| Mon 12 Feb 2007, 8:59 | | AMS - AMSP - Anglo Platinum - Abridged Financial R |
|
AMS AMSP
ANANP
AMS - AMSP - Anglo Platinum - Abridged Financial Results For The Year
Ended 31 December 2006
Anglo Platinum Limited and its Subsidiaries
(Incorporated in the Republic of South Africa)
(Registration number 1946/022452/06)
JSE Codes: AMS; AMSP ISIN: ZAE000013181; ZAE000054474
A member of the Anglo American plc group
("Anglo Platinum")
MAIN FEATURES
- Rand basket price per Pt oz increased by 56.2%
- Headline earnings per ordinary share up 194%
- Dividends per ordinary share up 349%
- Refined Pt production up 15% to 2 816 500 oz
ABRIDGED FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006
Consolidated Income Statement
Audited Audited
Year Year
ended ended
31 December 31 December
R millions 2006 2005
Gross sales revenue 39 355,7 23 108,1
Mined 34 978,5 21 197,4
Purchased metals in 4 377,2 1 910,7
concentrate
Commissions paid (200,4) (170,1)
Net sales revenue 39 155,3 22 938,0
COST OF SALES (22 531,2) (17 100,3)
GROSS PROFIT ON METAL SALES 16 624,1 5 837,7
Mined 16 283,5 5 751,2
Purchased metals in 340,6 86,5
concentrate
Other net (130,0) 322,1
(expenditure)/income
Market development and (236,4) (214,3)
promotional expenditure
Operating profit 16 257,7 5 945,5
Interest expensed (193,2) (273,4)
Interest received 219,5 135,5
Income from associates 429,9 134,8
Profit before taxation 16 713,9 5 942,4
Taxation (4 782,1) (1 452,5)
PROFIT AFTER TAXATION 11 931,8 4 489,9
Minority interest (14,9) -
Net profit 11 916,9 4 489,9
Reconciliation between net
profit and headline earnings
Net profit 11 916,9 4 489,9
Less: Declared and undeclared (236,7) (255,2)
cumulative preference share
dividends and related STC
Basic earnings attributable 11 680,2 4 234,7
to ordinary shareholders
Adjustments (after tax where
applicable):
Profit on disposal of (22,0) (117,3)
conversion rights
Impact of assets exchanged - (139,2)
Property, plant and equipment - (67,3)
Conversion rights - (71,9)
Cost on disposal of 15% 104,7 -
interest in Union section
(Profit)/loss on disposal and (6,4) (2,0)
scrapping of property, plant
and equipment
Headline earnings 11 756,5 3 976,2
attributable to ordinary
shareholders
Add: Declared and undeclared 236,7 255,2
cumulative preference share
dividends and related STC
Headline earnings 11 993,2 4 231,4
Number of ordinary shares in 229,6 218,3
issue (millions)
Weighted average number of 218,8 217,5
ordinary shares in issue
(millions)
Attributable earnings per
ordinary share (cents)
- Basic 5 339,5 1 947,0
- Diluted 5 317,4 1 935,3
Attributable headline
earnings per ordinary share
(cents)
- Headline 5 374,4 1 828,1
- Diluted 5 352,1 1 823,9
Dividends per ordinary share 5 300 1 180
(cents)
- Interim 1 400 480
- Final 3 900* 700
Dividends per preference 638,0 638,0
share (cents)
Dividend cover per ordinary 1,0 1,5
share (headline earnings)
* Proposed ordinary dividend
Group statement of recognised income and expense
Audited Audited
Year Year
ended ended
31 December 31 December
R millions 2006 2005
Income and expense recognised
directly in the income statement
profit after taxation 11 931,8 4 489,9
Less: Taxation recognised (79,1) -
directly in equity
11 852,7 4 489,9
Attributable to:
Equity holders of the parent 11 837,8 4 489,9
Minority shareholders interest 14,9 -
11 852,7 4 489,9
Effect of change in accounting
policy:
IFRS 3 - Negative goodwill on 173,4
associate reversed
Abridged consolidated Balance Sheet
Audited Audited
as at as at
31 December 31 December
R millions 2006 2005
ASSETS
Non-current assets 31 400,7 27 105,3
Property, plant and equipment 20 871,7 19 650,5
Capital work-in-progress 9 127,9 6 280,1
Investment in associates 943,6 749,5
Cash deposits held by environmental 264,4 204,7
trusts
Prepaid leases and other 193,1 220,5
receivables
Current assets 14 912,0 8 657,1
Inventories 5 300,4 4 412,3
Accounts receivable 4 883,1 2 270,2
Derivative financial assets 4,7 -
Cash and cash equivalents 4 723,8 1 974,6
Total assets 46 312,7 35 762,4
EQUITY AND LIABILITIES
Share capital and premium 5 591,0 5 421,9
Accumulated profits 22 589,4 15 380,1
Minority shareholders` interest 511,4 -
Shareholders` equity 28 691,8 20 802,0
Non-current liabilities 8 465,9 6 924,4
Deferred taxation 7 168,2 5 920,9
