Wrap Text
Half year financial report for the six months ended 30 June 2018
Anglo American plc (the "Company")
Registered office: 20 Carlton House Terrace, London SW1Y 5AN
Registered number: 3564138 (incorporated in England and Wales)
Legal Entity Identifier: 549300S9XF92D1X8ME43
ISIN: GBOOB1XZS820
JSE Share Code: AGL
NSX Share Code: ANM
HALF YEAR FINANCIAL REPORT
for the six months ended 30 June 2018
26 July 2018
Anglo American Interim Results 2018
Continued performance improvement supports 11% underlying EBITDA increase to $4.6 billion
Mark Cutifani, Chief Executive of Anglo American, said: "We have delivered another strong performance
during the first half, with an 11% increase in underlying EBITDA to $4.6 billion and a 19% return on capital
employed. We have also made good progress against our disciplined capital allocation objectives,
strengthening the balance sheet with net debt down to $4 billion, delivering an increase in the dividend
commensurate with earnings, and continuing to invest prudently across the business. This strong financial
result derives from our consistent productivity improvements in the underlying operations and a stronger
price environment for many of our products.
"We have continued to build on the significant productivity improvements of recent years, delivering a further
two percentage point improvement(1) in the first six months of 2018. A 6% increase in copper equivalent
production volumes(2) helped deliver $0.4 billion(3) of cost and volume improvements in the first half, out of
the $0.8 billion targeted for the full year, against a backdrop of rising input cost inflation and the temporary
suspension at Minas-Rio.
"We see significant further potential to deliver enhanced returns from the portfolio, with our business model
and relentless focus on innovation and business improvement resetting our performance benchmarks. As we
now move forward to develop the world-class Quellaveco copper project in Peru, in conjunction with our
partner Mitsubishi, we are excited about the opportunities we see across the business."
Highlights - six months ended 30 June 2018
- Reduced net debt* to $4 billion, an 11% reduction since end 2017 - 0.4x net debt / underlying EBITDA*
- Generated underlying EBITDA* of $4.6 billion, an 11% increase, and $1.6 billion of attributable free cash flow*
- Profit attributable to equity shareholders of $1.3 billion
- Achieved cost and volume improvements of $0.4 billion(3) - on track for the full year
- Minas-Rio pipeline inspection on track, with remedial work to be completed in Q4 2018, prior to restart
- Increased interim dividend of $0.49 per share - 40% of first half underlying earnings*
Six months ended 30 June 2018 30 June 2017 Change
US$ million, unless otherwise stated
Underlying EBITDA* 4,577 4,116 11%
Underlying earnings* 1,565 1,536 2%
Profit attributable to equity shareholders of the Company 1,290 1,415 (9)%
Underlying earnings per share* ($) 1.23 1.19 3%
Earnings per share ($) 1.02 1.09 (6)%
Dividend per share ($) 0.49 0.48 2%
Group attributable ROCE* 19% 18% 6%
(1) Productivity indexed to 2012 benchmark.
(2) Excludes the impact of the suspension of operations at Minas-Rio. Including this, the increase is 3%.
(3) Excludes the impact of the suspension of operations at Minas-Rio.
Words with this symbol * are defined as Alternative Performance Measures ('APMs'). For more information on the APMs used by the
Group, including definitions, please refer to the Alternative Performance Measures section of the Group's Annual Report for the year
ended 31 December 2017.
SUSTAINABILITY PERFORMANCE
Safety
Anglo American's safety performance is the subject of very significant management attention in order to
eliminate the causes of harm in the workplace. Two people lost their lives in the first six months of 2018, and
one person has lost their life during July. All three incidents took place in South Africa, one in each of our
Platinum, Coal and Diamonds businesses. We have put in place an Elimination of Fatalities Taskforce to
enable a more thorough understanding of the underlying causes of fatal incidents, in parallel with a focused
programme addressing management of fatal risks across the business.
The Group's total recordable case frequency rate for the first half of the year provides a broader picture of
the significant progress that is being made, with 2.62 injuries per million hours worked - a 31% improvement
over the same period in 2017 and a 24% improvement over the record performance rate achieved for 2017
as a whole.
Environment
Environmental incidents have been reduced materially in recent years due to a continued focus on detailed
operational planning. In the first half of 2018, four significant environmental incidents were reported. These
included the two separate leaks of non-hazardous material from the Minas-Rio iron ore pipeline in Brazil in
March. Both leaks were stopped without delay, there were no injuries and a thorough clean-up of the
surrounding area was completed. The pipeline is undergoing a thorough technical examination in order to
ensure its integrity.
Responsible mining
Anglo American launched its innovative Sustainability Strategy in March 2018, aligned to the 2030
Sustainable Development Goals of the United Nations. This ambitious strategy set out a series of stretch
goals relating to: the long term prosperity of our host communities; the protection of the natural environment
(with a focus on biodiversity, water and energy efficiency and climate change); the proactive shaping of
policy and ethical standards to drive greater trust and transparency amongst our stakeholders; and a new
collaborative approach to supporting regional development.
Anglo American has a long track record as a leader in sustainable, responsible mining. Such attributes were
recognised in April 2018 in the inaugural Responsible Mining Index, across all metrics and particularly in
relation to economic development, community wellbeing and lifecycle management.
Operational and financial review of Group results
for the six months ended 30 June 2018
OPERATIONAL PERFORMANCE
We have continued to drive improvement in asset performance through the Operating Model, facilitated by
an enhanced focus on the Group's key assets as a result of work undertaken to upgrade the portfolio.
Copper equivalent production increased by 6%, excluding the impact of the stoppage at Minas-Rio, primarily
driven by a continued strong performance at Metallurgical Coal, Copper and De Beers, as well as improved
production at Platinum, partly offset by geological challenges at Thermal Coal - South Africa.
Metallurgical coal production increased by 17% to 10.8 Mt (H1 2017: 9.2 Mt), driven by a sustained strong
performance from Moranbah and the full ramp-up of Grosvenor.
Copper production rose by 10% to 312,900 tonnes (H1 2017: 283,400 tonnes), driven by productivity
improvements at mine and plant and planned higher ore grades at both Los Bronces and Collahuasi. This
more than offset the effect of a three-month planned maintenance at Collahuasi that was completed in July 2018.
De Beers' rough diamond production increased by 8% to 17.5 million carats (H1 2017: 16.1 million carats) in
line with the expected continuation of strong demand. This was facilitated by the contribution from the
ramp-up of Gahcho Ku� in Canada and an incremental increase at Jwaneng, partly offset by the temporary
suspension of production at Venetia following a fatality.
At Platinum, production of platinum increased by 4% to 1,233,400 ounces (H1 2017: 1,189,100 ounces) and
palladium by 5% to 813,200 ounces (H1 2017: 774,900 ounces). This was driven, in particular, by a robust
performance at Mogalakwena. Refined metal production decreased by 3% for platinum, to 1,075,300 ounces
(H1 2017: 1,105,600 ounces), and by 6% for palladium, to 686,500 ounces (H1 2017: 726,500 ounces) as
planned maintenance constrained processing capacity.
Kumba's production of iron ore increased by 3% to 22.4 Mt (H1 2017: 21.9 Mt), driven by plant efficiencies at
Kolomela, partly offset by marginally lower production at Sishen.
At Thermal Coal - South Africa, total export production decreased by 9% as Mafube transitioned to a new pit
and areas of the Goedehoop South and Khwezela North operations transitioned towards closure, offset by
continued underground productivity improvements at Greenside.
Group copper equivalent unit costs increased by 5%, driven mainly by stronger producer currencies. In local
currency terms, the cost increase was limited to 1% as a strong operational performance across the portfolio
largely offset lower production at Thermal Coal - South Africa and inflationary pressures, including higher
diesel and energy prices across the Group.
Excluded from the Group copper equivalent result is the effect of Minas-Rio suspending operations from
March 2018, following two pipeline leaks. The pipeline inspection is on track, with the technical inspections
underway and pipeline replacement construction work expected to be completed in Q4 2018. There is no
change to the earnings impact of the pipeline incident from the guidance provided in April, with an
anticipated 2018 underlying EBITDA loss of $300-$400 million.
FINANCIAL PERFORMANCE
UNDERLYING EBITDA*
Group underlying EBITDA increased by 11% to $4.6 billion (H1 2017: $4.1 billion), with the underlying
EBITDA margin in line with the prior period at 30%. This was driven by strong pricing across the Group,
particularly in copper and the platinum basket of metals, and continued productivity improvements and cost
control across the portfolio, more than offsetting the impact of inflation across the Group and suspension of
Minas-Rio operations. A reconciliation of 'Profit before net finance costs and tax', the closest equivalent IFRS
measure to underlying EBITDA, is provided within note 3 to the Condensed financial statements.
Underlying EBITDA* by segment
6 months ended 6 months ended
$ million 30 June 2018 30 June 2017
De Beers 712 786
Copper 966 586
Platinum 511 276
Iron Ore 454 925
Coal 1,640 1,382
Nickel and Manganese 420 257
Corporate and other (126) (96)
Total 4,577 4,116
Underlying EBITDA* reconciliation H1 2017 to H1 2018
The reconciliation of underlying EBITDA from $4.1 billion in H1 2017 to $4.6 billion in H1 2018 allows an
understanding of the controllable factors (e.g. cost and volume), and those largely outside of management
control (e.g. price, foreign exchange and inflation) that drive the Group's performance.
$ billion
H1 2017 underlying EBITDA* 4.1
Price 0.8
Foreign exchange (0.2)
Inflation (0.2)
Net volume and cost improvements 0.4
Volume 0.2
Cash cost 0.2
Minas-Rio (0.3)
H1 2018 underlying EBITDA* 4.6
Price
Average market prices for the Group's basket of commodities and products increased by 8%, contributing
$0.8 billion of improvement to underlying EBITDA. In respect of copper, the realised price increased by 13%.
The price achieved for the platinum basket of metals was 26% higher, largely driven by palladium and
rhodium, which recorded increases of 29% and 113% respectively.
Foreign exchange
Stronger producer country currencies reduced underlying EBITDA by $0.2 billion, mainly owing to a 7%
strengthening of the South African rand and an 8% strengthening of the Chilean peso against the dollar.
Inflation
The Group's weighted average CPI for the period was 4%, in line with the same period in the prior year,
principally influenced by South Africa, which saw local CPI of 5%. The impact of inflationary cost increases
reduced underlying EBITDA by $0.2 billion.
Volume
Increased volumes across the portfolio benefited underlying EBITDA by $0.2 billion, driven by a robust
performance at Metallurgical Coal's longwall operations and higher grades and strong mine and plant
performance at Copper, as well as Platinum drawing down refined inventory levels. Lower export thermal
coal production from South Africa partly offset these improvements.
Cost
The Group's cost improvements benefited underlying EBITDA by $0.2 billion, with cost reductions
outweighing the effects of above-CPI inflationary pressure on the mining industry related to higher diesel and
electricity prices. The positive cost achievement reflected the improved operational performance at
Metallurgical Coal's Moranbah-Grosvenor complex and continued cost-saving initiatives at Platinum
and Copper.
Minas-Rio
Group underlying EBITDA reduced by $0.3 billion owing to the impact of the suspension of operations at
Minas-Rio from March 2018. Production decreased to 3.2 Mt (H1 2017: 8.7 Mt).
UNDERLYING EARNINGS*
Profit for the financial period decreased by 7% to $1.6 billion (H1 2017: $1.8 billion) which reflected the net
charge of $0.3 billion in special items discussed below. Group underlying earnings were in line with the prior
period at $1.6 billion (H1 2017: $1.5 billion), driven by an 11% increase in underlying EBITDA, partly offset
by increased depreciation and amortisation charges during the period.
Reconciliation from underlying EBITDA* to underlying earnings*
6 months ended 6 months ended
$ million 30 June 2018 30 June 2017
Underlying EBITDA* 4,577 4,116
Depreciation and amortisation (1,402) (1,185)
Net finance costs and income tax expense (1,214) (1,057)
Non-controlling interests (396) (338)
Underlying earnings* 1,565 1,536
Depreciation and amortisation
Depreciation and amortisation increased to $1.4 billion (H1 2017: $1.2 billion), reflecting the Gahcho Ku�
diamond mine reaching commercial production, as well as increased production at the Moranbah
metallurgical coal mine and the effect of stronger local currencies.
Net finance costs and income tax expense
Net finance costs, before special items and remeasurements, excluding associates and joint ventures, were
$0.2 billion (H1 2017: $0.2 billion). Increases in LIBOR were partially offset by lower average borrowings
during the year as a result of gross debt reductions.
The underlying effective tax rate was 34.2% for the six months ended 30 June 2018 (H1 2017: 30.2%). The
effective tax rate in 2018 was impacted by the relative levels of profits arising in the Group's operating
jurisdictions, partly offset by a benefit from the reassessment of deferred tax balances, primarily in Brazil. In
future periods, the underlying effective tax rate is expected to be above the United Kingdom statutory
tax rate.
Non-controlling interests
Non-controlling interests of $0.4 billion (H1 2017: $0.3 billion) principally relate to minority shareholders in
Kumba, Copper and De Beers.
SPECIAL ITEMS AND REMEASUREMENTS
Special items and remeasurements are a net charge of $0.3 billion (H1 2017: net charge of $0.1 billion) and
include an impairment of $0.1 billion relating to De Beers' South African operations, the write down to fair
value of Platinum's investment in Bafokeng Rasimone Platinum Mine and loss on disposals of $0.1 billion
(Union), partly offset by net gains on disposal relating to the disposal of the Eskom-tied mines in South Africa
(Thermal Coal - South Africa) and Drayton mine (Metallurgical Coal).
Full details of the special items and remeasurements recorded are included in note 9 to the Condensed
financial statements.
CASH FLOW
Cash flows from operations
Cash flows from operations were in line with the first six months of 2017 at $3.7 billion, with an increase in
underlying EBITDA from subsidiaries and joint operations being offset by working capital outflows.
Cash outflows on operating working capital were $0.1 billion (H1 2017: inflows of $0.2 billion), driven mainly
by an increase in inventories at Platinum as a result of refining capacity constraints due to maintenance work
on the processing assets, and at Kumba owing to rail constraints. These were partly offset by inflows in
operating receivables across the Group.
Group capital expenditure*
6 months ended 6 months ended
$ million 30 June 2018 30 June 2017
Expansionary 280 135
Stay-in-business 592 404
Development and stripping 372 296
Proceeds from disposal of property, plant and equipment (10) (36)
Total 1,234 799
Capitalised operating cash flows (14) (68)
Total capital expenditure 1,220 731
Capital expenditure increased to $1.2 billion (H1 2017: $0.7 billion). Stay-in-business capital expenditure
increased to $0.6 billion (H1 2017: $0.4 billion), driven by stronger local currencies as well as a rise in
planned maintenance spend at Collahuasi (Copper) and Mogalakwena (Platinum). The increase in
expansionary capital expenditure was driven by the ongoing development of the Venetia underground mine
in South Africa (De Beers) and early works at the Quellaveco copper project in Peru.
In line with previous guidance, capital expenditure for FY 2018 is expected to be between $2.6 and
$2.8 billion (2017: $2.2 billion).
Attributable free cash flow*
The Group generated attributable free cash flow of $1.6 billion (H1 2017: $2.7 billion). Stronger underlying
EBITDA generation in H1 2018 was offset by increased capital expenditure, higher tax payments in
Metallurgical Coal and Copper, and higher dividends paid to minorities.
Dividends
In line with the Group's established dividend policy to pay out 40% of underlying earnings, the Board are
recommending an interim dividend of $0.49 per share, equivalent to $630 million.
NET DEBT*
$ million 2018 2017
Opening net debt* at 1 January (4,501) (8,487)
Underlying EBITDA* from subsidiaries and joint operations 3,895 3,554
Working capital movements (99) 231
Other cash flows from operations (54) (106)
Cash flows from operations 3,742 3,679
Capital expenditure* (1,220) (731)
Cash tax paid (758) (298)
Dividends from associates, joint ventures and financial asset investments 396 340
Net interest(1) (171) (204)
Dividends paid to non-controlling interests (383) (86)
Attributable free cash flow* 1,606 2,700
Dividends to Anglo American plc shareholders (681) -
Disposals 90 (100)
FX and fair value movements (187) 5
Other net debt movements(2) (314) (339)
Total movement in net debt*(3) 514 2,266
Closing net debt* at 30 June (3,987) (6,221)
(1) Includes cash inflows of $30 million (H1 2017: $62 million), relating to interest payments on derivatives hedging net debt, which are
included in cash flows from derivatives related to financing activities.
(2) Principally made up of the purchase of shares for employee share schemes and losses recognised on bond buybacks.
(3) Net debt excludes the own credit risk fair value adjustment on derivatives of $11 million (H1 2017: $28 million).
Net debt (including related derivatives) of $4.0 billion decreased by $0.5 billion since 31 December 2017,
and by $2.2 billion since 30 June 2017, representing gearing of 12% (H1 2017: 19%). Net debt at 30 June
2018 comprised cash and cash equivalents of $6.3 billion (H1 2017: $7.4 billion) and gross debt, including
related derivatives, of $10.2 billion (H1 2017: $13.6 billion). The reduction in net debt was driven by
$1.6 billion of attributable free cash flow, partly offset by the payment of dividends to Group shareholders in
May 2018 (dividend payments resumed in H2 2017) and other net debt movements.
BALANCE SHEET
Net assets of the Group decreased during the period by $0.9 billion to $28.0 billion
(31 December 2017: $28.9 billion) as the profit for the period was more than offset by the effects of foreign
exchange on operating assets denominated in local currency, and dividend payments to Company
shareholders and non-controlling interests. Capital expenditure of $1.2 billion was largely offset by
depreciation and amortisation of $1.4 billion.
ATTRIBUTABLE ROCE*
Attributable ROCE increased to 19% (H1 2017: 18%), primarily owing to the 8% improvement in attributable
underlying EBIT to $3.2 billion (H1 2017: $2.9 billion), reflecting higher prices, improved sales volumes at
Metallurgical Coal and Copper and the continued delivery of cost-efficiency programmes across the Group.
