| Mon 14 Feb 2005, 9:07 | | RESULTS FOR THE YEAR ENDED 31 DECEMBER 2004 |
|
Anglo Platinum - Audited results for the year ended 31 December 2004
Anglo American Platinum Corporation Limited and its subsidiaries
(`Anglo Platinum`)
(Incorporated in the Republic of South Africa)
(Registration number 1946/022452/06)
JSE Code: AMS ISIN: ZAE000013181
AMSP ISIN: ZAE000054474
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2004
* Headline earnings per ordinary share up 17%
* Refined Pt production increased by 6,3%
Consolidated Income Statement (audited)
Year Year
ended ended
31 December 31 December %
R millions Notes 2004 2003 Change
GROSS SALES REVENUE 19 624,8 16 508,6
Commissions paid (357,8) (408,2)
NET SALES REVENUE 19 267,0 16 100,4 20%
COST OF SALES (Segmental (14 639,9) (12 190,5) 20%
information)
GROSS PROFIT ON METAL SALES 4 627,1 3 909,9 18%
Other net expenditure 5 (663,9) (269,3)
Market development and (194,1) (257,5)
promotional expenditure
OPERATING PROFIT 3 769,1 3 383,1 11%
Interest expensed 6 (354,3) (355,2)
Interest and dividends 6 166,1 118,3
received
Income from associates 50,7 35,0
PROFIT BEFORE TAXATION 3 631,6 3 181,2 14%
Taxation (1 107,1) (1 089,3) 2%
NET PROFIT 2 524,5 2 091,9 21%
HEADLINE EARNINGS 2 617,1 2 091,7 25%
Number of ordinary shares 217,4 215,4
in issue (millions)
Weighted average number of 216,5 215,1
ordinary shares in issue
(millions)
Earnings per ordinary share
(cents)
- Basic 1 095,5 972,5 13%
- Headline 1 138,2 972,4 17%
- Diluted (basic) 1 091,4 971,2 12%
- Diluted (headline) 1 131,9 971,1 17%
Dividends per ordinary 735,0 640,0 5%
share (cents)
- Interim 400,0 370,0
- Final 335,0* 270,0
Dividend per preference 322,0 -
share (cents)
Dividend cover per ordinary 1,5 1,5
share (headline earnings)
Reconciliation between
basic and headline earnings
Net profit 2 524,5 2 091,9 21%
Less: Declared and
undeclared cumulative
preference share
dividends and related STC (152,8) -
Basic earnings attributable 2 371,7 2 091,9 13%
to ordinary shareholders
Adjustments (after tax
where applicable):
Profit on disposal of 5 (5,8) (64,6)
mineral rights
Impact of assets exchanged 5 68,3 -
Property, plant and (65,4) -
equipment
Mineral rights 133,7 -
Net goodwill amortization 1,5 1,5
Loss on disposal, and 28,6 62,9
scrapping of property,
plant and equipment
Headline earnings 2 464,3 2 091,7 18%
attributable to ordinary
shareholders
Add: Declared and
undeclared cumulative
preference share
dividends and related STC 152,8 -
Headline earnings 2 617,1 2 091,7 25%
* Proposed dividend.
