REVIEWED GROUP INTERIM RESULTS For the twelve months ended 30 June 2004 PRESENTATION 2004

Transcription

1 HARNESSING THE POWER OF THE EARTH REVIEWED GROUP INTERIM RESULTS For the twelve months ended 30 June 2004 PRESENTATION

2 CHIEF EXECUTIVE HARNESSING THE POWER OF THE EARTH 2

3 KEY FINANCIALS Revenue Net operating profit R8 454m R1 101m Headline EPS (cps) Headline earnings Headline earnings (cps) R580m Interim dividend (cps) 35 FY02 FY03 12M04 1H 2H Stronger second half 3

4 HIGHLIGHTS Record safety performance Good progress on HIV / AIDS programme Solid operating performance from all businesses Strong US$ commodity prices but Pleasing safety performance 4

5 RAND IMPACT Continued Rand strength (24% appreciation y-o-y) mitigated by: Strong sales volumes Good hedging policy contributing R81m Business improvement programme R/US$ AU$/US$ (average realised) H02 1H03 2H03 1H04 2H04 Continued impact by strong Rand 5

6 BUSINESS IMPROVEMENT PROGRAMME To maintain an attractive return in a prolonged strong rand environment R800m EBIT contribution Cost and revenue focus Shared services optimisation Programme Detailed planning All improvements implemented during 2005 Full financial benefits in 2006 Crucial in strong Rand environment 6

7 EXECUTIVE DIRECTOR OPERATIONS HARNESSING THE POWER OF THE EARTH 7

8 SAFETY & ENVIRONMENT Safety Fatalities at all time low Lost Day Injury Frequency Rate (LDIFR) at record low level Environment Environmental management programmes approved for all operations ISO Certification 4 Business units certified ISO Business units certified OSHAS All operations by December 2004 Fatalities FY00 FY01 FY02 FY03 12M04 LDIFR FY00 FY01 FY02 FY03 12M04 Zero tolerance key focus 8

9 IRON ORE MARKETS Strong growth in global blast furnace output Continued growth in Chinese imports of iron ore (148 Mt last year) Price increase of 18.6% effective 1 April 2004 Global blast furnace output Mt f Source: AME EU 15 China Japan Other Kumba well positioned for blast furnace demand 9

10 IRON ORE OPERATIONS Total production and exports Total production exceeds 30 Mt New record at Sishen Mt Exports influenced by stock build-up Strong domestic sales Mt H02 2H02 1H03 2H03 1H04 2H04 Export sales Production Continued growth in iron ore output 10

11 IRON ORE EXPORT CHANNEL Record tonnage railed of 21.9 Mt Port expansion on track for completion by end of 2005 Negotiations underway for further 12 Mtpa expansion by 2008 Mt Sishen-Saldanha rail performance 1H02 2H02 1H03 2H03 1H04 2H04 Kumba Other Infrastructure expansion is key to future growth 11

12 COAL MARKETS Total sales to Eskom Mt Record sales to Matimba Mt Strong domestic and international demand Thermal coal and coke prices (US$/t) RBCT thermal coal FOB Chinese market coke exports Sources: SA Coal Report, CRU 12

13 COAL OPERATIONS Excellent safety results at each coal mine Total coal production exceeds 19 Mt Annual record production at Grootegeluk and Leeuwpan Mt Production volumes 1H02 2H02 1H03 2H03 1H04 2H04 Grootegeluk Leeuwpan Tshikondeni Solid operating performance at all mines 13

14 HEAVY MINERALS MARKETS Signs of recovery in pigment market Zircon and pigment prices (US$/t) Zircon, rutile and pig-iron in strong demand Titania slag market oversupplied First sales of slag and pig-iron Good sales of synthetic rutile Q4 01 Q2 02 Q4 02 Zircon Q2 03 Q4 03 Pigment Source: TZMI 14

15 HEAVY MINERALS OPERATIONS Excellent synthetic rutile and pigment production at Tiwest Good growth in slag and pig-iron production from SA operations Planned shut of furnace 2 for improvements and repair kt Heavy minerals production 1H 2H Good growth in production of key products 15

16 ZINC MARKETS Zinc metal price US$ zinc price recovery Depressed Rand price Low treatment charges prevail US$/t H022H02 1H03 2H031H04 2H04 R/t Source: LME Challenging market conditions persist 16

17 BASE METALS OPERATING RESULTS Sustained record production at Rosh Pinah Chifeng refinery expansion on schedule Zincor metal production affected by concentrate quality Zn conc. (kt) Zn metal (kt) Rosh Pinah H02 2H02 1H03 2H03 1H04 2H04 Zincor Chifeng H02 2H02 1H03 2H03 1H04 2H04 Refinery in China contributes to zinc metal output 17

18 INDUSTRIAL MINERALS Good production levels maintained Solid financial contribution FeSi production (t) Dolomite sales (Mt) H02 2H02 1H03 2H03 1H04 2H H02 2H02 1H03 2H03 1H04 2H04 18

19 EXECUTIVE DIRECTOR FINANCE HARNESSING THE POWER OF THE EARTH 19

20 REVENUE R million 12M04 FY03 % Change Iron Ore (7) Coal ) Heavy Minerals - Ticor SA - Ticor Ltd ) Base Metals ) Industrial Minerals ) Other 8 40 (80) Total ) R/US$ exchange rate realised

