30th Jul 2007 08:00
Anglo Platinum Limited30 July 2007 ANGLO PLATINUM LIMITED AND ITS SUBSIDIARIES ("Anglo Platinum") (Incorporated in the Republic of South Africa)(Registration number 1946/022452/06) JSE Codes: AMS; AMSP ISIN: ZAE000013181;ZAE000054474A member of the Anglo American plc group ABRIDGED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 MAIN FEATURES • Headline earnings per ordinary share up 47%• Dividend per ordinary share up 107%• Rand basket price per platinum ounce increased by 51%• Refined platinum sales 1 212 000 ounces Consolidated Income Statement Reviewed Reviewed Audited ------------------------- ---------- ----------- ------- ---------- Six months Six months Year ------------------------- ---------- ----------- ------- ---------- ended ended ended ------------------------- ---------- ----------- ------- ---------- 30 June 30 June % 31 December ------------------------- ---------- ----------- ------- ----------R millions 2007 2006 Change 2006------------------------- ---------- ----------- ------- ----------Gross sales revenue 23 646 16 656 39 356------------------------- ---------- ----------- ------- ----------Mined 20 933 14 882 34 979------------------------- ---------- ----------- ------- ----------Purchased metals in concentrate 2 713 1 774 4 377------------------------- ---------- ----------- ------- ----------Commissions paid (179) (143) (201)------------------------- ---------- ----------- ------- ---------- ------------------------- ---------- ----------- ------- ----------Net sales revenue 23 467 16 513 42 39 155------------------------- ---------- ----------- ------- ----------COST OF SALES (12 654) (10 429) (21) (22 531)------------------------- ---------- ----------- ------- ---------- ------------------------- ---------- ----------- ------- ----------GROSS PROFIT ON METAL SALES 10 813 6 084 78 16 624------------------------- ---------- ----------- ------- ----------Mined 10 542 5 921 16 284------------------------- ---------- ----------- ------- ----------Purchased metals in concentrate 271 163 340------------------------- ---------- ----------- ------- ----------Other net (expense)/income (114) 160 (130)------------------------- ---------- ----------- ------- ----------Market development andpromotional ---------- ----------- ------- -----------------------------------expenditure (151) (129) (236)------------------------- ---------- ----------- ------- ---------- ------------------------- ---------- ----------- ------- ----------Operating profit 10 548 6 115 73 16 258------------------------- ---------- ----------- ------- ----------Interest expensed (140) (103) (193)------------------------- ---------- ----------- ------- ----------Interest received 279 74 220------------------------- ---------- ----------- ------- ----------Net income from associates 322 131 430------------------------- ---------- ----------- ------- ---------- ------------------------- ---------- ----------- ------- ----------Profit before taxation 11 009 6 217 77 16 715------------------------- ---------- ----------- ------- ----------Taxation (3 938) (1 713) (130) (4 783)------------------------- ---------- ----------- ------- ---------- ------------------------- ---------- ----------- ------- ----------profit after taxation 7 071 4 504 57 11 932------------------------- ---------- ----------- ------- ----------Minority interest (171) - (15)------------------------- ---------- ----------- ------- ---------- ------------------------- ---------- ----------- ------- ----------Net profit 6 900 4 504 53 11 917------------------------- ---------- ----------- ------- ---------- ------------------------- ---------- ----------- ------- ---------- Reconciliation between net profit------------------------ ----------- ----------- ------- ----------and headline earnings------------------------ ----------- ----------- ------- ----------Net profit 6 900 4 504 11 917------------------------ ----------- ----------- ------- ----------Less: Declared and undeclaredcumulative ----------- ----------- ------- ----------------------------------preference share dividends andrelated (7) (127) (237)STC ----------- ----------- ------- ----------------------------------Less: Deemed dividend topreference ----------- ----------- ------- ----------------------------------shareholders (Note 9) (16) - ------------------------- ----------- ----------- ------- ---------- ------------------------ ----------- ----------- ------- ----------Basic earnings attributable toordinary ----------- ----------- ------- ----------------------------------shareholders 6 877 4 377 11 680------------------------ ----------- ----------- ------- ----------Adjustments (after tax whereapplicable): ----------- ----------- ------- ----------------------------------Profit on disposal of conversion - - (22)rights ----------- ----------- ------- ----------------------------------Profit on disposal and scrapping ofproperty, ----------- ----------- ------- ----------------------------------plant and equipment (3) - (7)------------------------ ----------- ----------- ------- ----------Cost on disposal of 15% interestof ----------- ----------- ------- ----------------------------------Union Section - - 105 --------- --------- ---------Headline earnings attributable toordinary ----------- ----------- ------- ----------------------------------shareholders 6 874 4 377 57 11 756------------------------ ----------- ----------- ------- ----------Add: Declared and undeclaredcumulative ----------- ----------- ------- ----------------------------------preference share dividends andrelated 7 127 237STC ----------- ----------- ------- ----------------------------------Add: Deemed dividend to preference------------------------ ----------- ----------- ------- ----------shareholders (Note 9) 16 - ------------------------- ----------- ----------- ------- ---------- ------------------------ ----------- ----------- ------- ----------Headline earnings 6 897 4 504 11 993------------------------ ----------- ----------- ------- ---------- ------------------------ ----------- ----------- ------- ----------Number of ordinary shares in issue(millions) 236,0 219,0 229,6------------------------ ----------- ----------- ------- ----------Weighted average number ofordinary ----------- ----------- ------- ----------------------------------shares in issue (millions) 233,6 218,6 218,8------------------------ ----------- ----------- ------- ----------Attributable earnings per ordinaryshare (cents) ----------- ----------- ------- ----------------------------------- Basic 2 944 2 002 47 5 339------------------------ ----------- ----------- ------- ----------- Diluted 2 926 1 989 47 5 317------------------------ ----------- ----------- ------- ----------Attributable headline earnings perordinary ----------- ----------- ------- ----------------------------------share (cents)------------------------ ----------- ----------- ------- ----------- Headline 2 943 2 002 47 5 374------------------------ ----------- ----------- ------- ----------- Diluted 2 925 1 989 47 5 