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AGL
ANAAL
AGL - Anglo American plc - Results for Year Ended 31 December 2006
Anglo American plc
(Incorporated in the United Kingdom)
Registration number: 3564138
Share code: AGL
ISIN: GB0004901517
(the "Company")
News Release
21 February 2007
Anglo American announces record earnings of $5.5 billion, up 46%
Financial results
Operating profit(1) increased to $9.8 billion, up 54%
Record underlying earnings(2) of $5.5 billion, up 46% over 2005
Strong performances from Platinum; Base Metals; Ferrous Metals and Gold
Record production levels across most commodities
Cost savings of $583 million achieved, despite ongoing industry cost
pressures
$6.9 billion of projects currently under development; projects approved in
2006 include $1.2 billion Barro Alto nickel and $1.6 billion of platinum
projects
Capital return/dividends
Additional buyback of $3 billion announced for 2007, following $7.5 billion
announced in 2006, totalling $10.5 billion
Ongoing capital management programme
Final dividend up 21% to 75 US cents per share, bringing total normal
dividends for the year to 108 US cents per share - up 20%
Strategic progress
AngloGold Ashanti - interest reduced to 42% - initial $1 billion realised -
phased exit strategy
Approval obtained for Dual Listed Company Structure for Mondi
Kumba restructuring completed resulting in a 64% direct interest in Kumba
Iron Ore
Tarmac portfolio restructured; good progress on operational improvements
Disposal of major portion of Highveld Steel - $412 million received for 49.8%
stake
Tongaat-Hulett: announces broad based BEE proposals and Hulamin demerger
HIGHLIGHTS FOR THE YEAR TO 31 DECEMBER 2006
Year ended Year ended %
US$ million, except per share amounts 31.12.06 31.12.05 change
Group revenue including associates(3) 38,637 34,472 12%
Operating profit including associates
before special items and 9,832 6,376 54%
remeasurements(1)
Profit for the year attributable to
equity shareholders 6,186 3,521 76%
Underlying earnings for the year(2) 5,471 3,736 46%
EBITDA(4) 12,197 8,959 36%
Net cash inflows from operating
activities 8,310 6,781 23%
Earnings per share (US$):
Basic earnings per share 4.21 2.43 73%
Underlying earnings per share 3.73 2.58 45%
Interim dividend (US cents per share) 33 28 18%
Recommended final dividend 75 62 21%
Total normal dividends for year 108 90 20%
Special dividend previously paid 67 33 103%
Total dividends for the year including
special dividend 175 123 42%
(1)Operating profit includes share of associates` operating profit (before
share of associates` tax and finance charges) and is before special items and
remeasurements, unless otherwise stated. See note 3 to the financial
information. For definition of special items and remeasurements see note 6 to
the financial information.
(2)See note 9 to the financial information for basis of calculation of
underlying earnings.
(3)Includes the Group`s share of associates` turnover of $5,565 million (2005:
$5,038 million). See note 3 to the financial information.
(4)EBITDA is operating profit before special items and remeasurements,
depreciation and amortisation in subsidiaries and joint ventures and share of
EBITDA of associates. EBITDA is reconciled to cash inflows from operations and
to total profit from operations and associates in note 14 to the financial
information.
Tony Trahar, Chief executive, said:
"In 2006, we achieved the highest ever operating profit of $9.8 billion, an
increase of 54% over the prior year. Our strong performance was due to
increased production across the majority of our businesses and higher prices,
in particular for base metals, platinum and iron ore. The strong global growth
during the year as well as constrained supply in many metals and minerals meant
that commodity prices remained strong, though cost pressures continued to be a
major area of focus.
Strong cash generation (EBITDA) from our operations of $12.2 billion, as well
as proceeds from non-core disposals, resulted in us announcing $7.5 billion
being returned to our shareholders in the form of share buybacks and special
dividends, one of the highest levels of capital return in the industry. A
further $3 billion buyback programme will be undertaken in 2007.
During 2006, excellent progress was made in developing the Group`s pipeline of
growth opportunities with a number of projects given the go-ahead, including
the $1.2 billion Barro Alto nickel deposit in Brazil and $1.6 billion of
platinum projects including the Potgietersrust expansion, the Amandelbult
expansion and the Rustenburg Paardekraal 2 shaft replacement project. There are
currently $6.9 billion of projects under development and we are assessing a
further $10 - $15 billion of unapproved opportunities that will provide the
Group with a profitable growth platform over the next decade.
It was an important year for Anglo American, with the Group making progress on
its strategic objectives of further focusing the business on its core mining
portfolio, simplifying its structure and enhancing returns.
As a more focused, cohesive group, further cost savings and synergies as well
as technology and knowledge sharing will be key priorities.
Global economic growth was especially rapid in the first half of 2006, with all
the major regions of the world growing rapidly over this period. Commodity
prices reacted positively to this environment, with new highs being recorded
for a number of products. In the second half, global growth began to moderate,
particularly in the US.
European markets are improving and emerging markets, in particular China and
India, are growing strongly. Continued growth in these regions in 2007 is
likely to largely offset weaker US growth and thus the decline in global growth
from the strong level achieved in 2006 should be fairly modest. This should
provide a supportive climate for commodities in the near term. The Group
continues to progress its strong organic project pipeline and drive operational
excellence to meet ongoing demand for its commodities."
Review of 2006
Financial results
Anglo American`s underlying earnings for the year were a record $5.5 billion as
continued strong metal prices and improved volumes reflected the favourable
trading environment for the Group`s key commodities. Operating profit of $9.8
billion was 54% higher over the prior year, with EBITDA up 36% at a record
$12.2 billion. Strong contributions came from Base Metals and Platinum as well
as a significant increase in contribution from AngloGold Ashanti. Kumba`s
results also showed a significant increase. Coal recorded lower underlying
earnings mainly due to a decline in export sales volumes and increased costs,
while Paper and Packaging recorded a lower contribution and Industrial Minerals
a flat contribution, owing to continuing difficult market conditions although
Paper and Packaging saw some improvement in conditions in the second half of
the year. Underlying earnings at De Beers were below the prior year,
mainly reflecting lower preference share income due to the June 2006
redemptions, and higher minorities as a result of the Ponahalo black economic
empowerment transaction which was completed in April 2006.
Production volumes were up for platinum, copper, zinc and nickel, iron ore,
coal and industrial minerals, despite challenging operating conditions at some
of the base metals and coal mines.
The mining industry globally is facing ongoing cost pressure throughout the
supply chain and, against this background, the Group achieved cost savings of
$583 million in synergies, efficiencies and procurement.
Platinum reported record operating profit of $2,398 million (24% of Anglo
American`s total operating profit), up 181%, on the back of a significantly
higher price achieved for the basket of metals sold, higher production and a
weaker average rand/dollar exchange rate.
Diamonds recorded attributable operating profit of $463 million (5% of Anglo
American`s total), down 21% on 2005, due in part to lower sales by the Diamond
Trading Company.
Base Metals generated a record operating profit of $3,876 million (39% of Anglo
American`s total), up 131%, due to increased copper, zinc, lead and
ferroniobium production and significantly higher metals prices.
Ferrous Metals and Industries` operating profit declined 7% to $1,360 million
(14% of Anglo American`s total), mainly as a result of the sale of non-core
businesses as well as lower vanadium and manganese prices, partially offset by
higher iron ore prices.
Coal recorded operating profit of $864 million (9% of Anglo American`s total),
15% lower, due mainly to lower export prices and export sales volumes.
Industrial Minerals` operating profit was 9% lower at $336 million (3% of Anglo
American`s total), a robust performance in the face of challenging market
conditions, with lower volumes and weaker margins in some businesses
exacerbated by high energy costs for much of the year.
Gold achieved a 41% increase in operating profit of $467 million (5% of Anglo
American`s total), on the back of a stronger gold price which was 31% higher
than the average price received in 2005.
Paper and Packaging reported a lower operating profit of $477 million (5% of
Anglo American`s total), a decrease of 4%, after a stronger second half partly
offset the impact of a poor first six months.
Capital structure and increased return to shareholders
The Group`s net debt position has reduced by $1.7 billion since the prior year
end. At 31 December net debt amounted to $3.3 billion. This underlines the
strong operating cash flows as well as proceeds from disposals, deconsolidation
of AngloGold Ashanti debt and the conversion of $1.1 billion of the Group`s
convertible debt. The $2 billion share buyback, which commenced in March 2006,
was completed in August 2006. The additional $4 billion share buyback announced
at the interim commenced in September 2006, with around $3.2 billion of shares
having been repurchased as at 20 February 2007.
Dividends
In line with the Group`s progressive dividend policy, the final dividend has
been raised 21% to 75 cents per share, to be paid on 3 May 2007 subject to
shareholder approval at the Annual General Meeting to be held on 17 April 2007.
Total dividends for the year (including the interim special dividend of 67
cents per share), amount to 175 cents per share (2005:123 cents per share).
Significant progress on strategic objectives
During 2006, significant progress was made in terms of restructuring the
portfolio. In April, $1 billion worth of AngloGold Ashanti shares was sold,
reducing Anglo American`s shareholding from 51% to 42%. The decision to reduce
and ultimately exit the Group`s gold holding relates to the higher relative
valuations attributable to pure-play gold companies, rather than as part of a
diversified mining group. Anglo American continues to explore all available
options to exit AngloGold Ashanti in an orderly manner.
Regarding Mondi, plans for a full demerger are progressing. Approval in
principle has been received from the regulatory authorities in South Africa for
a Dual Listed Company Structure with primary listings in Johannesburg and
London. Arrangements are being finalised to enable a smooth and efficient
transition to a fully independent company. The senior management team is in
place and a new board of directors is being established. The listing is
targeted for mid 2007.
Good progress was made in restructuring the Ferrous Metals and Industries
business. In July 2006 the majority of the Group`s stake in Highveld Steel was
sold, with Russia`s Evraz group and Credit Suisse each acquiring 24.9% of
Highveld`s share capital for an aggregate consideration of $412 million. Evraz
has an option to increase its stake in Highveld, once regulatory approvals are
received, entitling Evraz to purchase the remaining 29.2% shareholding. On
implementation of the option arrangement, the aggregate amount that will have
been received by Anglo American for its 79% interest in Highveld will be $678
million.
In November, the restructuring of Kumba was completed, with the listings on the
Johannesburg Stock Exchange of Kumba Iron Ore as a pure play iron ore company,
in which Anglo American holds 64%, and Exxaro, which became South Africa`s
largest black economic empowered natural resources company.
The unbundling of the Tongaat-Hulett Group`s aluminium business to shareholders
and simultaneous introduction of broad based black economic empowerment in both
Tongaat-Hulett and Hulamin will occur during the second quarter of 2007. This
will reduce Anglo American`s interests in Tongaat-Hulett to 38% and in Hulamin
to 39%.
Tarmac`s strategic review was completed in early 2006 and clearly defines the
scope of its business as aggregates, together with three routes to market
(asphalt, concrete and concrete products), and integration of cement where
appropriate. The disposals announced in February 2006 have been largely
completed and good progress is being made on delivering structural operational
improvements. Tarmac is aiming to make a $50 million profit improvement on a
like-for-like basis over the next three years.
Strong project pipeline driving growth
During 2006, excellent progress was made in developing the Group`s pipeline of
growth opportunities across numerous territories. Anglo American currently has
$6.9 billion of approved projects under development.
Anglo Platinum expects refined platinum production to be between 2.8 and 2.9
million ounces in 2007 in line with its long term growth target of 5% per
annum. During 2006 the company approved several major projects, including the
$692 million Potgietersrust expansion, the $224 million Amandelbult expansion
and the $316 million Paardekraal 2 shaft replacement project. These new
projects will contribute 456,000 platinum ounces to Anglo Platinum`s
production.
The Townlands Ore Replacement Project at a capital cost of $139 million was
approved in February 2007. This 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.
Anglo Coal has an extensive range of growth options in the coal industry and is
currently developing four major projects across three operating regions. In
Australia, work is continuing on the $835 million Dawson project, which is
planned to reach full production in 2007, producing an additional 12.7 million
tonnes per annum for export markets. Construction has also begun on the $516
million Lake Lindsay greenfield project at the German Creek mine which will
produce 3.7 million tonnes of metallurgical coal and 0.3 million tonnes of
thermal coal annually by 2008, most of it for the Pacific Rim markets. In South
Africa, development of the Mafube mine has started following the granting of
prospecting rights, while the Isibonelo project, which supplies 5 million
tonnes to Sasol per annum, reached full production in 2006. In Colombia, the
first phase of the expansion to 28 million tonnes per annum at the Cerrejon
mine reached completion and a second expansion to 32 million tonnes per annum
is already under way.
Base Metals is currently assessing a number of major projects, which will drive
significant production growth well into the next decade. In December, the
go-ahead was given for the $1.2 billion Barro Alto project in Brazil which will
produce an average of 36,000 tonnes of nickel per year in the form of
ferronickel over a minimum 26 year mine life. Construction of the Barro Alto
facilities is scheduled to begin in 2007, with production commencing in 2010
and ramping up to full capacity during 2011. In addition, work is continuing on
feasibility and de-bottlenecking studies at the two major Chilean copper
operations, Los Bronces and Collahuasi, and a decision to proceed with these
expansions is expected in 2007.
Kumba Iron Ore is well advanced on the $754 million Sishen expansion project in
South Africa`s Northern Cape, with first output due in 2007 and full ramp-up to
13 million tonnes per annum targeted for 2009. This will take the company to 45
million tonnes per annum of iron ore production, of which 36 million tonnes per
annum will be exported. Further brownfield and greenfield projects offer the
potential to increase Kumba Iron Ore`s annual production to over 70 million
tonnes per annum by 2015. Other iron ore growth opportunities are being
pursued.
Progress continues on De Beers` Canadian projects at Snap Lake and Victor.
Despite project costs rising, owing to higher energy costs, technological
challenges and the impact of the early closure of the winter road to the sites,
both developments remain on track to open in the final quarters of 2007 and
2008, respectively. In 2006, De Beers also approved two projects in South
Africa: the re-opening of the dormant Voorspoed mine and the South African Sea
Areas marine mining project for a total capital expenditure of $284 million.
Outlook
Global economic growth was especially rapid in the first half of 2006, with all
the major regions of the world growing rapidly over this period. Commodity
prices reacted positively to this environment, with new highs being recorded
for a number of products. In the second half, global growth began to moderate,
particularly in the US.
European markets are improving and emerging markets, in particular China and
India, are growing strongly. Continued growth in these regions in 2007 is
likely to largely offset weaker US growth and thus the decline in global growth
from the strong level achieved in 2006 should be fairly modest. This should
provide a supportive climate for commodities in the near term. The Group
continues to progress its strong organic project pipeline and drive operational
excellence to meet ongoing demand for its commodities.
For further information:
Investor enquiries
Nick von Schirnding
Tel: +44 207 968 8540
Charles Gordon
Tel: +44 207 968 8933
Anne Dunn
Tel: +27 11 638 4730
Media enquiries
Kate Aindow
Tel: +44 207 968 8619
Daniel Ngwepe
Tel: +27 11 638 2267
Fiona Wrench
Tel : +27 11 638
Notes to editors:
Anglo American plc is one of the world`s largest mining and natural resource
groups. With its subsidiaries, joint ventures and associates, it is a global
leader in platinum group metals, gold and diamonds, with significant interests
in coal, base and ferrous metals, industrial minerals and paper and packaging.
The group is geographically diverse, with operations in Africa, Europe, South
and North America, Australia and Asia. (www.angloamerican.co.uk)
Webcast of presentation:
A live webcast of the annual results presentation starting at 10.00am UK time
on 21 February can be accessed through the Anglo American website at
www.angloamerican.co.uk.
Pictures:
High resolution images can be downloaded by the media at www.vismedia.co.uk
Note: Throughout this press release `$` denotes United States dollars and
`cents` refers to United States cents; operating profit includes associates`
operating profit and is before special items and remeasurements unless
otherwise stated; special items and remeasurements are defined in note 6 and
underlying earnings are calculated as set out in note 9 to the financial
information. EBITDA is operating profit before special items and
remeasurements, depreciation and amortisation in subsidiaries and joint
ventures and share of EBITDA of associates. EBITDA is reconciled to cash
inflows from operations and to total profit from operations and associates in
note 14 to the financial information.
Financial review of Group results
Underlying earnings per share for the year increased to $3.73 per share, an
increase of 45% compared with 2005. Underlying earnings totalled $5,471
million, with strong contributions from Base Metals and Platinum as well as a
significant increase in contribution from AngloGold Ashanti. Coal recorded
lower underlying earnings mainly due to a decline in export sales volumes and
increased costs, while Paper and Packaging recorded a lower contribution and
Industrial Minerals a flat contribution, owing to continuing difficult market
conditions, although Paper and Packaging saw some improvement in overall market
conditions in the second half of the year. Underlying earnings at De Beers were
below the prior year, principally reflecting lower sales by the Diamond Trading
Company and increased exploration and development cost, as well as lower
preference share income arising from the June 2006 redemptions, and higher
minorities as a result of the Ponahalo black economic empowerment transaction
which was completed in April 2006. Kumba`s results showed a significant
increase over the prior year; however, Ferrous Metals as a whole recorded a
lower contribution chiefly owing to lower manganese and vanadium prices, the
impact of the increased minorities as a result of the Highveld part disposal in
July, as well as the full year impact of the disposal in mid-2005 of Boart
Longyear and Samancor Chrome.
Underlying earnings Year ended Year ended
$ million 31 Dec 2006 31 Dec 2005
Profit for the financial year attributable to
equity shareholders 6,186 3,521
Operating special items including associates 562 323
Operating remeasurements including associates 429 317
Net profit on disposals including associates (1,367) (185)
Financing special item 4 -
Financing remeasurements including associates:
Fair value loss on convertible option 18 32
Exchange gain on De Beers` preference shares (40) (72)
Unrealised gains and losses on non-hedge
derivatives (8) (2)
Tax on special items and remeasurements
including associates (124) (15)
Related minority interests on special items and
remeasurements (189) (183)
including associates
Underlying earnings 5,471 3,736
Underlying earnings per share ($) 3.73 2.58
Profit for the year after special items and remeasurements increased by 76% to
$6,186 million compared with $3,521 million in the prior year. This increase
relates mainly to strong operational results as discussed above. There was a
significant increase in net profits on disposal which, including associates,
was $1,182 million higher than 2005, mainly as a result of the Group`s disposal
of 19.7 million ordinary shares in AngloGold Ashanti and the Group`s
non-participation in the issue of ordinary shares by AngloGold Ashanti ($909
million net profit on disposal) as well as the profit of $301 million on
partial disposal of Highveld. This was largely offset by the $52 million loss
on partial disposal of Kumba`s non- iron ore assets as well as operating
special items and remeasurements losses of $991 million, including the
impairment and restructuring of certain Tarmac assets ($278 million),
impairment and closure costs relating to the Dartbrook coal mine in Australia
($125 million), impairment mainly of certain downstream converting Packaging
assets and certain Business Paper assets at Paper and Packaging ($104 million)
and unrealised losses on non-hedge derivatives ($429 million), recorded
principally at AngloGold Ashanti.
The Group`s results are influenced by a variety of currencies owing to the
geographic diversity of the Group. The South African rand on average weakened
slightly against the US dollar compared with the prior year, with an average
exchange rate of R6.77 compared with R6.37 in 2005. Currency movements
positively impacted underlying earnings by $129 million. Operating results
benefited from weaker average rates for the rand and Australian dollar,
although these were offset by the stronger Chilean peso and Brazilian real.
There was a significant beneficial effect on underlying earnings from increased
prices amounting to $3,581 million, particularly in respect of copper and
platinum group metals.
Summary income statement Year ended Year ended
$ million 31 Dec 2006 31 Dec 2005
Operating profit before special items and
remeasurements 8,742 5,344
Operating special items (524) (186)
Operating remeasurements (344) (301)
Operating profit from subsidiaries and joint
ventures 7,874 4,857
Net profit on disposals 1,168 87
Share of net income from associates (1) 685 657
Total profit from operations and associates 9,727 5,601
Net finance costs before special items and
remeasurements (165) (428)
Financing special items and remeasurements - 35
Profit before tax 9,562 5,208
Income tax expense (2,640) (1,275)
Profit for the financial year 6,922 3,933
Minority interests (736) (412)
Profit for the financial year attributable to
equity shareholders 6,186 3,521
Basic earnings per share ($) 4.21 2.43
Group operating profit including associates
before special items and 9,832 6,376
remeasurements
(1)Operating profit from associates before
special items and remeasurements 1,090 1,032
Operating special items and remeasurements (2) (123) (153)
Net profit on disposals (2) 199 98
Financing remeasurements (2) 26 7
Net finance costs (before remeasurements) (101) (51)
Income tax expense (after special items and
remeasurements) (368) (274)
Underlying minority interest (after special
items and remeasurements) (38) (2)
Share of net income from associates 685 657
(2)See note 3 to the financial information.
