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AMS / AMSP - Anglo Platinum Limited - Abridged Financial Report for the Year
Ended 31 December 2009
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; ZAE000054474
A member of the Anglo American plc group
ABRIDGED FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2009
PERFORMANCE HIGHLIGHTS 2009
- Significant improvement in safety performance
- Mines productivity up 13% year-on-year
- Unit costs per equivalent refined platinum ounce essentially flat
- Refined platinum ounces up 3% to 2.45 million
- Headline earnings of R710 million due to reduced metal prices
- Net debt of R19.3 billion and R12.5 billion rights offer announced
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
Year Year
ended ended
31 December % 31 December
R millions 2009 Change 2008
Gross sales revenue 36 947 (28) 51 118
Commissions paid (260) (353)
Net sales revenue 36 687 (28) 50 765
COST OF SALES (34 715) (33 682)
GROSS PROFIT ON METAL SALES 1 972 (88) 17 083
Other net (expenditure)/income (659) 949
Market development and (392) (378)
promotional expenditure
Operating profit 921 (95) 17 654
Profit on disposal of - 1 141
investment in Northam Platinum
Limited
Profit on disposal of 1 982 -
investment in Booysendal joint
venture
Profit on disposal of 51% in 536 -
Lebowa Platinum Mines
Interest expensed (532) (159)
Interest received 296 277
Remeasurement of loan and (93) -
receivables
Dividends received 64 55
(Loss)/income from associates (199) 161
Profit before taxation 2 975 19 129
Taxation 153 (4 470)
PROFIT FOR THE YEAR 3 128 (79) 14 659
OTHER COMPREHENSIVE INCOME
Deferred foreign exchange (85) 4
translation (losses)/gains
Share of other comprehensive (19) -
income of associates
TOTAL COMPREHENSIVE INCOME FOR 3 024 14 663
THE year
Profit attributable to:
Owners of the Company 3 012 (79) 14 243
Minority interests 116 416
3 128 14 659
Total comprehensive income
attributable to:
Owners of the Company 2 908 (80) 14 247
Minority interests 116 416
3 024 14 663
Reconciliation between profit
and headline earnings
Profit attributable to owners 3 012 (79) 14 243
of the company
Less: Deemed dividend to - (5)
preference shareholders
Less: Declared and undeclared (5) (7)
cumulative preference share
dividends and related STC
Basic earnings attributable to 3 007 (79) 14 231
ordinary shareholders
Adjustments:
Profit on disposal of - (1 141)
investment in Northam Platinum
Limited
Tax effect thereon - 139
Profit on disposal of (1 982) -
investment in Booysendal joint
venture
Profit on disposal of 51% of (536) -
Lebowa Platinum Mines
Profit on sale of other (64) -
mineral rights and investments
Loss on disposal and scrapping 389 70
of property, plant and
equipment
Tax effect thereon (109) (19)
Headline earnings attributable 705 (95) 13 280
to ordinary shareholders
Add: Deemed dividend to - 5
preference shareholders
Add: Declared and undeclared 5 7
cumulative preference share
dividends and related STC
Headline earnings 710 (95) 13 292
Number of ordinary shares in 236.8 237.1
issue (millions)
Weighted average number of 236.9 236.8
ordinary shares in issue
(millions)
Attributable earnings per
ordinary share (cents)
- Basic 1 269 (79) 6 011
- Diluted 1 266 (79) 5 985
Attributable headline earnings
per ordinary share (cents)
- Headline 298 (95) 5 609
- Diluted 297 (95) 5 586
SEGMENTAL INFORMATION
Net sales revenue Operating
contribution
Audited Audited Audited
Year Year Year
ended ended ended
31 December 31 December 31 December
R millions 2009 2008 2009
OPERATIONS
Bathopele Mine* 1 950 2 346 305
Khomanani Mine* 1 489 1 659 14
Thembelani Mine* 1 170 1 476 (28)
Khuseleka Mine* 2 273 3 383 50
Siphumelele Mine* 1 566 2 338 (102)
Tumela Mine+ 4 173 6 212 1 171
Dishaba Mine+ 2 126 2 772 451
Union Mine 4 135 6 171 816
Mogalakwena Mine 4 540 3 755 428
Twickenham Platinum Mine 127 220 (111)
Modikwa Platinum Mine 1 054 1 530 (109)
Kroondal Platinum Mine 1 564 2 191 301
Marikana Platinum Mine 637 678 122
Mototolo Platinum Mine 727 873 182
Bafokeng-Rasimone Platinum Mine 1 184 1 587 198
Bokoni Platinum Mine 557 1 519 (207)
29 272 38 710 3 481
Western Limb Tailings 452 725 84
Retreatment (WLTR)
MASA Chrome 247 466 231
Total - mined 29 971 39 901 3 796
Purchased metals 6 716 10 864 236
36 687 50 765 4 032
Other costs (2 060)
Gross profit on metal sales 1 972
Operating
contribution Depreciation
Audited Audited Audited
Year Year Year
ended ended ended
31 December 31 December 31 December
R millions 2008 2009 2008
OPERATIONS
Bathopele Mine* 1 155 274 163
Khomanani Mine* 549 183 197
Thembelani Mine* 463 124 114
Khuseleka Mine* 1 307 228 186
Siphumelele Mine* 475 243 220
Tumela Mine+ 3 566 363 352
Dishaba Mine+ 1 418 170 134
Union Mine 3 063 445 433
Mogalakwena Mine 1 070 1 307 772
Twickenham Platinum Mine (92) 69 96
Modikwa Platinum Mine 451 246 185
Kroondal Platinum Mine 1 277 59 45
Marikana Platinum Mine 83 28 28
Mototolo Platinum Mine 463 81 69
Bafokeng-Rasimone 728 90 116
Platinum Mine
Bokoni Platinum Mine 481 11 24
16 457 3 921 3 134
Western Limb Tailings 313 73 82
Retreatment (WLTR)
MASA Chrome 452 2 2
Total - mined 17 222 3 996 3 218
Purchased metals 1 695 130 95
18 917 4 126 3 313
Other costs (1 834)
Gross profit on metal 17 083
sales
* Previously part of Rustenburg Section
+ Previously part of Amandelbult Section
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
as at as at
31 December 31 December
R millions 2009 2008
ASSETS
Non-current assets 57 778 47 400
Property, plant and equipment 35 283 28 435
Capital work-in-progress 18 074 18 136
Investment in associates 3 301 530
Investments held by environmental 78 66
trusts
Other financial assets 941 158
Other non-current assets 101 75
Current assets 18 043 18 715
Inventories 11 292 10 064
Trade and other receivables 2 891 3 941
Other assets 328 225
Other current financial assets - 1 615
Cash and cash equivalents 3 532 2 870
Assets classified as held for sale - 2 553
Total assets 75 821 68 668
EQUITY AND LIABILITIES
Share capital and reserves
Share capital - ordinary and 24 24
preference
