Final Results

20th Feb 2008 07:00

Anglo American PLC20 February 2008 News Release 20 February 2008 Anglo American announces record underlying earnings of $5.8 billion Financial results • Record total Group operating profit(1) of $10.1 billion, with operating profit from core operations(2) up 12% to $8.9 billion • Highest ever total Group underlying earnings(3) of $5.8 billion, up 5% • Underlying earnings per share up 18% to $4.40 • Strong performances from Base Metals, Platinum, Ferrous Metals and Industrial Minerals • Value Based Management being rolled out across the Group: - $1 billion initial estimate of annualised procurement and shared services savings in 3 years - $380 million achieved in cost savings in 2007 • Total Group profit for the year attributable to equity shareholders up 18% at $7.3 billion Uplifting our unique portfolio and driving significant growth • Expediting projects for significant near and medium term growth (PPRust, Sishen, Dawson, Lake Lindsay, Barro Alto, Los Bronces, Zondagsfontein) • Creating new growth through acquisitions (Minas-Rio / Amapa, Michiquillay, Foxleigh, Pebble) • $12 billion of projects currently under development; additional projects under consideration estimated at $29 billion • Demerger of Mondi and reduction of AngloGold Ashanti shareholding Dividend • Final dividend up 15% to 86 cents per share, bringing total normal dividends for the year to 124 cents per share - a 15% increase on 2006 HIGHLIGHTS FOR THE YEAR TO 31 DECEMBER 2007 Year ended Year ended %US$ million, except per share amounts 31 Dec 2007 31 Dec 2006 change Total Group revenue including associates(4) 35,674 38,637 (7.7)% Operating profit including associates before special items and remeasurements - core continuing operations(1)(2) 8,894 7,974 11.5% Operating profit including associates before special items and remeasurements - total Group(1) 10,116 9,832 2.9% Underlying earnings for the year - total Group(3) 5,761 5,471 5.3% EBITDA - total Group(5) 12,132 12,197 (0.5)% Net cash inflows from operating activities - total Group 7,264 8,310 (12.6)% Profit for the year attributable to equity shareholders - total Group 7,304 6,186 18.1% Earnings per share (US$): Basic earnings per share - total Group 5.58 4.21 32.5% Underlying earnings per share - total Group 4.40 3.73 18.0% Interim dividend (US cents per share) 38 33 15.2% Recommended final dividend 86 75 14.7% Total normal dividends for the year 124 108 14.8% Special dividend previously paid -- 67 Total dividends for the year including special dividend 124 175 (29.1)% Total Group includes both continuing and discontinued operations. (1) Operating profit includes share of associates' operating profit (before share of associates' tax andfinance charges) and is before special items and remeasurements, unless otherwise stated. See note 4 to thefinancial information for operating profit on a total Group basis. For definition of special items andremeasurements see note 6 to the financial information and see note 14 for information on discontinuedoperations. (2) Operations considered core to the Group are Base Metals, Platinum, Ferrous Metals' core businesses (KumbaIron Ore, Scaw Metals, Samancor and Minas-Rio), Coal and Diamonds. See the operating profit table in thefinancial review of Group results for a reconciliation of operating profit from core operations to totaloperating profit. (3) See note 9 to the financial information for basis of calculation of underlying earnings and see note 14 forinformation on discontinued operations. (4) Represents total Group revenue (including the revenue of discontinued operations) and includes the Group'sshare of associates' revenue of $6,142 million (2006: $5,565 million). See note 3 to the financial information. (5) EBITDA is operating profit before special items and remeasurements, depreciation and amortisation insubsidiaries and joint ventures and share of EBITDA of associates. See note 13 for analysis of EBITDA bycontinuing and discontinued operations. Cynthia Carroll, Chief Executive, said: "In my first year as Chief Executive, I am pleased to report a record financialperformance by Anglo American. We achieved our highest ever operating profit of$10.1 billion and underlying earnings of $5.8 billion, with continued strongcash generation. The strength of our performance was due to improved productionvolumes of ferrous metals, copper and zinc, an increased focus on operationaldiscipline and a continuation of the supportive trading environment. The year under review has seen a combination of strategic restructuring and aperiod of building from a position of strength, including the identification andexecution of opportunities to drive new growth and value. We have a tremendous $41 billion pipeline of projects approved and underconsideration across our three commodity businesses - precious, base metals andbulks - which, with our leading track record of delivery, will generatesignificant profitable growth for Anglo American, both in the near and mediumterm. 2008 will also see our planned expansions delivering significant newproduction in iron ore and coal. We have made good strategic progress in 2007. The demerger of Mondi wassuccessfully completed in early July and in August we announced our decision tosell Tarmac, our construction materials business. We also realised in excess of$2.9 billion by reducing our stake in AngloGold Ashanti to 16.6% by the yearend. We approved a number of significant projects during the year, including the $1.7billion Los Bronces copper expansion in Chile and the $505 millionZondagsfontein coal project in South Africa. In addition, we made severalsubstantial acquisitions, further extending our geographic reach - the 50% stakein the Pebble copper project in Alaska, the Michiquillay copper project in Peru,70% of the Foxleigh coal mine in Australia and 49% of the Minas-Rio iron oreproject in Brazil. As we announced in January, we are now in negotiations toacquire control of the Minas-Rio project and a 70% stake in the Amapa iron oremine, marking a major advancement in our iron ore growth strategy. Our restructuring programme is almost complete and we are focused on theoperational improvements that will be delivered by our asset optimisationprogramme and the cultural change that we are implementing across the Group.Together, these initiatives are beginning to drive superior operatingperformance, substantial procurement benefits and Group-wide cost savings. The Group achieved cost savings of $380 million in synergies, efficiencies andprocurement. The mining industry continues to experience significant costpressures across the supply chain, including freight, transportation, fuel andconsumables. In spite of these cost pressures, growth in cash costs for thetotal Group was limited to 4% above inflation. Two major cost saving exerciseswere launched in the year; the introduction of three regional shared servicecentres each covering finance, information technology and human resourceslocated in South Africa, Latin America and Asia Pacific and the move to acentralised procurement programme to maximise the benefits of being a globaloperator - initial estimates are that $1 billion in annualised procurement andshared services savings will be achieved in 3 years. 2007 also marked a turning point in our approach to safety. Our historicfatality and injury record has been unacceptable and I believe strongly thatoptimally run businesses have good safety records. We have launched a series ofinitiatives to drive consistent safety messages and practices across ourbusiness. Significant early progress is being made and I expect our operationsto build on this momentum in 2008. In terms of the outlook, Anglo American's position as a focused mining companywith a clear strategy and unique position in platinum group metals and diamondsenables us to benefit from the ongoing strong global environment for commoditiesas we accelerate the realisation of our exciting growth prospects." Review of 2007 Financial results Anglo American's total Group underlying earnings were a record $5.8 billion forthe year as continued strong metal prices reflected the favourable tradingenvironment for the Group's key commodities and volumes improved in mostcommodities. Operating profit from the Group's core operations was 12% higherthan in 2006 at $8.9 billion. Strong contributions came from Base Metals, Platinum, Ferrous Metals' corebusinesses and Industrial Minerals, which all achieved record operating profitin the year. Coal recorded lower operating profit due to a sharp reduction incontribution from Coal Australia, due to port and rail infrastructureconstraints experienced in the industry, necessitating stockpiles and slowing ofproduction resulting in higher demurrage charges, the impact of the appreciationof local currency against the US dollar and lower sales prices. Thecontributions from both Paper and Packaging and Gold were lower than the prioryear due to the demerger of Mondi in early July and the reduction of the Group'sshareholding in AngloGold Ashanti from 41.6% to 16.6% during October. Base Metals generated a record operating profit of $4,338 million (49% of AngloAmerican's total operating profit from core operations), up 11%, due toincreased copper, zinc and phosphate fertiliser production and higher nickel,lead, niobium and fertiliser prices. Platinum reported record operating profit of $2,697 million (30% of AngloAmerican's total operating profit from core operations), up 12%, due to asignificantly higher price achieved for the basket of metals sold and the weakeraverage rand in relation to the US dollar, partially offset by higher costs andlower refined production. Ferrous Metals' operating profit increased 5% to $1,432 million, with operatingprofit from its core businesses increasing by 59% to $1,210 million, (14% ofAnglo American's total operating profit from core operations), mainly due tohigher iron ore and manganese prices, partially offset by the loss ofcontribution, following their disposal, from Kumba non-iron ore and Highveld. Coal recorded operating profit of $614 million (7% of Anglo American's totaloperating profit from its core operations), 29% lower than the prior year, dueto a significant reduction in Australia's contribution, with port and railconstraints which reduced sales, the adverse impact of the appreciation of localcurrency against the US dollar and lower average metallurgical coal prices.Despite the port and rail constraints experienced in Australia, production atthe Australian mines was over 25 million tonnes, 3% above the prior year. Diamonds recorded attributable operating profit of $484 million (5% of AngloAmerican's total operating profit from core operations), up 5% on 2006,principally due to higher earnings from joint ventures and a modest increase inthe price of diamonds. Industrial Minerals saw a significant improvement in its operating profit, up38% (excluding benefit from exchange rate movements) at $474 million due in partto disciplined margin management and favourable demand in certain sectors. Gold's contribution to total Group operating profit declined 57% to $202 milliondue to the reduction of the Group's shareholding