Special items and remeasurement charges
31 December 2006
Excluding
associates Associates Total
$ million
Operating special (524) (38) (562)
items
Operating (344) (85) (429)
remeasurements
Operating special
items and (868) (123) (991)
remeasurements
31 December 2005
Excluding
associates Associates Total
$ million
Operating special (186) (137) (323)
items
Operating (301) (16) (317)
remeasurements
Operating special
items and (487) (153) (640)
remeasurements
Operating special items and remeasurements, including associates, amounted to
$991 million, with $562 million operating special charges in respect of
impairments, restructurings and mine and operation closures, including a $278
million combined impairment and restructuring charge relating to certain
non-core assets to be sold and other assets to be restructured at Industrial
Minerals following the conclusion of the strategic review, an impairment and
related closure costs of $125 million at AngloCoal Australia`s Dartbrook mine,
and a $104 million impairment at Paper and Packaging mainly of certain
downstream converting Packaging assets.
Operating remeasurements, including associates, of $429 million principally
relates to unrealised losses on non-hedge commodity derivatives at AngloGold
Ashanti. The loss in 2006 relates to the revaluation of non-hedge derivatives
resulting from changes in the prevailing spot gold price, exchange rates and
interest rates compared with the equivalent period in 2005.
Net profit on sale of operations, including associates, amounted to $1,367
million. This included the profit on sale of 19.7 million ordinary shares in
AngloGold Ashanti, which resulted in $737 million profit on disposal as well as
$172 million profit on the deemed disposal of AngloGold Ashanti arising from
the non- participation in the issue of ordinary shares by AngloGold Ashanti. A
gain of $301 million also arose on the part disposal of Highveld, offset by a
loss of $52 million on the part disposal of Kumba`s non-iron ore assets. The
Group also realised a $103 million profit on the sale of an indirect 26% equity
interest in De Beers Consolidated Mines Limited to Ponahalo Holdings
(Proprietary) Limited.
Financing remeasurements, including associates, are made up of a $18 million
fair value loss on the AngloGold Ashanti convertible bond option, unrealised
net gains of $8 million on non-hedge derivatives and a $40 million foreign
exchange gain on De Beers dollar preference shares held by a rand denominated
entity.
In line with IFRIC guidance, the option component of the AngloGold Ashanti
convertible bond is fair valued at each reporting period and held as a
liability. Changes in fair value of the liability are taken to the income
statement.
The US dollar preference shares held by De Beers (a rand functional currency
entity) are classified as `financial asset investments` and are retranslated at
each period end. The resulting rand:US dollar foreign exchange gains and losses
are reported through the income statement as a remeasurement charge.
Net finance costs
Net finance costs, excluding special items and remeasurements of nil (2005:
gain of $35 million), decreased from $428 million in 2005 to $165 million. The
decrease reflects lower interest costs due to the reduction in net debt.
Taxation
31 December 2006
$ million Associates`
Before special tax and
items and minority Including
remeasurements interests associates
Profit before 9,159 407 9,566
tax
Tax (2,763) (369) (3,132)
Profit for 6,396 38 6,434
financial
period
Effective tax 32.7
rate including
associates %
31 December 2005
$ million Associates`
Before special tax and
items and minority Including
remeasurements interests associates
Profit before 5,612 285 5,897
tax
Tax (1,283) (281) (1,564)
Profit for 4,329 4 4,333
financial
period
Effective tax 26.5
rate including
associates %
IAS 1 Presentation of financial statements requires income from associates to
be presented net of tax on the face of the income statement. Associates` tax is
therefore not included within the Group`s total tax charge on the face of the
income statement. Associates` tax before special items and remeasurements
included within `Share of net income from associates` for the year ended 31
December 2006 was $369 million (2005: $281 million).
The effective rate of taxation before special items and remeasurements
including share of associates` tax before special items and remeasurements was
32.7%. This was an increase from the effective rate on the same basis of 26.5%
in the year ended 31 December 2005. The December 2005 tax rate benefited from
the one-off impact of a reduction in the statutory tax rates in South Africa
and Ghana. Without this one-off benefit the effective tax rate for the prior
year would have been 29.7%. The December 2006 tax rate reflects the relative
impact of the statutory tax rates, on a fully distributed basis where
appropriate, of the countries in which the Group`s operations are based. In
future periods it is expected that the effective tax rate, including
associates` tax, will remain at or above the UK statutory tax rate of 30%.
Balance sheet
Equity attributable to equity shareholders of the Company was $24,271 million
compared with $23,621 million as at 31 December 2005.
During the year, the Group announced a share buyback programme totalling $6
billion. By the end of 2006, $3.9 billion of this programme had been completed,
with the programme due to complete fully in the first half of 2007. A further
$3 billion share buyback has been announced for 2007.
Net debt, excluding hedges but including balances that have been reclassified
as held for sale ($80 million) was $3,324 million, a decrease of $1,669 million
from 31 December 2005. The reduction was principally due to reduction of debt
from cash flows from operations and disposals, deconsolidation of AngloGold
Ashanti debt and conversion of $1.1 billion of the Group`s convertible debt,
although this was partially offset by $3.9 billion of share buyback and $1.5
billion special dividend as at 31 December 2006.
Net debt at 31 December 2006 comprised $6,304 million of debt, offset by $2,980
million of cash, cash equivalents and current financial asset investments. Net
debt to total capital(1) as at 31 December 2006 was 12.9%, compared with 17.0%
at 31 December 2005.
Cash flow
Net cash inflows from operating activities was $8,310 million compared with
$6,781 million in 2005. EBITDA was $12,197 million, a substantial increase of
36% from $8,959 million in 2005. Depreciation and amortisation decreased by
$405 million to $2,036 million.
Acquisition expenditure accounted for an outflow of $344 million compared with
$530 million in 2005. This included $76 million, net of cash acquired, in
respect of the Group`s investment in AltaSteel (Ferrous Metals and Industries)
and $65 million in respect of the Group`s investment in Akrosil and
Stambolijski (Paper and Packaging).
Proceeds from disposals totalled $1,642 million, with net proceeds on the sale
of 19.7 million ordinary shares of AngloGold Ashanti of $839 million and net
proceeds of $412 million received on disposal of 49.8% of Anglo American`s
shareholding in Highveld Steel.
Repayment of loans and capital from associates amounted to $394 million and is
attributable to capital redemptions by De Beers, comprising the redemption of
$175 million of preference shares and a further $219 million in respect of a
share premium redemption following the Ponahalo black economic empowerment
transaction. Purchases of tangible assets amounted to $3,686 million, an
increase of $380 million. Increased capital expenditure by Platinum, Coal,
Ferrous Metals and Industries, Industrial Minerals and Base Metals was
partially offset by a reduction in capital expenditure at Paper and Packaging,
as well as the impact of including AngloGold Ashanti`s capital expenditure up
to 20 April 2006, after which it is accounted for as an associate.
Dividends
A final dividend of 75 US cents per share to be paid on 3 May 2007 has been
recommended.
Analysis of dividends
US cents per share 2006 2005
Interim dividend (US cents per share) 33 28
Recommended final dividend 75 62
Normal dividend for year 108 90
Special dividend previously paid 67 33
Total dividends 175 123
(1) Net debt to total capital is calculated as net debt divided by total
capital less investments in associates. Total capital is net assets excluding
net debt.
Operations review
In the operations review on the following pages, operating profit includes
associates` operating profit and is before special items and remeasurements
unless otherwise stated. Capital expenditure relates to cash expenditure on
fixed assets.
PLATINUM
$ million Year ended Year ended
31 Dec 2006 31 Dec 2005
Operating profit 2,398 854
EBITDA 2,845 1,282
Net operating assets 7,078 7,018
Capital expenditure 923 616
Share of Group operating profit 24% 13%
Share of Group net operating assets 25% 20%
Anglo Platinum`s operating profit reached a record $2,398 million, increasing
181% on 2005`s operating profit of $854 million. This was achieved on the back
of a significantly higher price achieved for the basket of metals sold,
increased production and a weaker average rand/US dollar exchange rate.
Markets
The average dollar price realised for the basket of metals sold equated to
$2,030 per platinum ounce, 46% higher than in 2005, with firmer platinum,
rhodium and nickel prices making the largest contribution to the increase. The
average realised price for platinum of $1,140 per ounce was $246 higher than in
2005, while nickel averaged $10.74 per pound against $6.77 in 2005. The price
achieved for rhodium averaged $3,542 per ounce, an increase of $1,576 per ounce
over 2005, and includes the effect of existing long term contractual
arrangements with some customers entered into to support and develop the
rhodium market.
Technological development continues to drive industrial demand for platinum and
ongoing research into new applications will create further growth in this
sector. With the rapid spread of exhaust emissions legislation, over 91% of new
vehicles sold in the world now have autocatalysts fitted. The intensifying
stringency of emissions legislation will drive growth in PGM demand for
autocatalysts as new legislation is applied to trucks and off road vehicles in
the USA. The increasing popularity of diesel-powered vehicles in Europe
continues and this has also intensified the demand for platinum, as
diesel-powered cars can only use autocatalysts that are predominantly
platinum-based.
Operating performance
Refined platinum production for the year rose by 15% to 2,816,500 ounces,
primarily due to increased production at mining operations and the release of
metal from pipeline stocks, including the processing of concentrate built up at
the Polokwane Smelter in 2005. Platinum production from mining operations,
expressed in equivalent refined ounces (metal contained in concentrate net of
smelting and refining losses), increased by 5% to 2,638,600 ounces. The
increase was mainly attributable to improved production volumes at the
Amandelbult, Kroondal, Modikwa, Bafokeng-Rasimone and Rustenburg operations as
well as new output from the Marikana and Mototolo operations. However, this was
partly offset by lower output from Potgietersrust and the Western Limb Tailings
Retreatment plant.
The cash operating cost per equivalent refined platinum ounce in rand terms
increased by 10.7%. 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, 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, were the principal reasons for the above
inflation unit cost increase.
Projects
Anglo Platinum remains confident of the robustness of demand for platinum and
is continuing with its expansion programme and expects to meet its stated
average compound growth target 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 refined platinum ounces a year by 2009. Mototolo is set to reach
steady state production by the end of 2007, producing refined platinum
production of 130,000 ounces per annum at steady state.
In 2006 the company approved capital expenditure totalling $1.6 billion, which
included the Potgietersrust North expansion project. Work on this project,
which aims to mill an additional 600,000 tonnes 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 tonnes 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 tpm UG2 concentrator will be expanded
to 210,000 tpm and by 2012 the project will contribute an additional 106,000
ounces of refined platinum per annum.
The Rustenburg Paardekraal 2 shaft replacement project will access deeper
Merensky reserves at a rate of 100,000 tpm. 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 $139 million 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.
In December, Anglo Platinum concluded a black economic empowerment transaction
with the Bakgatla- Ba-Kgafela traditional community, under which the community
acquired a 15% interest in Anglo Platinum`s Union Section mining and
concentrating business as well as interests in the prospecting rights of
certain properties in the vicinity of Union Section.
Outlook
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 dependent 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 for 2007 is expected to be between 2.8 million and
2.9 million ounces. 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.
DIAMONDS
$ million Year ended Year ended
31 Dec 2006 31 Dec 2005
Share of associate`s operating profit 463 583
EBITDA 541 655
Group`s share of De Beers` net assets(1) 2,062 2,056
Share of Group operating profit 5% 9%
(1) De Beers is an independently managed associate of the Group.
The Group`s share of De Beers` net assets is disclosed.
The Group`s share of operating profit from De Beers declined by 21% to $463
million from the 2005 figure of $583 million. This was largely attributable to
lower sales by the Diamond Trading Company (DTC), the marketing arm of De
Beers, increased exploration and development costs, reduced earnings in the
diamond account, the impact of increased finance charges, and the dilution in
earnings as a consequence of the sale of 26% of De Beers Consolidated Mines to
a black economic empowerment consortium.
Markets
Solid consumer demand for diamond jewellery continued in 2006, with the US, and
particularly China and India, reporting strong sales growth. Sales by the DTC
were $6.2 billion, slightly below the previous year (2005: $6.5 billion),
though still the second-highest on record. The decline reflected the reduced
supply available to the DTC and the continuing challenging environment in the
wholesale market for rough diamonds, where a lack of liquidity, margin pressure
and increasing financing costs impacted pipeline demand.
DTC marketing initiatives continue to effectively drive demand for diamond
jewellery. Preliminary reports point to global retail sales for 2006 rising by
about 4%-5%, with India and China achieving double-digit growth. DTC marketing
programmes such as `Journey Diamond Jewellery` and `Trilogy` were strong growth
drivers in 2006. Independently managed De Beers Diamond Jewellers (DBDJ), the
De Beers retail joint venture with Louis Vuitton Moet Hennessy (LVMH), had
an excellent year, with an encouraging performance in the United States, which
accounts for around 50% of world jewellery sales by value. In 2007 DBDJ will
introduce its first wristwatch collection and increase its presence in the US,
the Middle East, Japan, Hong Kong and South Korea.
Operating performance
In 2006 the De Beers group achieved its highest ever production of 51 million
carats (2005: 49 million carats). This was attributable mainly to Debswana
raising output in Botswana from 31.9 million carats to 34.3 million carats. In
Namibia, Namdeb lifted production by 18% to just over 2 million carats.
Production from the South African operations totalled 14.6 million carats.
Element Six, De Beers industrial diamond business, continues to achieve
sustained growth, recording a satisfactory profit for the year.
In Canada, De Beers is on target to start production at Snap Lake in the
Northwest Territories in October, 2007, while the Victor mine in Ontario is
scheduled to come on stream in the last quarter of 2008. In June 2006 De Beers
announced that it had been granted a right to mine for diamonds at the
long-closed Voorspoed mine in South Africa`s Free State province. As part of
its $145 million South African Sea Areas marine mining project, a mining
vessel, now undergoing commissioning, will commence operations off the west
coast of South Africa in the third quarter of 2007. When all of these
operations are in full production they will contribute 3.3 million carats,
valued at $700 million, to De Beers` production capacity.
In 2006 De Beers positioned itself well to take advantage of exploration
opportunities. The company has been granted three new concessions in Angola,
prospecting licences have been granted in Botswana around the Jwaneng and Orapa
areas, while De Beers is involved in a number of joint ventures to access
promising ground in the Democratic Republic of Congo. In Canada, De Beers has
sold its 42% stake in the Fort a la Corne project in Saskatchewan. In September
2006 De Beers and Alrosa, the leading Russian diamond mining company, signed a
Memorandum of Understanding which should lead to joint diamond prospecting and
exploration activities in Russia.
A groundbreaking empowerment transaction was concluded in April 2006, resulting
in the sale of 26% of De Beers Consolidated Mines, the South African mining arm
of De Beers, to a black economic empowerment consortium.
In May 2006 the Government of Botswana and De Beers signed the renewal of the
mining licence for Jwaneng, the world`s most valuable diamond mine. The licence
will run for 25 years (effective from 1 August 2004), while the currently held
licences for the Orapa, Lethlakane and Damtshaa mines were also extended to
2029. The agreement also covered the sale of diamond production from Debswana
(held 50:50 by the Government of Botswana and De Beers) to the DTC for a
further five years, and the establishment of Diamond Trading Company Botswana
(also equally owned by the two parties) to sort and value all Debswana`s
diamond production.
On 30 January 2007, the Government of Namibia and De Beers announced the
extension of the DTC sales contract for a further eight years (effective 1
January 2006), and the establishment of Namibia Diamond Trading Company to
sort, value and market Namibia`s diamond output.
Following the announcement in 2004 that De Beers had reached a settlement with
the US Department of Justice, De Beers announced a provisional agreement in
March 2006 to settle and consolidate all of the remaining class actions against
De Beers for a total sum of $295 million. Proceedings to obtain final judicial
approval of the settlement of the class actions are continuing.
On 31 January 2007 the European Commission formally announced that it had
decided to reject all of the outstanding complaints against De Beers and the
DTC in respect of the DTC Sales and Marketing policy, and the Russian Trade
agreement.
Outlook
The outlook for further growth in retail diamond jewellery sales remains
positive, with India and China likely to be the leading growth markets, and the
US continuing its five year growth trend. While DTC sales are likely to be
constrained by availability in 2007, due to the reduction in Russian purchases
as agreed with the European Commission, De Beers will benefit from bringing new
production on stream towards the end of the third quarter of 2007. De Beers
will focus on implementing its new vision of `maximising the value of its
leadership position`. This includes, in addition to new production, reviewing
assets that do not fit the De Beers portfolio criteria, focusing exploration on
the most prospective areas, continuing to improve cost efficiency and investing
in DBDJ and the `Forevermark` marketing programmes.
BASE METALS
$ million Year ended Year ended
31 Dec 2006 31 Dec 2005
Operating profit 3,876 1,678
Copper 3,019 1,381
Nickel, Niobium, Mineral Sands 405 249
Zinc 516 102
Other (64) (54)
EBITDA 4,214 1,990
Net operating assets 4,268 4,785
Capital expenditure 298 271
Share of Group operating profit 39% 26%
Share of Group net operating assets 15% 13%
Anglo Base Metals generated a record operating profit of $3,876 million (2005:
$1,678 million) on the back of increased copper, zinc, lead and ferroniobium
production and significantly higher metal prices, partially offset by
significant rises in the costs of energy and most key consumables.
Although copper and zinc treatment and refining charges eased, increases in
metal price linked smelter deductions and price participation saw a significant
increase in this component of costs. The strength of the Chilean and Brazilian
currencies against the dollar also adversely impacted operating profits.
Markets
Average LME prices (c/lb) 2006 2005
Copper 305 167
Nickel 1,095 668
Zinc 148 63
Lead 58 44
With global GDP growth remaining strong, average base metal prices moved
significantly upwards in 2006. Although copper demand was slightly weaker than
expected (with destocking by the Chinese and other manufacturers) and
price-induced substitution (particularly in respect of copper and nickel) was
also a feature, aggregate demand growth for base metals was largely as expected
at 5%-6%. The primary drivers of the dramatic increase in prices were tight
metal inventories (in turn, a reflection of weak mine supply growth arising
from a lack of investment in new capacity and further supply side disruptions,
particularly in the case of copper) and the significant and rapid inflow of
speculative and investor funds into commodities markets.
Operating performance
Copper Division 2006 2005
Operating profit ($m) 3,019 1,381
Attributable production (tonnes) 643,800 634,600
Los Bronces copper mine implemented measures to overcome the lower throughput
experienced in the first half arising from unexpectedly hard ore encountered in
the Donoso Este area. Production, which included a record amount of cathode,
was marginally lower at 226,000 tonnes (2005: 227,300 tonnes). El Soldado saw
increasing mining flexibility and grade as the year progressed and delivered
68,700 tonnes (2005: 66,500 tonnes). Mantoverde suffered some delays in dump
construction early in the year and output decreased by 3% to 60,300 tonnes.
Mantos Blancos reduced the dump leach area under irrigation but this was more
than offset by improved grades and recoveries in both the vat leach and
sulphide ore circuits, resulting in a 5% rise in production to 91,700 tonnes.
Notwithstanding intermittent production interruptions arising from the Rosario
crushing and conveying system and SAG Mill No. 3, Collahuasi lifted output to
440,000 tonnes (2005: 427,100 tonnes) largely as a result of a 13% improvement
in sulphide mill throughput. Molybdenum production rose materially to 3,400
tonnes (2005: 300 tonnes) in the first full year of molybdenum plant
production. Chagres increased production by 26% to 173,400 tonnes following the
completion of the expansion project at the end of 2005.
The $80 million El Soldado pit extension project was completed on time and
under budget. The Los Bronces feasibility study, which contemplates increasing
copper production by 75% at a cost of approximately $1.2 billion, will be
completed in mid-2007, while the Quellaveco revised feasibility study,
examining a project with production of copper of around 200,000 tonnes per
annum at a capital cost of approximately $1.2 billion, will be complete in
2008. Evaluation of the progressive de-bottlenecking project at Collahuasi will
be undertaken this year.
The new Chilean mining tax was paid with effect from January 2006.
Nickel, Niobium and Mineral Sands Divisions 2006 2005
Operating profit ($m) 405 249
Attributable nickel production (tonnes) 26,400 26,500
Production of 16,600 tonnes at Loma de Niquel was marginally down for the year.
Codemin output rose to 9,800 tonnes (2005: 9,600 tonnes), but sales volumes
were 11% higher owing to the timing of shipments. In the first full year of
production following the completion of the scalping project, niobium output
increased a further 18% to a record 4,700 tonnes. Namakwa Sands` zircon and
rutile production was very similar to 2005 at 128,400 tonnes and 28,200 tonnes
respectively, while slag tonnage, which had been at similar levels until a
major furnace burn-out occurred in August, was 19% lower at 133,900 tonnes.
In December the $1.2 billion Barro Alto project, which will see the
construction of a 36,000 tonnes per annum ferronickel operation in Brazil, was
approved. First production is scheduled for 2010.
Zinc Division 2006 2005
Operating profit ($m) 516 102
Attributable zinc production (tonnes) 334,700 324,200
Attributable lead production (tonnes) 71,400 63,000
Skorpion operated at design capacity until August when impurities in the
electrowinning circuit caused a hydrogen fire, necessitating a 20 day shutdown.
Although operations were again running at design capacity by December,
production for the year eased to 129,900 tonnes (2005: 132,800 tonnes).
Increased production from secondary mining (released by the backfill
programme), improved grades (arising from the start-up of mining in the Bog
Zone) and improved mill throughput and recoveries resulted in Lisheen producing
170,700 tonnes of zinc and 23,100 tonnes of lead (2005: 159,300 tonnes and
20,800 tonnes, respectively).
