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ANGLO AMERICAN
MEETING THE
WORLD’S NEEDS
ANNUAL REPORT 2004
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HIGHLIGHTS OF 2004
•
Record results: headline earnings(1) up 59% at
$2,689 million; headline earnings per share up 57%
at $1.88
•
Total profit for the year up 83% at $2,913 million
• Cash generation: EBITDA(2) up by $2.3 billion
at $7.1 billion
• Record Base and Ferrous Metals performances
• $1.5 billion of projects successfully commissioned;
$4.7 billion project pipeline on track
• Ongoing optimisation of asset base: $2.1 billion
of disposals, including Hudson Bay and stakes
in Gold Fields and Terra. Minera Sur Andes
and Kumba acquisitions performing well
• Cost savings and efficiencies up 65% at $554 million
• Final dividend increased by 31% to 51 US cents.
Total dividend up 30% at 70 US cents
over 2003
CONTENTS
Financial highlights
Chairman’s questions and answers
Chief executive’s statement
Financial review
Directors’ report
Corporate governance
Remuneration report
Statement of directors’ responsibilities
Independent auditors’ report
01
02
03
06
19
22
28
44
45
Financial statements
Ore reserves and mineral resources
Production statistics
Exchange rates and commodity prices
Key financial data
Summary by business segment
Shareholder information
Other Anglo American publications
46
90
114
120
121
122
123
124
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Anglo American plc Annual Report 2004 01
FINANCIAL HIGHLIGHTS
$ million (unless otherwise stated)
Turnover including share of joint ventures and associates
Total operating profit
Total operating profit before operating exceptional items
Profit for the financial year
Headline earnings for the financial year(1)
Net operating assets(3)
EBITDA(2)
Net cash inflow from operating activities
Capital expenditure
Basic earnings per share ($):
Profit for the financial year
Headline earnings for the financial year
Total dividend for the financial year (US cents per share)
SELECTED FINANCIAL DATA
2004
2003
31,795
4,480
4,572
2,913
2,689
37,601
7,110
4,773
3,129
2.03
1.88
70.0
24,909
2,606
2,892
1,592
1,694
29,709
4,785
3,184
3,025
1.13
1.20
54.0
123
47.5
114
49.0
125
51.0
120
54.0
188
70.0
4,688
4,647
4,792
4,785
7,110
2000
2001
2002
2003
2004
2000
2001
2002
2003
2004
n Headline earnings per share
n Dividends per share
US cents
EBITDA US$ million
(1) Headline earnings are defined in note 12 to the financial statements.
(2) EBITDA is operating profit before exceptional items, plus depreciation and amortisation in subsidiaries and share of EBITDA of joint ventures and associates. EBITDA is reconciled to net cash inflow
from operating activities in the financial statements following the cash flow statement and statement of total recognised gains and losses.
(3) Net operating assets are defined in note 2 to the financial statements.
*Throughout this report 1999, 2000 and 2001 figures have been restated for FRS 19. Figures for the years 1999 to 2003 have been restated for UITF 38.
Unless otherwise stated, throughout this report ‘$’ and ‘dollar’ denote US dollars.
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02 Anglo American plc Annual Report 2004
CHAIRMAN’S QUESTIONS AND ANSWERS
Q. While the financial performance for 2004 was good,
do you feel that enough was done to strengthen the
fundamentals of the business?
A. Yes. Our earnings were strong but this was not purely a
function of commodity prices. They reflect, for example,
the value adding nature of the acquisitions made over the
last four years – especially Minera Sur Andes, Syktyvkar,
Cerrejón – and the De Beers transaction. These have produced
a stronger and more balanced portfolio. Who, in the past,
would have predicted the pre-eminence of Latin America
in our 2004 earnings? Nor, in a year of ‘plenty’, have we
rested on our laurels. We have realised a further $554 million
in cost savings. Through the merger with Ashanti Goldfields,
AngloGold’s resource base and growth prospects have been
strengthened. Reorganisations within Anglo Platinum and
Paper and Packaging have been carried out. We launched a
drive to encourage innovation and greater entrepreneurialism.
The fundamentals of the business are stronger than they
were 12 months ago.
Q. Many of the opportunities which Anglo is examining are
in ‘new geographies’. Do you think you are properly
equipped to manage the risks involved?
A. Actually, we have a strong project pipeline in very familiar
regions – southern Africa, South America, eastern Europe
and Australia. We are also looking at new geographies,
chiefly China, Russia and India, since each has the potential
to be a major growth market as well as a significant
commodities producer. Our approach has been to become
involved, initially in a relatively limited way, while we seek
to better understand the risks of doing business in each.
The board is very supportive of this and believes it is one
of Anglo’s strengths. When I went to China, for example,
I visited small Anglo businesses in quarrying and drilling
equipment and was briefed on three other potential
opportunities. Similarly, we held a stake in Syktyvkar in
Russia for five years before taking control. This gradualist
approach gives us a better feel for the operating
environment in new countries.
Q. There was a controversy about Anglo’s judgement of
political risk in South Africa – where do things now
stand on this?
A. The problem was never our perception of political risk – but
those of some people in the international capital markets.
These concerns are largely the legacy of the leaking of an
early draft of the Mining Empowerment Charter in 2002.
Confidence has been returning as this memory has receded
and this will be given momentum by the successful
conversion of ‘old order’ mineral rights. We remain committed
to South Africa and are strongly supportive of the agreed
scorecard approach in the Mining Act and the need to deliver
on it – hence our big continuing investment programme.
To an extent I can share the frustration of the South African
government. It has pursued exemplary macro-economic
policies and deserves to have been rewarded with more
foreign direct investment.
at the traditional ‘hard’ skills, but the board has identified
‘people’ issues as a strategic priority and we are now
definitely moving in the right direction.
Q. What do you see as the non-financial highlights of 2004?
A. I would highlight four. First, Anglo became a signatory to the
UN Global Compact – the ten principles of which we fully
support – and made all the preparations to become a party
to the Voluntary Principles on Security and Human Rights.
Secondly, our work on HIV/AIDS continued to progress,
with some 2,200 employees now on anti-retrovirals and
an improved uptake of voluntary counselling and testing.
Thirdly, our innovative Socio-Economic Assessment Toolbox
process had an enthusiastic take-up at site level, with some
30 assessments already under way. Fourthly, we reorganised
how we bring the strands of sustainable development
together and instituted a project to improve our calibration
of sustainable development risk. The benefits of these
changes will come through during 2005.
Q. You are closely identified with ‘sustainable development’
and ‘corporate responsibility’ – how would you answer
those who say it is a peripheral issue or, as in the
recent Economist article, that business should just
concentrate on profits for shareholders?
A. Sustainable development is absolutely central to the future
acceptability of our business and to its ongoing success and
profitability. Our businesses have high environmental and
social impacts, many deplete a non-renewable (albeit generally
recyclable) resource, and global concerns like climate change
and HIV/AIDS are highly relevant to us. These issues
reflect upon our licence to operate, our sustainability as an
investment, our ability to attract the most talented recruits
and our acceptability to governments and communities.
Moreover, our ability to understand and address societal
concerns is fundamental to our good name and the value
of that reputation.
Q. Are you concerned that other stakeholders, like
governments and more assertive communities,
want to increase their share of the profits from
your operations?
A. Every enterprise faces tensions around how rewards are
shared – investors, employees, suppliers and customers all
want their ‘fair share’. In the natural resources business
there are more parties to the process. For much of the last
30 years mining has been a value destroyer for investors.
Governments tend to overlook the lean times when
proposing new or higher taxes in years like this. During
2005, Chile and South Africa are both planning to decide
upon a royalty regime. Such taxes have implications for
competitiveness, investment and employment. Some
communities feel they get a raw deal when fiscal benefits
are often only felt at a national level. We seek to improve
the local development effects of our businesses but it is
important too for national governments to ensure that a
proportion of tax revenues is shared with local people.
Q. Anglo is used to thinking about physical assets, finance
and technology. Are you as good at nurturing talent?
A. I would like to thank our employees for their commitment in
2004. During my site visits and at the centre I have been
impressed by the calibre of Anglo’s people. I like the fact
that we typically entrust most senior operational posts to
locally recruited managers. We have become much more
strategic and proactive in creating a performance-driven
culture, career and talent management, addressing
shortcomings in our engagement with employees and in
moving to a more diverse workforce. We have been better
Q. Were there any major disappointments in 2004 –
if so, how do you intend to rectify them?
A. The increase in fatalities at our managed operations from
44 to 49 was of course a major disappointment. There was
a welcome further improvement in the lost time injury
frequency rate of 23%, but we are not prepared to be
philosophical about the death of any employee or contractor.
There is already an emphasis on improving safety at all sites,
but it is evidently not enough. Thus, we must continue to
emphasise visible felt leadership in the field of safety, focus
on safety for contractors – who made up over half the 2004
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Anglo American plc Annual Report 2004 03
fatalities – and seek to focus on leading indicators such as
‘near hits’ and tackling unsafe behaviour. We have made
good progress over the last four years and we will do our
utmost to return to the path of improvement.
Q. What changes are planned in the composition
of the board?
A. Bill Nairn, our technical director, retired from the board at
the end of 2004. I am grateful for the experience that he
brought to the Group and especially his relentless focus
on safety. At the AGM, two non-executive directors will
be retiring: Sir David Scholey and Göran Lindahl. Sir David
steps down after a long association with the Anglo Group,
including serving as a director since December 1999. Göran
has brought his wide international experience and knowledge
of sustainable development to our deliberations. We shall
miss them.
One new independent non-executive director, Ralph
Alexander, will be proposed at the AGM. He is an American
citizen and is chief executive of BP Petrochemicals. He brings
extensive experience of the energy business and has a
strong international background. Two new executive directors
will also be proposed: David Hathorn and Simon Thompson,
respectively chief executives of the Paper and Packaging and
Base Metals businesses. Both have played a major part in
the international expansion of the Group. In addition, it is
proposed that René Médori be elected a director with effect
from 1 June 2005. René, a French national, who has
extensive experience of UK and US business cultures,
will be joining us from The BOC Group plc, where he is
finance director. He will succeed Tony Lea as finance director
in September and Tony will leave the board in December.
In relation to the Combined Code requirement to ‘comply
or explain’ I should mention that we will briefly be
non-compliant in that from June to December less than
half the board, excluding myself, will be independent
non-executive directors. I believe that this is fully justified
in ensuring continuity and a smooth handover between
Tony and René.
Sir Mark Moody-Stuart
Chairman
CHIEF EXECUTIVE’S
STATEMENT
One of the dominant features of 2004 was the increased
demand for a range of commodities as China’s industrialising
economy continued to consume more raw materials. Copper,
nickel, zinc, coal and iron ore markets all benefited materially
and a number of these commodities reached their highest price
levels for many years. As a result of these strong conditions as
well as rising platinum, gold and diamond prices, Anglo American
reported record headline earnings of $2.69 billion and headline
earnings per share increased by 57% to $1.88 per share.
Nonetheless, the year was dominated by two major influences –
volatile global markets, largely because of the uncertain outlook
in the Middle East; and the possibility of a marked slowdown in
China’s economic growth rate. During the second, and again in
the fourth quarter of the year, markets grew concerned that
official Chinese attempts to slow down excessive investment
and growth would result in a ‘hard landing’. During each of these
periods, metals prices responded by dropping sharply and then
rebounding fairly quickly. Chinese GDP growth is now projected
to average around 8% for 2005.
In line with the board’s policy of progressively increasing
dividends, the board has decided to increase the final dividend
by 12 cents to 51 cents per share, resulting in a total dividend
of 70 cents per share for 2004, up 30%.
STRATEGY
Since our primary London listing in mid-1999, Anglo American
has grown by over 70%, with a present market capitalisation
now approaching $38 billion. Our strong cash generation
has been matched by one of the largest capital expenditure
programmes in the industry. Our existing $4.7 billion project
pipeline and more than $8 billion in unapproved projects, spread
across all our business units and geographies, provide an
excellent platform for growth going forward. We will continue
to enhance and add value to Anglo’s portfolio of world-class
assets in all areas; in particular, through:
Securing the most competitive cost of capital
Owning world-class assets
Anglo’s high-calibre employees
Innovation and entrepreneurship
Development of world-class technology
Maintaining high standards of sustainable development
Becoming the business partner of choice to suppliers,
customers and key stakeholders.
Our strategy for future investment remains focused around the
three key areas that make up our portfolio, namely Precious
Commodities, Metals and Minerals, and Paper and Packaging.
ACQUISITIONS AND ORGANIC GROWTH
Although Anglo American remains cautious about valuations at
this point in the cycle, the Group continues to examine expansion
and acquisition opportunities in all its business sectors.
The following overview of our business units covers key
developments; detailed summaries of operating performances
are contained on pages 7 to 14 of this report.
Platinum
We are actively focusing on achieving further business optimisation
in Anglo Platinum. The strong level of the South African rand
continues to materially affect the rate of expansion and also
operating costs when translated into US dollars. The projects that
have been earmarked for development will continue to be reviewed
in light of the strong rand.
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4 Anglo American plc Annual Report 2004
CHIEF EXECUTIVE’S STATEMENT
CONTINUED
Despite the loss of production due to industrial action during
October, arising out of wage negotiations, Anglo Platinum
achieved its 2004 target of producing 2.45 million ounces
of refined platinum. The company recently established a
co-operative joint venture contract with Sichuan Mineral Resource
Company to conduct exploration for platinum group metals in
China's Sichuan Province.
Gold
One of the most significant transactions of the year was the
merger of AngloGold and Ashanti Goldfields, which was completed
in April. The merger has resulted in a substantial increase in gold
reserves against a background of a diminishing global reserve
base. AngloGold Ashanti continues to pursue further growth
opportunities in new frontiers such as Laos, the Philippines
and Russia, in partnership with junior mining and exploration
companies. AngloGold Ashanti, in which Anglo American holds
a 51% stake, is the world’s second largest gold mining company
in terms of production.
Diamonds
De Beers’ strategy of Supplier of Choice, which focuses
on driving demand in the diamond industry, continues to be
implemented successfully. Central to this has been the realignment
of De Beers’ relationship with its sightholders, a process that
is now substantially complete and that has brought about
considerable benefits for De Beers and the diamond industry
as a whole. De Beers’ $180 million a year advertising and
marketing spend has been significantly bolstered by an increase
in advertising programmes by sightholders and their downstream
trade partners. Following years of underperformance in terms of
market share, diamonds are now competing successfully with
other luxury goods. At the retail level, sales of diamonds worldwide
exceeded $60 billion for the first time.
An important breakthrough took place in July when De Beers
announced that it had reached a settlement with the US
Department of Justice for the resolution of a longstanding case
against De Beers in respect of industrial diamonds. The resolution
of the case underscores the company’s commitment to be fully
legally compliant throughout the world.
In December, De Beers announced that it had secured a 25 year
renewal of all four mining leases in Botswana, on a coterminous
basis. De Beers and the European Commission are in the final
stages of a constructive dialogue to address the Commission’s
concerns over aspects of the five year trade agreement between
De Beers and Russian diamond producer Alrosa.
Base Metals
On the back of high base metals prices and record production
of copper, nickel, zinc and mineral sands products, Base Metals
achieved record headline earnings of just over $1 billion.
The acquisition of Minera Sur Andes was a major contributor
to this performance with headline earnings of $430 million.
A significant achievement during the year was the Skorpion zinc
mine in Namibia commencing commercial production in May and
achieving 95% of design capacity by year end. Commissioning
of the $654 million Collahuasi Rosario Project in Chile commenced
in April, some five weeks ahead of schedule and under budget.
The project rapidly achieved design capacity and will enable
Collahuasi to maintain production of copper in concentrate at
a long term average rate of 400,000 tonnes per annum.
Codemin, in Brazil, became a wholly-owned subsidiary following
the purchase of the remaining 10% from the International Finance
Corporation, and the expansion project was completed on time
and on budget and will ramp up to full capacity during the first
quarter of 2005. In line with Base Metals’ strategy of focusing
on fewer, larger, lower cost assets, its 25% stake in Nkomati
Nickel was disposed of in February for $37 million and Hudson
Bay in Canada was sold for $257 million.
Coal
In December, Anglo American and Mitsui announced the
approval of the $653 million Dawson Complex, which will
include the recapitalisation of the existing operation at Moura
in central Queensland, Australia and the establishment of two
additional operations on adjacent tenures. This will increase
production by 5.7 million tonnes per annum over Moura’s
existing saleable production of 7 million tonnes per annum.
In October, Anglo American and Kumba signed Heads of
Agreement that could lead to the development of a major
coking coal mine in central Queensland.
In August, Anglo Coal and Eyesizwe announced that they
were entering into a 50:50 joint venture to mine the Arnot
North coal reserves, known as Mafube Colliery, and mining has
commenced. A new opencast operation, the Isibonelo Colliery, is
being developed to provide Sasol with 5 million tonnes of coal per
annum. Production is due to commence in mid-2005. Anglo Coal
and BHP Billiton are jointly investigating the proposed expansion
of coal resources in the Western Complex in South Africa.
In Colombia the approved expansion at Cerrejón from 22 million
to 28 million tonnes per annum is on schedule and should be
achieved by 2007.
Paper and Packaging
In April, Anglo American’s wholly-owned subsidiary Mondi
acquired the remaining 30% interest in Frantschach for a total
consideration of $390 million. The acquisitions of Copamex’s
industrial packaging businesses (renamed Mondimex) and Roman
Bauernfeind were completed in the first quarter of 2004 and are
performing according to expectations, having strengthened
Mondi’s position in the North American and central European
markets respectively.
In November, Mondi announced a major restructuring focused
on global product lines, namely Mondi Business Paper and Mondi
Packaging. The reorganisation has streamlined and rebranded the
existing businesses under the Mondi name, allowing the group to
improve its visibility to customers and to reduce its overhead costs.
Industrial Minerals
In the UK, Anglo Industrial Minerals’ new cement plant at Buxton
commenced operating in March and is ramping up to full capacity
of 800,000 tonnes per annum. The project cost of £110 million
was £5 million below budget. In China, the Yang Quarry,
situated 140 kilometres from Shanghai and the closest reserve
of top-quality asphalt aggregates to China’s commercial capital,
commenced production at the end of the year. Production will
be ramped up during 2005. Following completion of the Goiás
project in 2003, Copebrás almost doubled its contribution on the
back of buoyant Brazilian fertiliser markets.
Ferrous Metals and Industries
With global steel production surpassing 1 billion tonnes for the
first time, the contribution from Ferrous Metals and Industries’
operations increased more than fourfold. Regarding Kumba's
Hope Downs iron ore project in Australia, which has been the
subject of a dispute with a local partner, Kumba is appealing a
recent arbitration decision. Subject to Kumba’s rights of appeal,
the process for determining a fair value, at which the local
partner can elect to acquire Kumba’s project interest, has
commenced. Until Kumba’s participation in the project is finally
resolved, it continues to perform its contractual obligations in
respect of the project.
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Anglo American plc Annual Report 2004 05
SAFETY AND SUSTAINABLE DEVELOPMENT
It is with deep regret that we report the deaths of 28 contractors
and 21 employees in accidents at our operations during the year.
This represented an increase of five deaths compared with 2003,
following four years of consistent decline. Such accidents are
wholly unacceptable and we will be redoubling our efforts to
eliminate them. It was encouraging, however, that the lost time
injury frequency rate improved by 23% – which indicates
success in embedding safer behaviour at site level.
We have made significant progress in addressing the sustainable
development agenda, including launching our Socio-Economic
Assessment Toolbox; making strides in improving local business
development and initiating a pilot sustainable development risk
management process.
OUTLOOK
The outlook for the year ahead is very dependent upon growth
prospects for Organisation for Economic Co-operation and
Development (OECD) countries and China. While the leading
indicators for the OECD currently point to some slowing of
industrial output growth during the first half, China continues
to grow strongly and will remain a vital market for many of our
commodities. On the supply side, global output is generally set
to increase and much will depend on the industry maintaining
capital discipline in the face of higher commodity prices. A key
challenge for the Group will be to continue improving operating
efficiencies and cost control against a background of volatile
currencies and, in particular, a weak US dollar. In the meantime,
Anglo American’s geographic and commodity diversity, its
significant project pipeline, its disciplined acquisition process and
strong cash generation will continue to underpin performance.
OUR EMPLOYEES
At the end of 2004, Bill Nairn retired as technical director.
I would like to thank Bill for his long and dedicated service
to the Group. He has been succeeded as technical director by
Tony Redman, who is also chairman of Anglo Coal, and who
has been appointed to the Executive Board. In February 2005,
we announced the appointment of Lazarus Zim as chief
executive officer and Godfrey Gomwe as chief operating officer
of Anglo American Corporation of South Africa. Lazarus will
also chair the South Africa Transformation Committee and has
joined the Executive Board. Finally, my appreciation and thanks
go to all our employees worldwide who, through their hard
work and dedication, have helped make this a record year for
Anglo American.
A J Trahar
Chief Executive
SOUTH AFRICA: BLACK ECONOMIC EMPOWERMENT
During the year, several developments took place concerning the
legislative framework governing the transformation process in
South Africa’s mining industry. Most notably, the Mineral and
Petroleum Resources Development Act, which aims to make
transformation effective across a broad front – including human
resources and community development, as well as employment
equity – came into effect on 1 May 2004. All South African
mining operations are focused on the implementation of this Act.
Anglo American has submitted a number of applications to convert
‘old order’ mineral rights into ‘new order’ rights. The Group hopes
to be able to report progress in this regard later in the year.
During the year the South African government confirmed
that royalties in terms of the Royalty Bill will become payable
only in 2009; a second draft of the Royalty Bill is expected
to be unveiled in the future.
We have adopted a comprehensive approach to transformation
in South Africa, including the establishment of a Transformation
Committee, which has been integrated with all the business units’
activities. Procurement remains an important area of focus: over
the last year we spent the equivalent of $900 million on business
development and the procurement of goods and services from
black-owned businesses, up 62% on the previous year.
Mondi South Africa concluded two significant empowerment
transactions during 2004. First in June, a joint venture was
formed with Shanduka Resources (formerly MCI Resources)
in its integrated newsprint business, with Mondi retaining
a 58% interest and, secondly, Mondi disposed of 42% of its
$370 million South African packaging businesses to Shanduka,
effective 1 January 2005. These empowerment transactions
allowed for further interests in the newsprint and packaging
businesses to be set aside for broad based participation by
Mondi South Africa employees and relevant communities.
DISPOSALS
During 2004, a number of disposals were made. These
included Anglo American’s 20% stake in Gold Fields Limited
for $1.18 billion, the remaining interest in FirstRand Limited for
$47 million and the Group’s 49% stake in Terra Industries Inc for
$255 million. In line with Base Metals’ strategy of focusing on
fewer, larger, lower cost assets, its 25% stake in Nkomati Nickel
was disposed of in February for $37 million and Hudson Bay in
Canada was sold for $257 million in December. Anglo American
and BHP Billiton have recently announced the sale of their
respective 40% and 60% shareholdings in Samancor Chrome
for an enterprise value of $469 million, the sale will be effective
1 April 2005, subject to obtaining regulatory approvals.
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06 Anglo American plc Annual Report 2004
FINANCIAL REVIEW
RESULTS SUMMARY
Headline earnings for the year reached record levels at $2,689 million
compared with $1,694 million in 2003 and headline earnings per
share increased by 57% to $1.88 per share. This performance
resulted from a particularly strong contribution from Base Metals
and significant increases from Ferrous Metals and Industries and
Coal. Platinum also increased its contribution. Industrial Minerals
headline earnings were marginally lower than last year. Lower
headline earnings were recorded by Paper and Packaging, reflecting
tougher market conditions. AngloGold Ashanti recorded lower
headline earnings due mainly to the impact of the stronger rand.
Headline earnings
$ million
Profit for the financial year
Operating exceptional items
Non-operating exceptional items
Exceptional finance charge
Goodwill amortisation
Tax on exceptional items
Related minority interests
Headline earnings
Headline earnings per share ($)
2004
2003
2,913
92
(520)
–
221
(1)
(16)
2,689
1.88
1,592
286
(386)
13
203
(13)
(1)
1,694
1.20
Profit for the year increased by 83% to $2,913 million compared
with $1,592 million in the prior year. The increased profit in 2004
was principally due to strong operational results, significant profits
on the sale of the Group’s non-core assets, including its holding in
Gold Fields Limited, and a net reduction in exceptional impairment
charges. These more than compensated for an increased net
interest charge and an increase in the effective tax rate.
Summary profit and loss account
$ million
2004
2003
Total operating profit before exceptional items 4,572
(92)
Exceptional operating items
Total operating profit
Non-operating exceptional items
Profit before interest
Net interest payable
Profit before tax
Tax
Profit after tax
Minority interests
Profit for the financial year
Earnings per share ($)
4,480
520
5,000
(359)
4,641
(1,279)
3,362
(449)
2,913
2.03
2,892
(286)
2,606
386
2,992
(319)
2,673
(736)
1,937
(345)
1,592
1.13
The Group’s results are influenced by a variety of currencies due
to its geographic diversity. The South African rand in particular
strengthened considerably against the US dollar during the year
with an average exchange rate of $1:R6.44 compared with R7.55
in 2003. Currency movements adversely impacted headline
earnings by $385 million. This was more than offset by the
positive impact of increased prices amounting to $1,661 million.
EXCEPTIONAL ITEMS
Operating exceptional charges amounted to $92 million.
These included an impairment of $100 million to the carrying
value of Black Mountain in Base Metals and the Group’s share,
$117 million, of an impairment in Palabora, an associate of Base
Metals. Impairments were partially offset by the $154 million
reversal of a previous impairment of Terra Industries Inc.
Non-operating exceptional gains amounted to $520 million.
These included $464 million of profit from the sale of the
Group’s holding in Gold Fields Limited.
INTEREST
The net interest charge increased from $319 million in the prior
year to $359 million in 2004. The increase reflects higher
average net debt levels during 2004 compared with the average
during 2003.
TAXATION
The effective rate of taxation before exceptional items was
30%, compared to 29% in 2003. This change in the effective
rate was due to a number of one-off tax benefits arising in
2003 and a change in the mix of earnings contributed by the
Group’s businesses.
BALANCE SHEET
Total shareholders’ funds were $24,998 million compared with
$19,772(1) million as at 31 December 2003. The increase was
primarily due to retained earnings and the appreciation of the
South African rand and other local currencies against the US dollar.
Net debt was $8,121 million, a decrease of $512 million
from 2003. Net debt at 31 December 2004 comprised
$10,782 million of debt, offset by $2,661 million of cash
and current asset investments. Net debt to total capital as
at 31 December 2004 was 21.5%, compared with 27.1%(1)
in 2003. Further information on net debt is given on
page 15.
CASH FLOW
Net cash inflow from operations was $4,773 million compared
with $3,184 million in 2003. EBITDA was $7,110 million,
a substantial increase of 49% from $4,785 million in 2003.
Depreciation and amortisation, which increased by $660 million
to $2,123 million, are analysed opposite.
Acquisitions expenditure accounted for an outflow of
$1,119 million compared with $1,469 million in 2003. The
Group has increased its interests in Anglo Platinum to 74.8%
and, following the merger of AngloGold and Ashanti Goldfields,
purchased further shares in AngloGold Ashanti to restore
the Group’s holding to 51%. The Group has also acquired the
remaining 30% minority interest in Frantschach AG.
Proceeds from disposals, excluding sale of other investments,
totalled $1,863 million, with $1,180 million from the sale of
the Group’s holding in Gold Fields Limited, $246 million cash
consideration from the sale of Hudson Bay Mining and Smelting
Co Ltd and $255 million from the sale of the Group’s interest
in Terra Industries Inc. Net proceeds from the sale of other
investments totalled $263 million, including the sale of the
Group’s remaining stake in FirstRand Limited, part disposal
of the Group’s interest in Western Areas and sale of the
Group’s interest in Avgold.
(1) Restated for UITF (Urgent Issues Task Force) abstract 38 ‘Accounting for ESOP trusts’.
See note 1 to the financial statements.
7878v03_PH_Rp_FC-p27_020305.qxp 2/3/05 11:52 pm Page 7
Anglo American plc Annual Report 2004 7
Analysis of depreciation by business segment (subsidiaries)
$ million
Platinum
Gold
Coal
Base Metals
Industrial Minerals
Ferrous Metals and Industries
Paper and Packaging
Other
2004
309
338
148
270
215
273
379
16
2003
206
180
124
220
176
105
285
14
1,948
1,310
Analysis of amortisation by business segment (subsidiaries)
$ million
2004
2003
Platinum
Gold
Coal
Base Metals
Industrial Minerals
Ferrous Metals and Industries
Paper and Packaging
Other
17
38
5
2
60
6
27
20
17
32
5
1
53
5
18
22
175
153
Analysis of capital expenditure by business segment
(subsidiaries)
$ million
Platinum
Gold
Coal
Base Metals
Industrial Minerals
Ferrous Metals and Industries
Paper and Packaging
Other
2004
633
572
217
286
299
284
819
19
3,129
2003
1,004
339
207
352
316
195
601
11
3,025
Purchases of tangible fixed assets amounted to $3,129 million,
an increase of $104 million from 2003. Increased capital
expenditure by Paper and Packaging, AngloGold Ashanti and
Ferrous Metals and Industries was partially offset by a reduction
in capital expenditure by Anglo Platinum.
Dividends
The directors recommend a final dividend of 51 US cents per share
to be paid on 29 April 2005. Total dividends for the year amount to
70 US cents per share, a 30% increase on the 2003 total dividend.
PLATINUM
$ million
Total operating profit before exceptional items
Total operating profit
Headline earnings
EBITDA
Net operating assets
Capital expenditure
Share of Group headline earnings (%)
Share of Group net operating assets (%)
2004
537
537
239
867
7,563
633
9
20
2003
447
433
205
673
6,119
1,004
12
21
Anglo Platinum’s operating profit rose by 24% to $537 million.
This was largely due to improved prices and greater sales volumes,
though partially offset by the strength of the rand, which raised
costs in dollar terms.
Markets
The average dollar price realised for the basket of metals sold
equated to $1,194 per platinum ounce sold, 25.9% greater than
in 2003, with improved platinum, rhodium and nickel prices making
the largest contribution. The average realised price for platinum
of $842 per ounce was $146 higher, while rhodium prices
climbed from $527 to $933 per ounce, with nickel rising from
$4.07 per pound to $5.92.
Operating performance
Refined platinum production increased by 6.3% to 2.45 million
ounces. The increase was due mainly to improved smelting
recoveries, additional production from the mines and the
commencement of the Western Limb Tailings Retreatment
Plant in January 2004.
Cash operating costs per equivalent refined ounce of platinum
rose to $784 following a 9.2% increase in rand unit costs and
the strength of the rand against the dollar, which raised costs
in dollar terms. Mining unit costs were adversely affected by
production lost to a wage strike in October, the ongoing
substitution of higher grade Merensky production with UG2
production and difficult geological conditions at Amandelbult
and Modikwa which, while anticipated, had a greater impact
than expected. Cost performance at the processing operations
was excellent and the overall smelting and refining unit cost
decreased in rand terms. The restructuring initiative has made
good progress to the stage where sustainable cost savings will
be realised from 2005. During 2004, a total of $80 million
was achieved in cost saving initiatives.
In May 2004, Anglo Platinum successfully concluded a rights offer
of convertible perpetual cumulative preference shares, which
raised $599 million. Anglo American subscribed for the rights
offer, investing $459 million. The proceeds were used to reduce
short term borrowings. Net debt has decreased from $1,038
million at the end of 2003 to $608 million. Capital expenditure
for 2004 amounted to $633 million (2003: $1,004 million).
Operations at the Anglo Platinum Converting Process were stable
and in line with planned production build-ups, with significantly
reduced sulphur emissions. The Polokwane Smelter recovered
well from the cooler failure and overall performance for the
year was good. The Western Limb Tailings Retreatment Plant
commissioned at the end of 2003 achieved a rapid build-up
of tonnage and is continuing towards maximising recoveries.
The Kroondal Platinum Mine, jointly mined with Aquarius
Platinum, is operating well and made a useful contribution
to Anglo Platinum’s performance for the year. Negotiations
in respect of other joint ventures are continuing.
Anglo Platinum continues to work closely with South Africa’s
Department of Minerals and Energy and good progress is being
made towards meeting the requirements of the Mineral and
Petroleum Resources Development Act and the Broad Based
Economic Empowerment Charter. The conversion of ‘old order’
mineral rights to ‘new order’ rights in accordance with the
requirements of the new Act has begun.
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08 Anglo American plc Annual Report 2004
FINANCIAL REVIEW
CONTINUED
Outlook
Anglo Platinum remains confident of the robustness of current
and future demand for platinum and will continue its expansion
programme. In line with its stated policy of implementing only
those projects which meet its investment hurdle rate and, with
the unlikely prospect of higher rand prices in the short term, the
rate of implementation of the expansion programme has been
adjusted. Current plans for 2005 indicate refined platinum
production of 2.6 million ounces. While Anglo Platinum remains
flexible with regard to the rate of expansion, the revised
implementation is expected to result in refined platinum
production in 2006 of between 2.7 and 2.8 million ounces.
Demand for platinum continues to be strong and, given the existing
currency environment and the outlook for supply, is supportive of
a platinum price at levels of $800 per ounce and above.
GOLD
$ million
Total operating profit before exceptional items
Total operating profit after exceptional items
Headline earnings
EBITDA
Net operating assets
Capital expenditure
Share of Group headline earnings (%)
Share of Group net operating assets (%)
2004
263
262
158
701
2003
369
326
167
642
6,425
3,302
572
6
17
339
10
11
Total operating profit before exceptional items was 29% lower
at $263 million (2003: $369 million). The average spot price
of $409 per ounce for the year was $46 per ounce or 12.7%
stronger than for 2003. However, the South African rand
strengthened against the dollar by some 15% during the year
and the average local price of R84,700 per kilogram was 4%
lower than for 2003. Despite the increase in the average dollar
gold price and a rise in gold output, total cash costs were
$54 per ounce higher, at $268 per ounce, mainly due to
stronger operating currencies and lower grades. Efficiency
improvements and cost saving initiatives totalled $63 million.
Gold production was 8% higher at 6.05 million ounces, attributable
largely to the merger with Ashanti Goldfields, completed on
26 April, as well as higher production at Sunrise Dam in Australia
and Cripple Creek & Victor in the US. These increases were
offset by the disposal of Jerritt Canyon in the US and the closure
of Union Reefs in Australia, as well as reduced production from
South Africa.
Markets
The return of investor interest in gold during the third quarter of
2004 produced a sustained rise in the gold price, and the final
quarter of the year produced a spot gold price of $457 per ounce,
the highest price seen in almost 17 years. The driving influence
on investor sentiment remained the weakening of the US dollar,
particularly against the euro, but also against the Japanese yen.
This has been the case throughout the past three and a half year
rise in the spot price of gold and it underlines the primary influence
of the health of the US currency on the gold price in this current
gold market cycle.
The physical market for gold during 2004 showed some positive
moves. Against the background of a long term downward trend
in the crucial area of demand for gold jewellery, there was
improved offtake in the Middle East and in south east Asia and
sustained demand in India. In China, sales of modern 18 carat gold
jewellery in metropolitan markets grew sharply.
Operating performance
The merger with Ashanti Goldfields brought to AngloGold
a substantial gold ore reserve. The challenge now is to ensure
that these operations, starved of working capital for an extended
period, realise their ore reserve, profit margin potential and
growth potential.
In addition to current growth projects, which will have the effect
of maintaining the AngloGold Ashanti annual production profile of
some 6.5 million ounces through to around 2012, management
is focused on growing the reserve and resource base. This growth
will be achieved through exploration and a disciplined, value
adding mergers and acquisitions programme, concentrating outside
of the world’s mature gold regions. In terms of this new frontiers
policy, joint ventures have been formed in Russia with London
based Trans-Siberian Gold, in the Philippines with Australian
listed company Red 5 and, in Laos, where AngloGold Ashanti
has formed an exploration alliance with Oxiana. In Mongolia, the
company has an exploration team on the ground and is acquiring
land positions in several prospective areas. In the Democratic
Republic of Congo, the company has been active for several
months establishing a base in the north east of the country.
The company has also established an office in Colombia and other
prospective areas in Central America are under consideration.
Outlook
The weakening of the US currency has been the primary driver of
the gold price rise over the past three and a half years and the
gold price correlation with the dollar remains an important one
for the year ahead. Against this background, the gold price is
expected to trade in the current range or higher in 2005.
DIAMONDS
$ million
Total operating profit
Headline earnings
EBITDA
2004
586
381
688
2003
562
386
638
Group’s share of De Beers’ net assets(1)
3,069
2,886
Share of Group headline earnings (%)
14
23
(1) De Beers is an independently managed associate of the Group. The Group’s share of
De Beers’ net assets is disclosed. The figures for the Group’s share of net operating assets
shown for other businesses relate to the Group’s subsidiaries only.
The Group’s share of total operating profit from De Beers
increased by $24 million over the 2003 figure to $586 million.
Diamond stocks at year end were at a similar level to that
reported at the end of 2003.
Markets
Overall, 2004 was another good year for the diamond industry.
Against the background of accelerating economic growth in the
major diamond consuming countries, diamond jewellery sales
performed well. Preliminary indications are that global retail sales
of diamond jewellery for the year as a whole were about 6%
higher than the previous year in local currency and, because of
the continued weakening of the dollar, about 8% higher in
dollars. Strong areas of growth were Asia-Pacific, India and the
Gulf region, with Japan also recording modest growth for the
second year running. The US, accounting for over 50% of world
diamond jewellery sales, had a solid Christmas season overall,
despite concerns over high personal debt levels.
7878v03_PH_Rp_FC-p27_020305.qxp 4/3/05 2:05 am Page 09
Anglo American plc Annual Report 2004 09
During the year, levels of polished stocks in the cutting centres
declined, but cutting centre bank debt continued to climb in line
with the increase in the volume of trade. However, the lending
banks seem reasonably comfortable with the ability of the trade
to finance the higher level of debt.
There was strong demand for rough diamonds from the cutting
centres throughout the year and full year sales by The Diamond
Trading Company (DTC), the marketing arm of De Beers, were
$5,695 million, 3% higher than in 2003. During the year, the
DTC raised its rough diamond prices on three occasions, the
cumulative effect being that sales by the DTC in 2004 were at
prices, on average, 14% higher than in 2003. The DTC had a
strong first sight in 2005 at which it raised its rough diamond
prices by a further 3% on the evidence of the underlying demand
growth achieved in 2004 and anticipated in 2005.
Operating performance
Despite De Beers group diamond production being significantly
below target in the first half of the year, the deficit was more
than made up in the second six months. Production for the year,
inclusive of its joint ventures in Botswana and Namibia, totalled
47 million carats, 3 million carats (7%) more than in 2003.
Debswana produced a record 31.1 million carats, an increase
of 2% over 2003, notwithstanding experiencing a number of
operational difficulties and industrial action. Namdeb’s production
of 1.86 million carats was 28% higher and included record marine
production of 865,000 carats.
De Beers’ South African mines produced a total of 13.7 million
carats in 2004, an increase of 1.8 million carats (15%) on
2003. Mainly because of the new Combined Treatment Plant,
Kimberley Mines produced a record 2 million carats, a production
level last achieved 90 years ago, in 1914. Although rand mining
costs per tonne were lower than in 2003, the weakness of the
dollar, the currency in which diamonds are sold, has put
De Beers’ older and more marginal mines under continued
pressure, with five of its seven mines operating at a loss.
Management continues to focus its efforts on further reducing
costs and driving efficiencies throughout its operations.
De Beers recently reached agreement with the Government of
the Republic of Botswana (GRB) for the renewal of the Jwaneng
mining licence for a further 25 year period from 1 August 2004
and the extension of the Orapa, Damtshaa and Letlhakane
mining licences to the same end date. De Beers and the GRB
have also agreed that the 15% holding in De Beers’ ultimate
holding company, DB Investments, previously owned by
Debswana, be directly owned by GRB.
De Beers has made a number of commitments to the European
Commission regarding its proposed trade agreement with the
Russian diamond producer, Alrosa. De Beers believes that it has
now addressed the concerns raised by the Commission and looks
forward to having the commitments formally accepted by the
Commission in the near future.
The reorganisation of De Beers’ South African assets is now in the
process of being implemented. Accordingly, De Beers Consolidated
Mines Limited should be in a position to implement a black
economic empowerment transaction during 2005.
Outlook
2005 is likely to be a more challenging year for the diamond
industry. However, with the transformation of the industry that
has taken place over the last few years, there is now growing
evidence that diamonds are competing favourably with other
luxury products.
BASE METALS
$ million
Total operating profit before exceptional items
Copper
Nickel, niobium and mineral sands
Zinc
Head office expenses and other
Total operating profit after exceptional items
Headline earnings
EBITDA
Net operating assets
Capital expenditure
Share of Group headline earnings (%)
Share of Group net operating assets (%)
2004
1,275
1,046
224
38
(33)
1,038
1,042
1,626
2003
286
269
106
(62)
(27)
78
206
569
4,062
4,087
286
352
39
11
12
14
Anglo Base Metals generated record operating profits before
exceptional items of $1,275 million (2003: $286 million)
following record production of copper, nickel, zinc and mineral
sands products and significantly higher base metals prices. While
on-mine cost control remained tight, margins were adversely
affected by increased prices in areas such as energy, explosives,
chemicals, freight, insurance and, in the copper concentrate market,
a significant increase in treatment and refining charges. However,
$47 million was realised from efficiency improvements and cost
saving initiatives, partly offsetting the increased operating costs.
Markets
2004 witnessed a record performance on the back of a sustained
rebound in world economic growth. Strong growth in metals
demand, together with relatively constrained supply increases,
resulted in metal market deficits and lower inventories. This,
together with a weakening of the US dollar and significant
speculative fund interest, propelled US dollar base metals prices
to multi-year highs.
Operating performance
The copper division’s operating profit before exceptional items
was $1,046 million (2003: $269 million) as a result of its
highest ever attributable copper production of 766,000 tonnes
(2003: 708,800 tonnes) and a higher average copper price
received of 133 US cents/lb (2003: 81 US cents/lb). Los Bronces
produced a record 231,600 tonnes on the back of higher mining
rates and grades and improved metallurgical recoveries. Attributable
production from Collahuasi was a record 211,600 tonnes, mainly
due to higher tonnages treated through the concentrator following
the Rosario project commissioning.
The Rosario transition project was successfully completed five
weeks ahead of schedule at a capital cost of $627 million
(budget $654 million) and its mill throughput has consistently
exceeded design capacity of 110,000 tonnes per day. The
$80 million El Soldado pit extension project, approved during
the year, will extend mine life by more than 20 years. The
$21 million Chagres de-bottlenecking project, which increases
production capacity from 162,000 tonnes per annum to
184,000 tonnes per annum of anode/blister, was also approved
during the year and will be built and commissioned during 2005.
The construction of a $47 million molybdenum plant with a
capacity of 6,700 tonnes per annum at Punta Patache was
approved by Collahuasi and will enter production in 2006.
Scoping studies for significant increases in production are
under way at both Collahuasi and Los Bronces.
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10 Anglo American plc Annual Report 2004
FINANCIAL REVIEW
CONTINUED
The Minera Sur Andes operations generated an operating profit of
$511 million. Current indications are that the remaining $86 million
of the contingent purchase price will be paid in May 2005.
FERROUS METALS AND INDUSTRIES
$ million
Total operating profit before exceptional items
The Group’s share of an impairment of Palabora amounted to
$117 million.
The nickel, niobium and mineral sands division generated an
operating profit of $224 million (2003: $106 million), on the
back of attributable nickel production of 24,000 tonnes and
an average nickel price received of 617 US cents/lb (2003:
403 US cents/lb). Production at both Loma de Níquel and
Codemin was essentially unchanged, while niobium production
rose slightly. At Namakwa, rutile and zircon production grew by
16% and 28% respectively as the operation recovered from the
after-effects of the mineral separation plant fire in the second
half of 2003. All operations saw significant upward pressure on
costs due to currency effects, the rising prices of key inputs such
as power, fuel oil, aluminium powder and anthracite, and, in
Brazil, the imposition of new taxes.
The 25% interest in the Nkomati joint venture was sold for
$37 million and Codemin became a wholly-owned subsidiary
following the purchase of the outstanding 10% of the company.
The $67 million Codemin 2 project which will increase nickel
production to in excess of 10,000 tonnes per annum, was
commissioned on time and on budget and will ramp up to full
capacity during the first quarter of 2005. The Barro Alto
feasibility study will be completed in 2005.
The zinc division’s operating profit before exceptional items was
$38 million (2003: $62 million loss) following zinc production
of 410,700 tonnes and an average zinc price received of
48 US cents/lb (2003: 38 US cents/lb). Skorpion mine entered
commercial production in May 2004. The operation produced
119,200 tonnes of zinc during 2004 and achieved 95% of
capacity by year end. Lisheen saw lower production of zinc and
lead due to lower grades and reduced mining rates ahead of
the commissioning of the pastefill plant which commenced in
October 2004. Black Mountain continued to experience lack of
mining flexibility ahead of the Deeps orebody entering production.
Mill throughput was maintained and zinc production rose 9%
but lower grades resulted in lead production of 37,500 tonnes
(2003: 39,600 tonnes). Currency effects at all operations
placed significant upward pressure on costs.
The sinking of both the main and ventilation shafts at Black
Mountain is complete and hoisting operations commenced in early
2005. The development of the Deeps mine and the ramping up
of zinc production will continue throughout 2005. The final
estimated cost of the project is $125 million, against a budget
of $110 million, as a result of the strength of the rand.
Hudson Bay, which contributed $37 million to operating profit
in 2004, was sold in December for $257 million, resulting in a
$42 million loss on the sale. A decision was also made to impair
the carrying value of Black Mountain by $100 million.
Outlook
A weaker dollar and low metal inventories should provide a solid
support to dollar-denominated prices. Nonetheless, some base
metals markets could move towards balance or even into surplus
in the second half as price-induced supply increases gather pace.
Kumba
Highveld Steel
Scaw Metals
Samancor
Boart Longyear
Tongaat-Hulett
Terra
Other
2004
895
205
168
101
236
67
69
53
(4)
2003
208
33
11
70
41
33
10
14
(4)
208
107
441
4,629
195
6
16
Total operating profit after exceptional items 1,050
Headline earnings
EBITDA
Net operating assets
Capital expenditure
Share of Group headline earnings (%)
Share of Group net operating assets (%)
480
1,249
5,534
284
18
15
Ferrous Metals and Industries lifted operating profit before
exceptional items to record levels in 2004, from $208 million
to $895 million. The business benefited from improved prices for
iron ore, manganese, ferrochrome, steel and vanadium. In addition,
significant progress was made in efficiency improvements and
cost saving initiatives which totalled $103 million.
Markets
World crude steel production in 2004 increased by 8.8% over
2003, while China produced 272.5 million tonnes of crude steel,
an increase of 23.2%. The South African steel market was also
characterised by strong local demand, rising by 20%.
In respect of Terra, a previous impairment of $154 million
was released during the year as an operating exceptional gain.
Anglo American’s entire shareholding in Terra was sold for
$255 million, resulting in an exceptional gain of $13 million.
In January 2005, Highveld Steel and Samancor sold half of their
shareholdings in Acerinox. Anglo American’s attributable share of
the proceeds was $69 million. In February 2005, Anglo American
and BHP Billiton announced that they had reached agreement
for the sale of their respective 40% and 60% shareholdings in
Samancor Chrome for an enterprise value of $469 million.
Operating performance
Kumba’s contribution to Anglo American’s operating profit before
exceptional items was $205 million (as a subsidiary) compared
with $33 million in 2003 (representing a 20.1% attributable
equity interest for ten months and as a subsidiary for one month).
This performance reflected higher commodity prices, solid
operational performances and margin-improvement initiatives,
countered to some extent by the strong rand. The global market
for seaborne iron ore increased by an estimated 95 million tonnes
in 2004. Kumba’s iron ore operations benefited from an average
19% annual increase in dollar denominated prices, with effect
from 1 April 2004, and further significant increases are anticipated
in 2005. Its Sishen and Thabazimbi mines produced a total
of 30.1 million tonnes of iron ore during the year, of which
20.9 million tonnes were exported.
7878v03_PH_Rp_FC-p27_020305.qxp 4/3/05 2:06 am Page 11
Anglo American plc Annual Report 2004 11
Regarding Kumba's Hope Downs iron ore project in Australia, which
has been the subject of a dispute with a local partner, Kumba is
appealing a recent arbitration decision. Subject to Kumba’s rights
of appeal, the process for determining a fair value, at which the
local partner can elect to acquire Kumba’s project interest, has
commenced. Until Kumba’s participation in the project is finally
resolved, it continues to perform its contractual obligations in
respect of the project.
Scaw Metals’ operating profit was $101 million (2003:
$70 million). This was achieved against a background of greatly
increased international steelmaking raw material prices and
resulting input cost increases, offset to some extent by high
selling prices. Production was higher, with strong performances
in most divisions. Import competition, however, aided by the
strong rand and weak dollar, continued to have a negative effect
on some of Scaw’s downstream businesses.
The attributable share of Samancor’s operating profit amounted to
$236 million (2003: $41 million). The manganese business had
an outstanding year, benefiting from improved market conditions
as a result of product shortages, driven primarily by Chinese crude
steel production. This led to significantly higher alloy prices being
achieved in 2004. The chrome operations benefited similarly from
higher ferrochrome prices, offset to some extent by the strong rand.
Highveld Steel had a record year with an operating profit of
$168 million (2003: $11 million). This was largely due to
higher prices for steel, vanadium and manganese alloys,
together with increased volumes sold into the South African
market. Production costs were well controlled and cost savings
of $38 million were achieved, resulting in substantially higher
operating margins. Ferrovanadium prices rose from historically
low levels in early 2003 of $6/kgV to recent levels of $52/kgV.
Boart Longyear’s operating profits totalled $67 million (2003:
$33 million). Product and contracting results in the Americas and
Asia-Pacific were substantially better than 2003 owing to much
higher drilling activity, while those in sub-Saharan Africa improved
as a result of increased sales of rockdrills and capital equipment.
The Hardmaterials and Wendt operations benefited from
restructurings undertaken in 2003, and Wendt also profited from
increased machine sales as a result of the improved business
environment. The European business continued to struggle, posting
a loss for the full year.
Tongaat-Hulett’s operating profit was $69 million (2003:
$10 million). The aluminium division performed well on the back
of increased volumes, an improved product mix and reduced costs,
while the sugar division’s profitability was negatively impacted by
the relatively small South African sugar crop. Import competition
and higher maize input costs adversely affected the starch and
glucose operations. Moreland Properties posted strong results,
capitalising on buoyant demand across all its portfolios.
Terra generated an attributable operating profit before exceptional
items of $53 million (2003: $14 million), largely reflecting
higher nitrogen margins.
Outlook
Ferrous metals prices may soften in 2005 as anticipated Chinese
demand for steel slows. China’s domestic steel consumption
growth rate has reportedly fallen as the country shifts from being
the world’s biggest steel importer to a net exporter. The persistent
strength of the rand is expected to continue to affect margins
adversely in the coming year. Ferrous Metals and Industries will
continue to reshape its portfolio around core businesses, focusing
on increased iron ore output and improved margins through
greater operating efficiencies and cost saving initiatives.
COAL
$ million
Total operating profit
South Africa
Australia
South America
Headline earnings
EBITDA
Net operating assets
Capital expenditure
Share of Group headline earnings (%)
Share of Group net operating assets (%)
2004
487
244
79
164
351
686
2003
333
133
130
70
232
505
2,539
2,152
217
13
7
207
14
7
Operating profit increased by 46% to $487 million, mainly due
to higher export prices and a 3 million tonne (3%) rise in sales.
Markets
During the year, coal demand was strong and prices increased
markedly. Metallurgical coal prices were driven by robust steel
sector raw material demand, led by sustained Chinese economic
growth and rising imports, a tight supply situation and logistics
chain constraints. Healthy thermal coal offtake in China moderated
the level of Chinese exports.
