| Mon 16 Feb 2004, 10:01 | | Results for the year ended 31 Dec 03 |
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Anglo American Platinum Corporation Limited - Results For The Year Ended 31
Release Date: 16/02/2004 08:00:06 Code(s): AMS
ANGLO AMERICAN PLATINUM CORPORATION LIMITED -
Anglo American Platinum Corporation Limited
("Anglo Platinum")
(Incorporated in the Republic of South Africa)
(Registration number 1946/022452/06)
JSE Code: AMS
ISIN: ZAE000013181
A member of the Anglo American plc group
Results for the year ended 31 December 2003
Equivalent refined platinum production* increases by 8,0%
* Mines" production and purchases of metal in concentrate converted to
equivalent refined production using Anglo Platinum"s standard smelting and
refining recoveries.
* Dividend cover maintained
* Earnings adversely affected by strong rand
Consolidated Income Statement
Audited Audited
Year Year
ended ended
31 December 31 December %
R millions Notes 2003 2002 Change
Gross sales revenue 16 508,6 20 285,7
Commissions paid (408,2) (733,0)
Net sales revenue 16 100,4 19 552,7 (18)
Cost of sales (Segmental (12 190,5) (10 129,9) (20)
information)
Gross profit on metal sales 3 909,9 9 422,8 (59)
Other net expenditure 5 (269,3) (754,7)
Market development and (257,5) (266,5)
promotional expenditure
Operating profit 3 383,1 8 401,6 (60)
Net interest (paid)/received 6 (236,9) 155,7
Income from associates 35,0 181,6
Profit before taxation 3 181,2 8 738,9 (64)
Taxation (1 089,3) (2 998,9) 64
Net profit 2 091,9 5 740,0 (64)
Headline earnings 2 091,7 5 630,4 (63)
Number of ordinary shares in 215,4 214,9
issue (millions)
Weighted average number of 215,1 214,5
ordinary shares in issue
(millions)
Earnings per share (cents)
- Basic 972,5 2 676,0 (64)
- Headline 972,4 2 624,9 (63)
- Diluted (basic) 971,2 2 671,0 (64)
- Diluted (headline) 971,1 2 620,0 (63)
Dividends per share (cents) 640 1 800 (64)
- Interim 370 900
- Final 270+ 900
Dividend cover (headline 1,5 1,5
earnings)
Reconciliation between basic
and headline earnings
Net profit 2 091,9 5 740,0
Adjustments:
Profit on disposal of (64,6) (98,0)
mineral rights
Goodwill amortization 13,1 -
Negative goodwill (11,6) (11,6)
amortization
Scrapping of property, plant 62,9 -
and equipment
Carrying amount 89,8 -
Deferred taxation effect (26,9) -
Headline earnings 2 091,7 5 630,4
+ Proposed ordinary dividend.
Segmental Information+/- (audited)
Purchased
metals in
R millions Mined concentrate Total
For the year ended
2003
GROSS SALES REVENUE 16 161,3 347,3 16 508,6
Commissions paid (399,2) (9,0) (408,2)
NET SALES REVENUE 15 762,1 338,3 16 100,4
COST OF SALES (11 923,1) (267,4) (12 190,5)
On-mine (9 968,9) - (9 968,9)
Cash operating (9 027,1) - (9 027,1)
costs
Amortization (941,8) - (941,8)
Purchase of metals - (291,6) (291,6)
in concentrate
Smelting (1 015,9) (21,2) (1 037,1)
Cash operating (891,5) (18,6) (910,1)
costs
Amortization (124,4) (2,6) (127,0)
Treatment and (857,2) (16,9) (874,1)
refining
Cash operating (781,1) (15,2) (796,3)
costs
Amortization (76,1) (1,7) (77,8)
Increase in metal 511,0 73,9 584,9
inventories
Other costs (592,1) (11,6) (603,7)
GROSS PROFIT ON 3 839,0 70,9 3 909,9
METAL SALES
Gross profit margin 23,8 20,4 23,7
(%)
Cost of sales per 5 305 5 735 5 313
Pt ounce sold
(Rand)
For the year ended
2002
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)
On-mine (8 017,7) - (8 017,7)
Cash operating (7 369,4) - (7 369,4)
costs
Amortization (648,3) - (648,3)
Purchase of metals - (121,9) (121,9)
in concentrate
Smelting (690,0) (7,8) (697,8)
Cash operating (633,6) (7,0) (640,6)
costs
Amortization (56,4) (0,8) (57,2)
Treatment and (808,3) (2,0) (810,3)
refining
Cash operating (750,2) (1,8) (752,0)
costs
Amortization (58,1) (0,2) (58,3)
Increase in metal 55,4 53,7 109,1
inventories
Other costs (588,6) (2,7) (591,3)
GROSS PROFIT ON 9 421,9 0,9 9 422,8
METAL SALES
Gross profit margin 46,7 1,0 46,5
(%)
Cost of sales per 4 485 8 495 4 502
Pt ounce sold
(Rand)
+/- The Group produces PGMs primarily in South Africa. The risks and rewards
associated with the individual operations are not
sufficiently dissimilar to warrant identification of seperate geographical
segments. Therefore, only business segments are reported.