Environmental obligations 530,4 424,9
Employees` service benefit 292,8 116,3
obligations
Obligations due under finance 474,5 462,3
leases
Current liabilities 9 155,0 8 036,0
Interest-bearing borrowings 100,0 3 805,2
Accounts payable 6 029,4 3 595,2
Share based payment provision 318,0 102,2
Derivative financial liabilities - 14,0
Taxation 2 707,6 519,4
Total equity and liabilities 46 312,7 35 762,4
Abridged consolidated Cash Flow Statement
Audited Audited
as at as at
31 December 31 December
R millions 2006 2005
CASH FLOWS FROM OPERATING
ACTIVITIES
Cash from operations 18 403,3 7 626,0
Interest paid (net of interest (163,7) (262,6)
capitalised)
Taxation paid (1 273,8) (554,9)
Net cash from operating activities 16 965,8 6 808,5
CASH FLOWS USED IN INVESTING
ACTIVITIES
Purchase of property, plant and (6 524,5) (4 097,4)
equipment (including interest
capitalised)
Proceeds from sale of plant, 106,0 123,7
equipment and conversion rights
Interest received 219,5 135,5
Net proceeds on sale of 15% 385,0 -
interest in Union Section
Advances made (70,0) -
Other 54,8 (35,5)
Net cash used in investing (5 829,2) (3 873,7)
activities
CASH FLOWS used in FINANCING
ACTIVITIES
Proceeds from the issue of ordinary 169,1 163,1
and preference share capital
Repayment of interest-bearing (3 705,2) (1 542,7)
borrowings
Ordinary and preference dividends (4 851,3) (2 028,7)
paid
Net cash used in financing (8 387,4) (3 408,3)
activities
Net increase/(decrease) in cash and 2 749,2 (473,5)
cash equivalents
Cash and cash equivalents at 1 974,6 2 448,1
beginning of year
Cash and cash equivalents at end of 4 723,8 1 974,6
year
MOVEMENT IN NET DEBT**
Net debt at beginning of year (2 292,9) (3 429,4)
Net cash from operating activities 16 965,8 6 808,5
Net cash used in investing (5 829,2) (3 873,7)
activities
Other (4 694,4) (1 798,3)
Net cash/(debt) at end of year 4 149,3 (2 292,9)
** Net debt comprises interest-bearing liabilities and obligations under
finance leases net of cash and cash equivalents.
Notes to the abridged results
1. This abridged report complies with International Accounting Standard 34
- Interim Financial Reporting and South African Statement of Generally
Accepted Accounting Practice, AC127, with the same title as well as with
Schedule 4 of the South African Companies Act and the disclosure
requirements of the JSE Limited`s Listings Requirements.
2. The abridged report has been prepared using accounting policies that
comply with South African Statements of Generally Accepted Accounting
Practice and International Financial Reporting Standards. The accounting
policies are consistent with those applied in the financial statements for
the year ended 31 December 2005, except for the changes which are described
below.
- IFRS 6 - Exploration for and evaluation of Mineral Resources. This
standard has no impact on the measurement of assets in the financial
statements.
- IFRIC 7 - Applying the restatement approach under IAS 29 - Financial
Reporting in Hyperinflationary Economies.
The adoption of this standard had no impact on the financial results.
- IFRIC 8 - Scope of IFRS 2. This new policy was applied in the accounting
for the disposal of a 15% interest in Union section for less than its fair
value.
- IFRIC 9 - Reassessment of Embedded Derivatives. This new policy had no
financial impact on the financial results.
- IFRIC 10 - Interim Financial Reporting. This new policy had no impact on
the financial results.
- IFRIC 11 - IFRS 2: Group and Treasury Shares. This standard had no impact
on the financial results.
Year Year
ended ended
31 December 31 December
R millions 2006 2005
3. Commitments
Mining and process property, plant
and equipment
Contracted for 4 866,5 1 442,9
Not yet contracted for 9 562,9 6 259,0
Authorised by the directors 14 429,4 7 701,9
Other
Operating lease rentals - buildings 602,4 589,9
Due within one year 44,0 41,0
Due within two to five years 196,5 163,3
More than five years 361,9 385,6
Information Technology Service 165,4 144,5
Providers
Due within one year 74,1 62,1
Due within two to five years 91,3 82,4
These commitments will be funded from existing cash resources, future
operating cash flows, borrowings and any other funding strategies embarked
on by the Group.
4. 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.