in AngloGold Ashanti from 41.6%to 17.3% on 2 October, combined with the benefit of consolidating AngloGoldAshanti as a subsidiary for four months in 2006. At 31 December 2007 theGroup's shareholding in AngloGold Ashanti was 16.6%. Paper and Packaging's contribution to total Group operating profit declined to$324 million, a decrease of 32%, due to the demerger of Mondi in early July2007. Production Production volumes were up for copper, zinc, iron ore and aggregates despitechallenging operating conditions at some of the base metals mines. Platinumproduction volumes from mining operations were down on the prior year due to theinterventions to improve safety combined with reduced production efficiencyfollowing a shortage of skilled labour, and lower grades at Potgietersrust.Challenging operating conditions and the safety interventions resulted in adecrease in total nickel production compared with the prior year. Capital structure and increased return to shareholders At 31 December 2007 the Group's net debt position has increased by $1.9 billionto $5.2 billion, reflecting the impact of the share buyback, increased plannedcapital expenditure and the acquisition of MMX Minas-Rio, partly offset bystrong operating cashflows, proceeds from disposals and the impact of the Mondidemerger. The $3 billion share buyback programme announced in February wascompleted in October 2007 and the additional share buyback programme of $4billion, announced in August, is 33% complete, with around $1.3 billion ofshares having been repurchased at 19 February 2008. Over the last two years,Anglo American has returned a total of $14.5 billion capital to shareholders. Dividends In line with the Group's progressive dividend policy, the final dividend hasbeen raised 15% to 86 cents per share, to be paid on 30 April 2008 subject toshareholder approval at the Annual General Meeting to be held on 15 April 2008.Total dividends for the year amount to 124 cents per share (2006: 175 cents pershare including the interim special dividend of 67). Progress on strategic objectives Anglo American made good progress in 2007 in line with its objective of becominga leading focused mining company. To achieve the goal of focusing on its threecommodity businesses - precious, base metals and bulks, further steps in theGroup's restructuring were completed successfully during the year. The Company disposed of its remaining 29% holding in Highveld Steel and Vanadiumin May and Hulett Aluminium (Hulamin) was unbundled from Tongaat-Hulett in June,together with related empowerment transactions, and listed on the JohannesburgStock Exchange (JSE), resulting in Anglo American's holding in Tongaat-Hulettfalling to 37% from 50%. Mondi, the paper and packaging business, was demerged in July and established asa dual-listed company on the London and Johannesburg stock exchanges. In linewith the intention to ultimately exit AngloGold Ashanti, Anglo American reducedits holding from 41.6% to 16.6% by the year end, realising in excess of $2.9billion. Following a strategic review and as announced in August, the decision was takento sell Tarmac, the construction materials business. Tarmac, which enjoys aleading position in the UK construction materials industry and is wellpositioned in certain key markets in continental Europe and the Middle East, hada very strong operational performance in 2007, with a number of its businessimprovement initiatives starting to make a significant impact. It is expectedthat the performance of Tarmac will continue to underpin a competitive saleprocess, however it has been decided not to launch the marketing phase of thesale process until current credit market conditions improve. It is thereforeunlikely that a sale will be completed within the originally envisagedtimetable. Tarmac continues to be managed to maximise shareholder value and thisincludes active reviews of its portfolio; for example, Tarmac recently increasedits ownership of United Marine Holdings, a significant UK marine dredgedaggregates business, to 100%. Anglo American is bringing greater rigour to its operating platform byintroducing a value based management (VBM) methodology in all its businessunits. A pilot project has been completed in Anglo Coal and VBM is now beingrolled out into all of the businesses. In addition, an asset optimisationinitiative will maximise operational efficiencies at site level and allowbenchmarking of performance and the spread of best practices. The company also made significant progress during 2007 in meeting the employmentequity and black economic empowerment requirements of the South African MiningCharter - culminating in ground-breaking equity participation arrangements inAnglo Platinum's assets. Project expertise driving profitable growth Anglo American has one of the strongest and highest quality project pipelines inthe entire mining sector. These projects will build on the Group's uniqueportfolio of existing assets and deliver considerable organic growth potential.Several major projects spanning a variety of countries are currently underdevelopment, totalling $12 billion. Looking further out, an additional $29billion of projects are under consideration. Several projects were approved at Anglo Platinum during the year, in particularthe $279 million expansion at the base metals refinery, the $139 millionTownlands ore replacement project and the $188 million Mainstream inert grindprojects. The $692 million PPRust North expansion project is in progress withthe mine expected to reach full capacity in 2009, when it will mill anadditional 600,000 tonnes of ore per month. In addition, the $224 million EastUpper UG2 project at Amandelbult is progressing on schedule and will increasethat mine's output by 100,000 ounces per annum by 2012. Anglo American's coal business has approved expansion programmes in both SouthAfrica and Australia. The recently approved $505 million 6.6 Mtpa Zondagsfonteinproject will form an important component of Anglo Coal's plans to increase itsSouth African coal production by 50% to around the 90 Mtpa level by 2015. Theexpansions at Lake Lindsay and Dawson will increase Anglo American's coalproduction at these mines by approximately 9.7 Mtpa and the approved expansionat Cerrejon in Colombia to 32 Mtpa is on schedule for 2008, with furtherexpansion potential being examined. In addition to several major base metals project acquisitions, the approval ofthe $1.7 billion expansion of Los Bronces in Chile was announced in November. Oncompletion in 2011, production of copper will increase by an average of 170,000tpa to an initial production level exceeding 400,000 tpa, making Los Bronces oneof the 10 largest copper mines in the world. Also in Chile, a two phaseexpansion at Collahuasi is being considered. The $1.5 billion Barro Altoexpansion in Brazil is making good progress and, when fully on stream from 2011,is expected to increase Anglo American's total attributable nickel production toan average of around 100,000 tpa. In Peru, the Quellaveco copper project,currently the subject of a revised feasibility study, is scheduled to besubmitted for Board approval in 2008 and, if approved, would produce around200,000 tpa of copper. At Kumba Iron Ore, the commissioning of the $754 million, 13 Mtpa SishenExpansion project commenced during the year, with ramp up to design capacityexpected to be achieved in 2009. De Beers has two significant projects, both in Canada. Snap Lake, the country'sfirst underground diamond mine, delivered its first diamonds in October 2007 andis expected to produce approximately 1.6 million carats per year at fullproduction. A second mine, Victor, is expected to enter production by mid-2008and produce 0.6 million carats of high quality diamonds per year at fullproduction. In Botswana, Debswana is reviewing a number of potential expansionopportunities, predominantly at Jwaneng, one of the world's great diamond mines. In February 2008, Anglo American announced that it had entered into a memorandumof understanding ("MOU") with China Development Bank. The MOU represents a longterm commitment to establish a strategic relationship to identify and develop apipeline of natural resources projects in China, Africa and elsewhere. Acquisitions to fuel further growth During 2007, Anglo American was active in identifying and successfully acquiringmajor new projects, particularly in iron ore and copper. In iron ore, considerable progress was made towards achieving the aim ofbecoming a significant player in the global seaborne iron ore trade through theacquisition, in July, of a 49% stake the MMX Minas-Rio iron ore project inBrazil, for an effective price of $1.15 billion, plus a potential payment of upto $600 million if certain criteria are met. Furthermore, in January 2008,Anglo American announced that it was in negotiations over a transaction in whichit would acquire control of the Minas-Rio project and a 70% stake in the Amapairon ore mine, for approximately $5.5 billion, if we acquire 100% of theinterests held by MMX in these assets. The resource statements for Minas-Rio andAmapa are currently being updated. In April, the acquisition of the Michiquillay copper project in northern Perufor a staged cash investment of $403 million was announced, with potentialproduction of up to 300,000 tpa. Michiquillay is one of the largest undevelopedcopper deposits in the world. This is Anglo American's second major investmentin Peru where the feasibility study for Quellaveco copper deposit in the southof the country is at an advanced stage. In July, a 50% stake in the Pebble copper project in Alaska was acquired for astaged cash investment of $1.425 billion. The key assets of the project, whichis co-owned by Northern Dynasty Minerals, are its open-pit Pebble Westcopper-gold-molybdenum deposit and the deeper and higher-grade Pebble Eastdeposit. In both Peru and Alaska, a key priority is to build supportive relationshipswith local communities, consistent with Anglo American's policy of developingand operating projects to the highest social and environmental standards and topromote development that is truly sustainable. Close to year end, the acquisition of a 70% interest in the Foxleigh coal minein Australia, for $620 million was announced, further supporting AngloAmerican's coal ambitions. Further out still, Anglo American is studying several energy schemes in alliancewith various international partners. Prominent among these are the Monashproject in Australia to convert brown coal to ultra-clean diesel and the Xiwanproject in China that is examining the feasibility of converting coal to gas,fuels and chemicals. Outlook The global economic outlook for 2008 is clouded by uncertainty. While it seemsclear that US economic activity will be weaker in 2008 than in recent years, itis less clear how economic growth will be affected in the rest of the world,especially in those emerging markets whose growth has been largely responsiblefor the strong demand that has underpinned commodity prices. In South Africa,the electrical power supply problems are causing disruption to mining operationsacross the country. At present, it is difficult to accurately forecast themedium term impact of power shortages on Anglo American's businesses. AngloAmerican is working with Eskom and the South African government to implementsolutions. Global commodity demand remains strong and seems likely to remain so throughout2008. Global commodity supply continues to be constrained by skills shortages,rising capital and operating costs, longer permitting processes and strongexchange rates in many of the countries where key operations are located.Industry inventories are therefore likely to remain low and continue to underpinprices. For further information, please contact: United Kingdom Anna Poulter, Investor RelationsTel: +44 (0)20 7968 2155 James Wyatt-Tilby, Media RelationsTel: +44 (0)20 7968 8759 South Africa Pranill Ramchander, Media RelationsTel: +27 (0)11 638 2592 Notes to editors: Anglo American plc is one of the world's largest mining and natural resourcegroups. With its subsidiaries, joint ventures and associates, it is a globalleader in platinum group metals and diamonds, with significant interests incoal, base and ferrous metals, as well as an industrial minerals business and astake in AngloGold Ashanti. The Group is geographically diverse, with operationsin 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 timeon 20 February, can be accessed through the Anglo American website atwww.