Share premium - ordinary and 9 143 9 373
preference
Foreign currency translation reserve (138) (53)
Retained earnings 23 109 19 691
Minority interests 495 461
Shareholders` equity 32 633 29 496
Non-current liabilities 34 830 23 098
Interest-bearing borrowings 22 773 10 313
Obligations due under finance leases 2 509
Other financial liabilities 175 152
Environmental obligations 1 196 11 101
Employees` service benefit 6 1 019
obligations
Deferred taxation 10 678 4
Current liabilities 8 358 15 328
Current interest-bearing borrowings 18 5 507
Trade and other payables 5 409 4 956
Other liabilities 2 119 1 807
Other current financial liabilities 158 2 388
Share based payment provision 162 97
Taxation 492 573
Liabilities directly associated with - 746
assets classified as held for sale
Total equity and liabilities 75 821 68 668
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Foreign
currency
Share Share translation
R millions capital premium reserve
Balance as at 31 December 2007 24 9 295 (57)
Total comprehensive income for the 4
year
Ordinary and preference dividends paid
in cash
Cash distribution to minorities
Ordinary share capital issued -* 192
Conversion of preference shares (-*) (114)
Issue of shares in respect of Employee -* 1 954
Share Participation Scheme
Scheme shares reflected as treasury (-*) (1 954)
shares
Equity-settled share based
compensation
Share purchased for employees
Balance as at 31 December 2008 24 9 373 (53)
Total comprehensive income for the (85)
year
Deferred tax charged directly to
equity
Excess of net asset value over
purchase price on acquisition of Unki
Mines from fellow subsidiary
Preference dividends paid in cash
Cash distribution to minorities
Ordinary share capital issued -* 34
Conversion of preference shares (-*) (6)
Redemption of preference shares (-*) (84)
Shares acquired in terms of the Bonus (-*) (185)
Share Plan (BSP) - treated as treasury
shares
Shares vested in terms of the BSP -* 11
Equity-settled share-based
compensation
Shares purchased for employees
Balance as at 31 December 2009 24 9 143 (138)
Retained Minority
R millions earnings interests Total
Balance as at 31 December 2007 19 045 466 28 773
Total comprehensive income for the 14 243 416 14 663
year
Ordinary and preference dividends (13 816) (13 816)
paid in cash
Cash distribution to minorities (421) (421)
Ordinary share capital issued 192
Conversion of preference shares (114)
Issue of shares in respect of 1 954
Employee Share Participation
Scheme
Scheme shares reflected as (1 954)
treasury shares
Equity-settled share based 262 262
compensation
Share purchased for employees (43) (43)
Balance as at 31 December 2008 19 691 461 29 496
Total comprehensive income for the 2 993 116 3 024
year
Deferred tax charged directly to 31 31
equity
Excess of net asset value over 69 69
purchase price on acquisition of
Unki Mines from fellow subsidiary
Preference dividends paid in cash (6) (6)
Cash distribution to minorities (82) (82)
Ordinary share capital issued 34
Conversion of preference shares (6)
Redemption of preference shares (84)
Shares acquired in terms of the (185)
Bonus Share Plan (BSP) - treated
as treasury shares
Shares vested in terms of the BSP (11) -
Equity-settled share-based 363 363
compensation
Shares purchased for employees (21) (21)
Balance as at 31 December 2009 23 109 495 32 633
* Less than R500 000
CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
Year Year
ended ended
31 December 31 December
R millions 2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers 36 763 52 855
Cash paid to suppliers and employees (31 246) (33 612)
Cash generated from operations 5 517 19 243
Interest paid (net of interest (424) (99)
capitalised)
Taxation paid (396) (1 799)
Net cash from operating activities 4 697 17 345
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of property, plant and (11 301) (14 388)
equipment (includes interest
capitalised)
Stay-in-business capital (3 741) (6 078)
Project capital (5 991) (7 001)
Interest capitalised (1 569) (1 309)
Investments in associates (38) (22)
Disposal of subsidiary (net of cash (170) (17)
disposed)
Disposal of 51% interest in Lebowa 27 -
Platinum Mines (net of cash disposed)
Acquisition of Unki Mines Zimbabwe (net (174) -
of cash acquired)
Repayment by/(advance to) Plateau 72 (30)
Loan to associates (181) -
Advances made to Plateau for the (190) -
operating cash shortfall facility
Advances made to ARM Mining Consortium (132) -
Limited
Proceeds on sale of investments in - 1 572
Northam Platinum Limited
Investments in funds in escrow regarding - (542)
the Booysendal transaction
Proceeds on/(investment in) rights in 1 610 (1 610)
preference shares
Other 213 481
Net cash used in investing activities (10 264) (14 556)
CASH FLOWS from/(used in) FINANCING
ACTIVITIES
Proceeds from the issue of ordinary 28 78
share capital
Redemption of preference shares (84) -
Purchase of treasury shares for BSP (185) -
Loan from Khumama Platinum (Proprietary) - 2 356
Limited
Proceeds on interest-bearing borrowings 6 971 8 145
Repayment of finance lease obligation (507) -
Ordinary and preference dividends paid (6) (13 816)
Cash distributions to minorities (82) (421)
Net cash from/(used in) financing 6 135 (3 658)
activities
Net increase/(decrease) in cash and cash 568 (869)
equivalents
Cash and cash equivalents at beginning 2 870 4 079
of year
Transfer from/(to) assets held for sale 94 (340)
Cash and cash equivalents at end of year 3 532 2 870
MOVEMENT IN NET DEBT
Net debt at beginning of year (13 459) (4 086)
Net cash from operating activities 4 697 17 345
Net cash used in investing activities (10 264) (14 556)
Other (235) (12 162)
Net debt at end of year (19 261) (13 459)
Notes to the annual results
1. This abridged report complies with International Accounting Standard 34 -
Interim Financial Reporting and South African Statement of Generally Accepted
Accounting Practice, AC127, with the same title, as well as with Schedule 4 of
the South African Companies Act and the disclosure requirements of the JSE
Limited`s Listings requirements.