Segmental Information* (audited)
Purchased
metals in
R millions Mined concentrate Total
Year ended 31 December 2004
GROSS SALES REVENUE 18 720,4 904,4 19 624,8
Commissions paid (340,7) (17,1) (357,8)
NET SALES REVENUE 18 379,7 887,3 19 267,0
COST OF SALES (13 791,7) (848,2) (14 639,9)
On-mine (11 555,0) - (11 555,0)
Cash operating costs (10 355,6) - (10 355,6)
Amortization (1 199,4) - (1 199,4)
Purchase of metals in concentrate (964,9) (964,9)
Smelting (1 128,5) (70,0) (1 198,5)
Cash operating costs (940,7) (58,4) (999,1)
Amortization (187,8) (11,6) (199,4)
Treatment and refining (873,8) (45,8) (919,6)
Cash operating costs (767,3) (40,0) (807,3)
Amortization (106,5) (5,8) (112,3)
Increase in metal inventories 482,6 235,0 717,6
Other costs (717,0) (2,5) (719,5)
GROSS PROFIT ON METAL SALES 4 588,0 39,1 4 627,1
Gross profit margin (%) 24,5 4,3 23,6
Cost of sales per Pt ounce sold (R) 5 896 7 206 5 958
Year ended 31 December 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 costs (9 027,1) - (9 027,1)
Amortization (941,8) - (941,8)
Purchase of metals in concentrate - (291,6) (291,6)
Smelting (1 015,9) (21,2) (1 037,1)
Cash operating costs (891,5) (18,6) (910,1)
Amortization (124,4) (2,6) (127,0)
Treatment and refining (857,2) (16,9) (874,1)
Cash operating costs (781,1) (15,2) (796,3)
Amortization (76,1) (1,7) (77,8)
Increase in metal inventories 511,0 73,9 584,9
Other costs (592,1) (11,6) (603,7)
GROSS PROFIT ON METAL SALES 3 839,0 70,9 3 909,9
Gross profit margin (%) 23,8 20,4 23,7
Cost of sales per Pt ounce sold (R) 5 305 5 735 5 313
* 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 separate 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 21,5 754,0 - 12 408,6 13 184,1
December 2002
Net profit 2 091,9 2 091,9
After-tax changes in (164,0) (164,0)
forward metal prices
Ordinary dividends (2 731,6) (2 731,6)
paid in cash
Ordinary share - * 42,3 42,3
capital issued
Balance as at 31 21,5 796,3 (164,0) 11 768,9 12 422,7
December 2003
Net profit 2 524,5 2 524,5
Amount charged to
gross sales revenue
and
taxation 164,0 164,0
Ordinary and
preference dividends
paid in
cash (1 579,6) (1 579,6)
Ordinary share 0,2 516,5 516,7
capital issued
Proceeds on 0,4 3 923,9 3 924,3
preference shares
issued
Preference share 0,4 3 999,6 4 000,0
capital issued
Less: Share issue (75,7) (75,7)
expenses
Balance as at 31 22,1 5 236,7 - 12 713,8 17 972,6
December 2004
* Less than R50 000.
Consolidated Balance Sheet (audited)
As at As at
31 December 31 December
R millions Notes 2004 2003
ASSETS
NON-CURRENT ASSETS 24 907,3 22 564,6
Property, plant and equipment 17 757,3 14 550,8
Capital work-in-progress 6 124,4 7 249,2
Investment in associates 7 435,3 484,0
Originated loans 233,0 184,1
Prepaid operating lease rentals and 357,3 96,5
royalties
CURRENT ASSETS 7 638,1 5 295,7
Inventories 3 192,3 2 439,6
Accounts receivable 2 081,3 2 286,7
Cash and cash equivalents 2 364,5 569,4
TOTAL ASSETS 32 545,4 27 860,3
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Share capital - Ordinary and preference 22,1 21,5
Share premium - Ordinary and preference 5 236,7 796,3
Unrealized hedging deficit - (164,0)
Accumulated profits before proposed 12 713,8 11 768,9
ordinary dividend and related STC
Accumulated profits after proposed 11 870,5 11 114,6
dividends and related STC
Proposed ordinary dividend 819,3 654,3
and related STC 91,0 72,7
Undeclared cumulative preference share 24,0 -
dividend and related STC
SHAREHOLDERS` EQUITY 17 972,6 12 422,7
NON-CURRENT LIABILITIES 6 629,4 5 631,5
Deferred taxation 5 172,2 4 438,9
Environmental obligations 362,7 308,7
Employees` service benefit obligations 648,5 559,6
Obligations due under finance leases 446,0 324,3
CURRENT LIABILITIES 7 943,4 9 806,1
Interest-bearing borrowings 9 5 347,9 7 168,1
Accounts payable 2 143,9 1 903,4
Derivative financial liabilities 10 28,1 336,2
Taxation 423,5 398,4
TOTAL EQUITY AND LIABILITIES 32 545,4 27 860,3
Consolidated Cash Flow Statement (audited)
Year Year
ended ended
31 December 31 December
R millions 2004 2003
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers 19 619,1 15 476,5
Cash paid to suppliers and employees (14 159,7) (12 093,1)
Cash from operations 5 459,4 3 383,4
Interest paid (net of interest capitalized) (274,5) (277,4)
Taxation paid (392,4) (1 474,9)
Net cash from operating activities 4 792,5 1 631,1
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of property, plant and equipment (4 260,3) (7 423,6)
(inclusive of interest capitalized)
Proceeds from sale of plant, equipment and 39,5 134,8
