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PLATINUM GROUP METALS
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2016 ANNUAL RESULTS
We announced our 2016 Annual Results on Wednesday 15 February 2017.
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Anglo American Platinum, delivering on strategy and managing the business for the current pricing environment
Anglo American Platinum Limited reported interim results for the six months ended 30 June 2016. Net sales revenue increased by 3% to R30.7 billion, EBIT increased 12 per cent to R1.5 billion, after normalising for the stock gains of R2.2 billion in H1 2015 and R0.6 billion in H1 2016 and net debt reduced by R2.9 billion to R9.9 billion. Headline earnings were R1.0 billion and headline earnings per share were R3.99
PGM pricing during the period remained weak, with the average US Dollar basket price per platinum ounce sold decreasing by 24% in H1 2016 to US$1,632, versus the US$2,157 achieved in 2015. The decline in US Dollar metal prices was partly offset by a weaker Rand resulting in the Rand basket price per platinum ounce ending 3% weaker at R25,100, compared to R25,748 in H1 2015.
Within this pricing environment, the Company continued to make progress in implementing its value driven strategy and improving its operational performance. Since 2013, the Company has reduced unprofitable platinum production by ~350koz. R1.0 billion of overhead cost savings have been identified through the reduction of 400 managerial roles and non-labour overhead savings, and R400 million of this has been achieved in H1 2016. The Company’s cash operating costs of R17.8 billion increased by 5%, below the level of mining inflation, and unit costs of R19,436 per platinum ounce increased by 1.8% over R19,095 achieved in H1 2015.
Anglo American Platinum had a strong recovery in platinum production in 2015, with 2014 being materially impacted by the five-month industrial action and associated production ramp up. Total platinum production was up 25% year-on-year due to strong operational performances at Amandelbult and Unki mines, as well as a record performance from Mogalakwena. The Company had improved performances at Rustenburg and Union mines, as they benefitted from an increased focus on operational efficiency.
Total refined platinum production of 2.46 million ounces was up 30% year-on-year, which was made up by platinum production of 2,33 million ounces; supplemented by a drawdown in pipeline inventory of 130,000 ounces. The increased refined production led to an increase in platinum sales, up 17% year-on-year, to 2.47 million platinum ounces.
As a result of this strong operational performance and the focus on costs and efficiencies, every one of the Company’s operations was cash positive in 2015, generating free cash flow of R4 billion. This enabled the Company to reduce its net debt position to R12.8 billion from R14.6 billion, thereby enabling it to maintain a robust balance sheet with plenty of liquidity headroom.
Anglo American Platinum reported strong performance in the context of commodity price pressure for the six months ended 30 June 2015.
Despite a steep decline in the dollar prices for most metals, the financial performance of the Company improved significantly over the comparative period in 2014, which was impacted by the five month long industrial action. Headline earnings increased to R2.5 billion from R157 million in the first half of 2014 and headline earnings per share were 936 cents per share compared to 164 cents per share.
Net sales revenue increased 7% to R29.9 billion (2014: R27.8 billion) due primarily to increased sales volume, up 11% to 1.16Moz, and the impact of the weakening Rand/ US dollar exchange rate.
The operational improvements and cash control initiatives introduced over the last two years resulted in all of the asset complexes in the portfolio being cash positive, and net debt declined R1.9 billion from the December 2014 close of R14.6 billion.
Mark Cutifani, Chief Executive of Anglo American provides an update on the business alongside members of Anglo American’s Group Management Committee. Key highlights from Investor Day 2015 included:
While industrial action dominated the financials, focus on value-driven strategy, strict capital management and operational recovery positioned the company for further improved performance in results for the twelve months ended 31 December 2014.
The first half of the year was characterised by the unprecedented five month strike, while the second half of the year demonstrated a faster than expected ramp up and strong underlying operational improvements across the portfolio as a result of the implementation of business improvement initiatives. This saw recovery from a first half operating profit of R353 million to achieve a profit of R970 million in the second half before the scrapping of assets arising from the Union mine south decline closures.
For the year as a whole, headline earnings were R786 million or 301 cents per share, compared to R1, 451 million or 556 cents per share in 2013. Profit attributable to ordinary shareholders was R624 million or 239 cents per share (2013: loss of R1, 370 million or 525 cents). Sales were 9% lower at 2.11 million ounces as inventories were drew down to supplement the strike affected production volumes, to ensure that all contractual obligations were met. Net sales revenue was up R3.2 billion on the back of the weaker Rand.