352------------------------ ----------- ----------- ------- ----------Dividends per ordinary share (cents) 1 400 5 300------------------------ ----------- ----------- ------- ----------- Interim 2 900* 1 400 107 1 400------------------------ ----------- ----------- ------- ----------- Final 3 900------------------------ ----------- ----------- ------- ----------Dividends per preference share 318,0 318,0 638,0(cents) ----------- ----------- ------- ----------------------------------Dividend cover per ordinary share------------------------ ----------- ----------- ------- ----------(headline earnings) 1,0 1,4 1,0------------------------ ----------- ----------- ------- ----------* Proposed ordinary dividend Group statement of recognised income and expense Reviewed Reviewed Audited ------------------------------- ---------- ---------- ----------- Six months Six months Year ------------------------------- ---------- ---------- ----------- ended ended ended ------------------------------- ---------- ---------- ----------- 30 June 30 June 31 December ------------------------------- ---------- ---------- -----------R millions 2007 2006 2006------------------------------- ---------- ---------- -----------income and expense recognised------------------------------- ---------- ---------- -----------directly in the income statement------------------------------- ---------- ---------- -----------Profit after taxation 7 071 4 504 11 932------------------------------- ---------- ---------- -----------Less: Taxation recognised directly inequity - - (79)------------------------------- ---------- ---------- ----------- ------------------------------- ---------- ---------- -----------Total recognised income and expense------------------------------- ---------- ---------- -----------for the period/year 7 071 4 504 11 853------------------------------- ---------- ---------- ----------- ------------------------------- ---------- ---------- -----------Attributable to:------------------------------- ---------- ---------- -----------Equity holders of parent 6 900 4 504 11 838------------------------------- ---------- ---------- -----------Minority shareholder interest 171 - 15------------------------------- ---------- ---------- ----------- ------------------------------- ---------- ---------- -----------TOTAL RECOGNISED INCOME AND EXPENSE------------------------------- ---------- ---------- -----------FOR THE PERIOD/YEAR 7 071 4 504 11 853------------------------------- ---------- ---------- ----------- ------------------------------- ---------- ---------- ----------- Consolidated Balance Sheet Reviewed Reviewed Audited ---------------------------- ----------- ----------- ----------- as at as at as at ---------------------------- ----------- ----------- ----------- 30 June 30 June 31 December ---------------------------- ----------- ----------- -----------R millions 2007 2006 2006---------------------------- ----------- ----------- -----------ASSETS---------------------------- ----------- ----------- -----------Non-current assets 34 730 27 757 31 401---------------------------- ----------- ----------- -----------Property, plant and equipment 20 485 21 189 20 872---------------------------- ----------- ----------- -----------Capital work-in-progress 12 730 5 389 9 128---------------------------- ----------- ----------- -----------Investment in associates 1 022 811 944---------------------------- ----------- ----------- -----------Cash deposits held by environmental trusts 296 216 264---------------------------- ----------- ----------- -----------Prepaid leases and other receivables 197 152 193---------------------------- ----------- ----------- -----------Current assets 13 703 10 130 14 912---------------------------- ----------- ----------- -----------Inventories 5 793 4 882 5 300---------------------------- ----------- ----------- -----------Accounts receivable 4 476 3 304 4 888---------------------------- ----------- ----------- -----------Cash and cash equivalents 3 434 1 944 4 724---------------------------- ----------- ----------- ----------- ---------------------------- ----------- ----------- -----------Total assets 48 433 37 887 46 313---------------------------- ----------- ----------- ----------- ---------------------------- ----------- ----------- -----------EQUITY AND LIABILITIES---------------------------- ----------- ----------- -----------Share capital and premium 9 292 5 547 5 591---------------------------- ----------- ----------- -----------Accumulated profits 20 398 18 260 22 590---------------------------- ----------- ----------- -----------Minority shareholders' interest 453 - 511---------------------------- ----------- ----------- ----------- ---------------------------- ----------- ----------- -----------Shareholders' equity 30 143 23 807 28 692---------------------------- ----------- ----------- -----------Non-current liabilities 9 196 7 546 8 466---------------------------- ----------- ----------- -----------Deferred taxation 8 098 6 378 7 168---------------------------- ----------- ----------- -----------Environmental obligations 569 484 530---------------------------- ----------- ----------- -----------Employees' service benefit obligations 25 61 33---------------------------- ----------- ----------- -----------Share based payment provision 23 152 260---------------------------- ----------- ----------- -----------Obligations due under finance leases 481 471 475---------------------------- ----------- ----------- -----------Current liabilities 9 094 6 534 9 155---------------------------- ----------- ----------- -----------Interest-bearing borrowings 600 779 100---------------------------- ----------- ----------- -----------Accounts payable 6 111 4 031 6 029---------------------------- ----------- ----------- -----------Share based payment provision 512 240 318---------------------------- ----------- ----------- -----------Taxation 1 871 1 484 2 708---------------------------- ----------- ----------- ----------- ---------------------------- ----------- ----------- -----------Total equity and liabilities 48 433 37 887 46 313---------------------------- ----------- ----------- ----------- ---------------------------- ----------- ----------- ----------- Consolidated Cash Flow Statement Reviewed Reviewed Audited -------------------------------- ---------- ---------- ---------- Six months Six months Year -------------------------------- ---------- ---------- ---------- ended ended ended -------------------------------- ---------- ---------- ---------- 30 June 30 June 31 December -------------------------------- ---------- ---------- ----------R millions 2007 2006 2006-------------------------------- ---------- ---------- ----------CASH FLOWS FROM OPERATING ACTIVITIES-------------------------------- ---------- ---------- ----------Cash from operations 11 829 6 513 18 403-------------------------------- ---------- ---------- ----------Interest paid (net of interestcapitalised) (79) (72) (164)-------------------------------- ---------- ---------- ----------Taxation paid (3 729) (241) (1 