mineral rights
Investment in associates (0,1) (1,5)
Interest received 156,0 106,7
Increase in originated loans (48,9) (24,1)
Growth in Platinum Producers` Environmental 10,1 11,2
Trust
Capital reduction by Northam Platinum Limited 10,4 28,7
Dividends received 54,7 47,3
Net cash used in investing activities (4 038,6) (7 120,5)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issue of ordinary and 0,6 -*
preference share capital
Increase in share premium 4 440,4 42,3
(Repayment of)/raised from current interest- (1 820,2) 7 168,1
bearing borrowings
Ordinary and preference dividends paid (1 579,6) (2 731,6)
Net cash from financing activities 1 041,2 4 478,8
Net increase/(decrease) in cash and cash 1 795,1 (1 010,6)
equivalents
Cash and cash equivalents at beginning of year 569,4 1 580,0
Cash and cash equivalents at end of year 2 364,5 569,4
MOVEMENT IN NET DEBT
Net (debt)/cash at beginning of year (6 923,0) 1 443,6
Net cash from operating activities 4 792,5 1 631,1
Net cash used in investing activities (4 038,6) (7 120,5)
Other 2 739,7 (2 877,2)
Net debt at end of year (3 429,4) (6 923,0)
Made up as follows:
Cash and cash equivalents 2 364,5 569,4
Obligations due under finance leases (446,0) (324,3)
Interest-bearing borrowings (5 347,9) (7 168,1)
(3 429,4) (6 923,0)
* 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, as well as South African Statements of
Generally Accepted Accounting Practice, the requirements of the South African
Companies Act, and the disclosure requirements of 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 2003.
2. Change in accounting policy
The Group adopted IFRIC 1 - Changes in existing decommissioning, restoration and
similar liabilities, before its effective date. This resulted in the recognition
of a gain of R26,7 million (after taxation of R11,4 million). The cumulative
effect of this change was recognized in the current year`s profit, but prior
years` results were not restated because the effect this change has on those
results is considered immaterial.
Year ended Year ended
31 December 31 December
2004 2003
Rm Rm
3. Directors` emoluments
Fees, salaries, benefits, bonuses and 27,4 33,5
other
Profit on share options exercised 10,8 16,8
38,2 50,3
4. Amortization and depreciation of
property, plant and equipment
Amortization of property, plant and
equipment consists of the following
categories:
Mining and process 1 511,1 1 146,6
Mining 1 199,4 941,8
Smelting 199,4 127,0
Treatment and refining 112,3 77,8
Amortization included in other costs 15,0 38,2
Depreciation - non-mining assets 46,2 41,8
1 572,3 1 226,6
5. Other net expenditure
Other net (expenditure)/income consists
of the following principal categories:
Realized and unrealized foreign exchange (266,3) (417,2)
losses
Project maintenance costs* (130,9) (111,4)
Restructuring costs** (191,0) -
Impact of assets exchanged (97,6) -
Property, plant and equipment 93,4 -
Mineral rights (191,0) -
Profit on commodity contracts 0,3 157,3
Profit on disposal of mineral rights 5,8 64,6
Other - net 15,8 37,4
(663,9) (269,3)
* Project maintenance costs comprize assets scrapped as a result of the slow-
down of capital projects, costs incurred to maintain land held for future
projects and costs to keep projects on care and maintenance.
** Restructuring costs comprize retrenchment costs and consultant fees.
Notes (audited) - continued
Year ended Year ended
31 December 31 December
2004 2003
Rm Rm
6. Interest expensed and, interest and dividends
received
Interest expensed (359,4) (286,9)
Interest paid (557,1) (487,4)
Less: Capitalized 197,7 200,5
Time value of money adjustment to environmental 5,1 (68,3)
obligations
Decommissioning costs 9,2 (62,9)
Time value adjustment (28,9) (62,9)
Adoption of IFRIC 1 (See change in accounting 38,1 -
policy - Note 1)
Restoration costs (4,1) (5,4)
(354,3) (355,2)
Interest received 156,0 106,7
Growth in Platinum Producers` Environmental Trust 10,1 11,2
Dividends received - 0,4
166,1 118,3
7. Investment in associates
Listed - Ordinary shares (Market value: R453,3 229,3 240,6
million (2003: R515,8 million))
Unlisted (Directors` valuation: R206,0 million 206,0 243,4
(2003: R243,4 million))
Ordinary shares 130,2 159,8
Redeemable preference shares 75,8 83,6
435,3 484,0
8. Preference share capital
On 31 May 2004 the Company issued 40 000 000 convertible perpetual cumulative
preference shares, with a par value of one cent each, at R100 per share, giving
rise to an increase of R3 923,9 million in share premium after share issue
expenses of R75,7 million.