Group Statement of Changes in Equity (audited)
Unrealized
Share Share hedging Accumulated
R millions capital premium deficit profits Total
Balance as
at 31
December
2001
- 21,4 1 203,6 - 11 296,6 12 521,6
previously
reported
Change in 215,4 215,4
accounting
policy with
respect to
recognizing
metals in
concentrate
as
inventory
on the
balance
sheet (Note
2)
Gross 322,1 322,1
Taxation (106,7) (106,7)
Balance as 21,4 1 203,6 - 11 512,0 12 737,0
at 31
December
2001 -
restated
Net profit 5 740,0 5 740,0
Dividends (5 362,9) (5 362,9)
paid in
cash
Share 0,1 74,8 74,9
capital
issued
Repurchase - (524,4) 519,5 (4,9)
of ordinary
shares
Cost of 0,2 491,8 492,0
shares sold
by wholly
owned
subsidiary
to Company
Unrealized 27,7 27,7
after-tax
Group
profit on
disposal of
Company
shares
Shares (0,2) (524,4) (524,6)
repurchased
by Company
from wholly
owned
subsidiary
(cancelled)
Balance as 21,5 754,0 - 12 408,6 13 184,1
at 31
December
2002
After-tax (164,0) (164,0)
changes in
forward
metal
prices
(Note 9)
Net profit 2 091,9 2 091,9
Dividends (2 731,6) (2 731,6)
paid in
cash
Share -+ 42,3 42,3
capital
issued
Balance as 21,5 796,3 (164,0) 11 768,9 12 422,7
at 31
December
2003
+ Less than R50 000.
Consolidated Balance Sheet
Audited Audited
as at as at
31 December 31 December
R millions Notes 2003 2002
ASSETS
Non-current assets 22 493,9 16 192,3
Property, plant and equipment 14 550,8 10 503,1
Capital work-in-progress 7 249,2 4 941,5
Platinum Producers" 113,4 89,3
Environmental Trust
Investment in associates 7 484,0 557,6
Non-current accounts 96,5 100,8
receivable
Current assets 5 295,7 5 017,6
Inventories 2 2 439,6 1 819,9
Accounts receivable 2 286,7 1 617,7
Cash and cash equivalents 569,4 1 580,0
Total assets 27 789,6 21 209,9
EQUITY AND LIABILITIES
Share capital and reserves
Share capital 21,5 21,5
Share premium 796,3 754,0
Unrealized hedging deficit (164,0) -
Accumulated profits before 11 768,9 12 408,6
proposed ordinary dividend
and related secondary tax on
companies (STC)
Accumulated profits after 11 114,6 10 232,7
proposed ordinary dividend
and related STC
Proposed ordinary dividend 581,6 1 934,1
STC in respect of proposed 72,7 241,8
ordinary dividend
Shareholders" equity 12 422,7 13 184,1
Non-current liabilities 5 560,8 4 687,5
Deferred taxation 4 438,9 3 870,0
Environmental obligations 308,7 192,8
Employees" service benefit 488,9 488,3
obligations
Obligations due under finance 324,3 136,4
leases
Current liabilities 9 806,1 3 338,3
Interest bearing borrowings 8 7 168,1 -
Accounts payable 1 903,4 1 857,4
Other financial liabilities 9 336,2 36,3
Taxation 398,4 1 444,6
Total equity and liabilities 27 789,6 21 209,9
Consolidated Cash Flow Statement
Audited Audited
Year Year
ended ended
31 December 31 December
R millions 2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers 15 476,5 20 004,9
Cash paid to suppliers and employees (12 117,2) (10 387,5)
Cash from operations 3 359,3 9 617,4
Interest paid (277,4) (35,4)
Taxation paid (1 474,9) (3 304,1)
Net cash from operating activities 1 607,0 6 277,9
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of property, plant and (7 423,6) (5 994,1)
equipment
To maintain operations (3 952,7) (2 140,9)
To expand operations (3 270,4) (3 853,2)
Interest capitalized (200,5) -
Proceeds from sale of plant, equipment 134,8 778,4
and mineral rights
Investment in associates (1,5) (312,4)
Interest received 106,7 195,4
Growth in Platinum Producers" 11,2 7,7
Environmental Trust
Capital reduction by Northam Platinum 28,7 39,0
Limited
Dividends received 47,3 89,7
Net cash used in investing activities (7 096,4) (5 196,3)
CASH FLOWS FROM/(USED IN) FINANCING
ACTIVITIES
Proceeds from the issue of share -+ 0,1
capital
Increase in share premium 42,3 74,8
Raised from current interest bearing 7 168,1 -
borrowings
Dividends paid (2 731,6) (5 362,9)
Net cash from/(used in) financing 4 478,8 (5 288,0)
activities
Net decrease in cash and cash (1 010,6) (4 206,4)
equivalents
Cash and cash equivalents at beginning 1 580,0 5 786,4
of year
Cash and cash equivalents at end of 569,4 1 580,0
year
MOVEMENT IN NET DEBT
Net cash at beginning of year 1 443,6 5 786,4
Net cash from operating activities 1 607,0 6 277,9
Net cash used in investing activities (7 096,4) (5 196,3)
Other (2 877,2) (5 424,4)
Net (debt)/cash at end of year (6 923,0) 1 443,6
Made up as follows:
Cash and cash equivalents 569,4 1 580,0
Interest bearing borrowings (7 168,1) -
Obligations due under finance leases (324,3) (136,4)
(6 923,0) 1 443,6
+ Less than R50 000.