This improvement was partially offset by inflation, stronger producer country currencies and the Minas-Rio
production stoppage. Average attributable capital employed has increased to $27.3 billion
(H1 2017: $27.1 billion) due to capital expenditure and the strengthening of producer currencies, partially
offset by the impact of depreciation and disposals.
LIQUIDITY AND FUNDING
In March 2018, the Group completed the repurchase of $1.5 billion (including the cost of unwinding
associated derivatives) of US- and Euro-denominated bonds with maturities from April 2019 to April 2021.
The Group also issued a $0.7 billion 10-year bond in the US bond markets.
In May 2018, the Group completed the repurchase of $0.6 billion (including the cost of unwinding associated
derivatives) of US-denominated bonds with maturities between May 2020 and September 2020.
These transactions, as well as $0.5 billion of bond maturities during H1 2018, have reduced short-term
refinancing requirements, increased the weighted average maturity of outstanding bonds by approximately
one year to 5.1 years and reduced gross debt.
In March 2018, the Group replaced a number of credit facilities maturing between March 2019 and March
2020 with a total value of $5.4 billion, with a $4.5 billion credit facility maturing in March 2023.
PORTFOLIO UPGRADE
In H1 2018, the Group completed a number of previously announced transactions primarily aimed at
continuing to upgrade the quality of the portfolio, including the disposal of the Drayton coal mine
(Metallurgical Coal) in Australia, the disposal of the Eskom-tied domestic thermal coal operations in South
Africa, the disposal of Platinum's 85% interest in Union Mine and 50.1% interest in Masa Chrome Company,
and a reduction in Platinum's listed interest in Royal Bafokeng Platinum Limited in South Africa from 11.4%
to 2.6%.
Anglo American also entered into several transactions during the period, the completion of which is expected
in the second half of 2018. These included agreements for Mitsubishi to increase its interest in the
Quellaveco copper project in Peru from 18.1% to 40% and the sale of the New Largo thermal coal project
and Old New Largo closed colliery in South Africa.
In July 2018, the Group agreed the sale of Platinum's 33% interest in the Bafokeng Rasimone Platinum Mine
joint venture in South Africa. Also in July, the Group entered into agreements for the acquisition by De Beers
of Peregrine Diamonds Ltd (the owner of the Chidliak diamond resource in Canada) and the acquisition by
Platinum of Glencore's 39% interest in the Mototolo joint venture (in which Platinum currently holds 50%).
Other portfolio changes
In July 2018, Platinum announced that it had subscribed for interests in two UK-based venture capital funds.
Platinum's commitment to the funds is matched by a commitment from South Africa's Government
Employees Pension Fund represented by the Public Investment Corporation SOC Ltd. Also in July,
Anglo American completed a sale and leaseback transaction with M&G Investments with the intention of
redeveloping and relocating the Group's London headquarters to Charterhouse Street in Farringdon.
THE BOARD
There have been no changes to the Board of Anglo American plc in 2018 to date. The names of the Directors
and the skills and experience the Board members bring to the Anglo American Group are set out in the
Annual Report 2017 and on the Group's website http://www.angloamerican.com/about-us/leadership-team/board.
PRINCIPAL RISKS AND UNCERTAINTIES
Anglo American plc is exposed to a variety of risks and uncertainties which may have a financial, operational
or reputational impact on the Group, and which may also have an impact on the achievement of social,
economic and environmental objectives.
The principal risks and uncertainties faced by the Group at the 2017 year-end are set out in detail in the
strategic report section of the Annual Report 2017. Subsequent to the publication of the Annual Report 2017,
the Group has undertaken a further review of the risks it faces and, as a result, the 2018 principal risks are
listed below. Further detail on each of these principal risks will be published in the Annual Report 2018.
- Catastrophic risks
- Political and regulatory
- Investor activism
- Future demand for diamonds
- Future demand for PGMs
- Cyber security
- Safety
- Commodity prices
- Corruption
- Operational performance
- Water security
- Natural catastrophe
The Group is exposed to changes in the economic environment, as with any other business. Details of any
key risks and uncertainties specific to the period are covered in the Operations review section.
http://www.angloamerican.com
Operations review for the six months ended 30 June 2018
DE BEERS
Financial and operational metrics(1)
Underlying
Production Sales Unit Underlying EBITDA Underlying Attrib.
volume volume Price cost* Revenue* EBITDA* margin EBIT* Capex* ROCE(7)*
'000 '000
carats carats(2) $/ct(3) $/ct(4) $m(5) $m $m $m(6)
De Beers 17,495 17,845 162 67 3,192 712 22% 412 156 8%
Prior period 16,142 18,434 156 63 3,131 786 25% 548 74 11%
Botswana
(Debswana) 12,087 - 155 31 - 263 - 234 34 -
Prior period 11,124 - 165 26 - 272 - 256 36 -
Namibia
(Namdeb Holdings) 1,044 - 545 272 - 90 - 73 19 -
Prior period 863 - 568 237 - 105 - 92 8 -
South Africa (DBCM) 2,111 - 106 73 - 71 - 2 66 -
Prior period 2,511 - 133 64 - 127 - 54 48 -
Canada(8) 2,253 - 157 51 - 126 - 52 17 -
Prior period 1,644 - 435 67 - 69 - 25 (28) -
Trading - - - - - 253 - 249 - -
Prior period - - - - - 281 - 278 2 -
Other(9) - - - - - (91) - (198) 20 -
Prior period - - - - - (68) - (157) 8 -
(1) Prepared on a consolidated accounting basis, except for production, which is stated on a 100% basis except for the Gahcho Ku�
joint venture in Canada, which is on an attributable 51% basis.
(2) In 2017, consolidated sales volumes (H1 2018: 17.8 million carats; H1 2017: 18.4 million carats) exclude pre-commercial production
sales volumes from Gahcho Ku�. Total sales volumes (100%), which are comparable to production, were 18.8 million carats
(H1 2017: 20.0 million carats). Total sales volumes (100%) include pre-commercial production sales volumes from Gahcho Ku� and
De Beers' JV partners' 50% proportionate share of sales to entities outside De Beers from Diamond Trading Company Botswana
and Namibia Diamond Trading Company.
(3) Pricing for the mining business units is based on 100% selling value post-aggregation of goods. The De Beers realised price
includes the price impact of the sale of non-equity product and, as a result, is not directly comparable to the De Beers unit costs,
which relate to equity production only.
(4) Unit cost is based on consolidated production and operating costs, excluding depreciation and operating special items, divided by
carats recovered.
(5) Includes rough diamond sales of $2.9 billion (H1 2017: $2.9 billion).
(6) In 2017, includes pre-commercial production capitalised operating cash inflows from Gahcho Ku�.
(7) Underlying EBIT used in the calculation of De Beers' attributable ROCE is based on the prior 12 months, rather than the annualised
H1 performance, owing to the seasonality of sales and underlying EBIT profile of De Beers.
(8) In 2017, for Canada, price excludes Gahcho Ku� contribution from sales related to pre-commercial production, which were
capitalised in the first half of 2017. Unit costs include Gahcho Ku� contribution following achievement of commercial production on
2 March 2017.
(9) Other includes Element Six, downstream, acquisition accounting adjustments, projects and corporate.
Financial and operational overview
Underlying EBITDA decreased by 9% to $712 million (H1 2017: $786 million) due to unit cost increases
driven by the impact of unfavourable exchange rate movements and a higher proportion of waste mining
costs having been expensed rather than capitalised, mitigated by higher production. Underlying EBITDA was
also impacted by the lower trading margins experienced in the period.
Total revenue increased marginally to $3.2 billion (H1 2017: $3.1 billion), while rough diamond sales were
steady at $2.9 billion. The average realised rough diamond price increased by 4% to $162/carat
(H1 2017: $156/carat) due to a 1.6% increase in the average rough price index and an improvement in the
sales mix, driven by the substantial volumes of lower value goods sold in H1 2017, following the Indian
demonetisation programme in late 2016. Excluding this impact, the average value of the production mix was
lower in H1 2018 as a higher proportion of lower value carats was delivered from Orapa (Botswana) and
Gahcho Ku� (Canada). Consolidated sales volumes of 17.8 million carats were 3% lower
(H1 2017: 18.4 million carats).
Other revenue includes Element Six, where revenue was in line, and De Beers Jewellers, whose results
have been consolidated following the acquisition in March 2017 of LVMH's 50% interest.
Markets
Preliminary data indicates a slight improvement in global consumer demand for diamond jewellery, in US
dollar terms. This was driven by growth in the US and China, and was further amplified by positive exchange
rate movements in China and Japan against the dollar. India was softer in dollar terms, with prevailing
consumer caution, resulting from both macro-economic factors and regulatory changes affecting the
jewellery sector.
Midstream sentiment was positive on the back of strong demand from the US and China in Q4 2017, and
conditions overall remained favourable, with midstream inventory within normal levels and a slight
strengthening of polished diamond prices since the start of the year.
Operating performance
Mining and manufacturing
Rough diamond production increased by 8% to 17.5 million carats (H1 2017: 16.1 million carats), including
the contribution from the ramp-up of Gahcho Ku� in Canada, in line with the expected continuation of strong demand.
In Botswana (Debswana), production increased by 9% to 12.1 million carats (H1 2017: 11.1 million carats) in
response to stronger market conditions. Production at Jwaneng was 2% higher owing to a 10% increase in
plant throughput. At Orapa, a 16% rise in output was driven by the continued ramp-up of Plant 1, the
successful restart of the Damtshaa operation and commissioning of the Letlhakane tailings plant. In June
2017, Jwaneng processed its first ore from Cut-8, which is now the mine's main source of ore.
In Namibia (Namdeb Holdings), production increased by 21% to 1.0 million carats (H1 2017: 0.9 million
carats). Production from the marine operation was 2% higher following improved availability of the Mafuta
crawler vessel and technology-led optimisation of the drill fleet. Production at the land operations increased
by 99% to 0.3 million carats (H1 2017: 0.2 million carats), driven by access to consistently higher grades.
In South Africa (DBCM), production declined by 16% to 2.1 million carats (H1 2017: 2.5 million carats). The
reduction was primarily due to a period of suspended production at Venetia following a fatal incident, as well
as geotechnical issues at Voorspoed restricting access to the resource. Construction continued on the Venetia
Underground Project, which is expected to become the mine's principal source of production from 2023.
In Canada, production increased by 37% to 2.3 million carats (H1 2017: 1.6 million carats) owing to the
ramp-up of Gahcho Ku�, which entered commercial production in March 2017, as well as slightly improved
grades at the mine. Higher grades were also achieved at Victor, where output increased by 16% to
0.4 million carats. Victor, which has been operating successfully since 2008, is due to close within the next
12 months when the open pit is expected to have been depleted. The closure of Snap Lake, which is
currently on extended care and maintenance, is progressing, with flooding having been completed, thereby
minimising holding costs.
Brands
De Beers Jewellers opened new stores in Xi'an in China and in Kowloon in Hong Kong, and launched new
franchise partnerships in Russia and Saudi Arabia. In May, De Beers Jewellers launched a new online store
in partnership with Farfetch, a global marketplace for the luxury fashion industry, selling its fine diamond
jewellery to a new audience, shipping throughout 100 countries and via 10 language sites.
Forevermark(TM) is now available in more than 2,300 retail outlets and in April launched a new partnership in
Indonesia, its 26th market. In May, the brand celebrated its 10th anniversary (and the introduction of its 1,000th
door in China) with the launch of a new retail concept, Libert'aime(TM) by Forevermark, incorporating an
innovative in-store offering with online and social media platforms, specifically focused on targeting
Millennials.
De Beers also launched a number of new initiatives including a pilot of the first blockchain technology
initiative to span the diamond value chain. The platform, called Tracr(TM) , will provide a single, tamper-proof
and permanent digital record for every diamond registered on the platform. Tracr(TM) will also underpin
confidence in diamonds and the diamond industry by ensuring that all registered diamonds are conflict-free
and natural, while also enhancing efficiency across the sector.
In April, De Beers announced the launch of GemFair, a pilot programme to create a secure and transparent
route to market for ethically sourced artisanal and small-scale mined (ASM) diamonds. GemFair will use
dedicated technology to record ASM production at mine sites that meet demonstrable ethical standards, with
the aim of purchasing rough diamonds from approved locations. This will help to improve working conditions
and livelihoods for those working in the sector. If successful, the technology used in GemFair will be
integrated with the Tracr(TM) blockchain platform.
In May, De Beers announced the launch of Lightbox Jewelry (Lightbox) that will begin selling a brand of
laboratory-grown diamond jewellery in the US from September 2018, offering consumers high-quality,
fashion jewellery designs at lower prices than existing laboratory-grown diamond offerings. Lightbox was
launched in response to research undertaken by De Beers that demonstrated consumers see laboratory-
grown diamonds as fun, fashion products suited to more casual occasions, and which should be accessibly
priced. As such, Lightbox will provide a completely new offering in the fashion jewellery category. To
support Lightbox, De Beers is investing a total of $94 million over four years in a new production facility near
Portland, Oregon, which will utilise Element Six's operational expertise in laboratory-grown diamonds. Once
fully operational, the plant will be capable of producing approximately 500,000 rough carats of laboratory
grown diamonds a year.
Outlook
The outlook for 2018 global consumer demand remains positive in most of the main diamond-consuming
countries, based on world economic prospects, positive consumer sentiment and continued investment in
marketing.
For 2018, forecast diamond production (on a 100% basis, except Gahcho Ku� on an attributable 51% basis)
remains unchanged at 34-36 million carats, subject to trading conditions.
COPPER
Financial and operational metrics
Underlying
Production Sales Unit Underlying EBITDA Underlying Attrib.
volume volume Price cost* Revenue* EBITDA* margin(2) EBIT* Capex* ROCE*
kt kt(1) c/lb(2) c/lb(3) $m(4) $m $m $m
Copper 313 306 297 142 2,429 966 52% 668 368 23%
Prior period 283 259 264 148 1,609 586 40% 303 225 10%
Los Bronces 175 172 - 151 1,062 544 51% 374 89 -
Prior period 155 144 - 164 767 317 41% 150 95 -
Collahuasi(5) 115 111 - 116 708 465 66% 360 128 -
Prior period 109 98 - 122 493 285 58% 184 87 -
Other operations 23 23 - - 659 33 22% 10 151 -
Prior period 20 17 - - 349 36 19% 21 43 -
Projects and
corporate - - - - - (76) - (76) - -
Prior period - - - - - (52) - (52) - -
(1) Excludes 71 kt third-party sales (H1 2017: 37 kt).
(2) Excludes impact of third-party sales.
(3) C1 unit cost includes by-product credits.
(4) Revenue is shown after deduction of treatment and refining charges (TC/RCs).
(5) 44% share of Collahuasi production, sales and financials.
Financial and operating overview
Underlying EBITDA increased by 65% to $966 million (H1 2017: $586 million), driven by higher production
and lower unit costs across all operations, supported by a 20% increase in the average LME copper price.
The reduction in unit costs was achieved despite an 8% strengthening in the Chilean peso and other input-
cost inflationary pressures, reflecting the focus on cost reduction initiatives across the portfolio. Production
increased by 10% to 312,900 tonnes (H1 2017: 283,400 tonnes), with strong performances at both
Los Bronces and Collahuasi. At 30 June 2018, 120,300 tonnes of copper were provisionally priced at
301 c/lb.
Markets
H1 2018 H1 2017
Average market price (c/lb) 314 261
Average realised price (c/lb) 297 264
The differences between market price and realised price are largely a function of the timing of sales across
the year and provisional pricing adjustments.
The average copper price increased by 20%, reflecting robust demand fundamentals and positive investor
sentiment. Prices weakened towards the end of the period, however, in response to uncertainty over the
US/China trade disputes and resulting risk aversion by investment funds.
Operating performance
At Los Bronces, production increased to 174,700 tonnes (H1 2017: 154,800 tonnes) as a result of strong
mine and plant performance, as well as an increase in ore grade (0.73% vs 1H 2017: 0.69%). C1 unit costs
decreased by 8% to 151 c/lb (H1 2017: 164 c/lb), with the increase in production, underlying cost savings
and higher by-product credits (primarily molybdenum) more than offsetting the effect of the stronger Chilean
peso and cost inflation.
At Collahuasi, Anglo American's attributable share of copper production was 115,300 tonnes, an increase of
6% (2017: 108,700 tonnes), with the operation continuing to build on the record performance seen in 2017.
A sustained strong plant performance and planned higher grades more than offset the impact of a planned
three-month major maintenance of Line 3 (responsible for 60% of plant throughput) to replace the stator
motor on one of the two ball mills. The maintenance was completed in the first half of July 2018. C1 unit
costs were 116 c/lb (H1 2017: 122 c/lb), with the increase in production and continued cost-saving initiatives
more than offsetting the stronger Chilean peso and cost inflation. During Q2, new float cells were
commissioned, which are expected to enhance copper recoveries by 2%.
Production at El Soldado increased by 15% to 22,900 tonnes (H1 2017: 19,900 tonnes), owing largely to the
temporary suspension of mine operations during H1 2017, which resulted in 6,000 tonnes of lost production.
C1 unit costs increased marginally to 234 c/lb (H1 2017: 233 c/lb), with the increase in production offset by
the stronger Chilean peso and cost inflation.
Operational outlook
Production guidance for 2018 remains unchanged at 630,000-660,000 tonnes.
PLATINUM
Financial and operational metrics
Production Production Sales Realised Underlying
volume volume volume Basket Unit Underlying EBITDA Underlying Attrib.
platinum palladium platinum price cost* Revenue* EBITDA* margin(5) EBIT* Capex* ROCE*
$/Pt
koz(1) koz(1) koz(2) $/Pt oz(3) oz(4) $m $m $m $m
Platinum 1,233 813 1,117 2,318 1,591 2,755 511 30% 328 216 14%
Prior period 1,189 775 1,119 1,843 1,522 2,144 276 19% 112 126 4%
Mogalakwena 273 295 241 2,887 1,400 701 316 45% 240 98 -
Prior period 226 251 204 2,391 1,448 488 179 37% 115 58 -
Amandelbult 220 103 204 2,345 1,764 482 82 17% 51 20 -
Prior period(6) 204 94 202 1,776 1,635 360 13 3% (14) 15 -
Other operations(7) 190 130 166 - - 538 27 6% (33) 98 -
Prior period 239 150 224 - - 492 15 3% (45) 53 -
Purchase of
concentrate(8) 550 285 506 - - 1,034 116 11% 100 - -
Prior period 520 280 489 - - 804 88 11% 75 - -
Projects and
corporate - - - - - - (30) - (30) - -
Prior period - - - - - - (19) - (19) - -
(1) Production disclosure reflects own-mined production and purchase of metal in concentrate.