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 dependant on a discounted cash flow valuation of their
interest at that point in time.
The Group is the subject of various claims, which are individually
immaterial. The expected outcomes of these individual claims are varied,
but on a probability weighting the amount is estimated at R72,8 million.
The Group has in the case of some of its mines provided the Department of
Minerals and Energy with guarantees that cover the difference between
closure cost and amounts held in the environmental trusts. At 31 December
2006 these guarantees amounted to R158,7 million.
The Group has provided Lexshell 36 General Trading (Pty) Limited, a company
owned by the Bakgatla-Ba-Kgafela traditional community, with a facility
that covers their debt repayments should that company not be able to meet
the repayments. The facility is limited to Union Section`s cash flows, and
a call on this facility is considered a remote possibility.
5. Change in accounting estimate - metal inventories
During the year, the Group changed its estimate of the quantities of
inventory based on the outcome of a physical count of in process metals.
The Group runs a theoretical metal inventory system based on inputs, the
results of previous physical counts and outputs. Due to the nature of in
process inventories being contained in weirs, pipes and other vessels,
physical counts only take place once per annum.
This change in estimate has had the effect of increasing the value of
inventory disclosed in the financial statements by R102,0 million (2005:
R335,7 million). This results in the recognition of an after-tax gain of
R72,4 million (2005: R238,3 million).
The amount of the effect in future periods has not been disclosed because
estimation is impracticable.
6. Comparative figures
Reclassification - transactions giving rise to adjustments to
revenue/purchases.
During the year the Group complied with the requirements of Circular 9/2006
Transactions giving rise to Adjustments to Revenue/Purchases, issued by the
South African Institute of Chartered Accountants. Previously the Group
included certain trade discounts in commissions paid. This change resulted
in revenue and commissions paid for the year ended 31 December 2005
decreasing by R200,3 million.
Reclassification - apportionment of share based payment provision between
current and non-current
During the period, the Group classified the current portion of R318,0
million (2005: R102,2 million) of the share based provision to "Current
liabilities". This had no impact on the financial results.
Reclassification - cash held by insurance captives
Cash held in insurance captives was previously disclosed separately on the
face of the balance sheet. This line item is now aggregated with cash and
cash equivalents and prior periods were reclassified accordingly. The
amount of cash held by insurance captives is R347,2 million (31 December
2005: R167,2 million).
Reclassification - Pandora
Pandora was previously accounted for as a joint venture instead of an
associate. A balance of R93,5 million (31 December 2004) in property, plant
and equipment and R27,1 million (31 December 2004) in the deferred tax
liabilities were reclassified to Investment in Associates.
Reclassification - accounts receivable
In 2005, R148,0 million of capital-work-in-progress was erroneously
included in accounts receivable. The comparative figures were reclassified
accordingly.
7. Post balance sheet events
As the dividend cover in respect of the 2006 dividends is less than 1,4
times, the terms of the preference share require an adjustment to the
conversion prices to be used when the convertible preference shares are
converted into ordinary shares. The current conversion price is R288,43 or
34,7603 ordinary shares for each 100 preference shares. The conversion
ratio is to be adjusted in proportion to the amount of the dividend, which
results in the dividend cover of less than 1,4 times in relation to the
share price at the time of the dividend. The revised ratio will be
published on SENS and in the press once it has been determined.
8. Corporate governance
The Board is of the view that the Company and its subsidiaries are
compliant with the recommendations as set out in the Code of Corporate
Practices and Conduct contained in King II.
9. Audit opinion
The auditors, Deloitte & Touche, have issued their opinion on the Group`s
financial statements for the year ended 31 December 2006. The audit was
conducted in accordance with International Standards on Auditing. They have
issued an unqualified audit opinion. A copy of their audit report is
available for inspection at the Company`s registered office. These abridged
financial statements have been derived from the Group financial statements
and are consistent in all material respects, with the Group financial
statements.
Commentary
1. FINANCIAL RESULTS
The Group achieved a substantial improvement in headline earnings compared
to the year ended 31 December 2005. Factors contributing to the increase
were higher US dollar prices realised on metals sold, increased sales
volumes and a weaker rand/US dollar exchange rate.
Headline earnings and headline earnings attributable to ordinary
shareholders rose to R11,99 billion and R11,76 billion respectively, an
increase of some 183% and 196%. Headline earnings per ordinary share rose
194% to 5 374 cents. Based on the strong financial performance for 2006 a
final dividend of 3 900 cents per ordinary share has been declared.
Net sales revenue rose by R16,22 billion to R39,16 billion. The increase
was the result of higher US dollar prices achieved on all metals sold,
contributing R11,38 billion of the increase and higher volumes of metals
sold, mainly platinum and rhodium, which contributed a further R2,30
billion. The average achieved rand/US dollar exchange rate was weaker at
R6,82, compared to the rate of R6,39 in 2005, contributing an increase in
revenue of R2,54 billion.