Notes (audited)
1. The preliminary report is prepared on the historical cost basis, except for
certain financial instruments that are fairly valued, using accounting polices
that comply with International Financial Reporting Standards issued by the
International Accounting Standards Board, South African Statements of Generally
Accepted Accounting Practice and the requirements of the South African Companies
Act and the JSE Securities Exchange, South Africa Listings Requirements. 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.
2. 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 recognized 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 recognize its own production of metals in concentrate within
inventory. This change in accounting policy results in improved matching of
costs with revenue.
The change in accounting policy resulted in a net credit to accumulated profits
at 1 January 2002 of R215,4 million, after tax of R106,7 million.
Opening retained earnings, inventory and taxation have been restated, but no
restatement of earnings for the year ended 31 December 2002 was carried out 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 recognizing
purchased and produced concentrate
inventory:
Opening retained earnings 2002 322,1 (106,7) 215,4
Earnings for the year ended 31 110,9 (33,3) 77,6
December 2003
Audited Audited
Year ended Year ended
31 December 31 December
2003 2002
Rm Rm
3. Directors" emoluments
Fees, salaries, benefits, bonuses 33,5 22,0
and other
Profit or share options exercised 16,8 52,5
50,3 74,5
4. Amortization and depreciation of
property, plant and equipment
Amortization of mining and process
property, plant and equipment
consists of the following
categories:
Operating assets 1 146,6 763,8
Mining 941,8 648,3
Smelting 127,0 57,2
Treatment and refining 77,8 58,3
Amortization included in other 38,2 -
costs
Depreciation - non-mining assets 41,8 33,4
1 226,6 797,2
Notes (audited) (continued)
Audited Audited
Year ended/ Year ended/
as at as at
31 December 31 December
R millions 2003 2002
5. Other net
expenditure
Other net
(expenditure)/income
consists of the
following principal
categories:
Realized and unrealized (417,2) (879,1)
foreign exchange losses
Restructuring costs++ (111,4) -
Profit on commodity 157,3 -
contracts
Profit on disposal of 64,6 98,0
mineral rights
Other 37,4 26,4
(269,3) (754,7)
++Restructuring costs mainly relate to costs incurred as a result of the
slowdown of expansion projects.
6. Net interest (paid)/received
Net interest (paid)/received consists of the following principal categories:
Interest expensed (286,9) (35,4)
Interest paid (487,4) (35,4)
Less: Capitalized 200,5 -
Time value of money adjustment to environmental (68,3) (13,4)
obligations
Decommissioning (62,9) (10,7)
Restoration (5,4) (2,7)
Interest received 106,7 195,4
Growth in Platinum Producers" Environmental 11,2 7,7
Trust
Dividends received 0,4 1,4
(236,9) 155,7
7. Investment in associates
Listed - Ordinary shares (Market value: R515,8 240,6 259,3
million (2002: R972,8 million))
Unlisted (Directors" valuation: R243,4 million 243,4 298,3
(2002: R298,3 million))
Ordinary shares 159,8 201,6
Redeemable preference shares 83,6 96,7
484,0 557,6
2003 2003 2002
Facility Utilized Utilized
8. Interest bearing
borrowings
The Group has the following
available and utilized
borrowing facilities:
Bank overdrafts: 10 173,6 7 168,1 -
At the end of 2002, the Group had borrowing facilities of R2 735 million
available, none of which had been utilized.
The weighted average borrowing rate at 31 December 2003 was 8,6925%.
Borrowing powers
The borrowing powers in terms of the Articles of Association of the Company and
its subsidiaries are unlimited.
Audited Audited
as at as at
31 December 31 December
2003 2002
9. Other financial liabilities
Fair value of forward foreign 90,4 36,3
exchange contracts
Fair value of forward metal 245,8 -
contracts designated as cash
flow hedges #
336,2 36,3
Forward foreign exchange contracts (FEC"s):
The fair value of FEC"s represents the movement between contracted rates and
year-end forward rates. These movements are recognized in the income statement.
# Forward metal contracts:
Changes in the value of forward metal contracts caused by movements in forward
prices since inception of the contracts are recognized in the unrealized hedging
deficit. The net amount of R164,0 million charged to the unrealized hedging
deficit is made up of R234,3 million less deferred taxation of R70,3 million.
Changes in the value caused by translating the value of the forward contracts to
rand are recognized in the income statement. This amounts to a charge of R11,5
million less taxation of R3,5 million.
At 31 December 2003 the Group held forward contracts to fix the US$ price of
future sales relating to a nickel supply agreement. The objective is to hedge
the Group against variability in future cash flows. The terms of the forward
contracts are to sell 11 088 tons of nickel at US$ 12 540 per ton. The forward
metal contracts are valued using forward metal prices that match the contractual
maturity dates.