2. The abridged report has been prepared using accounting policies that comply
with International Financial Reporting Standards and South African Statements of
Generally Accepted Accounting Practice. The accounting policies are consistent
with those applied in the financial statements for the year ended 31 December
2008, except for the adoption of various new and revised accounting
standards/interpretations. Except for IFRS 8 - Operating Segments, none of these
accounting standards and interpretations had a significant impact on the Group`s
results. For full impact of these changes please refer to the annual report.
Audited Audited
Year Year
ended ended
31 December 31 December
2009 2008
% %
3. Taxation
A reconciliation of the standard rate
of South African normal taxation
compared with that charged in the
income statement is set out in the
following table:
South African normal taxation 28.0 28.0
STC 0.5 1.0
28.5 29.0
Disallowable items (0.8) (0.6)
Foreign income - (3.2)
Capital profits (23.8) (0.9)
Group relief (12.1) -
Change in corporate tax rate - (1.7)
Prior year 3.3 (0.1)
underprovision/(overprovision)
Other (0.2) 0.9
Effective taxation rate (5.1) 23.4
R millions R millions
4. Commitments
Mining and process property, plant and
equipment
Contracted for 2 317 5 062
Not yet contracted for 32 298 33 451
Authorised by the directors 34 615 38 513
Allocated for project capital 30 917 33 558
- within one year 4 209 5 430
- thereafter 26 708 28 128
Stay-in-business capital 3 698 4 955
- within one year 3 469 3 683
- thereafter 229 1 272
Other
Operating lease rentals - buildings 552 647
- due within one year 98 95
- due within two to five years 256 238
- more than five years 198 314
Information Technology Service 577 679
Providers
- due within one year 187 174
- due within two to five years 390 505
These commitments will be funded from existing cash resources, future operating
cash flows, borrowings and any other funding strategies embarked on by the
Group.
The Group has provided Plateau Resources (Proprietary) Limited (Plateau), a
company owned by Anooraq Resources Corporation (Anooraq), with a facility that
covers their senior debt repayments should Plateau not be able to meet its
repayments. The facility is limited to 29% of 49% of Lebowa Platinum Mine`s free
cash flows, and call on this facility is considered a remote possibility.
The Group has provided Lexshell 36 General Trading (Proprietary) Limited
(Lexshell 36), a company owned by the Bakgatla-Ba-Kgafela traditional community,
with a facility that covers their outstanding hedge exposure. The facility is
limited to Union Mine`s cash flows, and call on this facility is considered a
remote possibility.
The Group has also provided Lexshell 36 with a project capital expenditure
facility to fund their proportionate share of any specific new project capital
incurred for the development of a new shaft, other than the 5 South Decline
Project at Union Mine. This facility expires on 31 March 2015. At balance sheet
date, this facility had not been drawn upon.
Audited Audited
Year Year
ended ended
31 December 31 December
2009 2008
R millions R millions
5. Interest-bearing borrowings
The Group has the following borrowing
facilities:
Committed facilities 33 009 18 907
Uncommitted facilities 4 769 2 165
Total facilities 37 778 21 072
Less : Facilities utilised (22 791) (15 820)
Interest-bearing borrowings (22 773) (10 313)
Current interest-bearing borrowings (18) (5 507)
Available 14 987 5 252
Weighted average borrowing rate per 8.5874 12.4150
annum (%)
The Group`s forecasts and projections, taking into account reasonable possible
changes in the expected trading performance, indicate that the Group should be
able to operate within the level of its facilities for the next twelve months.
The Board is satisfied that the Group and Company will have adequate resources
to continue in operational existence for the next twelve months. For this
reason, the Group continues to adopt the going concern basis in preparing its
financial statements.
6. Contingent liabilities
Letters of comfort have been issued to financial institutions to cover certain
banking facilities. There are no encumbrances of Group assets, other than the
assets held under finance leases by the Group.
Aquarius Platinum (South Africa) (Proprietary) Limited holds a put option to put
their interest in the Kroondal pooling and sharing arrangement to the Group in
the case of termination of that relationship. The probability of the option
being exercised is considered remote. The amount of such an obligation is
dependant on a discounted cash flow valuation of their interest at that point in
time.
The Group is the subject of various claims, which are individually immaterial.
The expected outcomes of these individual claims are varied, but on a
probability weighting the amount is estimated at R224 million (2008: R82
million).
The Group has in the case of some of its mines provided the Department of
Mineral Resources with guarantees that cover the difference between its
environmental obligations and amounts held in the environmental trusts. At 31
December 2009 these guarantees amounted to R3 082 million (2008: R2 030
million).
