1
ramp-up phase
Purchases of metals 126,3 - 121,9
in concentrate
Smelting 416,9 282,2 640,6
Treatment and 378,7 361,6 752,0
refining
Amortisation of 4 514,7 343,8 763,8
operating assets
Increase in metal (665,9) (146,3) (109,1)
inventories
Other costs 330,4 305,5 591,3
Gross profit on metal 5 1 879,5 4 800,8 (61) 9 422,8
sales
Other net 6 25,5 (494,0) (754,7)
income/(expenditure)
Market development (129,4) (139,4) (266,5)
and promotional
expenditure
Operating profit 1 775,6 4 167,4 (57) 8 401,6
Net interest (19,5) 107,4 155,7
(paid)/received
Income from 12,8 105,6 181,6
associates
Profit before 1 768,9 4 380,4 (60) 8 738,9
taxation
Taxation 585,9 1 735,0 66 2 998,9
Net profit 1 183,0 2 645,4 (55) 5 740,0
Headline earnings 7 1 115,9 2 614,6 (57) 5 630,4
Number of ordinary 215,1 214,7 214,9
shares in issue
(millions)
Weighted average
number of
ordinary shares in 215,0 214,3 214,5
issue (millions)
Earnings per share
(cents)
- Basic 550,2 1 234,4 (55) 2 676,0
- Headline 519,0 1 220,1 (58) 2 624,9
- Diluted (basic) 549,7 1 216,8 (55) 2 671,0
- Diluted (headline) 518,5 1 205,3 (57) 2 620,0
Dividends per share 370,0 900,0 (66) 1 800,0
(cents)
- Interim 370,0* 900,0 900,0
- Final - - 900,0
Dividend cover 1,4 1,4 21 1,5
(headline earnings)
* Proposed dividend
Consolidated balance sheet
Reviewed Reviewed Audited
as at as at as at
30 June 30 June 31 December
R millions Notes 2003 2002 2002
ASSETS
Non-current assets 18 760,3 12 958,3 16 192,3
Property, plant and 14 355,6 8 884,0 10 503,1
equipment
Capital work-in-progress 3 718,5 3 468,4 4 941,5
Platinum Producers" 95,1 73,1 89,3
Environmental Trust
Investment in associates 8 492,5 301,2 557,6
Non-current accounts 98,6 231,6 100,8
receivable
Current assets 4 632,0 5 952,3 5 017,6
Inventories 3 2 537,8 1 813,6 1 819,9
Accounts receivable 1 452,7 1 800,6 1 617,7
Cash and cash equivalents 641,5 2 338,1 1 580,0
Total assets 23 392,3 18 910,6 21 209,9
EQUITY AND LIABILITIES
Share capital and
reserves
Share capital 21,5 21,5 21,5
Share premium 767,5 1 252,5 754,0
Accumulated profits
before proposed dividend
and related secondary tax 3 11 656,2 10 727,1 12 408,6
on companies (STC)
Accumulated profits after
proposed dividend
and related STC 10 760,8 8 553,3 10 232,7
Proposed ordinary 795,9 1 932,3 1 934,1
dividend
STC in respect of 99,5 241,5 241,8
proposed dividend
Shareholders" equity 12 445,2 12 001,1 13 184,1
Non-current liabilities 5 126,7 3 672,5 4 580,8
Deferred taxation 4 198,0 2 940,7 3 763,3
Environmental obligations 207,5 183,5 192,8
Employees" service 459,4 548,3 488,3
benefit obligations
Obligations due under 261,8 - 136,4
finance leases
Current liabilities 5 820,4 3 237,0 3 445,0
Accounts payable 1 853,9 1 350,9 1 893,7
Taxation 3 413,3 1 886,1 1 551,3
Interest-bearing 9 3 553,2 - -
borrowings
Total equity and 23 392,3 18 910,6 21 209,9
liabilities
Group statement of changes in shareholders" equity
Share Share Accumulated
R millions capital premium profits Total
Balance as at 31 December
2001 -
previously reported 21,4 1 203,6 11 296,6 12 521,6
(audited)
Change in accounting
policy with respect
to recognising metals in
concentrate as
inventory on the balance 215,4 215,4
sheet (Note 3)
Gross 322,1 322,1
Taxation (106,7) (106,7)
Balance as at 31 December
2001
- restated (reviewed) 21,4 1 203,6 11 512,0 12 737,0
Net profit 2 645,4 2 645,4
Dividends paid in cash (3 430,3) (3 430,3)
Share capital issued 0,1 48,9 49,0
Balance as at 30 June
2002
- restated (reviewed) 21,5 1 252,5 10 727,1 12 001,1
Net profit 3 094,6 3 094,6
Dividends paid in cash (1 932,6) (1 932,6)
Share capital issued - * 25,9 25,9
