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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 ZAR/USD 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 374c. 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 ZAR/USD 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 USD1 140 per ounce and USD319 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 USD3 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.
Dividends
Based on the strong financial performance for 2006, a final dividend of 3 900cps has been declared.
Outlook
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 ZAR/USD exchange rate. If the basket price of metals sold and the ZAR/USD exchange rate remain at current levels, then operating profit for 2007 is likely to be higher than that achieved in 2006.
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