(2) Sales volumes exclude the sale of refined metal purchased from third-parties.
(3) Average US$ basket price. Excludes the impact of the sale of refined metal purchased from third-parties.
(4) Total cash operating costs - includes on-mine, smelting and refining costs only. 2017 restated to include third-party tolling cost.
(5) Underlying EBITDA margins exclude the impact of the sale of refined metal purchased from third-parties. In addition, the total
Platinum margin excludes purchase of concentrate.
(6) Excludes 4koz of platinum production now included in purchase of concentrate.
(7) Includes Unki, Union (prior to disposal), Platinum's share of JVs and revenue from trading activities.
(8) Purchase of concentrate from joint ventures, associates and third-parties for processing into refined metals.
Financial and operating overview
Underlying EBITDA increased by 85% to $511 million (H1 2017: $276 million), largely as a result of stronger
prices and higher sales volumes for both palladium and rhodium. Lower local currency costs, driven by
ongoing cost improvement initiatives, were offset by the stronger South African rand, resulting in a 5%
increase in US dollar costs to $1,591/ounce (H1 2017: $1,522/ounce).
Markets
H1 2018 H1 2017
Average platinum market price ($/oz) 941 960
Average palladium market price ($/oz) 1,007 793
Average rhodium market price ($/oz) 1,987 929
Average gold market price ($/oz) 1,318 1,238
US$ realised basket price ($/Pt oz) 2,318 1,843
Rand realised basket price (R/Pt oz) 28,695 24,400
Despite the lower platinum price, stronger palladium and rhodium prices supported a 26% higher basket
price in dollar terms. The average platinum price declined by 2% in dollar terms, owing to the effect of the
stronger dollar and the expected weakness in the European light-duty vehicle diesel market. The average
palladium price of $1,007 per ounce was 27% higher as a rise in global production of petrol vehicles and
tighter emissions legislation have driven higher demand from the automotive sector, keeping the metal
in deficit.
Operating performance
Total platinum production (metal in concentrate), including both own mined production and purchase of
concentrate, increased by 4% to 1,233,400 ounces (H1 2017: 1,189,100 ounces). Total palladium production
(metal in concentrate), including both own-mined production and purchase of concentrate, was 5% higher at
813,200 ounces (H1 2017: 774,900 ounces).
Own mined
Own mined production is inclusive of ounces from Mogalakwena, Amandelbult and other operations (Unki,
Union (prior to disposal on 1 February 2018) and 50% of JV production). Own mine production increased by
2% to 683,200 ounces (H1 2017: 668,800 ounces), while palladium production increased by 7% to
528,300 ounces (H1 2017: 494,400 ounces). Excluding Union, platinum and palladium production both
increased by 14%, owing to strong performances from all operations.
Mogalakwena increased platinum production by 21% to 272,900 ounces (H1 2017: 225,800 ounces), and
palladium output by 18% to 295,500 ounces (H1 2017: 251,200 ounces). The increase resulted from higher
grades from the Zwartfontein pit and increased concentrator throughput and recoveries.
Amandelbult platinum production increased by 8% to 220,200 ounces (H1 2017: 203,700 ounces), while
palladium output increased by 10% to 102,900 ounces (H1 2017: 93,600 ounces). The improvements reflect
the early benefits of the turnaround plan at Amandelbult, with increased development at Dishaba increasing
the immediately available ore reserves.
Platinum production from other operations decreased by 21% to 190,100 ounces (H1 2017: 239,200) and
palladium production 13% to 129,900 ounces (H1 2017: 149,600). The decrease was driven by the sale of
Union mine to Siyanda Resources ("Siyanda"), from which date Union production was purchased as
concentrate. This was offset in part by Platinum's share of JV's platinum production increasing by 11% to
137,100 ounces (H1 2017: 123,300 ounces) and palladium production increasing by 10% to 88,500 ounces
(H1 2017: 80,700 ounces).
Purchase of concentrate
Purchase of concentrate increased by 6% and 2% for platinum and palladium respectively. The inclusion of
concentrate from Union following the sale to Siyanda was partly offset by the closing down of unprofitable
ounces from Bokoni, which was placed onto care and maintenance in H2 2017 (H1 2017: 37,900 ounces of
platinum and 27,900 ounces of palladium).
Refined production
Refined platinum production decreased by 3% to 1,075,300 ounces (H1 2017: 1,105,600 ounces), while
refined palladium production was 6% lower at 686,500 ounces (H1 2017: 726,500 ounces). This reduction
was primarily due to the removal of unprofitable production from Bokoni and Maseve, both placed onto care
and maintenance in H2 2017.
Refined platinum production was lower than production of metal in concentrate by approximately
140,000 ounces due to the planned rebuild of Mortimer smelter, which was completed during H1 2018, and
maintenance work on the processing assets. It is expected that the backlog of work-in-progress inventory will
be processed by year end, despite the planned rebuild of Polokwane Smelter and the Unki smelter
commissioning in Q3 2018.
Sales volumes
Platinum sales volumes, excluding refined metals purchased from third-parties, of 1,117,100 ounces were
marginally lower (H1 2017: 1,119,300 ounces), while palladium sales increased by 15% to 733,500 ounces
(H1 2017: 636,200 ounces) as refined production was supplemented by drawing down on refined inventory
levels. In addition, trading activities generated further sales volumes of 65,600 platinum ounces and
53,000 palladium ounces.
Operational outlook
Guidance of platinum production (metal in concentrate) for 2018 has been modestly increased following the
strong operational performance in the first six months. It is now expected to be 2.40-2.45 million ounces
(previously 2.3-2.4 million ounces). Refined production and sales are expected to be in line with the revised
production guidance. Palladium production (metal in concentrate) is expected to be in line with guidance of
1.5-1.6 million ounces; refined production and sales are expected to be lower, owing to a loss arising from
the annual stock count.
IRON ORE
Financial and operational metrics
Underlying
Production Sales Unit Underlying EBITDA Underlying Attrib.
volume volume Price cost* Revenue* EBITDA* margin EBIT* Capex* ROCE*
Mt(1) Mt $/t(2) $/t(3) $m $m $m $m
Iron Ore - - - - 1,900 454 24% 245 153 2%
Prior period - - - - 2,365 925 39% 759 73 16%
Kumba Iron
Ore 22.4 21.2 69 35 1,590 574 36% 417 138 28%
Prior period 21.9 21.2 71 32 1,627 700 43% 586 81 49%
Minas-Rio
(Iron Ore 3.2 3.2 70 - 310 (74) - (126) 15 (6)%
Brazil)
Prior period 8.7 8.6 66 29 738 253 34% 201 (8) 8%
Projects and
corporate - - - - - (46) - (46) - -
Prior period - - - - - (28) - (28) - -
(1) Minas-Rio production is Mt (wet basis).
(2) Prices for Kumba Iron Ore are the average realised export basket price (FOB Saldanha). Prices for Minas-Rio are the average
realised export basket price (FOB A�u) (wet basis).
(3) Unit costs for Kumba Iron Ore are on an FOB dry basis. Unit costs for Minas-Rio are not disclosed for 2018 due to the suspension of
operations; 2017 unit costs are on an FOB wet basis.
Financial and operating overview
Kumba
Underlying EBITDA of $574 million was 18% lower (H1 2017: $700 million), driven mainly by the stronger
South African rand, a 9% increase in FOB unit costs and a $2/tonne decrease in the average realised iron
ore price. In addition to the impact of foreign exchange, the increase in unit costs was largely driven by cost
inflation, including higher rail and fuel costs. This was partly offset by productivity gains in mining and
processing that led to a 3% increase in production, and through higher iron quality and achieved lump premiums.
Export sales volumes were flat at 19.5 Mt (H1 2017: 19.5 Mt), despite derailments and rail constraints
experienced since 2017. Total finished product stock held at the mine and port increased from 4.3 Mt at end
December 2017 to 6.2 Mt at end June 2018, reflecting the impact of the rail constraints.
Minas-Rio
Minas-Rio recorded an underlying EBITDA loss of $74 million (H1 2017: $253 million gain), reflecting the
suspension of operations from March 2018, following the two leaks in the iron ore pipeline. The average FOB
realised price of $70/wet metric tonne (equivalent to $77 dry metric tonne) increased by $4/tonne, or 6%.
Markets
H1 2018 H1 2017
Average market price (IODEX 62% Fe CFR China - $/tonne) 70 74
Average market price (MB 66% Fe Concentrate CFR - $/tonne) 93 88
Average realised price (Kumba export - $/tonne) (FOB Saldanha) 69 71
Average realised price (Minas-Rio - $/tonne) (FOB wet basis) 70 66
Kumba's outperformance over the IODEX (Platts) 62% Fe CFR China index was primarily due to the higher
iron (Fe) content and the relatively high proportion (approximately 67%) of lump in the overall product
portfolio.
Minas-Rio also produces higher grade products (higher iron content and lower gangue) than the reference
product used for the IODEX 62% Fe CFR China index. IODEX 62% is referred to for comparison
purposes only.
Operating performance
Kumba
Sishen's production decreased by 2% to 15.3 Mt (H1 2017: 15.6 Mt) mainly due to a strategic decision to
increase product quality and the value of product railed, to mitigate the impact of the rail constraints caused
by derailments. Waste volumes mined increased by 13% to 87 Mt (H1 2017: 77 Mt) as a result of the
continued improvement in fleet efficiencies.
Kolomela's production increased by 14% to 7.2 Mt (H1 2017: 6.3 Mt) owing to an improvement in plant
efficiencies and the DMS modular plant which has fully ramped up and delivered 0.3 Mt. Waste movement
volumes increased by 4% to 26 Mt (H1 2017: 25 Mt) due to increased primary equipment efficiencies,
supporting higher production levels.
Minas-Rio
Minas-Rio's production decreased by 64% to 3.2 Mt (H1 2017: 8.7 Mt), primarily due to the suspension of
operations from March 2018, following two leaks in the iron ore pipeline.
Operational outlook
Kumba
Full year production guidance for Kumba has been revised to 43-44 Mt (previously 44-45 Mt), more closely
aligned to rail supply levels. Waste movement guidance for Sishen and Kolomela remains unchanged at
170-180 Mt and 55-57 Mt, respectively.
Minas-Rio
The detailed pipeline inspection work is on track. A 4km section of the pipeline, where the leaks occurred will
be replaced as a precautionary measure and is expected to be completed in Q4 2018, followed by the restart
of the operation, subject to normal regulatory authorisations. There is no change to the earnings impact of
the pipeline incident from the guidance provided in April, with an anticipated 2018 underlying EBITDA loss of
$300-$400 million.
Full year production guidance for Minas-Rio remains at 3 Mt, reflecting production delivered to date.
Legal
The transfer of Thabazimbi to ArcelorMittal SA
Sishen Iron Ore Company Proprietary Limited (SIOC) and ArcelorMittal SA announced in 2016 that they had
entered into an agreement to transfer Thabazimbi mine to ArcelorMittal SA, subject to the fulfilment of certain
conditions precedent (CPs). On 10 July 2018, SIOC received the grant letter from the DMR in respect of
Section 11 of the MPRDA approving the cession of the Thabazimbi mining rights to ArcelorMittal SA.
The current deadline for compliance with the remaining CPs is 28 September 2018, unless extended by
agreement. The agreement is expected to become effective during the fourth quarter of 2018, at which time
the employees, assets and liabilities will transfer to ArcelorMittal SA at a nominal purchase consideration and
by ArcelorMittal SA assuming the assumed liabilities.
COAL
Financial and operational metrics
Underlying
Production Sales Unit Underlying EBITDA Underlying Attrib.
volume volume Price cost* Revenue* EBITDA* margin(5) EBIT* Capex* ROCE*
Mt(1) Mt(2) $/t(3) $/t(4) $m $m $m $m
Coal - - - - 3,877 1,640 48% 1,300 306 77%
Prior period - - - - 3,403 1,382 46% 1,120 221 63%
Metallurgical Coal 10.8 10.7 194 66 2,089 1,157 55% 931 219 100%
Prior period 9.2 9.1 193 64 1,775 943 53% 781 154 81%
Thermal Coal -
South Africa 8.8 8.7 88 48 1,374 341 36% 272 87 65%
Prior period 9.6 8.8 72 41 1,242 281 33% 225 67 51%
Thermal Coal -
Colombia 5.2 5.2 79 35 414 190 46% 145 - 34%
Prior period 5.2 5.4 71 31 386 183 47% 139 - 34%
Projects and - - - - - (48) - (48) - -
corporate
Prior period - - - - - (25) - (25) - -
(1) Production volumes are saleable tonnes. South African production volume is export production only and excludes Eskom-tied
operations volumes of 2.8 Mt (H1 2017: 12.0 Mt) and other domestic production of 4.9 Mt (H1 2017: 3.7 Mt). Metallurgical Coal
production volumes excludes thermal coal production volumes of 0.5 Mt (H1 2017: 0.8 Mt).
(2) South Africa sales volume is export only and excludes domestic volumes of 7.9 Mt (H1 2017: 16.1 Mt) and non-equity traded sales of
4.7 Mt (H1 2017: 3.4 Mt). Metallurgical Coal sales volumes exclude thermal coal sales of 0.7 Mt (H1 2017: 0.9 Mt).
(3) Metallurgical Coal realised price is the weighted average hard coking coal and PCI sales price achieved. Thermal Coal - South
Africa realised price is the weighted average export thermal coal price achieved. Excludes third-party sales.
(4) FOB cost per saleable tonne, excluding royalties. Metallurgical Coal excludes study costs. Thermal Coal - South Africa unit cost is
for the trade operations.
(5) Excludes impact of third-party sales and Eskom-tied operations.
Financial and operating overview
Metallurgical Coal
Underlying EBITDA increased by 23% to $1,157 million (H1 2017: $943 million), due to a 17% increase in
production and a marginal improvement in the metallurgical coal realised price. Hard coking coal volumes
accounted for 87% of metallurgical coal sales volumes (H1 2017: 89%). US dollar unit costs increased by
3% to $66/tonne (H1 2017: $64/tonne), partly attributable to the stronger Australian dollar.
Thermal Coal - South Africa
Underlying EBITDA increased by 21% to $341 million (H1 2017: $281 million). A 22% increase in the export
thermal coal price was offset by a 2% decline in export sales. US dollar unit costs for the export trade
operations increased by 17% to $48/tonne (H1 2017: $41/tonne), due to the stronger South African rand
($4/tonne impact) and lower production ($2/tonne impact).
The sale of the Eskom-tied domestic thermal coal operations, consisting of New Vaal, New Denmark, and
Kriel collieries, as well as four closed collieries to a wholly-owned subsidiary of Seriti Resources Holdings
Proprietary Limited was completed on 1 March 2018.
Thermal Coal - Colombia
Underlying EBITDA increased to $190 million (H1 2017: $183 million), with higher export thermal coal prices
partly offset by a 3% decrease in sales volumes.
Markets
Metallurgical coal
H1 2018 H1 2017
Average market price for premium low-volatility hard coking coal ($/tonne)(1) 209 179
Average market price for premium low-volatility PCI ($/tonne)(1) 145 117
Average realised price for hard coking coal ($/tonne) 198 195
Average realised price for PCI ($/tonne) 129 124
(1) Represents average spot prices.
Average realised prices differ from the average market price owing to differences in material grade and
timing of contracts.
Spot prices in H1 2018 were supported by stronger steelmaking margins globally and some supply
disruptions in Queensland owing to weather impacts.
Thermal coal
H1 2018 H1 2017
Average market price ($/tonne, FOB Australia) 104 81
Average market price ($/tonne, FOB South Africa) 97 79
Average market price ($/tonne, FOB Colombia) 82 74
Average realised price - Export Australia ($/tonne, FOB) 99 87
Average realised price - Export South Africa ($/tonne, FOB) 88 72
Average realised price - Domestic South Africa ($/tonne) 20 20
Average realised price - Colombia ($/tonne, FOB) 79 71
The average realised price for thermal coal will differ from the average market price owing to timing and
quality differences relative to the industry benchmark. The difference in the realised price compared with the
market price, between H1 2017 and H1 2018, reflects changing quality mix owing to a higher proportion of
secondary products being sold into the export market.
The thermal coal market was buoyed by strong demand from China that could not be met by domestic
production, as extreme temperatures put pressure on the Chinese electricity grid. On the supply side,
loading out of Indonesia remained constrained owing to weather-related, labour and regulatory problems.
Australian supply was affected by rail maintenance issues; lower Colombian and South African production
also contributed to the tight market in H1 2018.
Operating performance
Metallurgical Coal
Production from the underground longwall operations was 27% higher at 7.0 Mt (H1 2017: 5.5 Mt), and
included 1.3 Mt from the ramp-up of Grosvenor and sustained strong performance at Moranbah which
produced 3.0 Mt. Grasstree's output fell by 0.7 Mt owing to a longwall move that took place during the period.
Thermal Coal - South Africa
Total export production decreased by 9% as Mafube transitioned to a new pit and areas of the Goedehoop
South and Khwezela North operations transitioned towards closure, partly offset by continued underground
productivity improvements at Greenside.
Thermal Coal - Colombia
Anglo American's attributable production from its 33.3% ownership of Cerrej�n was 5.2 Mt, in line with H1 2017.
Operational outlook
Metallurgical coal
Export metallurgical coal production guidance for 2018 is unchanged at 20-22 Mt.
Export thermal coal
Full year production guidance for export thermal coal has been revised down to 28-30 Mt (previously 29-
31 Mt) owing to dust-related stoppages at Cerrej�n and challenging geology at the Thermal Coal - South
Africa operations approaching the end of mine life.