274)-------------------------------- ---------- ---------- ---------- -------------------------------- ---------- ---------- ----------Net cash from operating activities 8 021 6 200 16 965-------------------------------- ---------- ---------- ---------- -------------------------------- ---------- ---------- ----------CASH FLOWS USED IN INVESTINGACTIVITIES ---------- ---------- ------------------------------------------Purchase of property, plant andequipment ---------- ---------- ------------------------------------------(including interest capitalised) (4 653) (1 835) (6 524)-------------------------------- ---------- ---------- ----------Proceeds from sale of 15% interest inUnion Section - - 385-------------------------------- ---------- ---------- ----------Interest received 279 74 220-------------------------------- ---------- ---------- ----------Other 140 104 90-------------------------------- ---------- ---------- ---------- -------------------------------- ---------- ---------- ----------Net cash used in investing activities (4 234) (1 657) (5 829)-------------------------------- ---------- ---------- ---------- -------------------------------- ---------- ---------- ----------CASH FLOWS USED IN FINANCINGACTIVITIES ---------- ---------- ------------------------------------------Proceeds from the issue of ordinary-------------------------------- ---------- ---------- ----------share capital 73 125 169-------------------------------- ---------- ---------- ----------Raising/(repayment) of interest-bearingborrowings 500 (3 042) (3 705)-------------------------------- ---------- ---------- ----------Ordinary and preference dividends paid,net of ---------- ---------- ------------------------------------------reinvestment (5 421) (1 657) (4 851)-------------------------------- ---------- ---------- ----------Distributions to minority shareholders (229) - --------------------------------- ---------- ---------- ---------- -------------------------------- ---------- ---------- ----------Net cash used in financing activities (5 077) (4 574) (8 387)-------------------------------- ---------- ---------- ---------- -------------------------------- ---------- ---------- ----------Net (decrease)/increase in cash andcash ---------- ---------- ------------------------------------------equivalents (1 290) (31) 2 749-------------------------------- ---------- ---------- ----------Cash and cash equivalents at beginningof 4 724 1 975 1 975period/year ---------- ---------- ------------------------------------------ -------------------------------- ---------- ---------- ----------Cash and cash equivalents at end ofperiod/year 3 434 1 944 4 724-------------------------------- ---------- ---------- ---------- -------------------------------- ---------- ---------- ----------MOVEMENT IN NET CASH/(DEBT)**-------------------------------- ---------- ---------- ----------Net cash/(debt) at beginning of year 4 149 (2 293) (2 293)-------------------------------- ---------- ---------- ----------Net cash from operating activities 8 021 6 200 16 965-------------------------------- ---------- ---------- ----------Net cash used in investing activities (4 234) (1 657) (5 829)-------------------------------- ---------- ---------- ----------Other (5 583) (1 556) (4 694)-------------------------------- ---------- ---------- ---------- -------------------------------- ---------- ---------- ----------net cash at end of year 2 353 694 4 149-------------------------------- ---------- ---------- ---------- -------------------------------- ---------- ---------- ---------- ** Net cash comprises interest-bearing liabilities and obligations under financeleases net of cash and cash equivalents. Notes to the interim results 1. This abridged report has been extracted from the interim report whichcomplies with International Accounting Standard 34 - Interim Financial Reportingand South African Statement of Generally Accepted Accounting Practice, AC127,with the same title, as well as with Schedule 4 of the South African CompaniesAct and the disclosure requirements of the JSE Limited's listings requirements. 2. The interim report has been prepared using accounting policies that complywith International Financial Reporting Standards and South African Statements ofGenerally Accepted Accounting Practice. The accounting policies are consistentwith those applied in the financial statements for the year ended 31 December2006, except for the changes described in notes 5 and 8. Reviewed Reviewed Audited Six months Six months Year------------------------------ ---------- ---------- ------------ ended ended ended------------------------------ ---------- ---------- ------------ 30 June 30 June 31 December------------------------------ ---------- ---------- ------------R millions 2007 2006 2006------------------------------ ---------- ---------- ------------3. Commitments------------------------------ ---------- ---------- ------------Mining and process property, plant andequipment ---------- ---------- ------------------------------------------Contracted for 3 776 1 353 4 867------------------------------ ---------- ---------- ------------Not yet contracted for 15 751 11 435 9 563------------------------------ ---------- ---------- ------------ ------------------------------ ---------- ---------- ------------Authorised by the directors 19 527 12 788 14 430------------------------------ ---------- ---------- ------------ ------------------------------ ---------- ---------- ------------Other------------------------------ ---------- ---------- ------------Operating lease rentals - buildings 469 612 603------------------------------ ---------- ---------- ------------- within remainder of year/one year 30 45 44------------------------------ ---------- ---------- ------------- within two to five years 158 192 197------------------------------ ---------- ---------- ------------- thereafter 281 375 362------------------------------ ---------- ---------- ------------Information Technology Service Providers 620 130 165------------------------------ ---------- ---------- ------------- within remainder of year/one year 153 55 74- thereafter 467 75 91 4. Contingent liabilities Letters of comfort have been issued to financial institutions to cover certainbanking facilities. There are no encumbrances over Group assets, other thanhouses held under finance leases by the Group. Aquarius Platinum (South Africa) (Proprietary) Limited holds an option to putits interest in the Kroondal pooling and sharing arrangement to the Group in thecase of termination of that relationship. The probability of the option beingexercised is considered remote. The amount of such an obligation is dependent ona discounted cash flow valuation of its interest at that point in time.The Group has, in the case of some of its mines, provided the Department ofMinerals and Energy with guarantees that cover the difference between theclosure costs and amounts held in the environmental trusts. At 30 June 2007,these guarantees amounted to R453 million (31 December 2006: R159 million).The Group is the subject of various claims, which are individually immaterial.The expected outcomes of these individual claims are varied, but on aprobability weighting the amount is estimated at R8 million. (30 June 2006: R92million, 31 December 2006: R73 million). The Group has provided Lexshell 39 General Trading (Pty) Limited, a companyowned by the Bakgatla-Ba-Kgafela traditional community, with a facility thatcovers their debt repayments should the company not be able to meet itsrepayments. The facility is limited to Union section's cash flows, and call onthis facility is considered a remote possibility. 