At Black Mountain the commissioning at the Deeps shaft and the phased
redeployment from the Broken Hill and Swartberg orebodies to, and the opening
up of, the Deeps orebody has led to a gradual improvement in grade. This,
together with a modest improvement in mill throughput, saw an increase of 6% in
zinc production and 14% in lead output to 34,100 tonnes and 48,300 tonnes,
respectively.
In January 2007 it was announced that black economic empowerment company Exxaro
Resources Limited had exercised an option under which it had, subject to the
satisfaction of conditions precedent and contractual price adjustments, agreed
to acquire Namakwa Sands (for R2.0 billion) and 26% of each of Black Mountain
and Gamsberg (for a combined figure of R180 million).
Anglo Base Metals continues to focus on operational excellence and delivering
on the value- additive growth options that it is creating. Increases in zinc
and ferroniobium production are forecast in 2007 while nickel output should be
maintained. Copper production, excluding Collahuasi, is forecast to increase
modestly. Collahuasi had forecast a rise in production of some 5%, but the
taking down of a SAG mill for 65 days to replace its stator motor (which is
covered by insurance) will result in an attributable shortfall of approximately
13,000 tonnes and a level of production in line with 2006.
Outlook
After four consecutive years of particularly strong growth in the world
economy, the current consensus is one of slightly lower growth in 2007 without
undue pressure on inflation rates and thus the level of interest rates.
Although fundamentals will continue to be positive and overall stock levels
below `normal`, both the zinc and the copper markets are likely to see some
stock build up as they move into a surplus in 2007, the extent of which
(particularly in copper) will depend on supply side disruptions. Nickel markets
will remain very tight in 2007, but nickel and zinc markets will see further
increases in supply in 2008. Fundamentals are therefore supportive, but suggest
an easing of prices. The full extent of any price moves and the pace of such
change will be dictated by fluctuations in speculative and investment funds
sentiment in what is likely to be a volatile pricing environment.
FERROUS METALS AND INDUSTRIES
$ million Year ended Year ended
31 Dec 2006 31 Dec 2005
Operating profit 1,360 1,456
Kumba 778 568
Highveld Steel 230 436
Scaw Metals 160 121
Samancor Group 52 144
Tongaat-Hulett 154 131
Boart Longyear - 67
Other (14) (11)
EBITDA 1,560 1,779
Net operating assets 2,796 4,439
Capital expenditure (including biological
assets) 582 373
Share of Group operating profit 14% 23%
Share of Group net operating assets 10% 12%
Ferrous Metals and Industries` operating profit declined by 7% to $1,360
million (2005: $1,456 million), mainly as a result of the sale of non-core
businesses that contributed $94 million in 2005, as well as lower vanadium and
manganese prices, partially offset by higher iron ore prices.
Markets
World crude steel production increased by 9% in 2006, to reach a total of 1.2
billion tonnes. China accounted for most of the increase, with its share of
global output rising to 34% in 2006. The South African steel market was
characterised by strong demand, attributable to numerous major projects, among
them infrastructural preparations for the 2010 Soccer World Cup, as well as
expansion by utilities and the mining and chemical industries.
Operating performance
Kumba achieved an operating profit of $778 million (2005: $568 million). Global
iron ore demand remained strong in 2006, fuelled by the continuing expansion of
the steel industry in China. In addition to the 71.5% annual iron ore price
increase achieved in April 2005, an annual increase of 19% was achieved with
effect from April 2006. Export sales volumes for the period grew in line with
production improvements. Kumba Iron Ore produced a record 31 million tonnes of
iron ore for the period, exporting 21 million tonnes. A $754 million,
three-year expansion programme is currently under way at the Sishen mine which
will increase sales volumes by 40% to 45 million tonnes per annum. Ramp-up will
commence in 2007, with full production expected in early 2009.
Scaw produced a record operating profit of $160 million (2005: $121 million).
The acquisition in February of AltaSteel, a manufacturer of steel and
value-added steel products in Canada, together with the acquisition of the
remaining 50% of Moly-Cop Canada, contributed $32 million for the year. Strong
demand for rolled, cast and wire rod products contributed to higher profits.
The international grinding media operations achieved higher sales volumes,
although this benefit was more than offset by negative exchange rate movements.
Anglo American`s attributable share of Samancor`s operating profit was $52
million (2005: $144 million). The 2005 operating profit included a $16 million
contribution from Samancor`s chrome business, which was disposed of in June
2005. Although higher manganese ore sales volumes were achieved, lower alloy
volumes and lower selling prices negatively impacted profits. In 2006, the
average manganese ore price achieved was $2.2 per metric tonne unit (mtu),
compared with the 2005 average price of $2.9/mtu.
Highveld reported a lower operating profit of $230 million (2005: $436
million), although this performance was still the second best in its history.
An increased contribution from the steel business, driven by strong South
African steel demand, was more than counteracted by the easing of vanadium
prices from the record levels achieved in 2005. In 2006, the average
ferrovanadium price achieved was $39 per kilogram of vanadium (kgV) compared
with the 2005 average of $66/kgV.
Tongaat-Hulett`s operating profit grew to $154 million (2005: $131 million).
The sugar operations benefited from a higher world sugar price of 12.8 USc/lb
in 2006, compared with 9.0 USc/lb in 2005, while the 2006 South African sugar
crop was the second lowest in 10 years. Hulamin continued its progress in
increasing sales volumes, with record rolled product sales of 183,000 tonnes
(2005: 173,000 tonnes). African Products` margins were affected by pricing
pressures on starch and glucose and increasing maize input costs. Moreland
benefited from increased contributions from its commercial, industrial and
resorts property development portfolios.
Strategic review
Further progress was made on optimising the division`s asset base during the
year.
In July, Anglo American announced the sale of its 79% shareholding in Highveld
Steel to Evraz, an international steel producer, and Credit Suisse, for an
aggregate consideration of $678 million. Following the disposal of the initial
49.8%, for which Anglo American received $412 million, Evraz has an option to
acquire Anglo American`s remaining 29.2% stake in Highveld Steel for $266
million once regulatory approvals are received. This amount will be reduced by
any dividends paid by Highveld Steel prior to Anglo American selling its
remaining shares. The deal represents a substantial foreign direct investment
in South Africa.
In November the Kumba empowerment transaction was completed. This resulted in
the listings on the Johannesburg Stock Exchange of Kumba Iron Ore, as a pure
play iron ore company in which Anglo American holds 64%, and Exxaro, which
became South Africa`s largest black economic empowered natural resources
company.
In December the Tongaat-Hulett Group announced the proposed unbundling and
listing of Hulamin and simultaneous introduction of broad based black economic
empowerment into both companies. This transaction, which is anticipated to be
completed by mid 2007, will result in broad based black economic empowerment
groups acquiring 25% and 15% interests in Tongaat- Hulett and Hulamin,
respectively. Anglo American`s shareholding in Tongaat-Hulett will reduce from
50% to 38% and its shareholding in Hulamin from an effective 45% to 39%.
In line with Anglo American`s objective of consolidating its agri-processing
businesses within Tongaat-Hulett, it was announced in December that
Tongaat-Hulett had acquired Anglo American`s 50% shareholding in the Zimbabwe
Stock Exchange listed sugar producer, Hippo Valley Estates, for $36 million.
Outlook
Scaw`s volumes in the South African market are expected to grow, driven by
infrastructural expansion and construction and mining industry activity. Demand
for Scaw`s products internationally is forecast to remain strong, driven by
mining demand in Latin America and buoyant economic growth in Alberta, Canada.
Samancor should benefit from volume improvements and higher prices. Highveld`s
performance in 2007 should be similar to that of 2006, depending largely on
vanadium prices and continued strength in the South African steel demand.
Tongaat-Hulett is expected to benefit from higher sugar production and sales
revenue, while Hulamin plans to continue to grow its rolled product volumes and
optimise its sales mix.
Global economic growth looks set to continue in 2007, albeit at a slightly
softer pace, with global steel output forecast to rise by over 6% in 2007. The
outlook for the division remains broadly positive, given the benchmark annual
iron ore price increase of 9.5% effective 1 April 2007 and a stable rand.
Earnings in 2007 will be influenced by the timing of the sale of Anglo
American`s remaining Highveld stake and the transaction unbundling the
Tongaat-Hulett aluminium business.
COAL
$ million Year ended Year ended
31 Dec 2006 31 Dec 2005
Operating profit 864 1,019
South Africa 380 470
Australia 279 323
South America 227 240
Projects and corporate (22) (14)
EBITDA 1,082 1,243
Net operating assets 2,862 2,244
Capital expenditure 780 331
Share of Group operating profit 9% 16%
Share of Group net operating assets 10% 6%
Anglo Coal`s operating profit decreased by 15% to $864 million. Coal production
and sales for the first half of the year were adversely affected by a
combination of poor weather in South Africa and rail and port constraints in
Australia. In the second half production and sales volumes recovered and were
markedly higher. Nevertheless for the year, operating profit was lower due to
an overall decline in export volumes and a pull back in export prices from the
very high levels of the year before. South Africa, Australia and South America
contributed 44%, 32% and 26% respectively, to operating profit.
Markets
Global demand and supply for thermal coal remained well balanced during 2006.
The dampening effect of mild winter temperatures in Europe and the US was
mitigated by a series of worldwide logistical and production constraints and a
buoyant European energy market, bolstered by high oil and gas prices. The
combination of these factors maintained thermal coal prices at historically
high levels. Metallurgical coal prices softened in 2006 from the highs of 2005,
particularly the semi soft coking and pulverised injection (PCI) coals.
During 2006 geopolitical events demonstrated coal`s strategic importance to the
overall energy mix. Compared to oil and gas, coal`s security of supply from
widely distributed reserves makes it one of the world`s most reliable energy
sources. This together with the development and implementation of clean coal
technologies will, over time, position coal to make a significant contribution
towards satisfying future global energy demand while addressing environmental
concerns.
Operating performance
Operating profit for South African sourced coal, at $380 million, was 19% lower
than the previous year`s $470 million, reflecting average realised export
prices which were 6% lower in 2006 and a 1% decline in export sales volumes.
The rand continued to weaken in 2006, with a positive impact on operating
profit of $28 million.
Production for the year increased by 2.5 million tonnes, or 4.3%, to 59.3
million tonnes, as Isibonelo went into full production and output from Landau
and New Denmark grew. Landau benefited from improved yields arising from plant
efficiency improvements and favourable contractor performance, whilst New
Denmark benefited from strong longwall performance. Excessive rainfall during
the first quarter hampered production at several operations in particular New
Vaal and Kleinkopje.
Total sales, bolstered by Isibonelo, reached 59.3 million tonnes, 4.5% higher
than prior year. Export sales decreased by 0.2 million tonnes or 1%. Sales to
Eskom rose by 2.5% as increased economic activity continued to spur electricity
demand.
Operating profit for the Australian operations reduced by 14% to $279 million
(although the 2005 results included $27 million from insurance proceeds
pertaining to a roof fall at Moranbah North the previous year). The decline in
operating profit was chiefly on account of lower production volumes arising
from the cessation of mining at Dartbrook owing to difficult geological
conditions, combined with commissioning delays to the Grasstree longwall
operation. These reductions were partly compensated by the staged expansion at
Dawson, resulting in an overall reduction of 0.9 million tonnes for Anglo Coal
Australia. Site costs rose, with industry inflation statistics reporting 11.7%
increases year on year on the back of rising prices of commodities globally and
often poor local availability of scarce resources. Other cost increases came
with the expanding Dawson mine and the purchase of third party coal during the
Grasstree transition phase at Capcoal. Port and rail constraints impeded final
sales volumes and resulted in higher closing stock on hand at all export mine
sites.
Callide`s output increased by 0.3 million tonnes to 9.8 million tonnes. Dawson
mine received additional heavy mining equipment as part of its incremental
expansion and increased production by 11%, with the coking coal proportion of
its coal mix rising to 45% from 30% in 2005. Drayton maintained output,
although port constraints resulted in the mine being stock bound at year end.
During the year Capcoal moved its main underground operations to the Grasstree
mine, which experienced delays owing to conveyor and longwall commissioning
problems, resulting in an 11% reduction in production. In 2006 work got under
way on the Lake Lindsay project, which will extend open cut mining from the
Capcoal operation. Moranbah North`s production was 0.5 million tonnes lower,
primarily as a result of difficult geological challenges being experienced
during the first half of 2006.
In South America, operating profit was 5% lower than 2005 at $227 million
following a decline in export selling prices, higher operating costs,
particularly in respect of fuel prices, and a stronger Colombian peso. The
decrease in operating profit was partly offset by an increase in production at
Cerrejon of 9% to 28.4 million tonnes as the first expansion project was
completed. Sales volumes at Carbones del Guasare in Venezuela were marginally
below 2005 because of transportation difficulties between the mine and the
port.
In Australia, capital expenditure for the year was 190% higher at $537 million,
principally attributable to the ramp-up of the $426 million Dawson and $361
million Lake Lindsay projects. Dawson is expected to reach full production of
5.7 million tonnes per annum in 2007. Lake Lindsay is proceeding to plan, with
first coal scheduled for 2008.
In South Africa, the start of work at the $132 million Mafube mine, wash plant
enhancements at Goedehoop and completion of the Isibonelo mine represent the
majority of the capital expenditure. Mafube will increase Anglo Coal`s thermal
coal production by 5 million tonnes per annum. The coal projects which have
been identified as part of Project Eureka will continue to enhance Anglo Coal`s
participation in the South African coal sector.
In South America the expansion of Cerrejon to 32 million tonnes per annum is
continuing and full production is scheduled for 2008. A pre-feasibility study
is investigating additional capacity beyond 32 million tonnes per annum.
Outlook
The rand exchange rates and coal prices will continue to be the two main
variables in 2007, with export prices expected to be more stable in 2007,
though with a somewhat softer bias.
Thermal coal prices for 2007 will continue to be subject to volatility,
resulting from anticipated growth in India and the Asian economies, increased
incremental supply from major producing regions, unpredictable fluctuations in
seasonal temperatures and the price of competing energy fuels. Hard coking coal
prices have decreased by up to 20% for 2007 contracts beginning in April.
Early negotiations in thermal coal are showing that the market is remaining
strong, with similar prices set to be realised in 2007.
Substantial capital will continue to be invested in all regions, with
accompanying increases in production, particularly in South Africa and
Australia.
In November 2006, Anglo Coal, Hillsborough Resources and North Energy Mining
Incorporated created Peace River Coal, of which Anglo Coal owns 60%. Peace
River Coal is a metallurgical coal mine in Canada that is expected to produce
around 2.0 mt in 2007.
The agreement between Anglo Coal and Shell with respect to the joint
development of Monash Energy (coal-to-liquids projects) advances and the
conclusion of the concept study is anticipated in 2007.
In February 2007, Anglo Coal announced the creation of Anglo Inyosi Coal, an
empowered coal company housing key current and future domestic and export
focused coal operations. Anglo Coal has signed a Heads of Agreement with
Inyosi, a newly formed broad based black economic empowerment company. Inyosi
will acquire 27% of Anglo Inyosi Coal, creating a company valued at R7 billion
and incorporating several key Anglo Coal assets, namely Kriel Colliery an
existing mine, and Elders, Zondagsfontein, New Largo and Heidelberg projects.
INDUSTRIAL MINERALS
$ million Year ended Year ended
31 Dec 2006 31 Dec 2005
Operating profit 336 370
Tarmac 315 340
Copebras 21 30
EBITDA 580 618
Net operating assets 4,524 3,982
Capital expenditure 298 274
Share of Group operating profit 3% 6%
Share of Group net operating assets 16% 11%
Anglo Industrial Minerals generated an operating profit of $336 million. Tarmac
Group`s operating profit was 7% lower than 2005 at $315 million. The UK profit
was down 10%, considered a robust performance in the face of challenging market
conditions, with lower volumes and weaker margins in some businesses
exacerbated by high energy costs for much of the year. Input cost pressures
were partly mitigated by cost savings of some $63 million as a result of
operational efficiencies, including Tarmac`s ongoing supply chain management
programme.
Markets and operating performance
Tarmac`s contribution from its international businesses increased by 5%,
reflecting strong performances by the Middle East and improvements by Poland
and Germany, offset by weaker demand in Spain. Copebras` operating profit
was down 30% from the prior year owing to the combined effects of the 11%
strengthening of the Brazilian real against the US dollar and weak demand from
the agricultural sector.
In 2006 Tarmac completed its operational, commercial and organisational
restructuring. The new business structure facilitates continuous improvement
both operationally and commercially. The scope of its activities are also now
clearly defined as aggregates, together with the three routes to market
(asphalt, concrete and concrete products), and integration of cement where
appropriate. This strengthens Tarmac`s ability to improve its results and grow.
A special charge for impairment and restructuring costs of $278 million was
taken. This related to businesses sold ($46 million), businesses retained and
restructured ($212 million) and closure and other items ($20 million).
In addition to bolt-on acquisitions in France, the Czech Republic and Poland,
Tarmac successfully entered Turkey and acquired a developing business in
Romania, involving interests in quarries and ready mixed concrete. These
acquisitions enhance Tarmac`s ability to develop its business in Central and
eastern Europe, identified as a key focus of the company`s growth strategy.
2006 saw increased focus on improving the profitability of underperforming
businesses and on disposing of `non-core` businesses including the UK based
Minerals and Materials business and the underperforming TopPave business.
Previously announced disposals of assets in Hong Kong and Germany were
completed in the second half of the year.
Tarmac`s operating profit in the UK declined owing largely to general market
weakness, which caused demand to fall, and to high and volatile energy related
costs for much of the year. The Aggregate Products business was impacted by
weak demand and a highly competitive marketplace, with demand for coated stone
being 8% down on the previous year.
During 2006, additional resources were directed at improving commercial and
operational processes in Aggregate Products, and early results are encouraging.
Work has started on Tarmac`s largest ever contract, resurfacing England`s M1
motorway - an example of new, long term, framework agreements that now prevail
in the marketplace.
Tarmac`s Building Products and International businesses experienced improved
results compared with the previous year. However this gain was offset by weak
demand for aggregate products, particularly in the road and housing sectors.
Despite a substantial decline in demand from the housing sector for blocks,
underlying profits in Building Products were 23% better than 2005. This
reflects the benefits of operational improvements in the Topblock and Precast
businesses and the disposal of the underperforming TopPave business. The
Precast business also benefited from the work related to the construction
programme for the 2012 London Olympic games.
Operating profits for Tarmac International improved 5% over the previous year
owing to stronger markets in France and benefits accruing from acquisitions and
re-organisation and improved performance in Poland, the first full-year benefit
of the Shawkah quarry in the Middle East (one of the largest in the Tarmac
Group) and high demand in the Czech Republic and Germany. Profits in Spain were
lower, largely reflecting the impact of higher cement costs despite strong
demand in the Central Region.
Outlook
Market conditions in the UK are expected to remain challenging with weak demand
in some sectors and high cost pressures. The uncertainty of government spending
on infrastructure is also a cause for concern, as is the increasing impact of
different types of construction materials such as steel and timber on the
industry. Volatility of energy prices and the impact that they have on Tarmac`s
business in terms of cement and distribution costs will also continue to affect
performance and demand commensurate efforts to drive further efficiencies.
GOLD
$ million Year ended Year ended
31 Dec 2006(1) 31 Dec 2005
Operating profit 467 332
EBITDA 843 871
Net operating assets - 6,982
Capital expenditure 196 722
Group`s aggregate investment in AngloGold
Ashanti 1,623 -
Share of Group operating profit 5% 5%
Share of Group net operating assets - 20%
(1)The results for 2006 are reported as a subsidiary up to 20 April and
thereafter as an associate at 42% attributable (see note 3 to the financial
information). The Group`s share of AngloGold Ashanti`s net assets is disclosed.
Attributable operating profit in 2006 climbed to $467 million, 41% higher than
the figure for the previous year (2005: $332 million), mainly due to impact of
a stronger gold price, partially offset by the Group accounting for AngloGold
Ashanti as an associate from 20 April 2006. At the end of 2006 the gold price
($604 per ounce) was more than 36% higher than at the beginning of the year
($445 per ounce), while the average price received for the year was 31% higher
than the prior year. Total cash costs were $27 per ounce higher, at $308 per
ounce, mainly resulting from stronger operating currencies, inflation and lower
grades.
Markets
Investor interest in gold continued throughout 2006. The average gold price
received increased by $138 per ounce to $577. This momentum has continued into
2007, with the spot gold price currently well above the $600 per ounce mark.
Operating performance
In 2006, AngloGold Ashanti`s production from ongoing operations declined by 9%
to 5.64 million ounces and was largely attributable to reductions of 305,000
ounces in Tanzania, 122,000 ounces in South Africa and 88,000 ounces in Ghana.
These decreases were only partly compensated by small increases in output from
assets in Australia, Argentina and Mali.
The review of AngloGold Ashanti`s assets has resulted in management
implementing programmes to ensure that these operations better their ore
reserve, profit margin and growth potential.
During the year AngloGold Ashanti successfully raised $500 million of equity at
a negligible discount to the prevailing market price.
AngloGold Ashanti is focusing on growing the reserve and resource base, both
through exploration and through a disciplined, value adding mergers and
acquisitions programme.