7. Assets held for sale
Disposal of investment in associate - Northam and disposal of 50% interest in
Booysendal joint venture (Booysendal)
In September 2007, the Board approved the disposal of Anglo Platinum`s 22.4%
interest in Northam, 50% of Booysendal and a 1.3 km strike length portion of the
Der Brochen project in a BEE transaction with Mvelaphanda Resources Limited
(Mvela) for a net consideration of R3.7 billion. The parties implemented the
Northam part of the transaction on 20 August 2008 (receiving R1.66 billion) and
the Booysendal part on 24 June 2009. Consequently, the R1.6 billion invested in
the unlisted preference shares in relation to Booysendal was received in cash on
30 June 2009 and the profit on the sale of Booysendal was recognised in profit
for the year. Anglo Platinum has received R3.2 billion of a total of R3.7
billion in proceeds to date. R0.5 billion remains in escrow until the
registration and transfer of the rights on the portion of Der Brochen.
Disposal of 51% in Lebowa Platinum Mines (LPM) and 1% interest in Ga - Phasha,
Boikgantsho and Kwanda joint ventures
In September 2007, the Board approved the disposal of an effective 51% of LPM
(Richtrau 177 (Proprietary) Limited), a wholly owned subsidiary of Anglo
Platinum and an additional 1% of its interest in the Ga-Phasha, Boikgantsho and
Kwanda joint venture (50:50) projects, to Anooraq for a cash purchase
consideration of R3.6 billion. In April 2008, a suite of definitive legal
agreements was entered into, which remained subject to various suspensive
conditions, including the raising of debt and equity finance by Anooraq to fund
the purchase consideration. During the third quarter of 2008, the significant
deterioration in global market conditions, coupled with a material decline in
platinum group metal prices and constrained debt and equity capital markets,
limited the availability of funds. Due to this deterioration of market
conditions, a complete review of the LPM long-term plan and project pipeline,
including the key commercial terms of the transaction, was initiated jointly by
the parties in the fourth quarter of 2008.
On 14 May 2009, the revised terms of the transaction were announced. To ensure
the sustainability of the transaction, the renegotiated transaction
consideration was reduced from R3.6 billion to R2.6 billion, with Anglo Platinum
agreeing to re-invest a portion of the consideration (R1.1 billion), through the
subscription of a convertible preference share instrument, which once converted,
gives Anglo Platinum full equity upside on 115.8 million Anooraq shares. In
addition, Anglo Platinum subscribed for R1.2 billion of preference shares in
Plateau. The purchase consideration received of R2.6 billion was accounted for
at the fair value of the consideration received which amounted to R1.7 billion.
The fair value of the "A" preference shares was determined by discounting the
anticipated cash flows using a market related rate of interest. Anglo Platinum
also advanced funds of R149 million to assist the Anooraq Community
Participation Trust and the Lebowa Employee Share Option Trust in acquiring
Anooraq shares. The transaction agreements entered into in April 2008 were
amended to incorporate the revised terms and the funding agreements were
concluded in June 2009. All the significant conditions precedent were fulfilled
on 30 June 2009.
Consequently, the transaction was accounted for on this effective date.
8. Comparative figures
In 2009 the Group changed the manner in which the analysis of capital
expenditure is reported. In prior years, capital expenditure was split between
expenditure to maintain operations and expenditure to expand operations. In the
current year, capital expenditure has been split between stay-in-business
capital and project capital. Project capital includes capital expenditure to
both expand and maintain production capacity. All other capital expenditure is
reflected as stay-in-business capital. This is consistent with the manner in
which the Group reports and analyses capital expenditure internally.
The profit arising on the disposal of 51% of LPM and 1% of the Ga-Phasha,
Boikgantsho and Kwanda projects has been restated from the initial amount of
R336 million, published in the interim results for the period ended 30 June
2009. The revised profit is R536 million. The difference is due to management
refining and finalising its valuation of the various financial instruments and
commitments that arose on initial recognition of the transaction, subsequent to
the publishing of its interim results.
9. Post balance sheet events
On 5 February 2009, the Board approved Anglo Platinum pursuing an equity raising
through a rights offer of R12.5 billion. This equity raising is intended to
improve the Group`s capital structure. Funds from the rights offer will be used
to repay long-term debt. The Group`s holding company, Anglo American plc (Anglo)
has indicated its support for this rights offer. Details of the terms and
conditions of the rights offer will be reflected in a circular to Anglo Platinum
shareholders which will be distributed in March 2010. Anglo has provided an
undertaking to follow its rights and underwrite the minorities` allocation,
subject to customary underwriting conditions.
10. Corporate governance
The Board considers that the Company and its subsidiaries complied during the
year with the principles of the Code of Corporate Practices and Conduct
contained in the 2002 King Committee Report on Corporate governance (King II),
and that these have been applied appropriately and consistently.
11. Auditors` review
The auditors, Deloitte & Touche, have issued their opinion on the Group`s
financial statements for the year ended 31 December 2009.The audit was conducted
in accordance with International Standards on Auditing. They have issued an
unqualified audit opinion. A copy of their audit report is available for
inspection at the Company`s registered office .These abridged financial
statements have been derived from the Group financial statements and are
consistent in all material respects, with the Group financial statements.
COMMENTARY
Overview
Anglo Platinum experienced very challenging market conditions during 2009 but
used the opportunity to reconfigure the cost base, improve production and take a
significant step forward in safety efforts. While our financial results are
significantly below those of previous years, our operating performance improved
and we increased production and sales while keeping unit costs essentially flat.
As a result productivity improved significantly from 2008. During the year we
restructured management and replaced the traditional hierarchy with a more
efficient matrix structure. Our mines were restructured into smaller, more
manageable units and our total labour force was reduced, mainly through a
reduction in contractors. We advanced our values-based Company culture program
and improved our external relationships with stakeholders.
Safety
Anglo Platinum produced a much improved set of safety results in 2009. In many
respects it was a record year. Unfortunately, our goal of zero fatalities was
not achieved. During the year 13 of our employees died while on duty, compared
with 18 in 2008. The Chief Executive Officer reviewed each fatality. In this he
was fully supported by the respective mine management teams who, together with
Union representatives, attended each of the funerals and ensured the efficient
administration of death benefits. These reviews study all aspects of each
incident in detail to ensure we do everything possible to avoid a death or an
injury in similar circumstances in the future.