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, is before special items and remeasurements and refers tocontinuing operations unless otherwise stated; special items and remeasurementsare defined in note 6, results of discontinued operations are presented in note14 and underlying earnings are calculated as set out in note 9 to the financialinformation. Underlying earnings refers to continuing operations unlessotherwise stated. EBITDA is operating profit before special items andremeasurements, depreciation and amortisation in subsidiaries and joint venturesand share of EBITDA of associates and refers to continuing operations unlessotherwise stated. EBITDA is reconciled to cash inflows from operations and tototal profit from operations and associates in note 13 to the financialinformation. Financial review of Group results* Group underlying earnings per share on a continuing basis for the year were$4.18, an increase of 22% compared with 2006. On a total Group basis, includingresults from discontinued operations, underlying earnings per share were $4.40.Group underlying earnings on a continuing basis totalled $5,477 million, withrecord contributions from Base Metals, Platinum, Ferrous Metals' core businessesand Industrial Minerals as well as a strong contribution from De Beers. Higherprices realised in the year, in particular for the platinum group metals(PGM's), nickel, lead, niobium and iron ore, were the main driver for theincrease in Group underlying earnings. Increased volumes at copper, zinc andiron ore operations also contributed to the increase. Underlying earnings at DeBeers were higher than the prior year, principally reflecting higher income fromjoint ventures and a modest increase in diamond prices in 2007. Coal recordedlower underlying earnings due to a significant reduction in Australia'scontribution. This was driven by the impact of port and rail constraintsnecessitating stockpiles and slowing of production, resulting in higherdemurrage charges, as well as the impact of the weak US dollar relative to localcurrency and lower sales prices. The contributions from both Paper andPackaging and AngloGold Ashanti were lower than the prior year due to thedemerger of Mondi in early July and the reduction of the Group's shareholding inAngloGold Ashanti from 41.6% to 17.3% on 2 October. At 31 December 2007 theGroup's shareholding in AngloGold Ashanti was 16.6%. The results of bothAngloGold Ashanti and Paper and Packaging are shown as discontinued operations. Underlying earnings Year ended Year ended$ million 31 Dec 2007 31 Dec 2006(1) Profit for the financial year attributable to equity shareholders 5,294 5,149Operating special items including associates 713 458Operating remeasurements including associates (2) (35)Net profit on disposals including associates (484) (447)Financing special items - 4Financing remeasurements including associates: Exchange loss/(gain) on De Beers preference shares 3 (40) Unrealised net gains on non-hedge derivatives (28) (4)Tax on special items and remeasurements including associates 15 (58)Related minority interests on special items and remeasurementsincluding associates (34) (8) Underlying earnings - continuing operations 5,477 5,019Underlying earnings - discontinued operations 284 452 Underlying earnings - total Group 5,761 5,471 Underlying earnings per share ($) - continuing operations 4.18 3.42Underlying earnings per share ($) - discontinued operations 0.22 0.31 Underlying earnings per share ($) - total Group 4.40 3.73 (1)Comparatives have been adjusted to reclassify amounts relating todiscontinued operations Profit for the year after special items and remeasurements increased by 2.8% to$5,294 million compared with $5,149 million in the prior year. The increaserelates mainly to strong operational results, as discussed above and in theChief Executive's statement, and an increase in net profit on disposals, partlyoffset by higher operational special charges, particularly in the Group'sassociates. Net profit on disposals of $484 million which, including associates, was $37million higher than 2006, includes the net profit of $140 million on disposal ofthe remaining 29.2% shareholding in Highveld and the part-disposal of theinvestment in shares of Exxaro, generating a $234 million profit on disposal. * Throughout the financial review, the Group results are presented on acontinuing basis unless otherwise stated The Group's results are influenced by a variety of currencies owing to thegeographic diversity of the Group. The South African rand on average weakenedslightly against the US dollar compared with the prior year, with an averageexchange rate of R7.05 compared with R6.77 in 2006. Currency movementspositively impacted underlying earnings by $27 million. Operating resultsbenefited from weaker average rates for the rand, although this was offset bythe stronger Chilean peso, Brazilian real and Australian dollar. IndustrialMinerals' operations benefited from the strength of certain European currenciesagainst the US dollar. There was a significant beneficial effect on underlyingearnings from increased prices amounting to $1,302 million, particularly inrespect of nickel and PGM's. Summary income statement Year ended Year ended$ million 31 Dec 2007 31 Dec 2006(1) Operating profit before special items and remeasurements 8,518 8,048Operating special items (251) (424)Operating remeasurements 5 18 Operating profit from subsidiaries and joint ventures 8,272 7,642Net profit on disposals 460 265Share of net income from associates - continuing operations (2) 197 607 Total profit from operations and associates 8,929 8,514Net finance costs before special items and remeasurements (137) (110)Financing special items and remeasurements 29 39 Profit before tax 8,821 8,443Income tax expense (2,693) (2,518) Profit for the financial year - continuing operations 6,128 5,925Minority interests (834) (776) Profit for the financial year attributable to equity shareholders -continuing operations 5,294 5,149Profit for the financial year attributable to equity shareholders -discontinued operations 2,010 1,037 Profit for the financial year attributable to equity shareholders -total Group 7,304 6,186 Basic earnings per share ($) - continuing operations 4.04 3.51Basic earnings per share ($) - discontinued operations 1.54 0.70 Basic earnings per share ($) - total Group 5.58 4.21 Group operating profit including associates before special items andremeasurements - continuing operations 9,590 8,888Group operating profit including associates before special items andremeasurements - discontinued operations 526 944Group operating profit including associates before special items andremeasurements - total Group 10,116 9,832 (1) Comparatives have been adjusted to reclassify amounts relating to discontinuedoperations (2) Operating profit from associates before special items andremeasurements - continuing operations 1,072 840Operating special items and remeasurements (3) (465) (17)Net profit on disposals (3) 24 182Net finance costs (before remeasurements) (85) (70)Financing remeasurements (3) (4) 1Income tax expense (after special items and remeasurements) (303) (300)Minority interests (after special items and remeasurements) (42) (29) Share of net income from associates - continuing operations 197 607 (3) See note 3 to the financial information. Towards the front of this press release, reference has been made to corecontinuing operations. Operations considered core to the Group are Base Metals,Platinum, Ferrous Metals' core businesses (Kumba Iron Ore, Scaw Metals, Samancorand Minas-Rio), Coal and Diamonds. The table below reconciles operating profitfrom core and other operations to total Group operating profit. Operating profit Year ended Year ended$ million 31 Dec 2007 31 Dec 2006(1) Base Metals 4,338 3,897Platinum 2,697 2,398Ferrous Metals - core businesses(1) 1,210 763Coal 614 862Diamonds 484 463Corporate and Exploration (449) (409)Operating profit including associates before special items andremeasurements - core continuing operations 8,894 7,974 Industrial Minerals 474 317Ferrous Metals - other businesses(1) 222 597Operating profit including associates before special items andremeasurements - continuing operations 9,590 8,888 Operating profit including associates before special items andremeasurements - discontinued operations 526 944 Operating profit including associates before special items andremeasurements - total Group 10,116 9,832 (1) See Ferrous Metals and Industries operations review Special items and remeasurement charges Year ended Year ended 31 Dec 2007 31 Dec 2006(1) Excluding Excluding associates Associates Total associates Associates Total $ million Operating special items (251) (462) (713) (424) (34) (458)Operating remeasurements 5 (3) 2 18 17 35 Operating special items andremeasurements (246) (465) (711) (406) (17) (423) (1) Comparatives have been adjusted to exclude amounts relating to discontinuedoperations Operating special items and remeasurements, including associates, amounted to$711 million, with $653 million operating special charges in respect ofimpairments, restructurings and mine and operation closures, including a $434million impairment relating to the Group's share of an impairment of De Beers'Canadian assets, $153 million impairment against certain Coal Australia assets,and a combined impairment and restructuring charge relating to certain non-coreassets to be sold and other assets to be restructured at Industrial Minerals of$43 million. Net profit on sale of operations, including associates, amounted to $484 million(2006: $447 million), and is mainly a result of the profit on disposal of theremaining 29.2% shareholding in Highveld ($140 million) and the part-disposal ofthe investment in shares in Exxaro generating a $234 million profit on disposal. Financing remeasurements, including associates, are made up of unrealised netgains