Power, oil, gas and thermal coal prices were influenced by
continued inefficiencies in the logistics chain, mainly affecting
South Africa and Australia, coupled with growing global energy
demand and security of supply concerns. Relatively small
imbalances in supply and demand continue to bring significant
price and directional uncertainty to the world’s energy and raw
material markets, especially for thermal coals. Spot South African
steam coal prices increased by 73% during the first six months
and, although they had reduced by 25% at year end, they remain
well above historic average price levels.
Operating performance
Operating profit for South African sourced coal, at $244 million,
was 83% higher than in 2003 and export prices were up 42%.
The rand continued to strengthen against the dollar, reducing
headline earnings by $17 million.
Production rose by 5% to 54.5 million tonnes. This reflected
strong domestic demand from Eskom, the South African power
utility, which led Kriel and New Vaal collieries to produce at
record levels. Plans are in place to acquire additional mining
equipment for New Denmark, the other colliery serving the
domestic market, so that it can increase output substantially
in 2005. Production at most of the export mines was slightly
higher, with the exception of Bank and Landau, where difficult
mining conditions affected production.
Capital expenditure in South Africa rose by $27 million, mainly
due to the development of Isibonelo colliery, due to start
production in 2005. Following the signing of a memorandum of
understanding with BHP Billiton relating to the Western Complex
reserves, a feasibility study is investigating the optimal use of
these reserves.
Operating profit for the Australian operations fell by 39% to
$79 million. This was mainly because production ceased at
Moranbah North Mine (MNM) for eight months following a roof
collapse at the tail end of the longwall face in January 2004. The
effects were partly mitigated by an estimated $40 million, the
proceeds from a related insurance claim. Gains from exchange-
rate hedges taken out during the year dampened some of the
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12 Anglo American plc Annual Report 2004
FINANCIAL REVIEW
CONTINUED
adverse effects of the stronger Australian dollar (up by 11%
against the US currency). Following the roof strata collapse at
MNM, the longwall was relocated. Production resumed in late
August and by year end production rates were reaching targeted
expectations. However, the colliery produced 2.3 million tonnes
less high-margin coking coal than the previous year. At Dartbrook,
output was marginally down and production at Drayton was in
line with the prior year, while Callide, Moura and Capcoal exceeded
previous performances, which together offset MNM's negative
volume impact. Aggregate attributable saleable coal production
was in line with the previous year, at 25.6 million tonnes.
Total attributable sales declined by 4% to 25.5 million tonnes,
though domestic sales increased by 0.7 million tonnes, mainly
driven by generating capacity demand. Export sales were further
limited by port constraints at Dalrymple Bay Coal Terminal,
though a port-allocation system at Newcastle has helped eliminate
ship congestion.
The Moura/Theodore/Dawson project was announced in December,
and is scheduled to commence in early 2005. Work continues
on the feasibility study for Lake Lindsay, adjacent to the
Capcoal complex.
On 18 June, a Supreme Court decision on the Grasstree project’s
compliance with the Coal Mining Safety and Health Regulations
resulted in Grasstree suspending operations. This suspension was
lifted at the beginning of December and Grasstree remains on
schedule to start up during 2006. Dartbrook successfully made
the transition to the Kayuga seam during the first six months.
Anglo Coal has now acquired all the shares in Australian Power
and Energy Limited (APEL) that it did not previously own. APEL
is conducting a pre-feasibility study into producing liquid fuel
from brown coal in Victoria.
Operating profit at the South American operations rose by 134%
to $164 million, following significantly improved coal prices and
a 9% increase in attributable sales volume, to 9.9 million tonnes.
These gains were partly offset by increases in fuel prices and
royalty payments and the effects of the weakening dollar.
In addition, equipment availability at Venezuela's Carbones del
Guasare (CDG) was reduced by administration problems with
newly introduced exchange controls, although these appeared
to be under control by the year end.
Cerrejón continues to expand its operations, with a production goal
of 28 million tonnes per annum by the end of 2006. Feasibility
studies on further expansion opportunities are under way at both
Cerrejón and CDG.
In 2004, Anglo Coal realised $51 million from efficiency
improvements and cost saving initiatives.
Outlook
With MNM back in operation, improved production is expected
in 2005. Rand and Australian dollar strength together with coal
prices will continue to be the two main variables. Metallurgical
coal prices have again risen substantially in negotiations for
2005, and high prices for thermal coals – notwithstanding their
reductions in the second half of 2004 – are expected to continue
in the current year.
INDUSTRIAL MINERALS
$ million
Total operating profit before exceptional items
Tarmac
Copebrás
Total operating profit after exceptional items
Headline earnings
EBITDA
Net operating assets
Capital expenditure
Share of Group headline earnings (%)
Share of Group net operating assets (%)
2004
346
280
66
337
267
624
2003
325
290
35
325
270
557
4,729
4,304
299
10
13
316
16
14
Operating profit before exceptional items increased by 6% to
$346 million. Tarmac’s operating profit before exceptional items
declined by 3% to $280 million, mainly due to challenging
market conditions in the UK. In contrast, Copebrás benefited
from buoyant local market conditions and increased international
fertiliser prices which, together with the increased production from
the new plant, resulted in an 89% increase in operating profit.
Markets and operating performance
In the UK, markets were disappointing. Following the completion
of work on large projects such as the M6 toll road in 2003, demand
for asphalt was weaker, with little major contract activity during
the year. Aggregates demand was slightly lower, although concrete
volumes increased. Modest price improvements were achieved,
but these were insufficient to offset higher bitumen and fuel costs.
The benefits of Tarmac’s ongoing business improvement and
procurement programmes continued to be felt, with the group
achieving a total of $64 million in cost savings and efficiency
improvements, but these were partially offset by the disappointing
performance of Concrete Products.
By contrast, the cement business had a good year. The new
Buxton plant began operating in March, having been completed
at a cost of £110 million, £5 million below budget. The plant is
performing to expectations, which has resulted in a near-doubling
in contribution from this business. The mortar business also
performed well, assisted by recent investments in dry silo mortar
plants in Leeds, Glasgow and Coventry. As Tarmac continued to
develop its business in the UK, three acquisitions were completed
during the year, including that of David W Gordon Ltd, one of
Scotland’s leading concrete block producers. Significant investments
were also made in new plant, including a new ready-mixed concrete
plant at King’s Cross in London and the replant of a major
limestone quarry in South Yorkshire.
In continental Europe, operating profit grew by 9%. France
benefited from a strong private housing market, although the
public sector was more subdued. The businesses in Poland and
the Czech Republic experienced stronger market conditions.
The latter also benefited from a first-time contribution from
Bilfinger Berger Baustoffe, which is performing above expectations.
During the year, Wisniowka, a well located high quality sandstone
quarry in central Poland, was acquired. This will enable the business
to benefit from anticipated Polish infrastructure projects. Operating
profit in Spain improved again despite weaker market conditions
in Madrid. The business on the Mediterranean coast, which
was the main part of the Mavike acquisition in 2002, showed
a substantial improvement. Weak market conditions, however,
continued in Germany.
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Anglo American plc Annual Report 2004 13
The Middle East business experienced another year of substantial
growth. With its local partner, Tarmac is developing a new quarry
in the United Arab Emirates to supply this buoyant market.
The Far East business continued to improve. At the end of the
year, a new quarry supplying the Shanghai market commenced
operation. Production will be ramped up during 2005.
Copebrás had an excellent year. Operating profit increased by
89%, due to continued strong Brazilian demand for phosphate
based fertilisers and higher international prices. The continuing
recovery of the South American economies also resulted in
a significant improvement in sales volumes of sodium
tripolyphosphate (STPP), which is used in detergents.
Outlook
Market conditions in the UK are expected to remain extremely
challenging throughout 2005. Volumes are not expected to grow
significantly and the industry is facing cost increases arising mainly
from fossil fuel price rises and legislative compliance. Tarmac has
announced price increases for all its major products with effect
from the beginning of January. In addition, Tarmac’s performance
will be underpinned by continuing cost reductions and initiatives
to improve customer service.
In continental Europe, healthy market conditions are expected
in Poland and the Czech Republic as these economies continue
to grow. The short term outlook in Germany remains uncertain,
although in those major cities where the business is active, demand
is expected to remain stable. The run-up to the 2006 soccer
World Cup, which takes place in Germany, may provide a boost.
In Spain, although demand in Madrid may be weaker, continued
growth on the Mediterranean coast is expected. France is expected
to see modest improvement. In all regions, opportunities to invest
in the core product areas will continue to be examined, both in
existing and adjacent countries of focus.
Local market conditions for fertilisers in Brazil remain buoyant
although there is some concern about lower international prices
for some agricultural commodities. However, the new plant at
Goiás, which is in the country’s interior and away from the threat
of imports, gives Copebrás a strong position in this market.
PAPER AND PACKAGING
$ million
Total operating profit
Packaging
Business Paper
Other
Headline earnings (1)
EBITDA
Net operating assets
Capital expenditure
Share of Group headline earnings (%)
Share of Group net operating assets (%)
2004
559
284
209
66
381
996
2003
656
302
294
60
425
976
6,496
4,820
819
14
17
601
25
16
(1) Headline earnings for Paper and Packaging for the year ended 31 December 2003
have been adjusted as net interest for wholly-owned operations in Paper and
Packaging is now accounted for centrally within Corporate Activities. See note 3
to the financial information.
Operating profit at $559 million was 15% lower than 2003.
This reflected a significantly tougher trading environment than
in 2003, particularly in the business paper sector, despite the
positive impact of increased volumes and cost reductions.
Dollar reported results are improved by the translation impact
of the stronger euro and rand.
Operating performance
In November, Mondi announced the restructuring of its operations
into global product groups with the formation of two primary
business units, Mondi Packaging and Mondi Business Paper.
The rebranding and reorganisation of the existing businesses
under the Mondi name has improved Mondi’s visibility to customers
and reduced its overhead cost structure. Mondi Packaging is a
combination of the Frantschach group, including Swiecie, with the
existing Mondi Packaging Europe group and the containerboard
machines at Syktyvkar and Richards Bay. Mondi Business Paper
incorporates Neusiedler and the South African uncoated woodfree
paper machines in Merebank, the pulp mill in Richards Bay and
the related forest operations. The balance of the Mondi group
consists of the South African packaging businesses, the European
paper merchant group Europapier, and the European and South
African newsprint businesses.
Mondi Packaging’s operating profit of $284 million was 6% below
that of 2003. The adverse impact of soft markets was not fully
offset by the positive impact of substantial cost savings and
profit improvement initiatives achieved in 2004 and the acquisition
of the Roman Bauernfeind business. This acquisition is performing
above expectation. The purchase of the remaining 30% minority
interest in Frantschach AG was completed in April.
Mondi Business Paper’s operating profit of $209 million fell
29% short of the previous year. Total production volumes
increased by 19% to 1,881,851 tonnes, with the PM18
rebuild at Ruzomberok performing well. Production in South
Africa was affected by the planned March shutdown for the
mill modernisation and expansion project – RB720. Production
output since the shutdown has been highly satisfactory and
final commissioning of the pulp mill is currently progressing
well. Office communication paper prices fell by 9% compared
with 2003, due to competitive markets and the adverse effects
of currency movements. These negative price impacts were,
however, countered by further cost savings and production
efficiency improvements.
The balance of the Mondi operations performed in line with 2003,
with higher earnings at the paper merchant offset by lower
newsprint earnings, following the part disposal of the South African
newsprint assets in 2004.
Paper and Packaging delivered $144 million in cost savings and
productivity improvements during 2004, offsetting to a large
extent lower prices.
Other developments
The joint venture with Shanduka Resources (formerly MCI
Resources) in Mondi South Africa’s integrated newsprint business
was completed in the first half of 2004. Mondi retained a 58%
interest and this empowerment transaction allows for a further
8% in the newsprint business to be set aside for broad based
participation by Mondi South Africa employees and relevant
communities. Mondi has also sold, with effect from 1 January
2005, a 42% interest in its South African packaging businesses
to Shanduka Resources in an empowerment transaction, which
values the entire business at $370 million. There is a further
earn-out of $35 million in current terms if certain cash flow
projections are achieved over the next four years. A further 3%
will be set aside by Mondi for broad based participation by Mondi
South Africa employees.
In South Africa, the disposal of non-core assets is well advanced,
with a binding offer having been accepted for Mondi’s share
in surplus plantations in the Eastern Cape. That transaction is
expected to be concluded during early 2005.
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14 Anglo American plc Annual Report 2004
FINANCIAL REVIEW
CONTINUED
Outlook
In 2005, Mondi will continue its product differentiation strategy,
capitalising on the recent expansion projects and innovation
programmes combined with further aggressive cost reduction
initiatives. If dollar weakness is sustained, this will continue
to place pressure on European and South African prices.
The impact on pricing should be largely offset by increased
volume from the Ruzomberok rebuild which will reach full
capacity in 2005 as well as the Richards Bay RB720 project
which is currently commissioning.
EXPLORATION
The Group spent $120 million on exploration in 2004 – $41 million
on base metals, $9 million on coal, $14 million on ferrous metals,
$43 million at AngloGold Ashanti and $13 million at Anglo
Platinum.
Anglo Base Metals concentrated on brownfield exploration near
its mines in Chile, Brazil, Ireland, South Africa and Namibia. Drilling
identified additional copper resources at El Soldado and Los
Bronces in Chile. Other copper exploration took place in Mexico,
Peru, the Philippines and Brazil, while zinc exploration focused
on India and Australia. Nickel exploration continued around the
West Raglan sulphide discovery in northern Quebec as well
as in Brazil and Finland.
Anglo Coal's exploration stayed close to existing operations in
Australia, Colombia and South Africa. Prospecting for coal-bed
methane took place in South Africa and Australia, while the
Xiwan project in China’s Shaanxi province completed an
extensive initial drilling programme.
Anglo Ferrous Metals’ exploration activities all related to Kumba,
with most expenditure incurred on greenfield and brownfield iron
ore exploration in South Africa.
AngloGold Ashanti continued to explore around its mines in
Argentina, Australia, Brazil, Ghana, Guinea, Mali, Namibia,
South Africa, Tanzania and the US. In Asia, the company has an
exploration team on the ground in Mongolia, where it is acquiring
land positions in several prospective areas, and has set up an
exploration office in China. It has also established joint ventures
in the Philippines and Laos. In addition, its investment in Trans-
Siberian Gold provides opportunities for further growth in Russia.
Elsewhere, AngloGold Ashanti is exploring in prospective areas
of Peru, Colombia and Alaska and is establishing an exploration
base in the north east region of the Democratic Republic of Congo.
Anglo Platinum’s efforts focused on exploration in South Africa.
Elsewhere, its partners carried out programmes in Canada and
Russia, while a joint venture began to explore in the Sichuan
province of China.
TREASURY MANAGEMENT AND HEDGING POLICY
The principal financial risks arising from the Group’s activities
are those related to commodity price risk, currency risk, interest
rate risk, counterparty risk and liquidity risk.
The Group’s principal treasury policies are set by the board. The
Group treasury acts as a service centre and operates within
clearly defined guidelines approved by the board. Anglo
American uses a number of derivative instruments to hedge
these financial risk exposures. The Anglo American accounting
department provides an independent control function to monitor
and report on treasury activities, which are also subject to
regular review by internal and external audit.
The treasury of the Group’s associate, De Beers, is independently
managed as are those of the non-wholly-owned subsidiaries such
as AngloGold Ashanti and Anglo Platinum.
Commodity risk
Anglo American is exposed to movements in the price of precious
metals, base metals and other commodity products. Strategic
hedging of the price risk is undertaken from time to time and
derivatives are used to optimise the value of Anglo American’s
production of these commodities. Gold hedging is independently
managed by AngloGold Ashanti.
Currency risk
The Group publishes its financial statements in US dollars and
a substantial proportion of the Group’s sales are denominated
in US dollars. As a result, a large component of the Group’s net
debt is denominated in US dollars. However, the Group conducts
business in many currencies and, as a result, it is subject to
currency risks owing to exchange rate movements which will
affect the Group’s costs and the translation of the profits of
subsidiaries, joint ventures and associates whose functional
currency is not the US dollar.
Anglo American retains a significant proportion of its assets within
subsidiaries, joint ventures and associates located in countries,
principally South Africa, where the local currency is treated as
the functional currency and is used for reporting purposes.
In the consolidated financial statements, the exchange differences
arising on the translation of net assets of these non-dollar
denominated subsidiaries, joint ventures and associates less any
offsetting exchange differences on foreign currency financing
of these assets, are dealt with in reserves in accordance with
SSAP 20 ‘Foreign currency translation’. Accordingly, the currency
translation differences of $2,512 million recorded in note 25
have been reported through the consolidated statement of
total recognised gains and losses on page 50 and appear as an
increase in shareholders’ funds. These differences do not affect
the consolidated profit and loss account or the consolidated
cash flow statement.
The currency translation differences which have arisen are mainly
attributable to the appreciation of the South African rand against
the US dollar since 1 January 2004, although the appreciation of
the Australian dollar, euro and sterling against the US dollar have
also contributed. If the rand and other currencies appreciate or
depreciate against the US dollar in future reporting periods,
currency translation differences will continue to appear as an
increase or a reduction in shareholders’ funds, respectively.
The non-dollar denominated businesses actually derive the
majority of their revenues in dollars, while the majority of their
costs continue to be incurred in their local currency. To this
extent, the currency appreciation does not impact on the real
underlying value of the non-dollar denominated assets within
these businesses.
However, although revenues are mainly denominated in US
dollars, operating costs are incurred mainly in local currencies so
the Group profitability and cash flow is exposed to exchange rate
movements between local currencies and the US dollar.
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Anglo American plc Annual Report 2004 15
Exchange rates against the US dollar
Average
South African rand
Pound sterling
Euro
Australian dollar
Chilean peso
Year end
South African rand
Pound sterling
Euro
Australian dollar
Chilean peso
2004
6.44
0.55
0.80
1.36
609
5.65
0.52
0.74
1.28
556
2003
7.55
0.61
0.88
1.53
690
6.67
0.56
0.79
1.33
593
Non-wholly-owned subsidiaries in general will arrange and maintain
their own financing and funding requirements. In most cases the
financing will be non-recourse to Anglo American. In addition,
certain projects are financed by means of limited recourse project
finance, if appropriate.
It is believed that the Group’s net cash flow from operations,
its holdings of cash and cash equivalents and access to credit
facilities and capital markets will be sufficient to cover the likely
short and long term cash requirements of the Group. At the end
of 2004, net debt was $8,121 million, being gross debt of
$10,782 million offset by $2,661 million of cash and current asset
investments. At 31 December 2004, the Group had available
undrawn, committed borrowing facilities totalling $4,921 million.
The maturity profile for the Group’s available undrawn, committed
borrowing facilities is as follows:
Interest rate risk
The Group is exposed to interest rate risk, in particular to changes
in US dollar, rand, sterling and euro interest rates. Corporate policy
is to maintain a high proportion of floating rate debt, although
strategic hedging using fixed rate debt may be undertaken from
time to time if considered appropriate. At 31 December 2004,
the Group had fixed rate debt of $2,199 million, representing
27.1% of net debt (2003: 28.4%). The policy is to invest cash
at floating rates of interest and cash reserves are maintained in
relatively short term investments in order to maintain liquidity
while achieving a satisfactory return for shareholders.
Counterparty risk
Cash deposits and other financial instruments give rise to credit
risk on the amounts due from counterparties. The Group controls
and monitors the distribution of these exposures against approved
limits to minimise the risk of loss in the event of non-performance
by a counterparty. The limits involved relate to minimum credit
ratings, exposure limits and shareholders’ equity. The possibility
of material loss arising in the event of non-performance by
a counterparty is considered unlikely.
Liquidity risk and financing
The Group is assigned short term ratings of P-2 and A-2, and
long term ratings of A3 (stable outlook) and A- (stable outlook)
from Moody’s and Standard and Poor’s respectively.
Committed bank facilities $ million
Expiring
2005
2006
2007
2008
2009
2010
After 2010
Total
Facility
amount
4,146
103
203
1,636
2,699
178
152
9,117
The maturity profile of net debt is shown below:
Debt and (cash) maturity profile $ million
2005
2006
2007
2008
2009
2010
After 2010
Gross cash(1)
Debt
(2,661)
–
–
–
–
–
–
3,333
631
1,407
2,953
1,481
560
417
Drawn
Available
2,127
101
153
1,458
27
178
152
4,196
Net debt
672
631
1,407
2,953
1,481
560
417
8,121
2,019
2
50
178
2,672
–
–
4,921
Cumulative
net debt
672
1,303
2,710
5,663
7,144
7,704
8,121
8,121
The following financing activities were undertaken during 2004:
Total
(2,661)
10,782
Anglo American Capital plc and Anglo American Australia Finance
Limited issued a number of small private placements. (All notes
are guaranteed by Anglo American plc).
A $1,000 million European Commercial Paper Programme was
established in October 2004. The programme provides further
funding diversity and flexibility. The European Commercial Paper
Programme is in addition to a $1,300 million Canadian Commercial
Paper Programme established a number of years ago.
In addition to its capital market activities, Anglo American borrows
using short term variable rate instruments such as commercial
paper, bills and money market lines, as well as using committed
medium and short term bank facilities. Anglo American maintains
committed facilities as back up to its commercial paper programmes
and for immediate liquidity needs. An existing $2.25 billion
committed facility was refinanced in 2004. A new $2.5 billion
committed facility was set up, incorporating a $750 million
tranche maturing in July 2005 and a $1,750 million tranche
maturing in July 2009.
(1) Gross cash comprises cash of $2,086 million and cash equivalents of $575 million.
OTHER RISK FACTORS
The risk factors set out below are further uncertainties that the
Group considers could cause the Group’s actual results to differ
materially from expected and historical results:
Economic and political risks
The Group is geographically diverse and encounters different
legal and regulatory requirements in different jurisdictions.
Businesses may be affected by any political, economic or
regulatory developments in any of the countries in which they
operate, including risks such as restrictions on the export of
currency or expropriation of assets. The Group has no control
over changes in local inflation rates or market interest rates.
Acquisitions
The Group has undertaken a number of acquisitions in the past.
With these, as with any such future transaction, there is the risk
that any benefits or synergies identified at acquisition may not
be achieved. Rigorous guidelines are applied to the evaluation
and execution of all acquisitions, which require approval of the
Investment Committee and Executive Board and, in the case of
acquisitions beyond a certain value, the approval of the board.
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16 Anglo American plc Annual Report 2004
FINANCIAL REVIEW
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Health, safety and environment
The Group is subject to numerous health, safety and environmental
laws and regulations in each of the jurisdictions in which it
operates. Any changes in laws, regulations or community
expectations can result in increased compliance and remediation
costs. The HIV/AIDS epidemic in sub-Saharan Africa is a significant
threat to economic growth and development. Providing access to
treatment in developing countries has become a humanitarian as
well as an economic and social imperative. In 2002, the Group
announced it would provide anti-retroviral therapy to employees
with HIV/AIDS.
Natural risks
The Group’s operations can be exposed to natural risks such
as flood, weather or difficult geological conditions. Appropriate
insurance can provide protection from some, but not all, of the
costs that may arise from unforeseen events.
CRITICAL ACCOUNTING POLICIES
The Group financial statements are prepared in accordance with
UK GAAP. The Group’s accounting policies are described on
pages 52 to 53 of the financial statements. The application of
certain of these policies requires assumptions or judgements
by management. Actual results may differ from the estimates
calculated using these assumptions and judgements. Management
believes that the following are the critical policies where the
assumptions and judgements made could have a significant impact
on the consolidated financial statements:
Pensions and post-retirement benefits
The expected costs of providing pensions and post-retirement
benefits under defined benefit arrangements are charged against
profits to spread the expected costs on a straight-line basis over
the service lives of the employees entitled to those benefits.
Assumptions in respect of the expected costs are set after
consultation with qualified actuaries. While management believes
the assumptions used are appropriate, a change in the assumptions
used would impact the earnings of the Group.
Restoration, rehabilitation and environmental costs
Provision is made, based on net present values, for restoration,
rehabilitation and environmental costs as soon as the obligation
arises. Costs incurred at the start of each project are capitalised
and charged to the profit and loss account over the life of the
project through depreciation of the asset and the unwinding of
the discount on the provision. Costs for restoration of subsequent
site damage are provided at net present value and charged against
profits as extraction progresses. Management uses its judgement
and experience to provide for and amortise these estimated costs.
Mining reserves
The Group’s mining properties are depreciated over the life of
the mine using the unit of production method based on proven
and probable reserves. When determining reserves, assumptions
that were valid at the time of estimation may change when new
information becomes available. Any changes could affect
depreciation rates and asset carrying values.
Exceptional items
Operating exceptional items are those that management considers,
by virtue of their size or incidence, should be disclosed separately
to ensure that the financial information also allows an understanding
of the underlying performance of the business. The determination
as to which items should be disclosed separately requires a
degree of judgement.
INTERNATIONAL FINANCIAL REPORTING STANDARDS
The Council of the European Union announced in June 2002 that
listed companies in Europe would be required to adopt International
Financial Reporting Standards (IFRS) for accounting periods
beginning on or after 1 January 2005. The adoption of IFRS will
be first reflected in the Group’s financial statements for the half
year ended 30 June 2005 and the year ended 31 December 2005.
The accounting standards to be adopted are subject to ongoing
review and endorsement by the EU and possible amendment by
interpretative guidance from the International Financial Reporting
Interpretations Committee (IFRIC) and the accounting profession.
The information presented below has been prepared on the basis
of current interpretations of standards expected to be applied by
the Group in its 2005 financial statements.
The Group began preparation for the adoption of IFRS in April
2003 when it established a global project team to manage the
convergence to IFRS. The scope of this project included:
an assessment of the impact from the conversion to IFRS on
the Group’s reported financial results;
a continued assessment of the impact from proposed future
developments to international accounting standards;
identification of changes required to the Group’s existing
accounting systems and procedures;
targeted training and education of all appropriate employees
within our businesses; and
the timely communication to internal and external stakeholders
of areas subject to significant change.
The IFRS transition project is well advanced and the Group is
on track to meet its reporting deadlines. All significant project
milestones, including system changes and targeted IFRS training for
all employees affected by the transition, have now been completed.
The Group has prepared IFRS accounting and treasury policies in
accordance with standards expected to be effective, or available
for early adoption, as at 31 December 2005, the date of the
Group’s first annual IFRS financial statements.
The Audit Committee has approved the Group’s first time adoption
choices made in accordance with IFRS 1, including the adoption of
International Accounting Standards (IAS) 32 Financial Instruments:
Disclosure and Presentation and IAS 39 Financial Instruments:
Recognition and Measurement prospectively from 1 January 2005.
The UK GAAP balance sheet as at 1 January 2004 and financial
information for the six months ended 30 June 2004 and year
ended 31 December 2004 will be restated in accordance with
these first-time accounting choices and policies (excluding IAS
32 and 39). The 2004 restated financial information at each of
these reporting dates will be published in May 2005. This
publication will include a reconciliation of the Group’s UK GAAP
reported profit and loss account, balance sheet and total equity
to the restated IFRS results, and will provide details of material
policy differences and adjustments arising.
First-time adoption choices
The Group has made the following first-time accounting policy
choices, in accordance with IFRS 1:
business combinations – acquisitions prior to 1 January 2004 will
not be restated;
goodwill – the requirement to retranslate goodwill balances to
the exchange rate at reporting date in accordance with IAS 21
The Effects of Changes in Foreign Exchange Rates will be
applied prospectively to goodwill balances arising on
acquisitions after 1 January 2004 (the transition date);
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Anglo American plc Annual Report 2004 17
post-retirement benefits – surpluses/deficits of post-retirement
benefits under defined benefit arrangements will be recognised
in full at 1 January 2004. From 1 January 2004, the Group will
apply the full provision accounting method, as permitted in IAS 19
(revised) Employee Benefits, with subsequent actuarial gains
and losses being recorded directly in equity;
currency translation differences – translation differences relating
to foreign currency investments in subsidiaries, associates and
joint ventures are deemed to be zero at the date of transition
and, as such, the gain or loss on subsequent disposal of any
foreign operation will exclude translation differences that arose
before that date;
joint venture entities – these entities will be proportionally
consolidated in accordance with IAS 31 Interests in Joint Ventures;
financial instruments – IAS 32 and 39 will be applied
prospectively from 1 January 2005;
share-based payments – IFRS 2 Share-Based Payment will be
applied to all share-based rewards made after 7 November 2002
that did not vest before 1 January 2005;
disposal groups – IFRS 5 Non-Current Assets Held for Sale and
Discontinued Operations will be applied from 1 January 2005;
exploration for and evaluation of mineral resources – IFRS 6
Exploration for and Evaluation of Mineral Resources will be
applied early, from 1 January 2005.
Key policy impacts
Although the majority of accounting standards to be applied in
the Group’s first full IFRS financial statements have been finalised,
the principles may still be subject to possible amendment as a
result of additional interpretative guidance from IFRIC and the
accounting profession.
A summary of the more significant accounting policy changes
we anticipate will arise, based on current interpretations of the
standards within each of these areas, is provided below. Our
assessment may be subject to revision as a result of new
accounting developments and is not a comprehensive list of
all expected changes.
Business combinations, intangible assets and goodwill
The more significant policy changes resulting from the transition
to IFRS include:
the replacement of goodwill amortisation with an annual
impairment test;
the treatment of goodwill and fair value adjustments arising on
acquisition of foreign operations as assets and liabilities of
the acquiree, to be retranslated on consolidation in accordance
with IAS 21;
the abolition of merger accounting;
a broader definition of intangible assets to be recognised
at acquisition; and
the reclassification of minority interests from liabilities to equity.
Financial instruments
The adoption of IAS 32 and 39 will require all derivatives, with the
exception of commodity based (normal purchase or normal sale)
contracts, to be recognised on the balance sheet at fair value.
Subsequent changes in fair values are either taken to equity,
if the criteria for cash flow hedge accounting are met, or to the
income statement. Previously, derivatives qualifying as hedges in
accordance with UK GAAP have been held off balance sheet and
the fair value disclosed within a note to the financial statements.
Any derivatives embedded within the terms of contractual
commitments that are not considered closely related to the
underlying host contract will also be separately identified and
fair valued.
Commodity based (normal purchase or normal sale) contracts
that meet the own use requirements of IAS 39 are recognised in
earnings when they are settled by physical delivery.
Treasury systems and procedures have been reviewed to ensure
that any hedging undertaken by the Group qualifies for hedge
accounting under IFRS where otherwise the impact would be
considered material to the reported Group results.
Deferred tax
Deferred tax will be provided at the date of acquisition and on
some balances previously excluded from provision under UK
rules such as revaluations and fair value adjustments.
Unrealised gains
The international accounting framework provides no distinction
between unrealised and realised gains for financial reporting.
As such, all unrealised gains, with the exception of actuarial
gains/losses on post-retirement schemes and currency translation
differences, will be recorded through the income statement and
not through a statement of total recognised gains and losses, as
was required under UK GAAP.
Proportional consolidation of joint venture entities
Results of joint venture entities will be incorporated on an individual
line-by-line basis in the Group financial statements, in accordance
with proportional consolidation rules set out in IAS 31.
The accounting policies for Joint Arrangements Not Entities (JANEs)
and joint venture operations are fundamentally the same under
both UK and international policies.
Accounting for dividends proposed
The final dividend proposed will only be recognised in the following
year when it is formally approved for payment. This is in accordance
with IAS 10 Events After the Balance Sheet Date and also with
the Companies Act 1985 (International Accounting Standards and
Other Accounting Amendments) Regulations 2004, which will be
effective for financial years commencing on or after 1 January 2005.
Employee benefit schemes: post-retirement and share
option remuneration
IAS 19 requires companies to recognise the full deficit (or
surplus, subject to restrictions) of post-retirement benefit
schemes under defined benefit arrangements on the balance
sheet. The Group is expected to adopt IAS 19 (revised) early and
will recognise all actuarial gains or losses directly through equity.
Under IFRS, options granted by the Group to employees, for
example under Employee Share Option Schemes and Save As
You Earn Schemes, are to be fair valued at grant date using an
option pricing model and charged through the income statement
over the vesting period of the options. The nature of Anglo’s
employee remuneration schemes is such that there is not
expected to be a material difference to existing UK GAAP
charges on application of IFRS 2.
Translation of results from foreign currency operations
IFRS requires the currency translation adjustment (CTA) arising
on translation of a foreign operation to be recycled through the
income statement when that operation is disposed of. Currently,
under UK GAAP, the CTA is not included in the gain or loss
calculated if that operation is sold.
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18 Anglo American plc Annual Report 2004
FINANCIAL REVIEW
CONTINUED
Presentation and disclosure of financial information
The transition to an international accounting framework will give
rise to an increase in certain disclosures to the financial statements.
There will also be some presentational changes. Financial
statements will disclose a detailed reconciliation of reserve
movements for the current year, with comparatives. A statement
of recognised income and expenses will be presented, as required
by IAS 19 (revised), to report actuarial gains/losses in respect of
post-retirement schemes under defined benefit arrangements.
Exploration for and evaluation of mineral resources
IFRS 6 was issued in December 2004 as an interim standard in
advance of a more comprehensive review of accounting practices
in the extractive industry. The standard does not impact the
Group’s existing policy for exploration and evaluation expenditure.
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Anglo American plc Annual Report 2004 19
DIRECTORS’ REPORT
The directors have pleasure in submitting the statutory financial
statements of the Group for the year ended 31 December 2004.
This directors’ report should be read in conjunction with the
chairman’s questions and answers, chief executive’s statement,
operations review and social responsibility report contained in
the Annual Review, the financial review and the remuneration
report contained in this Annual Report. These include information
on all the individual business sectors of the Group, its joint
ventures and its associates, their performance and current
and future developments.
PRINCIPAL ACTIVITIES AND BUSINESS REVIEW
Anglo American, with its subsidiaries, joint ventures and
associates, continues to be a global leader in the mining and
natural resource sectors. It has significant and focused interests
in platinum group metals, gold, diamonds, coal, base metals,
industrial minerals, paper and packaging, and ferrous metals and
industries, as well as financial and technical strength.
The Group’s business is a going concern as interpreted by the
Guidance on Going Concern and Financial Reporting for directors
of listed companies registered in the United Kingdom, published
in November 1994. The net book value of the Group’s tangible
fixed assets at 31 December 2004 was $31,155 million.
DIVIDENDS
An interim dividend of 19 US cents per ordinary share was paid on
21 September 2004. The directors recommend a final dividend
of 51 US cents per ordinary share. This will make a total for the
year to 31 December 2004 of 70 US cents per ordinary share.
Subject to the approval of shareholders at the annual general
meeting (AGM) to be held on Wednesday, 20 April 2005,
the final dividend will be payable on Friday, 29 April 2005 to
shareholders registered in the books of the Company at the close
of business on Friday, 11 March 2005.
On 26 August 1999, Greenwood Nominees Limited, as nominee
for Butterfield Trust (Guernsey) Limited, the trustee for the
Anglo American Employee Share Ownership Trust, waived its right
to all dividends (except for 1 pence), payable by the Company.
The total amount waived during the year was $32,276,754,
being $21,729,868 in respect of the 2003 final dividend paid
in April 2004 and $10,546,886 in respect of the 2004 interim
dividend paid in September 2004.
On 24 June 2004, Security Nominees Limited, account BSPNI,
waived its right to all dividends payable by the Company. Such
waiver is in respect of shares registered in that nominee account
relating to the National Insurance liability on the Bonus Share Plan.
The amount waived during the year in respect of the 2004 interim
dividend paid in September 2004 was $2,430.
AUTHORISED SHARE CAPITAL
During the year there was no change to the authorised share
capital of the Company of $1,000,000,000 divided into
2,000,000,000 ordinary shares of $0.50 each and £50,000
preference shares of £1 each.
ISSUED SHARE CAPITAL
During the year a total of 4,028,367 ordinary shares were
allotted in respect of employee share schemes at various option
exercise prices. In addition, 15,110 shares were allotted on the
dates and at the prices shown below to certain non-executive
directors (or their nominees) by subscription of their after-tax
directors’ fees:
Date (2004)
7 January
2 April
1 July
30 September
Number of shares
Price per share
3,341
3,605
3,950
4,214
£11.89
£12.88
£11.29
£12.93
On 12 February 2004, 5,309,286 ordinary shares were allotted
at a price of $21.78 per share as consideration for the acquisition
of the Roman Bauernfeind Holding AG corrugated paper and
packaging business. On 5 April 2004, 8,181,998 ordinary shares
were allotted at a price equivalent to approximately £13.16 per share
as part consideration for the acquisition of the remaining 30%
minority interest in Frantschach AG. Consequently, at 31 December
2004, the issued ordinary share capital of the Company amounted
to 1,493,839,387 ordinary shares of $0.50 each. There was
no change during the year to the issued preference share capital
of the Company of 50,000 5% cumulative preference shares of
£1 each. As at 22 February 2005, the issued ordinary share
capital of the Company was 1,493,843,236 ordinary shares.
The authorised and issued share capital of the Company is also
set out in note 24 on pages 72 to 74.
Details of interests of 3% or more in the ordinary share capital of
the Company are shown in the shareholder information section
of the booklet enclosed herewith.
EMPLOYEE SHARE OWNERSHIP TRUST
The Employee Share Ownership Trust was established in 1999.
On 31 December 2004, it held 55,077,983 ordinary shares in
the Company, registered in the name of Greenwood Nominees
Limited. These shares, which are not voted at the Company’s
general meetings, are available to facilitate the operation of
the Group’s share schemes, details of which are disclosed in
the Remuneration Report. The operation of these schemes, and
the provision of shares in connection with them, is kept under
regular review.
CORPORATE GOVERNANCE
A report on corporate governance and compliance with the
Combined Code on Corporate Governance issued by the Financial
Reporting Council in July 2003 is set out on pages 22 to 27.
The directors’ remuneration report, as set out on pages 28 to 43,
will be proposed for approval at the AGM to be held on 20 April
2005. In accordance with the Directors’ Remuneration Report
Regulations 2003, the vote on such resolution is advisory and
no director’s remuneration is conditional upon the passing of
the resolution.
7878v03_PH_Rp_FC-p27_020305.qxp 4/3/05 2:19 am Page 20
20 Anglo American plc Annual Report 2004
DIRECTORS’ REPORT
CONTINUED
DIRECTORATE
The following directors held office during the year to
31 December 2004:
Sir Mark Moody-Stuart
non-executive chairman
A J Trahar
A W Lea
B E Davison
W A Nairn
D J Challen
Dr C E Fay
R M Godsell
G Lindahl
R J Margetts
chief executive
finance director
executive director
executive director
(retired 31 December 2004)
non-executive director
non-executive director
non-executive director
non-executive director
senior independent non-executive director
Dr M S B Marques
N F Oppenheimer
F T M Phaswana
Sir David Scholey
Prof K A L M Van Miert
non-executive director
non-executive director
non-executive director
non-executive director
non-executive director
Further details of the directors’ qualifications, specific
responsibilities and other directorships are set out on pages
20 and 21 of the Annual Review.
It is proposed at the forthcoming AGM to elect Mr R Médori as an
executive director with effect from 1 June 2005 and also to elect
Mr D A Hathorn and Mr S R Thompson as executive directors
and Mr R C Alexander as a non-executive director all with effect
from 20 April 2005. Messrs Godsell and Trahar and Professor
Van Miert retire by rotation at the forthcoming AGM and, following
performance reviews, and upon the recommendation of the
board, being eligible, they offer themselves for re-election.
Details of the directors’ interests in any Group company can be
found in the remuneration report on pages 41 to 42.
SUSTAINABLE DEVELOPMENT
The Report to Society 2004 will be available from the Company in
April. This report focuses on the safety, sustainable development,
health and environmental performance of the Company’s managed
operations, their performance with regard to the Company’s Good
Citizenship: Our Business Principlesprinciples and the operational
dimensions of their social programmes.
PAYMENT OF SUPPLIERS
Anglo American plc is a holding company and, as such, has no
trade creditors.
Businesses across the Group are responsible for agreeing the terms
and conditions, including payment terms, under which business
transactions with their suppliers are conducted. These terms
reflect local and industry norms. The Group values its suppliers
and recognises the benefits to be derived from maintaining
good relationships with them. Anglo American acknowledges
the importance of paying invoices, especially those of small
businesses, promptly.
POST BALANCE SHEET EVENTS
On 1 January 2005, Mondi completed the sale of a 42% equity
stake in a new entity which will own Mondi’s South African
packaging businesses. This transaction values the entire
business at $370 million.
The Company announced on 17 February 2005 that it and
BHP Billiton had reached agreement to dispose of their interest
in Samancor Chrome for an enterprise value of $469 million.
The disposal will be effective 1 April 2005, subject to obtaining
regulatory approvals.
VALUE OF LAND
Land is mainly carried in the financial statements at cost. It is
not practicable to estimate the market value of land and mineral
rights, since these depend on product prices over the next
20 years or longer, which will vary with market conditions.
EMPLOYMENT AND OTHER POLICIES
The Anglo American Group, which operates throughout the world,
is managed along decentralised lines. Each key operating business
is empowered to manage within the context of its own industry,
and the different legislative and social demands of the diverse
countries in which those businesses operate, subject to the
standards embodied in Anglo American’s Good Citizenship:
Our Business Principles.
Within all Anglo American’s businesses, the safe and effective
performance of all employees, and the maintenance of positive
employee relationships are of fundamental importance. Managers
of Anglo American’s businesses are charged with ensuring that
the following key principles are upheld:
adherence to national legal standards on employment and
workplace rights at all times;
adoption of fair labour practices;
prohibition of child labour;
prohibition of inhumane treatment of employees and any form
of forced labour, physical punishment or other abuse;
continual promotion of safe and healthy working practices;
promotion of workplace equality and elimination of all forms of
unfair discrimination;
provision of opportunities for employees to enhance their work-
related skills and capabilities;
recognition of the right of our employees to freedom of
association; and
adoption of fair and appropriate procedures for determining
terms and conditions of employment.
Copies of the Good Citizenship: Our Business Principles booklet
which sets out standards of conduct on a range of ethical, human
rights and social policy issues are available from the registered
office of the Company and may be accessed on the Company’s
website – www.angloamerican.co.uk
During 2004, numerous employee communication and education
workshops took place. The aim, which included areas as diverse as
Talent Management, Sustainable Development and Group Strategy,
was to provide employees with information on matters of concern
to them, to consult employees regularly for views on matters
affecting them and to make employees aware of financial and
economic factors affecting the performance of the Company.
In addition, presentations by certain operating divisions took place
and a survey of employee communication was conducted. The chief
executive also gave a presentation on the Company’s strategy.
The Company regularly publishes Optima and AngloWorld which
contain items of news, current affairs and information relevant to
Group employees. Press releases and a news clippings service are
published on the Company’s intranet, keeping employees up to
date with developments in those business sectors in which the
Group is active.
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Anglo American plc Annual Report 2004 21
DONATIONS
During the year, Anglo American and its subsidiaries made
donations for charitable purposes totalling $47.4 million. Of that
amount, $1.8 million was donated in the UK, consisting of
payments in respect of education, sport and youth $331,000
(18%); community development $942,000 (53%); health and
HIV/AIDS $200,000 (11%); environment $77,000 (4%); arts,
culture and heritage $49,000 (3%) and other charitable causes
$194,000 (11%). A fuller analysis of Anglo American’s social
investment activities can be found in the Annual Review and the
sustainable development Report to Society.
Although it is the policy of Anglo American plc not to give party
political donations, a policy shared by many multinational
corporations, the Anglo American plc board decided in 2003 that
it should make an exception in relation to South Africa’s democratic
transition. The board concluded that its major South African
operating company, Anglo Operations Limited (AOL), could
set aside the sum of R6 million for donations to political
parties contesting the 2004 South African general election.
A sub-committee of the board headed by Sir Mark Moody-Stuart
considered an appropriate allocation of funds and recommended
that the African National Congress, as the ruling party enjoying
the majority electoral support in the country, should receive
R3 million of the donation; the Democratic Alliance, as the official
opposition and second largest party, R1.5 million; the next three
largest parties – the Inkatha Freedom Party, the New National Party
and the United Democratic Movement – R480,000, R240,000 and
R120,000 respectively; and R60,000 each to the other smaller
parties with representation in the South African parliament.
These donations were made in February 2004. The Anglo American
Platinum board decided to contribute R1 million of the total of
R6 million donated by AOL.
In December 2003, the board of AngloGold decided to authorise
total donations for the South African political parties, to be paid
in 2004, of R1.6 million according to the formula – 30% each
to the African National Congress and Democratic Alliance
and 20% each to the Inkatha Freedom Party and the United
Democratic Movement.
In February 2004, a sub-committee of the board of Kumba
Resources authorised payments of R1 million in support of the
democratic process in South Africa. The money was distributed
to each of the six parties with representation in parliament with
a small upweighting of the share going to opposition parties.
This resulted in the following division: African National Congress
R600,000, Democratic Alliance R200,000, Inkatha Freedom
Party R120,000, the New National Party R50,000 and the
United Democratic Movement R30,000.
In February 2004, the board of Tongaat-Hulett also decided to make
a donation of R500,000 in support of the democratic process in
South Africa. The total grant was divided between the six parties
represented in parliament in proportion to the number of seats
which they hold.
The Anglo American plc board has reaffirmed the policy of not
making donations to, or incurring expenses for the benefit of, any
UK political party or any other EU political organisation, as defined
in the Political Parties, Elections and Referendums Act 2000.
AUDITORS
Resolutions to reappoint the auditors, Deloitte & Touche LLP, and
to authorise the board to determine their remuneration, will be
proposed at the forthcoming annual general meeting in accordance
with Section 384 of the Companies Act 1985.
ANNUAL GENERAL MEETING
The AGM will be held at 11:00 am on Wednesday, 20 April 2005
at The Conference Centre, Church House, Dean’s Yard, London
SW1P 3NZ. The notice convening the meeting is set out in the
separate booklet enclosed with this report. In addition to the
ordinary business of the meeting (which includes a resolution to
approve the directors’ remuneration report), as special business,
shareholder consent will be sought to renew the directors’ existing
authorities to:
(i) allot relevant securities up to an aggregate nominal amount of
$248,500,000 (equivalent to 497 million ordinary shares
of $0.50 each). This authority, which the directors have no
present intention of exercising (other than as referred to in
(ii) below) represents 33.3% of the ordinary issued share
capital at 22 February 2005 and is in accordance with the
Association of British Insurers (ABI) guidelines;
(ii) allot equity securities for cash up to an aggregate nominal
amount of $37,250,000 (equivalent to 74.5 million ordinary
shares of $0.50 each), being 5% of the ordinary issued share
capital in issue at 22 February 2005, which limit complies with
the guidelines of the Pre-Emption Group (set up by the London
Stock Exchange and which includes the National Association
of Pension Fund Managers and the ABI). The directors have no
present intention of exercising this authority except in relation
to the allotment of ordinary shares to certain non-executive
directors by subscription of their after tax directors’ fees; and
(iii) make market purchases of up to a maximum of 149 million
ordinary shares of $0.50 each of the Company, being up to
10% of the ordinary issued share capital at 22 February 2005,
at a price not less than $0.50 and not exceeding 105% of
the average middle market closing price of such shares on the
London Stock Exchange on the five dealing days prior to the
date of repurchase. The directors have no present intention
of exercising this authority and would only do so if they
considered it was in the best interests of shareholders generally
and if the purchase could be expected to result in an increase
in earnings per share. In exercising this authority, the directors
may treat the shares that have been bought back as either
cancelled or held in treasury (or a combination of both),
and to the extent that any such shares are held in treasury,
earnings per share will only be increased until such time as
the shares are transferred or re-sold out of treasury. Treating
the bought-back shares as treasury shares gives the Company
the ability to sell or transfer them quickly and cost-effectively
and provides the Company with additional flexibility in the
management of its capital base. The Company may use any
shares repurchased and held in treasury for the purposes of
its employee share schemes. If any such shares are used, the
Company will, so long as required under institutional investor
guidelines, count them towards the limits in the schemes as
if they were newly issued shares. The total number of options
to subscribe for shares outstanding at 22 February 2005,
which could be issued on conversion of the 3.375%
convertible bonds due April 2007, was 47,589,607 ordinary
shares, which represents 3.2% of the issued ordinary share
capital at that date. If the Company were to buy back the
maximum number of shares permitted pursuant to this
resolution, then the total number of options to subscribe for
shares outstanding would represent 3.5% of the reduced
issued share capital.
By order of the board
Nicholas Jordan
Company Secretary
22 February 2005
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22 Anglo American plc Annual Report 2004
CORPORATE GOVERNANCE
COMPLIANCE STATEMENT
The Anglo American Group is committed to the highest standards
of business integrity, ethical values and professionalism in all
its activities. As an essential part of this commitment, the board
supports the highest standards of corporate governance and the
directors are accountable to the shareholders for doing so. The
key principles underpinning the governance of the Group are set
out in this statement.
An effective system of control aimed at managing business risks
is an integral component of the Group’s governance practices,
details of which are provided in the internal control section below.
Throughout the year ended 31 December 2004 and up to the date
of this report, the Company has been in compliance with the
provisions set out in Section 1 of the Combined Code on Corporate
Governance issued by the Financial Reporting Council. Details of
the application of the principles of Section 1 of the Combined Code
are set out below.
BOARD OF DIRECTORS
The board of directors is responsible to the shareholders for setting
the direction of Anglo American through the establishment of
strategic objectives and key policies. The board meets on a regular
basis, at least six times a year. The board considers issues of
strategic direction, major acquisitions and disposals and approves
major capital expenditure and other matters having a material
effect on Anglo American. Presentations are made to the board
by business management on the activities of operations and both
executive and non-executive directors undertake regular visits
to operations and projects. During 2004, non-executive directors
visited the following operations: Richards Bay and SilvaCel paper
mills, the Sishen iron ore mine and the Potgietersrust Platinums
mine in South Africa and the Hippo Valley, Unki and Zimbabwe
Alloys operations in Zimbabwe, as well as operations in Canada
and China.
The composition of the board, with a strong independent
element, ensures that no one individual has unfettered powers
of decision and authority. Following the retirement of W A Nairn
on 31 December 2004, the board currently comprises three
executive and eleven non-executive directors, eight of whom are
independent according to the definition contained in the Combined
Code. The independent directors are Sir Mark Moody-Stuart,
D J Challen, F T M Phaswana, Prof K A L M Van Miert, Dr C E Fay,
G Lindahl, R J Margetts and Dr M S B Marques. R J Margetts is
the senior independent non-executive director.
The other non-executive directors are R M Godsell, N F Oppenheimer
and Sir David Scholey. The terms and conditions of appointment
of non-executive directors are available for inspection upon
request during normal business hours and at the AGM and
are referred to in the Remuneration Report set out on page 34.
Sir David Scholey and Mr Göran Lindahl have indicated that they
will retire from the board at the AGM in April. The board has
recommended to shareholders the appointment of Mr R C Alexander
as a non-executive director with effect from 20 April 2005.
The board has also recommended to shareholders that Mr R Médori
be appointed a director with effect from 1 June 2005 with the
intention that he will take over the position of finance director
on 1 September 2005. The board has also recommended
to shareholders the appointment of Mr D A Hathorn and
Mr S R Thompson as executive directors of the Company.
Biographical details of Messrs Hathorn and Thompson are set
out on page 14 of the Annual Review. Biographical details of
Messrs Alexander and Médori are set out in the Notice of Meeting.
The chairman is responsible for leading the board and for its
effectiveness. He sets the agenda for meetings of the board
in collaboration with the chief executive. The chairman, with
the assistance of the company secretary, ensures that the
directors receive timely, accurate and clear information before
board meetings and updates of issues arising between meetings.
The chief executive, together with the other members of the
Executive Board, is responsible for the overall day-to-day
management of the Company.