Dividends, if declared, are paid six-monthly in arrears at 6,38% per annum. The
dividend dates are 31 May and 30 November.
The preference shares are convertible into ordinary shares at a conversion price
of R288,43, at the election of the shareholder, at any time on or before the
final conversion date, being the fifth anniversary of the issue date, 31 May
2009. Thereafter, the preference shares are callable, by the Company, either
through redemption or acquisition into perpetuity. Preference shares which are
not converted nor called by the Company will continue to exist as preference
shares.
9. Interest-bearing borrowings
2004 2004 2003 2003
Facility Utilized Facility Utilized
Rm Rm Rm Rm
Bank overdrafts:
Committed 11 556,6 4 685,3 9 436,6 6 688,4
Uncommitted 1 070,0 662,6 737,0 479,7
12 626,6 5 347,9 10 173,6 7 168,1
The weighted average borrowing
rate at 31 December 2004 was
8,0763% (2003: 8,6925%.)
Borrowing powers
The borrowing powers in terms of the Articles of Association of the Company and
its subsidiaries are unlimited.
2004 2003
Rm Rm
10. Derivative financial liabilities
Fair value of forward foreign exchange contracts 25,1 90,4
Fair value of forward metal contracts designated as - 245,8
cash flow hedges
Other derivatives 3,0 -
28,1 336,2
11. Commitments
Mining and process property, plant and equipment
Contracted for 1 308,0 1 800,0
Not yet contracted for 5 953,6 11 943,4
Authorized by the Directors 7 261,6 13 743,4
Allocated for expansion of capacity 2 299,4 7 424,8
- within one year 1 201,9 2 844,3
- thereafter 1 097,5 4 580,5
Maintenance of capacity 4 962,2 6 318,6
- within one year 2 174,8 3 457,9
- thereafter 2 787,4 2 860,7
Other
Operating lease rentals - buildings 666,8 711,5
Due within one year 44,8 35,6
Due within two to five years 173,6 160,5
Thereafter 448,4 515,4
Information Technology Service Providers 100,8 126,6
Due within one year 38,9 33,4
Due within two to five years 61,9 93,2
These commitments will be funded from existing cash resources, future operating
cash flows, borrowings and any other funding strategies 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
assets 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.
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.
Aquarius Platinum (South Africa) (Proprietary) Limited holds an option to put
its interest in the pooling and sharing agreement 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 of their interest at that point in time.
13. Comparative figures
Reimbursive rights previously set-off against employees` service benefit
obligations have been reformatted and are reflected as orginated loans, together
with the Group`s investment in the Platinum Producers` Environmental Trust,
which was previously presented as a separate asset.
14. 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 II, except for the requirement that the
remuneration committee should comprize of a majority of independent Non-
executive Directors. The Remuneration Committee presently comprizes Messrs T A
Wixley (Chairman), C B Brayshaw, B E Davison and A J Trahar.
15. 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 2004. We have
audited the annual financial statements in accordance with statements of South
African Auditing Standards. In our report dated 11 February 2005, we expressed
an unqualified opinion on the financial statements from which the summarized
annual financial statements were derived.
16. 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 period and 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. The audit report is available for inspection at the
Company`s registered office.
Deloitte & Touche
Registered Accountants and Auditors
Chartered Accountants (SA)
Johannesburg
11 February 2005
Commentary
1. FINANCIAL RESULTS
The Group showed a significant improvement in performance in 2004 compared with
2003 as a result of higher rand prices realized on metals sold and increased
production and sales volumes. Headline earnings for 2004 were R2,62 billion,
25,1% up on the headline earnings of R2,09 billion for 2003. Headline earnings
attributable to ordinary shareholders, which exclude preference share dividends,
increased to R2,46 billion, 17,8% above those reported for 2003, while headline
earnings per ordinary share rose by 17,1% to 1 138 cents. A final dividend of
335 cents per share has been declared.
Gross sales revenue increased by R3,12 billion to R19,62 billion. The increase
was due to improved US dollar metal prices achieved, which contributed R3,74
billion, higher volumes of metals produced and sold, which contributed R1,61
billion, offset by a R2,23 billion reduction in rand revenues as a result of an
average 13,5% stronger rand when compared to the US dollar.