In respect of both of these activities, the company is now looking outside of
the world`s mature gold regions and has exploration projects in Africa in the
Democratic Republic of Congo and in South America in Colombia. In Russia,
AngloGold Ashanti has announced the formation of a strategic alliance with
Polymetal. Strategic alliances are being pursued in China to allow the company
to successfully extract value from a region undergoing significant regulatory
change. Exploration partnerships in the Philippines, Laos and Mongolia have
resulted in land positions being acquired in several prospective areas.
Outlook
The gold price has now risen for six years in succession, which has not been
seen since the deregulation of the gold market in the developed markets in
1971. Ongoing strong demand from the growing economies of China and India as
well as continued investor speculation and official sector activities are seen
as being supportive of the gold price.
PAPER AND PACKAGING
$ million Year ended Year ended
31 Dec 2006 31 Dec 2005
Operating profit 477 495
Packaging 287 293
Business Paper 130 163
Other 60 39
EBITDA 923 916
Net operating assets 7,019 6,365
Capital expenditure (including biological
assets) 644 746
Share of Group operating profit 5% 8%
Share of Group net operating assets 25% 18%
In the second half of the year there was some improvement in overall market
conditions. Operating profit for the second half of 2006 at $265 million was up
on the comparable period for 2005. The second half performance partially offset
the impact of a poor first six months with full year profits of $477 million,
4% down on 2005. Although operating rates for Mondi`s European upstream paper
markets appear to have improved allowing for some price increases, input cost
pressures (fibre, chemicals and energy) and tough trading conditions in
downstream converting activities have continued to put margins under pressure.
In response Mondi has focused on cost saving and profit improvement initiatives
delivering $224 million of benefits for the full year.
Markets and operating performance
Mondi Packaging`s operating profit of $287 million was 2% below the previous
year`s $293 million, the strong upturn in packaging paper pricing was more than
offset by higher input costs and continued margin pressure in the converting
operations. Mondi has been active in restructuring its converting operations to
improve efficiencies and focus on high growth niche areas, with ten sites
divested and one closed during the year. In addition Mondi closed down two
corrugators amounting to 8% of its capacity. The results of these actions can
be seen in productivity, measured in output per employee which has improved by
9% across the business.
There were several small acquisitions in the period with Mondi further
strengthening its position in the higher growth niche release liner segment
through the acquisition of Akrosil (mainly US and European based), Schleipen
and Erkens and NBG Special Coatings (both European based). The acquisition of
Peterson Barriere in Norway adds to the extrusion coating segment. The
acquisition of the Bulgarian Kraft Paper Factory Stambolijski was finalised
during June. Agreement to dispose of Mondi`s stake in Bischof + Klein, an
associate company specialising in polymer films and flexible packaging, was
reached in December with completion expected during the first quarter of 2007.
Mondi is considering an investment in Poland or the Czech Republic in a new
paper machine to produce lightweight testliner and fluting. This is a market
which is growing rapidly and where there is a shortage of product in Eastern
Europe. The cost of this investment is estimated at $365 million and will
provide capacity of 470,000 tonnes with first production expected in the second
half of 2009.
Mondi Business Paper`s operating profit of $130 million was 20% down on the
$163 million recorded in 2005. Tough trading conditions contributed to the
decline in profits (particularly in the first half), and were compounded by the
slow start up at the Merebank South Africa operation, of the paper machine PM31
following a major rebuild, and expenses related to project development.
PM31 is now operating at a much improved run rate and is producing better
grades of paper. Further improvement is required which may include some
modifications to the machine in order that it can produce at its designed
potential. In addition the South African operation is undergoing a major
restructuring programme to improve efficiencies and lower costs. As a result of
this restructuring and the improvement in PM31 performance a better result is
expected in 2007 from the South Africa.
Within the rest of the business the non-integrated mills saw profitability
significantly eroded by rising pulp costs but both Syktyvkar and Ruzomberok
recorded strong results on the back of increased sales volumes and good cost
control.
In response to weak European market conditions Mondi took 110,000 tonnes at
annual production capacity out of the business papers market in 2006 by
irreversibly converting the Dunaujvaros mill in Hungary to a speciality paper
plant and selling the assets.
Overall product demand was positive with uncoated woodfree sales volumes up 10%
also helped by increased production from PM31. The increased demand has led to
improved operating rates and some improvement in pricing towards the end of the
year (an average price increase of 4% was announced across Mondi business
paper`s key paper grades in January 2007). However pricing is still well below
historic mid cycle levels and margins continue to be impacted by rising input
costs, particularly for fibre and energy.
Consideration is being given to a major modernisation programme for the Russian
operation which could see substantial investment over the next five years in
improving infrastructure, increasing capacity and reducing cost through
enhanced efficiencies. This capital expenditure programme includes some
elements that would have been part of the previously announced major pulp
expansion project (initial cost estimate of $1.5 billion) and will allow the
mill to be in a good position to reconsider this project once the modernisation
programme is complete.
Mondi Packaging South Africa had a better year with improved agricultural
packaging volumes and good cost control. Other operations which comprise the
Newsprint and Merchant activities as well as corporate costs saw net operating
profits well up on the comparable period. All major trading operations recorded
improved results with both newsprint operations performing well as a result of
an improved pricing environment.
Outlook
The company enjoyed a strong finish to 2006 which will provide a good platform
going into 2007 and whilst the trading environment has undoubtedly improved,
concerns remain about the strength of the recovery and the level of
overcapacity in some of the markets in which Mondi operates. Mondi is
encouraged by the number and scale of recent industry announcements regarding
capacity closures and this bodes well for the future. Overall, Mondi expects a
better financial performance in 2007, despite rising corporate costs (in
anticipation of the demerger from Anglo American plc), as a result of improved
pricing for its key products, focus on cost saving and the benefits of a better
PM31 performance.
Consolidated income statement
for the year ended 31 December 2006
Before Special
special items and
items and remeasurements
remeasurements (note 6)
US$ million Note 2006 2006
Group revenue 3 33,072 -
Total operating costs (24,330) (868)
Operating profit from
subsidiaries and
joint ventures 3 8,742 (868)
Net profit on disposals 6 - 1,168
Share of net income from
associates 3 582 103
Total profit from operations and
associates 3 9,324 403
Investment income 609 57
Interest expense (774) (57)
Net finance costs 7 (165) -
Profit before tax 9,159 403
Income tax (expense)/income 8 (2,763) 123
Profit for the financial year 6,396 526
Attributable to:
Minority interests 925 (189)
Equity shareholders of the
Company 4 5,471 715
Earnings per share (US$)
Basic 9
Diluted 9
Dividends
Proposed ordinary dividend
per share (US cents)
Proposed ordinary dividend
(US$ million)
Proposed special dividend
per share (US cents)
Proposed special dividend
(US$ million)
Dividends paid during the year
per share
(US cents)
Dividends paid during the year
(US$ million)
Before
special
items and
remeasurements
US$ million 2006 2005
Group revenue 33,072 29,434
Total operating costs (25,198) (24,090)
Operating profit from subsidiaries and
joint ventures 7,874 5,344
Net profit on disposals 1,168 -
Share of net income from associates 685 696
Total profit from operations and
associates 9,727 6,040
Investment income 666 498
Interest expense (831) (926)
Net finance costs (165) (428)
Profit before tax 9,562 5,612
Income tax (expense)/income (2,640) (1,283)
Profit for the financial year 6,922 4,329
Attributable to:
Minority interests 736 593
Equity shareholders of the Company 6,186 3,736
Earnings per share (US$)
Basic 4.21
Diluted 4.12
Dividends
Proposed ordinary dividend per share
(US cents) 75
Proposed ordinary dividend (US$ million) 1,107
Proposed special dividend per share
(US cents) -
Proposed special dividend (US$ million) -
Dividends paid during the year per share
(US cents) 195
Dividends paid during the year (US$ million) 2,839
Special
items and
remeasurements
(note 6)
US$ million 2005 2005
Group revenue - 29,434
Total operating costs (487) (24,577)
Operating profit from subsidiaries and
joint ventures (487) 4,857
Net profit on disposals 87 87
Share of net income from associates (39) 657
Total profit from operations and
associates (439) 5,601
Investment income 72 570
Interest expense (37) (963)
Net finance costs 35 (393)
Profit before tax (404) 5,208
Income tax (expense)/income 8 (1,275)
Profit for the financial year (396) 3,933
Attributable to:
Minority interests (181) 412
Equity shareholders of the Company (215) 3,521
Earnings per share (US$)
Basic 2.43
Diluted 2.36
Dividends
Proposed ordinary dividend per share
(US cents) 62
Proposed ordinary dividend (US$ million) 903
Proposed special dividend per share
(US cents) 33
Proposed special dividend (US$ million) 480
Dividends paid during the year per share
(US cents) 79
Dividends paid during the year (US$ million) 1,137
Underlying earnings and underlying earnings per share are set out in note 9.
Consolidated balance sheet
as at 31 December 2006
US$ million Note 2006 2005
Intangible assets 2,134 2,572
Tangible assets 23,498 30,796
Biological assets 324 350
Environmental rehabilitation trusts 197 288
Investments in associates 4,780 3,165
Financial asset investments 1,973 899
Deferred tax assets 372 337
Other financial assets (derivatives) - 183
Other non-current assets 173 153
Total non-current assets 33,451 38,743
Inventories 2,974 3,569
Trade and other receivables 5,312 5,174
Current tax assets 225 211
Current financial asset investments - 16
Other current financial assets (derivatives) 329 747
Cash and cash equivalents 13 3,004 3,430
Total current assets 11,844 13,147
Assets classified as held for sale 11 1,188 -
Total assets 46,483 51,890
Short term borrowings 13 (2,028) (2,076)
Trade and other payables (5,040) (5,024)
Short term provisions (62) (19)
Current tax liabilities (1,453) (1,145)
Other current financial liabilities
(derivatives) (216) (1,286)
Total current liabilities (8,799) (9,550)
Medium and long term borrowings 13 (4,220) (6,363)
Retirement benefit obligations (775) (1,258)
Other financial liabilities (derivatives) (304) (508)
Deferred tax liabilities (3,687) (5,201)
Provisions (1,024) (1,432)
Total non-current liabilities (10,010) (14,762)
Liabilities directly associated with assets
classified as held for sale 11 (547) -
Total liabilities (19,356) (24,312)
Net assets 27,127 27,578
Equity
Called-up share capital 12 771 747
Share premium account 12 2,713 1,637
Other reserves 12 1,049 1,330
Retained earnings 12 19,738 19,907
Equity attributable to equity shareholders of
the Company 24,271 23,621
Minority interests 12 2,856 3,957
Total equity 27,127 27,578
The financial statements were approved by the Board of directors on 20 February
2007.
Tony Trahar Rene Medori
Chief executive Finance director
Consolidated cash flow statement
for the year ended 31 December 2006
US$ million Note 2006 2005
Cash inflows from operations 13 10,057 7,265
Dividends from associates 276 461
Dividends from financial asset investments 12 9
Income tax paid (2,035) (954)
Net cash inflows from operating activities 8,310 6,781
Cash flows from investing activities
Acquisition of subsidiaries, net of cash and
cash
equivalents acquired 15 (286) (298)
Investment in associates (11) (29)
Investment in joint ventures (7) -
Purchase of tangible assets 10 (3,686) (3,306)
Investment in biological assets 10 (64) (55)
Purchase of financial asset investments (40) (203)
Loans granted to related parties (72) -
Interest received and other investment income 240 210
Disposal of subsidiaries, net of cash and cash
equivalents disposed 16 1,520 419
Sale of interests in joint ventures 2 2
Sale of interests in associates 40 11
Repayment of loans and capital from associates 394 370
Proceeds from disposal of tangible assets 124 327
Proceeds from sale of financial asset
investments 80 245
Loan repayments from related parties - 1
Utilised in hedge restructure - (69)
Other investing activities (39) (18)
Net cash used in investing activities (1,805) (2,393)
Cash flows from financing activities
Cash inflow from current financial asset
investments 5 13
Issue of shares by subsidiaries to minority
interests 71 73
Sale of treasury shares to employees 259 240
Purchase of treasury shares (3,922) -
Interest paid (426) (547)
Dividends paid to minority interests (383) (421)
Dividends paid to Company shareholders (2,888) (1,137)
Receipt/(repayment) of short term borrowings 197 (1,356)
Receipt/(repayment) of medium and long term
borrowings 386 (632)
Capital element of finance leases (16) -
Other financing activities 42 (19)
Net cash used in financing activities (6,675) (3,786)
Net (decrease)/increase in cash and cash
equivalents (170) 602
Cash and cash equivalents at start of year 13 3,319 2,781
Cash movements in the year (170) 602
Effects of changes in foreign exchange rates (169) (64)
Cash and cash equivalents at end of year 13 2,980 3,319
Consolidated statement of recognised income and expense
for the year ended 31 December 2006
US$ million 2006 2005
Net gains on revaluation of available for sale investments 492 31
Impairment of available for sale investments (13) -
Loss on cash flow hedges (502) (316)
Loss on cash flow hedges - associates (117) -
Exchange losses on translation of foreign operations (439) (2,182)
Actuarial net gains/(losses) on post-retirement benefit
schemes 102 (171)
Actuarial net gains/(losses) on post-retirement benefit
schemes - associates 3 (24)
Deferred tax 60 140
Other movements - 5
Net expense recognised directly in equity (414) (2,517)
Transferred to income statement: sale of available for
sale investments (27) (32)
Transferred to income statement: impairment of available
for sale investments 13 -
Transferred to income statement: cash flow hedges 148 (8)
Transferred to income statement: exchange differences on
disposal of foreign operations 9 -
Tax on items transferred from equity (33) -
Total transferred to/(from) equity 110 (40)
Profit for the year 6,922 3,933
Total recognised income and expense for the year 6,618 1,376
Attributable to:
Minority interests 603 82
Equity shareholders of the Company 6,015 1,294
Notes to the financial information
1. General information
The financial information for the year ended 31 December 2006 does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985. Statutory accounts for the year ended 31 December 2005 have been
delivered to the Registrar of Companies and those for 2006 will be delivered
following the Company`s annual general meeting convened for Tuesday, 17 April
2007. The auditors have reported on these accounts; their reports were
unqualified and did not contain statements under Section 237 (2) or (3) of the
Companies Act 1985.
2. Basis of preparation
Whilst the preliminary announcement has been prepared in accordance with
International Financial Reporting Standards (IFRS) and IFRIC interpretations
adopted for use by the European Union and with those parts of the Companies Act
1985 applicable to companies reporting under IFRS, this announcement does not
itself contain sufficient information to comply with IFRS. The Group will
publish full financial statements that comply with IFRS in March 2007. The
financial statements have been prepared under the historical cost convention as
modified by the recording of pension assets and liabilities and the revaluation
of biological assets and certain financial instruments.
The accounting policies applied are consistent with those adopted and disclosed
in the Group`s annual financial statements for the year ended 31 December 2005,
with the exception of adopting the following standards and interpretations as
at 31 December 2006:
IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting
in Hyperinflationary Economies
IFRIC 8 Scope of IFRS 2
IFRIC 9 Reassessment of embedded derivatives
IFRIC 10 Interim Financial Reporting and Impairment
These have not had a material impact on the Group.
3. Segmental information
Based on risks and returns the directors consider the primary reporting format
is by business segment and the secondary reporting format is by geographical
segment.
The analysis of associates` revenue by business segment is provided here for
completeness and consistency.
On 20 April 2006 the Group completed the sale of 19.7 million ordinary shares
held in AngloGold Ashanti Limited for cash of $978 million. This, together with
the Group`s non-participation in the issue of ordinary shares throughout the
year by AngloGold Ashanti, diluted the Group`s percentage investment from 50.9%
to 41.7%.
As a result of this, the Group is no longer considered to `control` AngloGold
Ashanti and therefore the investment is now reflected in the Group accounts on
an equity accounted basis. This change in accounting treatment is effective
from the date of sale and therefore the current year includes AngloGold
Ashanti`s 100% consolidated contribution to profit for the period 1 January to
20 April 2006 and the appropriate share of AngloGold Ashanti`s profit for the
period after 20 April 2006 until the year end.
3. Segmental information (continued)
Primary reporting format - by business segment
Segment
revenue(1)
US$ million 2006 2005
Subsidiaries and joint ventures
Platinum 5,766 3,646
Gold 857 2,629
Coal 2,726 2,766
Base Metals 6,252 3,647
Industrial Minerals 4,274 4,043
Ferrous Metals and Industries 5,973 6,030
Paper and Packaging 7,224 6,673
Exploration - -
Corporate Activities - -
33,072(3) 29,434(3)
Total subsidiaries and joint ventures
Revenue and net income from associates
Platinum 95 68
Gold 883 15
Diamonds 3,148 3,316
Coal 607 583
Industrial Minerals 17 30
Ferrous Metals and Industries 546 743
Paper and Packaging 269 283
Total associates 5,565 5,038
Total Group operations including net income
from associates 38,637 34,472
Net profit on disposals
Total profit from operations and associates
Segment result
before
special items and
remeasurements(2)
US$ million 2006 2005
Subsidiaries and joint ventures
Platinum 2,337 835
Gold 228 332
Coal 607 752
Base Metals 3,876 1,678
Industrial Minerals 334 366
Ferrous Metals and Industries 1,303 1,308
Paper and Packaging 466 484
Exploration (132) (150)
Corporate Activities (277) (261)
8,742 5,344
Total subsidiaries and joint ventures
Revenue and net income from associates
Platinum 40 12
Gold 113 -
Diamonds 199 386
Coal 185 192
Industrial Minerals 1 3
Ferrous Metals and Industries 38 96
Paper and Packaging 6 7
Total associates 582 696
Total Group operations including net income
from associates 9,324 6,040
Net profit on disposals
Total profit from operations and associates
Segment result
after
special items and
remeasurements
US$ million 2006 2005
Subsidiaries and joint ventures
Platinum 2,337 835
Gold (142) (50)
Coal 482 753
Base Metals 3,884 1,667
Industrial Minerals 37 350
Ferrous Metals and Industries 1,324 1,312
Paper and Packaging 374 401
Exploration (132) (150)
Corporate Activities (290) (261)
7,874 4,857
Total subsidiaries and joint ventures
Revenue and net income from associates
Platinum 40 12
Gold 72 (2)
Diamonds 337 257
Coal 185 192
Industrial Minerals 1 3
Ferrous Metals and Industries 44 189
Paper and Packaging 6 6
Total associates 685 657
Total Group operations including net income
from associates 8,559 5,514
Net profit on disposals 1,168 87
Total profit from operations and associates 9,727 5,601
Footnotes (1) and (2) are to be found on the following page.
(3) This represents segment revenue; the Group`s share of associates` revenue
figures are provided for additional information.
For information, a segmental analysis of associates` operating profit is set
out below to show operating profit for total Group operations including
associates.
Operating profit
before
special items and
remeasurements
US$ million 2006 2005
Total subsidiaries and joint ventures 8,742 5,344
Associates
Platinum 61 19
Gold 239 -
Diamonds 463 583
Coal 257 267
Industrial Minerals 2 4
Ferrous Metals and Industries 57 148
Paper and Packaging 11 11
Total associates 1,090 1,032
Total Group operations including operating profit from
associates 9,832 6,376
Operating profit
after
special items and
remeasurements
US$ million 2006 2005
Total subsidiaries and joint ventures 7,874 4,857
Associates
Platinum 61 19
Gold 133 (2)
Diamonds 446 431
Coal 257 267
Industrial Minerals 2 4
Ferrous Metals and Industries 57 149
Paper and Packaging 11 11
Total associates 967 879
Total Group operations including operating profit from
associates 8,841 5,736
3. Segmental information (continued)
Primary reporting format - by business segment (continued)
(1) By-product revenue credited to Group cost of sales for the year ended 31
December 2006 was $34 million (2005: $76 million) and related principally to
AngloGold Ashanti`s contribution as a subsidiary; AngloGold Ashanti credit
sales of uranium, silver and acid to cost of sales in accordance with the Gold
Industry Standard on production cost.