of $28 million on non-hedge derivatives and a $3 million foreign exchangeloss on De Beers dollar preference shares held by a rand denominated entity. The De Beers US dollar preference shares held by a rand functional currencyentity are classified as 'financial asset investments' and are retranslated ateach period end. The resulting rand:US dollar foreign exchange gains and lossesare reported through the income statement as a remeasurement charge. Discontinued operations On 2 July 2007 the Paper and Packaging business was demerged from the Group byway of a dividend in specie paid to shareholders. On 2 October 2007 the Group sold 67.1 million shares in AngloGold Ashanti whichreduced the Group's shareholding from 41.6% to 17.3%. The remaining investmentis accounted for as a financial asset investment. The Group has subsequentlyreduced its shareholding in AngloGold Ashanti which at 31 December 2007 was16.6%. Both of these operations are considered discontinued. Please refer to note 16for further details on the demerger of Paper and Packaging and the disposal ofAngloGold Ashanti. Year ended Year ended$ million 31 Dec 2007 31 Dec 2006 Profit for the financial year - discontinued operations 318 593Special items and remeasurements (77) 404 Profit for the financial year after special items and remeasurements-discontinued operations 241 997 Net profit after tax on disposal and demerger of discontinuedoperations 1,803 - Total profit for the financial year - discontinued operations 2,044 997Minority interests - discontinued operations (34) 40Profit for the financial year attributable to equity shareholders -discontinued operations 2,010 1,037 Net profit after tax on disposal and demerger of discontinued operationsamounted to $1,803 million and is principally as a result of the sale of 67.1million shares in AngloGold Ashanti on 2 October 2007. Proceeds on sale ofthese shares are the major contributor to net cash inflows from investingactivities of discontinued operations of $2.6 billion. Net finance costs Net finance costs from continuing operations, excluding special items andremeasurements of $29 million gain (2006: gain of $39 million), increased from$110 million in 2006 to $137 million. The increase reflects higher interestcosts due to the increase in net debt. Taxation Year ended Year ended 31 Dec 2007 31 Dec 2006(1) Before special Associates' Including Before special Associates' tax Including items and tax and associates items and and minority associates remeasurements minority remeasurements interests$ million interests Profit before tax 9,021 347 9,368 8,401 307 8,708Tax (2,676) (305) (2,981) (2,598) (278) (2,876)Profit for financial year 6,345 42 6,387 5,803 29 5,832Effective tax rate including associates % 31.8 33.0 (1) Comparatives have been adjusted to exclude amounts relating to discontinuedoperations IAS 1 Presentation of Financial Statements requires income from associates to bepresented net of tax on the face of the income statement. Associates' tax istherefore not included within the Group's total tax charge on the face of theincome statement. Associates' tax before special items and remeasurementsincluded within 'Share of net income from associates' for the year ended 31December 2007 was $305 million (2006: $278 million). The effective rate of tax before special items and remeasurements includingshare of associates' tax on a continuing basis was 31.8%. This was a decreasefrom the equivalent effective rate of 33.0% in the year ended 31 December 2006.The main reasons for this net decrease are reduced levels of tax ondistributions, changes in statutory tax rates, prior year adjustments and theavailability of enhanced tax depreciation on certain assets. Balance sheet Equity attributable to equity shareholders of the Company was $22,461 millioncompared with $24,271 million at 31 December 2006. The $3 billion share buyback programme announced in February was completed inOctober 2007 and the additional share buyback programme of $4 billion, announcedin August is 33% complete, with around $1.3 billion of shares having beenrepurchased at 19 February 2008. Net debt, excluding hedges but including balances that have been reclassified asheld for sale ($69 million) was $5,239 million, an increase of $1.9 billion from31 December 2006. The increase reflects the impact of the share buy back,increased planned capital expenditure on projects in Platinum, Base Metals andCoal and the acquisition of MMX Minas-Rio for $1.15 billion, partly offset bystrong operating cashflows, proceeds from disposals and the impact of the Mondidemerger. Net debt at 31 December 2007 comprised $8,313 million of debt, offset by $3,074million of cash and cash equivalents. Net debt to total capital(1) at 31December 2007 was 20.0%, compared with 12.9% at 31 December 2006. (1) Net debt to total capital is calculated as net debt divided by total capitalless investments in associates. Total capital is net assets excluding net debt. Cash flow Year ended Year ended$ million 31 Dec 2007 31 Dec 2006 Net cash inflows from operating activities - continuing operations 6,800 7,337Net cash inflows from operating activities - discontinued operations 464 973 Net cash inflows from operating activities - total Group 7,264 8,310 Net cash inflows from operating activities on a continuing operations basis were$6,800 million compared with $7,337 million in 2006. EBITDA from continuingoperations was $11,171 million, an increase of 7% from $10,431 million in 2006. Acquisition expenditure from continuing operations accounted for an outflow of$1,934 million compared with $197 million in 2006. This included $1.15 billionin respect of the Group's acquisition of a 49% interest in the MMX Minas-Riointegrated iron ore project in Brazil and $658 million in respect of the Group'sinvestment in 4.4 million ordinary shares in Anglo Platinum Limited. Proceeds from disposals on a continuing basis totalled $711 million includingnet proceeds on the sale of the remaining 29.2% shareholding in Highveld of $182million and $456 million proceeds from the part-disposal of the investment ofshares in Exxaro. Repayment of loans and capital from associates on a continuing basis amounted to$119 million, of which $43 million relates to the redemption of De Beerspreference shares. Purchases of tangible assets amounted to $3,931 million, anincrease of $1,022 million. Increased capital expenditure by Platinum, Coal andBase Metals was partly offset by lower spend at Ferrous Metals and Industriesand Industrial Minerals. Weighted average number of shares The weighted average number of shares used to determine earnings per share in2007 was 1,309 million compared to 1,468 million in 2006. This reflects theeffect of the share buyback programme as well as the Anglo American shareconsolidation on demerger of Mondi which on 2 July 2007, resulted in 100existing Anglo American ordinary shares being exchanged for 91 new AngloAmerican ordinary shares. Dividends A final dividend of 86 US cents per share to be paid on 30 April 2008 has beenrecommended. Analysis of dividends US cents per share 2007 2006 Interim dividend (US cents per share) 38 33Recommended final dividend 86 75 Normal dividend for year 124 108 Special dividend previously paid - 67 Total dividends 124 175 Operations review 2007 In the operations review on the following pages, operating profit includesassociates' operating profit and is before special items and remeasurementsunless otherwise stated. Capital expenditure relates to cash expenditure ontangible and biological assets. Share of Group operating profit and share ofGroup net operating assets for both 2007 and 2006, is based on continuingoperations and therefore excludes the contribution of Mondi and AngloGoldAshanti. BASE METALS $ million Year ended Year ended(unless otherwise stated) 31 Dec 2007 31 Dec 2006(1) Operating profit 4,338 3,897 Copper 2,983 3,019 Nickel, Niobium, Mineral Sands and Phosphates 786 426 Zinc 654 516 Other (85) (64)EBITDA 4,683 4,255Net operating assets 4,989 4,599Capital expenditure 610 315Share of Group operating profit 45% 44%Share of Group net operating assets 19% 22% (1) In 2007, Copebras was reclassified from Industrial Minerals to Base Metalsto align with internal management reporting. As such, the comparative data hasbeen reclassified. Operating profit at Anglo Base Metals reached an all time high of $4,338million, surpassing the previous year's record of $3,897 million. This resultedfrom increased copper, zinc and phosphate fertiliser production combined withhigher nickel, lead, niobium and fertiliser prices, partially offset by adverseexchange rate movements and further rises in the costs of energy, labour andmost key consumables. Although the LME copper price was higher than in 2006, asignificant mark to market and final liquidation adjustment as at 31 December2007 resulted in realised copper prices being very little changed from 2006. Markets Average prices (c/lb) 2007 2006 Copper 323 305Nickel 1,686 1,095Zinc 147 148Lead 118 58 During 2007, the copper market was broadly in balance, with prices recoveringstrongly in the first half as the Chinese restocked, but then moved lower in thefourth quarter. Nickel had a buoyant first six months, with very tight terminalmarket stocks, but weakened materially in the second half as ongoing stainlesssteel production cutbacks, greater scrap availability, substitution andincreases in nickel pig-iron production all contributed to a material build upof stock across the year. Zinc prices weakened, particularly in the second half,owing to market concerns about the impact of increasing 2008 supply on terminalmarket stocks. Operating performance Copper division 2007 2006 Operating profit ($m) 2,983 3,019Attributable production (tonnes) 655,000 643,800 All of the division's mines, with the exception of Mantos Blancos, increasedproduction. In addition, Mantos Blancos, Mantoverde and Collahuasi allsuccessfully renegotiated collective bargaining agreements without anydisruption to the operations. Los Bronces increased output by 2% principally due to a 14% increase in cathodeproduction. Despite the attributable loss of 9,200 tonnes of production owing tothe shutdown of the SAG mill number 3 (for replacement of its stator motor) andplanned lower oxide and sulphide grades, Collahuasi increased its attributableproduction by 3%. El Soldado lifted production by 6%. Output from Mantoverdewas marginally up, while Mantos Blancos was affected by planned and unplannedmaintenance shutdowns as well as an earthquake and was unable to offset theimpact of lower grades with higher throughputs, leading to a marginal productiondecline. Molybdenum production rose 8% to 4,400 tonnes, primarily as a resultof increases at Collahuasi. Chagres' output fell by 5% mainly due to the loweraverage grade of concentrate treated. Adverse exchange rate movements andfurther rises in the costs of energy, labour and most key consumables impactedall Chilean operations. Nickel, Niobium, Mineral Sands and Phosphates 2007 2006 Operating profit ($m) 786 426 Attributable nickel production (tonnes) 25,600 26,400 At Codemin, output moved up marginally, but sales were 5% lower following aslowdown in