5. New accounting policies adopted IFRS 7 - Financial Instruments: DisclosuresOn 1 January 2007, the Group adopted the disclosure requirements for financialinstruments under IFRS 7. This standard has no impact on recognition,measurement and presentation of financial instruments and consequently has noimpact on profit or loss or equity for the period. The primary objective of IFRS7 is to provide risk management and financial instrument disclosures that enableusers to evaluate the nature and significance of financial instruments on anentity's financial performance and position. These new disclosure requirementswill mainly impact the annual financial statements rather than the interimfinancial results. Amendment to IAS 1 - Presentation of Financial StatementsThe Group adopted the amendment to IAS 1. IAS 1 was amended in conjunction withthe issue of IFRS 7. The amendments require additional disclosure of theentity's capital management objectives, policies and processes, somequantitative data around the composition of capital and compliance with anycapital requirements. Due to the nature of the capital disclosures, this willhave an impact on the annual financial statements.Amendments to IAS 23 - Borrowing costs The Group early adopted the amendments to IAS 23 - Borrowing costs. The mainchange from the previous version is the removal of the option to immediatelyrecognise borrowing costs that relate to assets that take a substantial amountof time to get ready for use or sale, as an expense. This has no impact on theGroup. 6. Derivatives - no fair value The Group holds a call option over a 16,95% (31 December 2006: 17,04%) stake inNortham Platinum Limited, which option is conditional upon the current ownerachieving certain ownership thresholds by historically disadvantaged persons. This option has been extended on three occasions and now the conditions must bemet on 30 November 2007. The call option is exerciseable at R13,45 (31 December2006: R8,60) per share. No fair value is attributed to this option as it iscontingent upon the event explained above. 7. Change in accounting estimate Mining Assets During the period, the Group revised its depreciation method for capitalisedshaft and development costs. These costs which were previously amortised on astraight-line basis over their expected useful lives, are now amortised on aunit of production basis. The reason for the change in estimate is due to thealignment of the accounting policies with the holding company of the Group. This change in accounting estimate has been applied prospectively and hasresulted in an increase in depreciation of R59 million for the half-year.The amount of the effect in future periods cannot be disclosed becauseestimation is impracticable. Inventory During the period, the Group changed its estimate of the quantities of inventorybased on the outcome of a physical count of in process metals. The Group runs atheoretical metal inventory system based on inputs, the results of previousphysical counts and outputs. Due to the nature of in process inventories beingcontained in weirs, pipes and other vessels, physical counts take place onlyonce per annum. This change in estimate has had the effect of decreasing the value of inventorydisclosed in the financial statements by R148 million (31 December 2006:increase of R102 million). This results in the recognition of an after-taxdecrease in earnings of R105 million (31 December 2006: R72 million). The amount of the effect in future periods cannot be disclosed becauseestimation is impracticable. 8. Change in accounting policy During the period, the Group changed its accounting policy of valuing stores andmaterial at average cost. Stores and material are now valued at cost on a firstin, first out (FIFO) basis. The reason for the change in policy is due to thealignment of the accounting policies with the holding company of the Group. Theimpact of this change is immaterial. 9. Revision of conversion price applicable to convertible preference shares As the dividend cover in respect of the 2006 dividend was less than 1.4 times,it was necessary, in accordance with the rights and privileges attaching to theconvertible perpetual cumulative preference shares ("convertible preferenceshares"), to amend the conversion price to be used when the convertiblepreference shares are converted into ordinary shares. The conversion price wasoriginally R288.43 or 34.67046 ordinary shares for each 100 convertiblepreference shares converted. Based on the announcement published on 12 March2007, the conversion price was amended to R284.24 or 35.18154 ordinary sharesfor each 100 convertible preference shares converted. This decrease in the conversion price has resulted in a deemed dividend for thepurpose of calculating earnings per share in terms of IAS 33 - Earnings pershare to the outstanding preference shareholders at the date of the adjustment.Consequently, this deemed dividend of R4.19 per convertible preference share,amounting to R16 million has been taken into account when calculating the basicearnings attributable to ordinary shareholders. This amount has been includedwith the preference dividends due to preference shareholders of R7 million inthe total amount attributable to preference shareholders. 10. Reclassification - Pandora Pandora was previously accounted for as a joint venture instead of an associate.On 1 January 2006, a balance of R94 million in property, plant and equipment andR27 million in the deferred tax liabilities were reclassified to 'Investment inAssociates'. 11. Corporate governance The Board is of the view that the Company and its subsidiaries are compliantwith the recommendations as set out in the Code of Corporate Practices andConduct contained in King 2. 