The average prices achieved on platinum and palladium sales for the 12
months to 31 December 2006 were US$1 140 per ounce and US$319 per ounce
respectively. As a result of existing long term contractual arrangements
with some customers to support and develop the rhodium market, the average
price achieved on sales of rhodium for the period was US$3 542 per ounce.
Higher sales volumes were achieved as a result of a 15% increase in refined
platinum production to 2 816 500 ounces in 2006. This reflects increased
production at mining operations and the release of pipeline stocks,
including processing concentrate built up at Polokwane smelter in 2005.
Cost of sales increased by R5,43 billion to R22,53 billion, principally as
a result of:
- The value of purchases of metal in concentrate almost doubled from R1,99
billion to R3,95 billion. This was due to higher US dollar prices paid for
metals in concentrate, contributing R1,26 billion of the increase, higher
volumes of metals in concentrate purchased from the Kroondal and Marikana
pooling-and-sharing agreements and the Bafokeng-Rasimone and Modikwa joint
ventures, contributing a further R0,46 billion. The impact of the weaker
average rand/US dollar exchange rate contributed R0,24 billion.
- Cash mining, smelting and refining costs rose 15% to R15,14 billion with
cash operating unit costs per equivalent refined platinum ounce rising by
10,7% to R6 116. The increase was due to inflation, additional costs
associated with increased mine production which, for the first time,
includes the costs associated with the Marikana and Mototolo operations,
once-off extensive ground support work at Union UG2 declines and costs
associated with the advanced turnaround programmes to establish a
sustainable base for future production at Rustenburg and Amandelbult.
Higher diesel, steel, tyres and labour costs also contributed to the
increase. Cost savings of some R367 million, arising from specific
procurement projects and other cost savings initiatives, were realised in
2006.
- Other costs increased by R776 million or 76%, including an increase of
R414 million in the cost associated with share-based payments as a result
of a higher share price on 31 December 2006 when compared to 31 December
2005, higher royalties and increased research and exploration costs.
- Amortisation increased by 9% or R208 million as a result of the capital
expenditure programme and increased use of new operating assets.
- The value of metals in inventory increased by R766 million during 2006.
Despite a net decrease in the quantity of pipeline stock following the
processing of concentrate built up at the Polokwane smelter at the end of
2005, offset by a stock adjustment following an increase in metal
identified during the annual stock take, the value of metal in stock
increased due to refined metal stocks returning to normal levels and the
increase in the unit cost at which metal inventories are valued.
Other net expenditure for the period amounted to R130 million and comprised
a cost of R258 million on disposal of 15% of Union section, and business
optimisation and project maintenance costs of R308 million offset by
foreign exchange gains of R297 million.
2. SAFETY
Improving the safety performance of our employees and contractors remains
Anglo Platinum`s highest priority. A drop in fatal incidents was recorded
for 2006. The Group continues to invest significant resources in a
comprehensive suite of safety initiatives to ensure a sustainable step
change in safety performance. It is, however, with deep regret that
management reports the loss of the lives of 18 employees at managed
operations and one at the non-managed Modikwa joint venture as a result of
mine related accidents in 2006. Management and the Board extend their
condolences to the families, friends and colleagues of the deceased.
3. OPERATIONS
Refined platinum production rose by 15% to 2 816 500 ounces, primarily due
to increased production at mining operations and the release of pipeline
stocks including the processing of concentrate built up at the Polokwane
smelter in 2005.
The cash operating cost per equivalent refined platinum ounce increased by
10.7% to R6 116. Once-off additional ground support work during 2006 at
Union, equipping and development programmes to establish a sustainable base
for future production at Amandelbult and Rustenburg, above inflation cost
increases in diesel, steel, tyres and labour and the effect of lower grades
as a consequence of a higher percentage of UG2 ore mined, are the principal
reasons for the above inflation unit cost increase.
Mining operations
Equivalent refined platinum production from the mines managed by Anglo
Platinum and its joint venture partners for 2006 increased by 134 900
ounces to 2 638 600 ounces in 2006, an increase of 5,4%.
Increased production of equivalent refined platinum ounces was recorded at:
- Rustenburg: The turnaround programme at Rustenburg increased production
volumes and efficiencies with a 50% reduction in fatal incidents.
Production increased by 9 300 ounces or 1,1%. Tons milled increased by
4,5%. The mine embarked on intensive development and equipping activities
during 2006 to both stabilise and then increase the level of immediately
available and immediately stopeable ore reserves. These are poised to
increase materially in 2007 on the completion of well advanced
infrastructural development in raises and boxholes. The ore-source mix
continued to change and an increase in UG2 ore mined from 57% to 63% was
recorded during 2006. This increase impacted adversely on the 4E built-up
head grade which reduced by 2% to 4,26g/t.