During the year, in addition to a reduction in the number of fatalities, we
improved our lost-time injury frequency rate (LTIFR) from 1.74 to 1.37. Many of
our individual operations achieved significant milestones in our pursuit of zero
harm. The most notable of these achievements was a fatality-free final quarter
for 2009, which is reflective of the sound and stable approach to safety adopted
during a very disrupted and challenging year. The following Anglo Platinum mines
and Service areas achieved significant safety milestones in 2009:
Dishaba Mine: 3.5 million fatality-free shifts
Tumela Mine: 4 million fatality-free shifts
Thembelani 1 Shaft: 2 million fatality-free shifts
Modikwa Mine: 6 million fatality-free shifts
Rustenburg Services: 10 years without a fatality
Safety is our first value and an important part of our operating strategy to
produce safe, profitable platinum. Early in 2009 we bolstered the Anglo
Platinum Safety Strategy following a gap analysis with the One Anglo Safety Way,
an analysis of the accidents we were experiencing and a review of various
existing Anglo Platinum safety management improvement systems. This strategy
continues to pursue the vision of zero harm and is based on the three principles
of zero mindset, no repeats, and simple non-negotiable standards. Our strategy
has four thrusts: first we need thorough and complete safety management systems
that are implemented on all our operations. Next we need to engineer or design
out the risks in our business through, for example, systems like FOGM (fall of
ground management) and IRM.net (integrated risk management). Behaviour is the
third thrust and in this regard we encourage people not to perform dangerous
tasks, and to withdraw from dangerous circumstances. Finally, we realised that
mine accident deaths form only a small number of the total number of employee
deaths per annum. As a consequence, Wellness in the Workplace is our fourth
thrust. In this we try to improve the health, both physical and emotional, of
our employees. A key achievement in this regard was the increase in our
Voluntary Counselling and Testing rate, for HIV/Aids, to over 80%.
Financial results
Anglo Platinum`s headline earnings for the year ended 31 December 2009 decreased
by 95% to R710 million. The main factors contributing to this decrease were
lower US dollar prices realised on metals sold, offset by higher sales volumes
and the receipt of insurance income. Headline earnings per ordinary share
decreased 95% to 298 cents. Headline earnings exclude profits of R2.5 billion
realised on the conclusion of Anglo Platinum`s BEE transactions with Anooraq
Resources Corporation (Anooraq) and Mvelaphanda Resources Limited (Mvela).
Basic earnings per share, which include the profits on the transactions,
amounted to 1,269 cents, down 79% on 2008.
While the global financial crisis that started during the last quarter of 2008
curbed demand for platinum group metals (PGMs) and caused prices to decline
significantly, the second half of 2009 brought early signs of economic recovery,
with a consequential increase in demand and recovery in prices with platinum
increasing by 60% from US$922 per ounce at the beginning of 2009 to US$1,475 at
31 December 2009. The average prices achieved on platinum, palladium, rhodium
and nickel sales for the year were US$1,199 per ounce, US$257 per ounce,
US$1,509 per ounce and US$14,424 per tonne respectively. The 2009 average rand
basket price achieved was R14,115 per platinum ounce, a reduction of 37% when
compared with the R22,348 price in 2008.
Refined platinum sales for the year ended 31 December 2009 amounted to 2.57
million ounces compared to 2.22 million ounces in 2008, representing an increase
of 16%. The increase was due to unsold metal at the end of 2008 being available
for sale in 2009 and the achievement of higher refined production volumes.
Net sales revenue decreased by R14.1 billion to R36.7 billion. The decrease was
primarily the result of lower US dollar metal prices achieved on metals sold,
which accounted for R21 billion, offset by higher volumes of metals sold
increasing revenue by R7 billion.
Costs were well controlled during 2009. Our focus on cost management, inbound
supply chain projects and asset optimisation initiatives started to bear fruit
and resulted in the cash operating cost per equivalent refined platinum ounce
remaining essentially flat at R11,236 compared with 2008. This was achieved
despite upward inflationary pressure caused by wage and electricity tariff
increases in excess of consumer price inflation.
Cost of sales for the year at R34.7 billion increased by 3% over 2008. This
increase is due to the following;
Cash mining, smelting and refining costs decreased by 0.6% to R22.9 billion
compared with 2008;
The cost of purchased metal decreased by R2.3 billion, or 26%, primarily due to
lower rand prices paid for metal purchased, offset by higher volumes purchased
mainly resulting from the disposal of a 51% interest in Lebowa Platinum Mines
(now Bokoni Platinum Mine) and the consequent arrangement to purchase their
concentrator output;
Other costs increased by 12% or R226 million, to R2.1 billion. This was largely
due to the increase in share-based payments costs, and R282 million once-off
costs in respect of voluntary separations;
The increase in metal inventories was lower in 2009 than in 2008, when a build-
up of refined stocks and a lock-up of metal in the pipeline following smelter
outages occurred;
Depreciation increased by 25% to R4.1 billion as a result of the high levels of
capital expenditure in prior years.
Cost increases were curbed through improved productivity and numerous cost
management initiatives including:
- Placing the high cost Siphumelele 3 (Bleskop), Siphumelele 2 (Brakspruit)
and Khuseleka 2 (Boschfontein) shafts onto "care and maintenance";
- Early re-negotiation with suppliers for reduced prices on key input
commodities such as diesel, steel tyres and reagents;
- Making full use of the centralised procurement facilities provided by the
One Anglo Supply Chain Project;
- Changing Mogalakwena mining production levels without sacrificing
concentrator throughput;
- Completing the restructuring processes at the Rustenburg and Amandelbult
mines; and
Reducing overhead costs at the Corporate and Regional Offices.
The Group`s taxation charge decreased by R4.6 billion, reducing the effective
tax rate from 23.4% in 2008 to (5.1%) in 2009 owing to the significant decrease
in taxable income.
