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| Record commodity prices |
| Financial performance |
| Record commodity prices have resulted in an improved financial performance in 2007. For the
12 months ended 31 December 2007, Anglo Platinum's headline earnings increased 3% to a
record R12.3 billion, with cash generated rom operations increasing 12% to R20.7 billion. |
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| Factors contributing to the increase were higher US dollar prices
realised on metals sold and a rand/US dollar exchange rate that was
on average weaker during 2007. This was offset by lower sales
volumes on the back of reduced production from mining operations. |
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| Strong demand for resources globally continues to create challenges for all players in the
industry and has led to increased costs for labour, contractors, raw materials, energy and other input costs. |
 In addition to the increased cost
pressures facing Anglo Platinum, reduced production has exacerbated unit cost
increases with cash operating costs per refined platinum ounce increasing 41%
to R8,129.
Based on the improved financial performance in 2007 and management's
positive outlook for 2008, Anglo Platinum has maintained its dividend cover
ratio of 1 times, and a final dividend of 2,300 cents per ordinary share has been
declared. |
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| Financial results |
| Key financial indicators of performance include: |
| |
2007
R million |
2006
R million |
%
change |
| Gross sales revenue |
46,961 |
39,356 |
19.3 |
| Cost of sales |
27,519 |
22,531 |
22.1 |
| Gross profit on metal sales |
19,097 |
16,624 |
14.9 |
| Headline earnings |
12,325 |
11,993 |
2.8 |
| Headline earnings per ordinary share (cents) |
5,239 |
5,374 |
(2.5) |
| Gross profit margin (%) |
40.7 |
42.2 |
(3.6) |
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| Gross sales revenue increased by R7.61 billion to R47.0 billion. The increase was the result of higher US dollar metal
prices achieved on all metals sold, contributing R8.28 billion of the increase and a weaker average rand/US dollar
exchange rate of R7.04, compared to R6.82 achieved in 2006, increasing revenue by R1.59 billion. This was offset by
lower volumes of metals sold, which reduced revenue by R2.26 billion. |
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| The decrease in sales volumes by 254,800 platinum ounces to 2.48 million in 2007 is the result of a 12% decrease in
refined platinum production to 2.47 million ounces for the current financial year. The intervention aimed at achieving
a significant improvement in employee safety and reduced production efficiency in 2007 as a result of a shortage of skilled labour, competition for labour at all levels, strike
action at joint ventures, the unsettled labour situation
associated with wage negotiations and lower grades at
Potgietersrust contributed to the decrease in production.
In addition to reduced production in 2007, refined
production in 2006 significantly exceeded production
from operations due to the once-off release of 112,000
ounces from the process pipeline attributable to the
effect of the shutdown of the Polokwane Smelter in
late 2005. |
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The average prices achieved on platinum, palladium and nickel sales for the year were US$1,302 per ounce, US$355
per ounce and US$17.04 per pound respectively. The average price achieved on rhodium sales for the year was
US$4,344 per ounce affected by existing long-term contractual arrangements with some customers to support and
develop the rhodium market. Anglo Platinum is at an advanced stage of negotiations to achieve mutual recognition
with its relevant customers of structural changes to the rhodium market affecting the US dollar price of the metal.
The objective of the negotiations is to move towards a contractual price for rhodium that is market related.
Over the past five years gross sales revenue has grown at a compound annual rate of 30%. This trend has been driven
by a growth in the average rand basket price achieved, which, at R18,167 per platinum ounce for 2007, represents a
compound annual growth of 27% over the same period.
Cost of sales increased by R4.99 billion to R27.5 billion because: |
| • |
the cost of purchases of metals increased by 40% to R5.54 billion. This was due to higher prices paid for metals
contributing R1.05 billion of the increase, and an increase in the volume of metals purchased from the Marikana
and Mototolo joint ventures, contributing a further R541 million; |
| • |
cash mining, smelting and refining costs rose 22% to R18.5 billion with cash operating cost per equivalent refined
platinum ounce rising by 34% to R8,181. The increase in unit costs is attributable to reduced production,
substantial inflationary pressures including above-inflation increases in wages, diesel, tyres, chemicals and steel
grinding media, costs associated with the safety intervention, increased support costs and ramp-up costs at
Mototolo and Marikana. In addition, a higher labour complement to support a planned increase in production at
mining operations in 2007 further contributed to the increase in unit costs; |
| • |
depreciation increased by 14% or R336 million mainly as a result of the capital expenditure programme and
increased utilisation of new operating assets. During 2007, Anglo Platinum revised its depreciation method for
capitalised shaft and development costs which are now depreciated on a unit-of-production basis; and |
| • |
the value of metals in inventory increased by R957 million during 2007. Despite a net volume decrease in pipeline
stock, the value of metal in stock rose as a result of the increase in the cost at which metal inventories are
valued. |
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The Group's taxation charge increased
to R6.66 billion. Higher dividends paid
in 2007 resulted in a higher STC
charge on the final 2006 dividend and
the interim dividend for 2007. The
increased STC resulted in an effective
tax rate of 34.4% compared to 28.6%
in 2006.
At R12.3 billion, both headline earnings
and headline earnings attributable to
ordinary shareholders increased some 3% and 5% respectively. Headline earnings per ordinary share decreased 3%
to 5,239 cents as a result of an increased weighted average number of shares in issue in 2007. The conversion of the
convertible preference shares by Anglo South Africa Capital Proprietary Limited into ordinary shares in December
2006 and additional conversions by Anglo Platinum minority shareholders in 2007 increased the weighted average
number of ordinary shares in issue. |
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