- Amandelbult: Production increased by 38 800 ounces or 7,0%. The benefits
of the turnaround programme were evident during 2006 and tons milled
increased by 16% to 6 974 000 tons. The grade was adversely affected by the
increased UG2 ore milled from 45% to 51% of total tons milled, as well as
the lower grade from the transition zone at the West Merensky Section of
the No 1 Shaft, which continued to erode output.
- Union: Production increased by 2 700 ounces or 0,9%. The mine
successfully launched initiatives to increase production while the UG2
decline operations were in a rehabilitation phase following progressive
ground support failures. The mine supplemented underground production from
other ore sources which included clean-up activities in old mined-out
areas, treatment of sifted low grade on-reef development material from
surface rock piles and tailings retreatment.
- Bafokeng-Rasimone: Production increased by 22 800 ounces or 11,7% due to
an increase in underground performance resulting in an increase in tons
delivered to concentrators of 7%, as well as the processing of excess ore
stockpiles at Rustenburg mine. These stockpiles resulted from increased ore
extraction above the BRPM plan capacity during the second half of 2005. The
remainder of the stockpile of some 89 000 tons will be depleted during
quarter one of 2007.
- Modikwa: Ended the year on 135 200 ounces, up 4,8% from 2005 or 6 200
ounces due to an improved 4E built-up head grade. Employee relation issues,
labour productivity and difficult ground conditions were the major
challenges during 2006. In late 2006 the mine commenced negotiations on
certain conditions of employment which led to a protected strike in early
2007. The mine, however, achieved record production during the second half
of 2006 with immediately available ore reserves increasing 32% to 14,5
months at the end of the year.
- Kroondal: 16 800 ounces or 6,8% up to 263 200 ounces of which 136 400
ounces are attributable to Anglo Platinum. Production was hampered by a
number of geological features, more complex than anticipated, that were
encountered at No. 3 Shaft and to a lesser degree at East Shaft.
- New production in 2006 arose from Marikana amounting to 33 800 ounces of
which 12 800 were attributable to Anglo Platinum, the balance being sold to
Impala Refining Services under the terms of the pooling-and-sharing
agreement. In addition, Mototolo yielded for the first time 12 800 ounces
of which 6 400 were attributable to Anglo Platinum and 6 400 purchased
ounces.
Lower production was recorded at:
- Potgietersrust: The increased complexity associated with the ore mix from
the existing Sandsloot and Zwartfontein pits, partly offset by the planned
early introduction of the PPRust North pit, caused grade and recovery
volatility and resulted in a lower 4E built-up head grade of 3,90g/t, down
3% from 2005. This together with above normal rainfall in the first quarter
of 2006 which temporarily restricted mining access to lower benches and
mechanical failures resulted in production decreasing by 6,8% from 2005 to
191 300 ounces. It is expected that the grade and recovery will normalise
once fresh ore is fully accessed in the new pit increasing the opportunity
for improved operational stability and optimal blending.
Process operations
Processsing operations performed well with improved processing efficiencies
whilst cash cost per refined platinum ounce was contained to an increase of
2,6% compared to 2005.
The concentrators increased production in line with the mining operations
and treated record tons of 43 792 000 during the period, an increase of 6%
on 2005. The commissioning of the Mototolo plant in the fourth quarter of
2006 increased the Group`s concentrators to 19 individual processing plants
located in nine separate geographical locations around the Bushveld
complex. Operations at the Western Limb Tailings Retreatment plant
continued with production 5 000 ounces lower than 2005 due to heavy
rainfall in early 2006 and a number of equipment failures.
Smelting operations performed well during the year, treating all excess
stocks resulting from the Polokwane shutdown in September 2005. Good
progress was made in resolving the material compatibility problem of the
Polokwane waffle coolers and a long-term solution is currently under test.
Cash smelting costs were maintained within inflationary levels with cash
cost per platinum ounce dispatched increasing 0,4% to R470.
The ACP process at Waterval smelter is performing well and has maintained
sulphur emissions within permit and target levels. Initiated in 2005, the
upgrade and rehabilitation of the associated acid plants were completed
during 2006. The Group is now uniquely positioned to achieve benchmark
sulphur fixation levels at the Waterval smelting complex. Optimisation of
the ACP and slag cleaning furnace continued with significant improvements
in processing efficiencies.
In 2006 the refineries achieved improvements in both cost and operating
efficiencies with unit costs decreasing by 6%, driven by increased volumes
refined.