Repurchase of ordinary - (524,4) 519,5 (4,9)
shares
Cost of shares sold by 0,2 491,8 492,0
wholly owned subsidiary
to parent company
Unrealised after-tax 27,7 27,7
Group profit on disposal
of holding company shares
to parent company
Shares repurchased by (0,2) (524,4) (524,6)
parent company from
wholly-owned subsidiary
(cancelled)
Balance as at 31 December
2002
- restated (reviewed) 21,5 754,0 12 408,6 13 184,1
Net profit 1 183,0 1 183,0
Dividends paid in cash (1 935,4) (1 935,4)
Share capital issued - * 13,5 13,5
Balance as at 30 June 21,5 767,5 11 656,2 12 445,2
2003 (reviewed)
* Less than R50 000.
Consolidated cash flow statement
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
R millions 2003 2002 2002
CASH FLOWS FROM OPERATING
ACTIVITIES
Cash receipts from customers 7 187,1 9 234,4 20 004,9
Cash paid to suppliers and (5 550,8) (5 057,7) (10 399,6)
employees
Cash from operations 1 636,3 4 176,7 9 605,3
Interest expensed (79,8) (19,8) (35,4)
Taxation paid (1 277,3) (2 551,3) (3 304,1)
Net cash from operating activities 279,2 1 605,6 6 265,8
CASH FLOWS USED IN INVESTING
ACTIVITIES
Purchase of property, plant and (3 053,9) (2 477,4) (5 994,1)
equipment
To maintain operations (1 482,7) (630,5) (2 140,9)
To expand operations (1 519,8) (1 846,9) (3 853,2)
Interest capitalised (51,4) - -
Proceeds from sale of property,
plant, equipment
and mineral rights 76,3 632,3 778,4
Investment in associates (1,4) (0,3) (300,3)
Interest received 72,4 135,8 203,1
Capital reduction by Northam 10,3 - 39,0
Platinum Limited
Dividends received 47,3 37,0 89,7
Net cash used in investing (2 849,0) (1 672,6) (5 184,2)
activities
CASH FLOWS FROM/ (USED IN)
FINANCING ACTIVITIES
Proceeds from the issue of share - * 0,1 0,1
capital
Increase in share premium 13,5 48,9 74,8
Proceeds from current borrowings 3 553,2 - -
Dividends paid (1 935,4) (3 430,3) (5 362,9)
Net cash from/(used in) financing 1 631,3 (3 381,3) (5 288,0)
activities
Net decrease in cash and cash (938,5) (3 448,3) (4 206,4)
equivalents
Cash and cash equivalents at 1 580,0 5 786,4 5 786,4
beginning of year
Cash and cash equivalents at end of 641,5 2 338,1 1 580,0
period/year
* Less than R 50 000.
A non-cash transaction in the form of a finance lease for housing was concluded.
During the period assets of R125,4 million (December 2002: R136,4 million) were
acquired in terms of this transaction.
Notes to the interim report
1. This interim report complies with International Accounting Standard 34 -
Interim Financial Reporting and South African Statement of Generally Accepted
Accounting Practice, AC127, with the same title, and with Schedule 4 of the
South African Companies Act.
2. The interim report has been prepared using accounting policies that comply
with South African Statements of Generally Accepted Accounting Practice and
International Financial Reporting Standards. Except for the change in accounting
policy described below, the policies are consistent with those applied in the
financial statements for the year ended 31 December 2002.
3. Change in accounting policy
The Group is increasingly entering into agreements to purchase significant
quantities of concentrate from joint venture partners. When such material is on
hand at the end of a reporting period, it is recognised as inventory on the
Group"s balance sheet. To ensure that the accounting treatment of `purchased"
and `produced" concentrate is congruent, the Group has changed its accounting
policy to recognise its own production of metals in concentrate within
inventory. This change in accounting policy results in improved matching of
costs with revenue.
