Transcript No Slide Title

ANGLO AMERICAN
ADDING VALUE TO
NATURAL RESOURCES
8 August 2003
This presentation is being made only to and is directed only at (a) persons who have professional experience in matters
relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion)
Order 2001 (the “Order”) or (b) high net worth entities, and other persons to whom it may otherwise lawfully be
communicated, falling within Article 49(1) of the Order (all such persons together being referred to as “relevant persons”).
Any person who is not a relevant person should not act or rely on this presentation or any of its contents.
2003 Interim Results
Key Financials
 Headline earnings up 2% at $856m
despite stronger rand
 Outstanding contribution from
Diamonds, strong performances
from European Paper and Packaging
and Industrial Minerals offset lower
Platinum, Gold and Coal
 Interim dividend maintained at 15
US cents per share
 Strong EBITDA of $2.4bn up 9%:
EBITDA interest cover 14x
 Cost savings & efficiency gains:
$127m
2
Headline EPS
$0.60
H1 ‘02
$0.61
H1 ‘03
2003 Interim Results
Rand/US$ Exchange Rate
13
12
11
13
12
11.96
Average
10.99
R/$
11
10.37
10
SA Rand 27%
stronger vs. US$
10
9
9
8
8
8.58
Average
8.03
7.48
7
7
6
6
JanFeb
FebMar
MarApr
AprMay
May
Jun
Jan
Jun
H1 2002
3
JanFebFeb
Jan
MarMarAprApr
MayMay
JunJun
H1 2003
2003 Interim Results
Headline Earnings Rest of
World
18%
Americas
7%
Europe
21%
South
Africa
54%
H1 2002
4
Rest of
World
28%
Americas
12%
Geographic
Diversity
Europe
30%
South
Africa
30%
H1 2003
2003 Interim Results
Headline Earnings Ferrous &
Industries
6%
Paper and
Packaging
18%
Gold
12%
Industrial
Minerals
11%
Base
Metals
4%
Coal
17%
Diamonds
20%
H1 2002
5
Platinum
19%
Paper and
Packaging
21%
Ferrous &
Industries Platinum
5%
13%
Gold
10%
Industrial
Minerals
13%
Base
Metals
7%
Product
Diversity
Diamonds
29%
Coal
13%
H1 2003
2003 Interim Results
Balanced Asset Mix -
Geographic
Diversity
Rest of
World
14%
Europe
30%
Americas
20%
South
Africa
36%
30 June 2003
Net attributable operating assets, including investment in associates & JVs
6
2003 Interim Results
Internal Growth
A Well-balanced $6bn Project Portfolio
Buxton
$173m
Kleinkopje
$56m
Goiás
$147m
Polokwane
$190m
Finsch
$126m
Black Mtn Richards Bay
$110m
$221m
Collahuasi
$288m
CC&V
$203m
Skorpion
$454m
PMR Expan.
$99m
TauTona
Ruzomberok
$169m
$233m
HBMS 777
$276m
ACP Project
$250m
Modikwa
$311m
2003
RPM Tailings
$186m
2004
Dartbrook
$55m
BRPM
$317m
2005
RPM Ph 1
$210m
Kriel
$65m
Capcoal
$106m
RPM Ph 2
$444m
Cerrejón
$50m
Mponeng
$191m
2006
Key:
Base Metals
Diamonds
Paper & Packaging
Industrial Minerals
Platinum
Coal
Gold
2007
Moab Khot.
$690m
2008
2009
Major authorised projects. Full project list included in appendix. 100% of subsidiaries and AA plc’s share of JV’s and associates. Full production dates.
