Angloplat gets vote of confidence
February 17, 2004
By Sherilee Bridge
Johannesburg - Anglo American would take up 74 percent of the R4 billion rights issue by Anglo Platinum (Angloplat) to show its support for the world's biggest platinum producer's expansion plans, Angloplat said yesterday.
Anglo American, the principal shareholder in Angloplat, increased its stake from 72.2 percent to 74 percent by agreeing to reinvest its portion of Angloplat's 2003 final dividend back into the company in exchange for shares.
Yesterday Angloplat declared a final dividend of R2.70, with cover of 1.5 times, after it said its profit plunged 63.5 percent to R2.09 billion in the 12 months to December.
The platinum producer, one of the country's primary exporters, laid the blame for the sag in earnings squarely on the stronger rand and additional costs associated with production.
Roeland van Kerckhoven, the executive director finance at Angloplat, said the strength of the rand against the dollar alone made R3.3 billion dent.
Almost all of Angloplat's annual production of 2.31 million ounces comes from South Africa. The group planned to increase production to 2.45 million ounces this year despite saying last year that it would slow down spending on capital projects.
The company has R7.25 billion worth of capital work in progress, and a further R6.5 billion would be spent this year.
But the new production from operations now in ramp-up phase, and a 12.4 percent rise in the platinum group metal basket price from $842 to $947 an ounce, did little to offset higher production costs.
Wage increases above inflation and rising steel prices contributed to the earnings fall, Van Kerckhoven said.
Net sales revenue was 18 percent down at R16.1 billion.
The company continued to take on more debt. Angloplat started the year with R1.4 billion in cash and ended 2003 with net borrowings of R6.1 billion.
The company felt that, instead of taking on further debt, it was prudent to proceed with the rights issue as a means of bolstering its balance sheet.
Raising R4 billion through the issue of convertible perpetual preference shares would give the company enough flexibility to fund the remainder of its capital spending commitments.
Angloplat said an increase of more than 10 percent in the platinum group metal basket price from R7 017 an ounce to R7 719 an ounce would wipe R1.4 billion off its debt. At noon yesterday, the basket price stood at R7 800.
The company remains bullish. Supply and demand dynamics indicate that the high metal prices can be sustained.
Shares in Angloplat dipped 55c to close at R161 and shares in Anglo American slid R3.50 to close at R300 in Johannesburg yesterday.
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