Cost of sales rose by R2,45 billion to R14,64 billion, principally as a result
of the following:
* Cash mining, smelting and refining costs increased by R1,43 billion to
R12,16 billion, as detailed in the Operations section of this commentary.
* Purchases of metal in concentrate increased by R673,3 million to R964,9
million, owing mainly to higher volumes of metal purchased from the
Bafokeng-Rasimone and Modikwa joint ventures. The Bafokeng-Rasimone joint
venture became operational in March 2004 and accordingly 50% of the metal
produced at the Bafokeng-Rasimone Platinum Mine from March to December 2004
was purchased by Anglo Platinum from the joint venture partner, Royal
Bafokeng Resources (Pty) Limited. Prior to March 2004 the full output of
the Bafokeng-Rasimone Platinum Mine was attributable to Anglo Platinum as
mining production.
* As a result of increased utilization of the Group`s expanded smelting and
refining operations, the commencement of the Western Limb Tailings
Retreatment plant in 2004 and ongoing capital expenditure, amortization of
operating assets rose by R364,5 million to R1 511,1 million.
* The value of metals in inventory increased by R717,6 million during 2004 as
a result of higher quantities of stock in the pipeline at the end of
December 2004 compared with the end of December 2003 and to cost increases
which affected the unit cost at which metal stocks are valued.
Other net expenditure for 2004 amounted to R663,9 million, compared with R269,3
million in 2003. Restructuring costs, comprizing consultants fees and
retrenchment costs, amounted to R191,0 million. Direct labour cost savings
resulting from the restructuring are estimated at R100 million per year from
2005. Profits realized on palladium forward sale contracts of R157,3 million in
2003 were not repeated in 2004. Other variances included those arising from
exchanges of assets in connection with joint ventures, lower profits on the
disposal of mineral rights and lower foreign exchange losses.
Net interest expensed during the review period amounted to R188,2 million,
compared with R236,9 million in 2003. Interest paid was net of R197,7 million
(2003: R200,5 million) of interest on borrowings capitalized to capital projects
under development.
2. SAFETY
Anglo Platinum continues to invest significant time, effort and money in a
comprehensive suite of safety initiatives, including the Behaviour-Based Safety
initiative. The lost-time injury frequency rate (LTIFR), including restricted
work cases where individuals are able to work but unable to perform the full
extent of their duties, improved by 14% compared with 2003.
Despite the intense focus on safety, work-related accidents claimed the lives of
24 employees and contractors at managed operations, and 3 employees of the
Modikwa Platinum Joint Ventures, in 2004. Management and the Board extend their
sincere condolences to the families, friends and colleagues of the deceased.
Improving safety performance remains Anglo Platinum`s highest priority.
3. OPERATIONS
Refined platinum production for 2004 rose by 145 700 ounces, or 6,3%, to 2 453
500 ounces. The cash operating cost per equivalent refined platinum ounce
(equivalent ounces are mine ounces converted to expected refined ounces)
increased by 9,2% (7,2% if the impact of the wage strike on production is
excluded) which comprizes an 11,2% unit cost increase at the mines offset by
unit cost reduction across the smelting and refining operations.
Mining and retreatment operations
Equivalent refined production from the mines managed by Anglo Platinum and its
joint venture partners increased by 93 200 ounces, or 3,9%, mainly as a result
of additional production from the Western Limb Tailings Retreatment operation
and the Modikwa Platinum Mine. In addition the Kroondal Platinum Mine venture
jointly owned with Aquarius Platinum (South Africa) Limited contributed some 74
000 equivalent refined platinum ounces which were sold to Impala Platinum in
concentrate form in terms of Kroondal`s existing off-take commitment. Production
in the second half of the year was disrupted by the wage strike in October which
affected the Rustenburg, Union, Amandelbult and Bafokeng-Rasimone mines and
resulted in the loss of some 50 000 equivalent refined platinum ounces.
Tighter safety standards have been evolved to accomodate changing mining and
geological conditions underground. Where necessary production was and will
continue to be stopped to ensure strict compliance with them.