NICKEL AND MANGANESE
Financial and operational metrics
Underlying
Production Sales Unit Underlying EBITDA Underlying Attrib.
volume volume Price cost* Revenue* EBITDA* margin EBIT* Capex* ROCE*
t t c/lb c/lb(1) $m $m(2) (2) $m
Nickel and
Manganese - - - - 857 420 - 350 15 29%
Prior period - - - - 652 257 - 192 7 16%
Nickel 19,400 20,100 632 378 280 88 31% 45 15 5%
Prior period 21,200 20,800 442 363 203 15 7% (25) 7 (3)%
Samancor(3) 1.8 1.8 - - 577 332 57% 305 - 162%
Prior period 1.7 1.7 - - 449 242 54% 217 - 116%
(1) C1 unit cost.
(2) Nickel segment includes $4 million projects and corporate costs (H1 2017: $4 million).
(3) Production, sales and financials include ore and alloy. Production and sales are million tonnes (Mt).
Financial and operating overview
Nickel
Underlying EBITDA increased to $88 million (H1 2017: $15 million), primarily reflecting the higher
nickel price.
Nickel unit costs increased by 4% to 378 c/lb (H1 2017: 363 c/lb) as result of lower production following a
40-day planned maintenance stoppage in H1 2018, and lower energy surplus sold on the spot market,
partially offset by favourable exchange rates and an improved operational performance.
Samancor
Underlying EBITDA increased by 37% to $332 million (H1 2017: $242 million), driven mainly by higher
realised manganese ore and alloy prices.
Markets
Nickel
H1 2018 H1 2017
Average market price (c/lb) 629 443
Average realised price (c/lb) 632 442
The average market price is the LME nickel price, from which ferronickel pricing is derived. Ferronickel is
traded based on discounts or premiums to the LME price, depending on market conditions, supplier products
and consumer preferences. Differences between market prices and realised prices are largely due to
variances between the LME and the ferronickel price.
The nickel price improved by 42% to 629 c/lb (H1 2017: 443 c/lb). Prices in H1 2017 came under pressure
from concerns around increased future supply growth - though these proved to be unfounded. Nickel
demand continued to increase in the first six months of 2018, driven by strong demand for stainless steel,
and the emergence of the fast-growing electric vehicle sector. Supply also increased, though not to the
extent expected by some, leading to an overall deficit in the market.
Manganese
The average benchmark manganese ore price (Platts 44% manganese ore CFR Tianjin) increased by 32%
to $7.45/dmtu (H1 2017: $5.63/dmtu) on the back of strong demand from China's steel manufacturing sector
that resulted in manganese ore stocks at Chinese ports reaching near 12-month lows in February 2018.
Operating performance
Nickel
Nickel output decreased by 8% to 19,400 tonnes (H1 2017: 21,200 tonnes) due to the 40-day planned
maintenance stoppage to replace the rotary kiln refractories at Barro Alto, which was completed on
schedule. Barro Alto produced 15,100 tonnes (H1 2017: 16,900 tonnes), while Codemin produced
4,300 tonnes (H1 2017: 4,300 tonnes).
Samancor
Manganese ore output increased by 5% to 1.75 Mt (attributable basis) (H1 2017: 1.67 Mt). Production from
the Australian operations was 13% higher due to increased concentrator throughput and higher yields as
a result of favourable weather during the wet season and the availability of suitable feed types. Production
from the South African operations decreased by 8% due to the impact of the planned extended shutdown
at Wessels.
Production of manganese alloys increased by 19% to 84,000 tonnes (attributable basis)
(2017: 70,800 tonnes), mainly as a result of improved furnace stability at the Australian operations. In South
Africa, manganese alloy production continued to utilise only one of the operation's four furnaces.
Operational outlook
Nickel
Production guidance for 2018 remains unchanged at 42,000-44,000 tonnes.
CORPORATE AND OTHER
Financial metrics
Underlying Underlying
Revenue* EBITDA* EBIT* Capex*
$m $m $m $m
Segment 2 (126) (128) 6
Prior period 2 (96) (103) 5
Exploration - (48) (48) -
Prior period - (43) (43) -
Corporate activities and
unallocated costs 2 (78) (80) 6
Prior period 2 (53) (60) 5
Financial and operating overview
Corporate and other reported an underlying EBITDA loss of $126 million (H1 2017: $96 million loss).
Exploration
Exploration expenditure increased to $48 million (H1 2017: $43 million), reflecting increased exploration
activities across most commodities, but predominantly in diamonds.
Corporate activities and unallocated costs
Underlying EBITDA amounted to a $78 million loss (H1 2017: $53 million loss), driven primarily by a
year-on-year loss recognised in the Group's self-insurance entity, reflecting higher net claims and
settlements during 2018, partly offset by higher premium income.
For further information, please contact:
Media Investors
UK UK
James Wyatt-Tilby Paul Galloway
james.wyatt-tilby@angloamerican.com paul.galloway@angloamerican.com
Tel: +44 (0)20 7968 8759 Tel: +44 (0)20 7968 8718
Marcelo Esquivel Robert Greenberg
marcelo.esquivel@angloamerican.com robert.greenberg@angloamerican.com
Tel: +44 (0)20 7968 8891 Tel: +44 (0)20 7968 2124
South Africa Sheena Jethwa
Pranill Ramchander sheena.jethwa@angloamerican.com
pranill.ramchander@angloamerican.com Tel: +44 (0)20 7968 8680
Tel: +27 (0)11 638 2592
Ann Farndell
ann.farndell@angloamerican.com
Tel: +27 (0)11 638 2786
Notes to editors:
Anglo American is a global diversified mining business and our products are the essential ingredients in almost every aspect of modern life. Our portfolio of
world-class competitive mining operations and undeveloped resources provides the metals and minerals to meet the growing consumer-driven demands of
the world's developed and maturing economies. With our people at the heart of our business, we use innovative practices and the latest technologies to
discover new resources and mine, process, move and market our products to our customers around the world.
As a responsible miner - of diamonds (through De Beers), copper, platinum and other precious metals, iron ore, coal and nickel - we are the custodians of
what are precious natural resources. We work together with our key partners and stakeholders to unlock the sustainable value that those resources
represent for our shareholders, the communities and countries in which we operate and for society at large. Anglo American is re-imagining mining to
improve people's lives.
http://www.angloamerican.com
Webcast of presentation:
A live webcast of the results presentation, starting at 9.00am UK time on 26 July 2018, can be accessed through the Anglo American website at
http://www.angloamerican.com
Note: Throughout this results announcement, '$' denotes United States dollars and 'cents' refers to United States cents. Tonnes are metric tons, 'Mt' denotes
million tonnes and 'kt' denotes thousand tonnes, unless otherwise stated.
Forward-looking statements:
This announcement includes forward-looking statements. All statements other than statements of historical facts included in this announcement, including,
without limitation, those regarding Anglo American's financial position, business, acquisition and divestment strategy, dividend policy, plans and objectives of
management for future operations (including development plans and objectives relating to Anglo American's products, production forecasts and Ore
Reserves and Mineral Resources), are forward-looking statements. By their nature, such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance or achievements of Anglo American, or industry results, to be materially
different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements
are based on numerous assumptions regarding Anglo American's present and future business strategies and the environment in which Anglo American will
operate in the future. Important factors that could cause Anglo American's actual results, performance or achievements to differ materially from those in the
forward-looking statements include, among others, levels of actual production during any period, levels of global demand and commodity market prices,
mineral resource exploration and development capabilities, recovery rates and other operational capabilities, the availability of mining and processing
equipment, the ability to produce and transport products profitably, the availability of transportation infrastructure, the impact of foreign currency exchange
rates on market prices and operating costs, the availability of sufficient credit, the effects of inflation, political uncertainty and economic conditions in relevant
areas of the world, the actions of competitors, activities by governmental authorities such as permitting and changes in taxation or safety, health,
environmental or other types of regulation in the countries where Anglo American operates, conflicts over land and resource ownership rights and such other
risk factors identified in Anglo American's most recent Annual Report. Forward-looking statements should, therefore, be construed in light of such risk factors
and undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this announcement.
Anglo American expressly disclaims any obligation or undertaking (except as required by applicable law, the City Code on Takeovers and Mergers (the
"Takeover Code"), the UK Listing Rules, the Disclosure and Transparency Rules of the Financial Conduct Authority, the Listings Requirements of the
securities exchange of the JSE Limited in South Africa, the SIX Swiss Exchange, the Botswana Stock Exchange and the Namibian Stock Exchange and any
other applicable regulations) to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in Anglo
American's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
Nothing in this announcement should be interpreted to mean that future earnings per share of Anglo American will necessarily match or exceed its historical
published earnings per share.
Certain statistical and other information about Anglo American included in this announcement is sourced from publicly available third-party sources. As such,
it presents the views of those third-parties, though these may not necessarily correspond to the views held by Anglo American.
Anglo American plc
20 Carlton House Terrace London SW1Y 5AN United Kingdom
Registered office as above. Incorporated in England and Wales under the Companies Act 1985.
Registered Number: 3564138 Legal Entity Identifier: 549300S9XF92D1X8ME43
CONDENSED FINANCIAL STATEMENTS
for the six months ended 30 June 2018
Consolidated income statement
for the six months ended 30 June 2018
6 months ended 6 months ended
30.06.18 30.06.17
Before special Special items and Before special Special items and
items and remeasurements items and remeasurements
US$ million Note remeasurements (note 9) Total remeasurements (note 9) Total
Revenue 3 13,698 - 13,698 12,122 - 12,122
Operating costs (11,111) (156) (11,267) (9,665) 107 (9,558)
Operating profit 3 2,587 (156) 2,431 2,457 107 2,564
Non-operating special items 9 - (42) (42) - (145) (145)
Net income from associates and joint ventures 3, 12 364 2 366 267 (1) 266
Profit before net finance costs and tax 2,951 (196) 2,755 2,724 (39) 2,685
Investment income 135 - 135 128 - 128
Interest expense (337) (100) (437) (340) (29) (369)
Other net financing losses 15 (27) (12) (5) (20) (25)
Net finance costs 5 (187) (127) (314) (217) (49) (266)
Profit before tax 2,764 (323) 2,441 2,507 (88) 2,419
Income tax expense 6 (813) 17 (796) (634) (11) (645)
Profit for the financial period 1,951 (306) 1,645 1,873 (99) 1,774
Attributable to:
Non-controlling interests 386 (31) 355 337 22 359
Equity shareholders of the Company 1,565 (275) 1,290 1,536 (121) 1,415
Earnings per share (US$)
Basic 4 1.23 (0.21) 1.02 1.19 (0.10) 1.09
Diluted 4 1.21 (0.21) 1.00 1.18 (0.09) 1.09
Consolidated statement of comprehensive income
for the six months ended 30 June 2018
6 months ended 6 months ended
US$ million 30.06.18 30.06.17
Profit for the financial period 1,645 1,774
Items that will not be reclassified to the income statement (net of tax)
Remeasurement of net retirement benefit obligation 153 (30)
Net revaluation loss on equity investments (24) -
Items that have been or may subsequently be reclassified to the income statement (net of tax)
Net exchange differences:
Net (loss)/gain (including associates and joint ventures) (1,532) 861
Cumulative loss/(gain) transferred to the income statement on disposal of foreign operations 35 (81)
Net revaluation loss on available for sale investments - (9)
Other comprehensive (expense)/income for the financial period (net of tax) (1,368) 741
Total comprehensive income for the financial period (net of tax) 277 2,515
Attributable to:
Non-controlling interests 79 487
Equity shareholders of the Company 198 2,028
Consolidated balance sheet
as at 30 June 2018
US$ million Note 30.06.18 31.12.17
ASSETS
Non-current assets
Intangible assets 3,200 3,323
Property, plant and equipment 29,074 30,643
Environmental rehabilitation trusts 333 421
Investments in associates and joint ventures 1,830 1,956
Financial asset investments 443 561
Trade and other receivables 721 937
Deferred tax assets 1,185 1,191
Derivative financial assets 15 180 309
Other non-current assets 664 487
Total non-current assets 37,630 39,828
Current assets
Inventories 4,312 4,441
Trade and other receivables 1,928 2,136
Current tax assets 129 146
Derivative financial assets 15 121 81
Cash and cash equivalents 13 6,277 7,800
Total current assets 12,767 14,604
Assets classified as held for sale 127 129
Total assets 50,524 54,561
LIABILITIES
Current liabilities
Trade and other payables (4,313) (4,501)
Short term borrowings 13, 14 (1,253) (1,351)
Provisions for liabilities and charges (472) (562)
Current tax liabilities (604) (601)
Derivative financial liabilities 15 (227) (336)
Total current liabilities (6,869) (7,351)
Non-current liabilities
Trade and other payables (89) (89)
Medium and long term borrowings 13, 14 (8,441) (10,620)
Retirement benefit obligations (630) (695)
Deferred tax liabilities (3,911) (4,188)
Derivative financial liabilities 15 (635) (460)
Provisions for liabilities and charges (1,971) (2,235)
Total non-current liabilities (15,677) (18,287)
Liabilities directly associated with assets classified as held for sale - (41)
Total liabilities (22,546) (25,679)
Net assets 27,978 28,882
EQUITY
Called-up share capital 772 772
Share premium account 4,358 4,358
Own shares (6,244) (6,191)
Other reserves (10,007) (8,702)
Retained earnings 33,514 32,735
Equity attributable to equity shareholders of the Company 22,393 22,972
Non-controlling interests 5,585 5,910
Total equity 27,978 28,882
The Condensed financial statements of Anglo American plc, registered number 03564138, were approved by the
Board of directors on 25 July 2018 and signed on its behalf by:
Mark Cutifani Stephen Pearce
Chief Executive Finance Director
Consolidated cash flow statement
for the six months ended 30 June 2018
6 months ended 6 months ended
US$ million Note 30.06.18 30.06.17
Cash flows from operating activities
Profit before tax 2,441 2,419
Net finance costs including financing special items and remeasurements 314 266
Net income from associates and joint ventures (366) (266)
Non-operating special items 9 42 145
Operating profit 2,431 2,564
Operating special items and remeasurements 9 156 (107)
Cash element of special items (1) (6)
Depreciation and amortisation 1,308 1,097
Share-based payment charges 91 84
Decrease in provisions and net retirement benefit obligations (69) (161)
Increase in inventories (168) (107)
Decrease in operating receivables 70 124
(Decrease)/increase in operating payables (1) 214
Other adjustments (75) (23)
Cash flows from operations 3,742 3,679
Dividends from associates and joint ventures 396 332
Dividends from financial asset investments - 8
Income tax paid (758) (298)
Net cash inflows from operating activities 3,380 3,721
Cash flows from investing activities
Expenditure on property, plant and equipment 11 (1,276) (800)
Cash flows from derivatives related to capital expenditure 11 17 25
Proceeds from disposal of property, plant and equipment 11 10 36
Investments in associates and joint ventures (46) (32)
Purchase of financial asset investments (3) (1)
Net redemption of financial asset investments held at amortised cost 5 45
Interest received and other investment income 102 61
Net cash inflow/(outflow) on disposals 18 90 (100)
Other investing activities (3) (40)
Net cash used in investing activities (1,104) (806)
Cash flows from financing activities
Interest paid (303) (327)
Cash flows from derivatives related to financing activities 13 (70) (251)
Dividends paid to Company shareholders (681) -
Dividends paid to non-controlling interests (383) (86)
Proceeds from issuance of bonds 647 996
Proceeds from other borrowings 39 32
Repayment of bonds and borrowings (2,699) (1,879)
Proceeds from issue of shares to non-controlling interests 29 8
Purchase of shares by Group companies for employee share schemes (190) (138)
Other financing activities (8) (10)
Net cash used in financing activities (3,619) (1,655)
Net (decrease)/increase in cash and cash equivalents (1,343) 1,260
Cash and cash equivalents at start of period 13 7,792 6,044
Cash movements in the period (1,343) 1,260
Effects of changes in foreign exchange rates (190) 101
Cash and cash equivalents at end of period 13 6,259 7,405
Consolidated statement of changes in equity
for the six months ended 30 June 2018
Total equity
attributable
Cumulative to equity
Total translation shareholders Non-
share Own Retained adjustment Other of the controlling Total
US$ million capital(1) shares(2) earnings reserve reserves(3) Company interests equity
At 1 January 2017 5,130 (6,090) 29,976 (10,851) 851 19,016 5,309 24,325
Total comprehensive income - - 1,385 651 (8) 2,028 487 2,515
Dividends payable - - - - - - (311) (311)
Issue of shares to non-controlling interests - - - - - - 8 8
Equity settled share-based payment schemes - (35) 62 - (87) (60) - (60)
At 30 June 2017 5,130 (6,125) 31,423 (10,200) 756 20,984 5,493 26,477
Total comprehensive income - - 1,966 926 (274) 2,618 753 3,371
Dividends payable - - (618) - - (618) (361) (979)
Issue of shares to non-controlling interests - - - - - - 28 28
Equity settled share-based payment schemes - (66) (36) - 93 (9) (3) (12)
Other - - - - (3) (3) - (3)
At 31 December 2017 5,130 (6,191) 32,735 (9,274) 572 22,972 5,910 28,882
Total comprehensive income - - 1,428 (1,211) (19) 198 79 277
Dividends payable - - (681) - - (681) (492) (1,173)
Issue of shares to non-controlling interests - - - - - - 29 29
Equity settled share-based payment schemes - (53) 41 - (84) (96) (4) (100)
Other - - (9) - 9 - 63 63
At 30 June 2018 5,130 (6,244) 33,514 (10,485) 478 22,393 5,585 27,978
(1)Includes share capital and share premium.
(2)Own shares comprise shares of Anglo American plc held by the Company (treasury shares), its subsidiaries and employee benefit trusts.
(3)Includes the share-based payment reserve, financial asset revaluation reserve, cash flow hedge reserve, capital redemption reserve and legal reserve.
Notes to the Condensed financial statements
1. BASIS OF PREPARATION
Basis of Preparation
The Condensed financial statements for the six month period ended 30 June 2018 have been prepared in accordance
with International Accounting Standard (IAS) 34 Interim Financial Reporting and the requirements of the Disclosure
and Transparency Rules (DTR) of the Financial Conduct Authority (FCA) in the United Kingdom as applicable to
interim financial reporting.