10. Commitments
Mining and process property, plant and equipment
Contracted for 1 800,0 2 094,3
Not yet contracted for 11 943,4 14 850,6
Authorized by the directors 13 743,4 16 944,9
Allocated for:
Expansion of capacity 7 424,8 13 913,9
- within one year 2 844,3 5 013,9
- thereafter 4 580,5 8 900,0
Maintenance of capacity 6 318,6 3 031,0
- within one year 3 457,9 1 570,1
- thereafter 2 860,7 1 460,9
Other
Operating lease rentals - buildings 711,5 177,7
- within one year 35,6 25,1
- within two to five years 160,5 64,5
- thereafter 515,4 88,1
Information Technology Service 126,6 139,4
Providers
- within one year 33,4 42,9
- thereafter 93,2 96,5
These commitments will be funded from cash resources, future operating cash
flows, borrowings and any other funding strategies embarked on by the Group.
11. 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 Five. The guarantee provides
security for lease payments to Group Five 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 Nedcor Limited (Nedcor) for
financing provided by Nedcor 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 earlier, on repayment by
Salene of the loan. Salene will sell all ore production from the mine to the
Group. The facility granted by Nedcor to Salene is for a maximum amount of R120
million. In the event that Nedcor 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.
As a result of the slowdown of capital projects, contracts with suppliers are
being renegotiated. As a part of the negotiations certain cancellation costs may
result. The amount of this will only be known and recognised during the course
of 2004.
Aquarius Platinum (South Africa) (Proprietary) Limited holds a put option to put
their interest in the pooling and sharing arrangement to the Group in the case
of termination of that relationship. The probability of the option being
exercised is considered remote. The amount of such an obligation is dependent on
a discounted cash flow valuation at that point in time.
12. Comparative figures
Comparatives figures have been restated in accordance with the change in
accounting policy.
Corporate Governance
The Board is of the view that the Company and its subsidiaries are fully
compliant with the recommendations as set out in the Code of Corporate Practices
and Conduct contained in King 2.
Report of the Independent Auditors
To the members of
Anglo American Platinum Corporation Limited
The summarized financial statements of Anglo American Platinum Corporation
Limited and its subsidiaries set out above have been derived from the annual
financial statements of the Group for the year ended 31 December 2003. We have
audited the annual financial statements in accordance with statements of South
African Auditing Standards. In our report dated 13 February 2004, we expressed
an unqualified opinion on the financial statements from which the summarized
annual financial statements were derived.
Audit opinion
In our opinion, the accompanying summarized financial statements are consistent,
in all material respects, with the annual financial statements from which they
were derived.
For a better understanding of the scope of our audit and the Group"s financial
position, the results of its operations and cash flows for the year, the
summarized financial statements should be read in conjunction with our audit
report and the annual financial statements from which the summarized financial
statements were derived.
Deloitte & Touche
Registered Accountants and Auditors
Chartered Accountants (SA)
Johannesburg
13 February 2004
COMMENTARY
1. SAFETY
Anglo Platinum"s continuous focus on safety programmes resulted in a significant
improvement in the lost-time injury frequency rate per 200 000 hours worked
("LTIFR") for the period under review. The LTIFR was 0,7 for 2003 compared with
1,2 for 2002. Notwithstanding the overall improvement in safety, The board
reports with deep regret that 24 employees died at managed operations as a
result of work related accidents, and extends its deepest condolences to the
families, friends and colleagues of the deceased. The Group is wholly
committed, as a matter of the highest priority, to ongoing education and
improvements in safety and to eliminating fatalities at work. It is management"s
firm belief that continued focus on the Behaviour-Based Safety process will
deliver the mindset change required to reduce the number of injuries and fatal
accidents in 2004.
2. RESULTS SUMMARY
Total platinum received at the smelters, including platinum purchased from joint
venture partners, increased by 8,0%, and was equivalent to refined platinum
production of 2,36 million ounces at standard processing recoveries. 53 000 of
these ounces were permanently absorbed into the production pipeline because of
higher volumes and the new Polokwane Smelter. Refined platinum output amounted
to 2,31 million ounces, slightly ahead of the target announced in July 2003.
The temporary increase in pipeline stock levels reported with the interim
results was successfully processed by the end of 2003, resulting in a
significant increase in production and sales volumes in the second half of the
year.
The average rand / US dollar exchange rate achieved on sales for 2003 was 28,2%
lower than for 2002. Had the average rand / US dollar exchange rate been the
same as that for 2002, gross sales revenue would have been R5,72 billion higher
than the R16,51 billion recorded. Cost of sales rose to R12,19 billion, mainly
because of increased production from ramp up operations and inflationary cost
pressures. Headline earnings declined by 62,8% to R2,09 billion. Headline
earnings per share decreased by 63,0% to 972 cents per share. Dividend cover has
been maintained at 1,5 in line with last year, and accordingly a final dividend
of 270 cents per share has been declared. This brings the total dividend
declared for 2003 to 640 cents per share.
3. OPERATIONS
Mining operations
Total platinum ounces delivered to the smelters increased by 8,0% in 2003, with
the Rustenburg UG2 project, Modikwa, Bafokeng-Rasimone, Potgietersrust and Union
Section all producing more ounces than in 2002.
The increasing shift to UG2 mining resulted in a lower head grade and associated
lower concentrating recovery. This led to a 3,8% decrease in the ratio of
platinum ounces produced to tons milled in 2003, with its concomitant impact on
cost per platinum ounce produced.
Mining costs
The cash on-mine costs per ton milled at steady state operations increased by
8,6%, primarily because of the 9,5% annual wage increase negotiated in 2002,
the cost to equalise retirement fund contribution rates across the Group and
above-inflation increases in steel costs. 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 equivalent refined platinum ounce at steady state operations
increased by 12,0 %.