7
2003 Interim Results
Social Responsibility
 Safety performance continues to show encouraging
improvements
 LTIFR improves 22% from 2002 total
 Fatal incidents levels unchanged from equivalent period
last year – area for intensive focus
 Good progress made in rolling out ART for HIV/AIDS
infected employees - around 500 employees already
receiving ART - with encouraging results
8
2003 Interim Results
Review of Financials
Tony Lea
2003 Interim Results
Headline Earnings
H1 ‘03
760
H1 ‘02
767
7
(11)
Amortisation of goodwill
98
82
Related tax & minority interests
(9)
$m
Profit for the financial period
Exceptional items
Headline earnings for the period
10
856
2
840
2003 Interim Results
Headline Earnings Variances
1,200
127
1,000
159
840
(112)
800
28
$m
600
856
82
30
(21)
(231)
(46)
400
200
0
H1 2002
11
Price
Inflation Exchange Volum e
Cash
cost
Non-cash Interest
cost
DBI
Structural H1 2003
& Other
2003 Interim Results
Headline Variance: Exchange
Group Total: -$231m
Platinum
Coal
Paper &
AngloGold Packaging
Base
Metals
Corporate
&
Ferrous
Exploration Metals
Industrial
Industries Minerals
Total
(50)
(65)
(100)
(44)
(150)
(200)
(44)
(25)
(23)
14
(19)
(250)
(16)
(9)
(231)
(300)
12
2003 Interim Results
Pre-tax Cost Savings: $127m
Maintenance
Admin & Overhead
Labour
Materials & Supplies
$84m
$3m
$7m
$19m
$29m
$55m
Operating
efficiencies
13
$1m
$2m
$14m
$26m
$2m
$8m
$4m
Procurement
Restructuring
& synergies
2003 Interim Results
Balance Sheet
$m
30/06/2003
Shareholders’ Funds
18,371
Net Debt:
South Africa
1,062
Rest of World
5,927
6,989
Minority Interests
Total Capital
Net Debt/Total Capital
ROCE
EBITDA/Total Capital
14
2,454
27,814
25.1%
12.7%
18.8%
31/12/2002
16,261
12
5,566
5,578
2,304
24,143
23.1%
17.5%
23.6%
2003 Interim Results
Cash Flow Analysis
Operating cash flow
Dividends from JVs & assocs.
Operating cash flow including
dividends from JVs & assocs.
Net interest & other dividend income
Taxation
Disposal of fixed assets
Available cash flow
Dividend paid - company & minorities
Net acquisitions & disposals
Capital expenditure
- maintenance
- expansionary
Other
Movements in net debt
Net debt at start of the period
Net debt at end of the period
15
H1 ‘03
1,286
203
H1 ‘02
1,381
115
1,489
(75)
(413)
40
1,041
(739)
(315)
(547)
(625)
(226)
(1,411)
(5,578)
(6,989)
1,496
55
(567)
272
1,256
(724)
(1,752)
(271)
(579)
(128)
(2,198)
(2,018)
(4,216)
2003 Interim Results
Review of Operations
Tony Trahar
2003 Interim Results
Highlights - Diamonds
 Record headline earnings up 49% to $248m
Headline earnings
up 49%
 DTC sales of $2.92bn up 3%
 Operating cash flow of $1,115m
 Anglo total dividends for 2002:
$126m (2001: $71m)
$248m
$166m
 De Beers net debt reduced by
$2,225m to $927m in 1½ years
 De Beers debt refinanced at
attractive rates
17
H1 ‘02
H1 ‘03
2003 Interim Results
Highlights - Platinum
 Headline earnings: $107m
 Lower earnings primarily due to
strong SA rand/dollar exchange rate
Headline earnings
down 32%
 Mine production up 10%
 Temporary increase in pipeline
stock levels result in reduced
production of refined metal
$158m
$107m
 AA plc holding in Anglo Platinum
at 72.25%
 3.5m oz target remains in place
 Continued rand strength: Project
timing & funding under review
18
H1 ‘02
H1 ‘03
2003 Interim Results
Highlights - Gold
 Headline earnings: $82m
 Gold production steady at 2.8m ozs
despite lower grades
 Lower contribution due to stronger
rand
Headline earnings
down 18%
$100m
 Hedge book continues to reduce down 17% to 8.7m oz
$82m
 AngloGold/Ashanti merger proposal
under consideration by Government
of Ghana
 $117m new expansion projects at