12. Auditors' review The interim results have been reviewed by the Company's auditors, Deloitte &Touche. Their unqualified review report is available for inspection at theCompany's registered office. Commentary 1. FINANCIAL RESULTS The Group achieved a substantial improvement in headline earnings when comparedto those for the first six months of 2006 with higher US dollar prices realisedon metals sold and a weaker rand/US dollar exchange rate the primarycontributing factors. Headline earnings and headline earnings attributable to ordinary shareholdersincreased to R6 897 million and R6 874 million respectively with headlineearnings per ordinary share increasing 47,0% to 2 943 cents. An interim dividendof 2 900 cents per ordinary share has been declared, maintaining a dividendcover ratio of 1. Net sales revenue rose by R6,95 billion to R23,5 billion. The increase wasprimarily the result of higher US dollar metal prices achieved on all metalssold, contributing R4,82 billion to the increase and a weaker average rand/USdollar exchange rate of R7,16, when compared to the rate of R6,34 achieved inthe first half of 2006, which increased revenue by R2,66 billion. Lower salesvolumes reduced net sales revenue by R526 million largely due to the revenuereduction from platinum and nickel sales. Refined platinum sales for thehalf-year ended 30 June 2007 amounted to 1,212 million ounces. The average prices achieved on platinum, palladium and nickel sales for the 6months to 30 June 2007 were US$1 233 per ounce, US$355 per ounce and US$19,98per pound respectively. The average price achieved on sales of rhodium metal forthe period was US$4 274 per ounce, which includes the effect of long termcontractual arrangements with some customers. Cost of sales rose by R2,23 billion to R12,7 billion, principally as a result ofthe following: • Purchases of metal in concentrate increased 45,8% to R2,45 billion. Higher rand prices paid for metals in concentrate contributed R651 million to the increase, with increased volumes of metals in concentrate purchased from the Kroondal, Marikana, Bafokeng-Rasimone, Modikwa and Mototolo joint ventures, contributing a further R117 million. • Cash mining, smelting and refining costs rose 20,2% to R8,54 billion with cash operating unit costs per equivalent refined platinum ounce rising by 19,2% to R7 200. The effect of and reasons for cost increases and additional costs incurred are set out in more detail below. • Other costs decreased by R130 million or 14,6% as a result of the reversal of an overprovision of R214 million related to prior periods' share based payments. • Amortisation rose by 14,7% or R173 million as a result of the capital expenditure programme and increased use of new operating assets. • The value of metals in inventory increased by R448 million during the first half of 2007, impacted by the increase in the unit cost at which metal inventories are valued and an increase in process pipeline stocks, offset by a reduction in refined metal stocks. Other net expenditure for the period amounted to R114 million and comprisedmainly of consultants fees of R129 million. The Group's net cash position at 30 June 2007 amounted to R2,35 billion,compared to the R4,15 billion net cash position at the end of 2006. 2. SAFETY Anglo Platinum remains committed to the principle of zero harm. Accordingly theBoard has implemented steps to align Anglo Platinum's approach to employeesafety with that adopted by the Anglo American Group. Anglo Platinum fullysupports the Anglo American ambition to set the safety standard in the miningindustry and has implemented a major shift in its approach to employee safety.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 new approach is being implemented at all AngloAmerican operations. The significant deterioration in safety performance in the first half of 2007 atRustenburg resulted in the suspension of production at all shafts on a staggeredbasis, with the aim of ensuring that every employee fully understands theprinciples and accountability underlying all current safety standards,initiatives and programmes and to identify and address any new factors thatcontributed to the deterioration and that safety is recognised as the overridingpriority. The loss of refined platinum production associated with the safetyintervention at Rustenburg is 38 000 ounces. A similiar safety intervention willbe implemented at all of the Company's operations and is expected to reduce 2007refined platinum production by a further 65 000 ounces. 3. OPERATIONS 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 the first half of 2007 increased by 16 585ounces or 1,3% when compared to the same period in 2006. The increase was lowerthan anticipated due to a shortage of skilled labour, competition for labour atall levels, contract labour instability, strike action at joint ventures, theunsettled labour situation associated with wage negotiations, the increasednumber of fatal events and lower process recovery at Potgietersrust. Despite production from operations increasing, refined platinum production forthe first half of 2007 decreased by 11,2% to 1 193 700 ounces. This was impactedby the increase in process pipeline stocks, increasing platinum levels by 90 000ounces. These stocks are expected to be refined for sale during the second halfof 2007. In addition, refined production in the first half of 2006 significantlyexceeded production from operations due to the processing of concentrate builtup at the Polokwane smelter in 2005. An increase in labour complement to support the planned increase in productionat mining operations coupled with the labour related reduced productionefficiency resulted in an increase in cash operating costs per equivalentrefined platinum ounce of 19,2% to R7 200. Mining operations Increased production volumes were recorded at: • Mototolo: The joint venture delivered its first production in the last quarter of 2006. In the first half of 2007 the operation contributed 43 200 ounces of equivalent refined platinum production of which 21 600 ounces were attributable to Anglo Platinum with the balance purchased in concentrate from the joint venture partners. • Union: Equivalent refined platinum production increased by 7% or 10 400 ounces as the decline operations returned to full production following the completion of remedial support work conducted in 2006. • Marikana: Equivalent refined platinum production attributable to Anglo Platinum increased by 122% or 4 400 ounces. Marikana remains in ramp-up and is expected to continue increasing production in 2007 with steady state production of 74 000 equivalent refined platinum ounces expected in 2009. • Western Limb Tailings Retreatment: Increased tons milled and a higher 4E built up head grade resulted in equivalent refined platinum production increasing by 3 100 ounces to 23 300 ounces for the first half of 2007. • Twickenham: Reported separately for the first time in 2007, Twickenham produced 4 600 equivalent refined platinum ounces, compared to 1 700 ounces produced in the comparative period of 2006. Lower production was recorded at: • Modikwa: Labour unrest experienced during the first quarter of 2007, which included a protected strike that lasted 25 days, resulted in equivalent refined platinum production decreasing by 20% or 13 200 ounces compared to the same period in 2006. An agreement was reached on 4 May 2007 whereby employees returned to work although some work previously performed on Sundays only re-commenced on 21 May 2007. • Potgietersrust: Mining at the new PPRust North pit, which commenced in December 2006, continued in the first half of 2007. In the area currently being mined the portion of oxidised material negatively impacting process recovery is more extensive than expected. Unscheduled mill and crusher maintenance resulted in lower volumes milled