4. PROJECTS
Anglo Platinum remains confident of the robustness of demand for platinum
and is continuing with its expansion programme. Anglo Platinum expects to
meet its long-term average growth profile of 5% per annum by exploiting its
own reserves through direct investment in projects as well as with joint
venture partners. This growth profile requires projects that will create
incremental new production as well as maintain existing production levels
due to reserve depletion from current mining activities.
The implementation of Anglo Platinum`s extensive suite of mining and
processing projects to expand and maintain production continues on
schedule. Projects that have increased production include Modikwa, Kroondal
and for the first time in 2006, the Marikana and Mototolo ventures which
have both added equivalent refined platinum ounces of 12 800 for 2006.
Marikana, approved in 2005, will produce 74 000 equivalent refined platinum
ounces a year by 2009. Mototolo is set to reach steady state production by
the end of 2007 producing equivalent refined platinum production of 130 000
ounces per annum at steady state.
In 2006 the board approved capital expenditure totalling R11 billion, which
included the PPRust North expansion project. Work on this project, which
aims to mill an additional 600 000 tons of ore per month producing an
additional 230 000 refined platinum ounces per annum from 2009, has
commenced.
Projects that contribute towards maintaining production levels include the
Amandelbult 1 shaft optimisation project which was successfully completed
during the year with the 75 000 ton per month UG2 concentrator being fully
commissioned and running at capacity. This concentrator processes UG2 ore
as Merensky production declines due to the depletion of Merensky ore
reserves.
The Amandelbult East Upper UG2 Project which was approved in 2006 will
conventionally mine the UG2 reef, using existing mining infrastructure
previously employed to extract Merensky reef, at the vertical number 2
shaft and at three decline shafts. The 75 000 ton per month UG2
concentrator will be expanded to 210 000 tons per month and by 2012 the
project will contribute an additional 100 000 ounces of refined platinum
per annum.
The Rustenburg Paardekraal 2 shaft replacement project will access deeper
Merensky reserves at a rate of 100 000 tons per month. The project is
expected to produce 120 000 ounces of refined platinum per annum by 2015
replacing decreasing production as a result of reserve depletion.
The Townlands Ore Replacement project at a capital cost of R 1,0 billion
was approved in February 2007 and will replace 70 000 ounces of refined
platinum per annum by 2014 with production from new Merensky and UG2 areas
at the Rustenburg Townlands Shaft.
5. CAPITAL EXPENDITURE
Total capital expenditure was R6,53 billion, an increase of R2,16 billion
over 2005. Expansion expenditure was R2,17 billion and expenditure to
maintain operations increased to R4,28 billion, with capitalised interest
of R83 million. Capital expenditure during 2006 included the PPRust North
expansion project, the Mototolo joint venture mining operations, and the
Waterval concentrator retrofit.
Anglo Platinum continues to pursue mining and processing projects that
maintain and expand production. It is anticipated that capital expenditure
for 2007 will be between R9 billion and R10 billion.
6. CASH FLOWS
The Group`s net cash position at 31 December 2006 was R4,15 billion, a
significant increase from the R2,29 billion net debt position at the end of
2005. Cash generated from operations was R18,40 billion. Cash outflows
consisted of capital expenditure of R6,52 billion, taxation payments of
R1,27 billion and dividend payments of R4,85 billion of which R4,60 billion
were ordinary dividends and R255 million preference dividends.
7. NEW MINERALS LEGISLATION AND EMPOWERMENT OF HISTORICALLY DISADVANTAGED
SOUTH AFRICANS
Anglo Platinum is fully committed to the Minerals and Petroleum Resources
Development Act ("the Act") and the mining charter and to achieving the
associated sustainable economic transformation.
This process started in 2000 with the sale of our stake in Northam to
Mvelaphanda Resources and in 2001 with the establishment of our 50:50 joint
venture with the African Rainbow Minerals led consortium at Modikwa.
Subsequent transactions and ventures included the Bafokeng Rasimone mine,
the Pandora, Ga-Phasha and Booysendal projects and a number of prospecting
properties. In July 2006 a joint review of progress was conducted by Anglo
Platinum and the Department of Minerals and Energy ("DME"). This
highlighted the additional detail required by the DME to facilitate the
processing of the submissions already made by Anglo Platinum to convert its
"old order rights" to "new order rights". Since then we have completed the
sale of 15% of our Union mine to the Bakgatla-Ba-Kgafela traditional
community. In 2006, 18 Anglo Platinum prospecting rights were converted
from "old order" to "new order".
Anglo Platinum expects to make significant progress in 2007 to further
enhance its empowerment to fully embrace the transformation envisaged by
the Act and mining charter and to obtain the associated conversion of
rights.
Noteworthy milestones achieved in 2006 as part of Anglo Platinum`s social
social and labour plan in support this transformation include:
- Women in mining up to 9,1%.