(2) Segment result is defined as being segment revenue less segment expense;
that is operating profit and gains and losses from foreign currency derivatives
that have been recycled in the income statement being cash flow hedges of sales
and purchases. In addition Share of net income from associates is shown by
segment. There are no material inter-segment transfers or transactions that
would affect the segment result. Special items and remeasurements are set out
in note 6. Associates` operating profit is reconciled to `Share of net income
from associates` as follows:
US$ million 2006 2005
Operating profit from associates before special items and
remeasurements 1,090 1,032
Operating special items and remeasurements (123) (153)
Operating profit from associates after special items and
remeasurements 967 879
Net profit on disposals 199 98
Financing remeasurements 26 7
Net finance costs (before remeasurements) (101) (51)
Income tax expense (after special items and remeasurements) (368) (274)
Underlying minority interest (after special items and
remeasurements) (38) (2)
Share of net income from associates 685 657
The segment result and associates` operating profit before special items and
remeasurements, as shown above, is reconciled to `Profit for the financial
year` as follows:
US$ million 2006 2005
Operating profit, including associates, before special
items and remeasurements
9,832 6,376
Operating special items and remeasurements:
Subsidiaries and joint ventures (868) (487)
Gold (370) (382)
Coal (125) 1
Base Metals 8 (11)
Industrial Minerals (297) (16)
Ferrous Metals and Industries 21 4
Paper and Packaging (92) (83)
Corporate Activities (13) -
Associates (123) (153)
Gold (106) (2)
Diamonds (17) (152)
Ferrous Metals and Industries - 1
Operating profit, including associates, after special
items and remeasurements 8,841 5,736
Net profit on disposals
Subsidiaries and joint ventures 1,168 87
Associates 199 98
Associates` net finance costs (101) (51)
Associates` financing remeasurements 26 7
Associates` income tax expense (369) (281)
Associates` tax on special items and remeasurements 1 7
Associates` minority interests (38) (4)
Associates` minority interests on special items and
remeasurements - 2
Total profit from operations and associates 9,727 5,601
Net finance costs before special items and
remeasurements (165) (428)
Financing special items (4) -
Financing remeasurements 4 35
Profit before tax 9,562 5,208
Income tax expense (2,640) (1,275)
Profit for the financial year 6,922 3,933
3. Segmental information (continued)
Primary reporting format - by business segment (continued)
Primary segment disclosures for segment assets, liabilities and capital
expenditure are as follows:
Segment assets(1)
US$ million 2006 2005
Platinum 7,721 7,550
Gold - 7,890
Coal 3,646 3,024
Base Metals 4,899 5,358
Industrial Minerals 5,487 5,041
Ferrous Metals and Industries 3,529 5,341
Paper and Packaging 8,113 7,400
Exploration 1 -
Corporate Activities 200 251
33,596 41,855
Unallocated
Investment in associates 4,780 3,165
Financial asset investments 1,973 915
Deferred tax assets/(liabilities) 372 337
Cash and cash equivalents 3,004 3,430
Other financial assets/(liabilities) -
(derivatives) 329 930
Other non-operating assets/
(liabilities) 2,429 1,258
Other provisions - -
Borrowings - -
Net assets 46,483 51,890
Segment liabilities(2)
US$ million 2006 2005
Platinum (643) (532)
Gold - (908)
Coal (784) (780)
Base Metals (631) (573)
Industrial Minerals (963) (1,059)
Ferrous Metals and Industries (733) (902)
Paper and Packaging (1,094) (1,035)
Exploration (2) (3)
Corporate Activities (404) (310)
(5,254) (6,102)
Unallocated
Investment in associates - -
Financial asset investments - -
Deferred tax assets/(liabilities) (3,687) (5,201)
Cash and cash equivalents - -
Other financial assets/(liabilities) -
(derivatives) (520) (1,794)
Other non-operating assets/
(liabilities) (3,308) (2,420)
Other provisions (339) (356)
Borrowings (6,248) (8,439)
Net assets (19,356) (24,312)
Net segment assets
US$ million 2006 2005
Platinum 7,078 7,018
Gold - 6,982
Coal 2,862 2,244
Base Metals 4,268 4,785
Industrial Minerals 4,524 3,982
Ferrous Metals and Industries 2,796 4,439
Paper and Packaging 7,019 6,365
Exploration (1) (3)
Corporate Activities (204) (59)
28,342 35,753
Unallocated
Investment in associates 4,780 3,165
Financial asset investments 1,973 915
Deferred tax assets/(liabilities) (3,315) (4,864)
Cash and cash equivalents 3,004 3,430
Other financial assets/(liabilities) -
(864)
(derivatives) (191)
Other non-operating assets/
(liabilities) (879) (1,162)
Other provisions (339) (356)
Borrowings (6,248) (8,439)
Net assets 27,127 27,578
Capital expenditure(3)
US$ million 2006 2005
Platinum 935 685
Gold 196 721
Coal 789 331
Base Metals 298 273
Industrial Minerals 402 312
Ferrous Metals and Industries 660 376
Paper and Packaging 704 703
Exploration - -
Corporate Activities 29 27
4,013 3,428
Unallocated
Investment in associates
Financial asset investments
Deferred tax assets/(liabilities)
Cash and cash equivalents
Other financial assets/(liabilities) -
(derivatives)
Other non-operating assets/
(liabilities)
Other provisions
Borrowings
Net assets
(1) Segment assets at 31 December 2006 are operating assets and consist
primarily of tangible assets ($23,498 million), intangible assets ($2,134
million), biological assets ($324 million), environmental rehabilitation trusts
($197 million), inventories ($2,974 million), pension and post-retirement
healthcare assets ($110 million) and operating receivables ($4,359 million).
Segment assets at 31 December 2005 are operating assets and consist primarily
of tangible assets ($30,796 million), intangible assets ($2,572 million),
biological assets ($350 million), environmental rehabilitation trusts ($288
million), inventories ($3,569 million), pension and post- retirement healthcare
assets ($77 million) and operating receivables ($4,203 million).
(2) Segment liabilities at 31 December 2006 are operating liabilities and
consist primarily of non-interest bearing current liabilities ($3,732 million),
restoration and decommissioning provisions ($747 million) and provisions for
post-retirement benefits ($775 million). Segment liabilities at 31 December
2005 are operating liabilities and consist primarily of non-interest bearing
current liabilities ($3,749 million), restoration and decommissioning
provisions ($1,095 million) and provisions for post- retirement benefits
($1,258 million).
(3) Capital expenditure reflects cash payments and accruals in respect of
additions to tangible assets and intangible assets $3,711 million (2005: $3,377
million) and includes additions resulting from acquisitions through business
combinations $302 million (2005: $51 million).
Other primary segment items included in the income statement are as follows:
Depreciation and amortisation
US$ million 2006 2005
Platinum 444 428
Gold 183 538
Coal 172 188
Base Metals 338 312
Industrial Minerals 244 248
Ferrous Metals and Industries 199 300
Paper and Packaging 439 411
Exploration - -
Corporate Activities 17 16
2,036 2,441
(Impairments)/reversal(1)
US$ million 2006 2005
Platinum - -
Gold - (96)
Coal (115) -
Base Metals - 1
Industrial Minerals (283) (16)
Ferrous Metals and Industries 11 8
Paper and Packaging (100) (83)
Exploration - -
Corporate Activities (13) -
(500) (186)
Other non-cash expense(2)
US$ million 2006 2005
Platinum 72 55
Gold 12 50
Coal 27 14
Base Metals 127 68
Industrial Minerals 17 36
Ferrous Metals and Industries 37 56
Paper and Packaging 21 17
Exploration 2 1
Corporate Activities 40 41
355 338
(1) See operating special items in note 6.
(2) Other non-cash expenses include share-based payment charges and charges in
respect of environmental rehabilitation provisions and other provisions.
3. Segmental information (continued)
Secondary reporting format - by geographical segment
The Group`s geographical analysis of revenue, allocated based on the country in
which the customer is located, is as follows. The geographical analysis of the
Group`s attributable revenue from associates is provided for completeness and
consistency.
Revenue
US$ million 2006 2005
Subsidiaries and joint ventures
South Africa 5,788 5,280
Rest of Africa 607 505
Europe 14,640 13,629
North America 2,349 2,740
South America 2,831 1,723
Australia and Asia 6,857 5,557
Total subsidiaries and joint ventures 33,072 29,434
Associates
South Africa 463 169
Rest of Africa 22 40
Europe 1,609 1,500
North America 1,898 1,768
South America 40 29
Australia and Asia 1,533 1,532
Total associates 5,565 5,038
Total Group operations including associates 38,637 34,472
The Group`s geographical analysis of segment assets, liabilities and capital
expenditure, allocated based on where assets and liabilities are located, is:
Segment assets
US$ million 2006 2005
South Africa 14,144 18,965
Rest of Africa 732 4,142
Europe 11,208 10,048
North America 388 500
South America 4,594 5,124
Australia and Asia 2,530 3,076
33,596 41,855
Segment liabilities
US$ million 2006 2005
South Africa (2,056) (2,689)
Rest of Africa (82) (298)
Europe (1,858) (1,926)
North America (108) (59)
South America (646) (543)
Australia and Asia (504) (587)
(5,254) (6,102)
Net segment assets
US$ million 2006 2005
South Africa 12,088 16,276
Rest of Africa 650 3,844
Europe 9,350 8,122
North America 280 441
South America 3,948 4,581
Australia and Asia 2,026 2,489
28,342 35,753
Capital expenditure
US$ million 2006 2005
South Africa 1,935 1,890
Rest of Africa 75 261
Europe 927 658
North America 202 28
South America 301 317
Australia and Asia 573 274
4,013 3,428
Additional geographical analysis by origin is as follows:
Revenue
US$ million 2006 2005
Subsidiaries and joint ventures
South Africa 13,123 11,981
Rest of Africa 717 1,193
Europe 11,178 9,748
North America 386 531
South America 5,786 3,873
Australia and Asia 1,882 2,108
Total subsidiaries and joint ventures 33,072 29,434
Associates
South Africa 1,358 1,479
Rest of Africa 2,365 2,138
Europe 722 753
North America 66 -
South America 647 525
Australia and Asia 407 143
Total associates 5,565 5,038
Total Group operations including associates 38,637 34,472
Operating profit
before special items
and remeasurements(1)
US$ million 2006 2005
Subsidiaries and joint ventures
South Africa 3,969 2,651
Rest of Africa 213 63
Europe 844 694
North America 26 27
South America 3,423 1,732
Australia and Asia 267 177
Total subsidiaries and joint ventures 8,742 5,344
Associates
South Africa 275 217
Rest of Africa 383 468
Europe 108 47
North America 33 -
South America 212 189
Australia and Asia 79 111
Total associates 1,090 1,032
Total Group operations including associates 9,832 6,376
Operating profit
after special items
and remeasurements
US$ million 2006 2005
Subsidiaries and joint ventures
South Africa 3,827 2,482
Rest of Africa 16 (156)
Europe 475 600
North America 3 (11)
South America 3,390 1,704
Australia and Asia 163 238
Total subsidiaries and joint ventures 7,874 4,857
Associates
South Africa 238 193
Rest of Africa 330 356
Europe 107 30
North America 2 -
South America 206 189
Australia and Asia 84 111
Total associates 967 879
Total Group operations including associates 8,841 5,736
(1) Special items and remeasurements are set out in note 6.
4. Profit for the financial year
The table below analyses the contribution of each business segment to the
Group`s operating profit including operating profit from associates for the
financial year and its underlying earnings, which the directors consider to be
a useful additional measure of the Group`s performance. A reconciliation from
`Profit for the financial year` to `Underlying earnings for the financial year`
is given in note 9. Group operating profit including operating profit from
associates is reconciled to `Profit for the financial year` in the table below:
Operating Operating
profit/(loss) before profit/(loss) after
special items and special items and
remeasurements(1) remeasurements
US$ million
By business segment
Platinum 2,398 2,398
Gold 467 (9)
Diamonds 463 446
Coal 864 739
Base Metals 3,876 3,884
Industrial Minerals 336 39
Ferrous Metals and Industries 1,360 1,381
Paper and Packaging 477 385
Exploration (132) (132)
Corporate Activities (277) (290)
Total / Underlying earnings 9,832 8,841
Underlying earnings adjustments
Profit for the financial year
attributable to
equity shareholders of the
Company
Operating special
items and Net profit on
remeasurements(2) disposals(2)
US$ million
By business segment
Platinum - -
Gold 476 -
Diamonds 17 -
Coal 125 -
Base Metals (8) -
Industrial Minerals 297 -
Ferrous Metals and Industries (21) -
Paper and Packaging 92 -
Exploration - -
Corporate Activities 13 -
Total / Underlying earnings 991 -
Underlying earnings adjustments (991) 1,367
Profit for the financial year
attributable to
equity shareholders of the Company
Net interest,
Financing tax and
special items and minority 2006
remeasurements (2) interests Total
US$ million
By business segment
Platinum - (1,133) 1,265
Gold - (289) 178
Diamonds - (236) 227
Coal - (224) 640
Base Metals - (1,229) 2,647
Industrial Minerals - (70) 266
Ferrous Metals and Industries - (777) 583
Paper and Packaging - (203) 274
Exploration - 19 (113)
Corporate Activities - (219) (496)
Total / Underlying earnings - (4,361) 5,471
Underlying earnings
adjustments 26 313 715
Profit for the financial
year attributable to
equity shareholders of the
Company 6,186
Operating profit/(loss) Operating
before profit/(loss) after
special items and special items and
remeasurements(1) remeasurements
US$ million
By business segment
Platinum 854 854
Gold 332 (52)
Diamonds 583 431
Coal 1,019 1,020
Base Metals 1,678 1,667
Industrial Minerals 370 354
Ferrous Metals and
Industries 1,456 1,461
Paper and Packaging 495 412
Exploration (150) (150)
Corporate Activities (261) (261)
Total / Underlying earnings 6,376 5,736
Underlying earnings
adjustments
Profit for the financial
year attributable
to equity shareholders of
the Company
Operating special
items and Net profit on
remeasurements(2) disposals(2)
US$ million
By business segment
Platinum - -
Gold 384 -
Diamonds 152 -
Coal (1) -
Base Metals 11 -
Industrial Minerals 16 -
Ferrous Metals and Industries (5) -
Paper and Packaging 83 -
Exploration - -
Corporate Activities - -
Total / Underlying earnings 640 -
Underlying earnings adjustments (640) 185
Profit for the financial year
attributable
to equity shareholders of the Company
Net interest,
Financing tax and
special items and minority 2005
remeasurements (2) interests Total
US$ million
By business segment
Platinum - (371) 483
Gold - (227) 105
Diamonds - (153) 430
Coal - (295) 724
Base Metals - (438) 1,240
Industrial Minerals - (103) 267
Ferrous Metals and Industries - (699) 757
Paper and Packaging - (199) 296
Exploration - 35 (115)
Corporate Activities - (190) (451)
Total / Underlying earnings - (2,640) 3,736
42 198 (215)
Underlying earnings
adjustments
Profit for the financial
year attributable
to equity shareholders of
the Company 3,521
(1) Operating profit includes associates` operating profit which is reconciled
to `Share of net income from associates` in note 3.
(2) Special items and remeasurements are set out in note 6.
5. Exploration expenditure
US$ million 2006 2005
By business segment
Platinum 30 21
Gold(1) 16 45
Coal 24 13
Base Metals 53 50
Ferrous Metals and Industries 9 21
132 150
(1) Relating to the period that AngloGold Ashanti was held as a subsidiary.
6. Special items and remeasurements
`Special items` are those items of financial performance that the Group
believes should be separately disclosed on the face of the income statement to
assist in the understanding of the underlying financial performance achieved by
the Group and its businesses. Such items are material by nature or amount to
the year`s results and require separate disclosure in accordance with IAS 1
Presentation of financial statements paragraph 86. Special items that relate to
the operating performance of the business are classified as special operating
items and include impairment charges and reversals and other exceptional items,
including significant legal provisions. Non-operating special items include
profits and losses on disposals of investments and businesses.
Remeasurements comprise other items which the Group believes should be reported
separately to aid an understanding of the underlying performance of the Group.
This category includes (i) unrealised gains and losses on `non-hedge`
derivative instruments open at year end and the reversal of the historical
marked-to-market value of the instruments settled in the year, such that the
full realised gain or loss is recorded in underlying earnings in the same year
as the underlying transaction for which such instruments provide an economic,
but not formally designated, hedge and (ii) foreign exchange gains and losses
arising on the retranslation of dollar denominated De Beers` preference shares
held by a rand functional currency subsidiary of the Group. Remeasurements are
defined as operating, non-operating or financing according to the nature of the
underlying expense.
6. Special items and remeasurements (continued)
Subsidiaries and joint ventures
US$ million 2006 2005
Operating special items
Impairment of Tarmac assets and restructuring costs (278) (12)
Impairment and closure costs of Dartbrook (125) -
Impairment of Packaging assets (80) -
Impairment of Business Paper assets (24) -
Impairment of Corrugated assets, goodwill and restructuring
costs - (77)
Impairment of Bibiani - (38)
Closure of Ergo - (31)
Other (17) (28)
Total operating special items (524) (186)
Taxation 114 14
Minority interests 2 38
Total attributable to equity shareholders of the Company (408) (134)
Operating remeasurements
Unrealised net losses on non-hedge derivatives (344) (301)
Taxation 42 22
Minority interests 159 130
Total attributable to equity shareholders of the Company (143) (149)
Financing special items
Financing special items (4) -
Taxation - -
Minority interests - -
Total attributable to equity shareholders of the Company (4) -
Financing remeasurements
Fair value loss on AngloGold Ashanti convertible bond (43) (32)
Foreign exchange gain on De Beers` preference shares 40 72
Unrealised net gains/(losses) on non-hedge derivatives 7 (5)
Total financing remeasurements 4 35
Taxation (1) (2)
Minority interests 21 16
Total attributable to equity shareholders of the Company 24 49
6. Special items and remeasurements (continued)
US$ million 2006 2005
Profits and (losses) on disposals
Part disposal of AngloGold Ashanti(1) 737 -
Deemed disposal of AngloGold Ashanti(1) 172 -
Part disposal of Highveld(1) 301 -
Part disposal of Kumba non-iron ore(1) (52) -
Bakgatla-Ba-Kgafela BEE transaction (84) -
Part disposal of Western Areas 31 14
Disposal of mineral rights - Anglo American Brazil 14 -
Disposal of interests in Eyesizwe 17 -
Disposal of Ferroveld joint venture 13 -
Formation of Marikana joint venture - 27
Disposal of Acerinox - 25
Disposal of Wendt - 21
Disposal of Boart Longyear - 21
Disposal of Elandsfontein - 18
Disposal of Columbus - 14
Disposal of Hope Downs - (57)
Part disposal of Mondi Packaging South Africa - (12)
Other items 19 16
Net profit on disposals(2) 1,168 87
Taxation (32) (26)
Minority interests 7 (3)
Total attributable to equity shareholders of the Company 1,143 58
Total special items and remeasurements before tax and
minority interests 300 (365)
Taxation 123 8
Minority interests 189 181
Total special items and remeasurements attributable to
equity shareholders
of the Company 612 (176)
(1) See disposals of subsidiaries and businesses note 16.
(2) Includes associated IFRS 2 charges on BEE transactions of $34 million
(2005: nil).
Associates
US$ million 2006 2005
Associates` special items and remeasurements
Share of De Beers` class action payment and related costs (25) (113)
Unrealised net losses on non-hedge derivatives (85) (16)
Other impairments and restructuring costs (13) (24)
Operating special items and remeasurements (123) (153)
Associates` financing remeasurements
Fair value gain on AngloGold Ashanti convertible bond 25 -
Unrealised net gains on non-hedge derivatives 1 7
Total financing remeasurements 26 7
Associates` profits on disposals
Part disposal of De Beers Consolidated Mines 103 -
Disposal of Fort a la Corne 69 -
Disposal of Samancor Chrome - 52
Disposal of Wonderkop joint venture interest - 20
Other items (net) 27 26
Net profit on disposals 199 98
6. Special items and remeasurements (continued)
US$ million 2006 2005
Total associates` special items and remeasurements 102 (48)
Taxation 1 7
Minority interests - 2
Net associates` special items and remeasurements 103 (39)
Group
US$ million 2006 2005
Operating special items (524) (186)
Operating remeasurements (344) (301)
Total operating special items and remeasurements
(excluding associates) (868) (487)
Associates` operating special items (38) (137)
Associates` operating remeasurements (85) (16)
Total associates` operating special items
and remeasurements (123) (153)
Total operating special items and remeasurements
(including associates) (991) (640)
Operating special items including associates (562) (323)
Operating remeasurements including associates (429) (317)
Total operating special items and remeasurements
(including associates) (991) (640)
Special items and remeasurements
Operating special items of $524 million (2005: $186 million) relate principally
to impairment, restructuring and closure costs.
Following the conclusion of its strategic review, Industrial Minerals has
identified certain non-core assets which are to be sold and other assets which
are to be restructured and, as such, Tarmac has recorded a combined impairment
and restructuring charge of $278 million.
On 18 May 2006 the Group announced that due to ongoing geological difficulties,
Anglo Coal intends to implement a phased reduction of operations at Dartbrook.
As such an impairment charge and closure costs of $125 million have been
recognised.
Paper and Packaging have recorded an additional impairment of $80 million
mainly of certain downstream fixed packaging assets as a result of continued
challenging market conditions and $24 million at Mondi Business Paper of fixed
assets at the Austrian businesses.
The impairment of Tarmac assets brings the carrying value in line with fair
value (less costs to sell). Fair value was determined using detailed cash flow
models.
The impairment of Dartbrook and Paper and Packaging assets were based on
`value-in-use` assessments of recoverable amount using a pre-tax, risk free
discount rate which equated to a post tax rate of 6%.
Unrealised net losses of $344 million (2005: $301 million) on non-hedge
derivatives have been included in operating remeasurements. These unrealised
losses were recorded principally at AngloGold Ashanti, during the period it was
held as a subsidiary prior to 20 April 2006 and relate to fair value movements
on commodity derivatives.
6. Special items and remeasurements (continued)
Associates` special items and remeasurements
Associates` operating special items and remeasurements include $25 million for
the Group`s share of De Beers` payment in respect of class action suits ($20
million) and related legal costs ($5 million). Agreement has been reached, and
a preliminary order issued, to settle the majority of civil class action suits
filed against De Beers in the United States. This settlement does not involve
any admission of liability on the part of De Beers and will, when concluded,
bring to an end a number of outstanding class actions. In 2005, De Beers paid
$250 million ($113 million attributable share) into escrow and an additional
$45 million ($20 million attributable share) has been paid by De Beers into
escrow pending conclusion of the settlement process.