stainless steel producer offtake. At Catalao, niobium productionwas flat, with higher mill throughput being offset by lower metallurgicalrecoveries arising from a change in ore characterisation. Copebras had aspectacular year, with much improved prices and fertiliser sales climbing by 14%to exceed 1 million tonnes for the first time. All of the Brazilian operationssaw costs increase as a consequence of adverse currency movements and costincreases in fuel oil, aluminium powder and sulphur. Loma de Niquel's productiondeclined by 5% due to heavy rains and strike action, while tonnage processed wasaffected by a planned maintenance stoppage and a series of refractory andequipment failures. These also had a bearing on operating costs which wereimpacted further by numerous cost and indirect tax increases within a fixedexchange rate and increasingly difficult operating environment. Sales fell from16,900 tonnes to 14,500 tonnes arising out of a combination of administrativedelays by the Venezuelan authorities and weakening stainless steel customerdemand. The Venezuelan Ministry of Basic Industries and Mining ("MIBAM") commencedadministrative proceedings in January 2007 in relation to the sixteen nickelexploration and exploitation concessions held by the Company's subsidiary,Minera Loma de Niquel ("MLdN") alleging that MLdN had failed to fulfil certainconditions of its concessions. MLdN submitted a timely response to MIBAM'sadministrative writ in February 2007. By means of a series of resolutionspublished in two Official Gazettes made available in January 2008, MIBAMdeclared the termination of thirteen of MLdN's nickel concessions. The thirteenconcessions do not include the concessions where the current mining operationsand the metallurgical facilities are located. MLdN is in the process of filingadministrative appeals seeking the annulment of all of these resolutions andrequesting that their effects be suspended pending a final decision by MIBAM At 31 December 2007 Anglo American's interest in the book value of MLdN,including its mineral rights, was $616 million (as included in the Group'sbalance sheet). In the 12 months to December 2007, MLdN's production andcontribution to Group operating profits were respectively, 15,700 tonnes ofnickel in ferronickel and $370 million. The average price of nickel in 2007 was1,686 c/lb. As of 19 February 2008 the price of nickel was 1,259 c/lb. Anglo American is proud of its record in Venezuela where it has investedsubstantial amounts in exploration and subsequently the construction of thecountry's only primary nickel producer. It is a major contributor to andemployer in the Venezuelan economy as well as a significant tax payer. Theoperation continues, as it has always done, to work constructively with allstakeholders - employees, local communities and government - and to the highestsustainable development, social and environmental standards. Anglo American and MLdN are seeking further clarification from MIBAM, with whichthey have maintained a constructive working relationship in the past. AngloAmerican and MLdN believe that there is a valid legal basis to reverse thenotices of termination and will pursue all appropriate legal and other remediesand actions to protect their respective interests both under Venezuelan andinternational law. As a result, the Group continues to consolidate MLdN and noimpairment has been recorded for the year ended 31 December 2007. Zinc division 2007 2006 Operating profit ($m) 654 516Attributable zinc production (tonnes) 343,100 334,700 Attributable lead production (tonnes) 62,100 71,400 Skorpion operated at design capacity throughout the year, producing a record150,100 tonnes (2006: 129,900 tonnes). Mine operating unit costs fell,reflecting tight cost control and higher volumes, partially offset by increasesin royalties and the costs of key consumables. At Lisheen, zinc productiondecreased by 4%, and lead output was down 13%. Higher than anticipated waterinflows and poor ground conditions limited mining flexibility, resulting inlower tonnages, grades and metallurgical recoveries. At Black Mountain, miningdifficulties related to limited stope availability were compounded by a slowerthan anticipated ramp up of the infrastructure and ore handling systems of thenew Deeps shaft as well as seven weeks of industrial action. Overall, decliningmill throughput and lower grades were only partly offset by materialimprovements in metallurgical recoveries and 28,300 tonnes of zinc and 41,900tonnes of lead were produced (2006: 34,100 tonnes and 48,300 tonnes,respectively). The previously announced sale of Namakwa Sands (R2.0 billion,subject to contractual adjustments) and 26% of each of Black Mountain andGamsberg (combined R180 million, subject to contractual adjustments) to ExxaroResources has yet to be completed, awaiting the approval of the conversion ofold order to new order mining rights. The sale is expected to be completed in2008. Projects Anglo Base Metals has a strong project pipeline which provides significant scopefor organic growth. The pipeline includes the Barro Alto nickel project which ison track for first production in 2010 and is due to increase existing nickelproduction by an average 36,000 tpa from 2011. To date, in excess of $900million of the $1.5 billion capital expenditure required has been committed tothis project and the strength of the Brazilian currency is putting ongoingmaterial upward pressure on the domestic component of capital expenditure. The $1.7 billion Los Bronces expansion project, which aims to increase sulphidemill throughput from 61,000 tpd to 148,000 tpd and increasing copper productionby an average of 170,000 tpa to an initial production level exceeding 400,000tpa has been approved. Construction is under way, with first productionscheduled for 2011. A debottlenecking project at Collahuasi, which will increase sulphide millthroughput from 130,000 tpd to 140,000 tpd, has been approved at a total cost of$64 million, with ramp-up due to commence in the second half of 2008. The firstphase of a potential two phase expansion at Collahuasi, which will increasethroughput to 170,000 tpd, plus the addition of a separate 30,000 tpd sulphideleach circuit (equivalent to around 650,000 tpa of copper on a 100% basis), willbe evaluated during 2008. Recent exploration success at Rosario Oeste, suggeststhat there is the potential to further increase production to around 1 milliontpa by 2014. The revised feasibility study on the Quellaveco project in Peru, whichcontemplates an operation producing approximately 200,000 tpa of copper inconcentrate at a capital cost of approximately $1.7 billion, will be completedin 2008. In April 2007, Anglo American tendered $403 million and won the Michiquillayprivatisation auction in Peru. The consideration for this world class resource,with a production potential of up to 300,000 tpa, will be payable over fiveyears. However, there is a right to exit the project, at any time after thefirst year, by paying 30% of the difference between monies expended and the $403million. During the first year there is a minimum work commitment of $1 millionwith no exit payment. The Peru-based team has been mobilised and the primaryfocus of efforts in the first 12 months will be the development of a productiverelationship with the local communities. In July 2007, Anglo American became a 50% partner with the Northern DynastyPartnership (a wholly owned affiliate of Northern Dynasty Minerals Ltd.) in thePebble Limited Partnership for a staged cash investment of $1.425 billion. Thepartnership owns the Pebble Project, the key assets of which are the open pitstyle Pebble West copper-gold-molybdenum deposit and the adjacent, deeper andhigher grade Pebble East deposit. The resources rank amongst the world's mostimportant accumulations of copper, gold and molybdenum. The objective is tocomplete a pre-feasibility study in 2008, a feasibility study around 2011 and tohave a world class mine in operation by 2015. Chagres, Mantoverde, Mantos Blancos, El Soldado, Catalao, Gamsberg, Copebras,Boyongan and Kalayaan have early-stage studies underway examining options forprojects that will either increase production and/or extend mine lives. Outlook Production of copper, zinc, lead, niobium and fertilisers are all forecast toincrease in 2008, while there is a risk that the nickel production profile willbe affected by uncertainties in Venezuela. With the base metals industryoperating at capacity and, on the assumption that the currencies of thecountries where the division produces continue to remain firm in relation to thedollar, cost pressures will remain, with sulphur and sulphuric acid pricesforecast to rise dramatically. In Chile the energy supply situation in thenorthern grid is very tight and the risk of periodic requests for load sheddingcannot be ruled out. It seems likely that certain base metal markets will move into surplus in 2008,with some modest build up of stock forecast (except in the case of zinc, whichis likely to see a material market surplus), the extent of which will bedependent on the magnitude of any supply side disruptions. Notwithstanding theseshorter term uncertainties, medium and longer term fundamentals remain positive. PLATINUM $ million Year ended Year ended(unless otherwise stated) 31 Dec 2007 31 Dec 2006 Operating profit 2,697 2,398EBITDA 3,155 2,845Net operating assets 9,234 7,078Capital expenditure 1,479 923Share of Group operating profit 28% 27%Share of Group net operating assets 35% 33% Anglo Platinum's operating profit rose by 12% to $2,697 million. This was mainlydue to a higher price achieved for the basket of metals sold and a weakeraverage rand relative to the US dollar, offset by lower sales volumes on theback of reduced production from mining operations. The average dollar price realised for the basket of metals sold equated to$2,579 per platinum ounce, 27% higher than in 2006, with firmer platinum,rhodium and nickel prices making the largest contribution to the increase. Theaverage realised price for platinum was $162 higher than 2006 at $1,302 perounce, while nickel averaged $17.04 per pound against $10.73 in 2006. Therealised rhodium price averaged $4,344 per ounce, an increase of $802 per ounceover 2006, and includes the effect of existing long term contractualarrangements with some customers, entered into to support and develop therhodium market. Anglo Platinum is at an advanced stage of negotiations to achieve mutualrecognition with its relevant customers of structural changes to the rhodiummarket affecting the dollar price of the metal. The objective of thenegotiations is to move towards a contractual price for rhodium which is marketrelated. The year also saw a significant increase in the price of rutheniumfollowing strong growth in demand, driven by its use in hard disk drives. Thisnew use, and its relative price insensitivity, has resulted in a structuralchange to the market. Markets Current high dollar PGM market prices partly reflect the up-cycle being enjoyedby most commodities, but are supported by strong market fundamentals, inparticular for platinum, where metal supply has substantially been in deficitfor 11 years. Long