This change in accounting policy resulted in a net credit to accumulated profits
at 1 January 2002 of R 215,4 million, after tax of R 106,7 million.
Opening retained earnings, inventory and taxation have been restated, however,
no restatement of the six months ended 30 June 2002 and the year ended 31
December 2002 was done as the change in accounting policy is not material to
those results.
Gross Taxation Net
Rm Rm Rm
Effect of the change in accounting
policy with
respect to recognising purchased
and
produced concentrate inventory:
Opening retained earnings 322,1 (106,7) 215,4
Earnings for the six months ended 30 447,1 (148,0) 299,1
June 2003
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
Rm Rm Rm
4. Amortisation and depreciation of
property,
plant and equipment 524,4 365,9 797,2
Amortisation of operating assets 514,7 343,8 763,8
Mining 427,1 287,9 646,1
Smelting 48,3 25,8 57,0
Treatment and refining 37,8 28,8 57,9
Decommissioning asset 1,5 1,3 2,8
Depreciation - non-mining assets
(included in Other costs) 9,7 22,1 33,4
5. Gross profit on metal sales - Segmental information
Purchases of
metals in
R millions Mined concentrate Total
Six months ended 30 June 2003
(reviewed)
Gross sales revenue 7 210,4 139,2 7 349,6
Commissions paid 199,5 4,0 203,5
Net sales revenue 7 010,9 135,2 7 146,1
Cost of sales 5 166,3 100,3 5 266,6
Cash operating costs 4 942,8 144,6 5 087,4
On-mine - steady state operations 3 025,4 - 3 025,4
On-mine - projects in ramp-up phase 1 140,1 - 1 140,1
Purchases of metals in concentrate - 126,3 126,3
Smelting 405,0 11,9 416,9
Treatment and refining 372,3 6,4 378,7
Amortisation of operating assets 512,6 2,1 514,7
Increase in metal inventories (612,9) (53,0) (665,9)
Other costs 323,8 6,6 330,4
1 844,6 34,9 1 879,5
Year ended 31 December 2002
(audited)
Gross sales revenue 20 194,4 91,3 20 285,7
Commissions paid 723,3 9,7 733,0
Net sales revenue 19 471,1 81,6 19 552,7
Cost of sales 10 049,2 80,7 10 129,9
Cash operating costs 8 753,2 130,7 8 883,9
On-mine - steady state operations 5 733,3 - 5 733,3
On-mine - projects in ramp-up phase 1 636,1 - 1 636,1
Purchases of metals in concentrate - 121,9 121,9
Smelting 633,6 7,0 640,6
Treatment and refining 750,2 1,8 752,0
Amortisation of operating assets 762,8 1,0 763,8
Increase in metal inventories (55,4) (53,7) (109,1)
Other costs 588,6 2,7 591,3
9 421,9 0,9 9 422,8
The Group commenced purchases of metals in concentrate from the 3rd quarter of
2002 and therefore no comparative figures are presented for the six months ended
30 June 2002.
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
R millions 2003 2002 2002
6. Other net income/(expenditure)
Other net income/(expenditure)
consists of the following principal
categories:
Net realised and unrealised foreign
exchange losses (198,2) (551,4) (879,1)
Profit on disposal of mineral rights 64,6 25,0 98,0
Profit on commodity contracts 156,3 - -
Other 2,8 32,4 26,4
25,5 (494,0) (754,7)
7. Reconciliation between net profit and headline earnings
Net profit 1 183,0 2 645,4 5 740,0
Adjustments:
Profit on disposal of mineral (64,6) (25,0) (98,0)
rights
Net negative goodwill amortisation (2,5) (5,8) (11,6)
Headline earnings 1 115,9 2 614,6 5 630,4
8. Investment in associates 492,5 301,2 557,6
Unlisted investment in associate 267,8 - 298,3
Carrying amount
Directors" valuation - R267,8m (Dec
02 - R298,3m)
Listed investment in associate
Carrying amount 224,7 301,2 259,3
Market value R643,4m (Jun 02 -
R874,2m; Dec 02 - R972,8m)
9. Borrowing facilities
The Group has the following
borrowing
facilities:
Reviewable annually by lenders at
various dates during 2003 and 2004 4 900,0 2 735,0 2 735,0
Amount utilised: floating rate (3 553,2) - -
Available undrawn borrowing 1 346,8 2 735,0 2 735,0
facilities
Facilities under negotiation:
Short term 1 000,0
Long term 2 000,0
3 000,0
10. Borrowing powers
The borrowing powers in terms of the articles of association of the holding
company and its subsidiaries are unlimited.