The Group`s share of unrealised net losses on non-hedge derivatives of
AngloGold Ashanti incurred during the period of ownership as an associate
partially offset by gains at De Beers, totalled $85 million.
Financing remeasurements
The option element of AngloGold Ashanti`s convertible bond is recorded at fair
value with changes going through the income statement in accordance with IAS 32
Financial Instruments: Disclosure and Presentation and IAS 39 Financial
Instruments: Recognition and Measurement. As a result, a charge of $43 million
(2005: $32 million) has been included in financing remeasurements, relating to
the period it was held as a subsidiary.
The Group holds US dollar preference shares issued by De Beers which are held
in a rand functional currency subsidiary of the Group. These shares are
classified as `non-current investments` and are retranslated at each period
end. As a result, a gain of $40 million (2005: $72 million) has been included
in financing remeasurements.
Associates` financing remeasurements
The Group`s share of the associates` financing remeasurements includes a share
of the fair value movement of the option element of the AngloGold Ashanti
convertible bond which generated a gain of $25 million during the period that
this investment was recorded as an associate, and a share of the net unrealised
gains on non-hedge financing derivatives of $1 million in De Beers.
Profits and losses on disposals
On 20 April 2006 the Group completed the sale of 19.7 million ordinary shares
held in AngloGold Ashanti for cash of $978 million. This, together with the
Group`s non-participation in the issue of additional ordinary shares throughout
the year by AngloGold Ashanti, diluted the Group`s percentage investment from
50.9% to 41.7%. As such the Group has recorded a profit on disposal of $737
million in respect of shares sold and a profit on the deemed disposal of $172
million, arising from the non-participation in the issue of ordinary shares by
AngloGold Ashanti.
On 14 July 2006, the Group announced the sale of Anglo American`s 79% stake in
Highveld Steel and Vanadium Corporation Limited to Evraz Group SA and Credit
Suisse for a total consideration of $678 million. An initial 49.8% was sold for
$412 million, with Evraz Group SA and Credit Suisse each acquiring a 24.9%
holding. Evraz Group SA has an option to acquire Anglo American`s remaining
29.2% in Highveld for $266 million. Anglo American and Credit Suisse have
agreed that Anglo American will retain the voting rights in respect of the
shares acquired by Credit Suisse until such time as Anglo American disposes of
all of its shares in Highveld Steel and Vanadium Corporation. As a result, the
Group continues to consolidate Highveld Steel and Vanadium Corporation (while
recording an increase in minority interest) and has recorded a profit on the
disposal of $301 million.
On 28 November 2006 the Kumba Resources BEE transaction was effected. Kumba
Iron Ore was accordingly unbundled from Kumba Resources, with the remainder of
the entity being renamed Exxaro. The Group disposed of part of its investment
in Exxaro through a share buyback and sale of shares and recorded a loss on
disposal of $52 million.
Platinum has recorded a loss of $84 million on the conclusion of the BEE
transaction with the Bakgatla-Ba-Kgafela traditional community, announced on 8
November 2006, in which the Bakgatla has acquired a 15% interest in Anglo
Platinum`s Rustenburg Platinum Mines` Union section mining and concentrating
business and interests in the prospecting rights of the Rooderand 46 JQ,
portion 2 and Magazynskraal 3 JQ properties.
6. Special items and remeasurements (continued)
Associates` profits and losses on disposals
In April 2006, De Beers announced that agreements had been signed in respect of
the implementation of the De Beers` BEE transaction resulting in the sale of an
indirect 26% equity interest in De Beers Consolidated Mines Limited to Ponahalo
Holdings (Proprietary) Limited. The total agreed proceeds for the transaction
were $585 million. The Group`s share of the profit realised on the transaction
was $103 million.
De Beers Canada disposed of its interest in the Fort a la Corne joint venture
for C$180 million in September 2006.
A profit of $155 million (attributable share $69 million) was generated on the
disposal.
7. Net finance costs
Finance costs and exchange gains/(losses) are presented net of effective cash
flow hedges for respective interest bearing and foreign currency borrowings.
Fair value gains/(losses) on derivatives, presented below, include the
mark-to-market value changes of interest rate and currency derivatives
designated as fair value hedges, net of fair value changes in the associated
hedged risk; and fair value changes of non-hedge derivatives of non-operating
items.
Before special After special
items and items and
remeasurements remeasurements
2006 2006
US$ million
Investment income
Interest and other financial income 269 269
Expected return on defined benefit
arrangements 265 265
Foreign exchange gains 54 94
Dividend income from financial asset
investments 14 14
Fair value gains on derivatives - 17
Other fair value gains 7 7
Total investment income 609 666
Interest expense
Amortisation discount relating to
provisions (39) (39)
Bank loans and overdrafts (294) (294)
Other loans (122) (122)
Interest paid on convertible bonds (5) (5)
Unwinding of discount on convertible bonds (13) (13)
Interest on defined benefit arrangements (274) (274)
Foreign exchange losses (19) (20)
Dividend on redeemable preference shares (22) (22)
Fair value losses on derivatives (2) (11)
Other fair value losses - (47)
(790) (847)
Less: interest capitalised 16 16
Total interest expense (774) (831)
Net finance cost (165) (165)
Before special After special
items and items and
remeasurements remeasurements
2005 2005
US$ million
Investment income
Interest and other financial income 227 227
Expected return on defined benefit
arrangements 241 241
Foreign exchange gains 20 92
Dividend income from financial asset
investments 10 10
Fair value gains on derivatives - -
Other fair value gains - -
Total investment income 498 570
Interest expense
Amortisation discount relating to
provisions (42) (42)
Bank loans and overdrafts (320) (320)
Other loans (167) (167)
Interest paid on convertible bonds (71) (71)
Unwinding of discount on convertible bonds (53) (53)
Interest on defined benefit arrangements (270) (270)
Foreign exchange losses (33) (33)
Dividend on redeemable preference shares - -
Fair value losses on derivatives (19) (24)
Other fair value losses - (32)
(975) (1,012)
Less: interest capitalised 49 49
Total interest expense (926) (963)
Net finance cost (428) (393)
The weighted average interest rate applicable to interest on general borrowings
capitalised was 8.2% (2005: 8.7%).
Financing remeasurements are set out in note 6.
8. Tax on profit on ordinary activities
a) Analysis of charge for the year from continuing operations
US$ million 2006 2005
United Kingdom corporation tax at 30% 28 15
South Africa tax 894 580
Other overseas tax 1,558 721
Current tax (excluding tax on special items and
remeasurements) 2,480 1,316
Total deferred tax (excluding tax on special items and
remeasurements) 283 (33)
Total tax on special items and remeasurements (123) (8)
Total tax charge 2,640 1,275
b) Factors affecting tax charge for the year
The effective tax rate for the year of 27.6% (2005: 24.5%) is lower than the
standard rate of corporation tax in the United Kingdom (30%). The differences
are explained below:
US$ million 2006 2005(1)
Profit on ordinary activities before tax 9,562 5,208
Tax on profit on ordinary activities calculated at
United Kingdom
corporation tax rate of 30% 2,869 1,562
Tax effect of net income from associates (206) (197)
Tax effects of:
Expenses not deductible for tax purposes
Operating special items and remeasurements 104 110
Exploration costs 13 21
Other non-deductible expenses 79 92
Non-taxable income
Profits and losses on disposals and remeasurements (317) (9)
Other non-taxable income (66) (113)
Temporary difference adjustments
Changes in tax rates - (187)
Movement in tax losses (80) (30)
Other temporary differences (13) (23)
Other adjustments
South African secondary tax on companies 228 160
Effect of differences between local and UK rates 53 (108)
Other adjustments (24) (3)
Tax charge for the year 2,640 1,275
(1) The 2005 comparative figures have been reclassified to align with
current year presentation.
IAS 1 requires income from associates to be presented net of tax on the face of
the income statement. The associates` tax is therefore not included within the
Group`s total tax charge. Associates` tax included within `Share of net income
from associates` for the year ended 31 December 2006 is $368 million ($369
million excluding special items and remeasurements) (2005: $274 million; $281
million excluding special items and remeasurements).
The effective rate of taxation before special items and remeasurements
including share of associates` tax before special items and remeasurements was
32.7%. This was an increase from the equivalent effective rate of 26.5% in
the year ended 31 December 2005. The December 2005 tax rate benefited from the
one-off impact of a reduction in the statutory tax rates in South Africa and
Ghana. Without this one-off benefit the effective tax rate for the prior year
would have been 29.7%. In future periods it is expected that the effective tax
rate, including associates` tax, will remain at or above the UK statutory tax
rate of 30%.
9. Earnings per share
US$ 2006 2005
Profit for the financial year attributable to equity
shareholders
Basic earnings per share 4.21 2.43
Diluted earnings per share 4.12 2.36
Headline earnings for the financial year(1):
Basic earnings per share 3.58 2.43
Diluted earnings per share 3.50 2.36
Underlying earnings for the financial year(1):
Basic earnings per share 3.73 2.58
Diluted earnings per share 3.64 2.50
(1) Basic and diluted earnings per share are shown based on headline earnings,
which is a Johannesburg Stock Exchange Limited defined measure and underlying
earnings, which the directors believe to be useful additional measures of the
Group`s performance. Both earnings measures are further explained below.
The calculation of the basic and diluted earnings per share is based on
the following data:
US$ million (unless otherwise stated) 2006 2005
Earnings
Basic earnings, being profit for the financial year
attributable 6,186 3,521
to equity shareholders
Effect of dilutive potential ordinary shares
Interest on convertible bonds (net of tax) 4 29
Unwinding of discount on convertible bonds (net of tax) 3 20
Diluted earnings 6,193 3,570
Number of shares (million)
Basic number of ordinary shares outstanding(1) 1,468 1,447
Effect of dilutive potential ordinary shares(2)
Share options 23 18
Convertible bonds 13 48
Diluted number of ordinary shares outstanding(1) 1,504 1,513
(1) Basic and diluted number of ordinary shares outstanding represent the
weighted average for the year. The average number of ordinary shares in issue
excludes the shares held by the employee benefit trust, Epoch and Tarl.
(2) Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares in issue on the assumption of conversion of all
potentially dilutive ordinary shares.
`Underlying earnings` is an alternative earnings measure, which the directors
believe provides a clearer picture of the underlying financial performance of
the Group`s operations. Underlying earnings is presented after minority
interest and excludes special items and remeasurements (see note 6). Underlying
earnings is distinct from `Headline earnings`, which is a Johannesburg Stock
Exchange Limited (JSE Limited) defined performance measure.
9. Earnings per share (continued)
The calculation of basic and diluted earnings per share, based on headline and
underlying earnings, uses the following earnings data:
Earnings Basic earnings
(US$ million) per share (US$)
2006 2005 2006 2005
Profit for the financial year
attributable to equity shareholders 6,186 3,521 4.21 2.43
Special items: operating 524 186 0.36 0.13
Special items: financing 4 - - -
Net profit on disposals(1) (1,202) (87) (0.81) (0.06)
Special items: associates(2) (186) (74) (0.13) (0.05)
Related tax (57) 6 (0.04) -
Related minority interests (9) (36) (0.01) (0.02)
Headline earnings for the financial
year 5,260 3,516 3.58 2.43
Unrealised losses on non-hedge
derivatives 421 315 0.29 0.22
Fair value loss on AngloGold
Ashanti convertible bond 18 32 0.01 0.02
Exchange gain on DBI preference
shares (40) (72) (0.03) (0.05)
Share of De Beers` legal settlement 25 113 0.02 0.08
IFRS 2 charges on disposals 34 - 0.02 -
Related tax (67) (21) (0.04) (0.02)
Related minority interests (180) (147) (0.12) (0.10)
Underlying earnings for the
financial year 5,471 3,736 3.73 2.58
(1) Excluding associated IFRS 2 charges on BEE transactions.
(2) Excluding legal settlements.
All outstanding share options and awards are potentially dilutive and have been
included in the calculation of diluted earnings per share. No instruments are
anti-dilutive for the year ended 31 December 2006 (2005: nil).
10. Capital expenditure on tangible assets and biological assets
US$ million 2006 2005
Platinum 923 616
Gold 196 722
Coal 780 331
Base Metals 298 271
Industrial Minerals 298 274
Paper and Packaging 581 691
Ferrous Metals and Industries 581 373
Other 29 28
3,686 3,306
Investment in biological assets 64 55
Total capital expenditure on tangible assets and biological
assets 3,750 3,361
Capital expenditure shown above comprises cash expenditure on tangible assets
and biological assets.
Segmental capital expenditure shown in note 3 also includes accruals and
expenditure on acquisitions and intangible assets, but excludes expenditure on
biological assets.
11. Disposal groups and non-current assets held for sale
Net assets relating to Kumba (non iron-ore) which were previously classified as
held for sale at 30 June 2006, were disposed of on 28 November 2006 as
disclosed in note 16.
The following assets and liabilities relating to disposal groups are
reclassified as held for sale at 31 December 2006. The Group expects to
complete the sale of these businesses within 12 months of the year end.
Namakwa
US$ million Highveld(1) Sands(2) Other Total
Intangible assets - 2 4 6
Tangible assets 322 278 42 642
Biological assets - - 16 16
Environmental rehabilitation trust - 2 - 2
Investments in asssociate - - 47 47
Financial asset investments 15 - 5 20
Other non-current assets - 1 - 1
Total non-current assets 337 283 114 734
Inventories 116 38 12 166
Trade and other receivables 160 41 24 225
Cash and cash equivalents 60 - 3 63
Total current assets 336 79 39 454
Total assets 673 362 153 1,188
Short term borrowings (134) - (1) (135)
Trade and other payables (166) (21) (46) (233)
Other current financial liabilities (4) - - (4)
Total current liabilities (304) (21) (47) (372)
Medium and long term borrowings (3) - (5) (8)
Provisions (23) (5) (2) (30)
Deferred tax liabilities (43) (72) (4) (119)
Retirement benefit obligations (15) (3) - (18)
Total non-current liabilities (84) (80) (11) (175)
Total liabilities (388) (101) (58) (547)
Net assets 285 261 95 641
(1) Highveld disposal group is included in the Ferrous Metals and Industries
business. Details of impending sale are included in Note 16c.
(2) The Namakwa Sands disposal group is included in the Base Metals business.
The net carrying amount of assets and associated liabilities reclassified as
held for sale during the year were written down by $28 million (after tax)
(2005: $36 million) in the current period to their fair value less costs to
sell.
12. Reconciliation of changes in equity
Attributable to equity shareholders of the Company
Share-
Total based
US$ million share Retained payment
capital(1) earnings(2) reserve
Balance at 1 January 2005 2,380 17,440 55
Total recognised income and expense - 3,364 -
Dividends paid - (1,137) -
Shares issued 4 - -
Share-based payments - - 100
Disposal of businesses - - -
Issue of shares to minority interests - - -
Dividends paid to minority interests - - -
Exercise of employee share options - 240 -
Purchase of minority interests - - -
Balance at 1 January 2006 2,384 19,907 155
Total recognised income and expense - 6,256 -
Dividends paid - (2,839) -
Dividends paid to minority interests - - -
Shares issued and reclassification on
conversion of bond(3) 1,100 - -
Convertible bond reserve transfer to
retained earnings - 109 -
Acquisitions and disposals of
businesses - - -
Issue of shares to minority interests - - -
Treasury share buyback - (3,951) -
Purchase of treasury shares for share
schemes - (19) -
Current tax on exercised employee
share
awards - 34 -
Share-based payments - - 94
Exercise of employee share options - 286 (31)
IFRS 2 charge arising on BEE
transaction - 28 -
Transfer to legal reserve - (3) -
Revaluation reserve arising from
acquisition
of minority interests - - -
Tax charge directly to equity
relating to
transactions with shareholders - (8) -
Deficit on conversion of Platinum`s
preference shares - (62) -
Tax credit on transactions with
equity holders - - 29
Other - - -
Balance at 31 December 2006 3,484 19,738 247
Attributable to equity shareholders of the Company
Cumulative Fair value
translation and
adjustment other
US$ million reserve reserves
Balance at 1 January 2005 2,247 998
Total recognised income and expense (1,908) (162)
Dividends paid - -
Shares issued - -
Share-based payments - -
Disposal of businesses - -
Issue of shares to minority interests - -
Dividends paid to minority interests - -
Exercise of employee share options - -
Purchase of minority interests - -
Balance at 1 January 2006 339 836
Total recognised income and expense (377) 136
Dividends paid - -
Dividends paid to minority interests - -
Shares issued and reclassification on
conversion of bond(3) - (32)
Convertible bond reserve transfer to
retained earnings - (109)
Acquisitions and disposals of businesses - -
Issue of shares to minority interests - -
Treasury share buyback - -
Purchase of treasury shares for share
schemes - -
Current tax on exercised employee share
awards - -
Share-based payments - -
Exercise of employee share options - -
IFRS 2 charge arising on BEE transaction - -
Transfer to legal reserve - 3
Revaluation reserve arising from acquisition
of minority interests - (4)
Tax charge directly to equity relating to
transactions with shareholders - -
Deficit on conversion of Platinum`s
preference shares - -
Tax credit on transactions with equity holders - 10
Other - -
Balance at 31 December 2006 (38) 840
US$ million Minority Total
interests equity
Balance at 1 January 2005 4,466 27,586
Total recognised income and expense 82 1,376
Dividends paid - (1,137)
Shares issued - 4
Share-based payments 6 106
Disposal of businesses (3) (3)
Issue of shares to minority interests 16 16
Dividends paid to minority interests (421) (421)
Exercise of employee share options - 240
Purchase of minority interests (189) (189)
Balance at 1 January 2006 3,957 27,578
Total recognised income and expense 603 6,618
Dividends paid - (2,839)
Dividends paid to minority interests (383) (383)
Shares issued and reclassification on
conversion of bond(3) - 1,068
Convertible bond reserve transfer to
retained earnings - -
Acquisitions and disposals of businesses (1,454) (1,454)
Issue of shares to minority interests 37 37
Treasury share buyback - (3,951)
Purchase of treasury shares for share
schemes - (19)
Current tax on exercised employee share
awards - 34
Share-based payments 14 108
Exercise of employee share options - 255
IFRS 2 charge arising on BEE transaction 6 34
Transfer to legal reserve - -
Revaluation reserve arising from acquisition
of minority interests - (4)
Tax charge directly to equity relating to
transactions with shareholders (3) (11)
Deficit on conversion of Platinum`s
preference shares 62 -
Tax credit on transactions with equity holders - 39
Other 17 17
Balance at 31 December 2006 2,856 27,127
(1) Total share capital comprises called-up share capital $771 million (2005:
$747 million) and the share premium account $2,713 million (2005: $1,637
million).
(2) Retained earnings is stated after deducting $4,218 million (2005: $456
million) of treasury shares. Treasury shares comprise shares of Anglo American
plc held in the employee benefit trust, own shares held by Anglo American plc
and other Group companies and treasury shares held by Epoch Investment Holdings
Limited (Epoch) and Tarl Investment Holdings Ltd (Tarl). Epoch and Tarl are the
vehicles used for the Anglo American share buyback programmes. As at 31
December 2006, the following treasury shares were held: shares held by the
employee benefit trust $247 million (2005: $456 million), own shares held by
Anglo American plc $2,010 million (2005: nil), own shares held by other Group
companies $20 million (2005: nil) and treasury shares held by Epoch and Tarl
$1,941 million (2005: nil).
(3) During the year ended 31 December 2006, the whole of the Anglo America n
plc convertible bond was converted to equity by bondholders. This has resulted
in a reduction in the discounted balance sheet liability of $1,068 million and
a corresponding increase in issued share capital and share premium. A further
reserve transfer of $32 million has been made from the convertible bond reserve
to share premium to reflect the total fair value of shares issued to
bondholders. During the year ended 31 December 2006, the number of shares
converted was 47,789,096, at a conversion price of $23.12 to May 2006 and
$22.76 subsequently.
12. Reconciliation of changes in equity (continued)
Fair value and other reserves comprise:
Convertible Available Cash flow
debt for sale hedge
reserve reserve reserve
US$ million
Balance at 1 January 2005 128 48 50
Total recognised income and expense 3 6 (171)
Balance at 1 January 2006 131 54 (121)
Total recognised income and expense - 437 (301)
Reclassification on conversion of
bond (32) - -
Convertible debt reserve transfer
to retained earnings (109) - -
Transfer to legal reserve - - -
Revaluation reserve arising from
acquisition of minority - - -
interests
Tax credit on transactions with
equity holders 10 - -
Balance at 31 December 2006 - 491 (422)
Total fair
value and
Other other
reserves(1) reserves
US$ million
Balance at 1 January 2005 772 998
Total recognised income and expense - (162)
Balance at 1 January 2006 772 836
Total recognised income and expense - 136
Reclassification on conversion of bond - (32)
Convertible debt reserve transfer to retained
earnings - (109)
Transfer to legal reserve 3 3
Revaluation reserve arising from acquisition of
minority interests (4) (4)
Tax credit on transactions with equity holders - 10
Balance at 31 December 2006 771 840
(1) Other reserves comprise $693 million (2005: $690 million) legal reserve and
$82 million (2005: $82 million) capital redemption reserve, partially offset by
negative revaluation reserve of $4m (2005: nil).