In the year to 31 December 2004 the board met seven times,
the Audit and Nomination Committees four times and the
Remuneration Committee five times. The attendance at these
meetings was as follows:
Board
(seven
meetings)
Audit
Committee
(four meetings)
Remuneration
Committee
(five meetings)
Nomination
Committee
(four meetings)
Sir Mark Moody-Stuart
A J Trahar
D J Challen
B E Davison
Dr C E Fay
R M Godsell
A W Lea
G Lindahl
R J Margetts
Dr M S B Marques
W A Nairn
N F Oppenheimer
F T M Phaswana
Sir David Scholey
Prof K A L M Van Miert
7
7
7
6
7
7
7
7
7
7
7
6
7
5
7
–
–
4
–
4
–
–
–
4
–
–
–
4
–
4
–
–
5
–
4
–
–
–
5
–
–
–
5
–
–
4
–
–
–
–
–
–
–
4
–
–
2
4
4
4
Anglo American’s directors have a wide range of expertise as
well as significant experience in financial, commercial and mining
activities. As recommended by the Combined Code, all directors
have full access to internal and external auditors, and are
encouraged to stay fully abreast of the Group’s business through
meetings with senior management and site visits. Training
and briefings are available to all directors on appointment and
subsequently, as necessary, taking into account existing
qualifications and experience. During the year, directors have
attended, inter alia, workshops and briefings on the following
subjects: the new OFR (operating and financial review)
requirements; board effectiveness; remuneration committees;
the role of the chairman, and corporate social responsibility.
Four of the non-executive directors, Dr Fay and Messrs Godsell,
Margetts and Oppenheimer, will have completed six years as
directors of the Company during the course of 2005. The Combined
Code requires that where non-executive directors remain on
a board beyond a six-year term, their continuance should be
subject to rigorous review and should take into account the need
for progressive refreshing of the board.
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Anglo American plc Annual Report 2004 23
In October 2004, the board met for its annual three day strategy
session, part of which was devoted to an evaluation of the
performance of the board, its committees and its members.
The directors (other than Dr Fay and Messrs Godsell, Margetts and
Oppenheimer) confirm that, having reviewed their performance,
they believe that it is in the best interests of the Company for
Dr Fay and Messrs Godsell, Margetts and Oppenheimer to
continue as directors of the Company beyond their six year terms.
In reaching this conclusion, the board has taken cognisance of
the unique positions of Messrs Godsell and Oppenheimer as,
respectively, the CEO and chairman of AngloGold Ashanti and
De Beers. Their advice and input to the Anglo American plc board
in relation to their respective companies are considered essential.
Dr Fay and Mr Margetts chair the Safety & Sustainable Development
and Remuneration Committees, respectively, and also provide
invaluable input as members of the Audit Committee. Dr Fay has
many years’ experience in the safety, health and environment
field, as well as broad technical and project management experience
and has gained considerable insight into these aspects of the
various Group operations. His continued leadership of the drive
to improve safety and enhance sustainable development at the
Company’s operations is considered most desirable and in the
best interests of the Company and its workforce as well as
its shareholders. Mr Margetts has broad experience of global
businesses and, in addition to his contribution to strategic issues,
has shown great skill in the complex field of remuneration policy
and in his roles as chairman of the Remuneration Committee,
a member of the Nomination and Audit Committees and as the
senior independent non-executive director. The board is therefore
of the view that it is also in the interest of the Company for Mr
Margetts to continue in those roles beyond the six-year term.
In addition, the board performance evaluation process confirmed
that those directors due for re-election at the AGM (Messrs Godsell
and Trahar and Professor Van Miert) continue to demonstrate their
commitment and to make valuable and effective contributions
to the Company and the proposed re-elections are therefore
recommended by the chairman and the board.
In relation to the “progressive refreshing of the board”,
Dr Marques’ appointment in December 2003, brought new insight
into South American affairs and the intended appointment of
Messrs Hathorn, Médori and Thompson as executive directors and
the intended appointment of Mr Alexander as an independent
non-executive director will bring further invaluable and new
experience to the board.
The board is confident that it has, therefore, fully complied
with the requirements of the Combined Code in regard to the
constitution of the board.
As referred to above, a formal evaluation of the performance of
the board, its committees and the directors was carried out in
October 2004 by means of detailed questionnaires and interviews.
This process confirmed that all the directors’ contributions remain
valid. The results of the evaluation were discussed at the October
meeting of the board. The evaluation process also included
a review, chaired by the senior independent non-executive
director (without the chairman present), of the performance of
the chairman. The board evaluation process resulted in a number
of changes to board agenda items and the conduct of the board
meetings. In addition, a programme of informal meetings of
directors was instituted.
All directors have access to management, and to the advice and
services of the company secretary, and to such information as
is needed to carry out their duties and responsibilities fully
and effectively. Furthermore, all directors are entitled to seek
independent professional advice concerning the affairs of Anglo
American at its expense. All directors are subject to election by
shareholders at the first opportunity following their appointment.
In addition, directors retire by rotation and stand for re-election
by shareholders at least once every three years in accordance
with Anglo American’s articles of association.
Subject to specific fundamental, strategic and formal matters
reserved for its decision, the board delegates certain responsibilities
to a number of standing committees, which operate within defined
terms of reference laid down by the board, as referred to below.
The terms of reference of the Audit, Remuneration, Nomination
and Safety & Sustainable Development Committees of the board
are published on the Company’s website.
EXECUTIVE MANAGEMENT
EXECUTIVE BOARD
On 22 February 2005, the Executive Committee was replaced
by the Executive Board, as the principal executive organ of the
Company. Prior to 22 February 2005, the Executive Committee
was chaired by the chief executive and the other members were
all of the executive directors of the Company and D A Hathorn,
R J King and S R Thompson. The Executive Board is chaired by
the chief executive and the membership comprises all of the
executive directors of the Company, the chief executive officer
of Anglo American South Africa, the executive vice president
responsible for Group human resources and business development
and the technical director. The Executive Board is empowered
and responsible for implementing the strategies and policies
determined by the board, managing the business and affairs of
the Company, prioritising the allocation of capital, technical and
human resources and establishing best management practices.
The Executive Board is also responsible for senior management
appointments and monitoring their performance and acts as the
Anglo American risk committee for the purpose of reviewing
and monitoring Anglo American’s systems of internal control.
The Executive Board presently comprises: A J Trahar (chairman),
B E Davison, D A Hathorn, R J King, A W Lea, A E Redman,
S R Thompson and P L Zim.
INVESTMENT COMMITTEE
The role of the Investment Committee, which is a sub-committee
of the Executive Board, is to manage the process of capital
allocation by ensuring that investments and divestments increase
shareholder value and meet Anglo American’s financial criteria.
The Committee makes recommendations to the Executive Board
and/or the board on these matters. The Committee meets
as required.
The Investment Committee presently comprises: A W Lea
(chairman), D A Hathorn, A E Redman, S R Thompson and
P G Whitcutt (Head of Finance).
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24 Anglo American plc Annual Report 2004
CORPORATE GOVERNANCE
CONTINUED
COMMITTEES OF THE BOARD
REMUNERATION COMMITTEE
The Remuneration Committee, comprising solely independent
non-executive directors, is responsible for establishing and
developing Anglo American’s general policy on executive and senior
management remuneration and determining specific remuneration
packages for executive directors.
The Remuneration Committee presently comprises: R J Margetts
(chairman), D J Challen, Dr C E Fay and F T M Phaswana.
SAFETY & SUSTAINABLE DEVELOPMENT
COMMITTEE (S&SD)
The S&SD Committee (formerly the Safety, Health and
Environment Committee) is responsible for developing framework
policies and guidelines for the management of sustainable
development issues, including safety, health and environment
matters, and ensuring the progressive implementation of the same
throughout the Group. The Committee normally meets four times
each year, including a visit to an operation, and business unit heads
are invited to attend committee meetings. Each business unit head
makes an annual safety and sustainable development presentation
to the Commitee. A separate Report to Society 2004 will be
published in April. This report focuses on the safety, sustainable
development, health and environmental performance of the
Company’s managed operations, their performance with regard to
the Company’s ‘Good Citizenship’ principles and the operational
dimensions of their social programmes.
The S&SD Committee presently comprises: Dr C E Fay (chairman),
B E Davison, R M Godsell, G Lindahl, Dr M S B Marques, Sir Mark
Moody-Stuart, W A Nairn, A E Redman, Sir David Scholey and
A J Trahar.
NOMINATION COMMITTEE
The Nomination Committee makes recommendations to the board
on the appointment of new executive and non-executive directors,
including making recommendations as to the composition of the
board generally and the balance between executive and non-
executive directors. The Nomination Committee meets as and
when required and has engaged external consultants to identify
appropriate candidates.
The board, via the Nomination Committee, has taken steps
to ensure that the Human Resources function of the Group
regularly reviews and updates the succession plans of directors
and senior managers.
During the year the Nomination Committee managed the process
of the selection of René Médori to succeed Tony Lea as finance
director with effect from 1 September 2005 and the proposed
election of Messrs Hathorn and Thompson as executive directors
and Mr Alexander as a non-executive director at the AGM.
The Nomination Committee presently comprises: F T M Phaswana
(chairman), R J Margetts, Sir Mark Moody-Stuart, N F Oppenheimer,
Sir David Scholey and Prof K A L M Van Miert.
AUDIT COMMITTEE
Role and responsibilities
The primary role of the Audit Committee is to ensure the integrity
of financial reporting and the audit process, and that a sound risk
management and internal control system is maintained. In pursuing
these objectives the Audit Committee oversees relations with
the external auditors and reviews the effectiveness of the internal
audit function.
In fulfilling its responsibility of monitoring the integrity of financial
reports to shareholders, the Audit Committee has reviewed
accounting principles, policies and practices adopted in the
preparation of public financial information and has examined
documentation relating to the Annual Report, Annual Review,
Interim Report, preliminary announcements and related public
reports. The clarity of disclosures included in the financial
statements was reviewed by the Audit Committee, as was the
basis for significant estimates and judgements. In assessing the
accounting treatment of major transactions open to different
approaches, the Committee considered written reports by
management and the external auditors. The Committee’s
recommendations are submitted to the board for approval.
The chief financial officers of all operations have provided
confirmation, on a six-monthly basis, that financial and accounting
control frameworks operate satisfactorily. The Audit Committee
considered summaries of the significant risk and control issues
arising from these reports. The Audit Committee also received
regular internal and external audit reports on the results of audits
at various operations. Further information on risk management
processes is provided in the internal control disclosure statement
on page 26.
The Audit Committee has satisfied itself that the United Kingdom
professional and regulatory requirements for audit partner rotation
and employment of former employees of the external auditors
have been complied with.
The Audit Committee considered information pertaining to the
balance between fees for audit and non-audit work for the Group
in 2004 and concluded that the nature and extent of non-audit
fees do not present a threat to the external auditors’ independence.
Furthermore, after reviewing a report from the external auditors
on all relationships between the external auditors and Anglo
American that might reasonably have a bearing on the external
auditors’ independence and the audit engagement partner and
staff’s objectivity, and the related safeguards and procedures,
the Audit Committee has concluded that the external auditors’
independence was not impaired.
The Audit Committee approved the external auditors’ terms of
engagement, scope of work, the process for the 2004 interim
review, the annual audit and the applicable levels of materiality.
Based on written reports submitted, the Audit Committee reviewed,
with the external auditors, the findings of their work and confirmed
that all significant matters have been satisfactorily resolved.
The Committee’s assessment of the external auditors’ performance
and independence underpins its recommendation to the board to
propose to shareholders the re-appointment of Deloitte & Touche
LLP as auditors until the conclusion of the AGM in 2006.
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Anglo American plc Annual Report 2004 25
A key factor that may impair auditors’ independence is a lack of
control over non-audit services provided by the external auditors.
In essence, the external auditors’ independence is deemed to be
impaired if the auditors provide a service which:
results in auditing of own work by the auditors;
results in the auditors acting as a manager or employee
of the Group;
puts the auditors in the role of advocate for the Group; or
creates a mutuality of interest between the auditors and
the Group.
Anglo American addresses this issue through three primary
measures, namely disclosure of the extent and nature of non-
audit services, the prohibition of selected services, and prior
approval by the Audit Committee chairman of non-audit services
where the cost of the proposed assignment is likely to exceed a
specified amount. Disclosure entails reporting non-audit services
to the Group’s audit committees and inclusion of prescribed detail
in the Annual Reports of listed entities. The policy’s definition
of prohibited non-audit services corresponds with the European
Commission’s recommendations on auditors’ independence.
Other safeguards encapsulated in the policy include:
The external auditors are required to adhere to a rotation policy
based on best practice and professional standards in the
United Kingdom. The standard period for rotation of the audit
engagement partner is five years and for any key audit principal
seven years.
Any partner designated as a key audit principal of Anglo American
will not be employed by Anglo American in a key management
position unless a period of at least two years has elapsed since
the conclusion of the last relevant audit.
The Audit Committee ensures that the scope of the auditors’ work
is sufficient and that the auditors are fairly remunerated.
The Audit Committee has primary responsibility for making
recommendations to the board on the appointment,
reappointment and removal of the external auditors.
The Audit Committee has the authority to engage independent
counsel and other advisors as they determine necessary in order
to resolve issues on auditor independence.
DIRECTORS’ REMUNERATION
The directors’ remuneration report, setting out Anglo American’s
policy on executive directors’ remuneration, benefits, share
schemes, long term incentive and bonus plans and pension
entitlements, is set out on pages 28 to 43 of this Annual Report.
A resolution to approve the remuneration report will be proposed
at the forthcoming AGM.
Each internal audit function reports directly to an audit committee
at business or listed company level and is accountable for
maintaining Group auditing standards, including risk reporting.
Internal audit functions’ mandates and annual audit coverage plans
were approved by the relevant audit committees, which have
considered reports on the results of internal audit work. A summary
of audit results and risk management information was presented
to the Audit Committee at regular intervals throughout the year.
Also tabled were reports submitted by the Group’s head of
internal audit on internal audit functions’ performance against
Group standards. The effectiveness of the Group’s internal audit
functions is evaluated by means of annual assessments against
predetermined criteria and periodic external peer reviews, the
results of which are reported to the Audit Committee.
During the year the Audit Committee has reviewed the Group’s
progress towards the implementation of the new International
Financial Reporting Standard (IFRS)programme. A special meeting
was called in April 2004 to consider the accounting options for
first time adoption of IFRS.
The Audit Committee also reviewed business units’ audit coverage
plans aimed at providing assurance in respect of mineral resources
and ore reserves.
Composition of the Audit Committee
The Committee comprises solely independent non-executive
directors. The dates of appointment and names of those who were
members during the year and who currently remain members are:
D J Challen (chairman)
R J Margetts
Dr C E Fay
F T M Phaswana
Prof K A L M Van Miert
9 September 2002
19 March 1999
4 June 2001
2 September 2002
10 May 2002
The board, in consultation with the Audit Committee chairman,
makes appointments to the Audit Committee. The board has
determined that the Committee members have the skills and
experience necessary to contribute meaningfully to the Committees’
deliberations. In addition, the chairman of the Committee has
requisite experience in accounting and financial management.
The Audit Committee met four times during 2004, two meetings
coinciding with key dates within the financial reporting and auditing
cycle. All of the members were present at those meetings, two of
which were followed by discussions, independent of management,
with the external audit partners and the head of internal audit.
Details of remuneration paid to members of the Audit Committee,
including the additional fee paid to the chairman of the Audit
Committee, are set out on page 36.
Policy on external auditors’ independence
Anglo American’s policy on auditors’ independence, which
came into effect on 1 January 2003, is consistent with the
ethical standards promulgated by the Auditing Practices Board
and published in December 2004.
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26 Anglo American plc Annual Report 2004
CORPORATE GOVERNANCE
CONTINUED
RELATIONS WITH SHAREHOLDERS
The Company maintains an active dialogue with its key financial
audiences, including institutional shareholders and sell-side
analysts. The Investor and Corporate Affairs department
manages the ongoing dialogue with these audiences and regular
presentations take place at the time of interim and final results
as well as during the rest of the year. An active programme with
potential shareholders is also maintained.
Any concerns raised by a shareholder in relation to the Company
and its affairs are communicated to the board as a whole.
The board is briefed on a regular basis by the Investor and
Corporate Affairs department and analysts’ reports are circulated
to the directors.
During the year there have been regular presentations and
meetings with institutional investors in the UK, South Africa,
continental Europe, the USA and Canada to communicate the
strategy and performance of Anglo American. Executive directors
as well as key corporate officers host such presentations and
meetings. The chairman is also available to shareholders to
discuss any matter they wish to raise. The Company’s website
(www.angloamerican.co.uk) provides the latest and historical
financial and other information on Anglo American.
Shareholders will have the opportunity at the forthcoming AGM,
notice of which is contained in the booklet enclosed herewith,
to put questions to the board, including the chairmen of the
various committees. Facilities have been put in place to enable
shareholders to receive company communications electronically
rather than by mail and, for those unable to attend the meeting,
to cast their AGM votes by telephone or by electronic means
including those shareholders whose shares are held in the
CREST system.
Voting on each resolution to be proposed at the AGM will
be conducted on a poll rather than by a show of hands.
The results of the poll will be announced to the press and
on the Company’s website.
ACCOUNTABILITY AND AUDIT
The board is required to present a balanced and understandable
assessment of Anglo American’s financial position and
prospects. Such assessment is provided in the chairman’s
questions and answers and the chief executive’s statement set
out on pages 2 to 5 and the financial review set out on pages
6 to 18 of this Annual Report. The respective responsibilities
of the directors and external auditors are set out on pages
44 and 45. As referred to in the directors’ report on page 19,
the directors have expressed their view that Anglo American’s
business is a going concern.
INTERNAL CONTROL DISCLOSURE
The Executive Board, as mandated by the board, has established
a Group-wide system of internal control to manage significant
Group risks. This system, which has been operating throughout
the year and to the date of this report, supports the board in
discharging its responsibility for ensuring that the wide range of
risks associated with the Group’s diverse international operations
is effectively managed in support of the creation and preservation
of shareholder wealth. The board’s policy on risk management
encompasses all significant business risks to the Group, including
financial, operational and compliance risk, which could undermine
the achievement of business objectives. This system of risk
management is designed so that the different businesses are able
to tailor and adapt their risk management processes to suit their
specific circumstances. This flexible approach has the commitment
of the Group’s senior management. There is clear accountability
for risk management, which is a key performance area of line
managers throughout the Group. The requisite risk and control
capability is assured through board challenge and appropriate
management selection and skills development. Managers are
supported in giving effect to their risk responsibilities through
policies and guidelines on risk and control management. Continuous
monitoring of risk and control processes, across 15 significant
Group-wide risk areas and other business-specific risk areas,
provides the basis for regular and exception reporting to business
management and boards, the Executive Board and the board.
The risk assessment and reporting criteria are designed to provide
the board with a consistent, Group-wide perspective of the key
risks. The reports to the board, which are submitted at least every
six months, include an assessment of the likelihood and impact
of risks materialising, as well as risk mitigation initiatives and
their effectiveness.
The system of internal control, which is embedded in all key
operations, provides reasonable rather than absolute assurance
that the Group’s business objectives will be achieved within the
risk tolerance levels defined by the board. Regular management
reporting, which provides a balanced assessment of key risks
and controls, is an important component of board assurance.
In addition, certain board committees focus on specific risks such
as safety of people and capital investment and provide assurance
to the board on those matters. The chief financial officers provide
confirmation, on a six-monthly basis, that financial and accounting
control frameworks have operated satisfactorily. The board also
receives assurance from the Audit Committee, which derives its
information, in part, from regular internal and external audit reports
on risk and internal control throughout the Group. The Group’s
internal audit functions have a formal collaboration process in
place with the external auditors to ensure efficient coverage of
internal controls. The Anglo American internal audit function is
responsible for providing independent assurance to the Executive
Board and the board on the effectiveness of the risk management
process throughout the Group.
Anglo American seeks to have a sound system of internal control,
based on the Group’s policies and guidelines, in all material
associates and joint ventures. In those companies that are
independently managed, the directors who are represented on
these organisations’ boards seek assurance that significant risks
are being managed.
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Anglo American plc Annual Report 2004 27
In conducting its annual review of the effectiveness of risk
management, the board considers the key findings from the
ongoing monitoring and reporting processes, management
assertions and independent assurance reports. The board
also takes account of material changes and trends in the risk
profile and considers whether the control system, including
reporting, adequately supports the board in achieving its
risk management objectives.
During the course of the year the board considered the Group’s
responsiveness to changes within its business environment.
The board is satisfied that there is an ongoing process, which has
been operational during the year, and up to the date of approval
of the Annual Report, for identifying, evaluating and managing
the significant risks faced by the Group in accordance with the
Turnbull guidelines. This includes social, environmental and ethical
risks as highlighted in the Disclosure Guidelines on Socially
Responsible Investment issued by the Association of British
Insurers. A detailed report on social, environmental and ethical
issues will be included in the Company’s Report to Society 2004.
WHISTLEBLOWING PROGRAMME
Following adoption in December 2003 of a whistleblowing policy
that is aligned with the Public Interest Disclosure Act 1998, the
Group has implemented a whistleblowing programme in virtually
all of the managed operations. The programme, which is monitored
by the Audit Committee, is aimed at enabling employees,
customers, suppliers, managers or other stakeholders, on a
confidential basis, to raise concerns in cases where conduct is
deemed to be contrary to our values. It may include:
actions that may result in danger to the health and/or safety of
people or damage to the environment;
unethical practice in accounting, internal accounting controls,
financial reporting and auditing matters;
criminal offences, including money laundering, fraud, bribery
and corruption;
failure to comply with any legal obligation;
miscarriage of justice;
any conduct contrary to the ethical principles embraced in our
Good Citizenship: Our Business Principles or any similar policy;
any other legal or ethical concern; and
concealment of any of the above.
The programme makes available a selection of telephonic,
e-mail, web-based and surface mail communication channels to
any person in the world who has information about unethical
practice in Anglo American plc and its managed operations.
The communication facilities are operated by independent service
providers who sanitise information received from callers to remove
all indications as to the identity of the callers before submission
to designated persons in the Group.
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28 Anglo American plc Annual Report 2004
REMUNERATION REPORT
REMUNERATION COMMITTEE
Role of the Remuneration Committee and Terms of Reference
The Remuneration Committee (the Committee) is responsible for considering and making recommendations to the board on:
the Company’s general policy on executive and senior management remuneration;
the specific remuneration packages for executive directors of the Company, including basic salary, performance-based short
and long term incentives, pensions, and other benefits; and
the design and operation of the Company’s share incentive schemes.
The full Terms of Reference of the Committee can be found on the Anglo American website and copies are available on request.
The Committee met five times during 2004.
Membership of the Committee
The Committee comprised the following independent non-executive directors during the year ended 31 December 2004:
R J Margetts (chairman);
D J Challen;
Dr C E Fay; and
F T M Phaswana.
The Company’s chairman and chief executive attend the Committee meetings by invitation and assist the Committee in its
considerations, except when issues relating to their own compensation are discussed. No directors are involved in deciding their
own remuneration. In 2004 the Committee was advised by R J King and C B Corrin (Group Human Resources), the Company’s
finance function and by Ernst & Young LLP (who were appointed by the Committee to act as independent advisors).
In 2004, the Committee also received advice from:
Monks Partnership (a subsidiary of PricewaterhouseCoopers LLP) – appointed by the Company, with the agreement
of the Committee, to provide market remuneration data;
PricewaterhouseCoopers LLP – appointed by the Company, with the agreement of the Committee, to provide specialist
valuation services; and
Hewitt Bacon & Woodrow Limited – appointed by the Company, with the agreement of the Committee, to provide specialist
actuarial advice.
In addition, Mercer Human Resource Consulting Limited (Mercer) is engaged by the Committee to review the Committee’s processes
on an annual basis in order to provide shareholders with assurance that the remuneration processes that the Company and the
Committee have followed are in line with the stated policy as set out below, and that the Committee has operated within its Terms
of Reference. A summary of the letter from Mercer containing the conclusions of their review of the Committee’s executive
remuneration processes for 2004 can be found on page 43, whilst the full letter can be found on the Company’s website.
In 2004 the advisors to the Committee provided other services to the Company in the UK on the following basis:
Advisors
Ernst & Young LLP
PricewaterhouseCoopers LLP
Nature of other services
General tax advice
Taxation and payroll advice; investment advisors and actuaries for various
pension schemes; advisors on internal audit projects
Mercer group companies
Investment advisors and actuaries for various pension schemes
Hewitt Bacon & Woodrow Limited
Investment advisors and actuaries for various pension schemes
Certain overseas operations within the Group are also provided with audit and non-audit related services from Ernst & Young’s,
PricewaterhouseCoopers’ and Mercer’s worldwide member firms. The Company’s auditors, Deloitte & Touche LLP, have not provided
advice to the Committee; however, in their capacity as Group auditors, they do undertake an audit of all remuneration elements.
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Anglo American plc Annual Report 2004 29
REMUNERATION POLICY
Anglo American’s remuneration policy is formulated to attract and retain high calibre executives and motivate them to develop and
implement the Company’s business strategy in order to optimise long term shareholder value creation. It is the intention that this
policy should conform to best practice standards and that it will apply for 2005 and subsequent years, subject to ongoing review
as appropriate. The policy is framed around the following key principles:
total rewards will be set at levels that are sufficiently competitive to enable the recruitment and retention of high calibre executives;
total incentive-based rewards will be earned through the achievement of demanding performance conditions consistent with
shareholder interests;
incentive plans, performance measures and targets will be structured to operate soundly throughout the business cycle;
the design of long term incentives will be prudent and will not expose shareholders to unreasonable financial risk;
in considering the market positioning of reward elements, account will be taken of the performance of the Company
and of the individual executive director; and
reward practice will conform to best practice standards as far as reasonably practicable.
Representatives of the Company’s principal investors are consulted on changes to remuneration policy.
Elements of executive director remuneration
Each executive director’s total remuneration consists of salary, annual bonus, long term incentives and benefits. An appropriate
balance is maintained between fixed and performance-related remuneration and between elements linked to short term financial
performance and those linked to longer term shareholder value creation.
Assuming on-target performance, the Committee’s policy is that at least 50% (60% for the chief executive) or more of total
executive director remuneration is performance-related. In 2004, 67% of the chief executive’s remuneration on an expected value
basis was performance-related; for the other executive directors, on average the figure was 61% (see illustrative charts below).
34%
33%
n Fixed
n Performance-related
annual bonus
n Performance-related
long-term incentives
33%
39%
n Fixed
n Performance-related
annual bonus
n Performance-related
long-term incentives
33%
28%
Chief executive expected values
Average executive director expected values
Shareholders approved the introduction of the new Bonus Share Plan (BSP) at the AGM in 2004. Taken together, the BSP and the
existing Long Term Incentive Plan (LTIP) are designed to clearly underpin the Company’s existing performance culture by creating
a better linkage between shareholder value creation and executive reward. The combination of performance measures provides a
thorough assessment of value-driven performance. The Committee monitors closely the relevance and appropriateness of the
performance measures and targets applicable to the BSP and LTIP. These performance conditions may be amended by the Committee
only to the extent that they are a fairer measure of performance, consistent with the original performance conditions and no less
demanding. The level of share-based remuneration within the reward mix will ensure that executive directors and other levels of
management have a meaningful level of exposure to the Company’s share price performance.
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30 Anglo American plc Annual Report 2004
REMUNERATION REPORT
CONTINUED
Basic salary
The basic salary of the executive directors is reviewed annually and is targeted at the median of companies of comparable size,
market sector, business complexity and international scope. Company performance, individual performance and changes in
responsibilities are also taken into consideration in setting salary levels each year.
Bonus Share Plan
The BSP was operated for the first time during 2004 and all executive directors are eligible to participate in it.
The BSP requires executive directors to invest a significant proportion of their remuneration in shares, thereby more closely aligning
their interests with those of shareholders, and encourages management at all levels to build up a meaningful personal stake in the
Company. Awards under the BSP are made annually and consist of three elements: a performance-related cash element, an equal
amount, as a conditional award, of Bonus Shares and an additional performance-related element in the form of Enhancement Shares.
These bonus awards are not pensionable. The BSP operates as follows:
the value of the bonus is calculated by reference to achievement against annual performance targets. The performance measures
for the BSP include measures of corporate and, where applicable, business unit performance as well as the achievement of
specific individual objectives. For executive directors, the corporate element is based on stretching Earnings Per Share (EPS)
targets which are calculated using headline earnings (defined in note 12 of the financial statements). In 2004, the EPS targets
were met in full;
the Committee reviews these measures annually to ensure they remain appropriate and sufficiently stretching in the context
of the economic and performance expectations for the Company and its operating businesses;
it is the Committee’s usual policy to base 70% of each annual bonus award on the corporate or business measure and the
remaining 30% on key personal performance measures. The level of bonuses payable will be reduced if certain overall safety
improvement targets are not met. Bonus parameters are set on an individual basis;
in the case of the directors and top tier of management, half of the bonus is paid in cash. The cash element would not normally
exceed 75% of basic salary for the chief executive and 60% of basic salary for the other executive directors. The other half of
the bonus is in the form of a conditional award of Bonus Shares equal in value to the cash element. These Bonus Shares vest
only if the participant remains in employment with the Group until the end of a three year holding period, or is, in the view of the
Remuneration Committee, deemed to be a ‘good leaver’; and
in order to provide continuing focus on medium term performance, executive directors will also receive an award of conditional
Enhancement Shares at the same time as the award of Bonus Shares. The maximum potential, at face value, of the
Enhancement Shares is 75% of the face value of the Bonus Shares (i.e. in the case of the chief executive a maximum of 56%
of basic salary). Awards of Enhancement Shares made in 2004 will vest after three years only to the extent that a challenging
performance condition, based on EPS growth against the UK Retail Price Index (RPI), is met, as shown below:
75%
33%
0%
f
o
e
g
a
t
n
e
c
r
e
p
l
a
n
o
i
t
i
d
d
A
d
e
r
i
a
u
q
c
a
s
e
r
a
h
S
s
u
n
o
B
RPI
+0%
RPI
+3%
RPI
+6%
RPI
+9%
RPI
+12%
RPI
+15%
RPI
+18%
Real EPS growth over 3 years
Vesting of Enhancement Shares
Additional percentage of Bonus Shares acquired
Real EPS has been selected as the most appropriate performance measure for this element of the plan because it is a fundamental
financial performance indicator, both internally and externally, and links directly to Anglo American’s long term objectives of
maintaining and improving earnings. The targets were approved by the Committee after reviewing industry performance over a
number of years and have been set at a level which provides stretching performance levels for management. At the end of each
performance period, the level of performance achieved and the proportion of awards vesting will be published in the subsequent
remuneration report.
In 2004, only executive directors and the top tier of management worldwide (circa 50 individuals) participated in the BSP. In 2005,
it is intended that participation in the BSP will be extended to other tiers of senior management globally (circa 1,300 individuals)
who will thereafter cease to receive grants under the Company’s Executive Share Option Scheme (ESOS).
7878v03_GC_Rp_28-p39_020305.qxp 4/3/05 2:10 am Page 31
Anglo American plc Annual Report 2004 31
Share option and all employee schemes
No share options were granted to executive directors under the ESOS in 2004 and, as noted above, future grants under the ESOS
will be discontinued, other than for use in recruitment or other exceptional circumstances.
Executive directors remain eligible to participate in the Company’s Save As You Earn (SAYE) and Share Incentive Plan (SIP) schemes.
As these schemes are open to all UK employees, performance conditions do not apply.
Long Term Incentive Plan
Grant levels
Conditional LTIP awards continue to be made annually to executive directors. Awards under the LTIP in 2004 were increased from
120% to 160% of basic salary for the chief executive and from 100% to 130% of basic salary for the other executive directors.
Awards were raised in order to maintain market competitiveness and to reflect the rebalanced incentive structure. These awards are
discretionary and are considered on a case-by-case basis. In exceptional circumstances and in order to accommodate changing market
conditions, individual awards may be made up to a maximum of two times’ basic salary per annum.
Performance measures
As in previous years, vesting of LTIP awards made during 2004 is subject to the achievement of stretching performance targets,
relating to Total Shareholder Return (TSR) and to an operating measure, currently Return On Capital Employed (ROCE), over a fixed
three year period. In previous years, executive directors with direct divisional responsibility were measured partially on divisional
ROCE as well as Group ROCE. However, all awards made in 2004 and thereafter will be measured only on Group ROCE, in order to
provide a simpler and more coherent focus on overall Group performance. Half of each award made to a director, therefore, is subject
to a Group TSR measure while the other half of each award is subject to a Group ROCE measure. These performance measures were
selected on the basis that they clearly foster the creation of shareholder value. At the end of each performance period, the level of
ROCE performance achieved and the level of award earned will be published in the subsequent remuneration report. There is no
retesting of performance.
The LTIP closely aligns the interests of shareholders and executive directors by rewarding superior shareholder and financial
performance and by encouraging executives to build up a shareholding in the Company.
Total Shareholder Return
The Committee considers comparative TSR to be a suitable long term performance measure for the Company’s LTIP awards.
Executives benefit only if shareholders have enjoyed returns on their investment which are superior to those that could have been
obtained in other comparable companies.
The vesting of that part of the LTIP award contingent upon TSR performance varies according to the Company’s TSR over the
performance period, relative to a weighted basket of international natural resource companies (the Index). The Index comprises
three categories: the first consists of a minimum of five international diversified mining companies, the second a minimum of five
international paper and packaging companies and the third a minimum of four international industrial minerals companies. Each
category is weighted to reflect Anglo American’s business mix. The Committee may amend the list of comparator companies in
the Index, and the relative weightings, if circumstances make this necessary (for example, as a result of takeovers or mergers
of comparator companies in the Index). In calculating TSR, it is assumed that all dividends are reinvested.
For awards made in 2004, the companies constituting the Index were as follows:
Mining
Paper and Packaging
Industrial Minerals
Category weighting
Comparator companies
71%
BHP Billiton plc
Companhia Vale do Rio Doce
Freeport McMoRan Copper & Gold Inc
Kumba Resources Limited
Noranda Inc
Rio Tinto plc
Teck Cominco Limited
WMC Resources Limited
Xstrata plc
17%
M-real Corporation
Sappi Limited
SCA
David S. Smith (Holdings) plc
Stora Enso Oyj
UPM-Kymmene Group
12%
Aggregate Industries plc
CRH plc
Hanson plc
RMC Group plc
7878v03_GC_Rp_28-p39_020305.qxp 4/3/05 2:10 am Page 32
32 Anglo American plc Annual Report 2004
REMUNERATION REPORT
CONTINUED
Shares contingent on TSR performance will vest as follows:
Anglo American’s relative TSR
% Proportion of TSR element vesting
Below the weighted average TSR of the Index
Equal to the weighted average TSR of the Index
Equal to the weighted average TSR of the top two companies in each category
Equal to or greater than the weighted average TSR of the top company in each category
0
50
100
150
Shares will vest on a straight-line basis for performance between 50% and 100% and between 100% and 150% as described above.
A graph showing the Company’s TSR performance against the weighted average of the Index as shown above for the five years from
1 January 2000 to 31 December 2004 can be found on page 35; for the purposes of drawing this graph, Companhia Vale do Rio
Doce and Xstrata plc were excluded as they were not listed at the beginning of the period depicted by the graph.
Return On Capital Employed
Group ROCE is the second performance measure for LTIP grants. The board considers this to be among the most important factors
which drive sustainable improvements in shareholder value in a natural resources business, as well as one of the most important
measures of differentiation in performance in this sector.
The proportion of shares vesting based on Group ROCE will vary according to the degree of improvement in the Group’s average
annualised ROCE over the performance period.
The Committee sets minimum targets for improvement in returns on both capital employed for the financial year preceding the start of
the performance period (existing capital employed) and on the additional capital employed during the performance period (incremental
capital employed). The maximum ROCE targets are based on stretching levels of return on the existing capital employed.
The targets for each element of the LTIP conditionally awarded in 2004 are shown below. These are adjusted for movements in
commodity prices, certain foreign exchange rate effects, capital in progress and for relevant changes in the composition of the Group.
Minimum ROCE target
Maximum ROCE target
The ROCE elements of the award vest as shown in the table below:
Below or equal to the minimum target
Equal to or greater than the maximum target
% Existing % Incremental
capital
employed
capital
employed
14.57
16.57
11
11
% Proportion of ROCE element vesting
0
100
Shares will vest on a straight-line basis for performance between the minimum target and the maximum target.
Vesting of share incentives in the event of change of control or termination of employment
In the event of a change of control of the Company, the following provisions apply under the Company’s incentive plans:
share options granted under the former ESOS may be exercised irrespective of whether the applicable performance conditions
have been met;
the number of shares that vest under the LTIP will be calculated by reference to the extent to which the applicable performance
conditions have been met at the time of the change of control;
participants will be entitled to receive their bonus and matching shares under the former Deferred Bonus Plan;
Bonus Shares awarded under the BSP will be released and Enhancement Shares awarded under that plan will vest, only to the
extent that the applicable performance conditions have been satisfied;
SAYE options may be exercised (to the extent of savings at the date of exercise); and
participants may direct the SIP trustee as to how to deal with their SIP shares (although the Matching Shares may be forfeited
in some circumstances).
In the event that a director’s employment is terminated, vesting of outstanding share options is dependent upon the reasons the
contract is terminated. Performance conditions fall away in the event of redundancy. However, if the executive resigns voluntarily,
then all options lapse unless the Committee determines otherwise.
In the case of LTIP interests, if a director resigns voluntarily, then his interests lapse. If he is made redundant, vesting at the end of
the performance period is based on the normal performance criteria and then pro-rated for the proportion of the performance period
for which the director served.
7878v03_GC_Rp_28-p39_020305.qxp 4/3/05 2:10 am Page 33
Anglo American plc Annual Report 2004 33
In the case of the BSP, if a director ceases to be employed before the end of the year in respect of which the annual performance
targets apply, then no award will be made unless the Committee determines otherwise (taking into account the proportion of the year
for which the director was an employee of the Group and of performance to date against the annual performance targets at the date
of cessation). If a director resigns before the end of the three year vesting period, the Bonus Share awards lapse and the Enhancement
Shares are forfeited. If a director is made redundant, Bonus Share awards will be transferred as soon as practicable after the date of
leaving and the Enhancement Shares will vest at the end of the performance period, to the extent that the performance conditions
have been met.
Pensions
Pension and life insurance benefits for executive directors reflect practice in the countries in which they perform their principal duties.
Pension arrangements are tailored to take account of historic obligations and, insofar as agreed by the Committee, the personal
circumstances of each executive. Details of individual pension arrangements are set out on pages 39 and 40.
The Remuneration Committee is considering the impact on UK pension arrangements of the new UK pensions regime which will apply
from April 2006. Further details will be disclosed in the 2005 remuneration report.
Other benefits
Executive directors are entitled to the provision of either a car allowance or a fully expensed car, medical insurance, death and
disability insurance, social club membership (in accordance with local market practice), limited personal taxation/financial advice
and reimbursement of reasonable business expenses. Directors based in South Africa are eligible to receive housing loan subsidies
at a preferential interest rate in accordance with local market practice. The provision of these benefits is considered to be market
competitive in the appropriate locality for executive director positions.
Executive shareholding targets
Within five years of their appointment, executive directors are expected to acquire a holding of shares with a value of two times’
basic salary in the case of the chief executive and one times’ basic salary in the case of other executive directors.
The Remuneration Committee will consider achievement against these targets when making grants under the various long term
incentive plans.
External appointments
Executive directors are not permitted to hold external directorships or offices without the approval of the board; if approved, they
may retain the fees payable from one such appointment. During the year ended 31 December 2004, B E Davison retained fees
from one appointment amounting to £16,000.
Policy on non-executive directors’ remuneration
Non-executive directors’ remuneration is approved by the board as a whole on the recommendation of the chairman and
executive directors.
The Company’s policy on non-executive directors’ remuneration is based on the following key principles. Remuneration should be:
sufficient to attract and retain world-class non-executive talent;
consistent with recognised best practice standards for non-executive directors’ remuneration;
in the form of cash fees, but with the flexibility to forgo all or part of such fees, to subscribe for shares in the Company
if the non-executive director so wishes (after deduction of applicable income tax and social security contributions); and
set by reference to the responsibilities taken on by the non-executives in chairing the board and its committees.
Non-executive directors may not participate in the Company’s annual bonus plan, share option schemes, Long Term Incentive Plan
or pension arrangements.
The board reviews non-executive directors’ fees periodically to ensure they remain market competitive. Additional fees are paid
to the chairmen of board committees and to the senior independent director. Where non-executive directors have executive board
roles within subsidiaries of the Company, then they may also receive additional remuneration on account of these increased
responsibilities. With the exception of R M Godsell, who is remunerated by AngloGold Ashanti Limited in his capacity as its chief
executive, none of the non-executive directors has any such role.
Chairman’s fees
The chairman’s fees are approved by the board (in the absence of the chairman) on the recommendation of the Committee and chief
executive, who take external advice on market comparators.
7878v03_GC_Rp_28-p39_020305.qxp 4/3/05 11:21 am Page 34
34 Anglo American plc Annual Report 2004
REMUNERATION REPORT
CONTINUED
Directors’ service contracts
It is the Company’s policy that the period of notice for executive directors will not exceed 12 months.
In order properly to reflect their spread of responsibilities, all the executive directors, with the exception of A W Lea, who is
employed by Anglo American International (BVI) Limited, have contracts with Anglo American International (IOM) Limited and with
Anglo Operations Limited. The salaries under these contracts are payable in sterling and/or South African rand as appropriate. The
employment contracts of all executive directors are terminable at 12 months’ notice by either party.
Executive directors(1)
A J Trahar (chief executive)
B E Davison (chairman, Anglo Platinum)
A W Lea (finance director)
W A Nairn (technical director) (retired 31/12/04)
Notice period
Date of appointment
AGM re-election
12 months
12 months
12 months
12 months
19 April 1999
15 May 2001
19 April 1999
15 May 2001
20 April 2005
21 April 2004
21 April 2004
–
(1) At each annual general meeting (AGM) all those directors who have been in office for three years or more since their election or last re-election shall retire from office. Details of those retiring by
rotation this year are contained in the Notice of AGM. In addition, a director may at any AGM retire from office and stand for re-election.
The contracts of executive directors contain a provision that sets out the compensation payable in lieu of notice if the Company
terminates the contract (other than for cause) or if the executive director resigns in circumstances where there has been a material
adverse change in role, responsibilities or remuneration. Compensation is based on the value of 12 months’ basic salary, target
annual bonus for 12 months and the annual value of benefits. The Company may choose whether to continue to provide other
benefits during any notice period or to pay an amount equal to the gross value of these benefits over the period. Although the
Committee notes that this policy is no longer in complete compliance with the latest ABI guidelines, it has enabled the Company
to remain market competitive in an historic context. As market practice has now moved away from the inclusion of liquidated
damages in service contracts, the Committee will review this policy in 2005 for new appointments to the board.
The contracts of executive directors do not provide for any enhanced payments in the event of a change of control of the Company.
All non-executive directors have letters of appointment with the Company for an initial period of three years from their date of
appointment, subject to re-election at the AGM. In addition to his letter of appointment with the Company, R M Godsell has a
service contract with AngloGold Ashanti Limited, an independently managed subsidiary of the Company, in his capacity as its
chief executive. Under this contract, his employment may be terminated by either party giving to the other 12 months’ notice.
Non-executive directors(1)(2)
Sir Mark Moody-Stuart (chairman)
D J Challen (chairman, Audit Committee)
Dr C E Fay (chairman, S&SD Committee)
R M Godsell
G Lindahl
R J Margetts (senior independent director and chairman, Remuneration Committee)
Dr M S B Marques
N F Oppenheimer
F T M Phaswana (chairman, Nomination Committee)
Sir David Scholey
Prof K A L M Van Miert
Date of letter of appointment
AGM re-election
19 July 2002
20 September 2002
15 April 1999
15 April 1999
27 September 2001
15 April 1999
11 December 2003
15 April 1999
21 June 2002
6 December 1999
25 March 2002
25 April 2003*
25 April 2003*
21 April 2004
20 April 2005*
to retire at AGM 2005
21 April 2004
21 April 2004*
21 April 2004
25 April 2003*
to retire at AGM 2005
20 April 2005*
* first election following date of appointment
(1) At each AGM all those directors who have been in office for three years or more since their election or last re-election shall retire from office. Details of those retiring by rotation this year are
contained in the Notice of AGM. In addition, a director may at any AGM retire from office and stand for re-election.
(2) There is no fixed notice period; however, the Company may in accordance with, and subject to, the provisions of the Companies Act 1985, by Ordinary Resolution of which special notice has been
given, remove any non-executive director from office.
7878v03_GC_Rp_28-p39_020305.qxp 4/3/05 2:11 am Page 35
Anglo American plc Annual Report 2004 35
Historical comparative TSR performance graphs
The graphs below represent the comparative TSR performance of the Company from 1 January 2000 to 31 December 2004.
In drawing these graphs it has been assumed that all dividends paid have been reinvested.
150
125
100
75
50
25
0
2000
2001
2002
2003
2004
200
150
100
50
0
2000
2001
2002
2003
2004
n FTSE 100 Index n Anglo American plc
n LTIP Comparator n Anglo American plc
The first graph shows the Company’s performance against the performance of the FTSE 100 Index, chosen as being a broad equity
market index consisting of companies of comparable size and complexity to Anglo American plc. This graph has been produced in
accordance with the requirements of Schedule 7A to the Companies Act 1985.
The second graph shows the Company’s performance against the weighted comparator group used to measure company performance
for the purposes of the vesting of LTIP interests awarded in 2002. This graph gives an indication of how Anglo American plc is
performing against the targets in place for LTIP interests already granted, although the specifics of the comparator companies for
each year’s interests may vary to reflect changes such as mergers and acquisitions amongst the Company’s competitors or changes
to the Company’s business mix.
The TSR level shown at 31 December each year is calculated in accordance with the LTIP rules. In particular, TSR is calculated in US
dollars, and the TSR level shown at 31 December each year is the average of the closing daily TSR levels for the six month period
up to and including that date.
REMUNERATION OUTCOMES DURING 2004
The information set out in sections one to eight below has been subject to audit.
1. Directors’ emoluments
The following tables set out an analysis of the pre-tax remuneration during the years ended 31 December 2004 and 2003, including
bonuses but excluding pensions, for individual directors who held office in the Company during the year ended 31 December 2004.
Executive directors
Basic Salary(2)
Basic salary sacrificed into
International Approved
Pension Scheme(2)
Annual
performance bonus(3)
Benefits in kind(4)
Payments
on retirement(5)
Executive
directors (1)
A J Trahar
B E Davison
A W Lea
W A Nairn
2004
£000
801
423
510
378
2003
£000
729
392
475
342
2004
£000
89
47
–
42
2003
£000
81
43
–
38
2004
£000
601
195
214
181
2003
£000
563
144
192
156
2004
£000
53
27
23
35
2003
£000
51
24
22
31
2004
£000
–
–
–
21
2003
£000
–
–
–
–
2004
£000
1,544
692
747
657
Total
2003
£000
1,424
603
689
567
(1) Subsequent to their retirement from the board in 2001, L Boyd and M W King continue to hold non-executive directorships with certain listed subsidiaries of the Group. They received fees of
£29,000 (2003: £29,000) and £21,000 (2003: £26,000) respectively, for the provision of these services during the year.
(2) As A J Trahar, B E Davison and W A Nairn had no provision for past service in respect of their sterling-denominated pension fund, their employing company has contractually agreed that
supplementary pension contributions should be made to the Anglo American plc International Approved Pension Scheme in return for these executives having given up their right to part of their
future basic salary. The table above includes these amounts, which are £89,000, £47,000 and £42,000 respectively.
(3) The 2004 performance bonus represents the cash element of the Bonus Share Plan payable in 2005. The share elements under this scheme for 2004 will be awarded during 2005.
(4) Each director received a car allowance or a fully expensed car and a limited amount of personal taxation/financial advice. All directors received death and disability insurance and, with the exception
of W A Nairn, also received medical insurance. A J Trahar, A W Lea and W A Nairn received club membership; in addition, A J Trahar received a housing loan subsidy.
(5) On retirement at 31 December 2004, W A Nairn received payment for accumulated untaken leave of £19,000 and an award to mark completion of 40 years of service of £2,000.
7878v03_GC_Rp_28-p39_020305.qxp 4/3/05 2:11 am Page 36
36 Anglo American plc Annual Report 2004
REMUNERATION REPORT
CONTINUED
Non-executive directors
The fees and other emoluments paid to non-executive directors during the year ended 31 December 2004 amounted to £1,602,000
(2003: £1,355,000).
Non-executive directors (1)
Sir Mark Moody-Stuart
D J Challen
Dr C E Fay
R M Godsell(2)(3)
G Lindahl
R J Margetts
Dr M S B Marques
N F Oppenheimer(2)
F T M Phaswana(2)
Sir David Scholey
Prof K A L M Van Miert
2004
£000
330
67
67
58
55
77
55
61
69
55
55
Fees
2003
£000
300
52
55
47
45
65
3
58
54
48
45
Other emoluments
2004
£000
–
–
–
653
–
–
–
–
–
–
–
2003
£000
–
–
–
583
–
–
–
–
–
–
–
2004
£000
330
67
67
711
55
77
55
61
69
55
55
Total
2003
£000
300
52
55
630
45
65
3
58
54
48
45
(1) Each non-executive director, with the exception of Sir Mark Moody-Stuart, is paid a fee of £55,000 per annum, and those non-executive directors who act as chairmen of the Audit Committee,
S&SD Committee and Remuneration Committee are paid an additional sum of £12,000 per annum. The chairman of the Nomination Committee is paid an additional sum of £6,000 per annum.
R J Margetts received additional fees of £10,000 in his capacity as senior independent director.
(2) R M Godsell, N F Oppenheimer and F T M Phaswana received fees for their services as non-executive directors of Anglo American Corporation of South Africa Limited amounting to £3,000,
£3,000 and £8,000 respectively. N F Oppenheimer also received fees of £3,000 from AngloGold Ashanti as a non-executive director of that company until 30 April 2004.
(3) Under R M Godsell’s service contract with AngloGold Ashanti, his basic salary was equivalent to £467,000 per annum (2003: £435,000) and he was awarded a performance bonus equivalent
to £170,000 (2003: £133,000). R M Godsell is also entitled to the provision of a car allowance, medical insurance and death and disability insurance. The total value of these benefits was
equivalent to £16,000 (2003: £15,000).
2. Bonus Share Plan
Total
interest at
1 January
Bonus Share
interests(1)
Number of
Bonus Shares
conditionally awarded
Number of
Enhancement Shares
conditionally awarded
2004(2)
during 2004(3)
during 2004(4)
A J Trahar
B E Davison
A W Lea
–
–
–
49,570
12,705
16,914
37,178
9,529
12,686
Total
interest at
31 December
2004
86,748
22,234
29,600
Market price
at date of
award £
11.36
11.36
11.36
Date of
vesting of
Bonus
Shares(3)
End date of
performance period
for Enhancement
Shares(4)
1/1/2007
1/1/2007
1/1/2007
31/12/2006
31/12/2006
31/12/2006
(1) In light of his retirement on 31 December 2004, W A Nairn was not granted conditional awards under the BSP.
(2) The BSP was approved by shareholders in 2004, as a replacement for the ESOS and the Deferred Bonus Plan. No BSP interests vested during 2004.
(3) The value of the bonus under the BSP is calculated by reference to measures of both corporate performance (based on stretching EPS targets) as well as the achievement of specific individual
objectives. Details of the performance conditions applying to bonuses in 2004 are described in further detail on page 30. In 2004, the EPS targets were met in full. Half of the bonus is paid in
cash (which would not normally exceed 75% of basic salary for the chief executive and 60% of basic salary for the other directors) and the other half takes the form of a conditional award of
Bonus Shares equal in value to the cash element. The Bonus Shares vest if the director remains in employment with the Group until the end of a three year holding period. The market price of the
shares at the date of award of Bonus Shares made in 2004, in respect of 2003 performance, was £11.36 per share.