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
R millions 2003 2002 2002
11. Commitments
Mining property, plant and equipment
Contracted for 2 776,8 1 532,3 2 094,3
Not yet contracted for 12 548,3 10 262,9 14 850,6
Authorised by the directors 15 325,1 11 795,2 16 944,9
Allocated for:
Expansion of capacity 8 689,3 8 560,6 13 913,9
- for remainder of the year/within 2 334,7 2 309,3 5 013,9
one year
- within two to five years 6 354,6 6 251,3 8 900,0
Maintenance of capacity 6 635,8 3 234,6 3 031,0
- for remainder of the year/within 1 686,9 946,4 1 570,1
one year
- within two to five years 4 948,9 2 288,2 1 460,9
Other
Operating lease rentals - premises 440,1 45,1 38,1
- for remainder of the year/within 7,9 7,1 15,2
one year
- within two to five years 59,9 38,0 22,9
- thereafter 372,3 - -
Information Technology Service 112,2 179,6 139,4
Providers
- for remainder of the year/within 15,7 26,0 42,9
one year
- within two to five years 96,5 153,6 96,5
Commitments will be funded from future cash flows from operations after payment
of dividends, borrowings and any other funding strategy embarked on by the
Group.
12. 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
houses held under finance leases by the Group.
The Group provided guarantees in favour of Changing Tides 166 (Proprietary)
Limited, a wholly owned subsidiary of Group 5 Construction Limited (Group 5).
The guarantee provides security for lease payments to Group 5 by the Anglo
Platinum Housing Trust (APHT). The probability of any obligation arising under
this guarantee is considered remote.
The Group provided a guarantee in favour of BoE Merchant Bank Limited (BoE) for
financing provided by BoE to Salene Mining (Proprietary) Limited (Salene). The
Group provided the guarantee to enable Salene to put mining infrastructure in
place. The guarantee is valid until 1 July 2006 or if earlier, on repayment by
Salene of the loan. Salene will sell all ore production from the mine to the
Group. The facility granted by BoE to Salene is for a maximum amount of R120
million. In the event that BoE calls up the guarantee, the Group holds bonds
over sufficient assets of Salene to make good any obligations that may be
incurred. It is unlikely that the Group will incur obligations under this
guarantee.
13. Comparative figures
Comparative figures have been restated as explained in note 3. Where
appropriate, comparative figures have been reformatted to facilitate
comparability.