13. Consolidated cash flow analysis
a) Reconciliation of profit before tax to cash inflows from operations
US$ million 2006 2005
Profit before tax 9,562 5,208
Depreciation and amortisation 2,036 2,441
Share-based payment charge 189 92
Special items and remeasurements of subsidiaries
and joint ventures (300) 365
Net finance costs before remeasurements 165 428
Fair value gains before special items
and remeasurements (152) (278)
Share of net income from associates (685) (657)
Additional pension contributions (232) -
Provisions 11 113
Increase in inventories (377) (453)
Increase in operating receivables (625) (600)
Increase in operating payables 470 539
Other adjustments (5) 67
Cash inflows from operations 10,057 7,265
b) Reconciliation to the balance sheet
Cash and cash
US$ million equivalents
2006 2005
Balance sheet
Continuing operations 3,004 3,430
Disposal groups(2) 63 -
Bank overdrafts
Continuing operations (87) (111)
Disposal groups(2) - -
Net debt classifications 2,980 3,319
Short term borrowings(1)
US$ million 2006 2005
Balance sheet
Continuing operations (2,028) (2,076)
Disposal groups(2) (135) -
Bank overdrafts
Continuing operations 87 111
Disposal groups(2) - -
Net debt classifications (2,076) (1,965)
Medium and long term
US$ million borrowings
2006 2005
Balance sheet
Continuing operations (4,220) (6,363)
Disposal groups(2) (8) -
Bank overdrafts
Continuing operations - -
Disposal groups(2) - -
Net debt classifications (4,228) (6,363)
(1) Short term borrowings on the balance sheet include overdrafts which
are included within cash and cash equivalents for net debt.
(2) Disposal group balances are shown as `assets classified as held for
sale` and `liabilities associated with assets classified as held for sale`
on the balance sheet.
13. Consolidated cash flow analysis (continued)
c) Movement in net debt
Debt due within
one year
Cash and cash Carrying
US$ million equivalents (1) value Hedge(2)
Balance at 1 January 2005 2,781 (3,272) 55
Cash flow 602 1,356 25
Acquisition and disposal of
businesses - 2 -
Unwinding of discount on convertible
debt - - -
Reclassifications - (300) -
Movement in fair value - - (67)
Other non-cash movements - - -
Currency movements (64) 249 -
Balance at 1 January 2006 3,319 (1,965) 13
Cash flow (170) (193) -
Acquisition and disposal of
businesses - 224 -
Conversion to equity - 311 -
Unwinding of discount of convertible
debt - - -
Reclassifications - (509) -
Movement in fair value - - (7)
Other non-cash movements - 6 -
Currency movements (169) 50 -
Balance at 31 December 2006 2,980 (2,076) 6
Debt due after
one year
Current
financial
US$ million Carrying asset Total
value Hedge(2) investments net debt(3)
Balance at 1 January 2005 (7,961) 302 2 (8,093)
Cash flow 632 - (13) 2,602
Acquisition and disposal
of businesses 5 - - 7
Unwinding of discount on
convertible debt (53) - - (53)
Reclassifications 299 - 1 -
Movement in fair value 12 (302) - (357)
Other non-cash movements - - 29 29
Currency movements 703 - (3) 885
Balance at 1 January 2006 (6,363) - 16 (4,980)
Cash flow (374) - (5) (742)
Acquisition and disposal
of businesses 1,480 - (1) 1,703
Conversion to equity 757 - - 1,068
Unwinding of discount of
convertible debt (13) - - (13)
Reclassifications 438 - - (71)
Movement in fair value 5 187 - 185
Other non-cash movements (13) - (14) (21)
Currency movements (145) - 4 (260)
Balance at 31 December
2006 (4,228) 187 - (3,131)
(1) The Group operates in certain countries (principally South Africa and
Venezuela) where the existence of exchange controls may restrict the use of
certain cash balances. These restrictions are not expected to have any material
effect on the Group`s ability to meet i ts ongoing obligations.
(2) Derivative instruments that have been designated as hedges of assets and
liabilities included above to reflect the true net debt position of the Group
at the year end. These instruments are classified within other financial assets
and liabilities on the balance sheet.
(3) Net debt excluding the impact of hedges is $3,324 million (2005: $4,993
million) and consists of cash and cash equivalents of $2,980 million (2005:
$3,319 million), short term borrowings of $2,076 million (2005: $1,965
million), medium and long term borrowings of $4,228 million (2005: $6,363
million) and current financial asset investments of nil (2005: $16 million).
14. EBITDA by business segment
US$ million 2006 2005
Platinum 2,845 1,282
Gold 843 871
Diamonds 541 655
Coal 1,082 1,243
Base Metals 4,214 1,990
Industrial Minerals 580 618
Ferrous Metals and Industries 1,560 1,779
Paper and Packaging 923 916
Exploration (132) (150)
Corporate Activities (259) (245)
EBITDA 12,197 8,959
EBITDA is stated before special items and remeasurements and is reconciled to
`Total profit from operations and associates` as follows:
US$ million 2006 2005
Total profit from operations and associates 9,727 5,601
Operating special items and remeasurements
(including associates) 991 640
Net profit on disposals (including associates) (1,367) (185)
Associates` financing remeasurements (26) (7)
Depreciation and amortisation: subsidiaries and joint
ventures 2,036 2,441
Share of associates` interest, tax, depreciation,
amortisation and underlying minority interests 836 469
EBITDA 12,197 8,959
EBITDA is reconciled to cash inflows from operations as follows:
US$ million 2006 2005
EBITDA(1) 12,197 8,959
Share of operating profit of associates before special
items (1,090) (1,032)
Underlying depreciation and amortisation in associates (329) (142)
Share-based payment charge 189 92
Fair value gains before special items and remeasurements (152) (278)
Additional pension contributions (232) -
Provisions 11 113
Increase in inventories (377) (453)
Increase in operating receivables (625) (600)
Increase in operating payables 470 539
Other adjustments (5) 67
Cash inflows from operations 10,057 7,265
(1) EBITDA is operating profit before special items, remeasurements,
depreciation and amortisation in subsidiaries and joint ventures and share of
EBITDA of associates:
US$ million 2006 2005
Operating profit including associates` operating profit
before special items and remeasurements 9,832 6,376
Depreciation and amortisation
Subsidiaries and joint ventures 2,036 2,441
Associates 329 142
12,197 8,959
15. Business combinations
The Group made one material acquisition in the year ended 31 December 2006. The
Group acquired a 100% interest in AltaSteel, including the remaining 50% of
Moly-Cop Canada, on 1 February 2006, for a total cash consideration of $84
million (including transaction costs).
AltaSteel(1)
Carrying Carrying
US$ million value Fair value value
Net assets acquired
Intangible assets - 3 5
Tangible assets 74 75 116
Deferred tax asset - - 1
Other financial assets (derivatives) 40 40 -
Other non-current assets 1 1 -
Inventories 30 30 41
Trade and other receivables 27 27 55
Cash and cash equivalents 8 8 11
Short term borrowings - - (36)
Overdrafts - - (20)
Trade and other payables (21) (21) (35)
Medium and long term borrowings - - (10)
Retirement benefit obligations (46) (46) (4)
Deferred tax liabilities (11) (4) (1)
Provisions for liabilities and charges - (21) (2)
Other non-current liabilities - - (1)
Equity minority interests - - 15
Revaluation on acquisition of minority
interest - - -
Net assets acquired 102 92 135
Goodwill arising on acquisition -
Negative goodwill arising on
acquisition (8)
Total cost of acquisition 84
Satisfied by
Net cash acquired 8
Deferred consideration -
Net cash paid 76
Total fair
Other value
US$ million Fair value 2006
Net assets acquired
Intangible assets 1 4
Tangible assets 182 257
Deferred tax asset 3 3
Other financial assets (derivatives) - 40
Other non-current assets - 1
Inventories 41 71
Trade and other receivables 55 82
Cash and cash equivalents 11 19
Short term borrowings (36) (36)
Overdrafts (20) (20)
Trade and other payables (37) (58)
Medium and long term borrowings (10) (10)
Retirement benefit obligations (6) (52)
Deferred tax liabilities (8) (12)
Provisions for liabilities and charges (2) (23)
Other non-current liabilities (1) (1)
Equity minority interests 3 3
Revaluation on acquisition of minority interest 4 4
Net assets acquired 180 272
Goodwill arising on acquisition 41 41
Negative goodwill arising on acquisition (2) (10)
Total cost of acquisition 219 303
Satisfied by
Net cash acquired (9) (1)
Deferred consideration 18 18
Net cash paid 210 286
(1) The revenue and operating profit for the year ended 31 December 2006 of
AltaSteel, including the remaining 50% of Moly-Cop Canada, if the acquisition
date had been at the beginning of the year, would have been $93 million and $34
million respectively. The operating profit for the period since acquisition was
$32 million.
There was one material acquisition made during the year to 31 December 2005.
The Group acquired the remaining 48.75% minority interest in Ticor Ltd for a
total cash consideration of $177 million. Net assets acquired in the
transaction totalled $191 million.
16. Disposal of subsidiaries and businesses
Total Total
US$ million 2006 2005
Net assets disposed
Tangible assets 7,925 178
Other non-current assets 1,027 87
Current assets 3,115 408
Current liabilities (2,878) (231)
Non-current liabilities (4,683) (87)
Net assets 4,506 355
Minority interests (1,679) (3)
Group`s share of net assets immediately prior to disposal 2,827 352
Less: Retained investment in an associate (1,451) -
Less: Retained financial asset investment (370) -
Less: Movement in share of assets arising on deemed
disposal (170) -
Add: Purchase price adjustment 10 -
Add: Liabilities retained - 95
Net assets disposed 846 447
Cumulative translation differences recycled from reserves (9) -
Increase in minority share 220 -
Fair value losses arising on transaction 52 -
Other 13 -
Net gain on disposal 1,072 30
Net sale proceeds 2,194 477
Net cash and cash equivalents disposed (283) (58)
Non-cash proceeds (393) -
Other 2 -
Net cash inflow on disposals 1,520 419
Disposals recorded during the year principally include the partial disposal of
AngloGold Ashanti, disposal of the non-iron ore operations of Kumba Resources,
disposal of a 49.8% interest in Highveld Steel and Vanadium and the disposal of
a 15% interest in Anglo Platinum`s Rustenburg Platinum Mines Union section
mining and concentrating business and interests in prospecting rights.
Details of these disposals are included below. The prior year disposals
principally relate to Boart Longyear.
16a. AngloGold Ashanti
On 20 April 2006 the Group completed the sale of 19.7 million ordinary shares
held in AngloGold Ashanti Limited for cash of $978 million. This, together with
the Group`s non-participation in the issue of additional ordinary shares,
throughout the year, by AngloGold Ashanti, diluted the Group`s percentage
investment from 50.9% to 41.7%. With effect from that date, the Group ceased to
account for AngloGold Ashanti as a subsidiary and began accounting for it as an
associate under the equity method.
The net asset position at the date of disposal, together with the
reclassification to an associate and resulting gain on disposal of shares and
related net cash inflow are shown below:
US$ million 2006
Tangible assets 6,613
Other non-current assets 856
Current assets 2,162
Current liabilities (2,596)
Non-current liabilities (4,233)
Net assets 2,802
Minority interest (1,101)
Group`s share of AngloGold Ashanti net assets immediately prior to
disposal 1,701
Less: Retained investment in an associated undertaking immediately
after disposal (1,451)
Net assets disposed 250
Cumulative translation differences recycled from reserves (9)
Net gain on disposal 737
Net sale proceeds 978
Net cash and cash equivalents disposed (147)
Other 8
Net cash inflow from partial disposal of AngloGold Ashanti 839
The non-participation in the issue of additional shares by AngloGold Ashanti
further diluted the percentage investment and thereby resulted in a deemed
disposal. The gain on deemed disposal is:
US$ million 2006
Movement in share of net assets as a result of share issue 187
Deemed disposal of goodwill and mining properties (17)
Cumulative translation differences recycled from reserves 2
Deemed gain on disposal 172
16b. Kumba (non iron-ore)
On 28 November 2006 the Kumba Resources BEE transaction was effected. Kumba
Iron Ore was accordingly unbundled from Kumba Resources (i.e. leaving the
non-iron ore operations) which was renamed Exxaro. The Group retained a 64%
interest in Kumba Iron Ore. The Group disposed of part of its investment in
Exxaro through a share buyback and sale of shares. The Group retains an
interest of 23% in Exxaro over which it does not exercise significant influence
and accordingly this has been held as an available for sale financial asset
since 28 November 2006.
The net asset position of Exxaro at 28 November 2006, together with the
resulting loss on disposal of shares and related net cash inflow are shown
below:
US$ million 2006
Tangible assets 1,186
Other non-current assets 145
Current assets 887
Current liabilities (248)
Non-current liabilities (438)
Net assets 1,532
Minority interest (564)
Group`s share of Exxaro net assets immediately prior to disposal 968
Less: Retained financial asset investment (370)
Net assets disposed 598
Cumulative translation differences recycled from reserves (4)
Increase in minority share 50
Fair value loss arising on transaction 36
Other 9
Net loss on disposal (52)
Net sale proceeds 637
Net cash and cash equivalents disposed (123)
Non-cash proceeds (393)
Net cash inflow from partial disposal of Exxaro 121
16c. Highveld Steel and Vanadium Corporation (Highveld)
On 14 July 2006, the Group announced the sale of Anglo American`s 79% stake in
Highveld to Evraz Group SA and Credit Suisse for a total consideration of $678
million. Following the disposal of the initial 49.8%, for which Anglo American
received $412 million, following certain regulatory approvals Evraz has an
option to acquire Anglo American`s remaining 29.2% stake in Highveld for $266
million. This amount will be reduced by any dividends paid by Highveld prior to
Anglo American selling its remaining shares. Anglo American and Credit Suisse
have agreed that Anglo American will retain the voting rights in respect of the
shares acquired by Credit Suisse until such time as Anglo American disposes of
all its shares in Highveld. As a result, the Group continues to consolidate
Highveld (while recording an increased minority interest).
The net asset position at the date of the initial disposal, 14 July 2006,
together with the resulting gain on disposal of shares and related net cash
inflow are shown below:
US$ million 2006
Increase in minority share 100
Cumulative translation differences recycled from reserves 5
Other 6
Net gain on disposal 301
Net cash inflow from partial disposal of Highveld 412
16d. Anglo Platinum`s Rustenburg Platinum Mines
On 8 November 2006, Anglo Platinum announced the conclusion of the BEE
transaction with the Bakgatla-Ba-Kgafela (Bakgatla) traditional community. In
terms of this transaction the Bakgatla acquired a 15% interest in Anglo
Platinum`s Rustenburg Platinum Mines Union section mining and concentrating
business and interests in prospecting rights of the Rooderand 46 JQ, portion 2
and Magazynskraal 3 JQ properties. The agreements became unconditional on 1
December 2006.
The net assets disposed together with the resulting loss and related cash
inflow are shown below:
US$ million 2006
Net assets disposed 47
Increase in minority share 70
Fair value charge arising on transaction 16
Net loss on disposal (84)
Purchase price adjustment 10
Net cash inflow from partial disposal of Union mine 59
Production statistics
The figures below include the entire output of consolidated entities and the
Group`s share of joint ventures, joint arrangements and associates where
applicable, except for De Beers and Collahuasi in Base Metals which are quoted
on a 100% basis.
2006 2005
Anglo Platinum (troy ounces) (1)(2)
Platinum 2,863,900 2,502,000
Palladium 1,563,000 1,376,700
Rhodium 331,700 333,500
4,758,600 4,212,200
Nickel (tonnes)(3) 21,700 20,900
Gold 115,400 119,100
AngloGold Ashanti (gold in troy ounces)(2)(4)
South Africa 1,506,500 2,676,000
Argentina 128,900 211,000
Australia 260,900 455,000
Brazil 193,200 346,000
Ghana 359,200 680,000
Guinea 146,400 246,000
Mali 318,400 528,000
Namibia 51,500 81,000
Tanzania 187,900 613,000
USA 164,300 330,000
3,317,200 6,166,000
De Beers (Diamonds recovered - carats)
100% basis
Debswana 34,293,000 31,890,000
Namdeb 2,084,800 1,774,000
DBCM 14,568,900 15,156,000
Williamson 189,400 190,000
51,136,100 49,010,000
Anglo Coal (tonnes)
South Africa
Eskom 34,821,200 34,327,900
Trade - Thermal 22,754,000 20,281,100
Trade - Metallurgical 1,768,200 2,268,800
59,343,400 56,877,800
Australia(5)
Thermal 15,258,400 15,214,800
Metallurgical 9,195,600 9,390,300
24,454,000 24,605,100
South America
Thermal 11,008,900 10,066,000
Total 94,806,300 91,548,900
(1) Includes Anglo Platinum`s share of Northam Platinum Limited: 76,700 ounces
Platinum, Palladium and Rhodium; 1,800 ounces Gold; and 400 tonnes Nickel
(2005: 77,700 ounces Platinum, Palladium and Rhodium, 1,600 ounces Gold and 400
tonnnes Nickel).
(2) See the published results of Anglo Platinum Limited, Northam Limited and
AngloGold Ashanti Limited for further analysis of production information.
(3) Also disclosed within total attributable nickel production of Anglo
Base Metals.
(4) Gold production for AngloGold Ashanti reflects 100% of that company`s
production to 20 April 2006 and the Group`s share of production thereafter.
(5) 2005 and 2006 excludes Dartbrook which was closed in the year. Production
for Dartbrook was 792,000 tonnes in 2006 and 1, 495,500 tonnes in 2005.
Production statistics (continued)
2006 2005
Anglo Coal (tonnes) (continued)
South Africa
Bank 477,600 3,202,200
Greenside 2,778,100 2,730,000
Goedehoop 8,534,500 6,298,600
Isibonelo 4,020,100 1,358,300
Kriel 12,318,400 12,030,900
Kleinkopje 3,898,400 4,483,500
Landau 4,102,400 3,682,900
New Denmark 5,508,500 4,139,400
New Vaal 16,275,000 17,100,000
Nooitgedacht 711,000 794,400
Mafube 719,400 1,057,600
59,343,400 56,877,800
Australia(1)
Callide 9,816,100 9,500,000
Drayton 4,136,300 4,099,000
German Creek (Capcoal) 3,165,400 3,560,000
Jellinbah East 887,400 851,100
Moranbah 2,928,500 3,432,800
Dawson Complex 3,520,300 3,162,200
24,454,000 24,605,100
South America
Carbones del Guasare 1,531,700 1,409,700
Carbones del Cerrejon 9,477,200 8,656,300
11,008,900 10,066,000
Total 94,806,300 91,548,900
(1) 2005 and 2006 excludes production at Dartbrook which was closed during the
year. Production for Dartbrook was 792,000 tonnes in 2006 and 1,495,500 tonnes
in 2005.
Production statistics (continued)
2006 2005
Anglo Base Metals
Copper
Collahuasi
100% basis (Anglo American 44%)
Ore mined tonnes 45,843,300 40,705,000
Ore processed Oxide tonnes 6,390,300 6,461,000
Sulphide tonnes 41,347,700 36,659,000
Ore grade processed Oxide % Cu 1.0 0.9
Sulphide % Cu 1.0 1.0
Production Copper concentrate dmt 1,312,400 1,234,000
Copper cathode tonnes 59,800 60,700
Copper in
concentrate tonnes 380,200 366,400
Total copper production
for Collahuasi tonnes 440,000 427,100
Minera Sur Andes
Los Bronces mine
Ore mined tonnes 22,346,200 22,146,000
Marginal ore mined tonnes 35,538,000 27,936,000
Las Tortolas
concentrator Ore processed tonnes 20,514,700 21,034,000
Ore grade processed % Cu 1.0 1.0
Average recovery % 88.1 88.3
Production Copper concentrate dmt 555,900 510,000
Copper cathode tonnes 42,500 38,800
Copper in
concentrate tonnes 183,500 188,500
Total tonnes 226,000 227,300
El Soldado mine
Ore mined Open pit
- ore mined tonnes 5,812,300 2,907,000
Open pit
- marginal
ore mined tonnes 110,800 384,000
Underground
(sulphide) tonnes 2,028,600 1,996,000
Total tonnes 7,951,700 5,287,000
Ore processed Oxide tonnes 654,200 665,000
Sulphide tonnes 7,527,700 7,004,000
Ore grade processed Oxide % Cu 1.4 1.3
Sulphide % Cu 1.0 1.1
Production Copper concentrate dmt 222,900 210,500
Copper cathode tonnes 6,500 6,500
Copper in
concentrate tonnes 62,200 60,000
Total tonnes 68,700 66,500
Production statistics (continued)
2006 2005
Anglo Base Metals (continued)
Chagres Smelter
Copper concentrate smelted tonnes 183,200 144,800
Production Copper blister/
anodes tonnes 173,400 138,100
Acid tonnes 499,200 371,900
Total copper production for the Minera
Sur Andes group tonnes 294,700 293,800
Mantos Blancos
Mantos Blancos mine
Ore processed Oxide tonnes 4,533,800 4,535,000
Sulphide tonnes 3,979,800 3,954,000
Marginal ore mined tonnes 6,307,300 5,337,000
Ore grade processed Oxide %Cu
(soluble) 0.8 0.8
Sulphide %Cu
(insoluble) 1.1 1.1
Marginal ore %Cu
(soluble) 0.8 0.4
Production Copper concentrate dmt 123,800 105,300
Copper cathode tonnes 49,100 48,600
Copper in
concentrate tonnes 42,600 39,100
Total tonnes 91,700 87,700
Mantoverde mine
Ore processed Oxide tonnes 9,502,300 9,439,000
Marginal ore tonnes 4,879,900 3,625,000
Ore grade processed Oxide %Cu
(soluble) 0.7 0.7
Marginal ore %Cu
(soluble) 0.3 0.3
Production Copper cathode tonnes 60,300 62,000
Black Mountain tonnes 3,400 3,200
Total Anglo Base Metals copper production tonnes 643,800 634,600
Anglo Platinum
Production(1) tonnes 11,400 11,500
Total attributable copper production tonnes 655,200 646,100
Nickel, Niobium and Mineral Sands
Nickel
Codemin
Ore mined tonnes 487,600 528,600
Ore processed tonnes 518,600 521,400
Ore grade processed % Ni 2.1 2.1
Production tonnes 9,800 9,600
Loma de Niquel
Ore mined tonnes 1,324,300 1,317,000
Ore processed tonnes 1,205,000 1,169,000
Ore grade processed % Ni 1.6 1.6
Production tonnes 16,600 16,900
Total Anglo Base Metals nickel production tonnes 26,400 26,500
Anglo Platinum
Production(1) tonnes 21,700 20,900
Total attributable nickel production tonnes 48,100 47,400
(1) Includes Anglo Platinum`s share of Northam production.