(4) A conditional award of Enhancement Shares was made at the same time as the award of Bonus Shares (to a maximum of 75% of the face value of the Bonus Shares). Enhancement Shares
awarded in 2004 will only vest to the extent that a challenging performance condition based on EPS growth against the UK Retail Price Index is met. Further details of this performance condition
are provided on page 30. The market value of the shares on the date of award of the Enhancement Shares in 2004 was £11.36 per share.
3. Long Term Incentive Plan
LTIP
interests
A J Trahar
B E Davison
A W Lea
W A Nairn
Total beneficial
interest in LTIP
at 1 January
2004
258,061
115,341
130,744
103,572
Number of shares
conditionally
awarded during
the year
111,525
47,829
51,900
–
Number of
shares
vested during
the year(1)
(42,983)
(15,178)
(23,418)
(18,194)
Number of
shares lapsed
during the
year
(31,317)
(18,172)
(17,062)
(13,256)
Total beneficial
interest in
LTIP at
31 December 2004
295,286
129,820
142,164
72,122
Latest performance
period end
date(2)
31/12/2006
31/12/2006
31/12/2006
31/12/2005
(1) The LTIP awards made in 2004 are conditional on two performance conditions as outlined on page 31: the first based on the Company’s TSR relative to a weighted group of international natural
resource companies and the second based on an underlying operating measure which focuses on raising Anglo American’s ROCE in the medium term. Further details on the structure of the LTIP,
the required level of performance for the 2004 award and how performance against targets is measured can be found on pages 31 and 32. A second award during 2004, included in the table
above, was made to the executive directors subsequent to the AGM at which the BSP was approved (and the consequent rebalancing of the incentive structure as outlined on page 30).
The market prices of the shares at the dates of award were £12.62 and £12.34 per share respectively.
(2) The performance period applicable to each award is three years. The performance period relating to the 2001 LTIP awards (which were granted on 26 June 2001) ended on 31 December 2003.
Vesting was subject to two performance conditions: the first based on the Company’s TSR relative to a weighted group of international natural resource companies and the second based on an
underlying operating measure which focused on improvements in the Company’s ROCE in the medium term. Part of each award was based on the TSR measure and part on the operating measure.
The market price of the shares at the date of the first LTIP awards was £10.30 per share. The market price of the shares at the date of vesting of such awards was £13.07 per share.
7878v03_GC_Rp_28-p39_020305.qxp 4/3/05 5:30 pm Page 37
Anglo American plc Annual Report 2004 37
Number of shares vested
A J Trahar
B E Davison
A W Lea
W A Nairn
Number of
shares vested
42,983
15,178
23,418
18,194
Date of
conditional award
26/06/2001
26/06/2001
26/06/2001
26/06/2001
Market price
at date of award £
Market price at
date of vesting £
10.30
10.30
10.30
10.30
13.07
13.07
13.07
13.07
Money value at
date of vesting £
561,788
198,376
306,073
237,796
In the case of the first LTIP awards, granted in 2001, for all executive directors except for B E Davison, the determinants for vesting
were 50% on relative TSR and 50% on meeting specified Group ROCE targets. In the case of B E Davison, to reflect his responsibility
for Anglo Platinum, in 2001 the targets were 50% relative TSR, 30% Group ROCE targets and 20% on Anglo Platinum specific
ROCE targets. The ROCE targets are a function of targeted improvement in returns on existing capital employed at the start of the
performance period and targeted returns in excess of the cost of capital on new capital investment over that period. The entry level
target for any LTIP has been the actual return achieved on the capital employed, excluding capital work in progress, in the year
immediately preceding the commencement of the performance period. In order to maintain the effectiveness of the plan in driving
long term performance, the actual returns in the final performance year are adjusted for movements in commodity prices, certain
foreign exchange rate effects (e.g. translation windfalls), capital in progress (to reflect the fact that mines under construction absorb
large amounts of capital before producing a return), for relevant changes in the composition of the Group (e.g. significant acquisitions
and disposals) and other one-off factors which would otherwise result in a misleading outcome.
The threshold blended target (i.e. the target on existing and new capital) for the period was 17.4% and the upper blended target
19.4%. The ROCE achieved was 18.6% and the outcome on this element of the LTIP was thus 61.7%. On the TSR measure,
Anglo American achieved a TSR over the three year performance period of 60% which generated a 54% vesting in terms of the
2001 Comparator Group. The overall vesting level for those directors with a 50% Group ROCE, 50% TSR split was therefore
57.9%. In the case of B E Davison, the ROCE element attributable to Anglo Platinum’s ROCE (20% of the total 2001 LTIP) failed
to meet the threshold target. The overall outcome in his case therefore was 45.5%.
4. Directors’ share options
No executive share options have been granted to directors since 2003.
Anglo American plc
Roll-over options(1)
A J Trahar
W A Nairn
Anglo American plc options(2)(3)
A J Trahar
B E Davison
A W Lea
W A Nairn
Beneficial
holding at 1
January 2004
5,000
82,000
603,512
239,000
311,608
196,029
Granted
Exercised
Lapsed
2004(4)
Beneficial
holding at 31
December
Weighted
average
exercise
price
rand
Earliest date
from which
exercisable
Latest
expiry date
–
–
–
–
–
–
5,000
82,000
51.25
1/3/2001 16/2/2008
51.25 11/8/2001 16/2/2008
£
–
–
–
–
– (100,828)
–
–
– 603,512
– 239,000
– 210,780
– 196,029
9.35 24/6/2002 4/3/2013
9.30 24/6/2002 4/3/2013
9.87 24/6/2002 4/3/2013
9.30 24/6/2002 4/3/2013
(1) Certain of the executive directors were granted share options prior to 1 January 1999 under a previous share option scheme operated by Anglo American Corporation of South Africa Limited which
were ‘rolled over’ into Anglo American plc options.
(2) Share options in respect of shares, the market price for which as at 31 December 2004 is equal to, or exceeds, the option exercise price. As at 31 December 2004, there were no share options
with an exercise price above the market price.
(3) Options were granted having UK Inland Revenue approval (Approved Options) and without such approval (Unapproved Options). The exercise of these historical options is subject to Anglo
American’s EPS (calculated in accordance with FRS 14, based on the Company’s headline earnings measure) increasing by at least 6% above the UK Retail Price Index over a three year period.
If the performance condition is not met at the end of the first three year period, then performance is retested each year over the ten year life of the option on a rolling three year basis.
Options are normally exercisable, subject to satisfaction of the performance condition, between three and ten years from the date of grant.
(4) Beneficial holdings include SAYE options held by A J Trahar, A W Lea and W A Nairn of 3,792, 3,480 and 1,029 options respectively, with option prices per share of £4.85, £4.85 and £9.28
respectively. There are no performance conditions attached to these options.
7878v03_GC_Rp_28-p39_020305.qxp 4/3/05 2:12 am Page 38
38 Anglo American plc Annual Report 2004
REMUNERATION REPORT
CONTINUED
Details of the share options exercised by the executive directors in 2004 are as follows:
A W Lea
Number
exercised
50,536
50,292
Option price £
6.98
7.66
Market price
at date of
exercise £
12.73
12.73
Gain £
290,986
255,377
The highest and lowest mid-market prices of the Company’s shares during the period 1 January 2004 to 31 December 2004 were
£14.20 and £10.72 respectively. The mid-market price of the Company’s shares at 31 December 2004 was £12.25 per share.
AngloGold Ashanti Limited (AngloGold Ashanti)
R M Godsell has share options in AngloGold Ashanti, an independently managed subsidiary of the Company. Details of these share
options are as follows:
AngloGold Ashanti options
R M Godsell(2)
R M Godsell(3)
Options held
at 1 January
2004
178,300
32,000
Granted(1)
Exercised
Lapsed
–
14,000
–
–
–
–
Holding at
31 December
2004
178,300
46,000
Weighted
average
exercise
price
rand
Earliest
date from
which
exercisable
Latest
expiry date
108.04 1/3/1998 16/10/2010
250.75 2/5/2005 1/11/2014
(1) The exercise of AngloGold Ashanti options granted in 2003 and 2004 is subject to performance conditions, requiring at least a 6% real increase in EPS, year-on-year for three consecutive years. The
previous existing options vest over a five year period from the date of grant with no attached performance criteria. The exercise price of the 14,000 options awarded in 2004 was R228.00 per option.
(2) Share options in respect of shares whose market price as at 31 December 2004 is equal to, or exceeds, the option exercise price.
(3) Share options in respect of shares whose market price as at 31 December 2004 is below the option exercise price.
The highest and lowest mid-market prices of AngloGold Ashanti’s shares during the period 1 January 2004 to 31 December 2004 were
R319.00 and R186.20 per share respectively. The mid-market price of an AngloGold Ashanti share at 31 December 2004 was R203.84.
Anglo American Platinum Corporation Limited (Anglo Platinum)
B E Davison held share options in Anglo Platinum, a listed subsidiary of the Company. Details of these share options are as follows:
Anglo Platinum options(1)
B E Davison
Options held
at 1 January
2004
36,639
1,686
Granted
Exercised(2)
Lapsed
Holding at
31 December
2004
Option
price
rand
–
–
(36,639)
(1,686)
–
–
–
–
67.80
131.40
Market
price at date
of exercise
rand
239.43
239.43
Gain
rand
6,288,352
182,139
(1) There were no performance criteria attached to any of these options, which have not been awarded to B E Davison since 23 June 1999.
(2) All options were exercised on 29 July 2004, with a share price of R239.43.
The highest and lowest mid-market prices of Anglo Platinum’s shares during the period 1 January 2004 to 31 December 2004 were
R368.06 and R193.98 per share respectively. The mid-market price of an Anglo Platinum share at 31 December 2004 was R207.00.
The information provided above is a summary. However, full details of directors’ shareholdings and options are contained in the
Registers of Directors’ Interests of the Company, AngloGold Ashanti and Anglo Platinum, which are open to inspection.
5. Deferred Bonus Plan and Share Incentive Plan
In 2003 and earlier years, executive directors were required to defer 50% of their annual bonus under the Deferred Bonus Plan and
could, at the discretion of the Committee on a year-by-year basis, defer all of their bonus (net of tax) to acquire shares in the
Company. If these shares are held for three years they will be matched by the Company on a one-for-one basis, conditional upon the
executive director’s continued employment. No further awards were made to directors under the Deferred Bonus Plan during 2004.
The directors hold interests in deferred bonus matching shares as follows:
Deferred bonus share matching interests
A J Trahar
B E Davison
A W Lea
W A Nairn
Total interest
at 1 January
2004
70,688
11,083
32,965
16,115
Number of
shares
conditionally
awarded during
the year
–
–
–
–
Number of
shares
vested during
the year
(13,704)
(2,804)
(10,572)
(2,204)
Total
interest at
31 December
2004
56,984
8,279
22,393
13,911
Latest
vesting
period
end date
31/12/2005
31/12/2005
31/12/2005
31/12/2005
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Anglo American plc Annual Report 2004 39
Details of the deferred bonus matching shares vested in 2004 are as follows:
Number of shares vested
A J Trahar
B E Davison
A W Lea
W A Nairn
Number of
shares
vested
9,560
4,144
868
1,936
10,572
696
1,508
Date of
conditional
award
10/4/2001
10/4/2001
10/4/2001
10/4/2001
10/4/2001
10/4/2001
10/4/2001
Market price
at date of
award
£10.03
R113.75
£10.03
R113.75
£10.03
£10.03
R113.75
Market price
at date of
vesting
£12.16
R145
£12.16
R145
£12.16
£12.16
R145
Money value
at date of
vesting
£116,250
R600,880
£10,555
R280,720
£128,555
£8,463
R218,660
A J Trahar, A W Lea and W A Nairn each purchased 123 shares under the SIP scheme during the year in addition to the 205 shares
held by each of them at the beginning of the year. If these shares are held for three years, they will be matched by the Company
on a one-for-one basis, conditional upon the director’s continued employment. Participants in the SIP scheme are entitled to receive
dividends from these matching shares upon vesting. No SIP matching shares vested during 2004.
6. Pensions
Directors’ pension arrangements
Each executive director, other than A W Lea, is a member of the Anglo American plc International Approved Pension Scheme
(the International Scheme), which is a defined contribution pension scheme.
A J Trahar participates in the International Scheme in terms of his contract with Anglo American International (IOM) Limited for
services to be rendered outside South Africa. Normal contributions were made on his behalf into the International Scheme at the rate
of 35% of the basic salary payable under this contract. He also participates in the Anglo American Corporation Pension Fund
(the Pension Fund) in respect of his South African contract, whereby he accrues an annual pension at the rate of 2.2% of
pensionable salary (as defined in the rules of that scheme) for each year of pensionable service. The Pension Fund provides spouse’s
benefits of two-thirds of the member’s pension on the death of a member. It does not have provision for guaranteed pension
increases.
Following previously announced senior management changes in South Africa, A J Trahar will increase the time he devotes to Group
matters globally. Accordingly, the Committee has decided that, with effect from January 2005, the proportion of his overall
remuneration paid under his South African contract will be reduced. The Committee has been advised that, as a consequence, his
pension payable on retirement out of the Pension Fund (his South African final salary defined benefit scheme) will be substantially
less than he would otherwise have accrued. The Committee has also been advised by independent professionally qualified actuaries
that to provide benefits of equivalent value to those forgone would require additional contributions into the International Scheme
amounting to £5.6 million, during 2005, which the Committee has decided should be paid. Normal contributions will continue to be
paid into the International Scheme with effect from January 2005, at the rate of 35% of the basic salary payable under his contract
with Anglo American International (IOM) Limited.
A W Lea participates in the Anglo American plc Approved Pension Scheme (formerly known as the Minorco Executive Directors’
Fund). This scheme is also a defined contribution pension scheme. Prior to the formation of the Company in May 1999, A W Lea
was entitled to employer contributions at a rate of 35% of the basic salary under his contract with Anglo American International
(BVI) Limited, a commitment which continues to be honoured. A W Lea is also entitled to deferred benefits in the Pension Fund in
respect of previous South African service.
B E Davison participates in the International Scheme in terms of his contract with Anglo American International (IOM) Limited; normal
contributions are made on his behalf at the rate of 25% of the basic salary payable under this contract. He also participates in the
Anglo American Corporation Retirement Fund, whereby contributions are made at the rate of 15% of basic salary (plus car allowance
for historical reasons), under his South African contract. He elected to join this scheme when it was established in September 1998
and transferred his accrued benefits from the Pension Fund, of which he was previously a member.
W A Nairn participated until his retirement at 31 December 2004 in the International Scheme in terms of his contract with Anglo
American International (IOM) Limited; normal contributions were made on his behalf at the rate of 25% of the basic salary payable
under this contract. He was also entitled to contributions at the rate of 14% of basic salary (plus car allowance for historical
reasons) to an independent personal retirement plan located in South Africa, under his South African contract.
No pension costs were incurred in respect of the non-executive directors, with the exception of R M Godsell, who continued to be a
member of the AngloGold Ashanti Pension Fund (a defined benefit pension scheme) in his capacity as chief executive of that company.
7878v03_PH_Rp_40-p43_020305.qxp 2/3/05 11:34 pm Page 40
40 Anglo American plc Annual Report 2004
REMUNERATION REPORT
CONTINUED
Defined contribution pension schemes
The amounts paid into defined contribution pension schemes by the Group in respect of the individual directors were as follows:
A J Trahar
B E Davison
A W Lea
W A Nairn
Normal contributions(1)
2004
£000
156
97
179
89
2003
£000
142
90
166
81
(1) As Messrs Trahar, Davison and Nairn have no provision for past service in respect of their sterling-denominated pension fund, their employing company has contractually agreed that supplementary
pension contributions should be made to the International Scheme in return for these executives having given up their right to part of their future basic salary. These supplementary contributions,
of £89,000 (2003: £81,000), £47,000 (2003: £43,000) and £42,000 (2003: £38,000) respectively, are disclosed in the directors’ emoluments table on page 35.
Defined benefit pension schemes
A J Trahar and A W Lea are eligible for membership of the Pension Fund in respect of their South African remuneration (or, in the
case of A W Lea, his past service in South Africa). The Pension Fund is a funded final salary occupational pension scheme approved
by the Financial Services Board and the Commissioner of Inland Revenue in South Africa.
Executive directors
A J Trahar
A W Lea
Non-executive director
R M Godsell(3)
Additional benefit earned
(excluding inflation) during
the year ended 31 December
2004
£000
Accrued entitlement
as at 31 December
2004
£000
20
3
17
322
51
289
Transfer value of
accrued benefits as
at 31 December
2004
£000
3,936
633
2003
£000
3,173
515
3,337
2,411
Increase in transfer
value in the year
less any personal
contributions(1)(2)
£000
405
64
905
(1) The transfer value, less any personal contributions, of the increase in additional benefits earned during 2004 amounted for A J Trahar, A W Lea and R M Godsell to £233,000, £33,000
and £171,000 respectively.
(2) The increase in transfer value above 2003’s figure arises from currency differences, salary increases and, in the case of A J Trahar, 12 months’ additional pensionable service.
(3) In his capacity as chief executive of AngloGold Ashanti, R M Godsell is entitled to membership of the AngloGold Ashanti Pension Fund.
The transfer values disclosed above do not represent a sum paid or payable to the individual director; instead, they represent
potential liabilities of the pension schemes.
7. Excess retirement benefits
No person who served as a director of the Company during or before 2004 has been paid or received retirement benefits in excess
of the retirement benefits to which he was entitled on the date on which benefits first became payable (or 31 March 1997,
whichever is later).
8. Sums paid to third parties in respect of a director’s services
No consideration was paid to or became receivable by third parties for making available the services of any person: as a director
of the Company, or while a director of the Company, as a director of any of the Company’s subsidiary undertakings, or as a director
of any other undertaking of which he was (while a director of the Company) a director by virtue of the Company’s nomination,
or otherwise in connection with the management of the Company or any undertaking during the year to 31 December 2004.
7878v03_PH_Rp_40-p43_020305.qxp 4/3/05 5:24 pm Page 41
Anglo American plc Annual Report 2004 41
9. Directors’ share interests
The interests of directors who held office at 31 December 2004 in Ordinary Shares (Shares) of the Company and its subsidiaries
were as follows:
Beneficial
Deferred
bonus share
match(2)
SIP(1)
LTIP(3)
As at 31 December 2004
As at 1 January 2004 (or if later, date of appointment)
Conditional
beneficial(6)
Beneficial
Non-
Conditional
beneficial(6)
Non-
BSP
BSP
Bonus Enhancement
Shares(4)
Shares(5)
Deferred
bonus share
match(2)
SIP(1)
LTIP(3)
–
81,203 205 70,688 258,061 917,778
90,985 328 56,984 295,286 49,570 37,178 767,778
A J Trahar(6)
–
– 11,083 115,341
15,307
–
9,529
8,279 129,820 12,705
32,299
B E Davison
A W Lea(7)
–
51,607 205 32,965 130,744
–
71,785 328 22,393 142,164 16,914 12,686
W A Nairn(8)
–
22,324 205 16,115 103,572
–
–
40,641 328 13,911 72,122
Sir Mark Moody-Stuart(9)
–
–
15,780
–
–
–
18,973
–
–
2,000
–
–
–
2,000
D J Challen
–
–
3,511
–
–
–
5,359
Dr C E Fay
R M Godsell(6)
– 917,778
92
– 767,778
–
92
–
–
7,792
–
–
–
10,934
G Lindahl
R J Margetts(10)
–
–
6,297
–
–
–
8,640
–
–
–
Dr M S B Marques
–
–
–
752
N F Oppenheimer(6)(11) 59,126,043
– 917,778
– 767,778 65,996,788
–
–
–
4,692
–
–
8,181
F T M Phaswana
–
–
10,537
–
–
11,220
Sir David Scholey
–
–
500
–
–
500
Prof K A L M Van Miert
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1) The award of these Shares is conditional upon the participant’s continued employment by the Group until three years after the conditional grant date.
(2) The award of these Shares is conditional upon the participant’s continued employment by the Group until three years after the grant date.
(3) The award of Shares under the LTIP is conditional upon the satisfaction of the performance conditions set out on pages 31 and 32.
(4) The award of Bonus Shares under the BSP is conditional upon the participant’s continued employment by the Group until three years after the conditional grant date.
(5) The award of Enhancement Shares under the BSP is conditional upon the satisfaction of the performance conditions set out on page 30 as well as continued employment.
(6) Messrs Godsell and Oppenheimer are deemed to be interested in The Ernest Oppenheimer Memorial Trust’s holding of 767,778 shares of virtue of being Trustees and Mr A J Trahar is also deemed
to be interested by virtue of his wife being a Trustee. None of them is a beneficiary of the Trust.
(7) A W Lea’s beneficial interest includes 200 Shares arising as a result of his son’s interest in these Shares.
(8) W A Nairn retired on 31 December 2004.
(9) Sir Mark Moody-Stuart’s beneficial interest includes 12,500 Shares arising as a result of his interest in a family trust.
(10) R J Margetts’ beneficial interest in 8,640 Shares arises as a result of his wife’s interest in these Shares.
(11) N F Oppenheimer’s beneficial interest in 59,125,951 of these Shares arises as a result of his interest in a discretionary trust which is treated as interested in 52,250,206 Shares in which
E Oppenheimer & Son Holdings Limited is treated as interested and 6,870,745 Shares in which Central Holdings Limited is treated as interested. The 6,870,745 Shares referred to above are
Shares held by Debswana Diamond Company (Pty) Limited, in which N F Oppenheimer and Central Holdings Limited have no economic interest. His interest in 5,000 of these Shares arises as
a result of his wife’s interest in a trust which has an indirect economic interest in those Shares.
The following changes in the above interests occurred between 1 January 2005 and the date of this report:
Shares in Anglo American plc
Beneficial
Directors
90,985
A J Trahar(6)
32,299
B E Davison
A W Lea (7)
71,785
Sir Mark Moody-Stuart(8) 18,973
5,359
Dr C E Fay
10,934
G Lindahl
R J Margetts(9)
8,640
8,181
F T M Phaswana
11,220
Sir David Scholey
SIP(1)
328
–
328
–
–
–
–
–
–
Deferred
bonus share
match(2)
56,984
8,279
22,393
–
–
–
–
–
–
LTIP(3)
295,286
129,820
142,164
–
–
–
–
–
–
As at 1 January 2005
Conditional
Non-beneficial
BSP Bonus
Shares(4)
49,570
12,705
16,914
–
–
–
–
–
–
BSP
Enhancement
Shares(5)
37,178
9,529
12,686
–
–
–
–
–
–
767,778
–
–
–
–
–
–
–
–
7878v03_PH_Rp_40-p43_020305.qxp 4/3/05 2:15 am Page 42
42 Anglo American plc Annual Report 2004
REMUNERATION REPORT
CONTINUED
Shares in Anglo American plc continued
Beneficial
Directors
108,472
A J Trahar(6)
35,311
B E Davison
A W Lea(7)
77,463
Sir Mark Moody-Stuart(8) 19,814
5,853
Dr C E Fay
11,735
G Lindahl
R J Margetts(9)
9,259
9,103
F T M Phaswana
11,392
Sir David Scholey
SIP(1)
347
–
347
–
–
–
–
–
–
Deferred
bonus share
match(2)
32,219
5,267
12,803
–
–
–
–
–
–
LTIP(3)
295,286
129,820
142,164
–
–
–
–
–
–
As at 22 February 2005
Conditional
Non-beneficial
BSP Bonus
Shares(4)
49,570
12,705
16,914
–
–
–
–
–
–
BSP
Enhancement
Shares(5)
37,178
9,529
12,686
–
–
–
–
–
–
767,778
–
–
–
–
–
–
–
–
(1) The award of these Shares is conditional upon the participant’s continued employment by the Group until three years after the conditional grant date.
(2) The award of these Shares is conditional upon the participant’s continued employment by the Group until three years after the grant date.
(3) The award of Shares under the LTIP is conditional upon the satisfaction of the performance conditions set out on pages 31 and 32.
(4) The award of Bonus Shares under the BSP is conditional upon the participant’s continued employment by the Group until three years after the conditional grant date.
(5) The award of Enhancement Shares under the BSP is conditional upon the satisfaction of the performance conditions set out on page 30 as well as continuing employment.
(6) A J Trahar is deemed to be interested in The Ernest Oppenheimer Memorial Trust’s holding of 767,778 shares by virtue of his wife being a Trustee. He is not a beneficiary of the Trust.
(7) A W Lea’s beneficial interest includes 200 Shares arising as a result of his son’s interest in these Shares.
(8) Sir Mark Moody-Stuart’s beneficial interest includes 12,500 Shares arising as a result of his interest in a family trust.
(9) R J Margetts’ beneficial interest in 9,259 Shares arises as a result of his wife’s interest in these Shares.
Shares in subsidiaries of Anglo American plc
AngloGold Ashanti Limited
R M Godsell
N F Oppenheimer
Anglo American Platinum Corporation Limited
B E Davison
(1) Shares held by N F Oppenheimer in his capacity as trustee of various trusts.
(2) 20,067 of these shares are held through a family trust.
(3) 38,325 of these shares are held through a family trust and were purchased during the year.
As at 1 January 2004
As at 31 December 2004
(or if later, date of appointment)
Beneficial
Non-
beneficial
Beneficial
Non-
beneficial
460
–
–
8,726(1)
460
–
–
4,370(1)
22,067(2)
–
60,392(3)
–
APPROVAL
This directors’ remuneration report has been approved by the board of directors of Anglo American plc.
Signed on behalf of the board of directors
R J Margetts
22 February 2005
7878v03_PH_Rp_40-p43_020305.qxp 4/3/05 2:15 am Page 43
Anglo American plc Annual Report 2004 43
INDEPENDENT REMUNERATION REPORT REVIEW
This letter reports on the results of the review carried out by Mercer Human Resource Consulting Limited of the processes followed
by the Anglo American Remuneration Committee (the Committee) that support the Remuneration Report for the financial year 2004.
Mercer undertook the review at the request of the chairman of the Committee in order to provide shareholders with assurance
that the remuneration processes followed are appropriate and that the Committee has complied with the policies set out in the
Remuneration Report.
In order to reach our opinion, we reviewed the Committee’s Terms of Reference and the minutes of its meetings held during
the year as well as material presented to the Committee for its review. We also interviewed the chairman and secretary of
the Committee. Our review was not intended to audit the compensation data set forth in the Remuneration Report or to evaluate
the merits of Anglo American’s remuneration programme.
Based on our review, Mercer is of the opinion that the process followed by the Committee during 2004 was fully consistent with
its Terms of Reference and that the decisions taken by the Committee were in line with the principles set out in the Remuneration
Report. It continues to be our view that the Committee takes a suitably robust approach to its work. We would note in particular
the changes to long term incentive arrangements which have been proposed in response to dialogue held with institutional
investors.
We note that the Committee has refined its modus operandi each year, taking into account any comments we have made in our
reviews. As a result, we believe that the Anglo American Remuneration Committee is exemplary in its conduct, decision-making
and reporting.
The members of the Remuneration Committee have received training and are regularly updated on executive compensation
and corporate governance matters.
Further detail regarding the Mercer review is included in a letter of this date addressed to the Committee chairman, which we
understand will be made available on the Company’s website.
Mark Hoble
Mercer Human Resource Consulting Limited
Dexter House
2 Royal Mint Court
London EC3N 4NA
25 January 2005
7878v04_GC_Rp_p44-89_020305.qxp 2/3/05 11:28 pm Page 44
44 Anglo American plc Annual Report 2004
STATEMENT OF DIRECTORS’
RESPONSIBILITIES
United Kingdom company law requires the directors to prepare
financial statements for each financial year which give a true
and fair view of the state of affairs of the Company and the
Group as at the end of the financial year and of the profit or
loss of the Group for that period. In preparing those financial
statements, the directors are required to:
• select suitable accounting policies and then
apply them consistently;
• make judgements and estimates that are
reasonable and prudent;
• state whether applicable accounting standards
have been followed; and
• prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Group will continue in business.
The directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Company and the Group and enable
them to ensure that the financial statements comply with the
Companies Act 1985. They are also responsible for the system
of internal control, safeguarding the assets of the Company and
the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
7878v04_GC_Rp_p44-89_020305.qxp 2/3/05 11:28 pm Page 45
Anglo American plc Annual Report 2004 45
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS
OF ANGLO AMERICAN plc
We read the directors’ report and the other information contained
in the annual report for the above year as described in the
contents section including the unaudited part of the directors’
remuneration report and consider the implications for our report
if we become aware of any apparent misstatements or material
inconsistencies with the financial statements.
BASIS OF AUDIT OPINION
We conducted our audit in accordance with United Kingdom
auditing standards issued by the Auditing Practices Board.
An audit includes examination, on a test basis, of evidence
relevant to the amounts and disclosures in the financial
statements and the part of the directors’ remuneration report
described as having been audited. It also includes an assessment
of the significant estimates and judgements made by the
directors in the preparation of the financial statements and
of whether the accounting policies are appropriate to the
circumstances of the Company and the Group, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the
information and explanations which we considered necessary in
order to provide us with sufficient evidence to give reasonable
assurance that the financial statements and the part of the
directors’ remuneration report described as having been audited
are free from material misstatement, whether caused by fraud
or other irregularity or error. In forming our opinion, we also
evaluated the overall adequacy of the presentation of
information in the financial statements and the part of the
directors’ remuneration report described as having been audited.
OPINION
In our opinion:
• the financial statements give a true and fair view of the state
of affairs of the Company and the Group as at 31 December
2004 and of the profit of the Group for the year then ended;
and
• the financial statements and part of the directors’ remuneration
report described as having been audited have been properly
prepared in accordance with the Companies Act 1985.
Deloitte & Touche LLP
Chartered Accountants and Registered Auditors
London
22 February 2005
We have audited the financial statements of Anglo American plc
for the year ended 31 December 2004 which comprise the
consolidated profit and loss account, the consolidated balance
sheet, the consolidated cash flow statement, the consolidated
statement of total recognised gains and losses, the Company
balance sheet and the related notes 1 to 38. These financial
statements have been prepared under the accounting policies
set out therein. We have also audited the information
specified by the Directors’ Remuneration Report Regulations
2002 to be audited which is set out in sections 1 to 8 of the
remuneration report.
This report is made solely to the Company’s members, as a
body, in accordance with section 235 of the Companies Act
1985. Our audit work has been undertaken so that we might
state to the Company’s members those matters we are required
to state to them in an auditors’ 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 and
the Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
RESPECTIVE RESPONSIBILITIES
OF DIRECTORS AND AUDITORS
As described in the statement of directors’ responsibilities, the
Company’s directors are responsible for the preparation of
the financial statements in accordance with applicable United
Kingdom law and accounting standards. They are also
responsible for the preparation of the other information
contained in the annual report including the directors’
remuneration report. Our responsibility is to audit the financial
statements and the part of the directors’ remuneration report
described as having been audited in accordance with relevant
United Kingdom legal and regulatory requirements and auditing
standards.
We report to you our opinion as to whether the financial
statements give a true and fair view and whether the financial
statements and the part of the directors’ remuneration report
described as having been audited have been properly prepared
in accordance with the Companies Act 1985. We also report to
you if, in our opinion, the directors’ report is not consistent with
the financial statements, if the Company has not kept proper
accounting records, if we have not received all the information
and explanations we require for our audit, or if information
specified by law regarding directors’ remuneration and
transactions with the Company and other members of the
Group is not disclosed.
We review whether the corporate governance statement reflects
the Company’s compliance with the nine provisions of the July
2003 FRC Combined Code specified for our review by the Listing
Rules of the Financial Services Authority, and we report if it does
not. We are not required to consider whether the board’s
statements on internal control cover all risks and controls, or
form an opinion on the effectiveness of the Group’s corporate
governance procedures or its risk and control procedures.
7878v04_GC_Rp_p44-89_020305.qxp 4/3/05 12:33 pm Page 46
46 Anglo American plc Annual Report 2004
FINANCIAL STATEMENTS
CONTENTS
Page
47
Consolidated profit and loss account
48
Consolidated balance sheet
49
Consolidated cash flow statement
Consolidated statement of total recognised gains and losses 50
51
Balance sheet of the Company, Anglo American plc
Notes to Financial Statements
1 Accounting policies
2 Segmental information
3 Profit for the financial year
4 Group operating profit
5 Exploration expenditure
6 Employee numbers and costs
7 Exceptional items
8 Investment income
9 Interest payable
10 Tax on profit on ordinary activities
11 Dividends
12 Earnings per share
13 Intangible fixed assets
14 Tangible fixed assets
15 Fixed asset investments
16 Joint ventures and associates
17 Stocks
18 Debtors
19 Current asset investments
20 Other current liabilities
21 Short term borrowings and liabilities due after one year
22 Derivatives and other financial instruments
23 Provisions for liabilities and charges
24 Called-up share capital
25 Combined statement of movement in shareholders’
funds and movement in reserves
26 Consolidated cash flow statement analysis
27 Movement in net debt
28 Acquisition of subsidiaries
29 Disposal of subsidiaries and businesses
30 Capital commitments
31 Contingent liabilities
32 Operating leases
33 Retirement benefits
34 Related party transactions
35 Reconciliation of net operating assets to net assets
36 Financial statements of the parent company
37 Group companies
38 Events occurring after end of year
66
67
71
72
74
75
75
76
80
80
80
81
81
85
86
86
88
89
52
54
56
57
58
58
59
60
60
60
61
62
62
63
64
65
65
65
66
66
7878v04_GC_Rp_p44-89_020305.qxp 2/3/05 11:28 pm Page 47
Anglo American plc Annual Report 2004 47
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2004
US$ million
Group turnover including share of joint ventures
and associates
Less: Share of joint ventures’ turnover
Share of associates’ turnover
Group turnover – subsidiaries
Operating costs
Group operating profit – subsidiaries
Share of operating profit of joint ventures
Share of operating profit of associates
Total operating profit
Profit on disposal of fixed assets
Profit on ordinary activities before interest
Investment income
Interest payable
Profit on ordinary activities before taxation
Tax on profit on ordinary activities
Profit on ordinary activities after taxation
Equity minority interests
Profit for the financial year
Equity dividends to shareholders
Retained profit for the financial year
Headline earnings for the financial year
Basic earnings per share (US$):
Profit for the financial year
Headline earnings for the financial year
Diluted earnings per share (US$):
Profit for the financial year
Headline earnings for the financial year
Dividend per share (US cents)
Basic number of shares outstanding(1) (million)
Diluted number of shares outstanding(1) (million)
Before
exceptional
items
2004
Exceptional
items
(note 7)
2004
Note
Before
exceptional
items
2003
Exceptional
items
(note 7)
2003
2004
–
–
–
–
(286)
(286)
–
–
(286)
386
100
–
(13)
87
13
100
(6)
94
–
94
31,795
(1,195)
(5,670)
24,930
(21,869)
3,061
446
1,065
4,572
–
4,572
345
(704)
4,213
(1,280)
2,933
(449)
2,484
(1,007)
1,477
2
2
2
2
4
4
2
2
2
7
3
8
9
10
3
3
11
12
12
12
12
12
11
12
12
–
–
–
31,795
(1,195)
(5,670)
24,909
(1,060)
(5,212)
–
25
24,930
(21,844)
18,637
(16,740)
1,897
247
748
2,892
–
2,892
308
(614)
2,586
(749)
1,837
(339)
1,498
(766)
732
25
–
(117)
(92)
520
428
–
–
428
1
429
–
429
–
429
3,086
446
948
4,480
520
5,000
345
(704)
4,641
(1,279)
3,362
(449)
2,913
(1,007)
1,906
2,689
2.03
1.88
1.96
1.81
70.0
1,434
1,500
2003
24,909
(1,060)
(5,212)
18,637
(17,026)
1,611
247
748
2,606
386
2,992
308
(627)
2,673
(736)
1,937
(345)
1,592
(766)
826
1,694
1.13
1.20
1.10
1.17
54.0
1,415
1,478
(1) Basic and diluted number of shares outstanding represent the weighted average for the year.
The impact of acquired and discontinued operations on the results for the year is not material.
7878v04_GC_Rp_p44-89_020305.qxp 4/3/05 2:21 am Page 48
48 Anglo American plc Annual Report 2004
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2004
US$ million
Fixed assets
Intangible assets
Tangible assets
Investments in joint ventures:
Share of gross assets
Share of gross liabilities
Investments in associates
Other investments
Current assets
Stocks
Debtors
Current asset investments
Cash at bank and in hand
Creditors due within one year
Short term borrowings
Other current liabilities
Net current assets/(liabilities)
Total assets less current liabilities
Creditors due after one year
Long term borrowings:
Convertible debt(2)
Other long term liabilities
Provisions for liabilities and charges
Equity minority interests
Non-equity minority interests
Net assets
Capital and reserves
Called-up share capital
Share premium account
Merger reserve
Other reserves
Profit and loss account
Total shareholders’ funds (equity)
Note
2004
2003
(as restated)(1)
13
14
15
15
15
17
18
19
21
20
21
23
24
25
25
25
25
2,590
31,155
1,496
2,216
(720)
4,346
889
2,267
24,379
1,630
2,483
(853)
4,804
772
40,476
33,852
3,401
5,668
575
2,086
11,730
2,744
4,383
1,032
1,094
9,253
(3,333)
(6,820)
1,577
(4,094)
(5,224)
(65)
42,053
33,787
(7,449)
(2,081)
(5,368)
(4,986)
(4,445)
(175)
(6,665)
(1,088)
(5,577)
(3,954)
(3,396)
–
24,998
19,772
747
1,633
489
716
21,413
738
1,284
460
716
16,574
24,998
19,772
(1) The Group has adopted Urgent Issues Task Force (UITF) abstract 38 ‘Accounting for ESOP trusts’. As required by this abstract, own shares held by employee trusts have been reclassified from
other investments and are now recorded as a reduction in shareholders’ funds. See note 1 to the financial statements.
(2) Includes $990 million (2003: nil) of convertible debt issued by listed subsidiaries.
The financial statements were approved by the board of directors on 22 February 2005.
A J Trahar
Chief executive
A W Lea
Finance director
7878v04_GC_Rp_p44-89_020305.qxp 2/3/05 11:28 pm Page 49
Anglo American plc Annual Report 2004 49
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2004
US$ million
Net cash inflow from operating activities
Dividends from joint ventures and associates
Returns on investments and servicing of finance:
Interest received and other financial income
Interest paid
Dividends received from other fixed asset investments
Dividends paid to minority shareholders
Net cash outflow from returns on investments and servicing of finance
Taxation:
UK corporation tax
Overseas tax
Net cash outflow from taxation
Capital expenditure and financial investment:
Payments for tangible fixed assets
Proceeds from the sale of tangible fixed assets
Payments for other investments(1)
Proceeds from the sale of other investments(1)
Net cash outflow from capital expenditure and financial investment
Acquisitions and disposals:
Acquisition of subsidiaries(2)(3)
Disposal of subsidiaries
Investment in joint ventures
Sale of interests in joint ventures
Repayment of loans and capital from joint ventures
Investment in associates(3)
Sale of interests in associates
Repayment of loans and capital from associates
Net cash inflow/(outflow) from acquisitions and disposals
Equity dividends paid to Anglo American shareholders
Cash inflow/(outflow) before management of liquid resources and financing
Management of liquid resources
Financing
Increase/(decrease) in cash in the year
(1) Comprises disposal and acquisition of other investments classified as fixed assets.
(2) Net of cash acquired within subsidiaries of $92 million (2003: $214 million).
(3) All amounts paid in 2003 in respect of the acquisition of Kumba are included within acquisition of subsidiaries.
Note
26
2004
4,773
408
2003
3,184
426
270
(572)
28
(238)
(512)
(50)
(428)
(478)
201
(452)
42
(349)
(558)
(6)
(701)
(707)
(3,129)
151
(142)
263
(3,025)
117
(46)
617
(2,857)
(2,337)
(1,119)
402
(21)
37
77
–
1,424
299
1,099
(818)
1,615
456
(1,169)
(1,469)
3
(1)
–
–
(78)
219
41
(1,285)
(741)
(2,018)
182
1,785
902
(51)
28
29
26
27
7878v04_GC_Rp_p44-89_020305.qxp 4/3/05 2:22 am Page 50
50 Anglo American plc Annual Report 2004
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS
AND LOSSES
FOR THE YEAR ENDED 31 DECEMBER 2004
US$ million
Profit for the financial year:
Joint ventures
Associates
Unrealised profit on deemed disposal of AngloGold(1)
Unrealised gain arising on exchange of business
Currency translation differences on foreign currency net investments
Related tax charge
Other gains recognised during the year
Total recognised gains for the financial year
Prior year adjustment(2)
Total recognised gains since last annual report
Note
3
2004
2003
2,913
355
575
410
–
2,512
(12)
21
1,592
190
479
–
13
3,282
(59)
–
5,844
4,828
(622)
5,222
(1) AngloGold merged with Ashanti Goldfields Company Limited on 26 April 2004. As a result of this transaction, the Group’s shareholding decreased from 55.8% to 47.2% and the Group has
therefore accounted for a deemed disposal in accordance with FRS 2 ‘Accounting for subsidiary undertakings’. The holding was subsequently increased to 51% through the purchase of additional
shares.
(2) The Group has adopted UITF abstract 38 ‘Accounting for ESOP trusts’. As required by this abstract, own shares held by employee trusts have been reclassified from other investments and are now
recorded as a reduction in shareholders’ funds. See note 1 to the financial statements. This change has been accounted for as a prior year adjustment and prior year numbers have been restated
accordingly. The impact of adopting this abstract is to reduce net assets and shareholders’ funds by $622 million at 1 January 2004 (1 January 2003: $630 million).
RECONCILIATION FROM EBITDA
TO NET CASH INFLOW FROM OPERATING ACTIVITIES
FOR THE YEAR ENDED 31 DECEMBER 2004
US$ million
EBITDA(1)
Less:
Share of operating profit of joint ventures
Share of operating profit of associates before exceptional items
Amortisation of goodwill in joint ventures and associates
Underlying depreciation and amortisation in joint ventures and associates
Increase in stocks
Increase in debtors
Increase in creditors
Increase in provisions
Other items
Net cash inflow from operating activities
2004
7,110
2003
4,785
(446)
(1,065)
(46)
(369)
(242)
(419)
69
91
90
(247)
(748)
(50)
(380)
(302)
(246)
348
38
(14)
4,773
3,184
(1) EBITDA is operating profit before exceptional items plus depreciation and amortisation in subsidiaries and share of EBITDA of joint ventures and associates.
7878v04_GC_Rp_p44-89_020305.qxp 4/3/05 2:22 am Page 51
Anglo American plc Annual Report 2004 51
BALANCE SHEET OF THE COMPANY, ANGLO AMERICAN plc
AS AT 31 DECEMBER 2004
US$ million
Fixed assets
Fixed asset investments
Current assets
Amounts due from subsidiaries
Prepayments and other debtors
Cash at bank and in hand
Creditors due within one year
Cash held on behalf of subsidiaries
Bank loans due within one year
Amounts owed to subsidiaries
Other current liabilities
Proposed dividend
Other creditors
Net current liabilities
Total assets less current liabilities
Long term liabilities
Convertible debt (see note 21)
Bank loans due in more than one year
Net assets
Capital and reserves
Called-up share capital (see note 24)
Share premium account
Capital redemption reserve
Other reserve
Profit and loss account
Total shareholders’ funds (equity)
Note
2004
(as restated)(1)
2003
36
12,451
9,505
1,252
50
4
1,306
1,222
6
8
1,236
(250)
(698)
(6,291)
(328)
(1,575)
(5,166)
(7,239)
(7,069)
(452)
(17)
(300)
(17)
(6,402)
(6,150)
6,049
3,355
(1,091)
–
(1,088)
(35)
4,958
2,232
36
36
36
36
36
747
1,633
82
1,955
541
4,958
738
1,284
82
–
128
2,232
(1) The Company has adopted UITF abstract 38 ‘Accounting for ESOP trusts’. As required by this abstract, own shares held by employee trusts have been reclassified from other investments and are
now recorded as a reduction in shareholders’ funds. See note 1 to the financial statements.
The financial statements were approved by the board of directors on 22 February 2005.
A J Trahar
Chief executive
A W Lea
Finance director
7878v04_GC_Rp_p44-89_020305.qxp 3/3/05 8:04 pm Page 52
52 Anglo American plc Annual Report 2004
NOTES TO FINANCIAL STATEMENTS
1 ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared according to the
historical cost convention, and in accordance with accounting
standards applicable in the United Kingdom.
The accounting policies applied in preparing the financial
statements are consistent with those adopted and disclosed
in the Group’s financial statements for the year ended
31 December 2003 with the addition of UITF abstract 38
‘Accounting for ESOP trusts’, which has been adopted for the
first time this year. As required by this abstract, own shares
held by employee trusts have been reclassified from other
investments and are now recorded as a reduction in
shareholders’ funds. This change has been accounted for as a
prior year adjustment and previously reported figures have been
restated accordingly. The impact of adopting this abstract is to
reduce net assets and shareholders’ funds by $622 million at
1 January 2004 (1 January 2003: $630 million).
Basis of consolidation
The financial statements comprise a consolidation of the
financial statements of the Company and all its subsidiaries
and incorporate the results of its share of joint ventures and
associates on a gross equity and equity basis respectively. The
financial statements also include the Group’s share of the results
of joint arrangements that are not entities as set out below.
Revenue recognition
Turnover amounts are measured at the fair value of consideration
received or receivable, after deducting trade discounts, volume
rebates, value added tax, treatment and refining charges where
applicable and other sales taxes. Turnover from metal mining
activities is based on the payable metal sold.
Acquisitions and goodwill arising thereon
Where an investment in a subsidiary, joint venture or an
associate is made, any difference between the purchase price
and the fair value of the attributable net assets is recognised as
goodwill. Goodwill is amortised over its estimated useful life up
to a maximum of 20 years. Goodwill in respect of subsidiaries is
included within intangible fixed assets. Goodwill relating to joint
ventures and associates is included within the carrying value
of the joint venture or associate. The unamortised balance is
reviewed on a regular basis and, if an impairment in value has
occurred, it is written off in the period in which the
circumstances are identified.
Joint ventures
A joint venture is an entity in which the Group holds a long term
interest and which is jointly controlled by the Group and one or
more other partner under a contractual arrangement. The Group’s
share of the results of joint ventures is accounted for using the
gross equity method of accounting.
Associates
The equity method of accounting is used for investments over
which the Group exercises significant influence. Typically the
Group owns between 20% and 50% of the voting equity of its
associates.
Results of associates are equity accounted from their most
recent audited financial statements or unaudited interim
statements. Any losses of associates are accounted for in the
consolidated financial statements.
The carrying values of investments in associates represent the
cost of each investment including unamortised goodwill, the
share of post-acquisition retained earnings and any other
movements in reserves. The carrying value of associates is
reviewed on a regular basis and if an impairment in value has
occurred, it is written off in the period in which those
circumstances are identified.
Joint arrangements
The Group has contractual arrangements with other participants
to engage in joint activities that do not create an entity carrying
on a trade of its own. The Group includes its share of the
assets, liabilities, income, expenditure and cash flows in such
joint arrangements, measured in accordance with the terms of
each arrangement, which is usually pro rata to the Group’s
interest in the joint arrangement.
Investments
Investments, other than investments in subsidiaries, joint
ventures and associates, are included at cost less provision for
any impairment in value.
Tangible fixed assets
Mining properties and leases include the cost of acquiring and
developing mining properties, mineral rights and investments in
and loans to companies holding mineral rights. Mining properties
are depreciated using the unit of production method based on
proven and probable reserves. Depreciation is charged on new
mining ventures from the date when the mining property is
capable of commercial production. When there is little likelihood
of a mineral right being exploited, or the value of the exploitable
mineral right has diminished below cost, a write-down is charged
against profits. Stripping costs incurred during the production
phase to remove additional overburden or waste ore are deferred
and charged to operating costs on the basis of the average life
of mine.
Interest on borrowings relating to the financing of major capital
projects under construction is capitalised during the construction
phase as part of the cost of the project. Where funds have been
borrowed specifically to finance a project, the amount capitalised
represents the actual borrowing costs incurred. Where the funds
used to finance a project form part of general borrowings, the
amount capitalised is calculated using a weighted average of
rates applicable to relevant general borrowings during the period.
Land and properties in the course of construction are not
depreciated. Buildings, plant and equipment are depreciated at
varying rates, on the straight-line basis over their estimated
useful lives. Estimated useful lives normally vary up to 20 years
for items of plant and equipment and up to a maximum of
50 years for buildings.
Assets held under finance leases are depreciated over the
shorter of the lease term and the useful lives of the assets.
Impairments
The carrying values of fixed assets are reviewed for impairment
if events or changes in circumstances indicate that they may not
be recoverable. Any provision for impairment is charged against
profit in the year concerned. In addition, first year impairment
reviews are conducted for acquired goodwill. Impairment is
determined by reference to the higher of net realisable value and
value in use, which is measured by reference to discounted
future cashflows. The discount rate applied is based upon the
Group’s weighted average cost of capital, with adjustment made
for local conditions where appropriate.
7878v04_GC_Rp_p44-89_020305.qxp 4/3/05 12:34 pm Page 53
Anglo American plc Annual Report 2004 53
Research and exploration expenditure
Research and exploration expenditure is written off in the year
in which it is incurred. When a decision is taken that a mining
property becomes viable for commercial production, all further
pre-production expenditure is capitalised. Capitalisation of
pre-production expenditure ceases when the mining property
is capable of commercial production.
Stocks
Stocks and work in progress are valued at the lower of cost and
net realisable value. The production cost of stocks includes an
appropriate proportion of depreciation and production overheads.
Cost is determined on the following bases:
• raw materials and consumables are valued at cost on a first-
in, first-out (FIFO) basis;
• metal, coal and coke stocks are valued at average cost; and
• finished products are valued at raw material cost, labour cost
and a proportion of manufacturing overhead expenses.
Current asset investments
Current asset investments consist mainly of bank term deposits
and fixed and floating rate debt securities. Debt securities that are
intended to be held to maturity are recorded on the amortised
cost basis. Debt securities that are not intended to be held to
maturity are recorded at the lower of cost and market value.
Retirement benefits
The Group operates both defined benefit and defined contribution
schemes for its employees. For defined contribution schemes the
amount charged to the profit and loss account is the
contributions paid during the year.
The expected costs of providing post-retirement benefits under
defined benefit arrangements are charged against profits to
spread the expected costs on a straight-line basis over the
service lives of employees entitled to those benefits. Costs are
assessed in accordance with the advice of qualified actuaries
using the projected unit method. Experience adjustments and
prior service costs resulting from plan amendments are
amortised over the expected average remaining service lives of
relevant current employees. The difference between pension
cost and funding is treated as a provision or prepayment.
The Group continues to account for post-retirement benefits
under the transitional arrangements for FRS 17 ‘Retirement
Benefits’.
Leases
Rental costs under operating leases are charged to the profit and
loss account in equal annual amounts over the lease term.
Finance lease obligations are recorded at the inception of the
lease as the present value of the minimum lease payments,
derived by discounting at the interest rate implicit in the lease.
The interest element of the rental is charged against profit.
Foreign currency translation
Foreign currency transactions by Group companies are booked
in local currency at the exchange rate ruling on the date of
transaction, or at the forward rate if hedged by a forward
contract. The profit and loss account of foreign subsidiaries,
joint ventures and associates as well as the cash flow
statements of foreign subsidiaries are translated at weighted
average rates of exchange, other than material exceptional items
which are translated at the rate on the date of the transaction.
Assets and liabilities are translated at the exchange rate
prevailing at the balance sheet date, or at the forward rate
if hedged by a forward contract.
Exchange differences on the translation of the net assets of
subsidiaries less offsetting exchange differences on foreign
currency loans financing these assets, are recorded as a
movement in reserves and in the consolidated statement of total
recognised gains and losses.
All other exchange gains or losses on settlement of foreign
currency transactions translated at the rate prevailing at the date
of the transactions, or the translation of monetary assets and
liabilities at year-end exchange rates, are recorded in the profit
and loss account.