Net debt at the end of 2009 increased to R19.3 billion from R13.5 billion at the
end of December 2008. Whilst operating activities produced a positive cash flow
of R4.7 billion, this was down 73% from 2008 and funding of some R9.7 billion of
capital expenditure was largely through increased debt. This cash outflow was
mitigated by the proceeds from the successful conclusion of the BEE transactions
with Mvela and Anooraq.
During the second half of 2009, we announced that the Board was considering
balance sheet restructuring options and that an announcement of the Board`s
decision would be made along with our 2009 Annual Results. Consequently Anglo
Platinum has announced its intention to issue equity to the value of R12.5
billion in a rights offer.
After considering the current level of Anglo Platinum`s debt, our Board believes
that raising additional equity through a rights issue will provide the Company
with a more balanced capital structure.
This will enable us to focus on:
- extracting value from our existing operations through cost and productivity
improvements; and
- optimising our premium portfolio of assets and growth projects through
targeted investment.
Dividend payments will be resumed when market conditions and the operating
environment permit.
The proceeds from the rights offer will be used to repay long-term debt. As at
31 December 2009 Anglo Platinum had gross debt of R23 billion, of which R20
billion was outstanding under facilities provided by our largest shareholder
Anglo American plc and R3 billion outstanding under facilities provided by other
financial institutions.
Markets
The unprecedented volatility in platinum demand and price experienced in 2008
was followed by a period of consolidation in 2009. The inherent strength in the
structure of the platinum business saw the platinum market return to balance
during 2009, as jewellery and investment demand increased, reacting to lower
price levels in the first half of the year and as investor sentiment improved.
These increases offset depressed demand for metal for use in autocatalysts and
lower demand from the industrial sector.
Developments in 2009 again highlight the importance of Anglo Platinum`s
continued commitment to market development which supports the maintenance of
existing and the development of new industrial (including autocatalyst)
applications, and also the maintenance of healthy jewellery markets. Market
development for joint products metals, most specifically palladium and rhodium,
maximise contribution to the total revenue from the basket of metals sold.
Autocatalysts
Demand for PGMs in the autocatalyst industry declined in 2009 due to falling
automobile production relative to 2008. The reduction in metal purchased by
auto manufacturers was exacerbated, in the first half of the year, by their need
to decrease vehicle inventory levels hence restricting production and selling
from available stock. Some re-building of these inventories together with
widespread government incentive schemes saw a firming in PGM demand in the
second half of 2009. Incentive schemes resulted in an increase in the sale of
smaller gasoline vehicles and a consequent reduction in diesel vehicle demand in
Europe.
Industrial
Demand for platinum in the industrial sector in 2009 reduced in line with the
global economic decline. Low utilisation rates in the chemical and petroleum
sectors further reduced demand for new metal as companies reduced inventory
levels. Glass demand was negatively affected by excess capacity and a return of
metal from decommissioned plants.
Jewellery
As expected, demand for platinum jewellery fabrication responded quickly and
strongly to the lower platinum prices in the latter part of 2008 and the first
half of 2009. The increased demand was most notable in the unsaturated Chinese
market. Total demand for jewellery in 2009 was 70% higher than in 2008.
Investment
Investor inflow into the platinum and palladium Exchange Traded Funds (ETFs)
continued strongly throughout the year. Platinum holdings increased by just
over 380,000 ounces and palladium by just over 506,000 ounces in 2009. The
expected launch of the US based ETFs supported firm investment demand towards
the end of 2009.
Anglo Platinum`s extensive knowledge of the market forms the base of our
operating strategy. This knowledge greatly enhances our ability to forecast the
PGM market needs and consequently the level of production required to ensure
long-term market sustainability. Having determined this production level we
plan accordingly, resulting in an operating strategy that is appropriate for us
as the leader in the platinum industry.
Operations
During the challenging past year and the opportunity it provided to reposition
Anglo Platinum, every aspect of our business was examined and questioned.
Rebuilding the competitive position we formerly occupied remained a key focus
and is supported by actions taken. The role of our corporate office was
redefined and our structures were reduced significantly. They are now focused on
supporting our operations in their efforts to improve performance.
The major restructuring of our mining operations, which we announced early in
2009, was completed by year-end. Our largest operations, Rustenburg and
Amandelbult, have been split into more efficient stand-alone units, of five and
two mines respectively. This new structure ensures that we can achieve a
sustainable reduction in the unit cost of our production and underpins our
commitment to extracting maximum value from our assets.
As part of the restructuring process, we have optimised the source of ounces
across our portfolio. This included placing three of our high cost shafts onto
`care and maintenance` indefinitely: Siphumelele 3 shaft and Siphumelele 2 Shaft
in April and August respectively and Khuseleka 2 Shaft at Khuseleka Mine in
August. Union and Mogalakwena remain untouched by these changes.
The programme to upgrade our smelters to provide maximum flexibility continued
successfully in 2009 and the efforts of our process division employees
contributed greatly to the enhanced smelter performance in the second half of
2009.
We reduced our head office and regional office complement by 724 people in 2009,
bringing the total reduction to 1,150 since July 2008. Overall we reduced our
labour complement by 15,752 people during the year or by 18,786 people from
October 2008. This reconfiguration of the company structure was a difficult time
for all Anglo Platinum employees, but was unfortunately a requisite part of our
rationalisation. We are proud of the Anglo Platinum team, who ensured these
reductions occurred in a professional, orderly and compassionate manner.
In spite of the significant reduction in employees and the associated
challenges, we are pleased to say we did not experience any industrial action
and we did not have a single forced retrenchment. This is only possible when
there are sound and robust relations with our employees, partners and the
Unions.
We delivered on our production target for 2009 of 2.4 million ounces of refined
platinum with 2.45 million ounces being the final refined total. It was pleasing
that we did not reduce our production target during the year, an unwelcome
occurrence in recent years. We have worked hard to ensure that that forecast
and actual production are aligned and to increase the flexibility of our mining
operations.