The Condensed financial statements represent a 'condensed set of financial statements' as referred to in the
DTR issued by the FCA. Accordingly, they do not include all of the information required for a full annual financial
report and are to be read in conjunction with the Group's Consolidated financial statements for the year ended
31 December 2017, which were prepared in accordance with International Financial Reporting Standards (IFRS)
adopted for use by the European Union. The Condensed financial statements are unaudited and do not
constitute statutory accounts as defined in section 434 of the Companies Act 2006. The financial information for the
year to 31 December 2017 included in this report was derived from the statutory accounts for the year ended
31 December 2017, a copy of which has been delivered to the Registrar of Companies. The auditor's report on these
accounts was unqualified, did not include a reference to any matters to which the auditor drew attention by way of an
emphasis of matter and did not contain a statement under sections 498 (2) or (3) of the Companies Act 2006.
Going concern
The financial position of the Group, its cash flows, liquidity position and borrowing facilities are set out in the Financial
review of Group results for the six months ended 30 June 2018 on pages 3 to 8. The Group's net debt (including
related hedges) at 30 June 2018 was $4.0 billion (31 December 2017: $4.5 billion) representing a gearing level of
12% (31 December 2017: 13%). Further analysis of net debt is set out in note 13 and details of borrowings and
facilities are set out in note 14.
The directors have considered the Group's cash flow forecasts for the period to the end of 31 December 2019. The
Board is satisfied that the Group's forecasts and projections, taking into account reasonably possible changes in
trading performance, show that the Group will be able to operate within the level of its current facilities for the
foreseeable future. For this reason the Group continues to adopt the going concern basis in preparing its Condensed
financial statements.
Alternative Performance Measures
When assessing and discussing the Group's reported financial performance, financial position and cash flows,
management makes reference to Alternative Performance Measures (APMs) of historical or future financial
performance, financial position or cash flows that are not defined or specified under IFRS. APMs should be
considered in addition to, and not as a substitute for or as superior to, measures of financial performance, financial
position or cash flows reported in accordance with IFRS. Further information on APMs is provided on further below of
these Condensed financial statements.
2. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
The accounting policies applied are consistent with those adopted and disclosed in the Group's Consolidated financial
statements for the year ended 31 December 2017, except for changes arising from the adoption of the following
significant new accounting pronouncements which became effective in the current reporting period:
IFRS 9 Financial Instruments
Impairment: The standard introduces an 'expected credit loss' model for the assessment of impairment of financial
assets held at amortised cost. The impact of this transition difference is not considered material to the Group and
hence comparative values have not been restated. If comparative values had been restated, the impact would have
been to reduce the Group's opening retained earnings at 1 January 2017 by $18 million, to increase the Group's
operating costs by $1 million and to decrease the Group's profit before tax and underlying earnings by $1 million for
the six months ended 30 June 2017.
Classification and measurement: The measurement and accounting treatment of the Group's financial assets is
materially unchanged on application of the new standard with the exception of equity securities previously categorised
as available for sale. These are now held at fair value through other comprehensive income, meaning the recycling of
gains and losses on disposal and impairment losses is no longer permitted for this category of asset. There is no
impact to the net assets of the Group at 1 January 2017, 30 June 2017 or 31 December 2017, or to the Group's
results for the six months ended 30 June 2017 from this change.
Hedge accounting: The Group has elected to adopt the IFRS 9 hedge accounting requirements from 1 January 2018.
The adoption of the new standard had no effect on the amounts recognised in relation to hedging arrangements for
the six months ended 30 June 2017.
IFRS 15 Revenue from Contracts with Customers
The Group's revenue is primarily derived from commodity sales, for which the point of recognition is dependent on the
contract sales terms, known as the International Commercial Terms (Incoterms). As the transfer of risks and rewards
generally coincides with the transfer of control at a point in time under the Incoterms, the timing and amount of
revenue recognised by the Group for the sale of commodities is not materially affected.
For the Incoterms Cost, Insurance and Freight (CIF) and Cost and Freight (CFR) the seller must contract for and pay
the costs and freight necessary to bring the goods to the named port of destination. Consequently, the freight service
on export commodity contracts with CIF/CFR Incoterms represents a separate performance obligation as defined
under the new standard, and a portion of the revenue earned under these contracts, representing the obligation to
perform the freight service, is deferred and recognised over time as this obligation is fulfilled, along with the
associated costs.
The impact of this transition difference is not considered material to the Group and hence comparative values have
not been restated. If comparative values had been restated, the impact would have been to reduce revenue and
operating costs respectively for the six months ended 30 June 2017 by $17 million with no impact on profit. Current
assets and current liabilities as at 30 June 2017 would each have been higher by $26 million (31 December 2017:
each would have been higher by $39 million).
A number of other new accounting pronouncements, principally minor amendments to existing standards, also
became effective on 1 January 2018 and have been adopted by the Group. The adoption of these new accounting
pronouncements has not had a significant impact on the accounting policies, methods of computation or presentation
applied by the Group.
The Group has not early adopted any amendment, standard or interpretation that has been issued but is not yet
effective. It is expected that where applicable, these standards and amendments will be adopted on each respective
effective date.
Standards which have been issued but are not yet effective
IFRS 16 Leases
IFRS 16 Leases will be effective for the Group from 1 January 2019, replacing IAS 17 Leases. The Group has now
completed its impact assessment and is continuing to work on the necessary changes to internal systems and
processes to embed the new accounting requirements.
The principal impact of IFRS 16 will be to change the accounting treatment by lessees of leases currently classified
as operating leases. Lease agreements will give rise to the recognition by the lessee of a right-of-use asset and a
related liability for future lease payments.
The most significant expected impact on the Group of applying IFRS 16, based on contractual arrangements in place
at 30 June 2018, will be the recognition of lease liabilities of approximately $0.4 billion, along with right-of-use assets
with a similar aggregate value. This corresponds to the minimum lease payments under operating leases disclosed in
the Group's 2017 Annual Report, adjusted for new leases entered into during the period and the effect of discounting.
Lease liabilities will principally relate to corporate offices, diamond jewellery retail outlets and shipping vessels.
The impact of the standard on underlying earnings and profit before tax following adoption is not expected to be
significant although the income statement presentation of the cost of leases is changed. Instead of a rental charge
recognised within operating costs, the cost of leases will be allocated between the depreciation of right-of-use assets,
and a finance charge representing the unwind of the discount on lease liabilities.
The Group has elected to apply the modified retrospective approach on transition. The cumulative effect of transition
to IFRS 16 will be recognised in retained earnings at 1 January 2019 and the comparative period will not be restated.
FINANCIAL PERFORMANCE
Profit attributable to equity shareholders decreased 9% to $1,290 million and underlying earnings increased
2% to $1,565 million.
The following disclosures provide further information about the drivers of the Group's financial performance in the
period. This includes analysis of the respective contribution of the Group's operating segments along with information
about net finance costs and tax. In addition, disclosure on earnings per share and the dividend is provided.
3. FINANCIAL PERFORMANCE BY SEGMENT
Overview
The Group's segments are aligned to those business units that are evaluated regularly by the chief operating decision
maker in deciding how to allocate resources and in assessing performance.
The disclosures in this note include certain Alternative Performance Measures (APMs). For more information on the
APMs used by the Group, including definitions, please refer to further below.
Segment results
30.06.18
Net finance
Depreciation costs and Non-
Group Underlying and Underlying income tax controlling Underlying
US$ million revenue EBITDA amortisation EBIT expense interests earnings
De Beers 3,192 712 (300) 412 (177) (33) 202
Copper 2,429 966 (298) 668 (305) (114) 249
Platinum 2,755 511 (183) 328 (52) (67) 209
Iron Ore 1,900 454 (209) 245 (29) (149) 67
Coal 3,877 1,640 (340) 1,300 (392) (27) 881
Nickel and Manganese 857 420 (70) 350 (117) (10) 223
Corporate and other 2 (126) (2) (128) (142) 4 (266)
15,012 4,577 (1,402) 3,175 (1,214) (396) 1,565
Less: associates and joint ventures (1,314) (682) 94 (588) 214 10 (364)
Subsidiaries and joint operations 13,698 3,895 (1,308) 2,587 (1,000) (386) 1,201
Reconciliation:
Net income from associates and joint ventures 366 366
Special items and remeasurements (198) (277)
Closest equivalent IFRS measure 2,755 1,290
30.06.17
Net finance
Depreciation costs and Non-
Group Underlying and Underlying income tax controlling Underlying
US$ million revenue EBITDA amortisation EBIT expense interests earnings
De Beers 3,131 786 (238) 548 (146) (61) 341
Copper 1,609 586 (283) 303 (126) (37) 140
Platinum 2,144 276 (164) 112 (60) (15) 37
Iron Ore 2,365 925 (166) 759 (157) (216) 386
Coal 3,403 1,382 (262) 1,120 (331) (11) 778
Nickel and Manganese 652 257 (65) 192 (87) (1) 104
Corporate and other 2 (96) (7) (103) (150) 3 (250)
13,306 4,116 (1,185) 2,931 (1,057) (338) 1,536
Less: associates and joint ventures (1,184) (562) 88 (474) 206 1 (267)
Subsidiaries and joint operations 12,122 3,554 (1,097) 2,457 (851) (337) 1,269
Reconciliation:
Net income from associates and joint ventures 266 266
Special items and remeasurements (38) (120)
Closest equivalent IFRS measure 2,685 1,415
Net finance costs and income tax expense comprises net finance costs of $195 million (six months ended
30 June 2017: $246 million) and income tax expense of $1,019 million (six months ended 30 June 2017: $811 million).
Following a reassessment of the Group's reportable segments, the Group has presented the results of the
Manganese and Nickel businesses together as a single aggregated segment. The results of the Group's iron ore
businesses are now disclosed separately as the Iron Ore reportable segment. The 'Corporate and other' segment
includes unallocated corporate costs and exploration costs. Exploration costs represent the cost of the Group's
exploration activities across all segments.
Revenue of $13,698 million for the six months ended 30 June 2018 includes revenue from contracts with customers
of $13,794 million and net losses of $96 million on provisionally priced receivables and economic hedges of
commodity sales. As the effects of applying IFRS 15 are considered immaterial to the Group, the Group has elected
not to restate revenue for the comparative period on adoption of the standard.
The segment results are stated after elimination of inter-segment transactions and dividends and include an allocation
of corporate costs.
Further information
Segments predominantly derive revenue as follows - De Beers: rough and polished diamonds; Copper: copper;
Platinum: platinum group metals; Iron Ore: iron ore; Coal: metallurgical coal and thermal coal; Nickel and Manganese:
nickel, manganese ore and alloys.
Group revenue by product
6 months ended 6 months ended
US$ million 30.06.18 30.06.17
Diamonds 3,192 3,131
Copper 2,339 1,569
Platinum 1,127 1,117
Palladium 803 517
Rhodium 286 120
Iron ore 1,676 2,243
Manganese ore and alloys 577 449
Metallurgical coal 2,028 1,698
Thermal coal 1,849 1,704
Nickel 447 320
Other 688 438
15,012 13,306
Group revenue by destination
The Group's geographical analysis of segment revenue is allocated based on the customer's port of destination.
Where the port of destination is not known revenue is allocated based on the customer's country of domicile:
6 months ended 6 months ended
US$ million 30.06.18 30.06.17
China 3,273 2,737
Japan 1,437 1,231
Other Asia 2,934 2,621
South Africa 791 918
Other Africa 929 871
Brazil 163 171
Chile 266 226
Other South America 25 6
North America 392 389
Australia 28 20
India 1,952 1,782
United Kingdom (Anglo American plc's country of domicile) 878 654
Other Europe 1,944 1,680
15,012 13,306
4. EARNINGS PER SHARE
Overview
The disclosures in this note include certain Alternative Performance Measures (APMs). For more information on the
APMs used by the Group, including definitions, please refer to further below.
6 months ended 6 months ended
US$ 30.06.18 30.06.17
Earnings per share
Basic 1.02 1.09
Diluted 1.00 1.09
Underlying earnings per share
Basic 1.23 1.19
Diluted 1.21 1.18
Headline earnings per share
Basic 1.03 1.07
Diluted 1.01 1.06
Further information
The calculation of basic and diluted earnings per share is based on the following data:
Profit attributable to equity
shareholders of the Company Underlying earnings Headline earnings
6 months 6 months 6 months 6 months 6 months 6 months
ended ended ended ended ended ended
30.06.18 30.06.17 30.06.18 30.06.17 30.06.18 30.06.17
Earnings (US$ million)
Basic and diluted earnings 1,290 1,415 1,565 1,536 1,307 1,386
Number of shares (million)
Basic number of ordinary shares outstanding 1,270 1,293 1,270 1,293 1,270 1,293
Effect of dilutive potential ordinary shares 26 9 26 9 26 9
Diluted number of ordinary shares outstanding 1,296 1,302 1,296 1,302 1,296 1,302
The average number of ordinary shares in issue excludes shares held by employee benefit trusts and
Anglo American plc shares held by Group companies. The diluted number of ordinary shares outstanding including
share options and awards is calculated on the assumption of conversion of all potentially dilutive ordinary shares. In
the period ended 30 June 2018 there were no share options (six months ended 30 June 2017: 115,200) that were
potentially dilutive but not included in the calculation of diluted earnings because they were anti-dilutive.
Headline earnings, a Johannesburg Stock Exchange defined performance measure, is reconciled from underlying
earnings as follows:
6 months ended 6 months ended
US$ million 30.06.18 30.06.17
Underlying earnings for the financial period 1,565 1,536
Operating special items - restructuring - 31
Operating remeasurements (52) (37)
Financing special items and remeasurements (126) (50)
Tax special items and remeasurements (25) 7
Associates' and joint ventures' special items and remeasurements 2 (1)
Other reconciling items (57) (100)
Headline earnings for the financial period 1,307 1,386
The reconciling items above are shown net of tax and non-controlling interests.
Other reconciling items principally relate to disposals of plant and equipment (six months ended 30 June 2017:
principally relate to the settlement of class action claims).
5. NET FINANCE COSTS
6 months ended 6 months ended
US$ million 30.06.18 30.06.17
Investment income
Interest income from cash and cash equivalents 94 66
Interest income from associates and joint ventures 11 19
Other interest income 10 22
Net interest income on defined benefit arrangements 20 13
Dividend income from financial asset investments - 8
Investment income 135 128
Interest expense
Interest and other finance expense (290) (283)
Net interest cost on defined benefit arrangements (24) (28)
Unwinding of discount relating to provisions and other liabilities (42) (44)
(356) (355)
Less: interest expense capitalised 19 15
Interest expense before special items and remeasurements (337) (340)
Financing special items (100) (29)
Interest expense (437) (369)
Other net financing gains/(losses)
Net foreign exchange gains/(losses) 15 (6)
Other net fair value gains - 1
Other net financing gains/(losses) before special items and remeasurements 15 (5)
Financing remeasurements (27) (20)
Other net financing losses (12) (25)
Net finance costs (314) (266)
6. INCOME TAX EXPENSE
Overview
The effective tax rate for the period of 32.6% (six months ended 30 June 2017: 26.7%) is higher (six months ended
30 June 2017: higher) than the applicable weighted average statutory rate of corporation tax in the United Kingdom.
The disclosures in this note include certain Alternative Performance Measures (APMs). For more information on the
APMs used by the Group, including definitions, please refer to further below.
6 months ended
30.06.18
Profit before tax Tax charge Effective
US$ million US$ million tax rate
Calculation of effective tax rate (statutory basis) 2,441 (796) 32.6%
Adjusted for:
Special items and remeasurements 323 (17)
Associates' and joint ventures' tax and non-controlling interests 216 (206)
Calculation of underlying effective tax rate 2,980 (1,019) 34.2%
The underlying effective tax rate for the period of 34.2% is higher than the equivalent underlying effective tax rate of
30.2% for the six months ended 30 June 2017.
The effective tax rate for the six months ended 30 June 2018 was impacted by the relative levels of profits arising in
the Group's operating jurisdictions, partly offset by a benefit from the reassessment of deferred tax balances, primarily
in Brazil. In future periods, it is expected that the underlying effective tax rate will remain above the United Kingdom
statutory tax rate.
a) Analysis of charge for the period
6 months ended 6 months ended
US$ million 30.06.18 30.06.17
United Kingdom corporation tax 11 10
South Africa tax 271 243
Other overseas tax 532 347
Prior period adjustments (17) -
Current tax 797 600
Deferred tax 16 34
Income tax expense before special items and remeasurements 813 634
Special items and remeasurements tax (note 9) (17) 11
Income tax expense 796 645
Current tax includes royalties which meet the definition of income tax and are in addition to royalties recorded in
operating costs.
b) Factors affecting tax charge for the period
The reconciling items between the statutory corporation tax rate and the income tax expense are:
6 months ended 6 months ended
US$ million 30.06.18 30.06.17
Profit before tax 2,441 2,419
Less: Net income from associates and joint ventures (366) (266)
Profit before tax (excluding associates and joint ventures) 2,075 2,153
Tax calculated at United Kingdom corporation tax rate of 19%
(six months ended 30 June 2017: 19.25%) 394 414
Tax effects of:
Items non-deductible/taxable for tax purposes 69 15
Temporary difference adjustments (71) (6)
Special items and remeasurements 45 28
Other adjustments
Dividend withholding taxes 97 82
Effect of differences between local and United Kingdom tax rates 276 117
Prior year adjustments to current tax (17) -
Other adjustments 3 (5)
Income tax expense 796 645
The special items and remeasurements reconciling item of $45 million (six months ended 30 June 2017: $28 million)
relates to the net tax impact of total special items and remeasurements before tax calculated at the United Kingdom
corporation tax rate less the associated tax recorded against these items and tax special items and remeasurements.
Associates' and joint ventures' tax included within Net income from associates and joint ventures for the period ended
30 June 2018 is a charge of $204 million (six months ended 30 June 2017: charge of $178 million). Excluding special
items and remeasurements this becomes a charge of $206 million (six months ended 30 June 2017: charge of
$177 million).
7. DIVIDENDS
6 months ended 6 months ended
30.06.18 30.06.17
Proposed interim ordinary dividend per share (US cents) 49 48
Proposed interim ordinary dividend (US$ million) 630 621
SIGNIFICANT ITEMS
Special items and remeasurements are a net charge of $0.3 billion and include the write-off of assets in
De Beers' South African operations (De Beers) of $0.1 billion and losses arising on bond buybacks
completed in the period (Corporate and other) of $0.1 billion.