The increase in the overall unit cost for mining and processing operations of
9,2% was largely due to an 11,2% increase in the cash cost per equivalent
refined platinum ounce across the mining operations. (9,2% if the impact of the
wage strike on production is excluded). This increase is principally as a result
of the unit cost increases at Amandelbult, Union and Rustenburg. Amandelbult`s
cost efficiency was adversely affected by reduced production as a result of the
strike and by more difficult geological conditions which, while anticipated, had
a greater impact than expected. At Union diminishing low cost surface ounces
were replaced with more expensive ounces from the new decline shafts.
Rustenburg`s unit cost performance was negatively affected by the strike and the
ongoing increase in the proportion of UG2 material mined as available Merensky
ore reserves diminish.
Process operations
The Anglo Platinum Converting Process (`ACP`) Plant performed well throughout
2004, achieving the planned volume build-up and reducing sulphur emissions
significantly. The old Pierce-Smith convertors were placed on cold stand-by in
the first half of the year. The subsequent Waterval Smelter site rehabilitation
resulted in a significant recovery of metals.
Polokwane Smelter had a good year overall, demonstrating a steady increase in
throughput and recoveries in line with expectations, notwithstanding a
controlled shutdown for repairs in September when an imminent cooler failure was
detected. The smelter was brought back on line in November and achieved a rapid
build-up in production, enabling the Group to meet its original production
target of 2 450 000 ounces.
At the base and precious metals refineries, de-bottlenecking projects have kept
pace with the increasing production volumes and these operations demonstrated
that increased throughput can be achieved at low incremental operating cost.
This resulted in a decrease in unit costs in 2004.
The cash smelting, treatment and refining cost per equivalent refined platinum
ounce declined mainly owing to the increase in production volumes and to cost
optimization efforts. This reduced the overall unit cost increase by 2,0% to
9,2%, or 7,2% if the effect of the strike is excluded.
4. PROJECTS
Anglo Platinum remains confident of the robustness of current and future demand
for platinum and will continue its expansion programme. However, the continuing
strength of the rand against the US dollar has reduced the ability of new
projects to meet the Group`s required hurdle rates, and therefore the rate of
implementation of projects has been adjusted. The rate of expansion will be
reviewed on an ongoing basis, with particular emphasis on future rand revenue
streams, to ensure that returns are maintained and shareholder value is
enhanced.
In line with Group`s stated policy of implementing only those projects which
meet its investment hurdle rate, and with the unlikely prospect of higher rand
prices in the short term, the rate of implementation of the expansion programme
has been adjusted. Current plans for 2005 indicate capital expenditure of R6
billion and refined platinum production of 2,6 million ounces. While we remain
flexible with regard to the rate of expansion, the revised implementation is
expected to result in refined platinum production in 2006 of between 2,7 and 2,8
million ounces.
Anglo Platinum`s production volumes in 2005 and 2006 when viewed in the context
of the current platinum supply/demand balance, should not place additional
upward pressure on the metal price.
5. CAPITAL EXPENDITURE
Total capital expenditure amounted to R4,61 billion (2003: R7,60 billion).
Expenditure to maintain operations decreased to R2,68 billion (2003: R4,13
billion) and expansion expenditure amounted to R1,73 billion (2003: R3,27
billion). Interest of R197,7 million was capitalized (2003: R200,5 million).
The decrease in capital expenditure in 2004 was a result of the ongoing focus on
capital optimization to ensure that capital expenditure is reduced where
appropriate and deferred where possible. It is anticipated that capital
expenditure for 2005 will amount to some R6 billion, but this remains subject to
the ongoing review of the project programme.
6. CASH FLOWS
Net debt decreased by R3,49 billion to R3,43 billion during 2004. The rights
offer in May 2004 raised R3,92 billion, net of issue costs. Cash generated by
operations amounted to R5,46 billion. Cash outflows consisted mainly of capital
expenditure (R4,26 billion), dividend payments (R1,58 billion) interest payments
(R0,27 billion) and taxation payments (R0,39 billion).
Ordinary dividends of R1,45 billion were paid, of which R0,48 billion was re-
invested at the election of shareholders. The first dividend on the preference
shares issued in May 2004 absorbed R0,13 billion.
7. NEW MINERALS LEGISLATION AND EMPOWERMENT OF HISTORICALLY DISADVANTAGED
SOUTH AFRICANS
Good progress is being made towards meeting the requirements of the Mineral and
Petroleum Resources Development Act and Broad-based Economic Empowerment
Charter. Anglo Platinum continues to work closely with the Department of
Minerals and Energy in this regard. The Group lodged several applications during
the year to convert `old-order` rights to `new-order` rights in accordance with
the requirements of the new Act.