Supplementary information for convenience of users
Consolidated income statement
UNITED STATES DOLLAR EQUIVALENT
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
US $ millions 2003 2002 2002
Gross sales revenue 915,1 882,8 1 936,1
Commissions paid 25,3 39,4 70,0
Net sales revenue 889,8 843,4 1 866,1
Cost of sales 655,6 406,3 966,7
Cash operating costs 633,3 360,5 847,8
On-mine - steady state operations 376,7 240,3 547,2
On-mine - projects in ramp-up phase 141,9 61,6 156,1
Purchases of metals in concentrate 15,7 - 11,6
Smelting 51,9 25,7 61,1
Treatment and refining 47,1 32,9 71,8
Amortisation of operating assets 64,1 31,3 72,9
Increase in metal inventories (82,9) (13,3) (10,4)
Other costs 41,1 27,8 56,4
Gross profit on metal sales 234,2 437,1 899,4
Other net income/(expenditure) 3,2 (44,9) (72,0)
Market development and promotional (16,1) (12,7) (25,4)
expenditure
Operating profit 221,3 379,5 802,0
Net interest (paid)/received (2,4) 9,8 14,9
Income from associates 1,6 9,6 17,3
Profit before taxation 220,5 398,9 834,2
Taxation 72,9 157,9 286,1
Net profit 147,6 241,0 548,1
Dividends paid in cash (241,0) (312,3) (511,8)
Exchange rate translation adjustment 204,3 143,2 398,2
Accumulated profits at beginning of 1 446,6 962,5 962,5
year as restated
As previously stated 1 446,6 944,5 944,5
Change in accounting policy
translated at 2001
closing rate (Note 3) - 18,0 18,0
Repurchase of shares by holding
company from
wholly owned subsidiary - - 49,6
Accumulated profits at end of 1 557,5 1 034,4 1 446,6
period/ year
Average Rand/US$ exchange rate 8,0319 10,9855 10,4778
Number of ordinary shares in issue 215,1 214,7 214,9
(millions)
Weighted average number of ordinary
shares
in issue (millions) 215,0 214,3 214,5
Earnings per share (cents)
- Basic 68,7 112,5 255,5
- Headline 64,6 111,2 250,5
- Diluted (basic) 68,4 110,8 254,9
- Diluted (headline) 64,6 109,7 250,1
Dividends per share (cents) 46,1 86,0 191,7
- Interim 46,1* 86,0 86,8
- Final - - 104,9
Income statement items were translated at the average exchange rate for the
period/year.
* Proposed dividend
Supplementary information for convenience of users
Consolidated balance sheet
UNITED STATES DOLLAR EQUIVALENT
Reviewed Reviewed Audited
as at as at as at
30 June 30 June 31 December
US $ millions 2003 2002 2002
ASSETS
Non-current assets 2 506,8 1 249,5 1 887,8
Current assets 618,9 574,1 585,0
Total assets 3 125,7 1 823,6 2 472,8
EQUITY AND LIABILITIES
Shareholders" equity 1 663,0 1 157,3 1 537,0
Non-current liabilities 685,0 354,1 534,0
Current liabilities 777,7 312,2 401,8
Total equity and liabilities 3 125,7 1 823,6 2 472,8
Closing Rand/US$ exchange rate 7,4838 10,3705 8,5775
Balance sheet items were translated at the closing exchange rate.
Supplementary information for convenience of users
Consolidated cash flow statement
UNITED STATES DOLLAR EQUIVALENT
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
US$ millions 2003 2002 2002
Net cash from operating activities 34,9 146,2 598,1
Net cash used in investing (354,7) (152,2) (494,7)
activities
Net cash from/(used in) financing 203,1 (307,8) (504,7)
activities
Net decrease in cash and cash (116,7) (313,8) (401,3)
equivalents
Exchange rate translation adjustment 18,2 55,5 101,7
Cash and cash equivalents at 184,2 483,8 483,8
beginning of year
Cash and cash equivalents at end of 85,7 225,5 184,2
period/year
Average Rand/US$ exchange rate 8,0319 10,9855 10,4778
Cash flow items were translated at the average exchange rate for the period/
year.
* Less than US$ 50 000
A non-cash transaction in the form of a finance lease for housing was concluded.
During the period assets of $12,0 million (December 2002: $17,0 million) were
acquired in terms of this transaction.