- 37,4% historically disadvantaged South Africans in management positions.
- R4,8 billion spent on HDSA procurement.
- Continued investment in housing and community projects.
- R179 million allocated to adult basic education over the next 3 years.
8. SOCIAL RESPONSIBILITY AND HIV/AIDS
Anglo Platinum remains committed to contributing towards social projects in
the communities in which its operations are located. The Group continued to
make significant contributions towards education, health, social services,
arts and culture, and small business development projects during 2006.
Anglo Platinum has continued to fight against the HIV/AIDS epidemic and
associated infections, particularly sexually transmitted infections and
tuberculosis. For the year ended 31 December 2006, the company spent R96
million on education, training, community based organisation support and a
full wellness programme which includes free anti-retroviral treatment,
counselling and voluntary testing.
This social investment has achieved success as a result of the increased
partnerships and support from government departments, civil society,
international development agencies and unions.
9. DIVIDENDS
Ordinary dividends are declared after considering current and future
funding requirements and are paid out of cash generated from operations.
Additional considerations currently impacting funding requirements include:
- Anglo Platinum`s view that metal prices will remain firm for the
foreseeable future,
- the advanced level of implementation of expansion and replacement
projects and the associated improved confidence in the accuracy of capital
expenditure forecasts,
- the magnitude of the planned capital expenditure, and
- the potential volatility of metal prices and exchange rates.
Consequently Anglo Platinum is able to declare a higher dividend and employ
a re-investment programme to optimise funding and provide shareholders with
an opportunity to invest in its expansion programme. Shareholders will
either receive the full dividend in cash or elect to invest 50% thereof in
new ordinary shares in Anglo Platinum. It is the Group`s intention to use a
similar approach for future dividend payments.
Anglo Platinum paid an interim ordinary dividend of 1 400 cents per
ordinary share. The Board has declared a final ordinary dividend of 3 900
cents per ordinary share resulting in a dividend cover ratio of 1:0 on full-
year headline earnings. This represents an increase of 349% on the 2005
dividend. A preference dividend of 318 cents and 320 cents per preference
share was declared and paid in May 2006 and November 2006 respectively,
bringing the full year preference share dividend to 638 cents per share.
Full details of the dividend are included in a separate announcement while
details of the dividend re-investment programme will be provided in a
separate circular.
10. PROSPECTS
Management continues to vigorously address unit costs. The emphasis on
increasing volumes and improving operating efficiencies remains the driver
of performance at operations. The wage agreement implemented in 2005 for
managed operations expires in June 2007. Anglo Platinum will enter into
negotiations with unions and associations. Operating costs and production
may be affected by the outcome of these negotiations.
The South African engineering and construction industry is experiencing and
forecasting rapid growth, which is expected to continue for a number of
years. It is anticipated that this industry-wide demand on resources will
affect Anglo Platinum`s expansion programme and associated costs. The
situation is being closely monitored and contingency plans have been
developed and are being continually reviewed as required to minimise any
negative impact.
The demand for newly-mined platinum continues to grow from the autocatalyst
and industrial sectors offsetting the decline in demand from the jewellery
sector. Autocatalyst demand is expected to continue growing in response to
growth in the sales of diesel vehicles worldwide coupled with the advances
in emission legislation requiring the fitment of catalyst systems and
particulate filters containing platinum. The application of platinum in a
wide variety of uses in industry remains robust. In the jewellery sector,
the high price of platinum, but more importantly the volatility in the
price, is limiting the levels of stock held within the trade and hence
demand is down. Additional development projects to support the "Platinum"
brand and the industry are being implemented in China, Japan and the USA.
These initiatives are expected to sustain interest and assist in restoring
demand even at current price levels.
The recovery of palladium demand in the industrial market continues
particularly in the autocatalyst and electronics sectors. Substitution of
palladium for platinum in gasoline engine emission control catalysts is a
continuing feature. The demand for palladium in the Chinese jewellery trade
reduced from the exceptional peak last year as the manufacturing and retail
pipelines were established. Sustained demand will be dependant on creating
consumer desire for the product. The development of a differentiating image
for palladium is in its infancy, but being pursued. The market for
palladium is also being supported by investor interest in the metal which
absorbs additional supply from Russian stocks.
The markets for rhodium and ruthenium are supported by strong industrial
demand and are expected to be buoyant in the medium term.
Refined platinum production is expected to be between 2,8 to 2,9 million
ounces in 2007 in line with the Group`s long-term average growth target of
5% per annum. While production and sales volumes will increase in 2007, the
most significant variable affecting earnings will be metal prices and the
rand / US dollar exchange rate. If the basket price of metals sold and the
rand / US dollar exchange rate remain at current levels, then operating
profit for 2007 is likely to be higher than that achieved in 2006.