During the six months ended 30 June 2018, the significant accounting matters addressed by management included:
- the assessment of impairment and impairment reversal indicators; and
- the estimation of cash flow projections for impairment testing.
8. SIGNIFICANT ACCOUNTING MATTERS
Minas-Rio
Following pipeline leaks identified on 12 March and 29 March, the Group announced the suspension of operations at
Minas-Rio, with effect from 29 March, in order to conduct a full inspection of the pipeline. This was identified as an
indicator of an impairment, and an impairment review has been undertaken as at 30 June 2018. The recoverable
amount, based on a discounted cash flow model, supports the carrying value of $4.2 billion.
The valuation is inherently sensitive to changes in economic and operational assumptions which could materially
increase or reduce the valuation. Key assumptions include the long-term iron ore price, the timing of resumption of
operations, and the timing of receipt of required permits and licences. For example, a $5/tonne change in the long-
term price forecast for iron ore, with all other valuation assumptions remaining the same, would change the valuation
by $0.6 billion.
9. SPECIAL ITEMS AND REMEASUREMENTS
Overview
6 months 6 months
ended ended
30.06.18 30.06.17
Non-controlling
US$ million Before tax Tax interests Net Net
Impairments and impairment reversals (99) 28 11 (60) 7
Restructuring costs - - - - 31
Operating remeasurements (57) 3 2 (52) (37)
Operating special items and remeasurements (156) 31 13 (112) 1
Disposals of businesses and investments (39) 16 21 (2) (34)
Adjustments relating to business combinations (21) - - (21) 53
Adjustments relating to former operations 18 (4) (5) 9 (97)
Non-operating special items (42) 12 16 (14) (78)
Financing special items and remeasurements (127) - 1 (126) (50)
Tax special items and remeasurements - (26) 1 (25) 7
Total (325) 17 31 (277) (120)
Associates' and joint ventures' special items and remeasurements 2 (1)
Total special items and remeasurements (275) (121)
Special items and remeasurements
Special items are those items of financial performance that, due to their size and nature, the Group believes should
be separately disclosed on the face of the income statement. Remeasurements are items that are excluded from
underlying earnings in order to reverse timing differences in the recognition of gains and losses in the income
statement in relation to transactions that, whilst economically linked, are subject to different accounting measurement
or recognition requirements. For information about the categories of items which are included within special items and
remeasurements, please refer to note 8 of the Group's Annual Report for the year ended 31 December 2017.
Special items and remeasurements, along with related tax and non-controlling interests, are excluded from underlying
earnings, which is an Alternative Performance Measure (APM). For more information on the APMs used by the
Group, including definitions, please refer to further below.
Operating special items
Impairments and impairment reversals
The impairment charge of $99 million ($60 million after tax and non-controlling interests) relates to the write-off of
assets in De Beers' South African operations that are no longer expected to generate future economic benefit.
2017
Net impairments and impairment reversals of $7 million after tax and non-controlling interests for the six months
ended 30 June 2017 principally related to the impairment of Bafokeng Rasimone Platinum Mine (BRPM) and an
impairment reversal at El Soldado.
Restructuring costs
There were no restructuring costs recorded in the six months ended 30 June 2018.
2017
Restructuring costs in the six months ended 30 June 2017 were a credit of $31 million after tax and non-controlling
interests due to the derecognition of the restructuring provisions relating to the Brisbane Corporate Office.
Operating remeasurements
Operating remeasurements reflect a net loss of $57 million ($52 million after tax and non-controlling interests) which
principally relates to a $63 million depreciation and amortisation charge arising due to the fair value uplift on the
Group's pre-existing 45% shareholding in De Beers, which was required on acquisition of a controlling stake.
2017
Operating remeasurements for the six months ended 30 June 2017 were a net loss of $37 million.
Non-operating special items
Disposals of businesses and investments
On 4 July 2018, Anglo American Platinum entered into an agreement to dispose of its 33% interest in the Bafokeng
Rasimone Platinum Mine (BRPM), an associate of the Group, to Royal Bafokeng Platinum Limited (RBPlat) for
consideration of approximately R1.9 billion ($135 million). The transaction is subject to a number of conditions
precedent including approval by the shareholders of RBPlat. An impairment charge of $82 million ($37 million after
tax and non-controlling interests) has been recorded to bring the carrying amount of the Group's investment in BRPM
into line with its fair value less costs to sell based on the fair value of the sale consideration.
On 1 March 2018, the Group completed the sale of the Eskom-tied domestic coal operations in South Africa to a
wholly owned subsidiary of Seriti Resources Holdings Proprietary Limited. The consideration payable for the
operations as at 1 January 2017 was R2.3 billion (approximately $164 million). A gain on disposal of $84 million
($59 million after tax and non-controlling interests) was recorded.
In addition, a gain on disposal of $30 million ($30 million after tax) was recorded on the disposal of the Group's
88.17% shareholding in the Drayton mine (Coal) and a loss on disposal of $71 million ($54 million after tax and non-
controlling interests) was recorded on the disposal of the Group's interests in the Union platinum mine and Masa
Chrome Company Proprietary Limited (Platinum).
2017
Non-operating special items in the six months ended 30 June 2017 were a net loss of $34 million after tax and non-
controlling interests, which principally included an impairment associated with the sale of the Union platinum mine and
a gain on disposal of the Group's interests in the Dartbrook coal mine.
Adjustments relating to business combinations
The $21 million loss during the six months ended 30 June 2018 relates to adjustments in respect of business
combinations in prior periods.
2017
The gain of $53 million (after tax and non-controlling interests) principally related to the acquisition of the remaining
50% share in De Beers Jewellers (De Beers) and adjustments in respect of business combinations in prior periods.
Adjustments relating to former operations
The gain of $18 million ($9 million after tax and non-controlling interests) relates to adjustments in respect of
disposals completed in prior periods.
2017
The loss of $97 million principally included the charge of $101 million relating to the estimated cost of the Group
contributing to a resolution of historical issues relating to occupational lung disease in the gold mining industry in
South Africa.
Financing special items and remeasurements
Financing special items and remeasurements principally comprise a loss of $98 million (six months ended
30 June 2017: $26 million) arising on bond buybacks completed in the period and a net fair value loss of $27 million
(six months ended 30 June 2017: loss of $21 million) on derivatives hedging net debt.
Tax associated with special items and remeasurements
This includes a tax remeasurement charge of $26 million principally arising on Brazilian deferred tax assets
(six months ended 30 June 2017: $16 million).
Of the total tax credit of $17 million, there is a net current tax charge of $22 million (six months ended
30 June 2017: nil) and a net deferred tax credit of $39 million (six months ended 30 June 2017: charge of $11 million).
Associates' and joint ventures' special items and remeasurements
Associates' and joint ventures' special items and remeasurements relate to the Coal segment (six months ended
30 June 2017: Coal segment).
CAPITAL BASE
We have a value-focused approach to capital allocation with clear prioritisation: maintain asset integrity;
ensure a strong balance sheet; and pay dividends to our shareholders.
Value-disciplined capital allocation throughout the cycle is critical to protecting and enhancing our shareholders'
capital, given the long-term and capital intensive nature of our business.
The Group uses attributable return on capital employed (ROCE) to monitor how efficiently assets are generating profit
on invested capital for the equity shareholders of the Company. Attributable ROCE is an Alternative Performance
Measure (APM). For more information on the APMs used by the Group, including definitions, please refer to further below.
Attributable ROCE %
6 months ended 6 months ended
30.06.18 30.06.17
De Beers 8 11
Copper 23 10
Platinum 14 4
Iron Ore 2 16
Coal 77 63
Nickel and Manganese 29 16
Corporate and other n/a n/a
19 18
Attributable ROCE increased to 19% in the six months ended 30 June 2018 (six months ended 30 June 2017: 18%),
primarily because of higher attributable annualised underlying EBIT. Average attributable capital employed has
increased to $27.3 billion (30 June 2017: $27.1 billion) due to capital expenditure and the strengthening of producer currencies.
10. CAPITAL BY SEGMENT
The disclosures in this note include certain Alternative Performance Measures (APMs). For more information on the
APMs used by the Group, including definitions, please refer to further below.
Capital employed by segment
Capital employed is the principal measure of segment assets and liabilities reported to the Group Management
Committee. Capital employed is defined as net assets excluding net debt and financial asset investments.
Capital employed
6 months ended Year ended
US$ million 30.06.18 31.12.17
De Beers 8,496 9,294
Copper 5,877 5,899
Platinum 4,125 4,510
Iron Ore 7,257 7,603
Coal 3,395 3,384
Nickel and Manganese 2,326 2,364
Corporate and other 35 (241)
Capital employed 31,511 32,813
Reconciliation to Consolidated balance sheet:
Net debt (3,987) (4,501)
Debit valuation adjustment attributable to derivatives hedging net debt 11 9
Financial asset investments 443 561
Net assets 27,978 28,882
11. CAPITAL EXPENDITURE
The disclosures in this note include certain Alternative Performance Measures (APMs). For more information on the
APMs used by the Group, including definitions, please refer to further below.
Capital expenditure by segment
6 months ended 6 months ended
US$ million 30.06.18 30.06.17
De Beers 156 74
Copper 368 225
Platinum 216 126
Iron Ore 153 73
Coal 306 221
Nickel and Manganese 15 7
Corporate and other 6 5
Capital expenditure 1,220 731
Reconciliation to the Consolidated cash flow statement:
Cash flows from derivatives related to capital expenditure 17 25
Proceeds from disposal of property, plant and equipment 10 36
Direct funding for capital expenditure received from non-controlling interests 29 8
Expenditure on property, plant and equipment 1,276 800
Capital expenditure by category
6 months ended 6 months ended
US$ million 30.06.18 30.06.17
Expansionary 266 67
Stay-in-business 592 404
Stripping and development 372 296
Proceeds from disposal of property, plant and equipment (10) (36)
1,220 731
Expansionary capital expenditure includes the cash flows from derivatives related to capital expenditure and is net of
direct funding for capital expenditure received from non-controlling interests.
12. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
Overview
Investments in associates and joint ventures represent businesses the Group does not control, but instead exercises
joint control or significant influence. These include the associates Cerrej�n and Jellinbah (Coal) and the joint ventures
Ferroport (Iron Ore) and Samancor (Nickel and Manganese).
Further information
The Group's share of the results of the associates and joint ventures is as follows:
Income Statement
6 months ended 6 months ended
US$ million 30.06.18 30.06.17
Revenue 1,314 1,184
Operating costs (before special items and remeasurements) (726) (710)
Associates' and joint ventures' underlying EBIT 588 474
Net finance costs (8) (29)
Income tax expense (206) (177)
Non-controlling interests (10) (1)
Net income from associates and joint ventures (before special items and remeasurements) 364 267
Special items and remeasurements tax 2 (1)
Net income from associates and joint ventures 366 266
Segmental information
Revenue Underlying EBITDA
6 months ended 6 months ended 6 months ended 6 months ended
US$ million 30.06.18 30.06.17 30.06.18 30.06.17
De Beers 3 16 - 2
Platinum 44 77 13 (6)
Iron Ore 24 41 15 31
Coal 666 601 322 293
Nickel and Manganese 577 449 332 242
1,314 1,184 682 562
Underlying EBIT Share of net income
6 months ended 6 months ended 6 months ended 6 months ended
US$ million 30.06.18 30.06.17 30.06.18 30.06.17
De Beers - 2 - 2
Platinum 2 (15) 1 (14)
Iron Ore 11 28 3 9
Coal 270 242 181 154
Nickel and Manganese 305 217 181 115
588 474 366 266
NET DEBT AND FINANCIAL RISK MANAGEMENT
Net debt has decreased from $4.5 billion to $4.0 billion during the period, driven by operating cashflows.
Gearing has decreased from 13% to 12%.
6 months ended Year ended
US$ million 30.06.18 31.12.17
Net assets 27,978 28,882
Net debt including related derivatives (note 13) 3,987 4,501
Total capital 31,965 33,383
Gearing 12% 13%
Net debt is calculated as total borrowings less cash and cash equivalents (including derivatives that provide an
economic hedge of net debt). Total capital is calculated as 'Net assets' (as shown in the Consolidated balance sheet)
excluding net debt.
13. NET DEBT
Overview
The disclosures in this note include certain Alternative Performance Measures (APMs). For more information on the
APMs used by the Group, including definitions, please refer to further below.
Movement in net debt
Cash and Net debt Derivatives Net debt
cash Short term Medium and long excluding hedging including
US$ million equivalents borrowings term borrowings derivatives net debt derivatives
At 1 January 2017 6,044 (1,799) (11,363) (7,118) (1,369) (8,487)
Cash flow 1,260 505 346 2,111 251 2,362
Reclassifications - (403) 403 - - -
Movement in fair value - (5) 65 60 424 484
Other non-cash movements - (106) (57) (163) - (163)
Currency movements 101 (68) (450) (417) - (417)
At 30 June 2017 7,405 (1,876) (11,056) (5,527) (694) (6,221)
Cash flow 289 1,333 (28) 1,594 168 1,762
Reclassifications - (674) 674 - - -
Movement in fair value - (2) 145 143 177 320
Other non-cash movements - (45) (87) (132) - (132)
Currency movements 98 (60) (268) (230) - (230)
At 31 December 2017 7,792 (1,324) (10,620) (4,152) (349) (4,501)
Cash flow (1,343) 438 1,575 670 70 740
Reclassifications - (449) 449 - - -
Movement in fair value - 2 186 188 (291) (103)
Other non-cash movements - 63 (132) (69) - (69)
Currency movements (190) 35 101 (54) - (54)
At 30 June 2018 6,259 (1,235) (8,441) (3,417) (570) (3,987)
Further information
Reconciliation to the Consolidated balance sheet
Cash and cash equivalents Short term borrowings Medium and long term borrowings
US$ million 30.06.18 30.06.17 31.12.17 30.06.18 30.06.17 31.12.17 30.06.18 30.06.17 31.12.17
Balance sheet 6,277 7,408 7,800 (1,253) (1,879) (1,351) (8,441) (11,056) (10,620)
Balance sheet - disposal groups - - 19 - - - - - -
Bank overdrafts (18) (3) (27) 18 3 27 - - -
Net cash/(debt) classifications 6,259 7,405 7,792 (1,235) (1,876) (1,324) (8,441) (11,056) (10,620)
Net debt excludes the debit valuation adjustment to derivative liabilities hedging net debt of $11 million
(31 December: 2017: $9 million). This adjustment reflects the impact of the Group's own credit risk on the fair value of
these liabilities.
South Africa net cash
The Group operates in South Africa where the existence of exchange controls may restrict the use of certain cash
balances. The Group therefore monitors the cash and debt associated with these operations separately. These
restrictions are not expected to have a material effect on the Group's ability to meet its ongoing obligations. Below is a
breakdown of net cash in South Africa.
US$ million 30.06.18 31.12.17
Cash and cash equivalents 4,132 4,276
Short term borrowings (143) (34)
Medium and long term borrowings (712) (798)
Net cash excluding derivatives 3,277 3,444
Derivatives hedging net debt 1 2
Net cash including derivatives 3,278 3,446
Cash of $2,639 million (31 December 2017: $2,625 million) that is legally owned by South African companies is
managed outside of South Africa as part of a Group cash pooling arrangement. On a managed basis, South Africa
net cash is therefore $639 million (31 December 2017: $821 million).
14. BORROWINGS
Overview
The Group accesses borrowings mostly in capital markets through bonds issued under the Euro Medium Term Note
(EMTN) programme, the South African Domestic Medium Term Note (DMTN) programme, the Australian Medium
Term Note (AMTN) programme and through accessing the US bond markets. The Group uses interest rate and cross
currency swaps to ensure that the majority of the Group's borrowings are floating rate US dollar denominated.
Between March and June 2018, the Group completed a number of bond buyback transactions consisting of Euro and
US dollar denominated bonds with maturities from April 2019 to April 2021. The Group used $2.24 billion of cash to
retire $2.14 billion of contractual repayment obligations (including derivatives hedging the bonds).
In March 2018, the Group issued $650 million 4.5% senior notes due 2028 through accessing the US bond markets.
Further information
30.06.18 31.12.17
Medium and Medium and
Short term long term Total Short term long term Total
US$ million borrowings borrowings borrowings borrowings borrowings borrowings
Secured
Bank loans and overdrafts 13 33 46 18 39 57
Obligations under finance leases 13 62 75 13 68 81
26 95 121 31 107 138
Unsecured
Bank loans and overdrafts 29 135 164 24 123 147
Bonds 1,082 8,084 9,166 1,114 10,263 11,377
Interest payable and other loans 116 127 243 182 127 309
1,227 8,346 9,573 1,320 10,513 11,833
Total borrowings 1,253 8,441 9,694 1,351 10,620 11,971
The Group had the following undrawn committed borrowing facilities at the period end:
US$ million 30.06.18 31.12.17
Expiry date
Within one year 516 490
Greater than one year, less than two years 1,169 598
Greater than two years, less than three years 1,231 7,676
Greater than three years, less than four years 3 -
Greater than four years, less than five years 4,842 244
7,761 9,008
In March 2018 the Group replaced a number of credit facilities maturing between March 2019 and March 2020 with a
total value of $5.4 billion, with a $4.5 billion credit facility maturing in March 2023.
Undrawn committed borrowing facilities expiring within one year include undrawn South African rand facilities
equivalent to $0.2 billion (31 December 2017: $0.3 billion) in respect of facilities with a 364 day maturity which roll
automatically on a daily basis, unless notice is served.
15. FINANCIAL INSTRUMENTS
Financial instruments overview
For financial assets and liabilities which are traded on an active market, such as listed investments or listed debt
instruments, fair value is determined by reference to market value. For non-traded financial assets and liabilities, fair
value is calculated using discounted cash flows, considered to be reasonable and consistent with those that would be
used by a market participant, and based on observable market data where available (for example forward exchange
rate, interest rate or commodity price curve), unless carrying value is considered to approximate fair value.
Where discounted cash flow models based on management's assumptions are used, the resulting fair value
measurements are considered to be at level 3 in the fair value hierarchy, as defined in IFRS 13 Fair Value
Measurement, as they depend to a significant extent on unobservable valuation inputs.