Cash on-mine costs at ramp-up operations increased owing to higher production.
Unit costs at these operations were relatively high as they continue to ramp up
to steady state production.
Process operations
The key feature of the performance of the process operations in 2003 is the
significant increase in smelting capacity that has been put in place with the
commissioning of the Polokwane Smelter, the Anglo Platinum Converting Process
(ACP) plant and the Slag-cleaning Furnace. The commissioning activity caused a
temporary build-up of some 160 000 equivalent refined platinum ounces at the end
of June, which were all released by the end of the year. As a result of higher
production levels and bringing Polokwane Smelter into operation, metals in the
process pipeline increased by some 53 000 equivalent refined platinum ounces.
The base and precious metals refineries performed well throughout 2003.
Process costs
During 2003 the old converters and acid plant were operated in tandem with the
new ACP converter to provide dual processing capability during the ramp-up of
the new plant. Together with the commissioning of the Polokwane Smelter, this
resulted in an increase in cash smelting costs of R269,5 million to R910,1
million.
The old converters and acid plant will be retained on standby until substituted
by a standby converter at the ACP plant in 2005, to ensure the availability of
converting capacity in the event of downtime at the new ACP converter. The
Group"s total installed smelting and converting capacity is greater than the
mines" short term requirements and consequently unit costs per ton smelted will
not reduce significantly until increased concentrate deliveries from the
expansion programme result in a more economic alignment of throughput to
capacity. Smelting costs are being vigorously reviewed to reduce them in line
with actual throughput as far as possible.
Cash treatment and refining costs increased by 5,9%, from R752,0 million to
R796.3 million. The cash treatment and refining cost per refined platinum ounce
was contained below CPIX, and increased by 3,3% per ounce.
Total operating costs
The cost of sales per refined platinum ounce sold, excluding the sales volume
and costs attributable to purchased ounces, increased by 18,3% in 2003. This is
due to the combined impact of the factors discussed above - cost increases
greater than inflation in respect of labour, steel, safety, health and training;
increased volumes at ramp-up operations with high unit costs; lower grade and
recovery owing to the ongoing increase in UG2 production; and a large increase
in smelting costs attributable to the new capacity commissioned during the year.
In addition amortisation of operating assets increased in line with the Group"s
capital expenditure programme and includes amortisation on new operations
brought into use in 2003.
Clearly, increases of this magnitude are not acceptable, particularly with the
increased pressure on margins due to the strong rand. Management has initiated a
comprehensive review of costs and structures across the Group. The short term
target of this exercise, taking into account the effect of wage increases and
contract prices that are already locked in for the first half of 2004, is to
achieve a unit cash cost increase in line with CPIX for 2004.
4. FINANCIAL RESULTS
Gross sales revenue decreased by R3,78 billion to R16,51 billion. The decrease
was caused primarily by the stronger rand (R5,72 billion), partly offset by an
increase in US dollar revenues for metals sold (R1,33 billion) and higher sales
volumes (R0,61 billion). The net sales revenue per platinum ounce sold ("basket
price") decreased by 19,3%, from R8 690 in 2002 to R7 017 in 2003.
Cost of sales rose by R2,06 billion to R12,19 billion:
Cash mining, smelting and refining costs increased by R1,97 billion to R10,73
billion as explained in the Operations section of the commentary.
Purchases of metal in concentrate increased by R169,7 million to R291,6 million,
owing mainly to higher purchases from the Modikwa Joint Venture.
Amortisation of operating assets rose by R382,8 million. Amortization of
smelting assets increased by 122,0% or R69,8 million as a result of bringing the
Polokwane Smelter and the ACP Converter into use in 2003. Amortization of mining
assets increased by R293,5 million owing to higher amortisation of the Modikwa
and the Rustenburg UG2 project, which were only in use for part of 2002, and a
general increase in amortisation charges across the operations resulting from
ongoing capital expenditure.
The value of metals in inventory increased by R584,9 million during 2003 as a
result of higher stocks and cost increases.
Other net expenditure in 2003 amounted to R269,3 million compared with R754,7
million in 2002. This primarily reflects lower foreign exchange losses resulting
from a lower appreciation of the rand than in the previous period. Profits of
R157,3 million realised on commodity contracts were largely offset by costs of
R111,4 million incurred as a result of the slow-down of the rate of
implementation of the expansion projects.
Net interest paid during the review period amounted to R236,9 million, compared
with net interest received of R155,7 million in 2002, as a result of the Group
moving into a borrowed position. Interest paid is net of R200,5 million of
interest on borrowings allocated to capital projects under construction.
5. CAPITAL EXPENDITURE
Capital expenditure amounted to R7,42 billion (2002: R5,99 billion). Expenditure
to maintain operations increased from R2,14 billion to R3,95 billion owing to
increased expenditure on projects to replace production at steady state mines,
including the Rustenburg UG2 project. Expansion capital expenditure amounted to
R3,27 billion (2002: R3,85 billion) and interest of R0,20 billion was
capitalised (2002: nil).