which, together with lower recovery, resulted in a decrease of 11% or 10 600 equivalent refined platinum ounces. The impact of the oxidized material on recoveries will reduce refined output at Potgietersrust in 2007 to 180 000 ounces. Production is expected to be 280 000 refined platinum ounces in 2008 with the mine expected to reach its forecast level of 430 000 ounces in 2009. • Rustenburg: The mine experienced a high number of fatal incidents in the first half of 2007. This resulted in both unplanned and remedial work stoppages. Labour unrest amongst contractors in the first quarter of the year and high labour turnover and resultant employment of novice workers resulted in a marked reduction in labour efficiencies. This has resulted in a 2% or 8 600 ounce decrease in equivalent refined platinum production and an 18% decrease in primary development which prevented the planned improvement in key underground metrics. • Amandelbult: Equivalent refined platinum production decreased by 2% or 7 100 ounces. Despite an improvement in immediately available reserves, short term unavailability in UG2 milling capacity resulted in lower tons milled. This resulted in a 193 000 ton UG2 ore stockpile ahead of the concentrators at 30 June 2007. • Bafokeng-Rasimone: Lower mined grades, hampered by a mill breakdown in the second quarter resulted in equivalent refined platinum production decreasing by 4% or 3 800 ounces. The ore stocks built up ahead of the milling circuit of 49 500 tons should be sufficient to negate the deficit over the remainder of the year. • Lebowa: Equivalent refined platinum production decreased by 4% or 2 100 ounces. This lower output is due to lower underground production affected by power outages, high labour turnover and labour inefficiencies. Process operations Smelting operations performed well over the period with a satisfactory solutionto furnace cooling at the Polokwane smelter. The scheduled re-build of theWaterval No. 1 furnace, which commenced in January 2007, was completedsuccessfully with full output in June 2007. A cooling water failure on the slagcleaning furnace at the Waterval complex resulted in damage that necessitatedbringing forward a shutdown scheduled for later in the year to carry outmaintenance and technical enhancements. While it would have been possible toprocess slag accumulated during the repair and revert material from No. 1furnace through the primary furnaces it was decided to stockpile and process theaccumulated material through the slag cleaning furnace to optimise recovery. This has resulted in an increase in pipeline stocks, including platinum levelsof 65 000 ounces, which will be processed during the second half of 2007. Theslag cleaning furnace will be fully operational in August 2007. Refining operations performed well over the period with improved recoveries atthe Precious Metals Refinery. The smelting and refining operations unit costs were impacted by the lowerrefined production resulting in cash smelting and refining cost per refinedplatinum ounce increasing by 26% over the first half of 2006. Unit costsincreases are expected to be significantly lower at the year end due to theexpected release of metal processed through the slag cleaning furnace andincreased mining production in the second half of the year. 4. PROJECTS Anglo Platinum remains confident of continued robust demand for platinum and iscontinuing with its expansion programme. The rate of expansion is reviewed on anongoing basis and currently supports the Group's stated average compound growthtarget of 5% per annum. The long term outlook for metal prices remains positiveand consequently studies evaluating the ramping up of various projects continue.In the first half of 2007 the Board approved projects totalling R6,2 billion, in2007 money terms. Included in these approvals is expansion of the Base MetalsRefinery, the Rustenburg Townlands ore replacement project and the LebowaMiddelpunt Hill project. The Base Metals Refinery project to expand the capacity of the existing plant to33ktpa of nickel by 2010 is estimated at R1,9 billion. The R1,0 billion Rustenburg Townlands ore replacement project was approved andwill replace 70 000 ounces of refined platinum per annum from 2014 withproduction expected from the new Merensky and UG2 areas at the RustenburgTownlands shaft. The R1,7 billion Lebowa Middelpunt Hill 125ktpm UG2 project was also approvedand will contribute an additional 93 000 ounces of platinum per annum from 2012.The implementation of Anglo Platinum's extensive suite of mining and processingprojects to maintain and expand production continues on schedule and withinbudget. The PPRust North expansion project, which aims to mill an additional 600 000tons of ore per month producing an additional 230 000 platinum ounces per annumfrom 2009, is progressing on schedule. The relocation of the Ga-Puka andGa-Sekhaolelo communities commenced in July 2007 under the guidance of arepresentative task team which is facilitated by the office of the Premier ofLimpopo. The relocation is the result of extensive consultations with thecommunities, tribal authorities and local and provincial government over thepast few years. The relocation is expected to cost some R650 million and isbeing conducted according to World Bank resettlement guidelines and aims toensure that the communities are better off after resettlement than they werebefore. In this regard, Anglo Platinum has established community trusts whichwill ensure that benefits flow to these communities, dealing withinfrastructure, education, health and sustainable job creation. The R1,5 billion Amandelbult East Upper UG2 project, which will contribute anadditional100 000 ounces of refined platinum per annum by 2012, is progressing ahead of schedule. The R2,3 billion Rustenburg Paardekraal 2 shaft replacement project is onschedule and is expected to produce 120 000 ounces of refined platinum per annumby 2015, replacing decreasing production as a result of continuing Merensky orereserve depletion. Projects that continue to increase production include Kroondal, Marikana and forthe first time in 2007, the Mototolo joint venture. 5. CAPITAL EXPENDITURE Total capital expenditure for the 6 months amounted to R4,65 billion (2006:R1,84 billion). Expansion expenditure amounted to R3,07 billion (2006: R635million) and expenditure to maintain operations increased to R1,53 billion(2006: R1,14 billion). Interest of R51 million was capitalised (2006: R64million). It is forecast that capital expenditure for 2007 will be between R9 billion andR10 billion, as previously estimated. 