term demand for the metal is expected to remain robust, basedon tightening automotive emissions legislation, buoyant demand in the relativelyprice resilient Chinese jewellery market, growth in existing applications andemerging fuel cell technology. Supplies of and demand for platinum are expected to grow and the market isexpected to remain balanced over the medium term with short term deficitsassociated with reduced South African output. Palladium demand is also expectedto grow but, against a backdrop of increasing supply from South Africanexpansions on higher palladium content UG2 ore, remains adequately supplied. Theincreased supply of rhodium from expansionary activity should ease pressure oncurrent prices in the longer term. Safety Anglo Platinum remains committed to the principle of zero harm and hasimplemented a major shift in its approach to safety. In addition, steps havebeen implemented to align Anglo Platinum's approach to employee safety to thatadopted by the Group. The creation of a culture in which safety standards are paramount, witheffective learning from safety incidents to ensure 'no repeats', underlies thisnew approach. This includes a visible, felt commitment from leadership toeliminate harm and increase capacity to manage safety risks wherever they mayoccur. Safety as the overriding priority, clarity of personal and collectiveresponsibilities and rigid and consistent application of standards lie at theheart of the new approach. This approach to safety is being implemented at allAnglo Platinum operations. A significant deterioration in safety performance occurred in the first half of2007 with 18 fatal incidents, 12 of which occurred at Rustenburg mine. Adecision was taken to suspend production at all Rustenburg shafts on a staggeredbasis. Following the temporary closure of Rustenburg, senior management andother relevant stakeholders developed a comprehensive enhanced safetyimprovement plan, which is being implemented over the next three years. In the second half of 2007, following the initial intervention, the lost timeinjury frequency rate at managed operations reduced to 1.71 compared to 2.37 inthe first half of the year. Operating performance Equivalent refined platinum production (equivalent ounces are mined ouncesconverted to expected refined ounces) from the mines managed by Anglo Platinumand its joint venture partners for 2007 decreased by 167,200 ounces or 6% whencompared to 2006. This was due to the intervention aimed at achieving asignificant improvement in employee safety as well as reduced productionefficiency following a shortage of skilled labour, strike action at jointventures, the unsettled labour situation associated with wage negotiations andlower grades at Potgietersrust. Refined platinum production for 2007 decreased by 12% to 2.47 million ounces.The decrease is attributed to the reduced production experienced in 2007 as wellas the one-off release of 112,000 ounces from the process pipeline in 2006 dueto the effect of the shutdown of the Polokwane smelter in 2005. The cash operating cost per equivalent refined platinum ounce in rand termsincreased by 34% due to reduced production, substantial inflationary pressuresincluding above inflation increases in wages, diesel, tyres, chemicals and steelgrinding media, costs associated with the safety intervention, increased supportcosts and ramp-up costs at Mototolo and Marikana. In addition, an increase inlabour complement to support a planned increase in production at miningoperations in 2007 further contributed to the increase in unit costs. Projects The implementation of the majority of Anglo Platinum's mining and processingprojects to expand and maintain production continues on schedule. Marikana andMototolo (which delivered its first production in the last quarter of 2006) bothincreased production in 2007, adding a combined 92,800 equivalent refinedplatinum ounces. Anglo Platinum approved capital expenditure totalling $1,520 million in 2007.Major items include the expansion of the base metals refinery plant to 33,000tonnes per annum of contained nickel by the end of 2010, the Townlands orereplacement project, at a capital cost of $139 million, which will replace70,000 ounces of refined platinum per annum from 2014, with production expectedfrom the new Merensky and UG2 areas at the Rustenburg Townlands shaft. The $188 million Mainstream inert grind projects were approved in November 2007.These projects will improve mineral liberation and metallurgical performancewithin the process flow of the current concentrators, and will result in anincrease in PGM recovery. The PPRust North expansion project, which will mill an additional 600,000 tonnesof ore per month, is progressing. Commissioning of the new concentrator hascommenced. The relocation of the Ga-Puka and Ga-Sekhaolelo communities commencedin July 2007 under the guidance of a representative task team facilitated by theoffice of the Premier of Limpopo. The Amandelbult East Upper UG2 project, which will contribute an additional100,000 ounces of refined platinum per annum by 2012, is progressing onschedule. The Rustenburg Paardekraal 2 shaft replacement project is in progressand is expected to produce 120,000 ounces of refined platinum annually by 2015,replacing decreasing production as a result of continuing Merensky ore reservedepletion. The strong global demand for resources is placing material inflationary pressureon capital expenditure and the ability to meet project schedules, the effect ofwhich was experienced in the latter part of 2007. These pressures are likely tocontinue in the foreseeable future. Outlook Anglo Platinum's commitment to safety including the principle of zero harm willcontinue to be an area of focus in 2008. The new approach to safety, togetherwith operational difficulties, has had a material impact on performance in 2007,which is likely to continue in 2008. Production disruptions arising fromEskom's inability to supply sufficient power have been experienced in 2008.Consequently, refined platinum production for 2008 is expected to be 2.4 millionounces. A combination of a weak dollar, robust demand for platinum and slower thananticipated supply growth is supportive of higher US dollar prices. Theautocatalyst sector remains buoyant, driven by rising European demand for dieselvehicles and their associated catalyst and filter requirements, as well asgrowing Asian automotive production. Purchases of newly mined platinum forjewellery manufacturing in China are holding up well in the face of recordprices, but new metal demand is declining in the Japanese and US jewellerymarkets as recycling of old jewellery is encouraged by the higher price levels.Industrial demand remains firm, particularly in the electrical and petroleumsectors. Palladium demand for autocatalyst and industrial applications continues to grow,supported by the low price relative to platinum. Jewellery demand is expected totake increasing market share from white gold as palladium prices have lagged therecent significant increase in the gold price. Palladium prices continue totrade in a narrow band and remain vulnerable to a change in investor and fundsentiment. Prices for rhodium are anticipated to stay strong as the market remains finelybalanced. FERROUS METALS AND INDUSTRIES $ million Year ended Year ended(unless otherwise stated) 31 Dec 2007 31 Dec 2006Operating profit 1,432 1,360 Kumba Iron Ore 834 565 Scaw Metals 172 160 Samancor Group 225 52 Other (21) (14) Core businesses 1,210 763 Highveld Steel 108 230 Tongaat-Hulett / Hulamin 114 154 Kumba Resources - 213 Other businesses 222 597EBITDA 1,561 1,560Net operating assets 3,987 2,796Capital expenditure (including biological assets) 471 582Share of Group operating profit 15% 15%Share of Group net operating assets 15% 13% Ferrous Metals' operating profit of $1,432 million was up by 5% on 2006, thoughoperating profit from core businesses increased by 59%. The iron ore andmanganese markets experienced favourable market conditions and stronger prices. Markets Demand for iron ore and manganese ore continues to be robust, driven by healthydemand by steel manufacturers in China and other markets. The American, Europeanand Asian manganese alloy markets all remain generally strong, driven bycontinuing buoyant demand for manganese alloys and ongoing concerns aroundsecurity of supply. Operating performance The unbundled Kumba Iron Ore achieved its highest ever operating profit of $834million, 48% up on 2006, on the back of strong iron ore prices. Global demandfor iron ore in 2007 rose by 5.7% to 1.89 billion tonnes, fuelled by increasingdemand for seaborne iron ore in China and other developing markets. The companyproduced 32.4 million tonnes of iron ore, an increase of 4% on 2006 productionvolumes. Operating costs, however, remained under pressure owing to aboveinflation cost increases, particularly in energy, labour, contractors and rawmaterials. Scaw Metals delivered a record operating profit of $172 million, with strongdemand for most of its products. Margins remained under pressure owing tosignificant price increases in key raw materials and import competition forcertain South African product lines. Anglo American's attributable share of Samancor's operating profit increasedmore than four fold to $225 million as strong global demand for both manganeseore and alloys, together with constrained global manganese ore production,resulted in surging ore prices during the second half of the year. Higher oreand alloy sales volumes also contributed to the strong performance. The Tongaat-Hulett and Hulamin contribution to operating profit declined by 26%to $114 million following the unbundling of Hulamin from Tongaat-Hulett andrelated empowerment transactions in June 2007. These businesses, which wereconsolidated for the first six months of 2007, were equity accounted in thesecond half of the year. The sale of the remaining 29% stake in Highveld to Evraz was completed in April2007. Projects In July, a 49% stake in the MMX Minas-Rio iron ore project in Brazil wasacquired for an effective price of $1.15 billion plus a potential payment of upto $600 million if certain criteria are met. On 17 January 2008, Anglo Americanannounced that it had entered into a period of exclusive discussions with thecontrolling shareholder of MMX Mineracao e Metalicos S.A. (MMX) to acquire a63.6% shareholding in a new company ("Newco") which will be demerged from MMXand will own MMX's current 51% interest in the Minas-Rio iron ore project and70% interest in the Amapa iron ore mine. After the acquisition of the 63.6%stake, Anglo American will offer to purchase the Newco shares held by theminority shareholders of Newco at the same price per share, for a total ofapproximately $5.5 billion on a 100% basis or approximately $361.12 per Newcoshare (assuming one Newco share for each current MMX share), as well as royaltypayments to MMX beginning in 2025 for the Minas-Rio project and 2023 for theAmapa mine. In October 2007, the $754 million, 13 Mtpa Sishen Expansion Project commencedcommercial production, with ramp up to full design capacity expected to beachieved in 2009. The Sishen South Project, which involves the development of a new opencastoperation some 70 kilometres south of Sishen mine, is currently being consideredfor development. A decision to proceed with this 9 Mtpa new mine is imminent,and is dependent on finalising logistical arrangements and the granting ofmining rights. A pre-feasibility study on a further expansion at Sishen mine of10 Mtpa by beneficiating lower grade resources is due to be completed during2008. The $183 million GEMCO expansion project in Australia's Northern Territory is ontarget to increase the company's annual manganese ore production capacity from3.0 dry metric tonne units (dmtu) to 4.0 dmtu by the first half of 2009. Outlook Global demand for steel is expected to remain strong through 2008, underpinningdemand for iron ore and manganese products. 