6. FINANCIAL STRUCTURE
During the year ended 31 December 2003, the Group moved from a net cash position
of R1,44 billion to a net debt position of R6,92 billion - a net outflow of
R8,36 billion. Cash generated by operations amounted to R3,36 billion (2002:
R9,62 billion). Payments consisted mainly of capital expenditure totalling R7,42
billion (2002: R5,99 billion), dividends of R2,73 billion (2002: R5,36 billion)
and taxation of R1,47 billion (2002: R3,30 billion).
Borrowings at the end of 2003 consist primarily of short term debt facilities. A
financing programme has been selected in conjunction with - external financiers
and with Anglo Platinum"s major shareholder, Anglo American plc. The proposed
financing programme includes the raising of R4 billion through a rights issue
and a dividend reinvestment election in respect of the final dividend for the
2003 financial year. The R4 billion is to be raised through the issue of
convertible perpetual preference shares. All existing shareholders will have the
opportunity to participate.
Anglo American plc has agreed to reinvest its portion of the Group"s final
dividend and to take up its portion of the Group"s rights issue.
7. NEW MINERALS LEGISLATION AND EMPOWERMENT OF HISTORICALLY
DISADVANTAGED SOUTH AFRICANS
Anglo Platinum continues to work closely with the Department of Minerals and
Energy and good progress is being made towards meeting the ownership and
attributable production requirements of the Mineral and Petroleum Resources
Development Act and Broad Based Economic Empowerment Charter. All of the
required mining licences in respect of "old-order" mineral rights have been
granted and the Group is preparing itself to convert these to "new-order"
rights in accordance with the requirements of the new Act. Several significant
ventures with Historically Disadvantaged South African (HDSA) partners have
commenced, and other agreements are being negotiated. Employment equity targets
are being vigorously pursued.
Anglo Platinum maintains a positive attitude towards the Minerals and Petroleum
Resources Development Act, the Mining Charter and Scorecard. The Group continues
to engage Government on the Mineral and Petroleum Royalty Bill.
8. SOCIAL RESPONSIBILITY AND HIV/AIDS
Anglo Platinum continues to invest significantly in social upliftment programmes
encompassing home ownership around the Group"s operations, local economic
development, the provision of healthcare and the economic development of areas
providing migrant labour.
The Group acknowledges the need to manage the business impacts of HIV/AIDS and a
comprehensive programme is in place to address all aspects of this pandemic.
Free antiretroviral treatment for employees was introduced in 2003.
9. PROJECTS
During 2003 a strategy review was conducted in the context of the strong rand,
which has a significant impact on operating margins, cash generation and the
funding requirements of new projects. The review confirmed Anglo Platinum"s
confidence in the robustness of current and future demand for platinum , and
accordingly Anglo Platinum remains firmly committed to expanding its production
base. However, in view of the current strength of the rand and uncertainty as to
its movements, the rate of implementation of the expansion projects has been
slowed. Production of refined platinum in 2006 is now planned to be 2,9
million ounces, which represents a compound annual production growth rate of 8%
from 2003 to 2006.
Significant progress was made with the project programme. The Polokwane
Smelter, designed to process concentrate from Eastern Limb operations, was
successfully commissioned in March. The slag-cleaning furnace at Rustenburg was
commissioned. The ACP converter plant was brought on stream and is ramping up to
full production. Phase 1 of the Western Limb Tailings Project was commissioned
ahead of schedule. Agreement was reached with Aquarius Platinum to jointly mine
contiguous properties in the Kroondal area with effect from November 2003 and
the Bafokeng-Rasimone, Rustenburg UG2 and Modikwa projects have continued to
increase production levels.
10. DIVIDEND
The Group is committed to large capital expenditures for several years in order
to increase production volumes. During this period cash generated by operations
may vary considerably, depending on short-term metal prices and the rand / US
dollar exchange rate. The declaration of cash dividends will continue to be
considered by the Board in conjunction with an evaluation of current and future
funding requirements, and will be adjusted to levels considered appropriate at
the time of the declaration. Dividends will be paid out of cash generated from
operations.
Accordingly, the Board has declared a final cash dividend of 270 cents per
ordinary share, with the option to reinvest the dividend in the company"s
equity. This brings the total dividend declared for 2003 to 640 cents per
ordinary share.
11. PROSPECTS
The Group"s refined platinum production is planned to increase to approximately
2,45 million ounces in 2004.
Platinum prices are expected to remain firm due to the fundamental strength of
demand for the metal. The market is experiencing historically high prices above
$800 per ounce after a strong rally from around $600 per ounce in May 2003. The
buoyant price is believed to be related partly to the weakness of the US dollar
relative to the major currencies and the SA rand and partly to sustained
physical offtake from all sectors, lower than expected production levels, and
anticipation of recovering economic growth around the world.
The prices of other PGMs, including palladium and rhodium, appear range bound,
although palladium could potentially benefit from investor interest in
anticipation of an increase in offtake of the metal by the automobile sector.
Fundamental trends in the base metal markets, particularly nickel, are
supportive of higher prices for these metals in 2004.
Production performance at the beginning of 2004 has been encouraging. The
planned increase in volumes and the anticipation of good US dollar metal prices
are expected to impact positively on results in 2004. Earnings remain sensitive
to the strength of the rand against the US dollar and US dollar metal prices.
Should these remain at the levels achieved so far in 2004, earnings for 2004
will be higher than they were in 2003.