Hedging transactions
In order to hedge its exposure to foreign exchange, interest rate
and commodity price risks, the Group enters into forward, option
and swap contracts. Gains and losses on these contracts are
recognised in the period to which the gains and losses of the
underlying transactions relate. Net income or expense associated
with interest rate swap agreements is recognised on the accrual
basis over the life of the swap agreements as a component of
interest. Where commodity option contracts hedge anticipated
future production or purchases, the Group amortises the option
premiums paid over the life of the option and recognises any
realised gains and losses on exercise in the period in which the
hedged production is sold or commodity purchases are made.
Restoration, rehabilitation and environmental costs
An obligation to incur restoration, rehabilitation and environmental
costs arises when environmental disturbance is caused by the
development or ongoing production of a mine or quarry. Such costs
arising from the installation of plant and other site preparation
work, discounted to their net present value, are provided for and
capitalised at the start of each project, as soon as the obligation
to incur such costs arises. These costs are charged against profits
over the life of the operation, through the depreciation of the asset
and the unwinding of the discount on the provision. Costs for
restoration of subsequent site damage which is created on an
ongoing basis during production are provided for at their net
present values and charged against profits as extraction progresses.
Employee share awards
The estimated cost of awards made by the Group is charged to
profit over the performance period, as appropriate. Where shares
are held by an employee benefit trust the carrying value of these
shares is recorded as a reduction in shareholders’ funds. The
estimated cost of awards is the market value of shares awarded
or the intrinsic value of the awards (being the difference
between the exercise price of the award and the market price at
the date of grant) adjusted to reflect performance conditions
where applicable. The Group has taken advantage of the
exemption given in Urgent Issues Task Force (UITF) Abstract 17
‘Employee share schemes’, in respect of Save As You Earn
schemes.
Deferred taxation
Deferred taxation is provided in full on all timing differences that
result in an obligation at the balance sheet date to pay more
tax, or a right to pay less tax, at a future date, subject to the
recoverability of deferred tax assets. Deferred tax assets and
liabilities are not discounted.
Reporting currency
As permitted by UK company law, the Group reports in US
dollars, the currency in which most of its business is conducted.
7878v04_GC_Rp_p44-89_020305.qxp 3/3/05 8:06 pm Page 54
54 Anglo American plc Annual Report 2004
NOTES TO FINANCIAL STATEMENTS
CONTINUED
2 SEGMENTAL INFORMATION
US$ million
By business segment
Group subsidiaries
Platinum
Gold
Coal
Base Metals
Industrial Minerals
Ferrous Metals and Industries
Paper and Packaging
Exploration
Corporate Activities
Joint ventures(5)
Gold
Coal
Base Metals
Industrial Minerals
Ferrous Metals and Industries
Paper and Packaging
Associates(5)
Platinum
Gold
Diamonds
Coal
Base Metals
Industrial Minerals
Ferrous Metals and Industries
Paper and Packaging
Corporate Activities
Turnover(1)
Operating profit(2)
Net operating assets(3)
2004
2003(4)
Before
exceptional
items
2004
Exceptional
items
(note 7)
2004
2004
2003
2004
2003
3,065
2,166
1,911
2,612
3,697
4,938
6,541
–
–
2,232
1,718
1,556
1,720
3,196
2,863
5,352
–
–
529
204
315
932
323
590
551
(120)
(263)
–
(1)
–
(120)
(9)
155
–
–
–
529
203
315
812
314
745
551
(120)
(263)
428
226
260
(36)
308
130
638
(125)
(218)
7,563
6,425
2,539
4,062
4,729
5,534
6,496
–
253
6,119
3,302
2,152
4,087
4,304
4,629
4,820
–
296
24,930
18,637
3,061
25
3,086
1,611
37,601
29,709
230
3
620
136
56
150
312
–
346
100
28
274
1,195
1,060
55
13
3,177
468
88
25
1,526
228
90
5,670
46
11
2,967
295
60
22
1,476
2
333
5,212
31,795
24,909
59
–
347
18
8
14
446
8
–
586
172
(4)
5
297
(6)
7
1,065
4,572
–
–
–
–
–
–
–
–
–
–
–
(117)
–
–
–
–
(117)
59
–
347
18
8
14
446
8
–
586
172
(121)
5
297
(6)
7
948
99
–
114
14
2
18
247
5
1
562
73
–
3
76
–
28
748
(92)
4,480
2,606
(1) Turnover is measured at the fair value of consideration received or receivable for all significant products. Where a by-product is not regarded as significant, revenue may be credited against the cost
of sales. The amount credited to cost of sales for the year ended 31 December 2004 was $81 million (2003: $55 million) and relates principally to AngloGold Ashanti which credits uranium and
silver to cost of sales in accordance with the Gold Industry Standard on production costs.
(2) An analysis of operating exceptional items for 2003 by business segment is given in note 3.
(3) Net operating assets consist of tangible assets, intangible assets, stocks and operating debtors less non-interest bearing current liabilities. See note 35 for the reconciliation of net operating assets
to net assets.
(4) 2004 Base Metals’ turnover is stated net of treatment and refining charges on concentrate sales to external parties and refining charges on copper anode sales from Chagres to refineries. On this
basis, 2003 total Base Metals’ turnover would be $1,957 million. There is no impact on operating profit for either 2004 or 2003.
(5) Net assets for joint ventures and associates are disclosed in note 16.
7878v04_GC_Rp_p44-89_020305.qxp 2/3/05 11:28 pm Page 55
Anglo American plc Annual Report 2004 55
2 SEGMENTAL INFORMATION CONTINUED
US$ million
2004
2003
Before
exceptional
items
2004
Exceptional
items
(note 7)
2004
2004
2003
2004
2003
Turnover
Operating profit
Net operating assets(1)
By geographical segment (by origin)
Group subsidiaries
South Africa
Rest of Africa
Europe
North America
South America
Australia and Asia
Joint ventures(2)
South Africa
Rest of Africa
Europe
North America
South America
Australia and Asia
Associates(2)
South Africa
Rest of Africa
Europe
North America
South America
Australia and Asia
10,080
574
9,214
986
2,565
1,511
56
230
235
32
611
31
1,565
1,972
969
461
447
256
7,308
44
7,721
708
1,675
1,181
17
312
372
28
323
8
1,302
2,157
640
504
280
329
1,236
(29)
637
6
1,070
141
(100)
–
(9)
154
(20)
–
1,136
(29)
628
160
1,050
141
837
(4)
592
(279)
360
105
18,012
3,191
9,504
596
3,417
2,881
14,148
873
8,086
868
3,168
2,566
10
59
22
4
346
5
289
364
168
32
129
83
–
–
–
–
–
–
(117)
–
–
–
–
–
10
59
22
4
346
5
172
364
168
32
129
83
9
98
31
2
105
2
135
398
116
(4)
61
42
31,795
24,909
4,572
(92)
4,480
2,606
37,601
29,709
By geographical segment (by destination)
Group subsidiaries
South Africa
Rest of Africa
Europe
North America
South America
Australia and Asia
4,554
479
11,998
2,841
1,349
3,709
Joint ventures(2)
South Africa
Rest of Africa
Europe
North America
South America
Australia and Asia
Associates(2)
South Africa
Rest of Africa
Europe
North America
South America
Australia and Asia
162
6
588
182
1
256
340
21
1,476
2,222
66
1,545
3,503
295
9,726
1,607
859
2,647
7
11
787
91
45
119
399
34
1,287
2,157
41
1,294
(1) Net operating assets consist of tangible and intangible assets, stocks and operating debtors less non-interest bearing current liabilities. See note 35 for the reconciliation of net operating
assets to net assets.
(2) Net assets for joint ventures and associates are disclosed in note 16.
31,795
24,909
7878v04_GC_Rp_p44-89_020305.qxp 4/3/05 12:35 pm Page 56
56 Anglo American plc Annual Report 2004
NOTES TO FINANCIAL STATEMENTS
CONTINUED
3 PROFIT FOR THE FINANCIAL YEAR
The table below analyses the contribution of each business segment to the Group’s profit for the financial year and its headline
earnings which the directors consider to be a useful additional measure of the Group’s performance. Headline earnings is calculated
in accordance with the definition issued by the Institute of Investment Management and Research (now Society of Investment
Professionals), in Statement of Investment Practice No.1, ‘The Definition of Headline Earnings’. A reconciliation from profit for the
financial year to headline earnings is given in note 12.
US$ million
By business segment
Platinum
Gold
Diamonds
Coal
Base Metals
Industrial Minerals
Ferrous Metals and Industries
Paper and Packaging
Exploration
Corporate Activities
Total/Headline earnings
Headline earnings adjustment (note 12)
Profit for the financial year
US$ million
By business segment
Platinum
Gold
Diamonds
Coal
Base Metals
Industrial Minerals
Ferrous Metals and Industries
Paper and Packaging(1)
Exploration
Corporate Activities(1)
Total/Headline earnings
Operating
profit
before
operating
exceptionals
Operating
profit
after
operating
exceptionals
Operating
exceptional
items
Non-
operating
exceptional
items
Net interest,
tax and
minority
interests
Goodwill
amortisation
537
263
586
487
1,275
346
895
559
(120)
(256)
537
262
586
487
1,038
337
1,050
559
(120)
(256)
4,572
4,480
–
1
–
–
237
9
(155)
–
–
–
92
(92)
17
43
35
8
2
60
9
27
–
20
(315)
(148)
(240)
(144)
(235)
(139)
(424)
(205)
29
(283)
–
–
–
–
–
–
–
–
–
–
–
221
(2,104)
2,689
520
(221)
17
Operating
profit
before
operating
exceptionals
Operating
profit
after
operating
exceptionals
Operating
exceptional
items
Non-
operating
exceptional
items
Goodwill
amortisation
Net interest,
tax and
minority
interests
447
369
562
333
286
325
208
656
(105)
(189)
433
326
562
333
78
325
208
656
(125)
(190)
2,892
2,606
14
43
–
–
208
–
–
–
20
1
286
–
–
–
–
–
–
–
–
–
–
–
17
41
32
8
1
53
13
18
–
20
(259)
(243)
(208)
(109)
(81)
(108)
(114)
(249)
22
(52)
203
(1,401)
1,694
2004
Total
239
158
381
351
1,042
267
480
381
(91)
(519)
224
2,913
2003
Total
205
167
386
232
206
270
107
425
(83)
(221)
Headline earnings adjustment (note 12)
Profit for the financial year
(286)
386
(203)
1
(102)
1,592
(1) Headline earnings for Paper and Packaging and Corporate Activities have been adjusted for the year ended 31 December 2003, as net interest for the wholly-owned operations in Paper
and Packaging is now accounted for centrally within Corporate Activities. Net interest payable for the wholly-owned operations in Paper and Packaging was $95 million for the year ended
31 December 2004 (2003: $57 million). On the former basis headline earnings for Paper and Packaging would have been $286 million for the year ended 31 December 2004
(2003: $368 million).
7878v04_GC_Rp_p44-89_020305.qxp 3/3/05 8:07 pm Page 57
Anglo American plc Annual Report 2004 57
4 GROUP OPERATING PROFIT
US$ million
Group turnover
Cost of sales(1)
Gross profit
Selling and distribution costs
Administrative expenses
Other operating income
Exploration expenditure(2) (see note 5)
Group operating profit
(1) Includes Group operating exceptional credit of $25 million in continuing operations (2003: charge of $266 million).
(2) Exploration expenditure in 2003 includes a $20 million exceptional charge (see note 7).
US$ million
Operating profit is after charging:
Depreciation of tangible assets
Goodwill amortisation:
Subsidiaries
Joint ventures and associates
Rentals under operating leases:
Hire of plant and machinery
Other operating leases
Research and development expenditure
Auditors’ remuneration(3):
Audit:
United Kingdom
Overseas
Other services provided by Deloitte:
United Kingdom
Overseas
Operating exceptional items (see note 7)
(3) A more detailed analysis of auditors’ remuneration for the year ended 31 December 2004 is provided below.
(4) In 2003 a further $1 million was capitalised in fixed assets relating to consultancy services provided by Deloitte.
US$ million
Audit services:
Statutory audit fees
Interim review
Further assurance services:
Corporate finance
Tax compliance
Other
Tax advisory services
Other non-audit services:
Consultancy services
Other
2004
2003
24,930
(17,846)
18,637
(14,010)
7,084
(1,625)
(2,370)
117
(120)
4,627
(1,258)
(1,651)
18
(125)
3,086
1,611
2004
2003
1,948
1,310
175
46
153
50
79
70
45
3
15
2
9
(25)
72
57
39
3
8
1
11(4)
286
Payable to auditor
(if not Deloitte)
United
Kingdom
Overseas
–
–
–
–
–
–
–
–
–
–
4.2
–
4.2
1.0
0.1
2.1
0.2
–
0.5
3.9
Payable to
Deloitte
Overseas
10.4
0.6
11.0
0.9
0.7
1.1
2.5
2.8
0.6
8.6
United
Kingdom
2.9
0.3
3.2
–
0.2
0.9
0.4
–
–
1.5
7878v04_GC_Rp_p44-89_020305.qxp 2/3/05 11:28 pm Page 58
58 Anglo American plc Annual Report 2004
NOTES TO FINANCIAL STATEMENTS
CONTINUED
5 EXPLORATION EXPENDITURE
US$ million
By business segment
Platinum
Gold
Base Metals
Coal
Ferrous Metals and Industries
Impairment of Boyongan (see note 7)
Other
6 EMPLOYEE NUMBERS AND COSTS
The average number of employees, excluding joint ventures’ and associates’ employees, was:
Thousands
By business segment
Platinum
Gold
Coal
Base Metals
Industrial Minerals
Ferrous Metals and Industries
Paper and Packaging
Corporate Activities
The principal locations of employment were:
Thousands
South Africa
Rest of Africa
Europe
North America
South America
Australia and Asia
Payroll costs in respect of the employees included in the tables above were:
US$ million
Wages and salaries
Social security costs
Post-retirement healthcare costs
Defined contribution pension plan costs
Defined benefit pension plan costs
2004
2003
13
43
41
9
14
–
–
11
36
50
5
1
20
2
120
125
2004
2003
47
51
9
8
12
42
39
1
46
46
9
8
12
34
37
1
209
193
2004
127
22
42
4
8
6
209
2004
4,449
324
111
181
105
5,170
2003
122
12
42
4
8
5
193
2003
3,311
271
108
131
108
3,929
Disclosures on directors’ emoluments, pension entitlements, share options and long term incentive plan awards required by the
Companies Act 1985 and those specified for audit by the Directors’ Remuneration Report Regulations 2002 are included in sections
1 to 8 of the remuneration report and form part of these financial statements.
7878v04_GC_Rp_p44-89_020305.qxp 3/3/05 8:11 pm Page 59
Anglo American plc Annual Report 2004 59
7 EXCEPTIONAL ITEMS
Operating exceptional items
US$ million
Reversal of impairment of Terra Industries Inc
Impairment of Black Mountain Mineral Development
Write down of assets at Mantos Blancos SA
Impairment of Hudson Bay Mining and Smelting Co Ltd
Impairment of Boyongan
Impairment of Savuka
Other impairments
Share of associate’s impairment charge – Palabora Mining Company Limited
Total operating exceptional charge
Taxation
Minority interests
Exceptional finance charge
US$ million
Share of associate’s charge on early redemption of debt
Total exceptional finance charge
Non-operating exceptional items
US$ million
Disposal of interest in Gold Fields Limited
Part disposal of Western Areas
Disposal of remaining interest in FirstRand Limited
Disposal of interest in Nkomati
Disposal of interest in Avgold
Disposal of Terra Industries Inc
Loss on redemption of De Beers’ preference shares
Loss on disposal of Hudson Bay Mining and Smelting Co Ltd
Disposal of interest in Li & Fung
Disposal of interest in East Africa Gold Mines
Disposal of interest in Randgold Resources
Disposal of interest in JCI
Disposal of Anglovaal Mining Limited
Other items
Share of associates’ exceptional items
Profit on disposal of fixed assets
Total non-operating exceptional gain
Taxation
Minority interests
Total exceptional items (net of tax and minority interests)
2004
154
(100)
(20)
–
–
–
(9)
(117)
(92)
42
1
2003
–
–
–
(208)
(20)
(34)
(24)
–
(286)
22
23
(49)
(241)
2004
–
–
2004
464
45
32
28
25
13
(44)
(42)
–
–
–
–
–
(12)
11
520
520
(41)
(1)
478
429
2003
(13)
(13)
2003
–
–
117
–
51
–
–
–
163
25
17
(20)
(13)
21
25
386
386
(9)
(29)
348
94
Operating exceptional items
A review of the carrying value of Black Mountain Mineral Development has resulted in a $100 million exceptional charge to operating
profit, attributable to Base Metals.
Following a review of operations at Empresa Minera de Mantos Blancos SA, the carrying values of certain dump leach assets were
written down. This has resulted in an exceptional charge to operating profit of $20 million, attributable to Base Metals.
During the year, in light of the prolonged recovery in the company’s markets and share price, Ferrous Metals and Industries reversed
$154 million of the impairment provision held against Terra Industries Inc.
Palabora, an associate within Base Metals, recorded an impairment of $409 million during the year. The Group’s share of this
impairment amounted to $117 million.
Where impairment provisions have been made by subsidiaries, impairment is determined by reference to the higher of net realisable
value and value in use. The relevant review during the year was based on estimated value in use, using pre-tax discount rates
equivalent to a real post-tax discount rate of six per cent.
7878v04_GC_Rp_p44-89_020305.qxp 2/3/05 11:28 pm Page 60
60 Anglo American plc Annual Report 2004
NOTES TO FINANCIAL STATEMENTS
CONTINUED
7 EXCEPTIONAL ITEMS CONTINUED
Non-operating exceptional items
The Group disposed of its investment in Gold Fields Limited in March 2004. Proceeds of $1.2 billion resulted in an exceptional gain
of $464 million.
The Group disposed of a holding of approximately 8.5% of Western Areas in December 2004. Proceeds of $48 million resulted in a
gain of $45 million.
An exceptional currency retranslation loss of $44 million arose on the redemption of $175 million of De Beers’ preference shares.
Base Metals completed the sale of Hudson Bay Mining and Smelting Co Ltd in December 2004. Proceeds of $257 million, including
cash consideration of $246 million, resulted in an exceptional loss of $42 million.
Ferrous Metals and Industries disposed of its interest in Terra Industries Inc. Proceeds of $255 million resulted in an exceptional gain
of $13 million.
8 INVESTMENT INCOME
US$ million
Interest and other financial income
Share of investment income of joint ventures
Share of investment income of associates
Dividend income from other financial assets
2004
292
6
19
28
345
2003
227
2
43
36
308
Other financial income in the table above includes $25 million net gains arising from net foreign currency borrowings less deposits
(2003: net losses of $70 million).
9 INTEREST PAYABLE
US$ million
Bank loans and overdrafts
Other loans
Unwinding of discount on provisions
Share of interest payable of joint ventures
Share of interest payable of associates
Share of associates’ charge on early redemption of debt
Capitalised
2004
428
181
62
32
83
–
786
(82)
704
2003
375
119
8
26
127
13
668
(41)
627
The weighted average interest rate applicable to interest on general borrowings capitalised was 8.4% (2003: 7.5%).
10 TAX ON PROFIT ON ORDINARY ACTIVITIES
a) Analysis of charge for the year
US$ million
United Kingdom corporation tax at 30%(1)
South Africa corporation tax at 30%
Other overseas taxation
Share of taxation charge of joint ventures
Share of taxation charge of associates
Current tax on exceptional items
Total current tax
Deferred taxation – subsidiaries
Deferred taxation – joint ventures
Deferred taxation – associates
Deferred tax on exceptional items
Total deferred tax(2)
Total tax charge(2)
2004
Excluding
exceptional
items
2004
Including
exceptional
items
2003
Excluding
exceptional
items
2003
Including
exceptional
items
54
261
337
19
308
–
979
258
55
(12)
–
301
54
261
337
19
308
59
1,038
258
55
(12)
(60)
241
1,280
1,279
26
74
240
15
200
–
555
193
17
(16)
–
194
749
26
74
240
15
200
9
564
193
17
(16)
(22)
172
736
(1) Net of double tax relief of $259 million (2003: nil). UK corporation tax before double tax relief was $313 million (2003: $26 million).
(2) In addition, $12 million (2003: $59 million) of deferred tax has been recognised in the statement of total recognised gains and losses.
7878v04_GC_Rp_p44-89_020305.qxp 3/3/05 8:12 pm Page 61
Anglo American plc Annual Report 2004 61
10 TAX ON PROFIT ON ORDINARY ACTIVITIES CONTINUED
b) Factors affecting current tax charge for the year
The current tax charge assessed for the year is lower than the standard rate of corporation tax in the United Kingdom and South
Africa (30%). The differences are explained below:
US$ million
Profit on ordinary activities before tax
Tax on profit on ordinary activities at 30% (2003: 30%)
Tax effects of:
Expenses not deductible for tax purposes:
Operating exceptional items
Goodwill amortisation
Exploration costs
Non-taxable income:
Dividends receivable
Non-operating exceptional items
Tax allowances for capital expenditure in excess of depreciation
Movement in tax losses
South African secondary tax on companies
Effect of differences between local and UK rates
Other differences
Current tax charge for the year
2004
Including
exceptional
items
4,641
1,392
2003
Including
exceptional
items
2,673
802
(15)
66
36
(8)
(115)
(91)
(130)
96
(98)
(95)
1,038
86
61
32
(11)
(103)
(207)
15
45
(66)
(90)
564
c) Factors that may affect future tax charges
The Group anticipates that its effective rate will remain above the statutory rate of 30% as the Group operates in certain countries
where tax rates are higher than the UK rate, including South Africa (effective rate of 37.8% assuming distribution of profits).
Details of the deferred tax provision are given in note 23. In addition to the amounts provided in deferred tax, unrecognised assets
exist in respect of taxable losses. No asset has been recognised in respect of these losses as it is not regarded as more likely than
not that there will be suitable taxable profits against which to offset these losses. Any utilisation of these losses in the future may
lead to a reduction in effective tax rates.
No deferred tax has been provided in respect of accumulated reserves of overseas subsidiaries, associates or joint ventures as future
dividends are expected to be paid out of future earnings.
11 DIVIDENDS
US$ million
Interim paid – 19 US cents per ordinary share (2003: 15 US cents)
Final proposed – 51 US cents per ordinary share (2003: 39 US cents)
2004
273
734
1,007
2003
212
554
766
As stated in note 24, the employee benefit trust has waived the right to receive dividends on the shares it holds.
7878v04_GC_Rp_p44-89_020305.qxp 3/3/05 8:13 pm Page 62
62 Anglo American plc Annual Report 2004
NOTES TO FINANCIAL STATEMENTS
CONTINUED
12 EARNINGS PER SHARE
Basic number of ordinary shares outstanding (million)(1)
Potentially dilutive ordinary shares (million)
Diluted number of ordinary shares outstanding (million)(1)
Profit for the financial year:
Basic earnings per share (US$)(2)
Diluted earnings per share (US$)(3)
Headline earnings for the financial year(4):
Basic earnings per share (US$)
Diluted earnings per share (US$)
2004
1,434
66
1,500
2.03
1.96
1.88
1.81
2003
1,415
63
1,478
1.13
1.10
1.20
1.17
(1) Basic and diluted number of shares outstanding represent the weighted average for the year.
(2) Basic earnings per share is calculated by dividing the profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year.
The average number of shares in issue excludes the shares held by the employee benefit trust.
(3) Diluted earnings per share is calculated by adjusting earnings and the weighted average number of ordinary shares in issue on the assumption of conversion of all potentially dilutive ordinary
shares.
(4) Basic and diluted earnings per share are also shown based on headline earnings, which the directors consider to be a useful additional measure of the Group’s performance.
US$ million (unless otherwise stated)
Profit for the financial year
Operating exceptional charges
Non-operating exceptional gains
Exceptional finance charge
Amortisation of goodwill:
Subsidiaries
Joint ventures and associates
Related tax
Related minority interest
2004
Basic
earnings
per share
US$
2.03
0.06
(0.36)
–
0.13
0.03
–
(0.01)
Earnings
1,592
286
(386)
13
153
50
(13)
(1)
Earnings
2,913
92
(520)
–
175
46
(1)
(16)
Headline earnings for the financial year
2,689
1.88
1,694
2003
Basic
earnings
per share
US$
1.13
0.20
(0.27)
0.01
0.11
0.04
(0.01)
(0.01)
1.20
13 INTANGIBLE FIXED ASSETS
US$ million
Cost
At 1 January 2004
Acquisition of subsidiaries
Transfers from joint ventures
Currency movements
At 31 December 2004
Accumulated amortisation
At 1 January 2004
Charge for the year
Impairment
Currency movements
At 31 December 2004
Net book value
At 31 December 2004
At 31 December 2003
Licences and
other intangibles
Goodwill
Total
8
30
–
1
39
2
2
–
–
4
35
6
2,985
330
100
50
3,465
724
173
4
9
910
2,993
360
100
51
3,504
726
175
4
9
914
2,555
2,261
2,590
2,267
The increase in goodwill relating to acquisition of subsidiaries represents the excess of fair value of the purchase price over the
provisional fair value of the net assets of businesses acquired. Further detail is given in note 28, Acquisition of subsidiaries.
7878v04_GC_Rp_p44-89_020305.qxp 4/3/05 4:29 pm Page 63
Anglo American plc Annual Report 2004 63
14 TANGIBLE FIXED ASSETS
US$ million
Cost
At 1 January 2004
Additions
Acquired with subsidiaries(2)
Disposal of assets
Disposed with subsidiaries
Reclassifications
Currency movements
At 31 December 2004
Accumulated depreciation
At 1 January 2004
Charge for the year
Impairment
Disposal of assets
Disposed with subsidiaries
Reclassifications
Currency movements
At 31 December 2004
Net book value
At 31 December 2004(3)
At 31 December 2003
Mining
properties
and leases
13,230
675
2,463
(272)
(548)
(439)
1,775
Land and
buildings
Plant and
equipment
Other(1)
Total
2,505
102
195
(70)
(4)
259
380
13,195
998
299
(438)
(867)
2,193
2,157
3,288
1,816
50
(77)
(47)
(1,940)
227
32,218
3,591
3,007
(857)
(1,466)
73
4,539
16,884
3,367
17,537
3,317
41,105
3,033
623
–
(93)
(405)
(18)
438
3,578
277
107
–
(15)
–
2
99
470
4,394
1,145
128
(326)
(672)
(10)
932
5,591
135
73
1
3
2
76
21
311
7,839
1,948
129
(431)
(1,075)
50
1,490
9,950
13,306
10,197
2,897
11,946
3,006
31,155
2,228
8,801
3,153
24,379
(1) Other tangible fixed assets include properties in the course of construction and afforestation.
(2) Acquired with subsidiaries includes $40 million relating to the reassessment of the fair value of Kumba (see note 28).
(3) Net book value and depreciation charges relating to assets held under finance leases amounts to $147 million (2003: $165 million) and $13 million (2003: $13 million) respectively.
Included in the cost above is $82 million of interest (2003: $41 million) which has been capitalised during the year. Aggregate
interest capitalised included in the cost above totals $212 million (2003: $141 million). Tax relief on interest capitalised is based on
the tax rates prevailing in the jurisdiction in which the interest is incurred.
The impairment charge for the year includes $100 million against the assets at Black Mountain in Base Metals. Further detail
regarding this impairment is given in note 7, Exceptional items.
Nominal pre-tax discount rates equivalent to real post-tax discount rates of between 4% and 9% were used in the performance of
impairment reviews.
Included in tangible fixed assets are properties in the course of construction and land and buildings amounting to $1,956 million
(2003: $2,413 million) which are not depreciated.
The net book value of land and buildings comprises:
US$ million
Freehold
Leasehold – long
Leasehold – short (less than 50 years)
2004
2,735
146
16
2,897
2003
2,114
98
16
2,228
7878v04_GC_Rp_p44-89_020305.qxp 2/3/05 11:28 pm Page 64
64 Anglo American plc Annual Report 2004
NOTES TO FINANCIAL STATEMENTS
CONTINUED
15 FIXED ASSET INVESTMENTS
US$ million
Loans
Equity
Loans
Equity
Loans
Equity
Own shares
Total
Interest in joint ventures
Interest in associates(1)
Other investments(2)
Cost
At 1 January 2004 (as previously reported)
Prior year adjustment(3)
At 1 January 2004 (as restated)
Group’s share of profits less losses(4)
Additions
Acquired with subsidiaries
Disposals
Reclassifications
(Repayments)/advances
Currency movements
At 31 December 2004
Provisions for impairment
At 1 January 2004 (as previously reported)
Prior year adjustment(3)
At 1 January 2004 (as restated)
Reversal of impairment
(Charge)/utilisation for the year
Reclassifications
Currency movements
At 31 December 2004
Net book value
At 31 December 2004(5)
At 31 December 2003 (as restated)(3)
260
–
260
–
–
–
–
–
(48)
–
212
–
–
–
–
–
–
–
–
1,370
–
1,370
337
11
–
(11)
(280)
(145)
2
1,284
–
–
–
–
–
–
–
–
118
–
118
–
–
–
–
–
–
7
125
–
–
–
–
–
–
–
–
5,096
–
5,096
185
3
–
(1,180)
67
(129)
422
4,464
410
–
410
(154)
–
(13)
–
243
212
260
1,284
1,370
125
118
4,221
4,686
353
–
353
–
–
36
–
(13)
(21)
46
401
71
–
71
–
(3)
(14)
7
61
340
282
627
–
627
–
141
31
(125)
2
1
69
746
137
–
137
–
10
39
11
197
549
490
693
(693)
–
–
–
–
–
–
–
–
–
71
(71)
–
–
–
–
–
–
–
–
8,517
(693)
7,824
522
155
67
(1,316)
(224)
(342)
546
7,232
689
(71)
618
(154)
7
12
18
501
6,731
7,206
(1) Interest in associates at 31 December 2004 includes $310 million of goodwill (2003: $359 million).
(2) Other investments in the table above include listed investments of $40 million (2003: $52 million). The market value of these listed investments, $51 million (2003: $166 million), exceeded the
carrying value at 31 December 2004 by $11 million (2003: $114 million).
(3) The Group has adopted UITF abstract 38 ‘Accounting for ESOP trusts’. As required by this abstract, own shares held by employee trusts have been reclassified from other investments and are now
recorded as a reduction in shareholders’ funds. See note 1 to the financial statements.
(4) Net of goodwill amortisation of $42 million (2003: $42 million) in associates and $4 million (2003: $8 million) in joint ventures.
(5) US$ million
31 December
Joint ventures
Associates
Other investments
Loans
212
125
340
Equity
1,284
4,221
549
2004
Total
1,496
4,346
889
Loans
260
118
282
Equity
1,370
4,686
490
2003
Total
1,630
4,804
772
7878v04_GC_Rp_p44-89_020305.qxp 4/3/05 12:36 pm Page 65
Anglo American plc Annual Report 2004 65
16 JOINT VENTURES AND ASSOCIATES
US$ million
Fixed assets
Current assets
Liabilities due within one year
Liabilities due after more than one year
Net assets
US$ million
By business segment:
Platinum
Gold
Diamonds
Coal
Base Metals
Industrial Minerals
Ferrous Metals and Industries
Paper and Packaging
Corporate Activities
Net assets
By geographical segment:
South Africa
Rest of Africa
Europe
North America
South America
Australia and Asia
Net assets
17 STOCKS
US$ million
Raw materials and consumables
Work-in-progress
Finished products
Joint
ventures
1,577
639
(213)
(507)
Associates
5,153
2,183
(1,237)
(1,753)
2004
Total
6,730
2,822
(1,450)
(2,260)
Joint
ventures
2,001
482
(355)
(498)
Associates
5,755
2,269
(856)
(2,364)
2003
Total
7,756
2,751
(1,211)
(2,862)
1,496
4,346
5,842
1,630
4,804
6,434
2004
2003
77
230
3,069
461
1,088
77
629
172
39
5,842
1,607
1,627
606
161
1,499
342
5,842
2004
1,197
860
1,344
3,401
73
1,219
2,886
504
963
60
495
178
56
6,434
1,751
1,960
686
316
1,301
420
6,434
2003
956
633
1,155
2,744
2003
Total
3,080
60
902
341
4,383
The difference between the replacement cost and the values included in the financial statements is not material.
18 DEBTORS
US$ million
Trade debtors
Amounts owed by joint ventures
Other debtors
Prepayments and accrued income(1)
(1) Includes $178 million in relation to prepaid pension contributions (2003: $170 million).
Due within
one year
Due after
one year
3,891
6
1,106
315
5,318
3
1
167
179
350
2004
Total
3,894
7
1,273
494
5,668
Due within
one year
Due after
one year
3,061
60
819
165
4,105
19
–
83
176
278
7878v04_GC_Rp_p44-89_020305.qxp 3/3/05 8:42 pm Page 66
66 Anglo American plc Annual Report 2004
NOTES TO FINANCIAL STATEMENTS
CONTINUED
19 CURRENT ASSET INVESTMENTS
US$ million
Bank term deposits
Quoted fixed and floating rate debt securities
Unquoted fixed and floating rate debt securities
20 OTHER CURRENT LIABILITIES
US$ million
Trade creditors
Amounts owed to associates
Taxation and social security
Other creditors
Accruals and deferred income
Proposed dividend (see note 11)
2004
Group
carrying
value
381
–
194
575
2003
Group
carrying
value
312
502
218
Market
value
312
502
218
1,032
1,032
Market
value
381
–
194
575
2004
2,792
–
986
1,423
885
734
6,820
Due after
one year
1,088
1,750
3,309
119
354
45
5,577
2003
2,528
3
579
1,127
433
554
5,224
2003
Total
1,088
1,802
5,942
140
1,734
53
9,671
6,665
10,759
21 SHORT TERM BORROWINGS AND LIABILITIES DUE AFTER ONE YEAR
US$ million
Convertible debt(1)
Other long term liabilities:
Bonds issued under EMTN programme
Bank loans and overdrafts
Obligations under finance leases
Other loans
Other creditors
Total
(1) Includes $990 million (2003: nil) of convertible debt issued by listed subsidiaries.
Due within
one year
–
33
2,642
31
621
6
3,333
3,333
Due after
one year
2,081
1,812
2,456
126
803
171
5,368
2004
Total
2,081
1,845
5,098
157
1,424
177
8,701
7,449
10,782
Due within
one year
–
52
2,633
21
1,380
8
4,094
4,094
The market value of the convertible debt at 31 December 2004 was $2,061 million (2003: $1,261 million).
Anglo American Capital plc and Anglo American Australia Finance Limited issued a number of small value bonds through
reverse enquiries under the $3,000 million Euro Medium Term Note Programme. The total value issued was $550 million
(2003: $143 million). All notes are guaranteed by Anglo American plc.
A $1,000 million European Commercial Paper Programme was established in October 2004. The programme was established to
provide further funding diversity and flexibility. The European Commercial Paper Programme is in addition to a $1,300 million
Canadian Commercial Paper Programme established a number of years ago.
In April 2002, Anglo American plc issued $1.1 billion 33⁄8 per cent convertible bonds, due 17 April 2007, convertible into ordinary
shares of Anglo American plc. The bonds were issued at par and bear a coupon of 33⁄8 per cent per annum, payable semi-annually.
The conversion price is £16.13 which represents a premium of 35% over the closing price of the shares in London at the date of
offer. The bonds can be converted by the holder at any time between 28 May 2002 and up to 14 business days prior to 17 April
2007. The total number of ordinary shares of 50 US cents each which could be issued on conversion is 47,589,607. The bonds can
be redeemed by Anglo American plc at their principal amount at any time after 9 May 2005, if the share price is at least 130% of
the conversion price for 20 dealing days within a 30 day dealing period. The bonds can also be redeemed by Anglo American plc at
their principal amount once conversion rights have been exercised in respect of 85% of the principal amount of the bonds. If not
converted or previously redeemed the bonds will be redeemed at par on 17 April 2007.
A Convertible Bond was issued in February 2004 by AngloGold Holdings Plc, a wholly-owned subsidiary of AngloGold Ashanti.
The Bond is convertible into American Depositary Shares (ADSs) at a price of $65.00 per ADS up to 27 February 2009. The
proceeds of the issue, after payment of expenses, were utilised by AngloGold Ashanti to refinance amounts outstanding under
credit facilities, to meet transaction costs in connection with the acquisition of Ashanti and for general corporate purposes,
including planned capital expenditure.
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Anglo American plc Annual Report 2004 67
21 SHORT TERM BORROWINGS AND LIABILITIES DUE AFTER ONE YEAR CONTINUED
Group financial liabilities (consisting of short term borrowings and long term liabilities – see note 22) have the following maturity
profile:
US$ million
At 31 December 2004
Convertible debt(1)
Bonds issued under EMTN programme
Bank loans and overdrafts
Obligations under finance leases
Other financial liabilities
Total at 31 December 2004
At 31 December 2003
Convertible debt
Bonds issued under EMTN programme
Bank loans and overdrafts
Obligations under finance leases
Other financial liabilities
Total at 31 December 2003
Within
1 year or on
demand
Between
1-2 years
Between
2-5 years
After
5 years
–
33
2,642
31
627
3,333
–
52
2,633
21
1,388
4,094
–
106
235
30
260
631
–
33
738
35
97
903
2,081
1,212
2,056
17
475
5,841
1,088
1,223
2,306
20
173
4,810
–
494
165
79
239
977
–
494
265
64
129
952
Total
2,081
1,845
5,098
157
1,601
10,782
1,088
1,802
5,942
140
1,787
10,759
(1) Includes $990 million (2003: nil) of convertible debt issued by listed subsidiaries.
At 31 December 2004, loans of $422 million (2003: $212 million) and $702 million (2003: $546 million) due within and after
more than one year respectively were secured on the assets of the Group.
Loans repayable after more than five years bear interest at rates which are either fixed or fluctuate in line with market rates.
At 31 December 2004, the rates of interest charged on the majority of these loans ranged from 2.1% to 11.7%.
Loans repayable after more than five years included in the above table as at 31 December 2004 include amounts of $207 million
payable by instalments (2003: $120 million). The aggregate amount of loans, any instalment of which falls due after more than five
years, is $355 million (2003: $184 million).
22 DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS
Treasury and risk management
A discussion of the objectives, policies and strategies of Group Treasury and Risk Management is given in the financial review on page 14.
Summary of the use of derivative instruments by the Group
The Group utilises derivative and equity instruments to manage its exposure to fluctuations in foreign currency exchange rates,
interest rates and commodity prices. The use of derivative instruments can give rise to credit and market risk. The Group controls
credit risk by entering into derivative contracts only with counterparties who are rated A1/P1, A or better by external rating agencies
or who have received specific internal corporate credit approval. The use of derivative instruments is subject to limits and the
positions are regularly monitored and reported to senior management. Market risk is the possibility that future changes in foreign
currency exchange rates, interest rates and commodity prices may make a derivative instrument more or less valuable. Since the
Group utilises derivative instruments for risk management, market risk relating to derivative instruments will principally be offset by
changes in the valuation of the underlying assets, liabilities or transactions being hedged.
Foreign exchange risk
The Group uses forward exchange contracts, currency swaps and option contracts to limit the effects of movements in exchange
rates on foreign currency denominated assets and liabilities. The Group also uses these instruments to hedge future transactions
and cash flows. As at 31 December 2004 the net amount of unrecognised hedging gains on all foreign exchange risk-related
instruments, which had been deferred to a period in respect of which an exposure has been hedged, was $8 million (2003: gain
$79 million). Any ultimate gain or loss resulting from these contracts will be recognised when the instruments expire.
Interest rate risk
The Group uses interest rate swap and option contracts to manage its exposure to interest rate movements on a portion of its
existing debt and short term investments. The effect of these derivatives is reflected, as appropriate, in interest expense or interest
income. As at 31 December 2004 the net amount of unrecognised hedging gains on all interest rate risk related instruments, which
had been deferred to a period in respect of which an exposure has been hedged, was $1 million (2003: losses $30 million).
7878v04_GC_Rp_p44-89_020305.qxp 3/3/05 8:44 pm Page 68
68 Anglo American plc Annual Report 2004
NOTES TO FINANCIAL STATEMENTS
CONTINUED
22 DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS CONTINUED
Commodity price risk
The Group uses forward, spot deferred and option contracts to hedge the price risk of certain commodities that it produces, including
gold and copper, and in respect of heating oil purchases. Gains or losses resulting from these activities are recognised concurrently with
gains and losses associated with underlying transactions. The majority of the deferred gains or losses are unrecognised and the ultimate
amount of gains or losses to be realised will depend on commodity price movements until the end of the hedge contracts concerned.
The net forward position of AngloGold Ashanti was 10.5 million ounces priced forward at 31 December 2004, covering periods up
to December 2014, with a marked to market value of negative $1,161 million at 31 December 2004. The value was based on a
gold price of $435/oz, exchange rates of $/ZAR5.67 and $/AU$1.29 and the prevailing market interest rates and volatilities at the
time. As at 25 January 2005, the marked to market value of the hedge book was a negative $993 million, based on a gold price of
$426/oz, exchange rates of $/ZAR5.93 and $/AU$1.30 and the prevailing market interest rates and volatilities at the time.
Concentration of credit risk
The Group is exposed to credit risk in respect of current asset investments, debtors and derivative financial instruments. Given the
geographical and business diversity of the Group’s debtors, the concentration of credit risk is limited. In respect of current asset
investments and derivative financial instruments, procedures and policies are in place to limit the amount of credit exposure to any
one counterparty. The maximum credit risk exposure is limited to fair value (see note 22(b) below).
Numerical disclosures
The disclosures present information regarding the Group as a whole and therefore exclude any intra-group loan balances. The
disclosure of financial assets and financial liabilities which follows (other than the currency disclosures in note 22(e)) excludes
debtors and other current liabilities, as permitted under FRS 13 ‘Derivatives and other financial instruments: disclosures’.
22(a) INTEREST RATE AND CURRENCY PROFILE
The following interest rate and currency profile of the Group’s financial liabilities and assets is after taking into account interest rate
swaps entered into by the Group:
Financial liabilities
US$ million
Currency
At 31 December 2004
US$
SA rand
Sterling
Euro
Canadian $
Australian $
Other currencies
Gross financial liabilities
At 31 December 2003
US$
SA rand
Sterling
Euro
Canadian $
Australian $
Other currencies
Gross financial liabilities
Fixed rate financial liabilities
Weighted
average
interest
rate %
Weighted
average period
for which the
rate is fixed
in years
Non-interest
bearing financial
liabilities
Weighted
average
period until
maturity
in years
Fixed
rate
financial
liabilities
Non-interest
bearing
financial
liabilities
1,287
644
1
247
–
–
20
2,199
1,349
890
1
163
5
6
41
2,455
3
124
26
13
2
12
12
192
12
88
5
19
15
12
11
162
3.9
11.7
6.8
1.7
–
–
7.0
6.0
4.0
13.2
5.9
3.5
1.4
2.4
7.2
7.3
3.1
4.1
0.8
1.8
–
–
2.9
3.2
4.1
3.4
0.9
2.2
5.0
2.0
10.1
3.8
–
5.4
1.0
2.6
–
–
9.0
4.4
1.1
4.4
2.1
0.5
5.0
1.3
2.9
2.3
Floating
rate
financial
liabilities
4,536
3,110
11
592
–
1
141
8,391
4,363
2,854
56
643
–
10
216
8,142
Total
5,826
3,878
38
852
2
13
173
10,782
5,724
3,832
62
825
20
28
268
10,759
Interest on floating rate liabilities is based on the relevant national inter-bank rates.
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Anglo American plc Annual Report 2004 69
22(a) INTEREST RATE AND CURRENCY PROFILE CONTINUED
Financial assets
US$ million
Currency
At 31 December 2004
US$
SA rand
Sterling
Euro
Canadian $
Australian $
Other currencies
Gross financial assets
At 31 December 2003
US$
SA rand
Sterling
Euro
Canadian $
Australian $
Other currencies
Gross financial assets
Non-interest bearing
financial assets
Floating
rate
financial
assets
Fixed
rate
financial
assets
Equity
investments
Non-interest
bearing
financial
assets
Weighted
average
interest
rate %
1,502
686
73
123
6
53
183
2,626
954
347
164
115
5
73
156
1,814
61
30
–
15
–
21
8
135
88
346
3
2
–
–
8
447
76
286
16
120
–
28
16
542
34
213
22
125
–
16
14
424
70
16
108
6
18
1
28
247
32
107
45
7
10
1
11
213
4.5
6.0
–
2.1
–
3.7
5.6
4.5
2.6
11.1
1.4
2.4
–
–
1.4
9.1
Total
1,709
1,018
197
264
24
103
235
3,550
1,108
1,013
234
249
15
90
189
2,898
Fixed rate
financial assets
Weighted
average period
for which
the rate
is fixed
in years
0.8
0.1
–
0.3
–
–
0.2
0.4
0.5
6.4
1.4
0.1
–
–
0.2
5.1
Floating rate financial assets consist mainly of cash and bank term deposits. Interest on floating rate assets is based on the relevant
national inter-bank rates. Fixed rate financial assets consist mainly of cash. Equity investments are fully liquid and have no maturity
period.
22(b) FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
The estimated fair value of financial instruments at 31 December is shown in the following tables:
Primary financial instruments held or issued to finance the Group’s operations
US$ million
Cash at bank and in hand
Current asset investments
Long term investments
Gross financial assets
Short term borrowings
Convertible debt
Long term borrowings
Other financial liabilities
Gross financial liabilities
Estimated
fair value
2,086
575
900
3,561
3,389
2,061
5,572
145
2004
Carrying
value
2,086
575
889
3,550
3,333
2,081
5,223
145
Estimated
fair value
1,094
1,032
886
3,012
4,165
1,261
5,577
77
2003
Carrying
value
1,094
1,032
772
2,898
4,094
1,088
5,500
77
11,167
10,782
11,080
10,759
7878v04_GC_Rp_p44-89_020305.qxp 2/3/05 11:28 pm Page 70
70 Anglo American plc Annual Report 2004
NOTES TO FINANCIAL STATEMENTS
CONTINUED
22(b) FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES CONTINUED
Derivative instruments
US$ million
Foreign exchange risk
Interest rate risk
Commodity price risk:
Gold
Other commodity derivatives
Estimated
fair value
asset
648
106
750
1
1,505
Estimated
fair value
liability
304
110
1,896
2
2,312
2004
Carrying
value
336
(5)
31
–
Estimated
fair value
asset
509
10
498
–
362
1,017
Estimated
fair value
liability
258
18
1,170
37
1,483
2003
Carrying
value
172
22
–
–
194
The following methods were used to estimate the fair value of the financial assets and liabilities:
Long term investments – fair value represents the market value of quoted investments and directors’ valuation of other
investments;
Current asset investments – fair value is based on market prices for quoted short term investments. For non-quoted investments fair
value is based on market prices of similar investments;
Convertible debt – fair value is based on the quoted market value of the convertible bonds;
Short and long term debt – fair value is determined by reference to quoted market prices for similar issues, where applicable,
otherwise carrying value is used as an approximation to fair value; and
Derivative instruments – fair value is determined by reference to market prices where available, otherwise pricing or valuation
models are applied to current market information to estimate their value.
22(c) UNDRAWN BORROWING FACILITIES
The Group had the following undrawn committed borrowing facilities at 31 December:
US$ million
Expiry date:
In one year or less
In more than one year but not more than two years
In more than two years
2004
2003
2,019
2
2,900
4,921
2,574
176
2,271
5,021
22(d) HEDGING
Gains and losses on instruments used for hedging are not recognised until the exposure that is being hedged is itself recognised.
Unrecognised gains and losses on instruments used for hedging at 31 December 2004 are as follows:
US$ million
Unrecognised gains and losses on hedges at 1 January 2004
Less: Gains and losses arising in previous years that were recognised in 2004
Add: Gains and losses arising in 2004 that were not recognised during the year
Currency movements
Gains
605
(523)
762
11
Losses
(1,266)
661
(1,407)
(12)
Total net
losses
(661)
138
(645)
(1)
Unrecognised gains and losses on hedges at 31 December 2004
855
(2,024)
(1,169)
Of which:
Gains and losses expected to be recognised during the year 2005
Gains and losses expected to be recognised after 2005
596
259
(696)
(1,328)
(100)
(1,069)
7878v04_GC_Rp_p44-89_020305.qxp 2/3/05 11:28 pm Page 71
Anglo American plc Annual Report 2004 71
22(e) CURRENCY PROFILE
The main functional currencies of the Group include the US dollar, South African rand, sterling, euro, Canadian dollar and Australian
dollar. The following analysis of net monetary assets and liabilities shows the Group’s currency exposures after the effects of forward
contracts and other derivatives used to manage currency exposure. Such exposures comprise the monetary assets and monetary
liabilities of the Group that are not denominated in the operating (or functional) currency of the operating unit involved and represent
the transactional (or non-structural) exposures that give rise to the net currency gains and losses recognised in the profit and loss
account, other than certain non-functional currency borrowings which are treated as hedges of net investments in overseas operations.
Net foreign currency monetary assets/(liabilities)
US$ million
US$
SA rand
Sterling
Euro
Canadian $
Australian $
Other
currencies
Total
At 31 December 2004
Functional currency of Group operations:
US$
SA rand
Sterling
Euro
Canadian $
Australian $
At 31 December 2003
Functional currency of Group operations:
US$
SA rand
Sterling
Euro
Canadian $
Australian $
N/A
(283)
1
27
–
79
(176)
N/A
(113)
8
(29)
4
16
(114)
(230)
N/A
–
–
–
–
(230)
(236)
N/A
–
–
–
–
(236)
(120)
103
N/A
64
–
–
47
72
106
N/A
44
–
–
222
(2)
13
44
N/A
–
–
55
(11)
20
14
N/A
–
–
23
1
37
–
–
N/A
–
38
–
28
–
–
N/A
–
28
–
38
–
8
–
N/A
46
(37)
70
–
–
–
N/A
33
23 PROVISIONS FOR LIABILITIES AND CHARGES
US$ million
At 1 January 2004
Acquired with subsidiaries(1)
Disposed with subsidiaries
Charged to profit and loss
Charged to reserves
Capitalised
Reclassifications
Unwinding of discount
Unused amounts reversed to profit and loss
Amounts applied
Currency movements
At 31 December 2004
Post-
retirement
medical
funding
Pensions
and similar
obligations
465
–
(31)
54
–
–
(4)
–
–
(36)
81
529
216
14
(34)
105
–
–
(2)
–
(3)
(88)
16
224
Restoration,
rehabilitation
and
environmental
652
69
(31)
55
–
75
8
61
(2)
(29)
84
942
Deferred
taxation
2,330
11
(4)
198
12
–
(15)
–
–
(2)
378
2,908
The amounts of deferred taxation provided in the accounts are as follows:
US$ million
Capital allowances in excess of depreciation
Other timing differences
(92)
46
52
(26)
–
–
(20)
19
46
21
(149)
–
–
(63)
Other
291
20
2
72
–
–
14
1
(2)
(35)
20
383
(443)
(46)
97
73
–
79
(240)
(193)
157
43
(134)
4
16
(107)
Total
3,954
114
(98)
484
12
75
1
62
(7)
(190)
579
4,986
2004
3,357
(449)
2,908
(1) Acquired with subsidiaries includes a debit of $17 million relating to the reassessment of the fair value of assets of Kumba (see note 28).
The potential impact of unprovided deferred tax assets on the future effective tax rate of the Group is discussed in note 10(c).
7878v04_GC_Rp_p44-89_020305.qxp 2/3/05 11:28 pm Page 72
72 Anglo American plc Annual Report 2004
NOTES TO FINANCIAL STATEMENTS
CONTINUED
23 PROVISIONS FOR LIABILITIES AND CHARGES CONTINUED
The restoration, rehabilitation and environmental provision represents the best estimate of the expenditure required to settle the
obligation to rehabilitate environmental disturbances caused by mining operations. These costs are expected to be incurred over
a period in excess of 20 years.