8. SOCIAL RESPONSIBILITY AND HIV/AIDS
Anglo Platinum continues to invest significantly in social upliftment
programmes, including home ownership around the Group`s operations, local
economic development, the provision of healthcare and the economic development
of areas providing migrant labour. A total of R92,1 million was spent on these
activities in 2004.
An amount of R30 million has been committed to facilitate the building of 3 000
houses in the vicinity of the Group`s operations over the next three years.
The Group manages the impact of HIV/AIDS through a comprehensive programme. The
provision of free antiretroviral treatment for employees, introduced in 2003,
and the wellness programme started in 2004, are achieving good results.
9. DIVIDEND
Ordinary dividends are declared in the light of current and future funding
requirements and are paid out of cash generated from operations.
The Board has declared a final ordinary dividend of 335 cents per share. This
brings the total ordinary dividend declared for 2004 to 735 cents per share,
which is 14,8% more than the corresponding figure for 2003. Dividend cover has
been maintained at 1,5.
A preference dividend of 322 cents per preference share was declared and paid in
November 2004.
10. PROSPECTS
Operating efficiencies and unit costs remain key focus areas for the Group.
The weakness of the US dollar is reflecting in higher US dollar prices for many
commodities, including platinum. Demand for the metal continues to be strong
and, given the existing currency environment and the outlook for supplies, is
supportive of platinum prices at levels of $800 and above. The substantial
demand from the Chinese jewellery industry is proving resilient at these prices.
Palladium consumption continues to grow. The overhang of stock however, should
prevent the price from firming to any significant extent.
Rhodium prices have risen recently in response to demand from the autocatalyst
and glass sectors. Prices are expected to remain firm in the face of strong
demand and limited availability.
Notwithstanding the steady increase in production and sales volumes expected in
2005, the volatility of the rand/US dollar exchange rate make it difficult to
predict the level of earnings for 2005.
R Havenstein B E Davison Johannesburg
(Chief Executive Officer) (Chairman) 11 February 2005
Declaration of final ordinary dividend (No. 104)
Notice is hereby given that a final dividend of 335 cents (2003: 270 cents) per
ordinary share, in the currency of the Republic of South Africa, has been
declared in respect of the financial year ended 31 December 2004. The dividend
is payable to shareholders recorded in the books of the Company at the close of
business on Friday, 18 March 2005.
The salient dates for the final ordinary dividend are as follows:
Salient Dates for South Africa and United Kingdom 2005
Last day to trade (cum dividend) Friday, 11 March
First day of trading (ex dividend) Monday, 14 March
Currency conversion date (for sterling payments from Tuesday, 15 March
London)
Record date Friday, 18 March
Payment date Tuesday, 22 March
Share certificates may not be dematerialized or re-materialized between Monday,
14 March 2005 and Friday, 18 March 2005, both days inclusive, nor may transfers
take place between the South African and United Kingdom share registers during
this period.
No convertible perpetual cumulative preference shares may be converted into
ordinary shares during the period Monday, 14 March 2005 and Friday, 18 March
2005.
On Tuesday, 22 March 2005, the dividend will be electronically transferred to
the bank accounts of all certificated shareholders where this facility is
available. Where electronic fund transfer is not available or desired, cheques
dated 22 March 2005 will be posted on that date. Dematerialized shareholders
will have their accounts at their CSDP or broker credited on 22 March 2005.
Shareholders registered on the United Kingdom section of the register will be
paid the dividend in pounds sterling at the rate of exchange determined on
Tuesday, 15 March 2005.
A further announcement stating the rand/sterling conversion rate will be
released through the relevant South African and United Kingdom news services on
Wednesday, 16 March 2005.
The dividend is payable subject to conditions which may be inspected at or
obtained from the Company`s Johannesburg Office or from its London Secretaries.
By order of the Board
I G Acres
For and on behalf of
Anglo Platinum Management Services (Proprietary) Limited Johannesburg
Company Secretary
11 February 2005
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, 29 March 2005 at 14:00.