R Havenstein B E Davison Johannesburg
(Chief Executive Officer) (Chairman) 13 February 2003
Declaration of ordinary dividend (No. 102) and option
to elect to reinvest dividend
Notice is hereby given that on Friday, 13 February 2004 the Board of directors
of Anglo Platinum has declared a final cash dividend of 270 cents (2002: 900
cents) per ordinary share in respect of the financial year ended 31 December
2003 (the cash dividend).
In addition, the Board has proposed that shareholders be given the option to
elect (the reinvestment election) to use the proceeds of the cash dividend to
subscribe for new ordinary shares in Anglo Platinum (the subscription shares).
The number of subscription shares to which the shareholders will become
entitled, will be determined by the ratio that 270 cents per share multiplied by
1,05 bears to the issue price. The issue price is defined as the weighted
average traded price of the ordinary shares of the Company on the JSE Securities
Exchange South Africa (JSE) for the five business days ending Thursday, 4 March
2004.
To the extent that shares cannot be subscribed for using the proceeds of the
cash dividend, that portion of the cash dividend which is insufficient to
subscribe for a whole share or an additional whole share (the cash dividend
portion) will be posted to shareholders on the payment date.
The subscription shares will be issued on Tuesday, 23 March 2004, and the
adjusted number of shares will be listed on the JSE on that date. Documentation
dealing with the subscription shares and election will be posted to shareholders
on Monday, 16 February 2004.
Only shareholders recorded in the register on Friday, 19 March 2004, will be
entitled to receive the cash dividend or be able to make the reinvestment
election.
Salient Dates for South Africa and United Kingdom 2004
Circular incorporating a form of election posted to shareholders
Monday, 16 February
Election period opens at 09:00 Monday, 16 February
Last day to trade to receive cash dividend and to be entitled to the
reinvestment election Friday, 12 March
Ordinary shares trade "ex" dividend Monday, 15 March
Maximum number of new ordinary shares listed on the JSE in respect of the
reinvestment election Monday, 15 March
Election period closes as 12:00 (see note) Friday, 19 March
Record date to receive the cash dividend for the reinvestment election
Friday, 19 March
Dividend cheques or, where applicable, share certificates and cheques in respect
of the cash dividend portion posted to certified shareholders
Tuesday, 23 March
Safe custody accounts with the Central Securities Depository Participant (CSDP)
or broker credited and/or updated Tuesday, 23 March
Results announcement published on SENS Tuesday, 23 March
Results announcement published in press Wednesday, 24 March
Adjusted number of new ordinary shares listed on the JSE on or about
Wednesday, 24 March
No dematerialization or rematerialization of share certificates may take place
between Monday, 15 March 2004, and Friday, 19 March 2004, both days inclusive.
Note:
Dematerialized shareholders are required to notify their duly appointed CSDP or
broker of their acceptance of the offer in the manner and time stipulated in the
agreement governing the relationship between the shareholder and his/her CSDP or
broker.
By order of the Board
R A VenterJohannesburg
Company Secretary13 February 2004
Annual General Meeting
The Annual General Meeting of members of Anglo American Platinum Corporation
Limited will be held on the 18th Floor, 55 Marshall Street, Johannesburg, on
Tuesday, 16 March 2004.
supplementary information
Consolidated Statistics (unaudited)
Year Year
ended ended
31 December 31 December %
Total operations 2003 2002 change
Marketing statistics
Average market
prices achieved
Platinum (US$/oz) 696 544 27,9
Palladium (US$/oz) 198 329 (39,8)
Rhodium (US$/oz) 527 831 (36,6)
Nickel (US$/lb) 4,07 3,03 34,3
Net sales revenue (US$) 948 843 12,5
per Pt ounce sold
Platinum (R/oz) 5 140 5 567 (7,7)
Palladium (R/oz) 1 459 3 403 (57,1)
Rhodium (R/oz) 3 967 8 683 (54,3)
Nickel (R/lb) 30,76 31,92 (3,6)
Net sales revenue (R) 7 017 8 690 (19,3)
per Pt ounce sold
Average exchange (R: $) 7,4055 10,3101 (28,2)
rate achieved on
sales
Exchange rate at end (R: $) 6,6679 8,5775 (22,3)
of year
Financial statistics
and ratios
Gross profit margin (%) 23,7 46,5 (49,0)
Earnings before
interest, taxation,
depreciation and (R millions) 4 578,5 9 376,1 (51,2)
amortization
(EBITDA)
Operating profit to