Other provisions mainly consist of provisions for restructuring and reorganisation costs and for other obligations existing at
31 December 2004.
24 CALLED-UP SHARE CAPITAL
Authorised:
5% cumulative preference shares of £1 each
Ordinary shares of 50 US cents each
Called up, allotted and fully paid:
5% cumulative preference shares of £1 each
Ordinary shares of 50 US cents each
Number of shares
US$ million
Number of shares
US$ million
2004
2003
50,000
2,000,000,000
50,000
1,493,839,387
–
1,000
1,000
–
747
747
50,000
2,000,000,000
50,000
1,476,304,626
–
1,000
1,000
–
738
738
At general meetings, every member who is present in person has one vote on a show of hands and, on a poll, every member who is
present in person or by proxy has one vote for every ordinary share held.
In the event of winding up, the holders of the cumulative preference shares will be entitled to the repayment of a sum equal to the
nominal capital paid up, or credited as paid up, on the cumulative preference shares held by them and any accrued dividend, whether
such dividend has been earned or declared or not, calculated up to the date of the winding up.
During 2004, 15,110 ordinary shares of 50 US cents each were allotted in respect of certain non-executive directors by subscription
of their after-tax directors’ fees (2003: 15,080). A further 4,028,367 ordinary shares of 50 US cents were allotted on exercise of
employee share option plans (2003: 7,113,375).
Former AAC Executive Share Incentive Scheme(1)
Options to acquire ordinary shares of 50 US cents were outstanding under the terms of this scheme as follows:
Year of grant
Date exercisable
1990–1997
1998
1999
1 January 1999 to 15 December 2007
1 January 2000 to 4 December 2008
4 January 2001 to 4 January 2009
Weighted average
option price
per share £
Options
outstanding
1 Jan 2004
Options
exercised
in year
4.72
4.57
3.82
503,500
10,109,700
390,900
84,300
1,712,600
151,400
11,004,100
1,948,300
Options
lapsed
in year
–
–
–
–
Options
outstanding
31 Dec 2004
419,200
8,397,100
239,500
9,055,800
The above share option prices have been calculated using a weighted average option price based on the shares outstanding at
31 December 2004 and converted to sterling using an exchange rate of £1.00 = ZAR 10.85.
See footnote definitions on page 74.
7878v04_GC_Rp_p44-89_020305.qxp 2/3/05 11:28 pm Page 73
Anglo American plc Annual Report 2004 73
24 CALLED-UP SHARE CAPITAL CONTINUED
Executive Share Option Scheme(1)
Options to acquire ordinary shares of 50 US cents were outstanding under the terms of this scheme as follows:
Year of grant
Date exercisable
Option
price per
share £
Options
outstanding
1 Jan 2004
Options
granted during
the year
Options
exercised
in year
Options
lapsed
in year
Options
outstanding
31 Dec 2004
1999
1999
2000
2000
2000
2001
2001
2002
2002
2003
2003
2003
2004
2004
2004
24 June 2002 to 23 June 2009
19 October 2002 to 18 October 2009
23 March 2003 to 22 March 2010
26 June 2003 to 25 June 2010
12 September 2003 to 11 September 2010
2 April 2004 to 1 April 2011
13 September 2004 to 12 September 2011
18 March 2005 to 17 March 2012
13 September 2005 to 12 September 2012
5 March 2006 to 4 March 2013
13 August 2006 to 12 August 2013
1 October 2006 to 30 September 2013
1 March 2007 to 28 February 2014
10 August 2007 to 9 August 2014
29 November 2009 to 28 November 2014
6.98 3,411,570
8.00
277,004
7.66 4,411,972
89,816
7.66
174,168
10.19
10.03 7,212,817
115,200
11.50 7,380,883
8.05
117,892
9.28 12,676,004
242,398
70,000
8.00
11.41
10.81
13.43
11.52
12.73
–
–
–
– 524,704
–
75,032
– 821,420
20,000
–
37,056
–
– 341,861
–
–
– 152,945
–
–
–
–
–
– 7,768,369
– 216,031
11,147
–
1,000 2,885,866
201,972
8,000 3,582,552
69,816
137,112
36,992 6,833,964
115,200
75,720 7,152,218
117,890
12,500 157,119 12,506,385
242,398
70,000
47,600 7,720,769
212,031
11,147
4,000
–
–
–
–
–
–
–
–
2
–
SAYE Share Option Scheme(1)
Options to acquire ordinary shares of 50 US cents were outstanding under the terms of this scheme as follows:
36,179,724 7,995,547 1,985,518 330,433 41,859,320
Year of grant
Date exercisable
1999
1999
2000
2000
2000
2001
2001
2001
2002
2002
2002
2003
2003
2003
2004
2004
2004
1 September 2004 to 28 February 2005
1 September 2006 to 28 February 2007
1 July 2003 to 31 December 2003(2)
1 July 2005 to 31 December 2005
1 July 2007 to 31 December 2007
1 July 2004 to 31 December 2004
1 July 2006 to 31 December 2006
1 July 2008 to 31 December 2008
1 September 2005 to 28 February 2006
1 September 2007 to 28 February 2008
1 September 2009 to 28 February 2010
1 September 2006 to 28 February 2007
1 September 2008 to 28 February 2009
1 September 2010 to 28 February 2011
1 September 2007 to 28 February 2008
1 September 2009 to 28 February 2010
1 September 2011 to 28 February 2012
Option
price per
share £
Options
outstanding
1 Jan 2004
Options
granted during
the year
Options
exercised
in year
Options
lapsed
in year
Options
outstanding
31 Dec 2004
153,408
6.38
34,432
6.38
4.85
24,325
4.85 1,336,760
403,064
4.85
267,732
8.45
218,877
8.45
63,775
8.45
228,343
9.23
152,320
9.23
51,407
9.23
578,009
7.52
241,853
7.52
7.52
81,680
10.81
10.81
10.81
– 146,987
3,285
–
5,525
–
28,776
–
–
19,634
– 248,543
2,010
–
1,710
–
3,038
–
–
–
–
65
3,968
–
639
–
608
–
48
– 237,004
57
– 129,404
–
30,393
–
5,580
841
30,740
407
18,800
–
28,684 1,279,300
359,896
23,534
13,763
5,426
201,350
15,517
55,868
6,197
202,906
22,399
137,962
14,358
45,372
5,970
503,209
70,832
218,548
22,666
60,914
20,158
221,544
15,412
123,361
5,986
29,742
651
3,835,985 396,801 464,893 277,838 3,490,055
Long Term Incentive Plan(1)(4)
Ordinary shares of 50 US cents may be awarded for no consideration under the terms of this scheme. The number of shares
outstanding is as shown below:
Year of grant
Performance period end date
2001
2002
2003
2004
31 December 2003
31 December 2004
31 December 2005
31 December 2006
See footnote definitions on following page.
Shares
Shares
conditionally
outstanding awarded during
the year
1 Jan 2004
Shares
vesting
in the year
Shares
lapsed
in the year
Shares
outstanding at
31 Dec 2004
1,313,483
1,421,525
1,956,551
– 811,009 419,782
–
–
–
–
–
– 1,823,743
82,692
79,742 1,341,783
77,388 1,879,163
25,196 1,798,547
4,691,559 1,823,743 811,009 602,108 5,102,185
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74 Anglo American plc Annual Report 2004
NOTES TO FINANCIAL STATEMENTS
CONTINUED
24 CALLED-UP SHARE CAPITAL CONTINUED
Other share incentive schemes
During the year the Company operated a number of other share schemes under which ordinary shares of 50 US cents may be
awarded for no consideration.
Deferred bonus matching(1)
Share incentive plan(1)
Bonus share plan:(1)(5)
Bonus shares
Enhancement shares
Awards outstanding
at 31 December 2004
Latest performance period end/
latest release date(3)
210,994
413,992
511,860
292,488
219,372
1 January 2006
7 December 2007
31 December 2006
31 December 2006
31 December 2006
(1) The early exercise of share options is permitted upon the termination of employment, ill-health or death.
(2) Outstanding options related to those individuals whose maturity period has been extended due to missed payments in terms of the scheme rules.
(3) Latest performance period relates only to the Long Term Incentive Plan. For the Deferred Bonus Matching Plan and Share Incentive Plan, the dates given are the latest release dates.
(4) The long term incentive awards are contingent on pre-established performance criteria being met. Further information in respect of this scheme is shown in the remuneration report on page 31.
(5) The Bonus Share Plan (BSP) was approved by shareholders in 2004 as a replacement for the ESOS and the Deferred Bonus Plan. No BSP interests vested during 2004. Further information in
respect of the BSP, including performance conditions, is shown in the remuneration report on page 30.
Employee benefit trust
The provision of shares to certain of the Company’s share option and share incentive schemes is facilitated by an employee benefit trust.
During 2004, 1,600,926 (2003: 253,363) shares were sold to employees on exercise of their options, and provisional allocations
were made to options already awarded. The employee benefit trust has waived the right to receive dividends on these shares.
The market value of the 55.1 million shares held by the trust at 31 December 2004 was $1,296 million. At 31 December 2003
the market value of the 56.7 million shares held by the trust was $1,225 million.
The costs of operating the trust are borne by the Group but are not material.
25 COMBINED STATEMENT OF MOVEMENT IN SHAREHOLDERS’ FUNDS AND MOVEMENT IN RESERVES
US$ million
Balance at 1 January 2004 (as previously reported)
Prior year adjustment(2)
At 1 January 2004 (as restated)
Profit for the financial year
Dividends paid and proposed
Realisation of merger reserve
Shares issued
Unrealised profit on deemed disposal of AngloGold(3)
Other reserve movements(4)
Currency translation differences on foreign currency
net investments(5)
Related tax charge
Issued
share
capital
738
–
738
–
–
–
9
–
–
–
–
Share
premium
1,284
–
1,284
–
–
–
349
–
–
–
–
Merger
reserve
Other
reserves
Profit
and loss
account(1)
17,196
(622)
16,574
2,913
(1,007)
(29)
–
410
52
Total
20,394
(622)
19,772
2,913
(1,007)
–
358
410
52
716
–
716
–
–
–
–
–
–
–
–
2,512
(12)
2,512
(12)
460
–
460
–
–
29
–
–
–
–
–
Balance at 31 December 2004
747
1,633
489
716
21,413
24,998
(1) Certain of the Group’s subsidiaries operate in South Africa, where significant exchange control restrictions on distributions limit the Group’s access to distributable profits and cash balances.
(2) The Group has adopted UITF abstract 38 ‘Accounting for ESOP trusts’. As required by this abstract, own shares held by employee trusts have been reclassified from other investments and are now
recorded as a reduction in shareholders’ funds. See note 1 to the financial statements.
(3) AngloGold merged with Ashanti Goldfields Company Limited on 26 April 2004. As a result of this transaction, the Group’s shareholding decreased from 55.8% to 47.2% and the Group has
therefore had to account for a deemed disposal in accordance with FRS 2 ‘Accounting for subsidiary undertakings’. The holding was subsequently increased to 51% through the purchase of
additional shares.
(4) Includes credit in respect of employee share schemes.
(5) An explanation of the currency translation differences included in the profit and loss reserve above is included in the financial review on page 14.
7878v04_GC_Rp_p44-89_020305.qxp 3/3/05 8:46 pm Page 75
Anglo American plc Annual Report 2004 75
26 CONSOLIDATED CASH FLOW STATEMENT ANALYSIS
a) Reconciliation of Group operating profit to net cash inflow from operating activities
US$ million
Group operating profit – subsidiaries
Exceptional (gains)/charges (all non-cash items)
Group operating profit before exceptionals
Depreciation and amortisation charges
Increase in stocks
Increase in debtors
Increase in creditors
Increase in provisions
Other items
Net cash inflow from operating activities
b) Financing
US$ million
(Decrease)/increase in short term borrowings
Increase in long term borrowings
Net movement in minorities’ shares and loans
Exercise of share options
Issue of shares in subsidiaries
Financing
c) Reconciliation of net cash flow to movement in net debt
US$ million
Increase/(decrease) in cash in the year
Cash inflow/(outflow) from debt financing
Cash outflow from management of liquid resources
Change in net debt arising from cash flows
Loans and current asset investments acquired with subsidiaries
Loans and current asset investments disposed with subsidiaries
Other non-cash movements
Exchange movements
2004
3,086
(25)
3,061
2,123
(242)
(419)
69
91
90
2003
1,611
286
1,897
1,463
(302)
(246)
348
38
(14)
4,773
3,184
2004
(1,664)
305
(2)
46
146
2003
875
531
3
71
305
(1,169)
1,785
2004
2003
902
1,359
(456)
1,805
(597)
10
(19)
(687)
512
(8,633)
(51)
(1,406)
(182)
(1,639)
(746)
5
–
(675)
(3,055)
(5,578)
(8,121)
(8,633)
Movement in net debt
Net debt at start of year
Net debt at end of year
27 MOVEMENT IN NET DEBT
US$ million
Cash at bank and in hand
Debt due after one year
Debt due within one year
Current asset investments
Total
Acquisitions
Cash flow excluding cash
Disposals
excluding cash
Other
non-cash
movements
Exchange
movements
2003
1,094
(6,665)
(4,094)
902
(305)
1,664
(10,759)
1,359
1,032
(456)
–
(348)
(249)
(597)
–
–
285
(304)
(19)
–
90
(439)
(356)
2004
2,086
(7,449)
(3,333)
(795)
(10,782)
18
575
–
23
6
29
(19)
10
(8,633)
1,805
(597)
(19)
(687)
(8,121)
7878v04_GC_Rp_p44-89_020305.qxp 3/3/05 8:48 pm Page 76
76 Anglo American plc Annual Report 2004
NOTES TO FINANCIAL STATEMENTS
CONTINUED
28 ACQUISITION OF SUBSIDIARIES
The following were the principal acquisitions made during the year to 31 December 2004, accounted for under the acquisition
method.
Name of company acquired
Frantschach AG
Ashanti Goldfields
Roman Bauernfeind Holding AG
AngloGold Ashanti Limited
Anglo American Platinum Corporation Limited
Percentage
acquired
30%
100%
100%
5.2%
0.9%
Date of
acquisition
April 2004
April 2004
February 2004
Piecemeal
Piecemeal
The fair values of the acquired assets and liabilities in the table below are provisional, and will be finalised in the 2005 financial
statements when the final values arising from the fair value exercises are confirmed.
Analysis of fair value of identifiable net assets of subsidiaries acquired
Frantschach
Bauernfeind
Ashanti
Goldfields
AngloGold
Ashanti
Anglo
Platinum
Other
acquisitions
US$ million
Net assets acquired:
Intangible fixed assets(1)
Tangible fixed assets
Investments in joint ventures
Investments in associates
Other investments
Stocks
Debtors
Cash at bank and in hand
Short term borrowings
Other current liabilities
Long term borrowings
Provisions for liabilities and charges
Equity minority interests
Net tangible assets acquired
Goodwill arising on acquisition
Total cost of acquisition
Satisfied by:
Net cash acquired
Shares issued by subsidiary
Shares issued by Group
Deferred consideration
Forgiveness of receivable due
from other joint venture partner
Transfer from joint ventures to subsidiaries
Amounts paid in prior years
Net cash paid
–
–
–
–
–
–
–
–
–
–
–
–
248
248
142
390
–
–
191
–
–
–
–
199
1
406
–
–
31
33
255
3
(100)
(276)
(219)
(25)
(4)
105
12
117
3
–
118
(5)
–
–
–
1
129
2,052
–
–
36
94
58
71
(158)
(283)
(73)
(97)
(3)
1,826
–
1,826
71
1,366
–
–
–
233
–
156
–
325
–
–
–
–
–
–
–
–
–
–
140
465
–
465
–
–
–
–
–
–
–
–
59
–
–
–
–
–
–
–
–
–
–
15
74
–
74
–
–
–
–
–
–
–
–
125
–
–
–
23
28
18
9
(32)
(5)
(9)
6
163
176
339
18
–
–
92
–
–
5
2004
2003
Total
Total
130
2,967
–
–
67
150
341
92
(249)
(591)
(297)
(131)
402
–
2,834
2
14
31
277
246
214
(209)
(239)
(537)
(225)
(526)
2,881
1,882
330
50
3,211
1,932
92
1,366
309
87
–
233
5
214
–
–
6
36
(33)
240
465
74
224
1,119
1,469
(1) Includes goodwill of $100 million which arose on the previous acquisition of a 50% interest in Geita. As a result of the acquisition of Ashanti, Geita is now a wholly-owned subsidiary.
Frantschach AG (now part of Mondi Packaging)
On 5 April 2004, the Group announced the conclusion of an agreement to acquire the remaining 30% minority interest in
Frantschach AG (‘Frantschach’) for a total consideration of —320 million, comprising approximately 8.2 million Anglo American plc
shares, valued at —160 million and a cash consideration of —160 million. Frantschach became 100% owned by Anglo American
as a result of this transaction.
The acquisition of Frantschach as a subsidiary has been accounted for in accordance with the Companies Act. A fair value table of
Frantschach’s assets and liabilities for this transaction is set out on the following page.
Profit after tax and minority interest of Frantschach for the period from 1 January 2004 to its acquisition on 5 April 2004
was —19.1 million. Frantschach’s profit after tax and minority interest for the period since acquisition to 31 December 2004
was —86.8 million. Frantschach’s profit after tax and minority interest for the year ended 31 December 2003 was —110.2 million.
7878v04_GC_Rp_p44-89_020305.qxp 3/3/05 8:51 pm Page 77
Anglo American plc Annual Report 2004 77
28 ACQUISITION OF SUBSIDIARIES CONTINUED
The assets and liabilities as at 5 April 2004 and the total consideration paid are set out in the following table:
US$ million
Net assets acquired:
Equity minority interests
Net tangible assets acquired
Goodwill arising on acquisition
Total cost of acquisition
Satisfied by:
Value of shares issued
Net cash paid
Book amount
Provisional
fair values
248
248
248
248
142
390
191
199
Ashanti Goldfields
On 26 April 2004, AngloGold merged with Ashanti Goldfields. This has been accounted for as an acquisition by AngloGold. As a
result of this transaction the Group owned 47.2% of the newly merged company AngloGold Ashanti. This holding was subsequently
increased to 51% through the purchase of shares.
Loss after tax of Ashanti Goldfields for the period from 1 January 2004 to its merger with AngloGold on 26 April 2004 was
$10.3 million. Ashanti Goldfields’ profit after tax as reported in its statutory accounts for the year ended 31 December 2003 was
$50.4 million.
US$ million
Net assets acquired:
Intangibles(1)
Tangible fixed assets
Other investments
Stocks
Debtors
Cash at bank and in hand
Short term borrowings
Other current liabilities
Long term borrowings
Provisions for liabilities and charges
Equity minority interests
Net tangible assets acquired
Goodwill arising on acquisition
Total cost of acquisition
Satisfied by:
Net cash acquired
Shares issued by subsidiary
Transfer from joint venture to subsidiary (acquired prior to 2004)(1)
Net cash paid
Book value
Revaluations
149
902
36
94
56
71
(158)
(342)
(73)
(64)
(3)
(20)
1,150
–
–
2
–
–
59
–
(33)
–
Provisional
fair
values
129
2,052
36
94
58
71
(158)
(283)
(73)
(97)
(3)
668
1,158
1,826
–
–
–
1,826
71
1,366
233
156
(1) Includes goodwill of $100 million which arose on the previous acquisition of a 50% interest in Geita. As a result of the acquisition of Ashanti, Geita is now a wholly-owned subsidiary.
The provisional fair value adjustments in the above table represent the following:
• Revaluations of reserves and resources, land and buildings and plant and equipment to fair value
• Additional rehabilitation, deferred taxation and pension liability provision
• Write back of goodwill and intangibles
• Fair value of derivatives and hedge settlement contracts
• Settlement of pre-acquisition fund as part of merger with AngloGold.
7878v04_GC_Rp_p44-89_020305.qxp 4/3/05 12:51 pm Page 78
78 Anglo American plc Annual Report 2004
NOTES TO FINANCIAL STATEMENTS
CONTINUED
28 ACQUISITION OF SUBSIDIARIES CONTINUED
Roman Bauernfeind Holding AG
On 12 February 2004, following the announcement made on 10 December 2003, the directors allotted 5,309,286 ordinary shares
of 50 US cents each in consideration for the acquisition of the corrugated paper and packaging business of Roman Bauernfeind
Holding AG (‘Bauernfeind’). As a result of this transaction, Anglo American owned 100% of the Bauernfeind packaging business.
The loss after tax and minority interest of Bauernfeind for the period from 1 January 2004 to its acquisition on 12 February 2004
was —0.7 million. The loss after tax and minority interest for the period since acquisition to 31 December 2004 was €7.5 million.
The loss after tax and minority interest for the year ended 31 December 2003 was —20.5 million.
US$ million
Net assets acquired:
Intangibles
Tangible fixed assets
Other investments
Stocks
Debtors
Cash at bank and in hand
Short term borrowings
Other current liabilities
Long term borrowings
Provisions for liabilities and charges
Equity minority interests
Net tangible assets acquired
Goodwill arising on acquisition
Total cost of acquisition
Satisfied by:
Net cash acquired
Value of shares issued
Deferred consideration
Net cash paid
Book value
Revaluations
Accounting
policy
alignment
Provisional
fair
values
1
225
31
33
255
3
(100)
(276)
(121)
(26)
(4)
21
–
84
–
–
–
–
–
–
(1)
1
–
84
–
97
–
–
–
–
–
–
(97)
–
–
–
1
406
31
33
255
3
(100)
(276)
(219)
(25)
(4)
105
12
117
3
118
(5)
1
The provisional fair value adjustments in the above table represent the following:
• Revaluations of land and buildings and plant and equipment to fair value
• Accounting policy adjustments for the reclassification of operating leases to finance leases.
AngloGold Ashanti and Anglo Platinum
AngloGold merged with Ashanti Goldfields Company Limited on 26 April 2004. As a result of this transaction, the Group’s
shareholding decreased from 55.8% to 47.2% and the Group has therefore had to account for a deemed disposal in accordance with
FRS2 ‘Accounting for subsidiary undertakings’. The holding was subsequently increased to 51% through the purchase of additional
shares. During the year the Group acquired a further 5.2% interest in AngloGold Ashanti, in piecemeal acquisitions and a further
0.9% interest in Anglo Platinum. The profit after tax of AngloGold Ashanti and Anglo Platinum for 2004 was $100 million (AngloGold
2003: $330 million) and $392 million (2003: $277 million) respectively, as reported in their statutory accounts.
The assets and liabilities acquired are set out in the following table:
US$ million
Tangible fixed assets
Equity minority interests
Goodwill arising on acquisition
Total cost of acquisition
Satisfied by:
Net cash paid
Book amount
Revaluations
Fair value
Book amount
Revaluations
Fair value
AngloGold Ashanti
Anglo Platinum
–
15
15
59
–
59
–
140
140
325
–
325
325
140
465
–
465
465
59
15
74
–
74
74
Revaluations in the above table represent the revaluation of reserves and resources to fair value.
7878v04_GC_Rp_p44-89_020305.qxp 3/3/05 9:13 pm Page 79
Anglo American plc Annual Report 2004 79
28 ACQUISITION OF SUBSIDIARIES CONTINUED
Other acquisitions
The assets and liabilities acquired in other acquisitions during the year are set out in the following table:
US$ million
Net assets acquired:
Tangible fixed assets
Stocks
Debtors
Cash at bank and in hand
Short term borrowings
Other current liabilities
Long term borrowings
Provisions for liabilities and charges
Equity minority interests
Net tangible assets acquired
Goodwill arising on acquisition
Total cost of acquisition
Satisfied by:
Net cash acquired
Deferred consideration
Amounts paid in prior year
Net cash paid
Book
amount
Revaluations
Accounting
policy
alignments
Provisional
fair values
81
24
28
18
9
(32)
(4)
(9)
6
121
43
(1)
–
–
–
–
(1)
–
–
41
1
–
–
–
–
–
–
–
–
1
125
23
28
18
9
(32)
(5)
(9)
6
163
176
339
18
92
5
224
The provisional fair value adjustments in the above table represent the following:
• Revaluations, mainly reflecting the revaluation of mining properties and leases to fair value
• Accounting policy adjustments, reflecting adjustments for differences between local and UK GAAP.
Other acquisitions includes additional consideration and goodwill of $120 million relating to the acquisition of Minera Sur Andes
(formerly Disputada) in 2002. This is the maximum amount payable as a result of copper prices reaching a certain average threshold
since the date of acquisition. $34 million of this additional consideration has been paid to date.
Kumba
The Group completed its acquisition of Kumba on 5 December 2003. The fair values of the identifiable assets and liabilities have
been reassessed during the current year to reflect additional information which has become available concerning conditions that
existed on the date of acquisition. The resulting changes are set out in the following table:
US$ million
Net assets acquired:
Tangible fixed assets
Investments in joint ventures
Investments in associates
Other investments
Stocks
Debtors
Cash at bank and in hand
Short term borrowings
Other current liabilities
Long term borrowings
Provisions for liabilities and charges
Equity minority interests
Goodwill arising on acquisition
Total cost of acquisition
Fair value
as previously
reported
2004
fair value
adjustments
Fair value
as restated
1,959
2
14
27
228
193
190
(127)
(155)
(487)
(208)
(670)
966
–
966
40
–
–
(1)
–
1
–
–
(6)
(51)
17
–
–
–
–
1,999
2
14
26
228
194
190
(127)
(161)
(538)
(191)
(670)
966
–
966
The principal fair value adjustments in the above table represent the following resulting from additional information becoming available:
• Revaluation of reserves and resources
• Revised fair value for decommissioning assets
• Revised employee benefit accrual
• Revised fair values of fixed rate borrowings
• Deferred tax effect of the above.
7878v04_GC_Rp_p44-89_020305.qxp 2/3/05 11:28 pm Page 80
80 Anglo American plc Annual Report 2004
NOTES TO FINANCIAL STATEMENTS
CONTINUED
29 DISPOSAL OF SUBSIDIARIES AND BUSINESSES
US$ million
Net assets disposed:
Tangible fixed assets
Other investments
Stocks
Debtors
Current asset investment
Cash
Short term borrowings
Other current liabilities
Long term liabilities
Long term borrowings
Provisions for liabilities and charges
(Loss)/profit on disposal
Disposal proceeds
Total proceeds
Net cash disposed
Interest in joint venture with net liabilities
Deferred consideration or allotted shares
Net cash inflow from disposal of subsidiaries during the year
Hudson
Bay
Other
disposals
313
1
49
72
19
20
(4)
(55)
–
(23)
(93)
(42)
257
257
(20)
–
(11)
226
78
–
10
38
–
–
(2)
(19)
–
–
(5)
30
130
130
–
46
–
176
2004
Total
391
1
59
110
19
20
(6)
(74)
–
(23)
(98)
(12)
387
387
(20)
46
(11)
402
2003
Total
34
–
10
20
–
–
(3)
(26)
(2)
–
(25)
9
17
17
–
–
(14)
3
AngloGold merged with Ashanti Goldfields Company Limited on 26 April 2004. As a result of this transaction, the Group’s
shareholding decreased from 55.8% to 47.2% and the Group has therefore had to account for a deemed disposal in accordance with
FRS2 ‘Accounting for subsidiary undertakings’. The holding was subsequently increased to 51% through the purchase of additional
shares.
As a result of the deemed disposal on the merger of AngloGold with Ashanti Goldfields Company Limited an unrealised profit of
$410 million has been recorded in the Statement of Total Recognised Gains and Losses.
Subsidiaries disposed of in the year principally include Hudson Bay, which was sold in December 2004.
The cash flows of the disposed subsidiaries did not have a material effect on the cash flow statement.
30 CAPITAL COMMITMENTS
US$ million
Contracted but not provided
2004
825
2003
873
31 CONTINGENT LIABILITIES
Contingent liabilities comprise aggregate amounts of $272 million (2003: $290 million) in respect of loans and performance
guarantees given to banks and other third parties.
AngloGold North America has $30 million of reclamation bonds with various federal and governmental agencies, to cover potential
environmental obligations. These obligations are guaranteed by AngloGold Ashanti Limited.
There are a number of legal or potential claims against the Group, the outcome of which cannot at present be foreseen. Provision is
made for all liabilities that are expected to materialise.
In addition to the amounts relating to Group companies above, under Chilean law payment of customs duties associated with capital
assets can be deferred for up to seven years. As at 31 December 2004, Collahuasi has potential deferred customs duties of $3 million
(2003: $11 million).
7878v04_GC_Rp_p44-89_020305.qxp 2/3/05 11:28 pm Page 81
Anglo American plc Annual Report 2004 81
32 OPERATING LEASES
At 31 December 2004, the Group was committed to making the following payments during the next year in respect of operating
leases:
US$ million
Expiry date:
Within one year
Two to five years
After five years
Land and
buildings
34
75
85
194
2004
Other
28
53
9
90
Land and
buildings
20
72
37
129
2003
Other
19
38
17
74
33 RETIREMENT BENEFITS
The Group operates defined contribution and defined benefit pension plans for the majority of its employees. It also operates post-
retirement medical arrangements in southern Africa and North America. The policy for accounting for pensions and post-retirement
benefits is included in note 1.
The assets of the defined contribution plans are held separately in independently administered funds. The charge in respect of these
plans is calculated on the basis of contributions payable by the Group in the financial year.
The post-retirement medical arrangements provide health benefits to retired employees and certain dependants. Eligibility for cover is
dependent upon certain criteria. The majority of these plans are unfunded.
The majority of the defined benefit pension plans are funded. The assets of these plans are held separately from those of the Group
in independently administered funds, in accordance with statutory requirements or local practice throughout the world. The unfunded
pension plans are principally in Europe and South America.
The retirement benefit charge for the year is as follows:
US$ million
Defined contribution pension plans
Defined benefit pension plans
Post-retirement medical plans
2004
167
106
55
2003
131
108
54
Defined contribution plans
The defined contribution pension cost represents the actual contributions payable by the Group to the various plans. At 31 December
2004, there were no material outstanding/prepaid contributions and so no prepayment or accrual has been disclosed in the balance
sheet in relation to these plans.
Defined benefit plans
The above defined benefit pension plan cost consists of a regular cost of $73 million (2003: $63 million) and a variation cost of
$33 million (2003: $45 million). The Group adopts a straight-line method of amortising unrecognised amounts over the future
working lifetimes of active employees.
Post-retirement medical plans
The accumulated benefit obligation and the annual cost of accrual of benefits are assessed by independent qualified actuaries
using the projected unit method. The accumulated benefit obligation calculated as at 31 December 2004 was $632 million
(2003: $527 million). The provision recorded on the balance sheet as at 31 December 2004 amounted to $529 million
(2003: $465 million).
7878v04_GC_Rp_p44-89_020305.qxp 2/3/05 11:28 pm Page 82
82 Anglo American plc Annual Report 2004
NOTES TO FINANCIAL STATEMENTS
CONTINUED
33 RETIREMENT BENEFITS CONTINUED
Defined benefit pension plans
Qualified actuaries carry out full valuations every three years using the projected unit method. The actuaries have updated the
valuations to 31 December 2004. The actuary to the majority of the South African pension plans is an employee of the Group and is
supported by external advisors. The actuaries to the other plans are independent of the Group.
At 31 December 2004 the estimated market value of the assets of the funded pension plans was $3,479 million (2003: $2,831
million). The market value of assets was used to determine the funding level of the plans. The market value of the assets of the
funded plans was sufficient to cover 91% (2003: 90%) of the benefits that had accrued to members after allowing for expected
increases in future earnings and pensions. In particular, the funding levels of the UK funded pension plans have fallen in the past
year as a result of an increase in the inflation assumption, although this has been offset by increasing asset values. Companies
within the Group are paying contributions as required in accordance with local actuarial advice.
As the majority of the defined benefit pension plans are closed to new members, it is expected that contributions will increase as
the members age. The benefit obligations in respect of the unfunded plans at 31 December 2004 were $182 million (2003:
$154 million).
To the extent that there is a difference between pension costs and contributions paid, a prepayment or provision arises.
The accumulated difference provided in the balance sheet at 31 December 2004 gives rise to a prepayment of $178 million
(2003: $170 million) and a provision of $224 million (2003: $216 million).
Actuarial assumptions
The principal assumptions used to determine the actuarial present value of benefit obligations and pension costs under SSAP 24 are
detailed below (shown as weighted averages):
Average discount rate for
plan liabilities
Average rate of inflation
Average rate of increase
in salaries
Average rate of increase of
pensions in payment
Average long term rate of
return on plan assets
Expected average increase
in healthcare costs
Southern
Africa
%
The
Americas
%
8.0
3.9
4.9
3.9
9.4
5.3
7.6
3.3
4.8
5.0
9.6
9.3
2004
Europe
%
5.3
2.7
3.5
2.8
6.7
N/A
Southern
Africa
%
The
Americas
%
9.9
5.7
6.8
5.7
11.0
6.6
7.3
2.9
4.7
5.0
8.7
7.7
2003
Europe
%
5.5
2.6
3.4
2.8
7.0
N/A
Southern
Africa
%
The
Americas
%
11.5
7.4
8.5
7.3
11.9
9.8
7.2
3.0
4.8
3.8
8.2
6.1
2002
Europe
%
5.6
2.3
3.1
2.6
6.9
N/A
FRS 17 background
In November 2000 the Accounting Standards Board issued FRS 17 ‘Retirement Benefits’ replacing SSAP 24 ‘Accounting for Pension
Costs’. The full implementation of FRS 17 has been deferred, though certain disclosures are required in the transition period for
periods ending on or after 22 June 2001. These further disclosures are included below.
Under SSAP 24, the projected unit method was one of the acceptable valuation methods. Under FRS 17, it is the only acceptable
method of valuation. The pension plans have been valued historically using the projected unit method and so there is no change to
the method of valuation of the defined benefit plans.
7878v04_GC_Rp_p44-89_020305.qxp 2/3/05 11:28 pm Page 83
Anglo American plc Annual Report 2004 83
33 RETIREMENT BENEFITS CONTINUED
FRS 17 balance sheet disclosure
Under FRS 17, the assumption for the average discount rate for plan liabilities is based on AA corporate bonds of a suitable duration
and currency. The discount rate and other actuarial assumptions are generally the same as for SSAP 24 and are given above. As
stated above, the principal funded schemes all relate to defined benefit pension plans. The market value of the assets in these plans
and the long term expected rate of return as at 31 December 2004, 31 December 2003 and 31 December 2002 are detailed below.
At 31 December 2004
Equity
Bonds
Other
Present value of pension plan liabilities
Deficit in the pension plans
Deferred tax
Net pension liability
At 31 December 2003
Equity
Bonds
Other
Present value of pension plan liabilities
Deficit in the pension plans
Deferred tax
Net pension liability
At 31 December 2002
Equity
Bonds
Other
Present value of pension plan liabilities
Deficit in the pension plans
Deferred tax
Net pension liability
Southern Africa
The Americas
Europe
Total
Rate of
return %
Fair value
US$ million
Rate of
return %
Fair value
US$ million
Rate of
return %
Fair value
US$ million
Fair value
US$ million
11.3
7.4
7.5
990
327
656
1,973
(1,994)
(21)
6
(15)
9.3
9.8
9.2
58
111
4
173
(276)
(103)
31
(72)
7.9
5.0
5.5
778
459
96
1,333
1,826
897
756
3,479
(1,724)
(3,994)
(391)
117
(274)
(515)
154
(361)
Southern Africa
The Americas
Europe
Total
Rate of
return %
Fair value
US$ million
Rate of
return %
Fair value
US$ million
Rate of
return %
Fair value
US$ million
Fair value
US$ million
12.4
8.8
8.7
918
230
312
1,460
(1,484)
(24)
7
(17)
8.5
9.0
6.4
105
119
10
234
(366)
(132)
40
(92)
7.9
5.0
5.1
773
334
30
1,137
1,796
683
352
2,831
(1,462)
(3,312)
(325)
97
(228)
(481)
144
(337)
Southern Africa
The Americas
Europe
Total
Rate of
return %
Fair value
US$ million
Rate of
return %
Fair value
US$ million
Rate of
return %
Fair value
US$ million
Fair value
US$ million
12.9
9.7
9.6
729
214
119
1,062
(1,068)
(6)
2
(4)
8.9
8.1
3.3
69
77
9
155
(261)
(106)
32
(74)
7.8
5.3
6.0
572
292
28
892
1,370
583
156
2,109
(1,162)
(2,491)
(270)
81
(189)
(382)
115
(267)
The increase in southern African pension plan assets and liabilities during 2003 and 2004 is principally a result of the strengthening
of the South African rand against the US dollar and lower discount rate assumptions.
7878v04_GC_Rp_p44-89_020305.qxp 4/3/05 12:54 pm Page 84
84 Anglo American plc Annual Report 2004
NOTES TO FINANCIAL STATEMENTS
CONTINUED
33 RETIREMENT BENEFITS CONTINUED
The Group is continuing to review the impact of legislation passed in 2001 in South Africa on the useable surpluses in its South
African plans. The actuaries to the Group plans have not yet finalised their calculations in respect of the apportionment of the
surplus from the plans. The liabilities shown above in respect of South Africa have been increased where applicable based on the
actuaries’ current estimates of complying with this new legislation at the relevant date.
The net pension liability comprises $19 million in respect of plans in surplus (2003: $17 million) and $380 million in respect of
plans in deficit (2003: $354 million).
The net post-retirement medical plan liability arises as follows:
US$ million
Southern
Africa
The
Americas
2004
Total
Southern
Africa
The
Americas
2003
Total
Southern
Africa
The
Americas
2002
Total
Present value of post-retirement
medical plan liabilities
Deferred tax
(621)
186
(11)
3
(632)
189
(486)
146
(41)
12
(527)
158
(359)
108
(33)
10
(392)
118
Net post-retirement medical
plan liability
(435)
(8)
(443)
(340)
(29)
(369)
(251)
(23)
(274)
The Group’s provision of anti-retroviral therapy to HIV positive staff has not significantly impacted the post-retirement medical plan
liability.
FRS 17 Profit and Loss account disclosure
Had the company adopted FRS 17 early, amounts included in the consolidated profit and loss account in respect of defined benefit
pension and post-retirement medical plans would have been as follows:
US$ million
Analysis of the amount charged to operating profit
Current service cost
Past service costs
Other amounts charged to profit and loss
(curtailments and settlements)
Total operating charge
Analysis of the amount charged to other finance income
Expected return on plan assets
Interest cost on plan liabilities
Net charge to other finance(income)/costs
Total charge to profit and loss account
Pension Post-retirement
medical plans
plans
73
8
(1)
80
(257)
248
(9)
71
7
–
(2)
5
–
50
50
55
2004
Total
plans
80
8
(3)
85
(257)
298
41
126
Pension Post-retirement
medical plans
plans
63
10
(2)
71
(217)
224
7
78
7
16
(12)
11
–
48
48
59
2003
Total
plans
70
26
(14)
82
(217)
272
55
137
FRS 17 Statement of Total Recognised Gains and Losses (STRGL) disclosure
Amounts included in the consolidated STRGL in respect of defined benefit pension plans and post-retirement medical plans would
have been stated as follows:
US$ million
Difference between actual and
expected return on plan assets
– gain/(losses)
Experience (losses)/gains arising
on plan liabilities
Effects of changes in
assumptions underlying the
plan liabilities – (loss)/gain
Total actuarial (losses)/gains
recognised in the STRGL
Pension Post-retirement
medical plans
plans
2004
Total
plans
Pension Post-retirement
medical plans
plans
2003
Total
plans
Pension Post-retirement
medical plans
plans
163
(20)
–
(7)
163
108
(27)
–
–
(9)
108
(370)
(9)
168
(178)
(15)
(193)
(145)
(3)
(148)
(37)
(35)
(22)
(57)
(37)
(12)
(49)
(239)
–
29
4
33
2002
Total
plans
(370)
197
(33)
(206)
The gain of $163 million (2003: $108 million; 2002: loss of $370 million) between actual and expected return on plan assets is
5% (2003: 4%; 2002: 18%) of the plan assets at 31 December 2004. The experience loss of $27 million (2003: $9 million;
2002: gain of $197 million) arising on the plan liabilities represents less than 1% (2003: less than 1%; 2002: 7%) of the present
value of the plan liabilities at 31 December 2004. The total actuarial loss of $57 million (2003: $49 million; 2002: $206 million)
represents 1% (2003: 1%; 2002: 7%) of the present value of the plan liabilities at 31 December 2004.
7878v04_GC_Rp_p44-89_020305.qxp 3/3/05 9:26 pm Page 85
Anglo American plc Annual Report 2004 85
33 RETIREMENT BENEFITS CONTINUED
FRS 17 liability disclosure
The movement during 2004 and 2003 in the FRS 17 pension and post-retirement medical liability (before allowance for deferred
tax) shown above can be analysed as follows:
US$ million
As at 1 January
Current service cost
Contributions
Acquisitions and disposals of subsidiaries
Past service costs and effects of settlements and curtailments
Net finance costs
Actuarial losses
Currency movements
As at 31 December
(481)
(73)
89
20
(7)
9
(35)
(37)
(515)
Pension Post-retirement
medical plans
plans
Pension Post-retirement
medical plans
plans
2004
Total
plans
(1,008)
(80)
134
49
(5)
(41)
(57)
(139)
(527)
(7)
45
29
2
(50)
(22)
(102)
2003
Total
plans
(774)
(70)
123
(6)
(12)
(55)
(49)
(165)
(392)
(7)
47
–
(4)
(48)
(12)
(111)
(382)
(63)
76
(6)
(8)
(7)
(37)
(54)
(481)
(632)
(1,147)
(527)
(1,008)
Had the company adopted FRS 17 early, the consolidated profit and loss reserve would have been restated as follows:
US$ million
Profit and loss reserve at 31 December in the financial statements
Less: FRS 17 Retirement benefit reserve
Add: SSAP 24 balances:
Prepayment (see note 18)
Pension provision (see note 23)
Post-retirement medical provision (see note 23)
Less: attributable deferred tax
Profit and loss reserve as adjusted
2004
21,413
(804)
402
(178)
224
529
(173)
2003
(as restated)
16,574
(706)
357
(170)
216
465
(154)
21,011
16,225
The above table does not include a restatement of the charges for pension and post-retirement medical plans in the current year
profit and loss account that would arise from the adoption of FRS 17.
Potential volatility of FRS 17
The method for calculating the net pension asset under FRS 17 would lead to volatility in the amount to be included in the balance
sheet. Pension plan liabilities are measured by reference to long term AA bond yields that can move substantially and rapidly
according to market conditions. The plans’ assets, which principally comprise equities, are also subject to large market swings.
34 RELATED PARTY TRANSACTIONS
With effect from 1 June 2001, the cross-holding between Anglo American and De Beers was eliminated and Anglo American now
accounts for its 45% interest in DB Investments (DBI), the new holding company of De Beers Société Anonyme. As a result of
De Beers’ partial interest in Debswana Diamond Company (Proprietary) Limited (one of the shareholders in DBI), Anglo American
accounted for an additional 3.65% of DBI’s post-tax equity earnings. As part of an agreement to extend a number of mining
licences, this partial interest has been ceded by De Beers to the Government of the Republic of Botswana. Following this
restructuring, Anglo American will account only for its direct 45% interest in DBI. Furthermore, Anglo American accounts for the
dividends attributable to 10% non-cumulative preference shares with a redemption value of $526 million in DBI as part of operating
profit, on the basis that the preference shares are part of Anglo American’s investment in the diamond business.
The Company and its subsidiaries, in the ordinary course of business, enter into various sales, purchase and service transactions
with joint ventures and associates and others in which the Group has a material interest. These transactions are under terms that
are no less favourable than those arranged with third parties. These transactions, in total, are not considered to be significant.
Amounts owing to the Group by joint ventures are disclosed in note 18. Dividends received from joint ventures and associates
during the year totalled $408 million (2003: $426 million), as disclosed in the consolidated cash flow statement on page 49.
7878v04_GC_Rp_p44-89_020305.qxp 2/3/05 11:28 pm Page 86
86 Anglo American plc Annual Report 2004
NOTES TO FINANCIAL STATEMENTS
CONTINUED
35 RECONCILIATION OF NET OPERATING ASSETS TO NET ASSETS
US$ million
Net operating assets (see note 2)
Fixed asset investments(1)
Current asset investments
Cash at bank and in hand
Other non-operating assets and liabilities
Long term liabilities
Provisions for liabilities and charges
Equity minority interests
Non-equity minority interests
Proposed dividend
Net assets
2004
2003
37,601
6,731
575
2,086
(4,206)
(7,449)
(4,986)
(4,445)
(175)
(734)
29,709
7,206
1,032
1,094
(4,700)
(6,665)
(3,954)
(3,396)
–
(554)
24,998
19,772
(1) As restated for the adoption of Urgent Issues Task Force (UITF) abstract 38 ‘Accounting for ESOP trusts’. See note 1 to the financial statements.
36 FINANCIAL STATEMENTS OF THE PARENT COMPANY
Profit and loss of parent
As permitted by section 230 of the Companies Act, the profit and loss account of the parent company is not presented as part of these
financial statements. The profit after tax for the year for the parent company amounted to $976 million (2003: loss of $254 million).
Balance sheet
The parent company’s balance sheet is shown on page 51.
Statement of movement in shareholders’ funds and movement of reserves
US$ million
Balance at 1 January 2004 (as previously reported)
Prior year adjustment
At 1 January 2004 (as restated)
Profit for the financial year
Employee share scheme credit
Shares issued
Dividends paid and proposed
At 31 December 2004
Issued
share
capital
738
–
738
–
–
9
–
747
Share
premium
account
1,284
–
1,284
–
–
349
–
1,633
Capital
redemption
reserve
82
–
82
–
–
–
–
82
Other
reserve
–
–
–
1,955(1)
–
–
–
Profit
and loss
account
750
(622)
128
976
31
–
(594)
Total
2,854
(622)
2,232
2,931
31
358
(594)
1,955
541
4,958
(1) On 1 October 2004, AA plc transferred AA Holdings to AA Services. The gain on this disposal of $1,955 million has been taken as an unrealised gain to reserves, as it does not constitute a
realised profit or loss.
Dividends paid and proposed relate only to shareholders on the United Kingdom principal register excluding dividends waived by
Greenwood Nominees Limited as nominees for Butterfield Trust (Guernsey) Limited, the trustee for the Anglo American employee
share scheme. Dividends paid to shareholders on the Johannesburg branch register are distributed by a South African subsidiary in
accordance with the terms of the Dividend Access Share Provisions of Anglo American plc’s articles of association.
7878v04_GC_Rp_p44-89_020305.qxp 4/3/05 12:37 pm Page 87
Anglo American plc Annual Report 2004 87
36 FINANCIAL STATEMENTS OF THE PARENT COMPANY CONTINUED
Fixed asset investments
US$ million
Cost
At 1 January 2004 (as previously reported)
Prior year adjustment
At 1 January 2004 (as restated)
Acquisitions
Disposals
At 31 December 2004
Provisions for impairment
At 1 January 2004 (as previously reported)
Prior year adjustment(1)
At 1 January 2004 (as restated)
Charge for the year
At 31 December 2004
Net book value
At 31 December 2004
At 31 December 2003 (as restated)
Investment
in subsidiaries’
equity
Own
shares
Total
9,513
–
9,513
8,510
(5,564)
12,459
693
(693)
10,206
(693)
–
–
–
–
9,513
8,510
(5,564)
12,459
(8)
–
(8)
–
(8)
12,451
9,505
(71)
71
–
–
–
–
–
(79)
71
(8)
–
(8)
12,451
9,505
(1) The Group and the Company have adopted Urgent Issues Task Force (UITF)38, ‘Accounting for ESOP Trusts’. As required by this abstract, own shares held by employee trusts have been
reclassified from fixed asset investments and are now recorded as a reduction in Shareholders’ Funds. See note 1.
The audit fee in respect of the parent company was $26,000 (2003: $20,000).
7878v04_GC_Rp_p44-89_020305.qxp 3/3/05 9:29 pm Page 88
88 Anglo American plc Annual Report 2004
NOTES TO FINANCIAL STATEMENTS
CONTINUED
37 GROUP COMPANIES
The principal subsidiaries, joint ventures, associates and proportionally consolidated joint arrangements of the Group at 31 December
2004, and the Group percentage of equity capital, joint arrangements and joint venture interests are set out below. All these interests
are held indirectly by the parent company and are consolidated within these financial statements. The Group has restricted the information
to its principal subsidiaries as full compliance with section 231(b) of the Companies Act would result in a statement of excessive length.
Country of
incorporation
Business
Percentage of
equity owned(1)
Subsidiary undertakings
Platinum
Anglo American Platinum Corporation Limited
Gold
AngloGold Ashanti Limited (formerly AngloGold Limited)
Coal
Anglo Coal(2)
Anglo Coal (Callide) Pty Limited
South Africa
Platinum
South Africa
South Africa
Australia
Gold
Coal
Coal
Base Metals
Black Mountain Mineral Development(2)
Namakwa Sands(2)
Gamsberg Zinc Corporation(2)
Bamisa – Barro Alto Mineração Limitada
Ambase Exploration (Namibia) Proprietary Limited (Skorpion) Namibia
Anglo American of South America Limitada (Catalão)
Minera Sur Andes Limitada
Empresa Minera de Mantos Blancos SA
Codemin SA
Minera Loma de Níquel, CA
Minera Quellaveco SA
Lisheen
Brazil
Chile
Chile
Brazil
Venezuela
Peru
Ireland
South Africa
South Africa
South Africa
Brazil
Copper, zinc and lead
Mineral sands
Zinc project
Nickel project
Zinc
Niobium
Copper
Copper
Nickel
Nickel
Copper project
Zinc and lead
Industrial Minerals
Tarmac Group Limited
Tarmac France SA
Bilfinger Berger Baustoffe GmbH
Lausitzer Grauwacke GmbH
Tarmac Iberia SA
WKSM SA
Tarmac Severokamen A.S.
Copebrás Limitada
Midland Quarry Products Limited
UK
France
Germany
Germany
Spain
Poland
Czech Republic
Brazil
UK
Construction materials
Construction materials
Construction materials
Construction materials
Construction materials
Construction materials
Construction materials
Fertilisers and sodium tripolyphosphate
Construction materials
Ferrous Metals and Industries
Scaw Metals(2)/Moly-Cop
Highveld Steel and Vanadium Corporation Limited
Kumba Resources Limited
Boart Longyear(2)/Boart Longyear Limited
The Tongaat-Hulett Group Limited
South Africa/Chile
South Africa
South Africa
South Africa
South Africa
100
Steel and engineering works
79.5
Steel, vanadium and ferroalloys
Iron ore, coal and heavy minerals
66.6
Tools, equipment and contracting services 100
52.5
Sugar, starch and aluminum
Paper and Packaging
Mondi Business Paper Holdings AG (formerly Neusiedler)
Mondi South Africa Limited
Mondi Packaging AG(3)(formerly Frantschach)
Mondi Packaging Europe SA
Mondi Packaging Holdings AG (holds Roman Bauernfeind gp) Austria
Frantschach Swiecie SA (now Mondi Packaging Paper
Swiecie SA)
Mondi Packaging South Africa(4)
Europapier AG
Austria
South Africa
Austria
Luxembourg
Poland
South Africa
Austria
(1) The proportion of voting rights of subsidiaries held by the Group is the same as the proportion of equity owned.
(2) A division of Anglo Operations Limited, a wholly-owned subsidiary.
(3) The acquisition of the minority stake was completed on 5 April 2004.
(4) The disposal of 42% to Shanduka Resources will be effective 1 January 2005.