Supplementary Information
Consolidated Statistics (unaudited)
Year Year
ended ended
31 December 31 December %
Total operations 2004 2003 change
Marketing statistics
Average market prices achieved
Platinum (US$/oz) 842 696 21,0
Palladium (US$/oz) 228 198 15,2
Rhodium (US$/oz) 933 527 77,0
Gold (US$/oz) 411 366 12,3
Nickel (US$/lb) 5,92 4,07 45,5
Copper (US$/lb) 1,25 0,77 62,3
Net sales revenue per Pt ounce (US$) 1 194 948 26,0
sold
Net sales revenue per PGM (US$) 668 526 27,0
ounce sold
Platinum (R/oz) 5 397 5 140 5,0
Palladium (R/oz) 1 458 1 459 (0,1)
Rhodium (R/oz) 5 917 3 967 49,2
Gold (R/oz) 2 627 2 728 (3,7)
Nickel (R/lb) 38,04 30,76 23,7
Copper (R/lb) 7,92 5,74 38,0
Net sales revenue per Pt ounce (R) 7 649 7 017 9,0
sold
Net sales revenue per PGM (R) 4 278 3 896 9,8
ounce sold
Average exchange rate achieved (R : $) 6,4055 7,4055 (13,5)
on sales
Exchange rate at end of period (R : $) 5,6450 6,6679 (15,3)
Financial statistics and
ratios
Gross profit margin (%) 23,6 23,7 (0,4)
Earnings before interest,
taxation, depreciation
and amortisation (EBITDA) (R millions) 5 392,1 4 578,5 17,8
Operating profit to average (%) 17,6 20,2 (12,9)
operating assets
Return on average (%) 16,2 16,3 (0,6)
shareholders` equity
Return on capital employed (%) 11,2 10,5 6,7
Interest cover - EBITDA 9,9 9,6 3,1
Net debt to total capital (%) 15,6 34,9 (55,3)
employed
Interest-bearing debt to (%) 32,2 60,3 (46,6)
shareholders` equity
Net asset value per share (R) 82,7 57,7 43,3
Cost of sales per Pt oz sold (R) 5 958 5 313 12,1
Cash operating cost per
equivalent refined Pt oz
(excluding ounces from
purchased concentrate
and associated costs) 5 049 4 622 9,2
Analysis of operating (R millions)
contribution by mine
Rustenburg Section steady- 1 539,8 1 130,0 36,3
state
Union Section 415,7 413,7 0,5
Amandelbult Section 2 068,2 2 106,7 (1,8)
Bafokeng-Rasimone Platinum 226,3 - -
Mine***
Potgietersrust Platinums 580,8 509,9 13,9
Lebowa Platinum Mines 218,6 163,4 33,8
Kroondal Pooling & Sharing 148,9 - -
Agreement
Western Limb Tailings 134,8 - -
Retreatment
Steady-state operating 5 333,1 4 323,7 23,3
contribution
Bafokeng-Rasimone Platinum - 120,3 -
Mine***
Rustenburg UG2 Project 10,6 66,4 (84,0)
Modikwa Platinum Mine 2,9 3,2 (9,4)
Consolidated operating 5 346,6 4 513,6 18,5
contribution - all operations
Other costs 719,5 603,7 19,2
Gross profit on metal sales 4 627,1 3 909,9 18,3
* Steady-state from January
2004
Refined production from mining
operations
Platinum (thousands) (oz) 2 326,8 2 264,7 2,7
Palladium (thousands) (oz) 1 226,7 1 150,6 6,6
Rhodium (thousands) (oz) 239,8 225,2 6,5
Gold (thousands) (oz) 104,2 114,8 (9,2)
Nickel (thousands) (tons) 21,2 21,9 (3,2)
Copper (thousands) (tons) 12,2 12,8 (4,7)
PGMs (thousands) (oz) 4 182,4 4 059,0 3,0
Refined production from
purchased metals in
concentrate
Platinum (thousands) (oz) 126,7 43,1 194,0
Palladium (thousands) (oz) 84,0 40,3 108,4
Rhodium (thousands) (oz) 13,5 7,3 84,9
Gold (thousands) (oz) 5,7 1,3 338,5
Nickel (thousands) (tons) 1,1 0,2 450,0
Copper (thousands) (tons) 0,7 0,1 600,0
PGMs (thousands) (oz) 244,0 102,5 138,0
Total refined production
*
Platinum (thousands) (oz) 2 453,5 2 307,8 6,3
Palladium (thousands) (oz) 1 310,7 1 190,9 10,1
Rhodium (thousands) (oz) 253,3 232,5 8,9
Gold (thousands) (oz) 109,9