Anglo American Platinum Limited has reported results for the six months ended 30 June 2014 showing reduced profitability as a result of the prolonged industrial action, though partially mitigated by the sale of inventory during the period. Headline earnings decreased to R157 million compared to R1.3 billion in 2013; profit attributable to shareholders was R429 million or R1.64 per share; and headline earnings was R0.60 per share.
The first half of 2014 was characterised by an unprecedented five month strike, which impacted on production and, therefore, profitability. Net sales revenue of R27.8 billion was 15% higher than the R24.1 billion in 2013, due primarily to the impact of the weakening of the rand / US dollar exchange rate and a marginal improvement in the US dollar basket price. Refined platinum sales for the period marginally declined to 1.04 million ounces. This was achieved despite 440,000 ounces of equivalent refined production lost during the industrial action and subsequent ramp up, as sales were supplemented with a draw down in stock of approximately 300 koz. As part of the ongoing strategy to extract value from our marketing business, the commissions paid on sales reduced to R10 million in the first half of 2014, compared to the R181 million paid in the same period in 2013.
Equivalent refined platinum production (equivalent ounces are mined ounces expressed as refined ounces) from the mines managed by the Company and its joint venture partners for the first half of 2014 at 715 koz, was 39% lower. This impact was mainly a result of the industrial action, but also from the consolidation of certain mines (at Union and Rustenburg) in 2013.
At Investor Day 2014, Mark Cutifani, Chief Executive of Anglo American provided an update on the business alongside members of Anglo American’s Group Management Committee.
Key findings from the day included:
Anglo American Platinum Limited reported a return to profitability with an operating profit of R2.0 billion for the 12 months to December 2013, up from last year’s loss of R6.33 billion.
Revenue increased by 22% to R52.4billion, driven by higher sales volumes and the impact of the weakening Rand/USD exchange rate. Headline earnings increased to R1.5 billion from the loss of R1.5 billion incurred in 2012. The Company recorded headline earnings attributable to ordinary shareholders of R5.56 per share, compared to the loss of R5.62 per share in 2012.
The main focus of the year under review was the completion of the portfolio review and then beginning to execute its outcomes. The resultant once-off restructuring costs of R1.5 billion and asset write-downs of R 2.8 billion, combined with a higher effective tax rate, gave rise to an attributable loss for the year of R1.4 billion or R5.25 per share.
Taking into account the net debt position of the group and considering future funding requirements, the Board decided not to declare a dividend for the 2013 financial year.
Anglo American Platinum Limited reported headline earnings per share of R5.14 in the first half of 2013, an 88% increase primarily due to a weaker Rand and an increase in platinum sales volumes, partially offset by the impact of higher costs and lower realised dollar metal prices.
Headline earnings for the first half of 2012 excluded an after-tax loss of R1.2 billion (R4.55 per share) resulting from the revaluation of Wesizwe Platinum Limited investments and the write-down of assets, which were considered uneconomical in the current environment, compared to an after-tax loss of R142 million(54 cents per share) in the first half of 2013.
Net sales revenue increased by 24% or R4.7 billion to R24.1 billion. R1.8 billion of the increase in net sales revenue was due to higher sales volumes and R2.9 billion was due to higher average realised Rand prices. Refined platinum sales for the period ended 30 June 2013 increased by 11%, to 1,074,155 ounces. The realised average dollar basket price declined by 5% from US$2,532 per ounce in the first half of 2012 to US$2,416 per ounce. However, the average exchange rate achieved on sales during the first half of 2013 was R9.31, 17% weaker compared to R7.94 in the first half of 2012. As a result, the average realised Rand basket price in the first half of 2013 was R22,473 per platinum ounce, 12% higher than the basket price of R20,086 achieved in the first half of 2012.
The first half of 2013 was characterised by intermittent illegal industrial actions which impacted production, unit costs and labour productivity. Notwithstanding these challenges, Anglo American Platinum delivered solid operational performance during the period. Equivalent refined platinum production was 1.2 million ounces, in line with the first half of 2012. Labour productivity declined marginally by 1% to 6.5 m2 in the first half of 2013.
For Investor Day 2013, Anglo American provided an update on Anglo American’s strategy, detailed findings of its asset review and progress made towards realising Anglo American’s value potential through a number of revenue enhancing and cost reduction opportunities.
Mark Cutifani, Chief Executive of Anglo American, said: "We know what we need to do to realise the value potential from Anglo American’s world class diversified asset base. Our asset review has identified a range of opportunities which will enable us to better utilise the installed capital across our operations, driving improved margins and returns."
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