average operating
assets (%) 20,2 68,5 (70,5)
Return on average (%) 16,3 44,3 (63,2)
shareholders" equity
Return on capital (%) 10,5 43,1 (75,6)
employed
Interest cover - 9,6 264,6 (96,4)
EBITDA
Net debt to total (%) 34,9 (11,8) (395,8)
capital employed
Interest-bearing (%) 60,3 - 100,0
debt to
shareholders" equity
Analysis of (R millions)
operating
contribution by mine
Rustenburg Section 1 130,0 2 794,2 (59,6)
Steady State
Union Section 413,7 1 059,3 (60,9)
Amandelbult Section 2 106,7 3 886,2 (45,8)
Potgietersrust 509,9 926,1 (44,9)
Platinums
Lebowa Platinum 163,4 450,1 (63,7)
Mines
Steady state 4 323,7 9 115,9 (52,6)
operating
contribution
Bafokeng-Rasimone 120,3 433,9 (72,3)
Platinum Mine
Rustenburg UG2 66,4 451,4 (85,3)
Project
Modikwa Platinum 3,2 12,9 (75,2)
Mine
Consolidated 4 513,6 10 014,1 (54,9)
operating
contribution - all
operations
Other costs 603,7 591,3 2,1
Gross profit on 3 909,9 9 422,8 (58,5)
metal sales
Refined production
from mining
operations
Platinum (thousands) (oz) 2 264,7 2 238,5 1,2
Palladium (thousands) (oz) 1 150,6 1 103,1 4,3
Rhodium (thousands) (oz) 225,2 210,0 7,2
Gold (thousands) (oz) 114,8 106,7 7,6
Nickel (thousands) (tons) 21,9 19,4 12,9
Copper (thousands) (tons) 12,8 10,5 21,9
PGMs (thousands) (oz) 4 059,0 3 920,6 3,5
Refined production
from purchased
metals in
concentrate
Platinum (thousands) (oz) 43,1 12,6 242,1
Palladium (thousands) (oz) 40,3 12,2 230,3
Rhodium (thousands) (oz) 7,3 1,7 329,4
Gold (thousands) (oz) 1,3 0,4 225,0
Nickel (thousands) 0,2 - 100,0
(tons)
Copper (thousands) 0,1 - 100,0
(tons)
PGMs (thousands) (oz) 102,5 27,0 279,6
Total refined
production +
Platinum (thousands) (oz) 2 307,8 2 251,1 2,5
Palladium (thousands) (oz) 1 190,9 1 115,3 6,8
Rhodium (thousands) (oz) 232,5 211,7 9,8
Gold (thousands) (oz) 116,1 107,1 8,4
Nickel (thousands) 22,1 19,4 13,9
(tons)
Copper (thousands) 12,9 10,5 22,9
(tons)
PGMs (thousands) (oz) 4 161,5 3 947,6 5,4
PIPELINE
CALCULATION
Equivalent (thousands) (oz) 2 360,5 2 185,5 8,0
refined platinum
production *
Steady state (thousands) (oz) 1 831,0 1 835,6 (0,3)
operations
Rustenburg (thousands) (oz) 571,3 611,5 (6,6)
Section Steady
State
Union Section (thousands) (oz) 318,2 276,7 15,0
Amandelbult (thousands) (oz) 644,7 677,6 (4,9)
Section
Potgietersrust (thousands) (oz) 191,8 164,7 16,5
Platinums
Lebowa Platinum (thousands) (oz) 105,0 105,1 (0,1)
Mines
Ramp-up (thousands) (oz) 529,5 349,9 51,3
operations
Bafokeng-Rasimone (thousands) (oz) 183,5 161,5 13,6
Platinum Mine
Rustenburg UG2 (thousands) (oz) 255,0 161,1 58,3
Project
Modikwa Platinum (thousands) (oz) 91,0 27,3 233,3
Mine
Refined platinum (thousands) (oz) 2 307,8 2 251,1 2,5
production +
Mining (thousands) (oz) 2 264,7 2 238,5 1,2
Purchase of (thousands) (oz) 43,1 12,6 242,1
concentrate
Platinum pipeline (thousands) (oz) 52,7 (65,6)
movement
+ Refined metal produced by the refinery and appointed toll treaters from mined
material and purchased concentrate, as well as metals in product sold from the
refinery.
* Mines" production and purchases of metal in concentrate converted to
equivalent refined production using Anglo Platinum"s standard smelting and
refining recoveries.
Directors and Company Secretary
EXECUTIVE DIRECTORS:
R Havenstein (Chief Executive Officer), D T G Emmett,
R G Mills, R H H Van Kerckhoven (Belgian), A I Wood (British).
NON-EXECUTIVE DIRECTORS:
B E Davison (Chairman), L Boyd, M W King, W A Nairn,
A J Trahar, P L Zim.
INDEPENDENT NON-EXECUTIVE DIRECTORS:
T A Wixley (Deputy Chairman), C B Brayshaw, B A Khumalo,
T H Nyasulu.
ALTERNATE DIRECTORS:
A H Calver (British), J M Halhead (British), R Pilkington, C B Sheppard, V P
Uren.
Company Secretary:
R A Venter.
Registered Office
55 Marshall Street, Johannesburg, 2001
(P.O. Box 62179, Marshalltown, 2107)
Facsimile +27 11 373-5111 Telephone +27 11 373-6111
South African Registrars
Computershare Limited
(Registration No. 1958/003546/06)
70 Marshall Street, Johannesburg, 2001
(P.O. Box 61051, Marshalltown, 2107)
Facsimile +27 11 836-0792/6145 Telephone +27 11 370-7700
London Secretaries
Anglo American Services (UK) Limited,
20 Carlton House Terrace, London, SW1Y 5AN, England
Facsimile +44 207 698-8755 Telephone +44 207 698-8888
United Kingdom Registrars
Capita IRG plc, The Registry,
34 Beckenham Road, Beckenham, Kent, BR3 4TU, England
Facsimile +44 207 478-7717 Telephone +44 207 478-8241
Internet Address: http://www.angloplatinum.com
E-mail enquiries should be directed to: mmtakati@angloplat.com