6. NEW MINERALS LEGISLATION AND EMPOWERMENT OF HISTORICALLY DISADVANTAGED SOUTHAFRICANS Anglo Platinum is fully committed to the Minerals and Petroleum ResourcesDevelopment Act ("the Act") and the mining charter and to achieving theassociated sustainable economic transformation. This process started in 2000 with the sale of a stake in Northam to MvelaphandaResources and in 2001 with the establishment of our 50:50 joint venture with theAfrican Rainbow Minerals led consortium at Modikwa. Subsequent transactions andventures included the Bafokeng-Rasimone mine, the Pandora, Ga-Phasha andBooysendal projects, the sale of 15% of Union mine and prospecting properties tothe Bakgatla-Ba-Kgafela traditional community. In July 2006 a joint review ofprogress was conducted by Anglo Platinum and the Department of Minerals andEnergy ("DME"). This highlighted the additional detail required by theDME to facilitate the processing of the submissions already made by AngloPlatinum to convert its "old order rights" to "new order rights". The review and subsequent interactions have further confirmed both the DME's and the Company's commitment to a successful conversion process. Anglo Platinum expects to make significant progress in 2007 to further enhanceits empowerment to fully embrace the transformation envisaged by the Act and themining charter and to obtain the associated conversion of rights. Detailedinteractions with the DME to finalise the applications already lodged have beenconducted on a continuing basis, whilst in parallel, the negotiation of two BEEtransactions to complete Anglo Platinum's transfer of ownership requirements inaccordance with the spirit and letter of the Act to achieve conversion, haveprogressed satisfactorily. These transactions will be announced once concluded.Noteworthy milestones achieved in support of Anglo Platinum's social and labourplan include:- • 9% women in mining • 40% historically disadvantaged South Africans in management positions • R3,1 billion spent on HDSA procurement in the first six months of 2007, some 32% of Anglo Platinum's total discretionary procurement spend • Continued investment in housing and community projects • R179 million committed to adult basic education over the next 3 years. In a move to address the ongoing skills shortage facing the industry, AngloPlatinum approved and commenced the construction of a R283 million mine trainingcentre on its Twickenham mine property, in support of the social and labourplans for its new mining projects. The training centre will provide skills to 2000 new mining employees per year for the new and existing mining projects onthe Eastern Limb of the Bushveld complex. The centre will include surface andunderground training facilities to equip employees with conventional andmechanised mining skills to match the range of mining techniques employed byAnglo Platinum. The first trainees are expected to be enrolled in 2008. 7. DIVIDENDS Ordinary dividends are declared after considering current and future fundingrequirements and are paid out of cash generated from operations. As was the caseat the 2006 year end, additional considerations currently impacting fundingrequirements include: • Anglo Platinum's view that metal prices will remain firm for the foreseeable future • The advanced level of implementation of expansion and replacement projects and associated improved confidence in the accuracy of capital expenditure forecasts • The magnitude of the planned capital expenditure • The potential volatility of metal prices and exchange rates. Consequently Anglo Platinum is able to declare a higher dividend. The Board has declared an interim ordinary dividend of 2 900 cents per share.This results in a dividend cover ratio of 1:1 on half-year headline earnings andrepresents an increase of 107% on the 2006 interim dividend. A preference dividend of 318 cents per preference share was declared and paid inMay 2007. 8. PROSPECTS As a result of the operating difficulties encountered in the first half of theyear and their ongoing impact on operational efficiencies refined platinumproduction for 2007 is expected to be between 2,60 and 2,65 million ounces andfor 2008 between 2,80 and 2,95 million ounces. While the impact of current labour issues, the new approach to safety and lowerrecovery at Potgietersrust have materially impacted 2007 and will impact 2008,the compound average production growth target of 5% planned by Anglo Platinum tomeet growing global demand will be maintained. Demand for platinum remains firm and supportive of higher prices. Purchases ofnewly mined platinum for jewellery manufacturing in China have held up well inthe face of higher prices, but new metal demand has slowed in the Japanese andUS jewellery markets. The increase in China of recycled platinum jewellery andhigher US dollar spend are indicators of strong brand support. Platinum demandfor autocatalysts remains robust, driven by European demand for catalysts,particulate filters for diesel vehicles and growing Asian automotive production. Industrial demand remains firm, particularly in the glass and petroleum sectors.Growth in palladium demand for autocatalysts and in industrial applications suchas electronics is supported by the relatively low metal price. Interest inpalladium for jewellery has spread beyond China to the USA where the lower pricemakes palladium jewellery increasingly competitive with white gold. Palladiumprices are trading in a tight band and remain vulnerable to a change in investorand fund sentiment. The recently launched Exchange Traded Funds for platinum and palladium have notsignificantly reduced market liquidity of either metal and their influence onprices has so far been muted. In addition to the refining and sale of process pipeline stocks accumulatedduring the first half of 2007, refined platinum production for the second halfis expected to be higher than that of the first half. Increased sales volumesand variable metal prices in rand terms are likely to have the most significanteffect on earnings in the second half of 2007. T M F Phaswana R Havenstein Johannesburg(Chairman) (Chief Executive Officer) 27 July 2007 Declaration of interim ordinary dividend (No. 109) Notice is hereby given that an interim dividend of 2 900 cents per ordinaryshare, in the currency of the Republic of South Africa, has been declared inrespect of the six months ended 30 June 2007. The dividend is payable toshareholders recorded in the books of the Company at the close of business onFriday, 24 August 2007. The salient dates for the interim ordinary dividend are as follows: Salient Dates for South Africa and United Kingdom 2007 Last day to trade (cum dividend) Friday, 17 AugustFirst day of trading (ex dividend) Monday, 20 AugustCurrency conversion date (for sterling payments from London) Tuesday, 21 AugustRecord date Friday, 24 AugustPayment date Monday, 27 August Share certificates may not be dematerialised or re-materialised and noconversion of preference shares into ordinary shares will be permitted betweenMonday, 20 August 2007 and Friday, 24 August 2007, both days inclusive, nor maytransfers take place between the South African and United Kingdom shareregisters during this period. On Monday, 27 August 2007, the dividend will be electronically transferred tothe bank accounts of all certificated shareholders where this facility isavailable. Where electronic fund transfer is either not available or not electedby the shareholder, cheques dated Monday, 27 August 2007 will be posted on thatdate. Holders of dematerialised shares will have