TauTona will deliver 1.8m oz over
the next 10 years
19
H1 ‘02
H1 ‘03
2003 Interim Results
Highlights - Coal
 Headline earnings: $107m
 Lower export thermal coal prices
and stronger rand & Australian
dollar drive earnings lower
 Sales volumes increased 5% to
43.0 mtpa
Headline earnings
down 25%
$142m
$107m
 Australia operating profit
increases by 29% to $74m,
helped by steady coking coal
prices and production
 Cerrejón commences expansion
to 28 mtpa from 22 mtpa
20
H1 ‘02
H1 ‘03
2003 Interim Results
Highlights - Base Metals
 Headline earnings: $60m
 Disputada performs well - initial
headline contribution $39m
Headline earnings
up 62%
 Losses in zinc offset by higher
contribution from copper, nickel
& niobium
$60m
$37m
 Skorpion zinc project
commissioning; first metal
produced in May
 Restructuring continues:
Anaconda Nickel and Bindura
Nickel sold
21
H1 ‘02
H1 ‘03
2003 Interim Results
Highlights - Industrial Minerals
 Headline earnings: $113m
 EBITDA up by 23% to $250m
Headline earnings
up 27%
 Increased earnings on the back of
higher UK margins and improved
European performance
$113m
$89m
 New Copebrás phosphate plant
performing well
 $173m Buxton cement plant to be
completed end 2003
22
H1 ‘02
H1 ‘03
2003 Interim Results
Highlights - Paper and Packaging
 Headline earnings: $178m
Headline earnings
up 16%
 Strong performance from Mondi
Europe despite economic downturn
$178m
 Cost reductions, profit-improvement
initiatives and strong Euro boost
performance
$153m
 $221m expansion of Richards Bay
mill announced
 $600m in expansionary projects
underway
23
H1 ‘02
H1 ‘03
2003 Interim Results
Highlights - Ferrous Metals
 Headline earnings: $42m
Headline earnings
up 2%
 Difficult trading conditions with
weaker SA domestic markets and
impact of strong SA rand
 Avmin stake disposed of for $231m
$41m
$42m
 Stake in Kumba 20.1%, right to
acquire further shares subject to
SA Competition Tribunal approval
H1 ‘02
24
H1 ‘03
2003 Interim Results
Outlook
 Outlook remains challenging
 While geopolitical tensions have reduced somewhat
following Iraq war, low growth forecasts for US, Japan
and Europe
 Prospect of a continued strong rand/US$ exchange
rate concerning
 Continued focus on cost savings and efficiency
improvements
 Anglo’s product & geographic asset mix and strong
project pipeline will continue to underpin performance
in years ahead
25
2003 Interim Results
ANGLO AMERICAN
ADDING VALUE TO
NATURAL RESOURCES
8 August 2003
2003 Interim Results
Additional Information
Handout Only
2003 Interim Results
Key Dates
Currency Conversion
Ex-dividend (JSE)
Ex-dividend (LSE)
5 August 2003
18 August 2003
Record date
22 August 2003
Payment of Interim Dividend
Annual Results
28
20 August 2003
15 September 2003
25 February 2004
2003 Interim Results
Market Prices
Gold
Platinum
Palladium
Rhodium
Copper
Nickel
Zinc
Coal: thermal (RSA - API 4 index average)
Coal: coking
29
H1 ‘03
349
H1 ‘02
302
654
207
557
515
370
952
75
379
35
25.75
72
298
36
27
45
44
2003 Interim Results
Headline Earnings Sensitivities
10% change in gold price
10% change in platinum price
10% change in palladium price
10% change in coal price
10% change in copper price
10% change in nickel price
10% change in zinc price
10% movement in diamond revenue
10% change in pulp price
10% movement in SA rand/US$
10% movement in AUD/US$
10% movement in Euro/US$
US$m
± 31
± 32
±4
± 54
± 55
± 10
± 17
± 45
±4
± 109
± 18
± 11
Estimated sensitivities represent 6 month outlook. Excludes the impact of translation of monetary assets & liabilities and the effect of any hedging activities.