2008 also promises to be a year ofhealthy steel production growth, with year on year global output forecast torise by 6.8%. With iron ore producers struggling to bring on new capacity,China and other major steel producing regions remain under-supplied. As aresult, the annual iron ore price increase with effect from 1 April 2008 isexpected to be significant. Demand for manganese ore and alloy is forecast to remain firm which, togetherwith supply constraints in manganese ore, should result in the record ore pricesseen in the latter part of 2007 continuing well into 2008. Manganese alloyprices will be supported by higher iron ore and other production costs. ScawMetal's volumes in the South African market are expected to grow, driven byinfrastructural expansion and construction and mining industry activity. Demand for Scaw's products is forecast to remain strong, driven by mining demandand infrastructure growth. Increasing input costs will, however, place furtherpressure on margins. COAL$ million Year ended Year ended(unless otherwise stated) 31 Dec 2007 31 Dec 2006(1)Operating profit 614 862 South Africa 414 380 Australia 9 279 South America 227 227Projects and corporate (36) (24)EBITDA 882 1,082Net operating assets 3,984 2,870Capital expenditure 1,052 782Share of Group operating profit 6% 10%Share of Group net operating assets 15% 13% (1) In 2007, Yang Quarry was reclassified from Industrial Minerals to Coal toalign with internal management reporting. As such, the comparative data has beenreclassified. Anglo Coal's operating profit decreased by 29% to $614 million. This was mainlybrought about by a disappointing performance from Australian operations, whereport and rail infrastructure constraints across the industry, lower sales pricesand a 11% appreciation of the local currency against the US dollar, resulted insignificantly lower earnings. During the period under review, Anglo Coal Australia has recorded an impairmentof $153 million against certain Australian operations to reflect the latestcommercial and operational conditions relating to those operations. Markets An increase in global thermal coal demand, buoyed by the influential Indian andChinese markets and coupled with periods of significant supply disruptions inkey producing countries, resulted in a particularly strong market in the secondhalf of 2007. In addition to the supply fundamentals, competing energy oil andgas prices further supported the renaissance of coal. Recently, thermal coalprice indices have set new historical highs. In Australia, 2007 opened with a strengthened market for thermal coal on theback of strong Asia Pacific demand, particularly from China, which experienced areduction in export tonnage and a rise in domestic prices. Continued portcongestion at Newcastle throughout the year and storm and flood events keptsupply tight and further strengthened the export thermal market. Prices steadilyincreased throughout the year and are likely to remain high into 2008. Exportperformance from South Africa and Colombia was steady. Metallurgical coal prices turned lower at the start of the year in the wake ofthe high 2006 prices that were driven by increasing global steel demand.However, supply constraints from Australia's congested Dalrymple Bay port,declining Russian exports, and China's net importer status, resulted in a steadyprice increase from April, with prices remaining high at year end. As most sales in respect of both thermal and metallurgical coal are concludedfor delivery some months hence, the full value of the rising market will only befelt next year. Operating performance Operating profit from South African sourced coal was 9% higher at $414 million,mainly because of a 10% rise in export prices and despite a decrease of nearly1% in export sales volumes. Production was maintained at around 59 Mt with a reduction of 0.6 Mt for thetrade mines being offset by a modest increase from Eskom and domesticproduction. Total sales, however, declined by just over 1% to 58.7 Mt, mainlybecause export sales volumes were below 2006 due to poor rail performance,adverse weather conditions at the Richards Bay Coal Terminal, together with someproduction issues. Capital expenditure was $150 million higher than in 2006, the Mafube Macro andNew Vaal MacWest projects being the primary contributors of the significantincrease in expansionary capital expenditure of $121 million. Operating profit from the Australia operation fell to $9 million. This wasprimarily due to lower realised prices, unfavourable exchange rate and higherport demurrage charges. Port and rail infrastructure constraints limited theability to then offset through volume increases. Delays in the port and rail infrastructure programme have affected theoperations. Significantly, high value metallurgical coal capacity allocation wasreduced by 2.7 Mt, on a 100% basis, and material additional costs were sufferedowing to lengthening port queues. Mitigating actions have included buildingstockpiles, adjusting production profiles, securing coal sales via alternativeroutes, rescheduling high rate vessels and renegotiating demurrage rates.Thermal coal prices strengthened by 7% over 2006, however, the 2007 coking coalsettlement was below the high levels of 2006. Operational performance improvements were limited by infrastructure constraintsfor all export mines except Dawson. The Dawson expansion project will ramp upproduction to achieve design rates by the end of 2008. It incurred an operatingloss during 2007 following transitional issues and a change in the mine plan. The Grasstree project at Capcoal became operational in 2007 and delivered anincrease in volumes over 2006. The full benefits of this could not be realised owing to the port constraints and operating shifts were reduced here and at existing operations. The Lake Lindsay project to expand operations at Capcoal will be completed in late 2008. Operating profit from South America was in line with 2006 at $227 million. Coalsales at Cerrejon increased by 4% to 29.8 Mt as the expansion project to 32 Mtpaprogressed, however operating costs also rose as a result of the appreciation ofthe Colombian peso and high fuel prices. In Venezuela, sales volumes at Carbonesdel Guasare were marginally ahead of 2006. The 66%-held Peace River Coal operation in Canada began producing high qualitycoking coal from the Trend Mine at the end of 2007. Projects In South Africa, the $505 million Zondagsfontein project has been approved,expected to deliver 6.6 Mtpa from 2010. The $292 million development of theMafube Macro project is progressing well, with plant commissioning commencing inmid-December 2007. Mafube will supply coal to Eskom and to the export market andit is anticipated that the mine will increase thermal coal production by a totalof 5.4 Mtpa, the attributable share being 2.7 Mtpa. In Australia, the expansion of the Dawson Complex to increase production by 5.7Mtpa (100%) is operational and ramping up to full design capacity and isexpected to achieve design rates by the end of 2008. At Capcoal, the LakeLindsay development is progressing with estimated completion during the secondhalf of 2008. The additional production from both Dawson and Lake Lindsay willincrease coal production at these mines by approximately 9.7 Mtpa. In additionto the current developments, Anglo Coal is reviewing a number of studies for keyfuture development prospects including Moranbah South, Grosvenor, Dartbrook andSaddlers Creek. In Colombia, the approved expansion at Cerrejon to 32 Mtpa is on schedule andshould be achieved in 2008. Feasibility studies are currently under wayreviewing possibilities of expanding the Cerrejon operation beyond 32 Mtpa. Outlook The increasing demand for thermal coal from China continues to demonstratecoal's strategic importance within the global energy mix. Compared to oil andgas, coal's security of supply from widely distributed reserves make it one ofthe world's most reliable energy sources. This together with the development andimplementation of clean coal technologies will, over time, provide coal theopportunity to make a significant contribution towards satisfying future globalenergy demand while addressing environmental concerns. In South Africa, the rand/dollar exchange rate and coal prices will continue tobe the two main variables in 2008. Export spot coal prices have doubled over thepast six months, reaching record highs. Globally, the high demand forelectricity and increased economic activity are expected to continue into 2008,which will have a positive impact on earnings. In Australia, port and rail expansions and related constraints are set tocontinue in 2008. Alternative sales routes have been secured, enabling the largestockpiles built in 2007 to be reduced. Infrastructure related supplyconstraints will result in a return to higher prices in the current contractnegotiations for delivery later in 2008. Growth from projects will deliverhigher volumes in 2008. DIAMONDS $ million Year ended Year ended(unless otherwise stated) 31 Dec 2007 31 Dec 2006 Share of associate's operating profit 484 463EBITDA 587 541Group's aggregate investment in De Beers 1,802 2,062Share of Group operating profit 5% 5% The Group's share of operating profit from De Beers increased by 5% to $484million. Earnings from joint ventures were higher than in 2006 and there was amodest rise in diamond prices in 2007, although the weakening of the dollar inthe second half of the year had an impact on costs and margins. Diamond saleswere lower than prior year, resulting from diminishing supplies of roughdiamonds to Diamond Trading Company International (DTCI) from the Russian stateproducer Alrosa. Underlying earnings at De Beers were higher than prior year, principallyreflecting an increased share of earnings from joint ventures and a tax refundto De Beers Consolidated Mines Limited (DBCM), which offset lower preferenceshare income arising as a result of the June 2006 redemptions and higherminorities due to the Ponahalo BEE transaction which was completed in April2006. In the US, a preliminary agreement was reached in March 2006 with all of theplaintiffs, which resolved all outstanding class actions in the US andsettlement funds were paid into an escrow account pending conclusion of thesettlement process. The matter is proceeding according to the timetable of theCourt and De Beers anticipates that a Fairness Hearing will occur in the firsthalf