Supplementary information
Consolidated statistics (Unaudited)
Six months Six months Year
ended ended ended
30 June 30 June 31 December
Total operations 2003 2002 2002
Marketing statistics
Average market prices
achieved
Platinum (US$/oz) 649 513 544
Palladium (US$/oz) 202 371 329
Rhodium (US$/oz) 556 946 831
Nickel (US$/lb) 3,62 2,91 3,03
Net sales revenue per (US$) 899 819 829
Pt ounce sold
Platinum revenue (R/oz) 5 198 5 533 5 567
Palladium revenue (R/oz) 1 614 4 036 3 403
Rhodium revenue (R/oz) 4 460 10 387 8 683
Nickel revenue (R/lb) 29,46 32,02 31,92
Net sales revenue per (R) 7 222 8 995 8 690
Pt ounce sold
Average Pt exchange (R : $) 8,0052 10,7842 10,2422
rates achieved
Exchange rates at end (R : $) 7,4838 10,3705 8,5775
of period
Profitability
statistics
Gross sales revenue per (R) 441 669 703
ton milled
Gross profit margin (%) 25,6 49,5 46,5
Earnings before (R millions) 2 300,7 4 633,9 9 368,4
interest, taxation,
depreciation and
amortisation (EBITDA)
Operating profit to (%) 21,9 71,6 66,3
average operating
assets
Return on average (%) 18,5 44,2 44,3
shareholders" equity
Return on capital (%) 17,9 44,5 42,7
employed
Interest bearing debt (%) 30,7 - -
to shareholders" equity
Analysis of operating
contribution by mine (R millions)
Rustenburg Section 575,1 1 419,0 2 794,2
Union Section 195,4 630,3 1 059,3
Amandelbult Section 1 007,8 2 060,9 3 886,2
Potgietersrust 312,1 518,5 926,1
Platinums
Lebowa Platinum Mines 88,0 238,5 450,1
Steady state operating 2 178,4 4 867,2 9 115,9
contribution
Bafokeng-Rasimone 51,2 171,8 433,9
Platinum Mine
Rustenburg UG2 Project (7,4) 67,3 451,4
Modikwa Platinum Mine (12,3) - 12,9
Consolidated operating
contribution
- all operations 2 209,9 5 106,3 10 014,1
Other costs 330,4 305,5 591,3
Gross profit on metal 1 879,5 4 800,8 9 422,8
sales
Refined production from
mining operations
Platinum (thousands) 897,9 1 043,3 2 238,5
(oz)
Palladium (thousands) 456,0 515,5 1 103,1
(oz)
Rhodium (thousands) 94,3 82,5 210,0
(oz)
Gold (thousands) 51,9 60,1 106,7
(oz)
Nickel (thousands) 10,1 9,2 19,4
(tons)
Copper (thousands) 6,2 5,1 10,5
(tons)
PGM"s (thousands) 1 622,0 1 787,5 3 920,6
(oz)
Refined production from
purchases of metals in
concentrate
Platinum (thousands) 17,2 - 12,6
(oz)
Palladium (thousands) 14,1 - 12,2
(oz)
Rhodium (thousands) 3,5 - 1,7
(oz)
Gold (thousands) 0,7 - 0,4
(oz)
Nickel (thousands) 0,1 - -
(tons)
Copper (thousands) 0,1 - -
(tons)
PGM"s (thousands) 39,8 - 27,0
(oz)
Total refined
production
Platinum (thousands) 915,1 1 043,3 2 251,1
(oz)
Palladium (thousands) 470,1 515,5 1 115,3
(oz)
Rhodium (thousands) 97,8 82,5 211,7
(oz)
Gold (thousands) 52,6 60,1 107,1
(oz)
Nickel (thousands) 10,2 9,2 19,4
(tons)
Copper (thousands) 6,3 5,1 10,5
(tons)
PGM"s (thousands) 1 661,8 1 787,5 3 947,6
(oz)
Total concentrator (thousands) 1 173,2 1 070,8 2 276,6
platinum ounces (oz)
Commentary
SAFETY
Anglo Platinum has continued its intense focus on safety programmes and is
pleased to report a further significant improvement in the lost-time injury
frequency rate per 200 000 hours worked ("LTIFR") for the period under review.
The LTIFR was 0,79 for the first half of 2003 compared with 1,49 for the same
period in 2002. Most regrettably and notwithstanding the overall improvement in
safety, 12 employees died at managed operations as a result of work related
accidents. The Board and management are committed to eliminating fatalities at
work and maintain focus on this objective.
RESULTS SUMMARY
Platinum ounces in concentrate delivered to the Process Division rose by 9,6%
over the equivalent period last year and amounted to 1 173 200 ounces. The
increase is attributable mainly to the added contribution from mines in the ramp
up phase - Modikwa, Bafokeng-Rasimone and phases 1 and 2 of the Rustenburg UG2
project.
Refined platinum production was negatively affected by a 205 000 ounce build-up
of pipeline stocks in the Process Division, and amounted to 915 100 ounces for
the six months to June 2003. The majority of the build-up is temporary and will
be released in the second half of 2003.
The average rand/US dollar exchange rate for the six months to June 2003 was
26,9% lower than it was in the same period in 2002. Had the average rand/US
dollar exchange rate been the same as that for the first half of 2002, gross
sales revenue would have been R2,54 billion higher than the R7,35 billion
recorded. Cost of sales rose by 18,0% or R0,80 billion mainly because of
increased production from ramp-up operations and inflationary cost pressures.