Stated after tax at marginal rate. Pulp sensitivity depends on recoveries. Diamond sensitivity dependent on consistent volumes, mixes and pricing.
30
2003 Interim Results
Projects
Gold
Approved
Mponeng
TauTona - Expansion project
TauTona - VCR A & Pillar & CLR <120L
Cripple Creek & Victor
Moab Khotsong
Total
Industrial Minerals
Approved
Goiás (completed under budget)
Buxton Cement Plant
Total
1
2
3
31
Total additional
production1
Production
commences
Full
prod.
Approved
capex $m2
4.0m oz
2.3m oz
1.8m oz
2.8m oz
4.1m oz
2004
2004
2005
2002
2003
2005
2005
2008
2002
2008
191
52
117
203
690
15.0m oz
1,253
Total additional
production3
Production
commences
Full
prod.
Approved
capex $m
455,000 t
425,000 t
2002
2003
2003
2004
147
173
320
Gold incremental production is total additional capacity over life of project. Capex converted to US$ on date of project approval.
Nominal
Incremental production is a per year amount once full production is reached. Capex converted at date of project approval.
2003 Interim Results
Projects
Platinum
Approved
Total additional
production1
ACP Convertor Phase 1
PMR Plant Expansion
Slag Cleaning Furnace
Rustenburg UG2 Phase 1
3
Rustenburg UG2 Phase 2
RPM Tailings Retreatment
Bafokeng-Rasimone Mine (BRPM)
Modikwa Mine
Polokwane Smelter
Meet
expansion
requirements
395,000 oz
306,000 oz
120,000 oz
254,000 oz
162,000 oz
650,000 t
concentrate
Production
commences
Full
prod.
Approved
capex $m2
2003
2002
2003
2002
2003
2004
1999
2002
2003
2004
2005
2003
2006
2007
2006
2004
2003
2003
250
99
34
210
444
186
317
311
190
Total
1
2
3
32
2,041
Incremental production is a per year amount once full production is reached.
Capex converted at date of project approval.
Replacement ounces
2003 Interim Results
Projects
Coal
Approved
Total additional
production1
Kleinkopje Expansion
1.3m tpa
Greenside Expansion
1.0m tpa
Cerrejón Sur
exploration
Cerrejón
2.0m tpa
Kriel South Project
5.0m tpa
2
German Creek - Capcoal (Grasstree)
3.9m tpa
Dartbrook (Kayuga)
3.6m tpa
Lake Lindsay
exploration
Total
Base Metals
Approved
HBMS 777 Project3
Black Mountain Deeps
Collahuasi Rosario Project
Skorpion
Total
1
2
3
33
Production
commences
Full
prod.
Approved
capex $m
2003
2003
2005
2005
2004
2005
2006
2004
2007
2007
2007
2005
56
17
8
50
65
106
55
35
16.8m tpa
Total additional
production
45,000 t Zn
150,000 t Zn
392
Production
commences
Full
prod.
Approved
capex $m
2003
2004
2002
2003
2004
2005
2004
2004
276
110
288
454
1,128
Incremental production is a per year amount once full production is reached. Capex converted at date of project approval.
To maintain & expand production levels at German Creek & Dartbrook. Incremental tonnes - German Creek (1.6m tpa) & Dartbrook (0.9m tpa).
Extends HBMS life to 2018
2003 Interim Results
Projects
Paper and Packaging
Approved
Frantschach: Steti PM3
Frantschach: Swiecie Pulp Mill
Ruzomberok: Pulp Mill
Ruzomberok: PM18 Expansion
Richards Bay: BEKP Line
Merebank: PM2 Rebuild
Total additional
production1
Production
commences
Full
prod.
Approved
capex $m
20,000 t
50,000 t
103,000 t
100,000 t
145,000 t
40,000 t
2003
2004
2004
2003
2005
2003
2003
2004
2005
2004
2005
2003
20
13
129
104
221
26
Total
Approved
Ybbstal: Flex 05
Frantschach: Inncoat Foils
Syktyvkar: A4 Cutter
Merebank: A4 Cutter
513
Total converting
capacity
Production
commences
Full
prod.