Business paper
Business paper
Packaging
Packaging
Packaging
Packaging
Packaging South Africa
Paper merchanting
100
100
100
100
100
72
100
100
74.8
51
100
100
100
100
100
100
100
100
100
99.9
100
91.4
80
100
100
100
100
100
100
100
100
73
50
7878v04_GC_Rp_p44-89_020305.qxp 4/3/05 12:38 pm Page 89
Anglo American plc Annual Report 2004 89
37 GROUP COMPANIES CONTINUED
Joint ventures
Aylesford Newsprint Holdings Limited
Compañia Minera Doña Inés de Collahuasi SCM
Mondi Shanduka Newsprint
United Marine Holdings Ltd
Country of
incorporation
UK
Chile
South Africa
UK
Associates
DB Investments SA
Luxembourg
Queensland Coal Mine Management (Pty) Ltd
Australia
Cerrejón Zona Norte SA
Colombia
Carbones del Cerrejón LLC
Anguilla
Carbones del Guasare SA
Venezuela
Samancor Limited
South Africa
Australia
Groote Eylandt Mining Company (Pty) Ltd (Gemco)
Tasmanian Electro Metallurgical Company (Pty) Ltd (Temco) Australia
Palabora Mining Company Limited
South Africa
Business
Newsprint
Copper
Newsprint
Construction materials
Diamonds
Coal
Coal
Coal
Coal
Chrome and manganese
Manganese
Manganese
Copper
Percentage of
equity owned(6)
50
44
58
50
45
33.3
33.3
33.3
24.9
40
40
40
28.7
Location
Business
Percentage owned
Proportionally consolidated joint arrangements(5)
Drayton
Moranbah North
Dartbrook
German Creek
Moura
Australia
Australia
Australia
Australia
Australia
Coal
Coal
Coal
Coal
Coal
(5) The wholly-owned subsidiary Anglo Coal Holdings Australia Limited holds the proportionally consolidated joint arrangements.
(6) All equity interests shown are ordinary shares.
88
88
78
70
51
38 EVENTS OCCURRING AFTER END OF YEAR
On 1 January 2005, Mondi completed the sale of a 42% equity stake in a new entity which will own Mondi’s South African
packaging businesses. The new entity, Mondi Packaging South Africa, now includes Mondi’s board and paper mills at Springs,
Felixton and Piet Retief, its corrugated converting business (Mondipak) and its waste paper collection and processing operations
(Mondi Recycling) and has an enterprise value of $370 million. Mondi has set aside a further 3% interest for broad-based
participation by Mondi South Africa employees and relevant communities.
In January 2005, Highveld Steel and Samancor sold half of their shareholdings in Acerinox. Anglo American’s attributable share of
the proceeds was $69 million.
On 17 February 2005, BHP Billiton and Anglo American announced that they had reached agreement for the sale of Samancor
Chrome to the Kermas Group for an enterprise value of $469 million. The sale will be effective 1 April 2005, subject to obtaining
regulatory approvals.
7878v04_GC_Rp_p90-ibc#86609.qxp 2/3/05 11:13 pm Page 90
90 Anglo American plc Annual Report 2004
ORE RESERVES AND MINERAL RESOURCES
INTRODUCTION
The Ore Reserves and Mineral Resources estimates presented in this report are prepared in accordance with the Anglo American plc
(AA plc) Policy for the Reporting of Ore Reserves and Mineral Resources. This policy requires that the Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves 2004 edition (the JORC Code) be used as a minimum
standard. Some AA plc subsidiary companies have a primary listing in South Africa where public reporting is carried out according
to the ‘South African Code for Reporting of Mineral Resources and Mineral Reserves’ (the SAMREC Code). The SAMREC Code is
similar to the JORC Code and the Ore Reserve and Mineral Resource terminology appearing in this section follows the definitions
in both the JORC (2004) and SAMREC Codes.
The information on Ore Reserves and Mineral Resources was prepared by or under the supervision of Competent Persons as defined
in the JORC or SAMREC Codes. All Competent Persons have sufficient experience relevant to the style of mineralisation and type
of deposit under consideration and to the activity which he/she is undertaking. All the Competent Persons consent to the inclusion
in this report of the matters based on their information in the form and context in which it appears. The names of the Competent
Persons are lodged with the AA plc company secretaries in London and are available on request.
Anglo American Group Companies are subject to a comprehensive programme of audits aimed at providing assurance in respect of
Ore Reserve and Mineral Resource estimates. The audits are conducted by people who qualify as Competent Persons from within
a particular division, from another division of the Company or from independent consultants. The frequency and depth of the audits
is a function of the risks/uncertainties associated with the estimates of a particular Ore Reserve and Mineral Resource, the overall
value thereof and the time that has lapsed since an independent third party audit has been conducted. Those operations/projects
subject to recent independent, third party audits are indicated in footnotes to the tables.
The JORC and SAMREC Codes require the use of reasonable economic assumptions. These include long-range commodity price
and exchange rate forecasts, which are prepared by in-house specialists largely using estimates of future supply and demand and
long-term economic outlooks. Ore Reserves are dynamic and are influenced by changing economic conditions, technical issues,
environmental regulations and additional information and therefore estimates can vary from year to year. Mineral Resource estimates
tend to be influenced mostly by additional information and transfers to Ore Reserves.
The estimates of Ore Reserves and Mineral Resources are as at 31 December 2004. Unless otherwise stated, Mineral Resources
are additional to Ore Reserves. The figures in the tables have been rounded and, if used to derive totals and averages, could cause
minor computational differences.
7878v04_GC_Rp_p90-ibc#86609.qxp 3/3/05 9:33 pm Page 91
Anglo American plc Annual Report 2004 91
PLATINUM
(stated as at 31 December 2004). The Group’s Ore Reserve and Mineral Resource estimates were compiled in accordance with the
Australasian Code for Reporting of Mineral Resources and Ore Reserves (The JORC Code, 2004) as a minimum standard. Where
relevant, the estimates were also prepared in compliance with regional codes and requirements (e.g. The South African Code for
Reporting of Mineral Resources and Mineral Reserves, The SAMREC Code, 2000). The Mineral Resources are additional to the Ore
Reserves.
The figures reported represent 100% of the Mineral Resources and Ore Reserves unless otherwise noted. AA plc’s interest in Anglo
Platinum is 74.84%.
Grade(1)
2003
Contained
metal tonnes
Contained metal
ounces (million)
2004
2003
2004
2003
Anglo Platinum Ore Reserves
Operations/Projects by reef
Merensky Reef(2)
Classification
Proved
Probable
Total
Proved
Probable
Total
Proved
Proved (stockpiles)
Probable
Total
Proved
Probable
Total metric
UG2 Reef(3)
Platreef(4)
All Reefs
Tonnes
(million)
2003
71.0
145.4
216.4
166.3
462.8
629.1
4.0
7.9
311.3
323.1
249.2
919.4
1,168.6
2004
91.3
124.8
216.0
229.5
362.3
591.8
246.8
9.9
92.0
348.7
577.6
579.1
1,156.6
2004
g/t
5.57
6.14
5.90
4.12
4.41
4.29
3.34
2.91
4.09
3.53
4.00
4.73
4.36
g/t
5.62
6.18
6.00
4.34
4.40
4.38
3.03
3.23
2.65
2.67
4.65
4.09
4.21
Total Imperial(6)
1,275.0Mton 1,288.1Mton
Tailings(5)
Proved
Probable
Total metric
–
33.5
33.5
Total Imperial(6)
37.0Mton
Rounding of figures may cause computational discrepancies.
–
–
–
–
0.127oz/t
–
1.10
1.10
0.032oz/t
0.123oz/t
–
–
–
–
508.9
765.8
1,274.7
944.8
1,596.9
2,541.7
825.5
28.9
376.0
1,230.4
2,308.0
2,738.8
5,046.8
–
36.9
36.9
399.4
899.0
1,298.4
721.7
2,034.0
2,755.7
12.0
25.5
826.1
863.6
1,158.6
3,759.0
4,917.7
16.4
24.6
41.0
30.4
51.3
81.7
26.5
0.9
12.1
39.6
74.2
88.1
162.3
–
1.2
–
–
–
12.8
28.9
41.7
23.2
65.4
88.6
0.4
0.8
26.6
27.8
37.3
120.9
158.1
–
–
1.2
–
(1) 4E PGE grade: sum of platinum, palladium, rhodium and gold grades in grammes per tonne.
(2) The global tonnage and grade remain largely unaffected compared with 2003. The proved reserves increased by 28% (20Mt).
(3) The decrease in the tonnage by 6% (37Mt) is partially due to the reallocation of reserves to resources and the narrower resource widths being modelled in the deeper areas at Union
and Amandelbult sections.
(4) Exploration results have generated improved confidence in the reserve. These results account for the substantial increase in Proved Ore Reserves. Finalisation of modelling of reserves
in the PPL North project has had a major influence on grade estimates. Within the PPRust open pit, material lying between 1.0 g/t and 1.7 g/t will be stockpiled on surface and does not report
to reserves. The Platreef is mined by open pit.
(5) Tailings are reported separately as resources and reserves but are not aggregated to the global resource and reserve summation tabulations due to their significantly different
characteristics and the calculation thereof.
(6) Total Imperial units: tonnage is reported in million short tons (Mton), grade in troy ounces per short ton (oz/t) and contained metal in million troy ounces (Moz).
During 2004 the geostatistical processes of the South African operations and projects were reviewed by an external third party consulting firm.
7878v04_GC_Rp_p90-ibc#86609.qxp 3/3/05 9:35 pm Page 92
92 Anglo American plc Annual Report 2004
ORE RESERVES AND MINERAL RESOURCES
CONTINUED
PLATINUM CONTINUED
Anglo Platinum – Mineral Resources
Operations/Projects by reef
UG2 Reef(3)
Classification
Merensky Reef(2) Measured
Indicated
Measured and Indicated
Inferred
Total
Measured
Indicated
Measured and Indicated
Inferred
Total
Measured
Indicated
Measured and Indicated
Inferred
Total
Measured
Indicated
Platreef(4)
All Reefs
Measured and Indicated
Inferred
Total metric
Tailings(5)
Total Imperial(6)
Measured
Indicated
Measured and Indicated
Inferred
Total metric
Grade(1)
2003
Contained
metal tonnes
Contained metal
ounces (million)
2004
2003
2004
2003
Tonnes
(million)
2003
60.6
238.5
299.2
1,082.1
1,381.2
288.5
595.2
883.7
1,958.2
2,841.9
11.9
338.9
350.8
153.6
504.4
361.0
1,172.6
1,533.6
3,193.8
4,727.5
2004
76.1
261.4
337.5
1,138.9
1,476.4
312.0
766.8
1,078.9
1,648.2
2,727.1
148.5
309.2
457.7
575.5
1,033.2
536.7
1,337.4
1,874.1
3,362.6
5,236.6
2004
g/t
5.23
5.63
5.54
5.53
5.53
5.25
5.12
5.16
5.30
5.24
1.88
2.49
2.29
1.37
1.78
4.31
4.61
4.53
4.70
4.64
398.3
1,470.4
1,868.7
6,299.4
8,168.1
1,638.8
3,925.4
5,564.2
8,732.1
g/t
297.1
4.90
1,274.4
5.34
1,571.5
5.25
5,917.2
5.47
7,488.7
5.42
1,506.6
5.22
3,128.5
5.26
4,635.1
5.25
5.05
9,895.2
5.11 14,296.3 14,530.3
20.7
278.6
1.74
800.8
769.0
2.36
821.6
1,047.6
2.34
374.1
788.6
2.44
1,195.7
1,836.2
2.37
1,824.4
2,315.7
5.05
5,203.8
6,164.8
4.44
8,480.5
4.58
7,028.2
5.07 15,820.1 16,186.6
4.91 24,300.6 23,214.7
5,772.4Mton 5,211.1Mton 0.135oz/t 0.143oz/t
–
180.1
180.1
–
180.1
–
219.0
219.0
–
219.0
–
1.03
1.03
–
1.03
–
1.08
1.08
–
1.08
–
186.4
186.4
–
186.4
–
235.8
235.8
–
235.8
12.8
47.3
60.1
202.5
262.6
52.7
126.2
178.9
280.7
459.6
9.0
24.7
33.7
25.4
59.0
74.5
198.2
272.7
508.6
781.3
–
6.0
6.0
–
9.6
41.0
50.5
190.2
240.8
48.4
100.6
149.0
318.1
467.2
0.7
25.7
26.4
12.0
38.4
58.7
167.3
226.0
520.4
746.4
–
7.6
7.6
–
Total Imperial(6)
198.5Mton 241.4Mton 0.030oz/t 0.031oz/t
6.0
7.6
Rounding of figures may cause computational discrepancies.
Joint venture agreements are still being finalised. Once finalised, the above statement will be affected.
(1) 4E PGE grade: sum of platinum, palladium, rhodium and gold grades in grammes per tonne.
(2) The additional 7% (95Mt) of Merensky resources accrue from exploration results, refinement of modelling techniques, and the addition of various joint venture properties (where
finalisation of agreements have been concluded) and other properties. Similarly the grade has been positively influenced by the 2004 exploration results.
(3) The decrease in total UG2 resources by 4% (115Mt) between 2003 and 2004, is ascribed largely to the restatement of the Pandora JV following the conclusion of a joint venture. Anglo
Platinum’s attributable percentage changed from 100% to 42.5%. The balance of the variance is determined by dilution due to other joint ventures and exploration results. The measured and
indicated categories of resources have increased significantly.
(4) Exploration results have allowed for a deepening of the resource envelope with a significant improvement in the lateral extent of the defined resources as well. This accounts for the substantial
increase in the measured resources. Finalisation of resources in the PPR North project has had a major influence in tonnage and grade estimates. Within the PPRust open pit, material lying between
1 g/t and 1.7 g/t, will be stockpiled on surface and reports to measured and indicated resources. The Platreef is mined by open pit.
(5) Tailings are reported separately as resources and reserves but are not aggregated to the global resource and reserve summation tabulations due to their significantly different characteristics.
(6) Total Imperial units: tonnage is reported in million short tons (Mton), grade in troy ounces per short ton (oz/t) and contained metal in million troy ounces (Moz).
During 2004 the geostatistical processes of the South African operations and projects were reviewed by an external third party consulting firm.
7878v04_GC_Rp_p90-ibc#86609.qxp 4/3/05 12:56 pm Page 93
Anglo American plc Annual Report 2004 93
PLATINUM CONTINUED
Anglo Platinum – Ore Reserves
Other Projects
Classification
Zimbabwe – Unki
– Great Dyke
Proved
Probable
Total metric
Tonnes
(million)
2003
14.9
22.2
37.1
2004
14.9
22.2
37.1
2004
g/t
4.30
4.30
4.30
Contained
metal tonnes
Contained metal
ounces (million)
2004
2003
2004
2003
Grade(1)
2003
g/t
4.30
4.30
4.30
64.1
95.5
159.6
64.1
95.5
159.6
2.1
3.1
2.1
3.1
Total Imperial(2)
40.9Mton
40.9Mton 0.125oz/t 0.125oz/t
5.1
5.1
Anglo Platinum – Mineral Resources
Other Projects
Classification
Zimbabwe – Unki
– Great Dyke
Measured
Indicated
Measured and indicated
Inferred
Total metric
Tonnes
(million)
2003
19.5
29.1
48.6
11.6
60.2
2004
19.5
29.1
48.6
11.6
60.2
2004
4.98
4.98
4.98
4.98
4.98
Grade(1)
2003
Contained
metal tonnes
Contained metal
ounces (million)
2004
2003
2004
2003
4.98
4.98
4.98
4.98
4.98
97.1
144.9
242.0
57.8
299.8
97.1
144.9
242.0
57.8
299.8
3.1
4.7
7.8
1.9
3.1
4.7
7.8
1.9
Total Imperial(2)
South Africa – Anooraq-Anglo Platinum JV
– Platreef(3)
66.4Mton
66.4Mton 0.145oz/t 0.145oz/t
9.6
9.6
g/t(6)
g/t(6)
Measured
Indicated
Measured and indicated
Inferred
Total metric
South Africa – Sheba’s Ridge
– Platreef(4)
Measured
Indicated
Measured and indicated
Inferred
Total metric
Total Imperial (South Africa)(2)
Canada – River Valley(5)
Measured
Indicated
Measured and indicated
Inferred
Total metric
–
88.3
88.3
52.0
140.4
–
180.9
180.9
150.8
331.7
520.4Mton
4.3
8.4
12.7
1.8
14.5
Total Imperial(2)
16.0Mton
Rounding of figures may cause computational discrepancies.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.35
1.35
1.23
1.31
–
0.66
0.66
0.65
0.65
0.025oz/t
1.79
1.17
1.38
1.09
1.34
0.039oz/t
–
119.2
119.2
64.0
183.3
–
118.9
118.9
98.3
217.2
7.6
9.8
17.4
2.0
19.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3.8
3.8
2.1
–
3.8
3.8
3.2
12.9
0.2
0.3
0.5
0.1
0.6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1) 4E PGE grade: sum of platinum, palladium, rhodium and gold grades in grammes per tonne.
(2) Total Imperial units: tonnage in million short tons (Mton), grade in troy ounces per short ton (oz/t) and contained metal in million troy ounces (Moz).
(3) Following the finalisation of an agreement Anglo Platinum holds an attributable interest of 50%. Only the attributable interest is reported.
(4) Following the finalisation of an agreement Anglo Platinum holds an attributable interest of 35%. While the reef style is currently listed as Platreef, the use of this nomenclature is under discussion
with Ridge Mining plc and a later revision of the term Platreef is anticipated. Only the attributable interest in Sheba’s Ridge is reported.
(5) Anglo Platinum holds an attributable interest of 50% in River Valley, only the attributable interest is reported.
(6) The grade is reported as 3E: sum of platinum, palladium and gold grades in grammes per tonne.
7878v04_GC_Rp_p90-ibc#86609.qxp 3/3/05 9:40 pm Page 94
94 Anglo American plc Annual Report 2004
ORE RESERVES AND MINERAL RESOURCES
CONTINUED
GOLD
(stated as at 31 December 2004). In determining the economic parameters to be used, AngloGold Ashanti has been guided by the
preferred position of the SEC in the USA, whereby the economic parameters used are based on a three year historical average. The
Group’s Ore Reserve and Mineral Resource estimates were compiled in accordance with the Australasian Code for Reporting of
Mineral Resources and Ore Reserves (The JORC Code, 2004) as a minimum standard. Where relevant, the estimates were also
prepared in compliance with regional codes and requirements (e.g. The South African Code for Reporting of Mineral Resources and
Mineral Reserves, The SAMREC Code, 2000).
The figures reported represent 100% of the Mineral Resources and Ore Reserves attributable to AngloGold Ashanti. AA plc’s interest
in AngloGold Ashanti is 50.97%.
AngloGold Ashanti – Ore Reserves
Tonnes (million)
2004
2003
South Africa(2)
Argentina
Australia
Brazil
Ghana
Guinea
Mali
Namibia
Tanzania(3)
USA
Total
Classification
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total metric
30.9
256.8
287.7
0.6
6.2
6.9
45.8
102.6
148.4
3.3
8.6
11.9
45.0
43.8
88.9
21.6
32.7
54.3
8.1
15.0
23.1
0.9
6.9
7.9
24.4
46.2
70.6
47.9
73.9
121.8
228.6
592.8
821.4
54.8
267.9
322.6
6.7
0.5
7.2
46.9
105.3
152.2
4.0
5.8
9.7
–
–
–
–
–
–
7.8
17.0
24.8
1.3
10.1
11.4
14.2
21.1
35.3
53.9
64.7
118.6
189.5
492.4
681.9
2004
g/t
5.21
4.11
4.23
9.99
6.87
7.15
1.21
1.33
1.29
6.58
7.59
7.31
2.09
6.23
4.13
0.77
1.10
0.97
2.74
3.31
3.11
1.09
2.06
1.94
3.01
4.49
3.98
1.07
0.94
0.99
2.20
3.29
2.99
Grade
2003
g/t
2.96
4.12
3.93
7.34
10.16
7.56
1.31
1.40
1.37
7.15
7.08
7.10
–
–
–
–
–
–
2.75
3.71
3.41
1.38
1.81
1.76
3.30
4.17
3.82
1.26
0.87
1.04
2.31
3.09
2.88
Contained
Au (tonnes)
Contained metal
ounces (million)(1)
2004
2003
2004
2003
160.8
1,056.7
1,217.5
6.0
42.9
49.0
55.6
135.9
191.5
21.4
65.5
86.9
94.3
273.1
367.3
16.6
35.9
52.5
22.1
49.7
71.8
1.0
14.2
15.3
73.7
207.4
281.1
51.2
69.4
120.6
502.7
1,950.8
2,453.6
162.0
1,104.3
1,266.4
49.1
5.6
54.6
61.3
147.2
208.6
28.3
40.8
69.1
–
–
–
–
–
–
21.4
63.1
84.5
1.8
18.2
20.0
46.8
88.1
134.9
67.7
56.1
123.8
438.5
1,523.5
1,962.0
5.2
34.0
39.1
0.2
1.4
1.6
1.8
4.4
6.2
0.7
2.1
2.8
3.0
8.8
11.8
0.5
1.2
1.7
0.7
1.6
2.3
0.0
0.5
0.5
2.4
6.7
9.0
1.6
2.2
3.9
16.2
62.7
5.2
35.5
40.7
1.6
0.2
1.8
2.0
4.7
6.7
0.9
1.3
2.2
–
–
–
–
–
–
0.7
2.0
2.7
0.1
0.6
0.6
1.5
2.8
4.3
2.2
1.8
4.0
14.1
49.0
Total Imperial(4)
905.4Mton 751.7Mton 0.087oz/t 0.084oz/t
78.9
63.1
See footnotes on facing page.
7878v04_GC_Rp_p90-ibc#86609.qxp 2/3/05 11:13 pm Page 95
Anglo American plc Annual Report 2004 95
GOLD CONTINUED
AngloGold Ashanti –
Mineral Resources
Tonnes (million)
2004
2003
South Africa(2)
Argentina
Australia
Brazil
Ghana
Guinea
Mali
Namibia
Tanzania(3)
USA
Total
Classification
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total
Measured
Indicated
Inferred
Total metric
90.3
423.9
135.3
649.5
7.9
19.4
3.5
30.8
59.7
146.0
84.7
290.3
8.1
15.2
23.0
46.3
91.6
74.0
36.6
202.2
32.6
74.4
25.7
132.7
16.5
23.9
36.6
76.9
9.2
63.0
65.6
137.7
39.4
103.3
27.1
169.8
80.6
122.8
45.3
248.7
435.9
1,065.8
483.2
1,984.9
103.2
661.1
263.2
1,027.5
23.2
2.4
0.9
26.5
63.0
149.9
87.2
300.1
6.6
10.3
28.2
45.1
–
–
–
–
–
–
–
–
13.2
23.3
57.2
93.8
8.7
56.9
60.8
126.3
20.5
43.3
20.0
83.7
109.4
110.8
38.0
258.2
347.7
1,058.0
555.4
1,961.1
Grade
2003
g/t
4.26
4.17
6.48
4.77
3.62
6.07
8.40
4.00
1.36
1.30
1.29
1.31
7.17
7.14
6.94
7.02
–
–
–
–
–
–
–
–
2.34
2.97
1.75
2.14
0.79
1.31
1.04
1.15
3.13
3.80
3.03
3.45
1.17
0.88
1.05
1.03
2.55
3.26
4.11
3.37
Contained
Au (tonnes)
Contained metal
ounces (million)(1)
2004
2003
2004
2003
463.1
2,758.5
417.1
3,638.7
16.3
73.3
18.7
108.3
75.2
184.4
101.7
361.3
54.6
118.4
165.9
338.9
357.0
377.4
331.2
1,065.7
25.4
74.6
30.4
130.4
34.6
65.4
77.4
177.4
6.7
81.7
74.4
162.8
107.2
377.7
79.0
563.9
80.6
117.3
41.1
239.0
1,220.7
4,228.7
1,336.9
6,786.4
439.4
2,754.6
1,705.8
4,899.7
83.8
14.7
7.3
105.8
85.5
195.1
112.2
392.8
47.4
73.4
195.5
316.3
–
–
–
–
–
–
–
–
30.9
69.1
100.4
200.5
6.8
74.7
63.1
144.7
64.0
164.8
60.4
289.2
128.1
97.7
39.7
265.5
885.9
3,444.1
2,284.5
6,614.5
14.9
88.7
13.4
117.0
0.5
2.4
0.6
3.5
2.4
5.9
3.3
11.6
1.8
3.8
5.3
10.9
11.5
12.1
10.6
34.3
0.8
2.4
1.0
4.2
1.1
2.1
2.5
5.7
0.2
2.6
2.4
5.2
3.4
12.1
2.5
18.1
2.6
3.8
1.3
7.7
39.2
136.0
43.0
14.1
88.6
54.8
157.5
2.7
0.5
0.2
3.4
2.7
6.3
3.6
12.6
1.5
2.4
6.3
10.2
–
–
–
–
–
–
–
–
1.0
2.2
3.2
6.4
0.2
2.4
2.0
4.7
2.1
5.3
1.9
9.3
4.1
3.1
1.3
8.5
28.5
110.7
73.4
2004
g/t
5.13
6.51
3.08
5.60
2.06
3.77
5.40
3.52
1.26
1.26
1.20
1.24
6.73
7.80
7.22
7.32
3.90
5.10
9.04
5.27
0.78
1.00
1.18
0.98
2.10
2.74
2.12
2.31
0.73
1.30
1.13
1.18
2.72
3.66
2.91
3.32
1.00
0.96
0.91
0.96
2.80
3.97
2.77
3.42
Total Imperial(4)
2,188.0Mton 2,161.7Mton 0.100oz/t
0.098oz/t
218.2
212.7
Rounding of figures may cause computational discrepancies.
(1) AngloGold Ashanti reports Mineral Resources ‘as inclusive of those Mineral Resources modified to produce the Ore Reserve’ figures (JORC).
(2) The large variance between the 2004 and 2003 figures is the result of economic scoping studies at WUDL, resulting in sub-economic areas being removed from the Mineral Resources.
(3) The large variance between the 2004 and 2003 figures is due to the fact that AngloGold and Ashanti Goldfields each owned 50% of Geita Mine prior to the merger.
(4) Total Imperial units: tonnage is reported in million short tons (Mton), grade in troy ounces per short ton (oz/t) and contained metal in million troy ounces (Moz).
The 2004 Ore Reserves and Mineral Resources of the following operations were audited by third party independent auditors: Sadiola, Yatela, Kopanang, TauTona, Obuasi, Iduapriem, and Cerro Vanguardia.
7878v04_GC_Rp_p90-ibc#86609.qxp 3/3/05 9:45 pm Page 96
96 Anglo American plc Annual Report 2004
ORE RESERVES AND MINERAL RESOURCES
CONTINUED
COAL
(stated as at 31 December 2004). The Group’s Coal Reserve and Coal Resource estimates were compiled in accordance with the
Australasian Code for Reporting of Mineral Resources and Ore Reserves (The JORC Code, 2004) as a minimum standard. Where
relevant, the estimates were also prepared in compliance with regional codes and requirements (e.g. The South African Code for
Reporting of Mineral Resources and Mineral Reserves, The SAMREC Code, 2000). The Coal Resources are additional to the Coal
Reserves, unless otherwise stated.
Anglo Coal – Coal Reserves(3)
Reported
(%)(1)
Attributable
(%)(1)
Tonnes (million)(2)
ROM(3)
2003
ROM(3)
2004
Yield (%)(4)
Saleable(3)
2004
Heat content(5)
(kcal/kg)
Gross as
received
Saleable(3)
2004
Tonnes (million)(2)
Saleable(3)
2003
Saleable(3)
2004
Trade Collieries
South Africa
Australia
Colombia
Venezuela
Total
Classification
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Power Generation Collieries
South Africa
Australia
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
100
100
100
67.3
33.3
33.3
24.9
24.9
86.7
72.1
99.6
99.6
100
100
99.7
99.7
199
353
552
422
268
690
202
64
266
37
–
37
860
685
1,545
678
299
977
226
58
284
904
357
1,261
241
373
614
347
269
616
105
148
253
39
–
39
732
790
1,522
718
298
1,016
247
86
333
966
384
1,350
59
58
58
80
78
79
99
99
99
100
–
100
81
70
76
94
100
96
95
98
95
94
100
96
6,230
6,230
6,230
7,090
6,970
7,050
6,290
6,440
6,320
6,880
–
6,880
6,710
6,590
6,660
4,210
4,890
4,430
4,730
4,310
4,640
4,340
4,800
4,480
119
208
327
351
217
568
204
64
268
38
–
38
712
489
1,201
637
299
936
214
57
271
852
355
1,207
147
225
372
290
227
517
105
150
255
40
–
40
583
601
1,184
664
298
962
215
76
291
880
374
1,254
Anglo Coal – Coal Resources(6)
Reported
(%)(1)
Attributable
(%)(1)
Classification
Trade Collieries
South Africa
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
Australia
Colombia
See footnotes on facing page.
100
100
100
77.2
33.3
33.3
Tonnes (million)(2)
MTIS(6)
2003
MTIS(6)
2004
Heat content(5)
(kcal/kg)
Gross as
received
2004
315
265
580
165
165
330
55
220
275
370
230
600
250
150
400
–
–
–
5,870
6,180
6,010
6,640
6,540
6,590
6,580
6,480
6,500
7878v04_GC_Rp_p90-ibc#86609.qxp 4/3/05 12:57 pm Page 97
Anglo American plc Annual Report 2004 97
COAL CONTINUED
Anglo Coal – Coal Resources(6)
Reported
(%)(1)
Attributable
(%)(1)
Classification
Tonnes (million)(2)
MTIS (6)
2003
MTIS(6)
2004
Heat content(5)
(kcal/kg)
Gross as
received
2004
Trade Collieries continued
Venezuela
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
Total
Power Generation Collieries
South Africa
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
Australia
Total
Other Coal Resources
South Africa
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
Australia
Total
24.9
24.9
84.0
77.7
90.7
90.7
100
100
98.7
98.7
100
100
100
87.2
100
97.4
4
6
10
539
656
1,195
55
50
105
340
300
640
395
350
745
–
3,280
3,280
395
435
830
395
3,715
4,110
4
6
10
624
386
1,010
60
30
90
300
340
640
360
370
730
70
3,280
3,350
590
455
1,045
660
3,735
4,395
7,260
7,580
7,480
6,190
6,380
6,300
5,230
5,060
5,150
5,010
4,540
4,790
5,040
4,610
4,840
–
4,690
4,690
6,380
6,510
6,450
6,380
4,900
5,050
Rounding of figures may cause computational discrepancies.
Trade Collieries refers to operations primarily associated with the production of coal for the world export market.
Power Generation Collieries refers to operations that primarily produce coal for domestic power generation requirements.
Other Coal Resources refers to project areas not included in the Trade Collieries or Power Generation Collieries, while Power Generation Collieries refers to operations that primarily produce coal
for internal power generation requirements.
(1) Reported and Attributable (%) refers to 2004 only. For the 2003 Reported and Attributable figures, please refer to the previous Annual Report.
(2) Includes 100% of Coal Reserves and Coal Resources of consolidated entities and the Group’s share of joint ventures and associates where applicable.
Where the Group’s share is more than 50%, 100% of the Coal Reserves and Coal Resources are reported.
(3) Coal Reserves are quoted on a run of mine (ROM) reserve tonnage basis, which represents the tonnes delivered to the plant, and on a Saleable reserve tonnage basis,
which represents the product tonnes produced.
(4) Yield percentage represents the ratio of Saleable tonnes to ROM tonnes and is quoted on an in situ to in situ basis or on an air dried to air dried basis.
(5) The coal quality is quoted as a weighted average of the heat content of all Saleable coal products. The coal quality for the Coal Resources is reported on an in situ basis.
(6) Coal Resources are quoted on a mineable in situ (MTIS) tonnage basis in addition to the ROM reserves.
Coal quality parameters for Coal Reserves for trade collieries meet the contractual specifications for coking coal, metallurgical coal, steam coal and domestic coal.
Coal quality parameters for Coal Reserves for power generation collieries meet the specification of the individual supply contracts.
In Australia, the finalisation of the Dawson Project resources and reserve statement is reflected in a gain in Coal Reserves for the Trade Colliery Reserves (44 million ROM tonnes (51% basis)),
a change in the Proved and Probable ratio and a reduction in the Trade Colliery Coal Resources and Other Coal Resources (28 million and 108 million MTIS tonnes respectively (51% basis)).
The reporting of the Lake Lindsay Project Coal Resources reflects a gain of additional Coal Resources for the Trade Collieries (62 million MTIS tonnes (51% basis)).
In Colombia, the change in the Proved to Probable ratio in the Trade Colliery Coal Reserves and the gain of additional Trade Colliery Coal Resources (277 million MTIS tonnes (33% basis)) reflects
the result of the upgrading of the resource estimate in response to geological drilling at Cerrejón.
In South Africa, the conversion of resources to reserves at Mafube Colliery is reflected in a reduction in Other Coal Resources (68 million MTIS tonnes) and the gain in the Power Generation Collieries
Coal Reserves and Coal Resources (14 million ROM tonnes and 20 million tonnes respectively (50% basis)).
In addition, 99.2 million saleable tonnes were depleted during 2004 by mining operations (reportable basis).
The geological models for the following operations and projects were audited during 2004 by third party, independent auditors: Kriel, Cerrejón, Zondagsfontein, Saddlers Creek and Theodore North.
7878v04_GC_Rp_p90-ibc#86609.qxp 3/3/05 9:49 pm Page 98
98 Anglo American plc Annual Report 2004
ORE RESERVES AND MINERAL RESOURCES
CONTINUED
BASE METALS
(stated as at 31 December 2004). The Group’s Ore Reserve and Mineral Resource estimates were compiled in accordance with
the Australasian Code for Reporting of Mineral Resources and Ore Reserves (The JORC Code, 2004) as a minimum standard.
Where relevant, the estimates were also prepared in compliance with regional codes and requirements (e.g. The South African Code
for Reporting of Mineral Resources and Mineral Reserves, The SAMREC Code, 2000). The Mineral Resources are additional to the
Ore Reserves, unless otherwise stated.
Copper Division – Ore Reserves
Classification
Reported
Attributable
Tonnes (million)(2)
(%)(1)
(%)(1)
2004
2003
Los Bronces(3)
Sulphide
(flotation)
Dump Leach (ASCu)(6)
Oxide (ASCu)(6)
Vat leach
Mantos Blancos(5)
Sulphide (ICu)(6)
El Soldado(4)
Sulphide (flotation)
Sulphide
(low grade leachable)
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Collahuasi(8)
Proved
Oxide and Mixed (TCu)(6) Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Mantoverde
Heap Leach (ASCu)(6)
Low Grade Sulphide
(TCu)(6)
Dump Leach (ASCu)(6)(7)
Sulphide (TCu)(6)
See footnotes on facing page.
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
44
44
44
44
44
44
638.0
77.7
715.7
480.9
656.7
1,137.6
76.8
65.7
142.5
9.2
17.1
26.3
9.4
10.2
19.6
2.5
3.2
5.7
51.8
28.6
80.4
25.7
21.3
47.0
12.3
5.4
17.7
124.3
506.5
630.8
–
165.3
165.3
674.9
85.8
760.7
426.8
739.4
1,166.2
85.0
52.0
137.0
9.4
31.7
41.1
11.0
10.8
21.8
8.3
5.1
13.4
56.2
25.6
81.8
34.1
26.7
60.8
7.9
9.5
17.4
138.3
467.2
605.4
45.5
127.3
172.8
Grade
2003
%Cu
0.91
0.65
0.88
0.47
0.30
0.36
1.10
0.94
1.04
0.71
1.05
0.97
0.59
0.97
0.78
0.38
0.40
0.39
0.65
0.70
0.66
0.30
0.30
0.30
1.03
1.23
1.14
1.00
1.01
1.01
0.58
0.52
0.54
Contained metal
tonnes (thousand)(2)
2004
2003
5,839
532
6,371
2,261
2,142
4,403
815
584
1,398
62
207
269
63
99
162
10
13
23
326
186
512
75
62
136
124
67
191
1,359
4,933
6,292
–
869
869
6,166
558
6,724
2,024
2,217
4,241
936
488
1,424
67
333
399
65
105
170
32
20
52
364
179
543
103
79
182
81
117
198
1,383
4,740
6,122
264
663
927
2004
%Cu
0.92
0.68
0.89
0.47
0.33
0.39
1.06
0.89
0.98
0.68
1.21
1.02
0.67
0.97
0.82
0.40
0.40
0.40
0.63
0.65
0.64
0.29
0.29
0.29
1.01
1.24
1.08
1.09
0.97
1.00
–
0.53
0.53
7878v04_GC_Rp_p90-ibc#86609.qxp 4/3/05 11:05 am Page 99
Anglo American plc Annual Report 2004 99
BASE METALS CONTINUED
Copper Division – Mineral Resources
Classification
Reported
(%)(1)
Attributable
(%)(1)
Tonnes (million)(2)
2004
2003
Los Bronces
Sulphide
El Soldado(9)
Sulphide
Mantos Blancos(10)
Sulphide (ICu)(6)
Oxide (ASCu)(6)
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
Dump Leach (ASCu)(6)
Mantoverde(11)
Heap Leach (ASCu)(6)
Dump Leach (ASCu)(6)
Collahuasi(8)
Oxide and Mixed(TCu)(6)
Sulphide (TCu)(6)
Low Grade Sulphide
(TCu)(6)
100
100
100
100
100
100
100
100
100
100
100
100
100
100
44
44
44
44
44
44
451.5
619.4
1,070.9
34.3
54.4
88.7
5.6
90.8
96.4
1.5
9.3
10.8
–
–
–
34.6
73.6
108.2
1.1
0.3
1.4
0.02
0.79
0.81
5.4
83.2
88.6
16.9
105.2
122.1
416.8
571.8
988.6
41.0
25.0
66.0
5.2
53.2
58.4
0.1
7.1
7.2
0.1
6.8
6.8
14.9
23.2
38.1
20.0
51.4
71.4
0.03
0.23
0.26
5.5
76.5
82.0
15.6
112.3
127.9
Grade
2003
%Cu
0.62
0.55
0.58
0.83
0.82
0.83
0.93
0.85
0.86
0.67
0.82
0.82
0.39
0.40
0.40
0.63
0.56
0.59
0.29
0.29
0.29
0.88
1.21
1.18
0.89
0.86
0.87
0.46
0.47
0.47
Contained metal
tonnes (thousand)(2)
2004
2003
2,721
3,161
5,882
281
397
678
47
735
782
7
53
60
–
–
–
156
280
435
4
1
5
0.2
8.8
9.0
47
735
782
76
489
565
2,584
3,145
5,729
346
202
548
49
452
502
1
58
59
0.3
27
27
93
130
223
59
151
210
0.4
2.6
3.1
49
661
711
71
529
600
2004
%Cu
0.60
0.51
0.55
0.82
0.73
0.76
0.84
0.81
0.81
0.49
0.57
0.56
–
–
–
0.45
0.38
0.40
0.32
0.35
0.33
0.97
1.09
1.09
0.86
0.88
0.88
0.45
0.46
0.46
Rounding of figures may cause computational discrepancies.
(1) Reported and Attributable (%) refers to 2004 only. For the 2003 Reported and Attributable figures, please refer to the previous Annual Report.
(2)
Includes 100% of Ore Reserves and Mineral Resources of consolidated entities and the Group’s share of joint ventures and associates where applicable. Where the Group’s share is more than
50%, 100% of the Ore Reserves and Mineral Resources are reported.
(3) Los Bronces Reserves include 29.7Mt @ 0.97%Cu sulphides (flotation) and 20.2Mt @ 0.48%Cu low grade sulphides (leaching) to be mined from a third party mining property (as an easement
agreement). The agreement that gives Los Bronces the right to mine and process these Reserves was signed in November of 2003 (Acuerdo MARCO). Sulphide flotation Reserves contain
0.015%Mo recovered as a by-product. The infill drilling carried out during the year resulted in an upgrade of Probable Reserves to Proved Reserves. The overall decrease in the sulphide flotation
Reserves is due to a change in the cut-off grade which introduced changes in the geometry of the optimised pit.
(4) El Soldado Oxide Resources and Reserves included in the mine plan amount to 1.3Mt @ 1.13%Cu.
(5) Mantos Blancos – loss of more than 10Mt of sulphide Ore Reserves due to reduction in current life of mine. The life of mine is scheduled to end when the oxide plant runs out of material
(leaving only the sulphide plant). The operation is not economic with just the sulphide plant producing. The remaining material is reported as Mineral Resource.
ICu = insoluble copper (total copper less acid soluble copper), ASCu = acid soluble copper, TCu = total copper.
(6)
(7) Mantoverde – the dump leach Reserves have decreased due to depletion and transfer to heap leach Reserve as a result of a review of the marginal cut-off grade, and some material
reclassified as Mineral Resource.
(8) Collahuasi – only the attributable tonnage and metal tonnes (44%) are reported (in the AA plc 2003 Annual Report 100% was reported). Sulphide Reserves from Rosario deposit include
1045Mt @ 0.026%Mo to be mined and processed as from 2006. Rosario low grade sulphide Reserves and all Ujina sulphides previously in the Proved category have been downgraded
to Probable category due to uncertainties in long term modifying factors.
(9) El Soldado sulphide Resources – near mine exploration has resulted in an increase in the Indicated Mineral Resources.
(10) Mantos Blancos – the change in Resources is due to the transfer from Reserves to Resources and the lowering of the cut-off grade to the marginal cut-off value. For this year's additional
Resources, dump leach mineralisation outside pits has been eliminated. This loss is offset by reporting vat leach material at a lower marginal cut-off grade.
(11) Mantoverde – for this year's additional Resources, dump leach mineralisation outside pits has been eliminated. This loss is offset by reporting heap leach material at a lower marginal cut-off grade,
i.e. transfer of dump leach material to heap leach material.
The Ore Reserves and Mineral Resources of the following operations were audited during 2004 by third party, independent auditors: Mantoverde and Collahuasi.
7878v04_GC_Rp_p90-ibc#86609.qxp 2/3/05 11:13 pm Page 100
100 Anglo American plc Annual Report 2004
ORE RESERVES AND MINERAL RESOURCES
CONTINUED
BASE METALS CONTINUED
Nickel Division – Ore Reserves
Reported
Attributable
Tonnes (million)(2)
(%)(1)
(%)(1)
2004
2003
Loma de Níquel
Laterite
Codemin(3)
Laterite
Classification
Proved
Probable
Total
Proved
Probable
Total
100
91.4
100
100
17.4
18.9
36.3
3.2
0.5
3.7
18.6
19.9
38.5
3.5
0.6
4.0
Nickel Division – Mineral Resources
Reported
Attributable
(%)(1)
(%)(1)
2004
Loma de Níquel
Laterite
Codemin(3)
Laterite
Classification
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
100
91.4
100
100
1.0
4.5
5.5
3.4
3.5
6.9
Tonnes (million)(2)
2003
0.3
4.2
4.5
3.4
3.5
6.9
2004
%Ni
1.53
1.43
1.48
1.33
1.33
1.33
2004
%Ni
1.42
1.46
1.45
1.29
1.25
1.27
Grade
2003
%Ni
1.53
1.40
1.46
1.34
1.33
1.34
Grade
2003
%Ni
1.54
1.47
1.47
1.29
1.25
1.27
Contained metal
tonnes (thousand)(2)
2004
2003
266
270
536
42
7
49
285
278
563
46
7
54
Contained metal
tonnes (thousand)(2)
2004
2003
14
66
79
43
44
87
5
62
67
43
44
87
Rounding of figures may cause computational discrepancies.
(1) Reported and Attributable (%) refers to 2004 only. For the 2003 Reported and Attributable figures, please refer to the previous Annual Report.
(2) Includes 100% of Ore Reserves and Mineral Resources of consolidated entities and the Group’s share of joint ventures and associates where applicable. Where the Group’s share is more than
50%, 100% of the Ore Reserves and Mineral Resources are reported.
(3) In July of 2004 Anglo American acquired the 10% share in Codemin held by IFC raising Anglo American’s stake to 100%.
The Ore Reserves and Mineral Resources of Loma de Níquel were audited during 2004 by third party, independent auditors.
7878v04_GC_Rp_p90-ibc#86609.qxp 3/3/05 9:52 pm Page 101
Anglo American plc Annual Report 2004 101
BASE METALS CONTINUED
For the polymetallic deposits, the tonnage figures apply to each metal.
Zinc Division – Ore Reserves
Reported
Attributable
Tonnes (million)(2)
(%)(1)
(%)(1)
2004
2003
Black Mountain
Broken Hill(3)
Zinc Reserves
Copper Reserves
Lead Reserves
Black Mountain
Swartberg(4)
Zinc Reserves
Copper Reserves
Lead Reserves
Lisheen(5)
Zinc Reserves
Lead Reserves
Skorpion
Zinc Reserves
See footnotes on page 102.
Classification
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
100
100
0.1
14.0
14.1
0.4
14.0
14.4
100
100
–
2.5
2.5
–
1.5
1.5
100
100
8.6
3.4
12.0
7.6
2.3
9.9
100
100
10.4
9.3
19.7
11.2
9.5
20.7
2004
%Zn
3.53
3.68
3.68
%Cu
0.42
0.67
0.67
%Pb
2.57
3.66
3.65
%Zn
–
1.01
1.01
%Cu
–
0.40
0.40
%Pb
–
3.50
3.50
%Zn
12.38
9.97
11.69
%Pb
2.15
1.41
1.94
%Zn
11.37
9.58
10.53
Grade
2003
%Zn
2.41
3.69
3.65
%Cu
0.52
0.67
0.67
%Pb
3.43
3.65
3.64
%Zn
–
1.24
1.24
%Cu
–
0.48
0.48
%Pb
–
3.80
3.80
%Zn
12.96
10.62
12.41
%Pb
2.30
1.60
2.14
%Zn
11.40
9.69
10.62
Contained metal
tonnes (thousand)(2)
2004
2003
5
513
519
1
94
94
4
511
514
–
25
25
–
10
10
–
88
88
1,059
341
1,399
184
48
232
1,186
887
2,073
10
518
528
2
94
96
14
512
526
–
18
18
–
7
7
–
56
56
979
245
1,224
174
37
211
1,278
918
2,196
7878v04_GC_Rp_p90-ibc#86609.qxp 4/3/05 11:07 am Page 102
102 Anglo American plc Annual Report 2004
ORE RESERVES AND MINERAL RESOURCES
CONTINUED
BASE METALS CONTINUED
Zinc Division – Mineral Resources
Classification
Black Mountain
Broken Hill(6)
Zinc Resources
Measured
Indicated
Measured and Indicated
Copper Resources
Measured
Indicated
Measured and Indicated
Lead Resources
Measured
Indicated
Measured and Indicated
Black Mountain
Swartberg(7)
Zinc Resources
Measured
Indicated
Measured and Indicated
Copper Resources
Measured
Indicated
Measured and Indicated
Lead Resources
Measured
Indicated
Measured and Indicated
Lisheen(5)
Zinc Resources
Measured
Indicated
Measured and Indicated
Lead Resources
Measured
Indicated
Measured and Indicated
Reported
(%)(1)
Attributable
(%)(1)
Tonnes (million)(2)
2004
2003
100
100
1.7
5.1
6.7
2.1
4.4
6.5
100
100
–
17.8
17.8
–
19.4
19.4
100
100
1.1
0.4
1.5
–
0.3
0.3
2004
%Zn
2.90
4.20
3.88
%Cu
0.61
0.83
0.78
%Pb
4.34
4.15
4.20
%Zn
–
0.66
0.66
%Cu
–
0.69
0.69
%Pb
–
2.90
2.90
%Zn
13.36
9.63
12.33
%Pb
2.38
1.43
2.12
Grade
2003
%Zn
2.89
3.86
3.55
%Cu
0.56
0.71
0.66
%Pb
3.98
3.85
3.89
%Zn
–
0.73
0.73
%Cu
–
0.71
0.71
%Pb
–
3.09
3.09
%Zn
–
11.70
11.70
%Pb
–
1.10
1.10
Contained metal
tonnes (thousand)(2)
2004
2003
48
213
261
10
42
52
72
210
282
–
118
118
–
123
123
–
517
517
148
41
188
26
6
32
60
169
229
12
31
43
82
169
251
–
142
142
–
138
138
–
600
600
–
31
31
–
3
3
Rounding of figures may cause computational discrepancies.
(1) Reported and Attributable (%) refers to 2004 only. For the 2003 Reported and Attributable figures, please refer to the previous Annual Report.
(2) Includes 100% of Ore Reserves and Mineral Resources of consolidated entities and the Group’s share of joint ventures and associates where applicable.
Where the Group’s share is more than 50%, 100% of the Ore Reserves and Mineral Resources are reported.
(3) Broken Hill Ore Reserves contain 14.1 million tonnes of silver ore at 52 g/t as a by-product.
(4) The increase in the Reserve is due to a change in the mine plan (addition of stopes as a result of improved orebody definition).
Swartberg Ore Reserves contain 2.5Mt of silver ore @ 42 g/t as a by-product.
(5) The increase in Ore Reserves and additional Mineral Resources is due to extensive infill drilling, and the results of a cut-off grade optimisation study resulting in an increase in tonnes
and decrease in mining grade.
(6) Broken Hill Mineral Resources contain 6.7Mt of silver ore @ 62 g/t as a by-product.
(7) Swartberg Mineral Resources contain 17.8Mt of silver ore @ 35 g/t as a by-product.
7878v04_GC_Rp_p90-ibc#86609.qxp 4/3/05 12:57 pm Page 103
Anglo American plc Annual Report 2004 103
BASE METALS CONTINUED
Niobium – Ore Reserves
Reported
(%)(1)
Attributable
(%)(1)
Tonnes (million)(2)
2004
2003
2004
Grade
2003
Contained product
tonnes (thousand)(2)
2004
2003
Catalão
(Open pit)
Classification
Proved
Probable
Total
100
100
7.0
8.4
15.4
7.0
9.1
16.0
Projects – Ore Reserves
Reported
(%)(1)
Attributable
(%)(1)
Tonnes (million)(2)
2004
2003
Quellaveco
Advanced project
Barro Alto(3)
Laterite
(Advanced project)
Gamsberg(4)
Advanced project
Classification
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Projects – Mineral Resources
Classification
Quellaveco
Advanced project
Measured
Indicated
Measured and Indicated
Barro Alto
Laterite
(Advanced project)
Measured
Indicated
Measured and Indicated
100
80
100
100
100
100
250.1
688.3
938.4
22.9
7.3
30.2
35.0
110.3
145.2
250.1
688.3
938.4
22.9
7.3
30.2
35.0
110.3
145.3
Reported
(%)(1)
Attributable
(%)(1)
Tonnes (million)(2)
2004
2003
100
80
100
100
1.5
176.7
178.2
0.8
21.2
22.0
1.5
176.7
178.2
0.8
21.2
22.0
%Nb2O5
%Nb2O5
1.15
1.47
1.33
2004
%Cu
0.76
0.59
0.64
%Ni
1.85
1.80
1.84
%Zn
7.55
5.55
6.04
2004
%Cu
0.53
0.46
0.46
%Ni
1.63
1.36
1.36
1.15
1.48
1.34
Grade
2003
%Cu
0.76
0.59
0.64
%Ni
1.85
1.80
1.84
%Zn
7.55
5.55
6.04
Grade
2003
%Cu
0.53
0.46
0.46
%Ni
1.63
1.36
1.36
80
124
204
80
134
215
Contained metal
tonnes (thousand)(2)
2004
2003
1,901
4,061
5,962
424
131
555
2,641
6,124
8,765
1,901
4,061
5,962
424
131
555
2,642
6,124
8,766
Contained metal
tonnes (thousand)(2)
2004
2003
8
813
821
13
288
301
8
813
821
13
288
301
Rounding of figures may cause computational discrepancies.
(1) Reported and Attributable (%) refers to 2004 only. For the 2003 Reported and Attributable figures, please refer to the previous Annual Report.
(2) Includes 100% of Ore Reserves and Mineral Resources of consolidated entities and the Group’s share of joint ventures and associates where applicable.
Where the Group’s share is more than 50%, 100% of the Ore Reserves and Mineral Resources are reported.
(3) During 2004 approximately 0.2Mt @ 2% Ni was mined from Barro Alto and processed at the Codemin plant.
This depletion is considered minor and is not reflected in this year's overall Reserve figures.