Headline earnings declined by 57,3% to R1,12 billion. Headline earnings per
share decreased by 57,5% to 519 cents per share. Dividend cover has been
maintained at 1,4 in line with last year, and accordingly a dividend of 370
cents per share has been declared.
OPERATIONS
Mining operations
The first six months of 2003 saw a pleasing increase in total production, with
an additional 102 400 platinum ounces in concentrate delivered to the smelters.
Total production was slightly below plan because of shortfalls at the Waterval
Mine at Rustenburg Section and at Modikwa. These shortfalls were due to limited
face availability resulting from development rates falling below plan.
Accelerated development plans are in place at both operations to address the
backlog. Potgietersrust has successfully brought the Zwartfontein South pit into
production and this has resulted in a significant improvement in the mine"s head
grade. The additional ounces from this source will assist in partly offsetting
production shortfalls at Waterval Mine and Modikwa in the second half of 2003.
The increasing shift to UG2 mining at the steady state operations resulted in
lower grade and associated lower concentrating recovery. This led to a 4,7%
decrease in the ratio of concentrator platinum ounces produced to tons milled.
Mining costs
Cash on-mine costs at steady state operations increased by 14,6% to R3,03
billion. Expressed in terms of cost per ton milled the increase was 9,4%,
slightly above inflation. This was achieved in the face of a 9,8% annual wage
increase, above inflation increases in steel costs and costs to equalise
retirement fund contribution rates across the Group. In addition the Group
raised the level of expenditure in key areas such as safety, training and
health. As a result of the lower grade and recovery arising from increased UG2
production, the cash cost per platinum ounce increased by 14,5%.
Cash on-mine costs at ramp-up operations increased by R463,3 million due to
higher production.
PROCESS OPERATIONS
The smelting operations have undergone substantial change over the past six
months. Three significant capital plants were commissioned and are in the
process of being ramped up - the Polokwane Smelter, the ACP Converter and the
slag cleaning furnace. In addition the smelter leasing arrangements with Xstrata
were terminated. The combination of these activities caused a temporary stock
build-up during June, which resulted in material being transferred to the
magnetic concentration plant at the base metal refinery too late to be processed
into refined metal by the end of the reporting period.
The base and precious metals refineries performed well. During June, the
combination of the late release of metal from Waterval Smelter and certain
technical challenges arising from the processing of different sources of matte
caused a temporary build-up in process stocks.
The total increase in pipeline stock was equivalent to 205 000 ounces.
Approximately 20% of the increase is the expected absorption by the ACP
convertor and Polokwane Smelter and the remainder is temporary and will be
released over the next few months.
Process costs
As previously advised, the old convertors and acid plant at Waterval Smelter are
continuing to operate to provide dual processing capability during the ACP
Converter build-up. Together with the commissioning of the Polokwane Smelter
this resulted in an increase in cash smelting costs of R134,7 million to R416,9
million, an increase of 47,7%. Smelting capacity is now greater than the mines"
short-term requirements and consequently unit costs per ton smelted will remain
high until increased concentrate deliveries from the expansion programme result
in closer matching of capacity to actual throughput.
Cash treatment and refining costs increased by 4,7%, from R361,6 million to
R378,7 million.
Operations costs
The steady state cash operating cost per refined platinum ounce, adjusted to
take into account the build-up in pipeline stocks, increased by 14,8%.
FINANCIAL RESULTS
Gross sales revenue decreased by R2,35 billion to R7,35 billion. The decrease
was caused primarily by the stronger rand (R2,54 billion) and lower sales
volumes (R0,09 billion), partly offset by an increase in US dollar revenues for
metals sold (R0,28 billion). The net sales revenue per platinum ounce sold
("basket price") decreased by 19,7%, from R8 995 in the first half of 2002 to R7
222 in the first half of 2003.
Cost of sales rose by R0,80 billion to R5,27 billion.
Cash mining, smelting and refining costs increased by R1,00 billion to R4,96
billion as explained in the Operations commentary.
Purchases of metal in concentrate amounted to R126,3 million.