All derivatives that have been designated into hedge relationships have been separately disclosed.
30.06.18
At fair value
At fair value Financial through other Financial
through profit assets at comprehensive Designated liabilities at
US$ million and loss amortised cost income into hedges amortised cost Total
Financial assets
Trade and other receivables 890 875 - - - 1,765
Derivative financial assets 115 - - 186 - 301
Cash and cash equivalents 4,004 2,273 - - - 6,277
Financial asset investments - 386 57 - - 443
5,009 3,534 57 186 - 8,786
Financial liabilities
Trade and other payables (855) - - - (3,012) (3,867)
Derivative financial liabilities (688) - - (174) - (862)
Borrowings - - - (9,233) (461) (9,694)
(1,543) - - (9,407) (3,473) (14,423)
Net financial (liabilities)/assets 3,466 3,534 57 (9,221) (3,473) (5,637)
31.12.17
At fair value Financial
through profit Loans and Available Designated liabilities at
US$ million and loss receivables for sale into hedges amortised cost Total
Financial assets
Trade and other receivables 796 1,356 - - - 2,152
Derivative financial assets 83 - - 307 - 390
Cash and cash equivalents - 7,800 - - - 7,800
Financial asset investments - 446 115 - - 561
879 9,602 115 307 - 10,903
Financial liabilities
Trade and other payables (706) - - - (3,363) (4,069)
Derivative financial liabilities (738) - - (58) - (796)
Borrowings - - - (11,496) (475) (11,971)
(1,444) - - (11,554) (3,838) (16,836)
Net financial (liabilities)/assets (565) 9,602 115 (11,247) (3,838) (5,933)
Trade and other receivables exclude prepayments and tax receivables. Trade and other payables exclude tax, social
security and deferred income.
Cash and cash equivalents at 30 June 2018 include $4,004 million held in short-term money market funds. These
funds are selected to ensure compliance with the minimum credit rating requirements and counterparty exposure
limits set out in the Group's Treasury policy. Following the adoption of IFRS 9 from 1 January 2018 these balances
have been reclassified as at fair value through profit and loss as they are redeemed through the sale of units in the
funds rather than solely through the recovery of principal and interest. The amount held in similar money market funds
at 31 December 2017 and classified as loans and receivables in the analysis above was $4,988 million. There is no
impact on the carrying value of Cash and cash equivalents as a result of this reclassification.
Fair value hierarchy
An analysis of financial assets and liabilities carried at fair value is set out below:
30.06.18 31.12.17
US$ million Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Financial assets
At fair value through profit and loss
Provisionally priced trade receivables - 667 - 667 - 558 - 558
Other receivables - - 223 223 - - 238 238
Derivatives hedging net debt - 28 - 28 - 30 - 30
Other derivatives 3 84 - 87 - 53 - 53
Cash and cash equivalents 4,004 - - 4,004 - - - -
Designated into hedges
Derivatives hedging net debt - 186 - 186 - 307 - 307
At fair value through other comprehensive income
Financial asset investments 19 - 38 57 69 - 46 115
4,026 965 261 5,252 69 948 284 1,301
Financial liabilities
At fair value through profit and loss
Provisionally priced trade payables - (744) - (744) - (594) - (594)
Other payables - - (111) (111) - - (112) (112)
Derivatives hedging net debt - (610) - (610) - (628) - (628)
Other derivatives (6) (83) - (89) (2) (117) - (119)
Designated into hedges
Derivatives hedging net debt - (174) - (174) - (58) - (58)
Debit valuation adjustment to derivative liabilities - 11 - 11 - 9 - 9
(6) (1,600) (111) (1,717) (2) (1,388) (112) (1,502)
Net assets/(liabilities) carried at fair value 4,020 (635) 150 3,535 67 (440) 172 (201)
Fair value hierarchy Valuation technique
Level 1 Valued using unadjusted quoted prices in active markets for identical financial instruments. This category
includes cash and cash equivalents held in money market funds, listed equity shares and quoted futures.
Level 2 Instruments in this category are valued using valuation techniques where all of the inputs that have a
significant effect on the valuation are directly or indirectly based on observable market data. This category
includes provisionally priced trade receivables and payables and over-the-counter derivatives.
Level 3 Instruments in this category have been valued using a valuation technique where at least one input (which
could have a significant effect on the instrument's valuation) is not based on observable market data. Where
inputs can be observed from market data without undue cost and effort, the observed input is used.
Otherwise, management determines a reasonable estimate for the input. This category includes contingent
consideration, receivables relating to disposals and unlisted equity investments.
UNRECOGNISED ITEMS AND UNCERTAIN EVENTS
16. EVENTS OCCURRING AFTER THE PERIOD END
On 4 July 2018, Anglo American Platinum entered into an agreement to dispose of its 33% interest in the Bafokeng
Rasimone Platinum Mine (BRPM) to Royal Bafokeng Platinum Limited (RBPlat). Further details are provided in
note 9.
With the exception of the declaration of the 2018 interim dividend, there have been no other reportable events since
30 June 2018.
17. CONTINGENT LIABILITIES
The Group is subject to various claims which arise in the ordinary course of business. Additionally, the Group has
provided indemnities against certain liabilities as part of agreements for the sale or other disposal of business
operations. Having taken appropriate legal advice, the Group believes that a material liability arising from the
indemnities provided is remote.
The Group is required to provide guarantees in several jurisdictions in respect of environmental restoration and
decommissioning obligations. The Group has provided for the estimated cost of these activities.
GROUP STRUCTURE
18. DISPOSALS
See note 9 for details of the principal disposals completed in the period.
The Group received net cash on disposals of $90 million in the six months ended 30 June 2018. This principally
comprised net cash inflows relating to the sale of the Eskom-tied domestic coal operations in South Africa, partially
offset by net cash outflows relating to the sale of the Group's interests in the Union mine and Masa Chrome Company
Proprietary Limited (Platinum), which included working capital support provided to Union as part of the transaction.
2017
Disposals in the six months ended 30 June 2017 principally relate to the Group's 83.3% interest in the Dartbrook coal
mine (Coal) and net cash payments of disposals completed in prior periods.
OTHER ITEMS
19. RELATED PARTY TRANSACTIONS
The Group has a related party relationship with its subsidiaries, joint operations, associates and joint ventures.
Members of the Board and the Group Management Committee are considered to be related parties.
The Company and its subsidiaries, in the ordinary course of business, enter into various sale, purchase and service
transactions with joint operations, associates, joint ventures and others in which the Group has a material interest.
These transactions are under terms that are no less favourable to the Group than those arranged with third parties.
Associates Joint ventures Joint operations
US$ million 30.06.18 30.06.17 31.12.17 30.06.18 30.06.17 31.12.17 30.06.18 30.06.17 31.12.17
Transactions with related
parties
Sale of goods and services 1 11 17 - - - 104 103 197
Purchase of goods and services (178) (217) (430) (63) (81) (163) (1,502) (1,524) (3,108)
Balances with related parties
Trade and other receivables from
related parties 2 5 3 - 1 1 31 12 23
Trade and other payables to
related parties (131) (143) (211) (19) (15) (29) (120) (96) (93)
Loans receivable from related
parties - - - 188 360 230 - - -
Balances and transactions with joint operations or joint operation partners represent the portion that the Group does
not have the right to offset against the corresponding amount recorded by the respective joint operations. These
amounts primarily relate to purchases by De Beers and Platinum from their joint operations in excess of the Group's
attributable share of their production.
Loans receivable from related parties are included in Financial asset investments on the Consolidated balance sheet.
Responsibility statement
We confirm that to the best of our knowledge:
(a) the Condensed financial statements have been prepared in accordance with IAS 34 Interim Financial
Reporting;
(b) the Half year financial report includes a fair review of the information required by DTR 4.2.7R (being an
indication of important events that have occurred during the first six months of the financial year, and their
impact on the Half year financial report, and a description of the principal risks and uncertainties for the
remaining six months of the financial year); and
(c) the Half year financial report includes a fair review of the information required by DTR 4.2.8R (being
disclosure of related party transactions that have taken place in the first six months of the current financial
year and that have materially affected the financial position or the performance of the Group during that
period and any changes in the related party transactions described in the last annual report that could have a
material effect on the financial position or performance of the Group in the first six months of the current
financial year).
By order of the Board
Mark Cutifani Stephen Pearce
Chief Executive Finance Director
INDEPENDENT REVIEW REPORT TO ANGLO AMERICAN PLC
We have been engaged by the Company to review the Condensed financial statements in the Half year financial
report for the six months ended 30 June 2018 which comprises the Consolidated income statement, the Consolidated
statement of comprehensive income, the Consolidated balance sheet, the Consolidated cash flow statement, the
Consolidated statement of changes in equity and related notes 1 to 19. We have read the other information contained
in the Half year financial report and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the Condensed set of financial statements.
This report is made solely to the Company in accordance with International Standard on Review Engagements (UK
and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued
by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters
we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The Half year financial report is the responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the Half year financial report in accordance with the Disclosure and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as
adopted by the European Union. The Condensed financial statements included in this Half year financial report have
been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as adopted by
the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the Condensed financial statements in the Half year
financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410
Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries,
primarily of persons responsible for financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in accordance with International
Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the Condensed financial
statements in the Half year financial report for the six months ended 30 June 2018 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the
Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Statutory Auditor
London, United Kingdom
25 July 2018
Summary by operation
The disclosures in this section include certain Alternative Performance Measures (APMs). For more information on
the APMs used by the Group, including definitions, please refer to further below.
Marketing activities are allocated to the underlying operation to which they relate.
30.06.18
Sales Realised Unit Group Underlying Underlying Underlying Capital
US$ million, unless otherwise stated volume price cost revenue(1) EBITDA EBIT earnings expenditure
'000 cts $/ct $/ct
De Beers 17,845(2) 162(3) 67(4) 3,192(5) 712 412 202 156
Mining
Botswana (Debswana) n/a 155(3) 31(4) n/a 263 234 n/a 34
Namibia (Namdeb Holdings) n/a 545(3) 272(4) n/a 90 73 n/a 19
South Africa (DBCM) n/a 106(3) 73(4) n/a 71 2 n/a 66
Canada n/a 157(3) 51(4) n/a 126 52 n/a 17
Trading n/a n/a n/a n/a 253 249 n/a -
Other(6) n/a n/a n/a n/a (65) (172) n/a 20
Projects and corporate n/a n/a n/a n/a (26) (26) n/a -
kt c/lb c/lb
Copper 306(7) 297(7) 142(8) 2,429 966 668 249 368
Los Bronces 172 n/a 151(8) 1,062 544 374 n/a 89
Collahuasi(9) 111 n/a 116(8) 708 465 360 204 128
Other operations 23(7) n/a n/a 659 33 10 n/a 151
Projects and corporate n/a n/a n/a - (76) (76) (53) -
koz $/Pt oz $/Pt oz
Platinum 1,117(10) 2,318(11) 1,591(12) 2,755 511 328 209 216
Mogalakwena 241(10) 2,887(11) 1,400(12) 701 316 240 n/a 98
Amandelbult 204(10) 2,345(11) 1,764(12) 482 82 51 n/a 20
Other operations(13) 166(10) n/a n/a 538 27 (33) n/a 98
Purchase of concentrate(14) 506(10) n/a n/a 1,034 116 100 n/a -
Projects and corporate n/a n/a n/a - (30) (30) n/a -
Mt $/t $/t
Iron Ore n/a n/a n/a 1,900 454 245 67 153
Kumba Iron Ore 21.2 69(15) 35(16) 1,590 574 417 149(17) 138
Minas-Rio (Iron Ore Brazil) 3.2 70(18) n/a(19) 310 (74) (126) (38) 15
Projects and corporate n/a n/a n/a - (46) (46) (44)(17) -
Mt $/t $/t
Coal n/a n/a n/a 3,877 1,640 1,300 881 306
Metallurgical Coal 10.7(20) 194(21) 66(22) 2,089 1,157 931 661 219
Thermal Coal - South Africa 8.7(23) 88(24) 48(25) 1,374 341 272 177 87
Thermal Coal - Colombia 5.2 79 35 414 190 145 89 -
Projects and corporate n/a n/a n/a - (48) (48) (46) -
Nickel and Manganese n/a n/a n/a 857 420 350 223 15
Nickel 20,100 t 632 c/lb 378 c/lb(26) 280 88 45 63 15
Samancor (Manganese)(27) 1.8 Mt n/a n/a 577 332 305 160 -
Corporate and other n/a n/a n/a 2 (126) (128) (266) 6
Exploration n/a n/a n/a - (48) (48) (44) -
Corporate activities and
unallocated costs n/a n/a n/a 2 (78) (80) (222) 6
n/a n/a n/a 15,012 4,577 3,175 1,565 1,220
See below for footnotes.
30.06.17
Sales Realised Unit Group Underlying Underlying Underlying Capital
US$ million, unless otherwise stated volume price cost revenue(1) EBITDA EBIT earnings expenditure
'000 cts $/ct $/ct
De Beers 18,434(2) 156(3) 63(4) 3,131(5) 786 548 341 74
Mining
Botswana (Debswana) n/a 165(3) 26(4) n/a 272 256 n/a 36
Namibia (Namdeb Holdings) n/a 568(3) 237(4) n/a 105 92 n/a 8
South Africa (DBCM) n/a 133(3) 64(4) n/a 127 54 n/a 48
Canada(28) n/a 435(3) 67(4) n/a 69 25 n/a (28)
Trading n/a n/a n/a n/a 281 278 n/a 2
Other(6) n/a n/a n/a n/a (51) (140) n/a 8
Projects and corporate n/a n/a n/a n/a (17) (17) n/a -
kt c/lb c/lb
Copper 259(7) 264(7) 148(8) 1,609 586 303 140 225
Los Bronces 144 n/a 164(8) 767 317 150 n/a 95
Collahuasi(9) 98 n/a 122(8) 493 285 184 116 87
Other operations 17(7) n/a n/a 349 36 21 n/a 43
Projects and corporate n/a n/a n/a - (52) (52) (32) -
koz $/Pt oz $/Pt oz
Platinum 1,119(10) 1,843(11) 1,522(12) 2,144 276 112 37 126
Mogalakwena 204(10) 2,391(11) 1,448(12) 488 179 115 n/a 58
Amandelbult 202(10) 1,776(11) 1,635(12) 360 13 (14) n/a 15
Other operations(13) 224(10) n/a n/a 492 15 (45) n/a 53
Purchase of concentrate(14) 489(10) n/a n/a 804 88 75 n/a -
Projects and corporate n/a n/a n/a - (19) (19) n/a -
Mt $/t $/t
Iron Ore n/a n/a n/a 2,365 925 759 386 73
Kumba Iron Ore 21.2 71(15) 32(16) 1,627 700 586 226(17) 81
Minas-Rio (Iron Ore Brazil) 8.6 66(18) 29(19) 738 253 201 187 (8)
Projects and corporate n/a n/a n/a - (28) (28) (27)(17) -
Mt $/t $/t
Coal n/a n/a n/a 3,403 1,382 1,120 778 221
Metallurgical Coal 9.1(20) 193(21) 64(22) 1,775 943 781 553 154
Thermal Coal - South Africa 8.8(23) 72(24) 41(25) 1,242 281 225 167 67
Thermal Coal - Colombia 5.4 71 31 386 183 139 82 -
Projects and corporate n/a n/a n/a - (25) (25) (24) -
Nickel and Manganese n/a n/a n/a 652 257 192 104 7
Nickel 20,800 t 442 c/lb 363 c/lb(26) 203 15 (25) (8) 7
Samancor (Manganese)(27) 1.7 Mt n/a n/a 449 242 217 112 -
Corporate and other n/a n/a n/a 2 (96) (103) (250) 5
Exploration n/a n/a n/a - (43) (43) (39) -
Corporate activities and
unallocated costs n/a n/a n/a 2 (53) (60) (211) 5
n/a n/a n/a 13,306 4,116 2,931 1,536 731
See below for footnotes.
31.12.17
Sales Realised Unit Group Underlying Underlying Underlying Capital
US$ million, unless otherwise stated volume price cost revenue(1) EBITDA EBIT earnings expenditure
'000 cts $/ct $/ct
De Beers 32,455(2) 162(3) 63(4) 5,841(5) 1,435 873 528 273
Mining
Botswana (Debswana) n/a 159(3) 28(4) n/a 484 447 n/a 86
Namibia (Namdeb Holdings) n/a 539(3) 257(4) n/a 176 146 n/a 33
South Africa (DBCM) n/a 129(3) 62(4) n/a 267 119 n/a 114
Canada(28) n/a 235(3) 57(4) n/a 205 58 n/a (5)
Trading n/a n/a n/a n/a 449 443 n/a 1
Other(6) n/a n/a n/a n/a (110) (304) n/a 44
Projects and corporate n/a n/a n/a n/a (36) (36) n/a -
kt c/lb c/lb
Copper 580(7) 290(7) 147(8) 4,233 1,508 923 370 665
Los Bronces 307 n/a 169(8) 1,839 737 401 n/a 245
Collahuasi(9) 232 n/a 113(8) 1,314 806 594 356 243
Other operations 41(7) n/a n/a 1,080 76 39 n/a 177
Projects and corporate n/a n/a n/a - (111) (111) (72) -
koz $/Pt oz $/Pt oz
Platinum 2,505(10) 1,966(11) 1,443(12) 5,078 866 512 217 355
Mogalakwena 467(10) 2,590(11) 1,179(12) 1,211 578 448 n/a 151
Amandelbult 459(10) 1,868(11) 1,596(12) 858 88 34 n/a 34
Other operations(13) 497(10) n/a n/a 1,125 83 (59) n/a 170
Purchase of concentrate(14) 1,082(10) n/a n/a 1,884 173 145 n/a -
Projects and corporate n/a n/a n/a - (56) (56) n/a -
Mt $/t $/t
Iron Ore n/a n/a n/a 4,891 1,828 1,500 803 252
Kumba Iron Ore 44.9 71(15) 31(16) 3,486 1,474 1,246 467(17) 229
Minas-Rio (Iron Ore Brazil) 16.5 65(18) 30(19) 1,405 435 335 413 23
Projects and corporate n/a n/a n/a - (81) (81) (77)(17) -
Mt $/t $/t
Coal n/a n/a n/a 7,211 2,868 2,274 1,763 568
Metallurgical Coal 19.8(20) 185(21) 61(22) 3,675 1,977 1,594 1,348 416
Thermal Coal - South Africa 18.6(23) 76(24) 44(25) 2,746 588 466 311 152
Thermal Coal - Colombia 10.6 75 31 790 385 296 181 -
Projects and corporate n/a n/a n/a - (82) (82) (77) -
Nickel and Manganese n/a n/a n/a 1,391 610 478 219 28
Nickel 43,000 t 476 c/lb 365 c/lb(26) 451 81 - (4) 28
Samancor (Manganese)(27) 3.6 Mt n/a n/a 940 529 478 223 -
Corporate and other n/a n/a n/a 5 (292) (313) (628) 9
Exploration n/a n/a n/a - (103) (103) (91) -
Corporate activities and
unallocated costs n/a n/a n/a 5 (189) (210) (537) 9
n/a n/a n/a 28,650 8,823 6,247 3,272 2,150
(1) Group revenue for copper is shown after deduction of treatment and refining charges (TC/RCs).