R Havenstein T M F Phaswana Johannesburg
(Chief Executive Officer) (Chairman) 12 February 2007
Notice of annual general meeting
Notice is hereby given that the annual general meeting of shareholders of
the company will be held in the Auditorium on the 18th Floor, 55 Marshall
Street, Johannesburg on Friday, 30 March 2007 at 14:00 to consider and if
approved, adopt the annual financial statements for the year ended 31
December 2006 together with the report of the auditors, re-elect directors
retiring by rotation, pass ordinary resolutions placing the unissued
ordinary shares under the control of directors and approving non-executive
director`s fees and passing a special resolution permitting the company
and/or its subsidiaries to acquire shares in the company.
supplementary information
Consolidated Statistics (Unaudited)
Year Year
ended ended
31 December 31 December
Total operations 2006 2005
Marketing statistics
Average market prices
achieved
Platinum (US$/oz) 1 140 894
Palladium (US$/oz) 319 199
Rhodium (US$/oz) 3 542 1 966
Nickel (US$/lb) 10,74 6,77
US$ Basket price (Net (US$) 2 030 1 388
sales revenue per
refined Pt ounce
sold)
Platinum (R/oz) 7 785 5 704
Palladium (R/oz) 2 178 1 274
Rhodium (R/oz) 23 996 12 640
Nickel (R/lb) 74,04 43,00
R Basket price (Net (R) 13 852 8 871
sales revenue per
refined Pt ounce
sold)
Average exchange rate (R : US$) 6,8223 6,3915
achieved on sales
Exchange rate at end (R : US$) 7,0010 6,3450
of period/year
Financial statistics
and ratios
Gross profit margin (%) 42,2 25,3
Earnings before (R millions) 19 186,9 8 354,3
interest, taxation,
depreciation and
amortisation (EBITDA)
Operating profit to (%) 56,2 23,8
average operating
assets
Return on average (%) 48,2 23,2
shareholders` equity
Return on capital (%) 70,1 27,3
employed
Interest cover - 81,5 21,6
EBITDA
Net asset value per (R) 124,9 95,3
share
Net debt to total (%) n/a 9,8
capital employed
Interest-bearing debt (%) 2,0 20,5
to shareholders`
equity
Cost of sales per (R) 7 963 6 587
total Pt oz sold
Cash operating cost
per equivalent Pt oz
(excluding ounces (R) 6 116 5 523
from purchased
concentrate and
associated costs)
Cash operating cost (R) 5 748 5 670
per refined Pt oz
Equivalent refined (thousands) (oz) 2 638,6 2 503,7
platinum production
Gain in smelting and (thousands) (oz) 39,9 73,1
refining pipeline
Refined platinum (thousands) (oz) (2 816,5) (2 453,2)
production
Mining (thousands) (oz) (2 506,3) (2 236,1)
Purchase of (thousands) (oz) (310,2) (217,1)
concentrate
Platinum pipeline (thousands) (oz) 138,0 123,6
movement
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 Investor Services 2004 (Pty) Limited
(Registration No. 2004/003647/07)
70 Marshall Street, Johannesburg, 2001
(P.O. Box 61051, Marshalltown, 2107)
Facsimile +27 11 688-5221
Telephone +27 11 370-5000
London Secretaries
Anglo American Services (UK) Limited,
20 Carlton House Terrace, London, SW1Y 5AN, England
Facsimile +44 207 968-8755
Telephone +44 207 968-8888
United Kingdom Registrars
Capita IRG plc
The Registry, 34 Beckenham Road
Beckenham, Kent, BR3 4TU, England
Facsimile +44 208 639-2142
Telephone +44 870 162-3100 (within UK)
Telephone +44 208 639-2157 (from outside UK)
Detailed results are available on the Internet at:
http://www.angloplatinum.com
E-mail enquiries should be directed to:
traymond@angloplat.com
Directors and Company Secretary
Executive Directors: R Havenstein (Chief Executive Officer), J M Halhead
(British), N B Mbazima (Zambian), R G Mills, A M Thebyane, R H H van
Kerckhoven (Belgian), D G Wanblad, A I Wood (British).
NON-EXECUTIVE DIRECTORS: T M F Phaswana (Chairman), D D Barber, P M Baum, D
A Hathorn, W A Nairn, A J Trahar, A E Redman (British).
INDEPENDENT NON-EXECUTIVE DIRECTORS: T A Wixley (Deputy Chairman), C B
Brayshaw, RMW Dunne, Dr. B Khumalo, T H Nyasulu.
ALTERNATE DIRECTORS: A H Calver (British), R Pilkington, C B Sheppard, J G
Williams.
Company Secretary: J D Meyer.
Date: 12/02/2007 08:59:02 Produced by the JSE SENS Department.