We also delivered on our cost target despite the inefficiency inherent in labour
rationalisation periods. Anglo Platinum`s unit cost of production was
essentially the same per equivalent refined platinum ounce in 2009 as in 2008,
at R11,236. As part of cost management, our productivity levels showed an
increase of 13% compared with 2008, to 6.33 m2 per total operating employee on
average per month.
Cost management is being institutionalised in our business and we have plans to
keep our unit costs flat for the next two years. This is a major challenge in an
environment of very high cost escalations and we will be hard pressed to achieve
this but we are sure the Anglo Platinum team will meet this challenge
successfully. This will be delivered through improved productivity, value
engineering and effective cost management, focusing on supply chain escalation
management, the elimination of wastage and reducing allocated costs.
Capital expenditure and projects
At R9.7 billion, our total capital expenditure for the year was some R3.1
billion lower than in 2008 due to the aggressive actions taken to reduce the
rate of capital expenditure across the Company whilst we were in the grip of the
global economic downturn. Project capital spend is now directly related to our
long-term ounce requirements and the reduction in the rate of spend resulted in
a number of our projects being delayed, including Tumela (Amandelbult) 4 Shaft,
Twickenham Platinum Mine and the Styldrift Merensky Phase 1 project. However,
the Thembelani 2 Shaft (formerly Paardekraal 2), Dishaba (Amandelbult) UG2
(formerly East Upper UG2) and Khuseleka 1 Shaft (formerly Townlands Ore
Replacement) projects are all progressing without delay.
Capital expenditure for 2009 included R6.0 billion spent on projects and R3.7
billion on stay-in-business (SIB) capital. It is important to further analyse
our SIB capital as a portion of this expenditure is solely for waste-stripping
at our open-pit Mogalakwena mine. The expenditure on waste-stripping at the mine
during the year amounted to R240 million.
We are particularly pleased with the initial progress we have made in re-
evaluating our SIB capital allocation procedures to ensure that we spend capital
only on work required to achieve our production profile. This has resulted in
substantial reductions in our SIB expenditure, which in 2009 were some 40% lower
than the previous year.
Dividends
Ordinary dividends are declared after consideration of current and future
funding requirements, and are paid out of cash generated from operations. Anglo
Platinum did not pay an interim and final dividend for 2009, owing to the impact
of the downturn in the economy and the need to retain cash to maintain
operations.
Transformation
During 2009, Anglo Platinum successfully completed three Black Economic
Empowerment (BEE) transactions. They were:
BEE transaction with Mvela: All of the conditions precedent in respect of the
disposal of Anglo Platinum`s 50% interest in the Booysendal project and of its
22.4% interest in Northam Platinum Limited to Mvela, for a total consideration
of R3.7 billion, were fulfilled, with the final part of the transaction becoming
effective in June 2009.
BEE transaction with Anooraq: All of the conditions precedent to the
acquisition by Anooraq of an effective 51% interest in Bokoni Platinum Mines
(formerly Lebowa Platinum Mine) and 1% interest in Ga Phasha, Boikgantsho and
Kwanda projects, have been fulfilled and the transaction became effective on 30
June 2009. The transaction facilitated Anooraq`s strategy of becoming a major
HDSA managed and controlled PGM producer and illustrates Anglo Platinum`s
commitment to broad-based BEE as a strategic transformation initiative. Anooraq
now controls the third largest PGM resource base in South Africa, with a
combination of high quality exploration, development and production mineral
properties.
BEE transaction with Royal Bafokeng Resources (Proprietary) Limited (RBR): The
transaction whereby RBR obtained a majority interest in the Bafokeng-Rasimone
Platinum Mine Joint Venture became unconditional and therefore effective on the
7th December 2009.
Communities
We strive to operate our business in a sustainable, responsible way, with
particular reference to engaging with the communities in which we operate. In
this regard, the planned resettlement of the Motlhotlo communities at
Mogalakwena Mine progressed in 2009, albeit slowly with only an additional nine
families being resettled during the year, bringing the total number of families
resettled to date to 892. A task team has been set up by the Minister of
Mineral Resources to address the issues being raised by the remaining 64
families. We are working through this task team to monitor and resolve the
outstanding issues preventing further resettlement. We continue to keep the
South African Human Rights Commission apprised of all aspects of the
resettlement, following their investigation in 2008.
People
Anglo Platinum is a people business. In July 2008 the leadership team of Anglo
Platinum, comprising management and Unions, studied our corporate culture and
identified a number of areas where we could better equip ourselves to meet the
challenges of our current circumstances. We launched a values programme to
encompass every human interaction within Anglo Platinum, and with our
stakeholders. We established a Leadership Academy to more efficiently fast-
track the skills transfer necessary for frontline supervisors and middle
management to integrate our values-based culture. The academy is supported by a
Personal Change Workshop programme that aids the creation of a culture in Anglo
Platinum appropriate for success in a modern South Africa.
Outlook
Anglo Platinum expects the platinum market in 2010 to return to a position of
deficit as a result of a moderate increase in supply but a significant recovery
in demand.
South African production is expected to remain constrained as producers adapt to
a safer working environment and as lower rand metal prices result in production
being restricted at high cost operations across the industry.
Vehicle sales in 2010 are expected to be similar to those in 2009. However,
production levels in 2010 will be higher as fewer sales from inventory are
expected in 2010 and production levels recover to match sales. Higher sales of
larger sedan vehicles are expected as diesel fleet purchases re-commence.
While demand for industrial products is expected to recover slowly, platinum
demand will be enhanced by a substantial element of re-stocking.
Another good year is expected from the investment segment, particularly as the
US ETF has been launched.
Jewellery demand is expected to be lower in 2010 as inventory levels in the
supply chain are adequate following the extra demand that re-built them in 2009.
Whilst the higher price may discourage new jewellery demand in mature markets,
the Chinese jewellery market continues to react positively to slow sustained
price increases and remains the largest jewellery market.