(4) During 2004 approximately 18 thousand tonnes @ 8% Zn of Proved Reserves were mined from Gamsberg via an exploration adit.
7878v04_GC_Rp_p90-ibc#86609.qxp 3/3/05 9:59 pm Page 104
104 Anglo American plc Annual Report 2004
ORE RESERVES AND MINERAL RESOURCES
CONTINUED
BASE METALS CONTINUED
The tonnage figures apply to each product.
Heavy Minerals
Namakwa Sands – Ore Reserves(3)
Reported
Attributable
Tonnes (million)(2)
(%)(1)
(%)(1)
2004
2003
100
100
182.7
173.3
356.0
114.4
299.7
414.1
Ilmenite
Zircon
Rutile
Classification
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Namakwa Sands – Mineral Resources(4)
Reported
Attributable
Tonnes (million)(2)
(%)(1)
(%)(1)
2004
2003
100
100
178.3
104.2
282.5
218.8
57.6
276.4
Ilmenite
Zircon
Rutile
Classification
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
Grade
2003
%
4.2
3.3
3.5
1.2
0.8
0.9
0.3
0.2
0.2
Grade
2003
%
3.4
2.6
3.3
0.8
0.9
0.8
0.2
0.2
0.2
Contained product
tonnes (million)(2)
2004
2003
7.7
6.0
13.7
2.0
1.4
3.4
0.4
0.4
0.8
4.8
9.8
14.6
1.4
2.5
3.9
0.3
0.6
0.9
Contained product
tonnes (million)(2)
2004
2003
6.0
3.0
9.0
1.3
0.8
2.1
0.3
0.2
0.5
7.5
1.5
9.0
1.7
0.5
2.2
0.4
0.1
0.5
2004
%
4.2
3.5
3.9
1.1
0.8
1.0
0.2
0.2
0.2
2004
%
3.4
2.9
3.2
0.8
0.8
0.8
0.2
0.2
0.2
Rounding of figures may cause computational discrepancies.
(1) Reported and Attributable (%) – no change between 2003 and 2004.
(2) Includes 100% of Ore Reserves and Mineral Resources of consolidated entities and the Group’s share of joint ventures and associates where applicable.
Where the Group’s share is more than 50%, 100% of the Ore Reserves and Mineral Resources are reported.
(3) The increase in Proved Ore Reserves was due to upgrading Probable Ore Reserves after the 2003 drilling campaign and conversion of Measured Resource.
Some Probable Ore Reserves were transferred to Mineral Resources during the 2003 model update.
(4) The increase in Mineral Resources is due to transfer from Probable Ore Reserves after the 2003 model update.
7878v04_GC_Rp_p90-ibc#86609.qxp 4/3/05 4:53 pm Page 105
Anglo American plc Annual Report 2004 105
FERROUS METALS AND INDUSTRIES
(stated as at 31 December 2004). The Group’s Ore Reserve and Mineral Resource estimates were compiled in accordance with the
Australasian Code for Reporting of Mineral Resources and Ore Reserves (The JORC Code, 2004) as a minimum standard. Where
relevant, the estimates were also prepared in compliance with regional codes and requirements (e.g. The South African Code for
Reporting of Mineral Resources and Mineral Reserves, The SAMREC Code, 2000). The Mineral Resources are additional to the Ore
Reserves, unless otherwise stated.
Ferrous Metals – Ore Reserves
Classification
Reported
Attributable
Tonnes (million)(2)
(%)(1)
(%)(1)
2004
2003
Hotazel Manganese Mines (Mn)(3)
Mamatwan
Proved
Probable
Total
Proved
Probable
Total
Wessels
GEMCO (Mn)(4)
Proved
Probable
Total
Highveld (Vanadium V2O5)(5)
40
40
40
40
40
40
Proved
Probable
Total
100
80
12.6
7.6
20.2
0.9
4.1
5.0
23.7
13.4
37.1
23.1
3.5
26.6
7.0
2.4
9.4
1.1
5.2
6.3
16.2
18.4
34.7
11.4
21.7
33.1
Ferrous Metals – Mineral Resources
Classification
Reported
Attributable
Tonnes (million)(2)
(%)(1)
(%)(1)
2004
2003
Hotazel Manganese Mines (Mn)(6)
Mamatwan
Measured
Indicated
Measured and Indicated
Measured
Indicated
Measured and Indicated
Wessels
GEMCO (Mn)(7)
Measured
Indicated
Measured and Indicated
Highveld (Vanadium V2O5)(8)
Measured
Indicated
Measured and Indicated
Zimbabwe Alloys (Cr2O3)(9)
Measured
Indicated
Measured and Indicated
Rounding of figures may cause computational discrepancies.
40
40
40
40
40
40
100
80
100
100
13.7
8.3
22.0
1.7
8.2
9.9
27.0
16.9
43.9
49.8
252.5
302.3
0.7
1.3
1.9
7.4
2.6
10.0
2.5
12.0
14.5
20.9
23.2
44.1
51.5
155.5
207.0
0.6
104.2
104.8
2004
% Yield
2003
49.0
46.2
48.0
43.8
41.0
42.3
2004
% Yield
2003
46.6
46.1
46.4
41.8
42.0
41.9
2004
%Mn
37.7
37.2
37.5
48.0
48.0
48.0
%Mn
46.3
47.2
46.6
%V2O5
1.69
1.70
1.69
2004
%Mn
37.7
37.2
37.5
48.0
48.0
48.0
%Mn
48.5
47.0
47.9
%V2O5
1.70
1.69
1.69
%Cr2O3
39.3
44.9
43.0
Grade
2003
%Mn
38.3
38.4
38.3
48.0
48.2
48.2
%Mn
48.1
47.5
47.8
%V2O5
1.69
1.70
1.69
Grade
2003
%Mn
38.8
38.0
38.6
48.0
48.2
48.2
%Mn
48.1
47.5
47.8
%V2O5
1.70
1.69
1.70
%Cr2O3
39.1
40.4
40.4
(1) Reported and Attributable (%) refers to 2004 only. For the 2003 Reported and Attributable figures, please refer to the previous Annual Report.
(2) Includes 100% of Ore Reserves and Mineral Resources of consolidated entities and the Group’s share of joint ventures and associates where applicable.
Where the Group’s share is more than 50%, 100% of the Ore Reserves and Mineral Resources are reported.
(3) Increase in Ore Reserves are mainly due to a change in cut-off grade policy. Mamatwan tonnages are stated as Wet Metric Tonnes, while Wessels is Dry Metric Tonnes.
(4) Grades reported are beneficiated (washed samples) grades, as beneficiated grades are used in mine scheduling, quality control and blending (rather than in situ grades) and as such reflect a mineral
product grade. Yield cut-offs of 30% for massive manganese and 16% for loose pisolitic manganese are used in conjunction with lithology to further differentiate the ore/waste envelope.
(5) The Ore Reserve grades and tonnages are reported after crushing, washing and screening. Some Probable Ore Reserves were transferred to Mineral Resources as they do not fall within
the current mining authorisation.
(6) Hotazel Manganese Mines report Measured and Indicated Mineral Resources as ‘inclusive of those Mineral Resources modified to produce the Ore Reserve’ (JORC).
The increase in Mineral Resources is due to a lowering of the cut-off grade. Mamatwan tonnages are stated as Wet Metric Tonnes, while Wessels is Dry Metric Tonnes.
(7) GEMCO report Measured and Indicated Mineral Resources as ‘inclusive of those Mineral Resources modified to produce the Ore Reserve’ (JORC).
(8) The increase in Mineral Resources is due to the inclusion of underground resources after further investigation, and the transfer of Ore Reserves. A total of 58 million tons of resources are the subject
of old order unused rights as defined in the Mineral and Petroleum Resources Development Act and will expire with effect from 1 May 2005 and the decision was taken not to convert these rights.
(9) Zimbabwe Alloys (ZAL) is primarily a smelting and refining company. It obtains its ore feed from tributors and small scale producers, some of whom mine from their own claims generating
the Ore Reserves. The Indicated Resources include Eluvial Chromite Resources. The 2004 Mineral Resource tonnage does not include 103Mt of low carbon Cr2O3 material.
The processing plant is optimised for high carbon Cr2O3. Currently it is not envisaged that ZAL will resume low carbon ferrochrome production.
7878v04_GC_Rp_p90-ibc#86609.qxp 2/3/05 11:13 pm Page 106
106 Anglo American plc Annual Report 2004
ORE RESERVES AND MINERAL RESOURCES
CONTINUED
FERROUS METALS AND INDUSTRIES CONTINUED
Kumba Resources Limited –
Ore Reserves
Reported
Attributable
(%)(1)
(%)(1)
Mining
Method
Tonnes (million)
2004
2003
100
59.6
UG
1.0
2.7
3.7
1.6
3.7
5.3
Base Metals
Rosh Pinah
Zinc Reserves
Lead Reserves
Classification
Proved
Probable
Total
Proved
Probable
Total
Iron Ore
Sishen Iron Ore Mine
Proved
Probable
510
208
717
15
1
16
63
87
150
706
67
773
656
132
787
15
5
20
63
87
150
768
67
835
Total
100
52.4
OP
Thabazimbi Iron Ore Mine
Proved
Probable
Total
100
52.4
OP
Hope Downs (Hope 1) Advanced project(3)
Proved
Probable
Total
33.3
33.3
OP
Coal – Reserves
Grootegeluk Coal Mine
Coking Coal
Proved
Probable
Total
Proved
Probable
Proved
Probable
Total Saleable Product
Thermal Coal
Metallurgical Coal
100
66.6
OP
Leeuwpan Coal Mine(4)
Thermal and
Proved
Metallurgical Coal Probable
Total
See footnotes on page 112.
100
66.6
OP
111
48
159
87
48
134
2004
%Zn
9.5
10.9
10.6
%Pb
2.7
2.6
2.7
%Fe
63.6
63.7
Grade
2003
Saleable Product
(thousand tonnes)(2)
2004
2003
%Zn
zinc metal
zinc metal
7.0
11.5
10.2
%Pb
2.5
2.7
2.7
%Fe
63.1
62.7
91
299
390
112
431
543
lead metal
lead metal
26
72
98
41
102
143
Saleable Product
(million tonnes)(2)
178@
436@
525@
66.3%Fe 66.0%Fe
103@
66.1%Fe 65.8%Fe
628@
66.3%Fe 65.9%Fe
614@
63.6
63.0
60.9
61.5
63.0
62.1
60.9
62.8
13@
63.5%Fe
1@
64.1%Fe
14@
63.5%Fe
13
4
17
61.9
61.1
61.4
61.9
61.1
61.4
Saleable Product
(million tonnes)(2)
35
5
264
26
40
0.7
371
57
23
80
39
4
306
28
43
0.7
421
39
18
58
7878v04_GC_Rp_p90-ibc#86609.qxp 4/3/05 11:31 am Page 107
Anglo American plc Annual Report 2004 107
Saleable Product(2)
(thousand tonnes)
2004
2003
4.1
–
4.1
3.4
–
3.4
4.9
–
4.9
–
–
–
FERROUS METALS AND INDUSTRIES CONTINUED
Kumba Resources Limited –
Ore Reserves continued
Reported
Attributable
(%)(1)
(%)(1)
Mining
Method
Tonnes (million)
2004
2003
2004
Grade
2003
7.1
–
7.1
4.9
–
4.9
41
–
41
9.7
–
9.7
–
–
–
57
–
57
Classification
Coal Reserves continued
Tshikondeni Coal Mine
Coking Coal
Proved
Probable
Total
Inyanda Coal
Advanced Project
A-grade export
steam coal
Proved
Probable
Total
100
66.6
OP
33.3
33.3
OP
100
53.7
OP
Mineral Sands(5)
Hillendale Mine excluding Braeburn
% Ilmenite in THM
% Rutile in THM
% Zircon in THM
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
% Heavy Minerals (%THM)
6.6
–
6.6
58.4
–
58.4
–
3.2
3.2
–
7.2
7.2
8.1
–
8.1
50.5
–
50.5
–
2.4
2.4
–
6.5
6.5
Fairbreeze A+B+C excluding Fairbreeze C extension
% Heavy Minerals (%THM)
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
% Ilmenite in THM
% Rutile in THM
% Zircon in THM
See footnotes on page 112.
100
53.7
OP
138
20
158
120
38
158
6.1
4.2
5.9
59.7
49.1
58.7
–
3.3
3.3
–
8.1
8.1
5.3
7.6
5.9
59.0
51.2
56.9
–
3.3
3.3
–
8.1
8.1
7878v04_GC_Rp_p90-ibc#86609.qxp 2/3/05 11:13 pm Page 108
108 Anglo American plc Annual Report 2004
ORE RESERVES AND MINERAL RESOURCES
CONTINUED
FERROUS METALS AND INDUSTRIES CONTINUED
Kumba Resources Limited –
Ore Reserves continued
Reported
Attributable
(%)(1)
(%)(1)
Mining
Method
Tonnes (million)(2)
2004
2003
2004
Grade
2003
% Ilmenite
Classification
Mineral Sands continued
Gravelotte Sand
Proved
Probable
Total
Coolijarloo Mine (Tiwest)
% Ilmenite in THM
% Rutile in THM
% Zircon in THM
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
100
53.7
OP
17.2
17.2
OP
52
–
52
7
23
30
52
–
52
8
19
27
11.0
–
11.0
11.0
–
11.0
% Heavy Minerals (%THM)
2.9
2.5
2.6
60
61
61
4.5
4.1
4.2
10
10
10
4.0
2.8
3.2
58
62
61
4.4
4.1
4.2
11
9
10
Jurien (Tiwest) – Project
% Heavy Minerals (%THM)
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
% Ilmenite in THM
% Rutile in THM
% Zircon in THM
See footnotes on page 112.
17.2
17.2
OP
2.4
0.3
2.7
2.4
0.3
2.7
6.3
6.6
6.3
55
54
55
8.4
6.1
8.1
11
7
11
6.3
6.6
6.3
55
54
55
8.4
6.1
8.1
11
7
11
7878v04_GC_Rp_p90-ibc#86609.qxp 3/3/05 10:01 pm Page 109
Anglo American plc Annual Report 2004 109
FERROUS METALS AND INDUSTRIES CONTINUED
Kumba Resources Limited –
Ore Reserves continued
Reported
Attributable
(%)(1)
(%)(1)
Mining
Method
Tonnes (million)(2)
2004
2003
2004
Grade
2003
Classification
Mineral Sands continued
Magnetic Minerals
(Ticor Limited) – Project
% Ilmenite in THM
% Rutile in THM
% Zircon in THM
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Proved
Probable
Total
Classification
Industrial Minerals
Glen Douglas Dolomite Mine
Proved
Metallurgical
Probable
Dolomite
Total
Proved
Probable
Total
Aggregate
Bridgetown Dolomite
Metallurgical
Dolomite
Proved
Probable
Total
Proved
Probable
Total
Aggregate
See footnotes on page 112.
% Heavy Minerals (%THM)
34.3
34.3
OP
–
7.6
7.6
–
7.6
7.6
–
10.0
10.0
–
10.0
10.0
–
48
48
–
7.0
7.0
–
10
10
–
48
48
–
7.0
7.0
–
10
10
Reported
Attributable
(%)(1)
(%)(1)
Mining
Method
Tonnes (million)(2)
Saleable Product
(million tonnes)(2)
2004
2003
2004
2003
100
66.6
OP
100
66.6
OP
33.3
33.3
OP
34
–
34
12.2
–
12.2
2.6
–
2.6
35
–
35
18.4
–
18.4
2.4
–
2.4
1.5
–
1.5
1.0
–
1.0
–
–
–
–
–
–
7878v04_GC_Rp_p90-ibc#86609.qxp 2/3/05 11:13 pm Page 110
110 Anglo American plc Annual Report 2004
ORE RESERVES AND MINERAL RESOURCES
CONTINUED
FERROUS METALS AND INDUSTRIES CONTINUED
2004
%Zn
8.2
11.0
9.9
%Pb
2.2
3.0
2.7
%Fe
65.2
64.8
65.0
63.1
62.4
62.9
62.1
61.1
61.5
65.4
64.6
65.0
Grade
2003
%Zn
8.4
12.6
11.1
%Pb
3.0
3.0
3.0
%Fe
65.1
64.6
65.0
62.5
62.5
62.5
62.1
61.1
61.5
65.5
64.5
65.0
–
>35.0
>35.0
–
>35.0
>35.0
Reported
Attributable
(%)(1)
(%)(1)
Cut-off
grade
Tonnes (million)(2)
2004
2003
100
59.7
UG
2.3
3.5
5.8
2.0
3.8
5.8
100
52.4
OP
754
636
1,390
975
411
1,386
Kumba Resources Limited –
Mineral Resources(6)
Classification
Base Metals
Rosh Pinah
Zinc Resources Measured
Indicated
Measured and Indicated
Lead Resources
Measured
Indicated
Measured and Indicated
Iron Ore
Sishen Iron Ore Mine
Measured
Indicated
Measured and Indicated
Thabazimbi Ore Mine
Measured
Indicated
Measured and Indicated
100
52.4
OP
Hope Downs (Hope 1) – Advanced Project(3)
Measured
Indicated
Measured and Indicated
Sishen South(7) – Advanced Project
33.3
33.3
OP
Measured
Indicated
Measured and Indicated
100
66.6
OP
Zandrivierspoort – Advanced Project
Measured
Indicated
Measured and Indicated
Coal Resources
Grootegeluk Coal Mine
Raw Coal
Measured
Indicated
Measured and Indicated
Leeuwpan Coal Mine
Raw Coal
Measured
Indicated
Measured and Indicated
Tshikondeni Coal Mine
Raw Coal
Measured
Indicated
Measured and Indicated
See footnotes on page 112.
33.3
33.3
OP
100
66.6
OP
100
66.6
OP
100
66.6
OP
43
19
63
66
97
163
146
147
293
–
149
149
40
26
67
66
97
163
130
126
256
–
149
149
1,463
2,075
3,538
1,521
2,075
3,596
187
10
197
27.2
10.1
37.3
160
30
190
30.0
10.1
40.1
7878v04_GC_Rp_p90-ibc#86609.qxp 3/3/05 10:08 pm Page 111
Anglo American plc Annual Report 2004 111
FERROUS METALS AND INDUSTRIES CONTINUED
Kumba Resources Limited –
Mineral Resources(6) continued
Reported
Attributable
(%)(1)
(%)(1)
Cut-off
grade
Tonnes (million)(2
2004
2003
Classification
Coal Resources continued
Moranbah South, Australia – Project
Raw Coal
Measured
Indicated
Measured and Indicated
Inyanda Coal – Advanced Project
Raw Coal
Measured
Indicated
Measured and Indicated
Strehla – Project
Raw Coal
Measured
Indicated
Measured and Indicated
100
66.6
OP
33.3
33.3
OP
100
66.6
OP
–
586
586
5.1
–
5.1
–
22.5
22.5
–
586
586
5.1
–
5.1
–
22.5
22.5
Kumba Resources Limited –
Mineral Resources(6)
Reported
Attributable
(%)(1)
(%)(1)
Cut-off
grade
Tonnes (million)(2)
2004
2003
Classification
Heavy Minerals
Hillendale Mine(8) – including Braeburn(9)
Measured
Indicated
Measured and Indicated
100
53.7
OP
Fairbreeze – including A+B+C+C extension(9)
Measured
Indicated
Measured and Indicated
Gravelotte Sand – in mining plan
100
53.7
OP
Measured
Indicated
Measured and Indicated
100
53.7
OP
KwaZulu-Natal(10) – Fairbreeze D and Block P
Measured
Indicated
Measured and Indicated
100
53.7
OP
Eastern Cape – Nombanjana, Ngcizele and Sandy Point
Measured
Indicated
Measured and Indicated
100
53.7
OP
Limpopo Sand – Letsitele Sand and Gravelotte Pebbles
Measured
Indicated
Measured and Indicated
53.7
Limpopo Rock – Letsitele Rock and Gravelotte Rock
100
OP
Measured
Indicated
Measured and Indicated
See footnotes on page 112.
100
53.7
OP
56
–
56
196
27
223
75
–
75
–
50
50
233
–
233
12.5
–
12.5
–
53.6
53.6
75
–
75
140
75
215
75
–
75
–
50
50
233
–
233
12.5
–
12.5
–
53.6
53.6
2004
% Ilm
3.7
–
3.7
3.7
2.5
3.5
9.1
–
9.1
–
3.0
3.0
4.5
–
4.5
10.5
–
10.5
–
25.9
25.9
Grade
2003
% Ilm
3.8
–
3.8
2.8
4.6
3.5
9.1
–
9.1
–
3.0
3.0
4.5
–
4.5
10.5
–
10.5
–
25.9
25.9
7878v04_GC_Rp_p90-ibc#86609.qxp 4/3/05 12:58 pm Page 112
112 Anglo American plc Annual Report 2004
ORE RESERVES AND MINERAL RESOURCES
CONTINUED
FERROUS METALS AND INDUSTRIES CONTINUED
Kumba Resources Limited –
Mineral Resources(6) continued
Reported
Attributable
(%)(1)
(%)(1)
Cut-off
grade
Tonnes (million)(2)
2004
2003
2004
Grade
2003
Classification
Heavy Minerals continued
Coolijarloo Mine, Tiwest
Measured
Indicated
Measured and Indicated
Jurien, Tiwest
Measured
Indicated
Measured and Indicated
Magnetic Minerals, Ticor
Measured
Indicated
Measured and Indicated
Classification
Industrial Minerals
Glen Douglas Dolomite Mine
Measured
Metallurgical
Indicated
Dolomite
Measured and Indicated
17.2
17.2
OP
17.2
17.2
OP
34.3
34.3
OP
100
66.6
OP
100
66.6
OP
Aggregate
Measured
Indicated
Measured and Indicated
Bridgetown Dolomite Mine(11)
Metallurgical Dolomite + Aggregate
Measured
Indicated
Measured and Indicated
33.3
33.3
OP
Rounding of figures may cause computational discrepancies.
OP = open pit UG = underground
% Heavy Minerals (%THM)
3.2
2.4
2.6
4.6
5.5
4.8
4.7
6.9
6.6
3.6
2.6
2.8
4.6
5.5
4.7
4.7
6.9
6.6
SiO2%
SiO2%
<2.5
–
<2.5
<2.5
–
<2.5
<2.5
–
<2.5
<2.5
–
<2.5
18
54
72
7.5
1.6
9.1
0.4
25.9
26.3
187
–
187
18.4
–
18.4
2.5
–
2.5
24
55
79
7.5
1.6
9.1
0.4
25.9
26.3
186
–
186
12.2
–
12.2
2.7
–
2.7
(1) Reported and Attributable (%) refers to 2004 only. For the 2003 Reported and Attributable figures, please refer to the previous Annual Report.
(2)
Includes 100% of Ore Reserves and Mineral Resources of consolidated entities and the Group’s share of joint ventures and associates where applicable.
Where the Group’s share is more than 50%, 100% of the Ore Reserves and Mineral Resources are reported.
(3) Status may change pending Kumba’s appeal regarding arbitration.
(4) Leeuwpan’s Coal Reserves have increased by just over 18% as a result of an increase in yield made possible by changes in specifications required by clients.
(5) Kumba reports mineral sands Ore Reserves as the percentage total heavy minerals (% THM) within the Ore Reserves.
Increase is due to positive exploration drilling results, which led to the updating of Mineral Resource estimates.
Individual valuable heavy mineral portions are reported as a percentage of the total heavy minerals (except Gravelotte Sand which reports the percentage ilmenite in the Ore Reserve tonnage).
Ilmenite is estimated with more confidence than rutile and zircon in some deposits, which is reflected in the classification.
(6) Kumba Resources report Mineral Resources ‘as inclusive of those Mineral Resources modified to produce the Ore Reserve’.
(7)
(8) The change in estimated Mineral Resources is the result of additional drilling and subsequent orebody boundary revision.
(9) Braeburn and Fairbreeze C extension Mineral Resources subject to successful prospecting rights conversion.
(10) Prospecting rights on the KwaZulu deposits (Red Scar, Anmatikulu and Red Hill) have been relinquished due to disappointing exploration results.
(11) Plant fines from the production of metallurgical dolomite are sold as aggregate.
The ore reserves and mineral resources of the following operations were audited during 2004 by third party, independent auditors: Sishen and Inyanda.
7878v04_GC_Rp_p90-ibc#86609.qxp 4/3/05 11:12 am Page 113
Anglo American plc Annual Report 2004 113
INDUSTRIAL MINERALS
(stated as at 31 December 2004). The Group’s Ore Reserve and Mineral Resource estimates were compiled in accordance with
the Australasian Code for Reporting of Mineral Resources and Ore Reserves (The JORC Code, 2004) as a minimum standard.
Where relevant, the estimates were also prepared in compliance with regional codes and requirements (e.g. The South African Code
for Reporting of Mineral Resources and Mineral Reserves, The SAMREC Code, 2000). The Mineral Resources are additional to the
Ore Reserves, unless otherwise stated.
Phosphate products
Copebrás –
Ore Reserves(2)
Classification
Proved(3)
Probable
Total
Copebrás –
Mineral Resources(2)
Measured
Indicated
Measured and Indicated
Rounding of figures may cause computational discrepancies.
Reported
Attributable
Tonnes (million)(2)
(%)(1)
(%)(1)
2004
2003
100
73
100
73
52.6
70.0
122.6
4.6
27.8
32.4
100.8
6.1
107.0
9.6
11.4
21.0
2004
%P2O5
12.9
13.6
13.3
12.9
13.6
13.5
Grade
2003
%P2O5
13.3
11.3
13.2
13.9
11.3
12.5
(1) Reported and Attributable (%) – no change between 2003 and 2004.
(2) The increase in Ore Reserves and additional Mineral Resources is due to a mining concession being granted for Area 5 during 2004 and the subsequent increase in the pit limits.
(3) A drilling grid of 50m x 50m is now required to classify reserves as Proved (and resources as Measured). This has resulted in a reduction of the Proved Reserves but the total
Proved plus Probable Reserves is not affected.
ANGLO PAPER AND PACKAGING
The Mondi Group in South Africa owns and manages an attributable 294,412 (2003: 316,508) hectares of sustainable
man-made forests. All of its producing forests have been certified by the Forestry Stewardship Council. The annual harvest
is currently 4.9 million tonnes, with the Group procuring 1.24 million tonnes in order to supplement its internal requirements.
7878v04_GC_Rp_p90-ibc#86609.qxp 3/3/05 10:13 pm Page 114
114 Anglo American plc Annual Report 2004
PRODUCTION STATISTICS
The figures below include the entire output of consolidated entities and the Group’s share of joint ventures, joint arrangements and
associates where applicable, except for Collahuasi in Base Metals which is quoted on a 100% basis.
Anglo Platinum (troy ounces)(1)(2)
Platinum
Palladium
Rhodium
Nickel (tons)
AngloGold Ashanti (gold in troy ounces)(2)
South Africa
Argentina
Australia
Brazil
Ghana
Guinea
Mali
Namibia
Tanzania
USA
Zimbabwe
Gold Fields (gold in troy ounces)(2)
Gold
Anglo Coal (tonnes)
South Africa:
Eskom
Trade – Thermal
Trade – Metallurgical
Australia:
Thermal
Metallurgical
South America:
Thermal
Anglo Coal (tonnes)
South Africa:
Bank
Greenside
Goedehoop
Kriel
Kleinkopje
Landau
New Denmark
New Vaal
Nooitgedacht
Mafube
2004
2003
2,498,200
1,331,800
258,600
22,700
3,079,000
211,000
410,000
334,000
485,000
83,000
475,000
67,000
570,000
329,000
9,000
6,052,000
2,356,100
1,213,700
237,400
22,500
3,281,000
209,000
432,000
323,000
–
–
577,000
73,000
331,000
390,000
–
5,616,000
207,000
870,500
33,668,300
18,648,600
2,143,700
54,460,600
17,378,800
8,203,800
25,582,600
9,589,600
89,632,800
2,733,100
2,754,800
6,462,100
11,059,500
4,691,600
3,474,100
4,975,800
17,312,000
676,600
321,000
54,460,600
31,301,000
18,600,200
1,835,500
51,736,700
17,025,400
9,100,000
26,125,400
8,728,400
86,590,500
3,225,000
2,712,400
5,961,500
10,984,300
4,381,100
3,508,000
4,316,800
16,000,000
647,600
–
51,736,700
(1) Includes Anglo Platinum’s share, 44,500 ounces, of Northam Platinum Limited.
(2) See the published results of Anglo American Platinum Corporation Limited, Northam Limited, AngloGold Ashanti Limited and Gold Fields Limited for further analysis of production information.
7878v04_GC_Rp_p90-ibc#86609.qxp 2/3/05 11:13 pm Page 115
Anglo Coal (tonnes) (continued)
Australia:
Callide
Drayton
Dartbrook
German Creek
Jellinbah East
Moranbah
Dawson Complex
South America:
Carbones del Guasare
Carbones del Cerrejón
Anglo Base Metals
Copper
Collahuasi
100% basis (Anglo American 44%)
Ore mined
Ore processed
Ore grade processed
Production
Oxide
Sulphide
Oxide
Sulphide
Copper concentrate
Copper cathode
Copper in concentrate
Total copper production for Collahuasi
Minera Sur Andes
Los Bronces mine
Ore mined
Marginal ore mined
Las Tortolas concentrator
Production
El Soldado mine
Ore mined
Ore processed
Ore grade processed
Production
Ore processed
Ore grade processed
Average recovery
Copper concentrate
Copper cathode
Copper in concentrate
Total
Open pit – ore mined
Open pit – marginal ore mined
Underground (sulphide)
Total
Oxide
Sulphide
Oxide
Sulphide
Copper concentrate
Copper cathode
Copper in concentrate
Total
Anglo American plc Annual Report 2004 115
2004
2003
9,355,300
4,278,800
2,268,100
4,047,600
925,200
1,125,900
3,581,700
25,582,600
1,677,600
7,912,000
9,589,600
50,342,000
6,610,000
34,844,000
0.9
1.3
1,280,400
58,200
422,800
481,000
20,995,000
29,187,000
20,572,000
1.1
89.5
549,000
31,800
199,800
231,600
4,971,000
1,061,000
2,687,000
8,719,000
661,000
6,976,000
1.4
1.1
216,700
8,100
60,700
68,800
8,520,600
4,286,100
2,432,500
3,802,000
883,600
3,158,900
3,041,700
26,125,400
1,380,900
7,347,500
8,728,400
27,680,000
6,355,000
24,415,000
0.8
1.5
861,600
63,400
331,300
394,700
20,901,000
23,676,000
19,514,000
1.1
87.1
553,800
27,700
180,100
207,800
3,188,000
1,590,000
3,267,000
8,045,000
531,000
6,581,000
1.7
1.1
228,600
8,000
62,500
70,500
tonnes
tonnes
tonnes
%Cu
%Cu
dmt
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
%Cu
%
dmt
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
%Cu
%Cu
dmt
tonnes
tonnes
tonnes
7878v04_GC_Rp_p90-ibc#86609.qxp 4/3/05 1:23 pm Page 116
116 Anglo American plc Annual Report 2004
PRODUCTION STATISTICS
CONTINUED
Chagres Smelter
Copper concentrates smelted
Production
Copper blister/anodes
Acid
Total copper production for the Minera Sur Andes group
Mantos Blancos
Mantos Blancos mine
Ore processed
Oxide
Sulphide
Marginal ore mined
Oxide
Sulphide
Marginal ore
Copper concentrate
Copper cathode
Copper in concentrate
Total
Oxide
Marginal ore
Oxide
Marginal ore
Copper cathode
Ore grade processed
Production
Mantoverde mine
Ore processed
Ore grade processed
Production
Black Mountain and Hudson Bay
Other
Total attributable copper production
Nickel, Niobium and Mineral Sands
Nickel
Codemin
Ore mined
Ore processed
Ore grade processed
Production
Loma de Níquel
Ore mined
Ore processed
Ore grade processed
Production
Other
Total attributable nickel production
Niobium
Catalão
Ore mined
Ore processed
Ore grade processed
Production
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
%Cu (Soluble)
%Cu (Insoluble)
%Cu (Soluble)
dmt
tonnes
tonnes
tonnes
tonnes
tonnes
%Cu (Soluble)
%Cu (Soluble)
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
% Ni
tonnes
tonnes
tonnes
% Ni
tonnes
tonnes
tonnes
tonnes
tonnes
kg Nb/tonne
tonnes
2004
2003
170,400
165,000
440,500
300,400
4,476,000
4,103,000
9,359,000
0.7
1.0
0.4
94,400
58,200
36,700
94,900
9,017,000
7,028,000
0.7
0.3
60,100
79,500
19,400
766,000
403,000
521,300
1.4
6,500
1,265,000
1,204,000
1.7
17,400
100
24,000
568,100
572,500
11.04
3,500
165,500
160,100
436,700
278,300
4,738,000
4,021,000
8,819,000
0.7
1.0
0.4
110,200
51,600
35,300
86,900
9,001,000
6,048,000
0.7
0.3
60,200
87,800
21,900
708,800
500,600
530,300
1.4
6,400
1,208,000
1,216,000
1.7
17,200
1,300
24,900
559,100
529,700
10.87
3,300
7878v04_GC_Rp_p90-ibc#86609.qxp 4/3/05 11:15 am Page 117
Anglo American plc Annual Report 2004 117
Mineral Sands
Namakwa Sands
Ore mined
Production
Smelter production
Zinc and Lead
Black Mountain
Ore mined
Ore processed
Ore grade processed
Production
Hudson Bay
Ore mined
Ore processed
Ore grade processed
Concentrate treated
Production (domestic)
Production (total)
Lisheen
Ore mined
Ore processed
Ore grade processed
Production
Ilmenite
Rutile
Zircon
Slag tapped
Iron tapped
Zinc
Lead
Copper
Zinc in concentrate
Lead in concentrate
Copper in concentrate
Copper
Zinc
Copper
Zinc
Copper
Zinc
Copper
Zinc
Gold
Silver
Zinc
Lead
Zinc in concentrate
Lead in concentrate
Skorpion
Ore mined
Ore processed
Ore grade processed
Production
Total attributable zinc production
Zinc
Zinc
2004
2003
18,618,000
320,600
23,700
119,100
169,300
105,900
16,739,000
314,600
20,400
93,300
165,800
105,900
1,518,000
1,500,000
2.7
3.0
0.5
28,200
37,500
5,200
2,484,000
2,419,000
2.2
5.2
274,900
216,500
40,000
105,200
74,300
107,000
73,400
1,020,900
1,475,000
1,460,000
11.7
1.8
156,300
17,200
1,304,000
1,187,000
12.3
119,200
410,700
1,501,000
1,449,000
2.6
3.3
0.5
25,900
39,600
4,700
2,206,000
2,207,000
1.9
5.0
273,000
228,500
39,400
93,100
83,100
117,900
57,500
1,032,800
1,522,000
1,521,000
12.3
2.1
169,300
20,800
673,000
619,000
12.0
47,400
360,500
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
%Zn
%Pb
%Cu
tonnes
tonnes
tonnes
tonnes
tonnes
%Cu
%Zn
tonnes
tonnes
tonnes
tonnes
tonnes
tonnes
ounces
ounces
tonnes
tonnes
%Zn
%Pb
tonnes
tonnes
tonnes
tonnes
%Zn
tonnes
tonnes
7878v04_GC_Rp_p90-ibc#86609.qxp 4/3/05 3:24 pm Page 118
118 Anglo American plc Annual Report 2004
PRODUCTION STATISTICS
CONTINUED
Anglo Industrial Minerals (tonnes)
Aggregates
Lime products
Concrete (m3)
Sodium tripolyphosphate
Phosphates
Anglo Ferrous Metals and Industries (tonnes)
Kumba Resources Limited
Iron ore production
Lump
Fines
Total iron ore
Coal
Power station coal
Coking coal
Steam coal
Total coal
Zinc metal
Heavy minerals(1)
Ilmenite
Scaw Metals
Rolled products
Cast products
Grinding media
Highveld Steel
Rolled products
Continuous cast blocks
Vanadium slag
Samancor
Chrome ore
Chrome alloys
Manganese ore (mtu m)
Manganese alloys
Zimbabwe Alloys
Chrome alloys
Tongaat-Hulett
Sugar
Aluminium
Starch and glucose
Hippo Valley
Sugar
Terra(2)
Ammonia
Nitrogen solutions
Urea
Ammonium nitrate
(1) Further details of heavy minerals production are available in Kumba’s annual report.
(2) Terra was sold effective December 2004.
2004
2003
70,448,300
1,185,700
8,310,800
115,700
1,169,300
18,248,000
11,864,000
30,112,000
14,017,000
2,409,000
3,018,000
19,444,000
116,000
498,000
458,000
110,000
429,000
674,013
922,477
67,587
1,155,000
378,600
106
321,100
31,000
756,000
162,000
576,000
200,000
550,200
1,497,200
163,600
387,400
67,158,100
893,800
7,874,600
88,800
1,040,300
18,172,000
11,421,000
29,593,000
13,869,000
2,162,000
2,933,000
18,964,000
112,000
393,000
352,000
115,000
389,000
578,035
877,405
69,814
1,127,400
407,700
76
288,200
39,000
843,000
147,000
610,000
224,000
677,000
1,862,400
264,500
452,800
7878v04_GC_Rp_p90-ibc#86609.qxp 4/3/05 3:25 pm Page 119
Anglo American plc Annual Report 2004 119
Anglo Paper and Packaging
Mondi Packaging
Packaging papers
Corrugated board and boxes
Paper sacks
Coating and release liners
Pulp – external
Mondi Business Paper
Uncoated wood free paper
Pulp – external
Wood chips
Mondi Packaging South Africa
Packaging papers
Corrugated board and boxes
Newsprint and other
Newsprint (attributable share)
Mining timber
tonnes
m m2
m units
m m2
tonnes
tonnes
tonnes
green metric tonnes
tonnes
m m2
tonnes
tonnes
2004
2003
2,600,291
2,103
3,251
1,661
153,045
1,881,851
53,142
2,125,858
365,557
335
550,986
154,727
2,010,423
1,386
2,723
1,584
143,855
1,583,496
109,811
2,122,470
370,917
297
572,054
158,640
7878v04_GC_Rp_p90-ibc#86609.qxp 4/3/05 12:59 pm Page 120
120 Anglo American plc Annual Report 2004
EXCHANGE RATES AND COMMODITY PRICES
US dollar exchange rates
Average spot prices for the period
South African rand
Sterling
Euro
Australian dollar
Chilean peso
Closing spot prices
South African rand
Sterling
Euro
Australian dollar
Chilean peso
Commodity prices
Average market prices for the period
Gold – US$/oz
Platinum – US$/oz
Palladium – US$/oz
Rhodium – US$/oz
Copper – US cents/lb
Nickel – US cents/lb
Zinc – US cents/lb
Lead – US cents/lb
Iron ore – lumpy - US$/t
Ferrovanodium – US$/t
Mc – Ferromanganese - US$/t
European eucalyptus pulp price – US$/t
2004
2003
6.44
0.55
0.80
1.36
609
5.65
0.52
0.74
1.28
556
7.55
0.61
0.88
1.53
690
6.67
0.56
0.79
1.33
593
2004
2003
409
847
231
991
130
628
48
40
26
20
1,207
520
363
692
201
530
81
437
38
23
20
10
707
500
7878v04_GC_Rp_p90-ibc#86609.qxp 3/3/05 10:22 pm Page 121
Anglo American plc Annual Report 2004 121
KEY FINANCIAL DATA
US$ million (unless otherwise stated)
2004
2003(1)
2002(1)
2001(1)(2)
2000(1)(2)
1999(1)(2)
Group turnover including share of joint ventures and associates 31,795
(1,195)
Less: Share of joint ventures’ turnover
(5,670)
Share of associates’ turnover
Group turnover – subsidiaries
Operating profit before exceptional items
Operating exceptional items(3)
Total operating profit(3)
Non-operating exceptional items(3)
Net interest (expense)/investment income
Profit on ordinary activities before taxation
Taxation on profit on ordinary activities
Taxation on exceptional items
Equity minority interests
Profit for the financial year
Headline earnings
Earnings per share ($)(4)
Headline earnings per share ($)(4)
Dividend per share (US cents)
Basic number of shares outstanding (million)(4)
EBITDA(5)
EBITDA interest cover(6)
Operating margin (before exceptional items)
Dividend cover (based on headline earnings)
Balance Sheet
Intangible and tangible fixed assets
Investments
Working capital
Provisions for liabilities and charges
Net (debt)/funds
Equity minority interests
Non-equity minority interests
Total shareholders’ funds (equity)
Total capital(7)
Net cash inflow from operating activities
Dividends received from joint ventures and associates
Return on capital employed(8)
EBITDA/average total capital
Net debt/(funds) to total capital
24,930
4,572
(92)
4,480
520
(359)
4,641
(1,280)
1
(449)
2,913
2,689
2.03
1.88
70.0
1,434
7,110
14.9
14.4%
2.7
33,745
6,731
2,249
(4,986)
(8,121)
(4,445)
(175)
24,998
37,739
4,773
408
13.4%
20.4%
21.5%
24,909
(1,060)
(5,212)
18,637
2,892
(286)
2,606
386
(319)
2,673
(749)
13
(345)
1,592
1,694
1.13
1.20
54.0
1,415
4,785
12.7
11.6%
2.2
26,646
7,206
1,903
(3,954)
(8,633)
(3,396)
–
19,772
31,801
3,184
426
10.7%
17.3%
27.1%
20,497
(1,066)
(4,286)
15,145
3,332
(81)
3,251
64
(179)
3,136
(1,042)
(3)
(528)
1,563
1,759
1.11
1.25
51.0
1,411
4,792
20.0
16.3%
2.5
18,841
6,746
822
(2,896)
(5,578)
(2,304)
–
15,631
23,513
3,618
258
17.5%
24.4%
23.7%
19,282
(1,109)
(3,387)
14,786
3,298
(513)
2,785
2,148
130
5,063
(1,247)
(147)
(584)
3,085
1,681
2.09
1.14
49.0
1,474
4,647
31.2
17.1%
2.3
12,870
4,873
282
(2,194)
(2,018)
(1,607)
–
12,206
15,831
3,539
258
19.0%
26.0%
12.7%
20,570
(1,590)
(4,156)
14,824
3,479
(433)
3,046
490
308
3,844
(1,143)
–
(818)
1,883
1,927
1.20
1.23
47.5
1,567
4,688
–
16.9%
2.6
14,315
7,234
971
(2,594)
(3,590)
(2,212)
–
14,124
19,926
2,959
258
19.5%
25.3%
18.0%
19,245
(1,720)
(5,947)
11,578
2,141
–
2,141
410
265
2,816
(538)
18
(758)
1,538
1,296
1.00
0.84
37.5
1,540
3,113
–
11.1%
2.2
11,110
7,644
914
(2,604)
81
(2,477)
–
14,668
17,064
1,850
209
13.2%
18.8%
(0.5%)
(1) The comparative years have been restated to reflect the adoption of UITF abstract 38 ‘Accounting for ESOP trusts’.
(2) 1999, 2000 and 2001 have been restated for the adoption of FRS 19.
(3) As first noted in 2002, operating profit for 2000 has been restated for the reclassification of the loss of $167 million arising on the anticipated disposal of Terra Industries Inc. The disposal did not
proceed and the loss has therefore been reclassified into operating exceptional items as an impairment.
(4) 2000 and 1999 have been restated to reflect the three-for-one bonus issue in May 2001.
(5) EBITDA is operating profit before exceptional items plus depreciation and amortisation in subsidiaries and share of EBITDA of joint ventures and associates.
(6) EBITDA interest cover is EBITDA divided by net interest expense, excluding other net financial income (2004: $119 million) and exceptional financing charges (2004: nil). EBITDA interest cover for
2002 is annualised to account for acquisitions during the year. The actual EBITDA interest cover for 2002 was 25.5 times. For 2000 and 1999 EBITDA interest cover is not applicable as the Group
was a net interest recipient after adjusting for other net financial income.
(7) Total capital is the sum of shareholders’ funds, net debt and minority interests.
(8) Return on capital employed is calculated as total operating profit before impairments for the year divided by the average total capital less other investments and adjusted for impairments.
7878v04_GC_Rp_p90-ibc#86609.qxp 3/3/05 10:23 pm Page 122
122 Anglo American plc Annual Report 2004
SUMMARY BY BUSINESS SEGMENT
Turnover(1)
TC/RCs(1)
EBITDA(2)
Operating profit/(loss)
Headline earnings/(loss)
US$ million (unless otherwise stated)
2004
2003
2004
2003
Platinum
Platinum
Exceptional items
Gold
Gold
Exceptional items
Diamonds
Coal
South Africa
Australia
South America
Base Metals
Copper
Collahuasi
Minera Sur Andes
Mantos Blancos
Palabora and other
Nickel, Niobium, Mineral Sands
Catalão
Codemin
Loma de Níquel
Namakwa Sands
Nkomati and other
Zinc
Black Mountain
Hudson Bay
Lisheen
Skorpion
Other
Exceptional items
Industrial Minerals
Tarmac
Copebrás
Exceptional items
Ferrous Metals and Industries
Kumba
Highveld Steel
Scaw Metals
Samancor Group
Boart Longyear
Tongaat-Hulett
Terra
Other
Exceptional items
Paper and Packaging
Mondi Packaging
Mondi Business Paper
Other
Exploration
Exploration
Exceptional items
Corporate
Gold Fields(3)
Other
Exceptional items
Less TC/RC charges(1)
3,120
3,120
2,278
2,278
2,409
2,409
2,041
2,041
3,177
2,382
1,109
840
433
3,517
2,247
650
1,034
475
88
528
44
89
247
146
2
741
74
405
189
73
1
3,858
3,596
262
6,520
1,413
775
910
821
872
1,121
598
10
6,919
3,766
2,003
1,150
–
–
90
90
–
2,967
1,851
843
739
269
2,126
1,247
323
587
277
60
372
39
56
136
124
17
506
62
294
150
–
1
3,318
3,129
189
4,367
332
488
670
499
665
994
654
65
5,628
2,885
1,693
1,050
–
–
333
333
–
–
–
–
–
–
–
–
–
–
197
94
39
44
11
–
–
–
–
–
–
–
103
25
–
78
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
169
79
34
33
12
–
–
–
–
–
–
–
90
22
–
68
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2004
867
867
701
701
688
686
297
184
205
1,626
1,252
412
608
225
7
273
29
48
158
37
1
131
2
78
29
22
(30)
624
543
81
1,249
329
222
123
268
102
116
92
(3)
996
535
352
109
(120)
(120)
(207)
19
(226)
2003
673
673
642
642
638
505
175
219
111
569
447
162
216
65
4
151
23
26
73
19
10
(1)
(5)
(9)
13
–
(28)
557
510
47
441
67
29
86
78
63
50
67
1
976
488
388
100
(104)
(104)
(112)
72
(184)
2004
537
537
–
262
263
(1)
586
487
244
79
164
1,038
1,046
345
511
195
(5)
224
26
44
137
16
1
38
(3)
37
17
(13)
(33)
(237)
337
280
66
(9)
1,050
205
168
101
236
67
69
53
(4)
155
559
284
209
66
(120)
(120)
–
(256)
7
(263)
–
–
4,480
2003
433
447
(14)
326
369
(43)
562
333
133
130
70
78
269
106
129
35
(1)
106
20
22
52
3
9
(62)
(7)
(59)
4
–
(27)
(208)
325
290
35
–
208
33
11
70
41
33
10
14
(4)
–
656
302
294
60
(125)
(105)
(20)
(190)
28
(217)
(1)
–
2,606
2004
239
239
158
158
381
351
162
73
116
1,042
871
279
430
163
(1)
172
27
30
103
11
1
31
(2)
31
16
(14)
(32)
267
238
29
480
72
92
72
162
35
21
29
(3)
381
193
148
40
(91)
(91)
2003
205
205
167
167
386
232
79
94
59
206
216
78
111
28
(1)
76
18
16
41
(6)
7
(65)
(6)
(63)
4
–
(21)
270
256
14
107
18
5
55
10
21
(10)
7
1
425
162
207
56
(83)
(83)
(519)
6
(525)
(221)
35
(256)
–
2,689
–
1,694
(197)
–
31,795 24,909
–
197
–
169
–
7,110
–
4,785
(1) Turnover includes share of joint ventures and associates. Base Metals’ turnover is shown before deduction of treatment charges and refining charges (TC/RCs) in 2004.
Refer to note 2 for further details.
(2) EBITDA is operating profit before exceptional items plus depreciation and amortisation in subsidiaries and share of EBITDA of joint ventures and associates.
(3) The Group disposed of its holding in Gold Fields Limited in March 2004.
7878v04_GC_Rp_p90-ibc#86609.qxp 4/3/05 1:22 pm Page 123
Anglo American plc Annual Report 2004 123
SHAREHOLDER INFORMATION
ANNUAL GENERAL MEETING
11:00 am on Wednesday, 20 April 2005, at
The Conference Centre
Church House
Dean’s Yard
London SW1P 3NZ
SHAREHOLDERS’ DIARY 2005/6
Interim results
Interim dividend payable
Financial year end
Annual results announcement
Annual Report
Annual General Meeting
Final dividend payable
August 2005
September 2005
31 December 2005
February 2006
March 2006
April 2006
April 2006
ENQUIRIES
Queries relating to Anglo American plc should be addressed
to the Company Secretary or the Investor and Corporate Affairs
Department at the following address:
Registered and Head Office
Anglo American plc
20 Carlton House Terrace
London SW1Y 5AN, England
Telephone +44 (0)20 7968 8888
Fax +44 (0)20 7968 8500
Registered number 3564138
Website: www.angloamerican.co.uk
If you have any questions about your shareholding
or dividend, please contact the Registrars at the relevant
address below:
UK Registrars
Lloyds TSB Registrars
The Causeway
Worthing
West Sussex
BN99 6DA, England
Telephone, from the UK 0870 609 2286
Telephone, from overseas +44 121 415 7558
Transfer Secretaries in South Africa
Ultra Registrars (Pty) Limited
11 Diagonal Street
Johannesburg 2001, South Africa
(PO Box 4844, Johannesburg 2000)
Telephone +27 (0)11 834 2266
7878v04_GC_Rp_p90-ibc#86609.qxp 4/3/05 1:00 pm Page 124
124 Anglo American plc Annual Report 2004
OTHER ANGLO AMERICAN PUBLICATIONS
• 2004 Annual Report
• 2004 Interim Report
• 2004/5 Fact Book
• 2004 Notice of AGM and Shareholder Information Booklet
• 2004 Report to Society
• Investing in the future – Black Economic Empowerment
• Good Neighbours: Our Work With Communities
• Good Citizenship: Our Business Principles
• Optima – Anglo American’s current affairs journal
If you would like to receive copies of Anglo American’s publications,
please write to:
Investor and Corporate Affairs Department
Anglo American plc
20 Carlton House Terrace
London SW1Y 5AN, England
Alternatively, publications can be ordered online at:
http://www.angloamerican.co.uk/investor/reqreport.asp
The 2004 Annual Review and the booklet containing the Notice
of AGM and other shareholder information are available free of
charge from the Company, its UK Registrars and South African
Transfer Secretaries.
CHARITABLE PARTNERS
This is just a selection of the charities which we have worked with
in 2004:
7878v04_GC_Rp_p90-ibc#86609.qxp 2/3/05 10:29 pm Page IBC1
Anglo American plc Annual Report 2004 IBC1
Designed and produced by
Addison Corporate Marketing.
Printed by St. Ives Westerham Press.
The paper used in this report is made
from virgin wood fibre sourced from
fully sustainable forests. It is a Totally
Chlorine-Free (TCF) product.
7878v03_PH_Rp_FC-p27_020305.qxp 2/3/05 10:10 pm Page bc2
ANGLO AMERICAN plc
20 Carlton House Terrace
London SW1Y 5AN
England
Telephone +44 (0)20 7968 8888
Fax
+44 (0)20 7968 8500
Registered number 3564138
www.angloamerican.co.uk