Approved
capex $m
60,000 t2
150,000 t
92,000 t
2004
2003
2003
2002
2005
2003
2003
2003
51
11
15
12
Total
1
2
34
89
Incremental production is a per year amount once full production is reached. Capex converted at date of project approval
60,000 t increase in cut size capacity plus 16,000t additional production of UCWF paper
2003 Interim Results
Projects
Diamonds
Current projects
!Gariep
Finsch Block 4
Venetia Upgrade
BB1E Premier
Elizabeth Basy Upgrade
Total
Total additional
1
production
3m carats
16m carats
1.5m carats pa
3m carats
2m carats
Production
commences
Full
prod.
Approved
2
capex $m
2003
2003
2003
2004
2004
2004
2007
2004
2007
2004
32
126
1
12
24
24m carats
+1.5m carats pa Venetia
195
Under review
C-Cut Premier
Finsch Tailings
Snap Lake
Victor
110m carats
6m carats
19m carats
6m carats
Total
141m carats
1
2
35
2007
2004
2007
2007
2011
2004
2008
2008
454
16
315
305
1,090
Total additional production shown for the life of the project. Shown on a 100% basis.
Approved capex is AA plc’s effective attributable share (48.65%), converted to US$ at R7.80=US$1, C$1=US$0.74
2003 Interim Results
Analysis of Headline Earnings
H1 ‘03
H1 ‘02
Platinum
Gold
Diamonds
Coal
Base Metals
Industrial Minerals
Paper and Packaging
Ferrous Metals
Industries
Exploration
Corporate Activities1
107
82
248
107
60
113
178
42
(1)
(39)
(41)
158
100
166
142
37
89
153
41
9
(32)
(23)
Headline Earnings
856
840
$m
1
36
includes Gold Fields
2003 Interim Results
Analysis of Operating Profit
$m
Platinum
Gold
Diamonds
Coal
Base Metals
Industrial Minerals
Paper and Packaging
Ferrous Metals
Industries
Exploration
Corporate Activities1
Operating Profit2
1
2
37
H1 ‘03
H1 ‘02
204
180
378
172
98
136
357
74
30
(50)
(45)
389
197
242
232
127
113
291
66
52
(40)
(88)
1,534
1,581
includes Gold Fields
after operating exceptional items
2003 Interim Results
Capital Expenditure
$m
Platinum
Gold
Coal
Base Metals
Industrial Minerals
Paper and Packaging
Ferrous Metals
Industries
Other
Total
38
H1 ‘03
H1 ‘02
394
117
74
155
136
233
22
37
4
229
107
41
146
159
132
8
25
3
1,172
850
2003 Interim Results
Headline Variance: Price
Group Total: +$127m
180
19
160
(1)
22
140
127
26
120
$m
8
100
(37)
28
80
62
60
40
20
0
AngloGold Ferrous
Metals
39
Base
Metals
Industrial Paper & Platinum Industries
Minerals Packaging
Coal
Total
2003 Interim Results
Headline Variance: Volume
Group Total: +$28m
60
8
3
2
1
50
12
(10)
40
$m
31
28
30
(19)
20
10
0
Paper &
Packaging
40
Coal
Industries Platinum Industrial Ferrous AngloGold Base
Minerals Metals
Metals
Total
2003 Interim Results
Operating Profit Variance
2,100
284
1,900
1,700
1,581
123
(211)
1,500
1,534
136
$m
47
1,300
62
(49)
(439)
1,100
900
700
500
H1 2002
Price
Inflation Exchange Volume
Cash
Cost
Non-cash
Cost
DBI
Structural H1 2003
& Other
Operating profit after operating exceptional items
41
2003 Interim Results
Regional Analysis
Operating Profit
H1 ‘03
H1 ‘02
$m
South Africa
Rest of Africa
Europe
Americas
Australasia
548
299
409
187
91
864
262
210
171
74
1,534
1,581
Operating profit after operating exceptional items
42