The platinum price in 2010 is expected to remain at above $1,500 per ounce on
average, as small improvements in the global economic recovery and re-stocking
are likely to further increase the expected demand recovery in 2010.
Firm investment demand for palladium and the strong reliance on it of gasoline
engines, more typical in smaller engines and in the growing Chinese market, is
likely to see the price of the metal strengthen. Rhodium remains in demand for
its particular catalytic properties but suffered demand loss due to thrifting at
the very high prices during 2008.
Operationally our top priority remains safety. We will consolidate at the level
we achieved in the second half of 2009 and prepare to take the next major step
in safety improvement.
Given the market conditions we believe that the appropriate level of production
for 2010 is 2.5 million ounces of refined platinum and this remains our target.
We also aim to produce this volume at a unit cost of just over R11,000/oz, the
same level as in the preceding two years. Our labour reductions are largely
complete and we will spend the year working on improved productivity.
N F Nicolau B Nqwababa
(Chief Executive Officer) (Finance Director)
T M F Phaswana D J Alison
(Chairman) (Group Company Secretary)
Johannesburg
5 February 2010
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the annual general meeting of shareholders of the
company will be held in the Auditorium on the 18th Floor, 55 Marshall Street,
Johannesburg on Monday, 29 March 2010 at 14:00 to consider and if approved,
adopt the annual financial statements for the year ended 31 December 2009,
together with the report of the auditors, re-election of directors retiring by
rotation, appointment of audit committee, appointment of auditors and designated
auditor, approving non-executive directors` fees, approval of remuneration
policy, placing the unissued ordinary shares under the control of directors, and
passing special resolutions permitting the company and/or its subsidiaries to
acquire shares in the company as well as cancelling the terms and conditions
applicable to the company`s preference shares and cancellation of the preference
shares in the authorised capital of the company. A detailed notice of AGM will
be posted to shareholders.
SUPPLEMENTARY INFORMATION
Consolidated Statistics*
Year Year
ended ended
31 December 31 December
Total operations 2009 2008
Marketing statistics
Average market prices
achieved
Platinum US$/oz 1 199 1 570
Palladium US$/oz 257 355
Rhodium US$/oz 1 509 5 174
Gold US$/oz 1 002 885
Nickel US$/lb 6.54 9.79
Copper US$/lb 2.2 3.15
US$ Basket price (Net US$/oz Pt sold 1 715 2 764
sales revenue per Pt
ounce sold)
US$ Basket price (Net US$/oz PGM sold 926 1 449
sales revenue per PGM
oz sold)
Platinum R/oz 9 893 12 640
Palladium R/oz 2 107 2 887
Rhodium R/oz 12 462 42 145
Gold R/oz 8 105 7 580
Nickel R/lb 52.85 77.30
Copper R/lb 17.76 25.85
R Basket price (Net R/oz Pt sold 14 115 22 348
sales revenue per Pt
ounce sold)
R Basket price (Net R/oz PGM sold 7 621 11 716
sales revenue per PGM
oz sold)
Average exchange rate R/US$ 8.2327 8.0850
achieved on sales
Exchange rate at end R/US$ 7.3787 9.2999
of year
Financial statistics
and ratios
Gross profit margin % 5.4 33.7
Earnings before R millions 4 936 21 206
interest, taxation,
depreciation and
amortisation (EBITDA)
Operating profit to % 2.0 46.5
average operating
assets
Return on average % 10.1 50.3
shareholders` equity
Return on average % 1.5 46.9
capital employed
Interest cover - 2.5 15.2
EBITDA
Net debt to total % 37.1 31.2
capital employed
Interest-bearing debt % 69.8 55.4
to shareholders`
equity
Net asset value per R 137.8 124.4
ordinary share
Cost of sales per R 13 359 14 922
total Pt oz sold *
Cash operating cost R 11 236 11 096
per equivalent Pt oz
(excluding ounces from
purchased concentrate
and associated costs)
Cash operating cost R 11 261 11 448
per refined Pt ounce
Equivalent refined 000 oz 2 464.3 2 465.3
platinum production
Pipeline stock 000 oz 8.5 46.8
adjustment
Refined platinum 000 oz (2 451.6) (2 386.6)
production
Mining 000 oz (1 966.8) (1 946.8)
Purchase of 000 oz (484.8) (439.8)
concentrate
Platinum pipeline 000 oz 21.2 125.5
movement
* Not reviewed or audited
REGISTERED OFFICE
55 Marshall Street, Johannesburg, 2001
(P.O. Box 62179, Marshalltown, 2107)
Telephone +27 11 373-6111
Facsimile +27 11 373-5111
REGISTRARS
Computershare Investor Services (Pty) Limited
(Registration No. 2004/003647/07)
70 Marshall Street, Johannesburg, 2001
(P.O. Box 61051, Marshalltown, 2107)
Telephone +27 11 370-5000
Facsimile +27 11 688-5200
The 2009 annual report will be posted to
shareholders on or about 22 February 2010.
Detailed results are available on the Internet at:
http://www.angloplatinum.com
E-mail enquiries should be directed to:
apoulter@angloplat.com
DIRECTORS AND COMPANY SECRETARY
executive directors: N F Nicolau (Chief Executive Officer), B Nqwababa (Finance
Director).
NON-EXECUTIVE DIRECTORS: T M F Phaswana (Chairman), C B Carroll (American), R
M'dori (French).
INDEPENDENT NON-EXECUTIVE DIRECTORS: T A Wixley (Deputy Chairman), R M W Dunne
(British), Dr B A Khumalo, W E Lucas-Bull, M V Moosa, S E N Sebotsa.
ALTERNATE DIRECTORS: P G Whitcutt.
Company Secretary: D J Alison.
8 February 2010
Sponsor in South Africa
Merrill Lynch South Africa (Pty) Limited
Date: 08/02/2010 09:00:02 Supplied by www.sharenet.co.za
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