of 2008. The Court of First Instance in Luxembourg announced in July 2007 that it hadannulled the European Commission's decision to accept commitments offered by DeBeers to cease all purchase of rough diamonds from Alrosa from 1 January 2009.De Beers will continue to purchase goods from Alrosa, up to the agreed levelsand within the proposed timeframe set out in the prior commitments. De Beers was informed by the South African Department of Minerals and Energy(DME) on 4 February 2008 that it has granted a New Order Mining Right in respectof the Venetia mine, to be executed in March. De Beers has already been grantedNew Order Mining Rights for Voorspoed and Cullinan and conversions forNamaqualand, Kimberley and Finsch mines are being processed by the DME. De Beers has made an impairment charge of $965 million ($434 millionattributable) against its Canadian assets. This non-cash valuation adjustmenthas been brought about by the strengthening of the Canadian dollar against theUS dollar, revised long term crude oil prices, labour cost pressures and theeffect of capital expenditure overruns at Snap Lake. Markets Early estimates indicate that the all important Thanksgiving to Christmas periodin the US has seen sales of jewellery, including diamond jewellery, underperformagainst analysts' and retailers' expectations - despite a surge in the weekbefore Christmas - with the result that sales are likely to have declined incomparison with prior years. Retail experts point to the 2007 holiday season having started well, butconsumers reduced spending amid financial concerns in the worsening economicenvironment, resulting in soft sales across the board, particularly for diamondjewellery. The majority of chains also reported lacklustre sales, withTiffany, a benchmark for higher end branded jewellers, reporting negative salesgrowth in the US for November and December. Notwithstanding this, diamondjewellery sales growth was positive in the US for the first three quarters of2007 and it is likely that full year results will show positive growth, thoughin low single digits. Operating performance In 2007, De Beers production was 51.1 million carats, maintaining the recordproduction achieved in 2006. Output from the South African operations increasedby 3% to 15.0 million carats mainly due to improvements made to the diamondrecovering process at Venetia mine which increased carats recovered by 9% .Output in Namibia rose by 4% to 2.2 million carats, reflecting increasedproduction from off-shore operations. This offset a 2% decline in productionfrom Debswana to 33.6 million carats. The industrial diamond arm, Element Six,continued to expand and recorded sales growth of 18% and organic growth of 10%. Projects Snap Lake in the Northwest Territories of Canada was brought into production inthe fourth quarter of 2007. The mine is currently being commissioned, fullproduction of 1.6 million carats per year is expected to be achieved during2008. By mid-2008, the Victor mine in Ontario is planned to enter production -expected to be 0.6 million carats of high quality diamonds per year. In Botswana, Debswana is reviewing expansion opportunities, the most significantof which is for Jwaneng which will result in open-pit operations until 2022,after which the transition to underground mining is planned. In mid-2007, the mvPeace in Africa, De Beers' latest marine mining vessel, started operations offSouth Africa's Atlantic coastline. It is expected to yield approximately 0.2million carats per year. Also in South Africa, the Voorspoed mine in the FreeState is scheduled to commence production in the fourth quarter of 2008,reaching full production in 2009. Voorspoed is expected to produce 0.7 millioncarats per year. Outlook The outlook for 2008 is tempered by uncertainty over global economic growth. Theeconomic conditions in the US could continue to impact consumer diamondjewellery sales through the first half, particularly at the lower end.Nevertheless, strong demand from China, India and the Middle East is expected,sustaining pricing for larger and better quality diamonds. Looking beyond 2008, De Beers is confident about the diamond marketfundamentals. With strong growth in the emerging markets of China, India andRussia, demand should exceed new supply with the opportunity for future pricegrowth. In this environment, De Beers continues to focus on transforming itselfto ensure it remains the leading company in an increasingly competitive diamondindustry. INDUSTRIAL MINERALS $ million Year ended Year ended(unless otherwise stated) 31 Dec 2007 31 Dec 2006(1) Operating profit 474 317EBITDA 732 539Net operating assets 4,509 4,185Capital expenditure 274 279Share of Group operating profit 5% 4%Share of Group net operating assets 17% 20% (1) In 2007, Copebras and Yang Quarry were reclassified from Industrial Mineralsto Base Metals and Coal respectively to align with internal managementreporting. As such, the comparative data has been reclassified. In 2007, Tarmac's operating profit climbed by 38% (excluding benefit fromexchange rate movements) to $474 million. Although the year was characterised byhigh cost pressures and volatile energy prices in a tight and highly competitivemarket, disciplined margin management, procurement initiatives and healthydemand from certain sectors had a major positive bearing on results. In the UK,operating profits grew by 41%, with sales growing ahead of the market. At TarmacInternational, operating profits were 32% higher, benefiting from milder weatherand buoyant markets in France, Poland and the Czech Republic. Markets The construction industry has experienced challenging market conditions over thepast few years, and some weakness could continue, particularly with roads andhousing. The volatility of energy prices and the impact on cement anddistribution costs will also continue to affect the industry. Operating performance The year was marked by a range of initiatives to drive and unlock furthershareholder value from the current portfolio of businesses. Overall, within the UK market, volumes in aggregates and concrete products werein line with growth in the construction markets, with lower demand in housingand roads being offset by improved demand in the commercial and infrastructuresectors. In the UK Aggregate Products business, operating profits were 21% up on 2006,mainly as a consequence of the business being well placed to capitalise onbenign markets as well as successful cost saving initiatives aimed at ensuringaggregates and asphalt deliveries come from the lowest cost source available. The UK Building Products business saw operating profits climb by 27%. Itscommercial strategy was focused around offering customers comprehensive buildingsolutions. Cement achieved a record turnover in 2007, driven by increased outputfrom new plant in a favourable market environment. Project Gryphon, for example,involved a thorough review of the operational and commercial structure of BuxtonLime and Cement, a process that is now largely complete, with the consequentimprovements expected to contribute $10 million of additional cost savingsduring the period 2008 to 2010. Tarmac International's higher operating profits were partially offset by marketweaknesses and high cost pressures in Spain and Romania. The year witnessed are-balancing of the company's international activities, with a $20 millionexpansion programme in growth areas such as Dubai and the benefits comingthrough in 2007 from the disposal of non-core or under performing businesses in2006. Outlook A three year business plan is now in place that will deliver performance gainsthrough to 2010, driven by efficiency improvements and targeted capitalexpenditure. In the UK, a predicted downturn in the housing markets and lowinvestment levels in road building are expected to have a modest effect in theshort term. The outlook for non-residential and civil construction is stable,with further demand support in the London area from the 2012 Olympics and othermajor infrastructure projects such as the widening of the M25 and the potentialCrossrail east-west rail link. Internationally, Tarmac has a presence inattractive markets with strong fundamentals and compelling growth prospects. Ata time when industrial minerals are in high demand, Tarmac has access tosubstantial reserves (3.2 billion tonnes of quarry reserves worldwide) and hasdirect and stable routes to end markets. DISCONTINUED OPERATIONS ANGLOGOLD ASHANTI $ million Year ended Year ended 31 Dec 2007 31 Dec 2006 Share of associate's operating profit (1) 202 467EBITDA 401 843 (1) The results for 2007 are reported as an associate up to 2 October 2007.After this date the remaining investment is accounted for as a financial assetinvestment. The results for 2006 are reported as a subsidiary up to 20 April2006 and thereafter as an associate at 42% attributable. Attributable operating profit from AngloGold Ashanti of $202 million representeda 57% decrease against the prior year. The decrease is due to the Groupaccounting for AngloGold Ashanti as an associate until 2 October 2007, when theGroup sold 67.1 million shares in AngloGold Ashanti which reduced the Group'sshareholding from 41.6% to 17.3%, as well as four months of contribution as asubsidiary in 2006. The Group's shareholding in AngloGold Ashanti was 16.6% at31 December 2007. The remaining investment is accounted for as a financialasset investment. The AngloGold Ashanti business is presented in the Group'sfinancial statements as a discontinued operation. PAPER AND PACKAGING $ million Year ended Year ended 31 Dec 2007 31 Dec 2006 Operating profit (1) 324 477Mondi Packaging 195 287Mondi Business Paper 105 130Other 24 60EBITDA 560 923 (1) On 2 July 2007, the Paper and Packaging business was demerged from the Groupby way of a dividend in specie paid to shareholders. The results for 2007 arereported up to the date of demerger. Attributable operating profit from Paper and Packaging of $324m represented a32% decrease against the prior year. The decrease was due to the demerger ofthe Paper and Packaging business from the Group by way of a dividend in specieon 2 July 2007. The results for the year ended 31 December 2007 are thereforereported up to the date of demerger. For the six months to the date of demerger, Mondi experienced a substantialimprovement in performance compared to the same period in the prior year, withoperating profit up 53% to $324 million. There was a significant pick-up in thetrading environment, particularly in Mondi Packaging, with price increasesacross all major paper grades. Mondi Business Paper also benefited from betteroperability of the PM31 paper machine in Merebank, South Africa, complemented bymodest increases in uncoated woodfree paper pricing. These positivedevelopments were partially offset by significant cost inflation in fibre costsas a result of Chinese fibre demand and alternative uses for wood in Europe. For the full financial accounts, please see attached PDF document: http://www.rns-pdf.londonstockexchange.com/rns/3487o_-2008-2-19.pdf This information is provided by RNS The company news service from the London Stock Exchange

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