Production statistics (continued)
2006 2005
Anglo Base Metals (continued)
Niobium
Catalao
Ore mined tonnes 795,400 723,100
Ore processed tonnes 813,900 672,300
Ore grade processed Kg Nb/tonne 10.9 11.0
Production tonnes 4,700 4,000
Mineral Sands
Namakwa Sands
Ore mined tonnes 17,382,700 18,100,000
Production Ilmenite tonnes 272,200 316,100
Rutile tonnes 28,200 29,100
Zircon tonnes 128,400 128,600
Smelter production Slag tapped tonnes 133,900 164,400
Iron tapped tonnes 88,900 105,400
Zinc and Lead
Black Mountain
Ore mined tonnes 1,544,500 1,413,000
Ore processed tonnes 1,403,800 1,350,000
Ore grade processed Zinc % Zn 3.4 3.3
Lead % Pb 4.1 3.7
Copper % Cu 0.4 0.4
Production Zinc in concentrate tonnes 34,100 32,100
Lead in concentrate tonnes 48,300 42,200
Copper in concentrate tonnes 3,400 3,200
Lisheen
Ore mined tonnes 1,605,900 1,527,000
Ore processed tonnes 1,527,600 1,461,000
Ore grade processed Zinc % Zn 12.3 12.0
Lead % Pb 2.1 2.0
Production Zinc in concentrate tonnes 170,700 159,300
Lead in concentrate tonnes 23,100 20,800
Skorpion
Ore mined tonnes 1,456,500 1,199,000
Ore processed tonnes 1,311,800 1,280,000
Ore grade processed Zinc % Zn 11.8 12.4
Production Zinc tonnes 129,900 132,800
Total attributable zinc production tonnes 334,700 324,200
Total attributable lead production tonnes 71,400 63,000
Anglo Industrial Minerals
Aggregates tonnes 92,268,200 85,887,000
Lime products tonnes 1,428,900 1,428,100
Concrete m3 8,526,800 8,353,200
Sodium tripolyphosphate tonnes 71,100 106,000
Phosphates tonnes 901,500 1,036,200
Production statistics (continued)
2006 2005
Anglo Ferrous Metals and
Industries
Kumba Iron Ore Limited
(unbundled from
Kumba Resources Limited)(1)
Iron ore production
Lump tonnes 18,639,800 18,747,000
Fines tonnes 12,470,300 12,240,000
Total iron ore 31,110,100 30,987,000
Scaw Metals
Rolled products tonnes 409,000 386,500
Cast products tonnes 166,900 133,900
Grinding media tonnes 481,800 461,400
Highveld Steel
Rolled products tonnes 767,300 684,000
Continuous cast blocks tonnes 863,100 874,900
Vanadium slag tonnes 65,000 66,800
Samancor
Manganese ore mtu m 109 88
Manganese alloys tonnes 256,300 309,000
Tongaat-Hulett(2)
Sugar tonnes 897,300 1,055,000
Aluminium tonnes 203,300 192,000
Starch and glucose tonnes 573,100 595,000
Anglo Paper and Packaging
Mondi Packaging
Packaging papers tonnes 2,894,700 2,705,700
Corrugated board and boxes m m 2 2,103 2,081
Paper bags m units 3,606 3,282
Coating and release liners m m 2 2,360 1,681
Pulp - external tonnes 180,200 174,700
Mondi Business Paper
Uncoated wood free paper tonnes 2,012,300 1,890,000
Newsprint tonnes 187,100 186,900
Pulp - external tonnes 114,100 127,700
Wood chips bone dry tonnes 886,600 1,142,100
Mondi Packaging South Africa
Packaging papers tonnes 369,300 373,000
Corrugated board and boxes m m 2 328 330
Newsprint Joint Ventures
Newsprint (attributable share)tonnes 320,900 316,500
(1) 2006 data shown above excludes production from Kumba Resources Limited
(Exxaro) which ceased to be a subsidiary during the year and is now held as a
Financial Asset Investment.
(2) Includes Hippo Valley`s production, which was acquired by a subsidiary of
Tongaat-Hulett during the year.
Reconciliation of subsidiaries` and associates` reported earnings to the
underlying earnings included in the consolidated financial statements
For the year ended 31 December 2006
Note only key reported lines are reconciled
2006
AngloGold Ashanti Limited US$ million
IFRS adjusted headline earnings (published) 413
Exploration 16
Depreciation on assets fair valued on acquisition (26)
Deferred tax on depreciation on assets fair valued on
acquisition 8
Other 10
Minorities` share of profit during subsidiary period up to 20
April 2006 (69)
Share of earnings not attributable to Anglo American`s 41.7%
shareholding from 20 April 2006 (174)
Contribution to Anglo American plc underlying earnings 178
2006
Anglo Platinum Limited US$ million
IFRS headline earnings (US$ equivalent of published) 1,771
Exchange rate difference (40)
Exploration 30
Adjustment to profit on disposal(1) 16
Other adjustments (6)
1,771
Minority interest (454)
Depreciation on assets fair valued on acquisition (net of tax) (52)
Contribution to Anglo American plc underlying earnings 1,265
(1) The BEE cost included in the current year transaction in respect of the
disposal of 15% of Union section by Anglo Platinum is calculated in accordance
with IFRS 2 "Share -based payment". This is excluded from Anglo American`s
`Underlying earnings` as it is considered to be part of the profit or loss on
disposal, however this amount is included in Anglo Platinum`s `Headline
earnings` as defined by the Johannesburg Securities Exchange (JSE).
2006
DB Investments (DBI) US$ million
DBI underlying earnings (100%)(1) 425
Adjustments(2) 18
DBI underlying earnings - Anglo American plc basis (100%) 443
Anglo American plc`s 45% ordinary share interest 199
Income from preference shares 28
Contribution to Anglo American plc underlying earnings 227
(1) DBI underlying earnings is stated before costs of $57 million in relation
to the amended class action settlement agreement, and profits of $229 million
and $105 million relating to the Ponahalo BEE transaction and sale of interest
in Fort a la Corne, respectively.
(2) Adjustments include the reclassification of the actuarial gains and losses
booked to the income statement by Dbsa under the corridor mechanism of IAS 19.
Reconciliation of subsidiaries` and associates` reported earnings to the
underlying earnings included in the consolidated financial statements
(continued)
2006
Kumba Iron Ore Limited (KIO) US$ million
IFRS proforma headline earnings (US$ equivalent of published)(1) 314
Depreciation on assets fair valued on acquisition (net of tax) (6)
Adjustment to profit on disposal(2) 23
Other adjustments (3)
328
Minority interest (66)
KIO contribution to Anglo American plc underlying earnings 262
Add contribution from Kumba non iron-ore 40
Kumba contribution to Anglo American plc underlying earnings 302
(1) The KIO IFRS pro -forma headline earnings for the 12 months ended 31
December 2006 assume a minority interest of 20% in KIO`s underlying mining
assets.
(2) The BEE cost in respect of KIO`s disposal of 3% of the issued share capital
of Sishen Iron Ore Company (Pty) Limited (`SIOC`) to the SIOC Community
Development Trust, as part of the conditions of the Kumba Resources empowerment
transaction, is calculated in accordance with IFRS 2 `Share-based payments`.
This is excluded from Anglo American`s `Underlying earnings` as it is
considered to be part of the Kumba empowerment transaction. This amount,
however, is included in KIO`s `Headline earnings` as defined by the
Johannesburg Securities Exchange.
2006
Highveld Steel and Vanadium Corporation Limited US$ million
IFRS headline earnings (US$ equivalent of published) 154
Adjustment in respect of disposal group accounting (1) 13
Other adjustments (7)
160
Minority interest (81)
Contribution to Anglo American plc underlying earnings 79
(1) Highveld was reclassified as `Held for Sale` during the year and,
therefore, in accordance with IFRS 5, the Group ceased recording depreciation
from the poi nt of reclassification.
2006
The Tongaat-Hulett Group Limited US$ million
IFRS headline earnings (US$ equivalent of published) 104
104
Minority interest (54)
50
Add Anglo American plc`s share of Hulamin 5
Contribution to Anglo American plc underlying earnings 55
Exchange rates and commodity prices
US$ exchange rates 2006 2005
Average spot prices for the year
South African rand 6.77 6.37
Sterling 0.54 0.55
Euro 0.80 0.80
Australian dollar 1.33 1.31
Chilean peso 530 559
Closing spot prices
South African rand 7.00 6.35
Sterling 0.51 0.58
Euro 0.76 0.85
Australian dollar 1.27 1.36
Chilean peso 533 512
Commodity prices 2006 2005
Average market prices for the year
Gold US$/oz 604 445
Platinum US$/oz 1,142 897
Palladium US$/oz 321 201
Rhodium US$/oz 4,571 2,056
Copper US cents/lb 305 167
Nickel US cents/lb 1,095 668
Zinc US cents/lb 148 63
Lead US cents/lb 58 44
European eucalyptus pulp price (CIF) US$/tonne 638 582
Key financial data
US$ million (unless otherwise stated) 2006 2005 2004
Group revenue including associates 38,637 34,472 31,938
Less: share of associates` revenue (5,565) (5,038) (5,670)
Group revenue 33,072 29,434 26,268
Operating profit including associates
before special items and remeasurements 9,832 6,376 4,697
Special items and remeasurements (excluding
financing special items and remeasurements) 376 (455) 933
Net finance costs (including
remeasurements), taxation and minority
interests of associates (481) (320) (399)
Total profit from operations and associates 9,727 5,601 5,231
Net finance costs (including special items
and remeasurements) (165) (393) (367)
Profit before tax 9,562 5,208 4,864
Income tax expense (2,640) (1,275) (923)
Profit for the financial year 6,922 3,933 3,941
Minority interests (736) (412) (440)
Profit attributable to equity shareholders
of the Company 6,186 3,521 3,501
Underlying earnings(1) 5,471 3,736 2,684
Earnings per share ($) 4.21 2.43 2.44
Underlying earnings per share ($) 3.73 2.58 1.87
Ordinary dividend per share (US cents) 108.0 90.0 70.0
Special dividend per share (US cents) 67.0 33.0 -
Weighted average number of shares
outstanding (million) 1,468 1,447 1,434
EBITDA(2) 12,197 8,959 7,031
EBITDA interest cover(3) 45.5 20.0 18.5
Operating margin (before special items and
remeasurements) 25.4% 18.5% 14.7%
Ordinary dividend cover (based on
underlying earnings per share) 3.5 2.9 2.7
Balance Sheet
Intangible and tangible assets 25,632 33,368 35,816
Other non-current assets and investments 7,819 5,375 5,375
Working capital 3,246 3,719 3,715
Other net current liabilities (1,177) (1,492) (611)
Other non-current liabilities and
obligations (5,790) (8,399) (8,339)
Net debt (3,324) (4,993) (8,243)
Net assets classified as held for sale 721 - -
Net assets 27,127 27,578 27,713
Minority interests (2,856) (3,957) (4,588)
Equity attributable to the equity
shareholders of the Company 24,271 23,621 23,125
Total capital(4) 30,451 32,571 35,956
Cash inflows from operations 10,057 7,265 5,291
Dividends received from associates and
financial asset investments 288 470 396
32.4% 19.2% 14.6%
Return on capital employed(5)
EBITDA/average total capital(4) 38.7% 26.0% 21.2%
Net debt to total capital(6) 12.9% 17.0% 25.4%
(1) Underlying earnings is net profit attributable to equity shareholders,
adjusted for the effect of special items and remeasurements, and any related
tax and minority interests.
(2) EBITDA is operating profit before special items, operating remeasurements,
depreciation and amortisation in subsidiaries and joint ventures and share of
EBITDA of associates.
(3) EBITDA interest cover is EBITDA divided by net finance costs, excluding
other net financial income, exchange losses and gains on monetary assets and
liabilities, amortisation of discounts on provisions, special items and
financial remeasurements, but including share of associates` net interest
expense.
(4) Total capital is net assets excluding net debt.
(5) Return on capital employed is calculated as total operating profit before
impairments for the year divided by the average total capital less other
investments and adjusted for impairments.
(6) Net debt to total capital is calculated as net debt divided by net assets
plus net debt less investments in associates.
Summary by business segment
Revenue(1) EBITDA(2)
US$ million 2006 2005 2006 2005
Platinum 5,861 3,714 2,845 1,282
Gold 1,740 2,644 843 871
Diamonds 3,148 3,316 541 655
Coal 3,333 3,349 1,082 1,243
South Africa 1,394 1,441 437 525
Australia 1,398 1,383 397 459
South America 541 525 271 273
Projects and Corporate - - (23) (14)
Base Metals 6,252 3,647 4,214 1,990
Copper 4,537 2,597 3,238 1,590
Collahuasi 1,442 712 1,037 468
Minera Sur Andes 2,372 1,306 1,640 824
Mantos Blancos 723 579 563 299
Other - - (2) (1)
Nickel, Niobium, Mineral
Sands 799 609 451 296
Catalao 66 49 26 20
Codemin 219 136 144 75
Loma de Niquel 334 249 229 153
Namakwa Sands 180 175 52 48
Zinc 916 441 588 157
Black Mountain 148 80 42 12
Lisheen 396 147 280 62
Skorpion 372 214 266 83
Other - - (63) (53)
Industrial Minerals 4,291 4,073 580 618
Tarmac 4,009 3,784 539 570
Copebras 282 289 41 48
Ferrous Metals and
Industries 6,519 6,773 1,560 1,779
Kumba 2,259 1,936 879 734
Highveld Steel 1,023 1,127 247 472
Scaw Metals 1,233 1,029 188 145
Samancor Group 425 634 51 164
Tongaat-Hulett 1,572 1,423 207 188
Boart Longyear - 618 - 87
Other 7 6 (12) (11)
Paper and Packaging 7,493 6,956 923 916
Mondi Packaging 4,132 3,798 528 528
Mondi Business Paper 2,215 2,050 297 310
Other 1,146 1,108 98 78
Exploration - - (132) (150)
Corporate - - (259) (245)
38,637 34,472 12,197 8,959
Operating profit/ Underlying
(loss)(3) earnings/(loss)
US$ million 2006 2005 2006 2005
Platinum 2,398 854 1,265 483
Gold 467 332 178 105
Diamonds 463 583 227 430
Coal 864 1,019 640 724
South Africa 380 470 279 333
Australia 279 323 216 224
South America 227 240 163 174
Projects and Corporate (22) (14) (18) (7)
Base Metals 3,876 1,678 2,647 1,240
Copper 3,019 1,381 1,908 983
Collahuasi 962 397 586 257
Minera Sur Andes 1,533 724 996 529
Mantos Blancos 526 261 328 195
Other (2) (1) (2) 2
Nickel, Niobium, Mineral
Sands 405 249 270 202
Catalao 25 18 15 17
Codemin 136 69 96 68
Loma de Niquel 209 132 134 92
Namakwa Sands 35 30 25 25
Zinc 516 102 525 100
Black Mountain 31 10 38 10
Lisheen 265 50 287 54
Skorpion 220 42 200 36
Other (64) (54) (56) (45)
Industrial Minerals 336 370 266 267
Tarmac 315 340 258 256
Copebras 21 30 8 11
Ferrous Metals and
Industries 1,360 1,456 583 757
Kumba 778 568 302 261
Highveld Steel 230 436 79 232
Scaw Metals 160 121 106 85
Samancor Group 52 144 38 103
Tongaat-Hulett 154 131 55 49
Boart Longyear - 67 - 35
Other (14) (11) 3 (8)
Paper and Packaging 477 495 274 296
Mondi Packaging 287 293 208 194
Mondi Business Paper 130 163 51 100
Other 60 39 15 2
Exploration (132) (150) (113) (115)
Corporate (277) (261) (496) (451)
9,832 6,376 5,471 3,736
(1) Revenue includes the Group`s share of revenue of joint ventures and
associates. Base Metals` revenue is shown after deduction of treatment charges
and refining charges (TC/RCs).
(2) EBITDA is operating profit before special items, remeasurements,
depreciation and amortisation in subsidiaries and joint ventures and share of
EBITDA of associates.
(3) Operating profit includes operating profit before special items and
remeasurements from subsidiaries and joint ventures and share of operating
profit (before interest, tax, minority interests, special items and
remeasurements) of associates.
ANGLO AMERICAN plc
(Incorporated in England and Wales - Registered number 3564138)
(the `Company`)
Notice of Recommended Final Dividend
(Dividend No 16)
The directors have recommended that a dividend on the Company`s ordinary share
capital in respect of the year ended 31 December 2006 will, subject to approval
by shareholders at the Annual General Meeting to be held on Tuesday 17 April
2007, be paid as follows:
Amount (United States currency) 75 cents per ordinary share (note 1)
Amount (South African currency) R5.3355 per share
Last day to effect removal of shares
between the UK and SA registers Tuesday 20 February 2007
Last day to trade on the JSE Limited
(`JSE`) to qualify for the dividend Friday 9 March 2007
Ex-dividend on the JSE from the
commencement of trading on Monday 12 March 2007
Ex-dividend on the London Stock Exchange
from the commencement of trading on Wednesday 14 March 2007
Record date (applicable to both the
United Kingdom principal register and
South African branch register) Friday 16 March 2007
Currency conversion
US$: GBP/ rates announced on Tuesday 20 March 2007
Removal of shares between the UK and
SA registers permissible from Tuesday 20 March 2007
Last day for receipt of Dividend
Reinvestment Plan (`DRIP`) Mandate Forms
by Central Securities Depository
Participants (`CSDPs`)
(notes 3, 4 and 5) Tuesday 10 April 2007
Last day for receipt of DRIP Mandate
Forms by the UK Registrars or the
South African Transfer Secretaries
(notes 3, 4 and 5) Thursday 12 April 2007
Dividend warrants posted Wednesday 2 May 2007
Payment date of dividend Thursday 3 May 2007
Notes:
1. Shareholders on the United Kingdom register of members with an address in
the United Kingdom will be paid in pounds sterling and those with an address
in a country in the European Union which has adopted the euro, will be paid
in euros. Such shareholders may, however, elect to be paid their dividends in
US dollars provided the UK Registrars receive such election by Friday 16
March 2007. Shareholders with an address elsewhere will be paid in US dollars
except those registered on the South African branch register who will be paid
in South African rand. The currency conversion rates and the amounts per
share in pounds sterling/euros will be announced on Tuesday 20 March 2007.
2. Dematerialisation and rematerialisation of registered share certificates
in South Africa will not be effected by CSDPs during the period from Monday
12 March 2007 to Friday 16 March 2007 (both days inclusive).
3. Those shareholders who already participate in the DRIP need not complete a
DRIP mandate form for each dividend as such forms provide an on-going
authority to participate in the DRIP until cancelled in writing. Shareholders
who wish to participate in the DRIP should obtain a mandate form from the UK
Registrars, the South African Transfer Secretaries or, in the case of those
who hold their shares through the STRATE system, their CSDP.
4. In terms of the DRIP, and subject to the purchase of shares in the open
market, share certificates/Crest notifications are expected to be mailed and
CSDP investor accounts credited/updated on Wednesday 23 May 2007.
5. Copies of the terms and conditions of the DRIP are available from the
UK Registrars or the South African Transfer Secretaries.
By order of the Board
N Jordan
Secretary
20 February 2007
Registered office UK Registrars
20 Carlton House Terrace Lloyds TSB Registrars
London The Causeway
SW1Y 5AN Worthing
England West Sussex
BN99 6DA
England
South African Transfer Secretaries
Link Market Services South Africa (Pty) Limited
11 Diagonal Street
Johannesburg 2001
PO Box 4844, Johannesburg 2000
South Africa
Sponsor: J.P.Morgan Equities Limited
Date: 21/02/2007 08:59:01 Produced by the JSE SENS Department.