(2) In 2017, consolidated sales volumes (six months ended 30 June 2018: 17.8 million carats; six months ended 30 June 2017: 18.4 million carats; year ended
31 December 2017: 32.5 million carats) exclude pre-commercial production sales volumes from Gahcho Ku�. Total sales volumes (100%), which are comparable to
production, were 18.8 million carats (six months ended 30 June 2017: 20.0 million carats; year ended 31 December 2017: 35.1 million carats). Total sales volumes
(100%) include pre-commercial production sales volumes from Gahcho Ku� and De Beers' joint venture partners' 50% proportionate share of sales to entities
outside De Beers from Diamond Trading Company Botswana and Namibia Diamond Trading Company.
(3) Pricing for the mining business units is based on 100% selling value post-aggregation of goods. The De Beers realised price includes the price impact of the sale of
non-equity product and, as a result, is not directly comparable to De Beers unit costs, which relate to equity production only.
(4) Unit cost is based on consolidated production and operating costs, excluding depreciation and operating special items, divided by carats recovered.
(5) Includes rough diamond sales of $2.9 billion (six months ended 30 June 2017: $2.9 billion; year ended 31 December 2017: $5.2 billion).
(6) Other includes Element Six, downstream and acquisition accounting adjustments.
(7) Excludes 71 kt third-party sales (six months ended 30 June 2017: 37 kt; year ended 31 December 2017: 111 kt).
(8) C1 unit cost includes by-product credits.
(9) 44% share of Collahuasi sales and financials.
(10) Sales volumes are platinum sales and exclude the sale of refined metal purchased from third-parties.
(11) Average US$ basket price. Excludes the impact of the sale of refined metal purchased from third-parties.
(12) Total cash operating costs - includes on-mine, smelting and refining costs only. 2017 restated to include third-party tolling cost.
(13) Includes Unki, Union (prior to disposal), Platinum's share of joint ventures and revenue from trading activities.
(14) Purchase of concentrate from joint ventures, associates and third parties for processing into refined metals.
(15) Prices for Kumba Iron Ore are the average realised export basket price (FOB Saldanha).
(16) Unit costs for Kumba Iron Ore are on an FOB dry basis.
(17) Of the projects and corporate expense, which includes a corporate cost allocation, $24 million (six months ended 30 June 2017: $16 million; year ended
31 December 2017: $49 million) relates to Kumba Iron Ore. The total contribution from Kumba Iron Ore to the Group's underlying earnings is $125 million
(six months ended 30 June 2017: $210 million; year ended 31 December 2017: $418 million).
(18) Prices for Minas-Rio are the average realised export basket price (FOB A�u) (wet basis).
(19) Unit costs for Minas-Rio are not disclosed for 2018 due to the suspension of operations; 2017 unit costs are on an FOB wet basis.
(20) Metallurgical Coal sales volumes exclude thermal coal sales of 0.7 Mt (six months ended 30 June 2017: 0.9 Mt; year ended 31 December 2017: 1.8 Mt).
(21) Metallurgical Coal realised price is the weighted average hard coking coal and PCI sales price achieved.
(22) FOB cost per saleable tonne, excluding royalties. Metallurgical Coal excludes study costs.
(23) South Africa sales volume is export only and excludes domestic volumes of 7.9 Mt (six months ended 30 June 2017: 16.1 Mt; year ended 31 December 2017:
32.0 Mt) and non-equity traded sales of 4.7 Mt (six months ended 30 June 2017: 3.4 Mt; year ended 31 December 2017: 7.6 Mt).
(24) Thermal Coal - South Africa realised price is the weighted average export thermal coal price achieved. Excludes third-party sales.
(25) FOB cost per saleable tonne, excluding royalties. Thermal Coal - South Africa unit cost is for the trade operations.
(26) C1 unit cost.
(27) Sales and financials include ore and alloy.
(28) For Canada, price excludes Gahcho Ku� contribution from sales related to pre-commercial production, which were capitalised in the first half of 2017. Unit costs
include Gahcho Ku� contribution following achievement of commercial production on 2 March 2017. Capital expenditure includes pre-commercial production
capitalised operating cash inflows from Gahcho Ku�.
Alternative performance measures
Introduction
When assessing and discussing the Group's reported financial performance, financial position and cash flows,
management makes reference to Alternative Performance Measures (APMs) of historical or future financial
performance, financial position or cash flows that are not defined or specified under International Financial Reporting
Standards (IFRS).
The APMs used by the Group fall into two categories:
- Financial APMs: These financial measures are usually derived from the financial statements, prepared in
accordance with IFRS. Certain financial measures cannot be directly derived from the financial statements as they
contain additional information, such as financial information from earlier periods or profit estimates or projections.
The accounting policies applied when calculating APMs are, where relevant and unless otherwise stated,
substantially the same as those disclosed in the Group's Consolidated financial statements for the year ended
31 December 2017 with the exception of the new accounting pronouncements disclosed in note 2.
- Non-financial APMs: These measures incorporate certain non-financial information that management believes is
useful when assessing the performance of the Group.
The table below summarises the Group's financial APMs. APMs are not uniformly defined by all companies, including
those in the Group's industry. Accordingly, the APMs used by the Group may not be comparable with similarly titled
measures and disclosures made by other companies. Refer to page 194 of the Group's Annual Report for the year
ended 31 December 2017 for more information about the purpose and definition of APMs.
Closest equivalent Reconciliation to
Group APM IFRS measure Adjustments to reconcile to primary statements IFRS measure
Income statement
Group revenue Revenue - Revenue from associates and joint ventures Note 3
Underlying EBIT Profit/(loss) before - Operating and non-operating special items and remeasurements Note 3
net finance income/(costs) - Underlying EBIT from associates and joint ventures
and tax
Underlying EBITDA Profit/(loss) before - Operating and non-operating special items and remeasurements Note 3
net finance income/(costs) - Depreciation and amortisation
and tax - Underlying EBITDA from associates and joint ventures
Underlying earnings Profit/(loss) for the financial - Special items and remeasurements Note 3
period attributable to equity
shareholders of the Company
Underlying effective Income tax expense - Tax related to special items and remeasurements Note 6
tax rate - The Group's share of associates' and joint ventures' profit before
tax, before special items and remeasurements, and tax expense,
before special items and remeasurements
Underlying earnings Earnings per share - Special items and remeasurements Notes 3 and 4
per share
Balance sheet
Net debt Borrowings less cash - Debit valuation adjustment Note 13
and related hedges
Attributable ROCE No direct equivalent - Non-controlling interests' share of capital employed and Page 66
underlying EBIT
- Average of opening and closing attributable capital employed
Cash flow
Capital expenditure Expenditure on property, - Cash flows from derivatives related to capital expenditure Note 11
(capex) plant and equipment - Proceeds from disposal of property, plant and equipment
- Direct funding for capital expenditure from non-controlling
interests
Attributable free Cash flows from operations - Capital expenditure Page 7
cash flow - Cash tax paid
- Dividends from associates, joint ventures and financial asset
investments
- Net interest paid
- Dividends to non-controlling interests
Attributable return on capital employed (ROCE)
Attributable ROCE is calculated as attributable underlying EBIT(1) divided by average attributable capital employed.
Since the APM has no direct equivalent under IFRS it is not reconciled to an IFRS measure within the Condensed
financial statements. The table below sets out the calculation of attributable ROCE. A reconciliation to 'Profit/(loss)
before net finance income/(costs) and tax', the closest equivalent IFRS measure to underlying EBIT, is provided
within note 3 to the Condensed financial statements. A reconciliation to 'Net assets', the closest equivalent IFRS
measure to capital employed, is provided within note 10 to the Condensed financial statements.
Attributable ROCE %
30.06.18 30.06.17
De Beers(1) 8 11
Copper 23 10
Platinum 14 4
Iron Ore 2 16
Coal 77 63
Nickel and Manganese 29 16
Corporate and other n/a n/a
19 18
30.06.18
Less: Less:
Non- Non-
controlling controlling
interests' interests'
share of Attributable Opening share of Closing Average
Annualised annualised annualised attributable Closing closing attributable attributable
Underlying underlying underlying underlying capital capital capital capital capital
US$ million EBIT EBIT EBIT EBIT employed employed employed employed employed
De Beers(1) 412 737 (115) 622 7,970 8,496 (1,209) 7,287 7,629
Copper 668 1,336 (370) 966 4,159 5,877 (1,689) 4,188 4,173
Platinum 328 656 (155) 501 3,841 4,125 (648) 3,477 3,659
Iron Ore 245 490 (394) 96 6,345 7,257 (1,078) 6,179 6,262
Coal 1,300 2,600 (69) 2,531 3,287 3,395 (75) 3,320 3,304
Nickel and
Manganese 350 700 (18) 682 2,364 2,326 - 2,326 2,345
Corporate
and other (128) (256) - (256) (241) 35 - 35 (103)
3,175 6,263 (1,121) 5,142 27,725 31,511 (4,699) 26,812 27,269
30.06.17
Less: Less:
Non- Non-
controlling controlling
interests' interests'
share of Attributable Opening share of Closing Average
Annualised annualised annualised attributable Closing closing attributable attributable
Underlying underlying underlying underlying capital capital capital capital capital
US$ million EBIT EBIT EBIT EBIT employed employed employed employed employed
De Beers(1) 548 982 (153) 829 7,481 8,786 (1,247) 7,539 7,510
Copper 303 606 (186) 420 4,189 5,941 (1,728) 4,213 4,201
Platinum 112 224 (59) 165 3,796 4,373 (649) 3,724 3,760
Iron Ore 759 1,518 (542) 976 6,006 7,024 (1,048) 5,976 5,991
Coal 1,120 2,240 (30) 2,210 3,420 3,679 (91) 3,588 3,504
Nickel and
Manganese 192 384 (1) 383 2,432 2,318 - 2,318 2,375
Corporate
and other (103) (206) - (206) (335) (238) - (238) (286)
2,931 5,748 (971) 4,777 26,989 31,883 (4,763) 27,120 27,055
(1) For half year reporting attributable underlying EBIT is annualised apart from the calculation of De Beers' attributable ROCE, where it is
based on the prior 12 months, rather than the annualised half year performance, owing to the seasonality of sales and underlying EBIT
profile of De Beers.
Exchange rates and commodity prices
US$ exchange rates 30.06.18 30.06.17 31.12.17
Period end spot rates
South African rand 13.73 13.08 12.31
Brazilian real 3.86 3.30 3.31
Sterling 0.76 0.77 0.74
Australian dollar 1.35 1.30 1.28
Euro 0.86 0.88 0.83
Chilean peso 650 665 615
Botswana pula 10.46 10.25 9.85
Average rates for the period
South African rand 12.30 13.21 13.31
Brazilian real 3.43 3.18 3.19
Sterling 0.73 0.79 0.78
Australian dollar 1.30 1.33 1.30
Euro 0.83 0.92 0.89
Chilean peso 612 665 649
Botswana pula 9.78 10.41 10.34
Commodity prices 30.06.18 30.06.17 31.12.17
Period end spot prices
Copper(1) US cents/lb 301 268 325
Platinum(2) US$/oz 851 922 925
Palladium(2) US$/oz 953 841 1,057
Rhodium(3) US$/oz 2,250 1,035 1,700
Iron ore (62% Fe CFR)(4) US$/tonne 64 63 74
Iron ore (66% Fe Concentrate CFR)(5) US$/tonne 94 74 96
Hard coking coal (FOB Australia)(4) US$/tonne 199 149 262
PCI (FOB Australia)(4) US$/tonne 136 103 147
Thermal coal (FOB South Africa)(6) US$/tonne 104 77 95
Thermal coal (FOB Australia)(7) US$/tonne 117 82 104
Thermal coal (FOB Colombia)(6) US$/tonne 89 76 86
Nickel(1) US cents/lb 676 421 556
Average market prices for the period
Copper(1) US cents/lb 314 261 280
Platinum(2) US$/oz 941 960 950
Palladium(2) US$/oz 1,007 793 871
Rhodium(3) US$/oz 1,987 929 1,097
Iron ore (62% Fe CFR)(4) US$/tonne 70 74 71
Iron ore (66% Fe Concentrate CFR)(5) US$/tonne 93 88 87
Hard coking coal (FOB Australia)(4) US$/tonne 209 179 188
PCI (FOB Australia)(4) US$/tonne 145 117 119
Thermal coal (FOB South Africa)(6) US$/tonne 97 79 84
Thermal coal (FOB Australia)(7) US$/tonne 104 81 89
Thermal coal (FOB Colombia)(6) US$/tonne 82 74 78
Nickel(1) US cents/lb 629 443 472
(1) Source: London Metal Exchange (LME).
(2) Source: London Platinum and Palladium Market (LPPM).
(3) Source: Comdaq.
(4) Source: Platts.
(5) Source: Metal Bulletin.
(6) Source: Argus/McCloskey.
(7) Source: globalCOAL.
ANGLO AMERICAN plc
(Incorporated in England and Wales - Registered number 03564138)
(the Company)
Notice of Interim Dividend
(Dividend No. 33)
Notice is hereby given that an interim dividend on the Company's ordinary share capital in respect of the year to
31 December 2018 will be paid as follows:
Amount (United States currency) 49 cents per ordinary share (note 1)
Amount (South African currency) R6.49936 per ordinary share (note 2)
Last day to effect removal of shares between the United Kingdom (UK) and
South African (SA) registers Monday 13 August 2018
Last day to trade on the JSE Limited (JSE) to qualify for dividend Tuesday 14 August 2018
Ex-dividend on the JSE from the commencement of trading on Wednesday 15 August 2018 (note 3)
Ex-dividend on the London Stock Exchange from the commencement of trading on Thursday 16 August 2018
Record date (applicable to both the UK principal register and SA branch register) Friday 17 August 2018
Removal of shares between the UK and SA registers permissible from Monday 20 August 2018
Last day for receipt of US$:GBP/EUR currency elections by the UK Registrars (note 1) Friday 31 August 2018
Last day for receipt of Dividend Reinvestment Plan (DRIP) mandate forms by the UK
Registrars (notes 4, 5 and 6) Friday 31 August 2018
Currency conversion US$:GBP/EUR rates announced on (note 7) Friday 7 September 2018
Last day for receipt of DRIP mandate forms by Central Securities Depository
Participants (CSDPs) (notes 4, 5 and 6) Friday 14 September 2018
Last day for receipt of DRIP mandate forms by the South African Transfer Secretaries
(notes 4, 5 and 6) Monday 17 September 2018
Payment date of dividend Friday 21 September 2018
Notes
1. Shareholders on the UK register of members with an address in the UK will be paid in pounds sterling and those with an address in a country in the
European Union which has adopted the euro will be paid in euros. Such shareholders may, however, elect to be paid their dividends in US dollars
provided the UK Registrars receive such election by Friday, 31 August 2018. Shareholders with an address elsewhere will be paid in US dollars except
those registered on the SA branch register who will be paid in South African rand.
2. Dividend Tax will be withheld from the amount of the gross dividend of R6.49936 per ordinary share paid to South African shareholders at the rate of
20% unless a shareholder qualifies for exemption. After the Dividend Tax has been withheld, the net dividend will be R5.199488 per ordinary share.
Anglo American plc had a total of 1,405,465,332 ordinary shares in issue, including 691,922 treasury shares, as at the date hereof. In South Africa the
dividend will be distributed by Anglo American South Africa Limited, a South African company with tax registration number 9030010608, in terms of the
Company's dividend access share arrangements.
3. Dematerialisation and rematerialisation of registered share certificates in South Africa will not be effected by CSDPs during the period from the JSE
ex-dividend date to the record date (both days inclusive).
4. Those shareholders who already participate in the DRIP need not complete a DRIP mandate form for each dividend as such forms provide an ongoing
authority to participate in the DRIP until cancelled in writing. Shareholders who wish to participate in the DRIP should obtain a mandate form from the
UK Registrars, the South African Transfer Secretaries or, in the case of those who hold their shares through the STRATE system, their CSDP.
5. In terms of the DRIP, and subject to the purchase of shares in the open market, share certificates/CREST notifications are expected to be mailed and
CSDP investor accounts credited/updated on Monday 15 October 2018. CREST accounts will be credited on Wednesday 26 September 2018.
6. Copies of the terms and conditions of the DRIP are available from the UK Registrars or the South African Transfer Secretaries.
7. The US$:GBP/EUR conversion rates will be determined by the actual rates achieved by Anglo American buying forward contracts for those currencies, during
the two days preceding the announcement of the conversion rates, for delivery on the dividend payment date.
Registered office UK Registrars South African Transfer Secretaries
20 Carlton House Terrace Equiniti Computershare Investor Services Proprietary Limited
London Aspect House Rosebank Towers, 15 Biermann Avenue
SW1Y 5AN Spencer Road Rosebank
United Kingdom Lancing PO Box 61051
West Sussex Marshalltown, 2107
BN99 6DA South Africa
United Kingdom
The Company has a primary listing on the Main Market of the London Stock Exchange and secondary listings on the Johannesburg Stock Exchange,
the Botswana Stock Exchange, the Namibia Stock Exchange and the SIX Swiss Exchange.
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
26 July 2018
Date: 26/07/2018 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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