2003 Interim Results
Operating Cost Reconciliation
Subsidiary & JV Operating Costs
H1 2002 operating costs
Subsidiaries
(5,756)
JVs (share of turnover less operating profit)
(401)
Inflation
Exchange
Volume
Depreciation & amortisation
Acquisitions & disposals
Operating impairments
Other costs recovered through revenues
Ramp up operations, costs higher than inflation & other
H1 2003 operating costs before cost savings
Cost saving initiatives
H1 2003 Operating costs
Subsidiaries
JVs (share of turnover less operating profit)
43
(7,979)
(386)
$m
(6,157)
(235)
(1,222)
(260)
(49)
(414)
(28)
(62)
(65)
(8,492)
127
(8,365)
2003 Interim Results
Anglo Platinum Reconciliation
$m
IAS net profit (published)
148
STC adjustment
12
Movement on unrealised profit on FEC
2
Exploration
11
Prior year stock adjustment change in AP accounting policy 13
Exceptional items
(8)
Weighted average exchange impact
2
180
Minority interest
(51)
Depreciation on assets revalued on acquisition
(22)
UK GAAP contribution to headline earnings
107
44
2003 Interim Results
AngloGold Reconciliation
1
IAS Headline earnings (published)
Exploration
Minority interest
UK GAAP contribution to headline earnings
1
45
$m
140
18
(76)
82
before unrealised non-hedge derivatives
2003 Interim Results
De Beers Reconciliation
$m
Total
DBI headline earnings (100%)
414
UK GAAP adjustments
58
DBI headline earnings - UK GAAP (100%) 472
AA plc’s 45% ordinary share interest
188
Additional 3.65% ordinary share interest
15
AA plc’s portion of preference shares
45
AA plc headline earnings
248
46
Ordinary
shares
417
188
15
203
Preference
shares
55
45
45
2003 Interim Results
EBITDA Reconciliation
$m
Net cash inflow from operating activities
Share of EBITDA of JVs & associates
Working capital adjustments
Differences in adjustments for
exceptionals & non-cash
EBITDA
47
H1 ‘03
1,286
800
375
(17)
H1 ‘02
1,381
588
290
(22)
2,444
2,237
2003 Interim Results
EBITDA by Business: H1 ‘03
$m
Platinum
Gold
Diamonds
Coal
Base Metals
Industrial Minerals
Paper & Packaging
Ferrous Metals
Industries
Other
Total
48
Operating Profit Exclude
(incl JVs
Exceptional
& Associates)
Items
204
180
378
172
98
136
357
74
30
(95)
1,534
12
12
Add Back
Add Back
Subsidiaries Subsidiaries
Depreciation Amortisation
Add Back JVs
& Associates
Depr. & Amort.
EBITDA
90
87
64
109
86
148
14
29
6
8
16
2
26
9
1
2
11
1
28
33
18
28
2
9
26
28
17
303
323
411
256
235
250
523
115
89
(61)
633
75
190
2,444
2003 Interim Results
EBITDA by Business: H1 ‘02
$m
Operating Profit Exclude
(incl JVs
Exceptional
& Associates)
Items
Platinum
Gold
Diamonds
Coal
Base Metals
Industrial Minerals
Paper & Packaging
Ferrous Metals
Industries
Other
389
197
242
232
127
113
291
66
52
(128)
Total
1,581
49
Add Back
Add Back
Subsidiaries Subsidiaries
Depreciation Amortisation
Add Back JVs
& Associates
Depr. & Amort.
EBITDA
30
44
81
51
57
67
104
9
17
8
8
15
2
22
4
1
11
4
31
24
17
41
1
8
20
25
-
445
324
266
302
179
203
407
95
95
(79)
(16)
438
63
171
2,237
(46)
2003 Interim Results
ANGLO AMERICAN
ADDING VALUE TO
NATURAL RESOURCES
8 August 2003
2003 Interim Results