their accounts credited at their CSDPor broker on Monday, 27 August 2007. Shareholders registered on the United Kingdom register will be paid the dividendin pounds sterling at the rate of exchange determined on Tuesday, 21 August 2007. A further announcement stating the rand/sterling conversion rate will bereleased through the relevant South African and United Kingdom news services onWednesday, 22 August 2007. The dividend is payable subject to payment conditions which may be inspected ator obtained from the Company's Johannesburg Office or from its LondonSecretaries. By order of the Board J D Meyer JohannesburgGroup Company Secretary 27 July 2007 SUPPLEMENTARY INFORMATIONCONSOLIDATED STATISTICS (UNAUDITED) Six months Six months Year --------------------- --------------- --------- -------- --------- ended ended ended --------------------- --------------- --------- -------- --------- 30 June 30 June 31 December --------------------- --------------- --------- -------- ---------TOTAL OPERATIONS 2007 2006 2006--------------------- --------------- --------- -------- ---------Marketing statistics--------------------- --------------- --------- -------- ---------Average market pricesachieved --------------- --------- -------- ------------------------------Platinum (US$/oz) 1 233 1 104 1 140--------------------- --------------- --------- -------- ---------Palladium (US$/oz) 355 315 319--------------------- --------------- --------- -------- ---------Rhodium (US$/oz) 4 274 3 419 3 542--------------------- --------------- --------- -------- ---------Nickel (US$/lb) 19,98 7,66 10,74--------------------- --------------- --------- -------- ---------US$ Basket price (Netsales revenue --------------- --------- -------- ------------------------------per refined Pt ouncesold) (US$) 2 613 1 953 2 030--------------------- --------------- --------- -------- ---------Platinum (R/oz) 8 825 7 018 7 785--------------------- --------------- --------- -------- ---------Palladium (R/oz) 2 530 2 001 2 178--------------------- --------------- --------- -------- ---------Rhodium (R/oz) 30 584 21 616 23 996--------------------- --------------- --------- -------- ---------Nickel (R/lb) 143,64 48,45 74,04--------------------- --------------- --------- -------- ---------R Basket price (Netsales revenue perrefined Pt ounce sold) (R) 18 706 12 390 13 852--------------------- --------------- --------- -------- ---------Average exchange rateachieved on sales (R : US$) 7,1579 6,3440 6,8223--------------------- --------------- --------- -------- ---------Exchange rate at end ofperiod/year (R : US$) 7,0472 7,1452 7,0010--------------------- --------------- --------- -------- ---------Financial statistics andratios --------------- --------- -------- ------------------------------Gross profit margin (%) 46,1 36,8 42,5--------------------- --------------- --------- -------- ---------Earnings beforeinterest, taxation, --------------- --------- -------- ------------------------------depreciation andamortisation (EBITDA) (R millions) 12 270 7 462 19 187--------------------- --------------- --------- -------- ---------Operating profit toaverage operatingassets (%) 67,8 43,1 56,2--------------------- --------------- --------- -------- ---------Return on averageshareholders' equity (%) 52,4 41,6 48,2--------------------- --------------- --------- -------- ---------Return on averagecapital employed (%) 83,1 54,8 70,1--------------------- --------------- --------- -------- ---------Interest cover - EBITDA 75,2 49,9 81,8--------------------- --------------- --------- -------- ---------Net asset value perordinary share (R) 125,8 108,7 122,7--------------------- --------------- --------- -------- ---------Net debt to total (%) - - -capital employed --------------- --------- -------- ------------------------------Interest-bearing debtto shareholders' equity (%) 3,6 5,2 2,0--------------------- --------------- --------- -------- ---------Cost of sales per totalPt oz sold (R) 10 087 7 832 7 963--------------------- --------------- --------- -------- ---------Cash operating cost perequivalent Pt oz --------------- --------- -------- ------------------------------(excluding ounces frompurchased --------------- --------- -------- ------------------------------concentrate andassociated costs) (R) 7 200 6 041 6 116--------------------- --------------- --------- -------- ---------Cash operating cost perrefined Pt oz (R) 7 645 5 672 5 748--------------------- --------------- --------- -------- ---------Equivalent refinedplatinum --------------- --------- -------- ------------------------------production (thousands) 1 274,0 1 257,4 2 638,6--------------------- (oz) --------- -------- --------- ---------------Gain in ounces indicatedby --------------- --------- -------- ------------------------------physical stock count (thousands) 9,8 39,9 39,9--------------------- (oz) --------- -------- --------- ---------------Refined platinumproduction (thousands) (1 193,7) (1 344,9) (2 816,5)--------------------- (oz) --------- -------- --------- ---------------Mining (thousands) (1 062,7) (1 199,6) (2 506,3)--------------------- (oz) --------- -------- --------- ---------------Purchase of concentrate (thousands) (131,0) (145,3) (310,2)--------------------- (oz) --------- -------- --------- --------------- --------- --------- --------- --------------------- --------------- --------- -------- ---------Platinum pipelinemovement (thousands) 90,1 (47,6) (138,0)--------------------- (oz) --------- -------- --------- --------------- --------- --------- --------- --------------------- --------------- --------- -------- --------- REGISTERED OFFICE55 Marshall Street, Johannesburg, 2001(P.O. Box 62179, Marshalltown, 2107)Facsimile +27 11 373-5111Telephone +27 11 373-6111 SOUTH AFRICAN REGISTRARSComputershare Investor Services 2004 (Pty) Limited(Registration No. 2004/003647/07)70 Marshall Street, Johannesburg, 2001(P.O. Box 61051, Marshalltown, 2107)Facsimile +27 11 688-5221Telephone +27 11 370-5000 LONDON SECRETARIESAnglo American Services (UK) Ltd,20 Carlton House Terrace, London, SW1Y 5AN, EnglandFacsimile +44 207 968-8755Telephone +44 207 968-8888 UNITED KINGDOM REGISTRARSCapita IRG plcThe Registry, 34 Beckenham Road,Beckenham, Kent, BR3 4TU, EnglandFacsimile +44 208 639-2142Telephone +44 870 162-3100 (within UK)+44 208 639-2157 (outside UK)Detailed results are available on the Internet at: http://www.angloplatinum.comE-mail enquiries should be directed to:[email protected] DIRECTORS AND COMPANY SECRETARY EXECUTIVE DIRECTORS: R Havenstein (Chief Executive Officer), J M Halhead (British), N B Mbazima(Zambian)R G Mills, A M Thebyane, D G Wanblad, A I Wood (British). NON-EXECUTIVE DIRECTORS:T M F Phaswana (Chairman), P M Baum, C B Carroll (American), R Medori (French),W A Nairn,A E Redman (British). INDEPENDENT NON-EXECUTIVE DIRECTORS:T A Wixley (Deputy Chairman), R M W Dunne (British), B A Khumalo,T H Nyasulu. ALTERNATE DIRECTORS: A H Calver (British), C B Sheppard, P G Whitcutt. GROUP COMPANY SECRETARY: J D Meyer. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Anpario