21 EBIT / MARGIN 12M04 FY03 % Change Rm) (%) Rm) (%) (in Rand) Iron Ore 673) ) 21 (24) Coal 310) ) 17 11) Heavy Minerals - Ticor SA - Ticor Ltd (25) 75) 6 24) 38) ) Base Metals (45) (9) Industrial Minerals 20) 23 21) 27 (5) Other 93) (46) Total EBIT 1 101) ) 16 (7) Total EBITDA 1 865) 1 744) 7) 21

22 EBIT COMPARISON R million 975 (1082) 262 (156) 1189 (240) (67) (166) FY03 EBIT Sales Price Exchange rate Inflation Volume Production cost Distribution cost Ticor Ltd Cost savings Goodwill "Core" EBIT Non-recurring items 12M04 EBIT Sales growth and cost focus 22

23 CURRENCY IMPACT R million EBIT Adjusted for: Asset disposals Non-recurring items Price increases Unrealised translation loss/(gain) Realised exchange rate impact Comparable EBIT Comparable EBIT margin 12M ) (122) 189) (809) (7) 1 162) 1514) 17) FY ) -) -) 73) 1 262) 17) Rand appreciation reduces margin 23

24 EARNINGS R million 12M04 FY03 % Change EBIT 1 101) 1 189) (7) Net financing cost (268) (244) (10) Equity (loss)/income (29) 2) Taxation (253) (229) (10) Profit after taxation 551) 718) (23) Minority interest (23) Attributable earnings 528) 718) (26) Attributable earnings per share (cents) 177) 242) (27) Total dividend for the period 55 cps 24

25 HEADLINE EARNINGS R million 12M04 FY03 % Change Attributable earnings 528) 718) (26) Post tax adjustments: Impairment charges 98) 2) Net surplus on asset disposals (103) (2) Closure cost 24) -) Goodwill and exceptionals 33) 66) Headline earnings 580) 784) (26) Headline earnings per share (cents) 195) 264) (26) Average number of shares in issue (million) 298) 297) HEPS 195 cps 25

26 CASHFLOW R million Opening net debt Net cashflow from operating activities Net cash used in investing activities New capacity Other capital expenditure Net impact of Ticor Ltd consolidation Asset disposals Share issue Non cashflow movements (Increase)/decrease in net debt Closing net debt 12M ) 818) (759) (314) -) 208) 133) 36) 122) 2 252) FY ) 780 (1 122) (264) (559) 44) -) (110) (1 231) 2 374) Positive operational cashflow 26

27 RATIOS 12M04 FY03 Margin excluding captive arrangements EBIT (%) EBITDA (%) Net financing cost cover EBIT (times) EBITDA (times) Return on equity - attributable income (%) Net debt / equity (%) Solid financial metrics 27

28 CHIEF EXECUTIVE HARNESSING THE POWER OF THE EARTH 28

29 STRATEGY Empowerment MPRDA - effective 1 May Kumba well placed to conform Coordinating with Anglo on empowerment ownership process Iron ore growth Hope Downs Northern Cape expansion projects Coal growth Inyanda Coal JV Leeuwpan expansion Grootegeluk market coke project Heavy minerals: Fairbreeze Longer term potential Iron ore Faleme (Senegal) Heavy minerals Toliara Sands (Madagascar) Coking coal - Moranbah South (Australia) Robust project pipeline 29

30 OUTLOOK Positive factors Strong commodity markets Sustained excellent operating performance Business improvement initiatives BUT: Rand strength and volatility poses major risk to the resource sector Strain on cash flow from operations Impact on new projects Therefore, if the Rand stays at recent levels, we are unlikely to improve on earnings 30

31 HARNESSING THE POWER OF THE EARTH

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33 REVENUE CONTRIBUTION 13% 12M04 1% Iron ore Coal Heavy minerals Base metals Industrial minerals Other 8% 12% FY03 1% 1% 19% 46% 22% 56% 21% 33

34 EBIT CONTRIBUTION 4% 2% 8% 12M04 Iron ore Coal Heavy minerals Base metals Industrial minerals Other 22% 5% FY03 2% 27% 59% 71% 34

35 IRON ORE PHYSICAL INFORMATION Production volumes Sales volumes Mt H02 2H02 1H03 2H03 1H04 2H04 Mt H02 2H02 1H03 2H03 1H04 2H04 Sishen Thabazimbi Exports Local 35

36 COAL PHYSICAL INFORMATION Production volumes Sales volumes Mt 10 Mt H02 2H02 1H03 2H03 1H04 2H04 Thermal Coal Coking Coal Other 0 1H02 2H02 1H03 2H03 1H04 2H04 Eskom Domestic Export 36

37 HEAVY MINERALS INFORMATION 500 Production volumes 100 Sales volumes Ticor SA Ticor Ltd Ticor SA Ticor Ltd 37

38 DEPRECIATION PER SEGMENT R million Iron Ore Coal Heavy Minerals Base Metals Industrial Minerals Corporate Total 12M FY

39 CAPITAL EXPENDITURE R million 12M04 FY03 Sustaining and environmental Expansion Ticor SA Group (other)

40 DEBT STRUCTURE R million Drawn Undrawn Maturity profile Long term Corporate 1 734) Ticor SA project finance 1 126) Ticor Ltd 630) ) Short term -) After Total debt 3 490) Cash and cash equivalents (1 238) Net debt 2 252) 40

41 PROJECT CAPITAL EXPENDITURE Project Hope Downs Sishen Expansion Project (SEP) Sishen South Faleme Leeuwpan expansion Inyanda Coal JV (50%) Grootegeluk market coke project Fairbreeze Implementation date (start) Estimated capital cost AU$1.7bn R2.4bn R2.0bn US$950m R91m R186m R344m R516m 41

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