Amortisation of operating assets rose by R170,9 million with the addition of
amortisation charges for Modikwa, the Polokwane Smelter and the ACP Converter,
which were not operating in the first half of 2002. Increased ongoing capital
expenditure has also contributed to a general increase in amortisation charges
across the operations.
The value of metals in inventory increased by R665,9 million during the six
months to June 2003, primarily because of the increase in pipeline stocks. The
valuation incorporated an amount of R447,1 million in respect of a change in the
accounting policy for metal inventories which now includes values for all metal
at the smelters, whereas previously only metal suitable for despatch to the
magnetic concentration plant was included. The change, which increased earnings
for the first half of 2003 by approximately R299,1 million, was necessary to
account for concentrate purchases from joint venture partners and also to more
properly match the cost of sales with sales revenue during a period when an
appreciable change in smelter stocks occurred.
Other net income in the first half of 2003 amounted to R25,5 million compared
with other net expenditure of R494,0 in the first half of 2002. This primarily
reflects lower foreign exchange losses resulting from a lower appreciation of
the rand than in the previous period, profits realised on commodity contracts
and a higher profit on the disposal of mineral rights.
Net interest paid during the review period amounted to R19,5 million, compared
with interest received of R107,4 million in the first half of 2002, as a result
of the Group moving into a borrowed position. Interest paid is net of R51,3
million of interest on borrowings allocated to capital projects under
construction.
CAPITAL EXPENDITURE
Capital expenditure amounted to R3,05 billion (2002: R2,48 billion). Expenditure
to maintain operations increased from R0,63 billion to R1,48 billion owing to
increased expenditure on projects to replace production at steady state mines,
including the Rustenburg UG2 Phase 2 project. Expansion capital expenditure
amounted to R1,52 billion (2002: R1,85 billion). Capital commitments at 30 June
2003 amounted to R2,78 billion (June 2002: R1,53 billion).
Following a focused capital optimisation programme, the Group has revised its
total capital spend for the year from R7,7 billion down to R7,0 billion. The
Group will continue to ensure that, where possible, capital expenditure is
deferred without adversely affecting planned production levels.
NET DEBT (BORROWINGS LESS CASH RESERVES)
During the six months ended 30 June 2003 the Group moved from a net cash
position of R1,44 billion to a net debt position of R3,17 billion - a net
outflow of R4,61 billion. Cash generated by operations amounted to R1,64 billion
(2002: R4,18 billion). Payments consisted mainly of capital expenditure
totalling R3,05 billion (2002: R2,48 billion), dividends of R1,94 billion (2002:
R3,43 billion) and taxation of R1,28 billion (2002: R2,55 billion).
Borrowings as at 30 June 2003 are made up primarily of short-term debt
facilities. Discussions with external financiers and with Anglo Platinum"s major
shareholder, Anglo American plc with a view to structuring an appropriate
financing package to meet the funding required for the company"s expansion
programmme in the face of reduced cash inflows, caused primarily by the
sustained strength of the South African Rand are well advanced.
NEW MINERALS LEGISLATION, EMPOWERMENT OF HISTORICALLY DISADVANTAGED SOUTH
AFRICANS and progress on social upliftment programmes
Anglo Platinum continues to work closely with the Department of Minerals and
Energy and good progress is being made towards meeting the challenging ownership
and attributable production requirements of the Mineral and Petroleum Resources
Development Act and Broad Based Economic Empowerment Charter. In addition, the
Group advises that the mining licenses applied for on the Eastern Limb have been
granted. Several significant ventures with Historically Disadvantaged South
African (HDSA) partners have commenced, and other agreements are being
negotiated.
The Group is very concerned about the impact of the Mineral and Petroleum
Royalty Bill on existing operations and new projects. Representations have been
made to the Department of Finance regarding matters of concern and there is
ongoing interaction with government in this regard.
Social upliftment programmes, the provision of anti-retroviral treatment for
employees with AIDS, development of small and medium HDSA enterprises and
employment equity targets are all being vigorously pursued as part of the
Group"s commitment to broad based economic empowerment initiatives.
PROJECTS
Anglo Platinum believes that the expansion programme target to produce at the
rate of 3,5 million ounces of refined platinum per year by the end of 2006
