While industrial action dominates the financials, focus on value-driven strategy, strict capital management and operational recovery positions the company for further improved performance

Anglo American Platinum Limited ('Anglo American Platinum' or 'the Company') today reported 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 the Company recover 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 the Company drew down inventories 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.

Financial Review

Operating profit for the full year ended at R843 million (including the R480 million impairment on the closure of the Union mine south declines), R1.1 billion lower than 2013. The Company generated R7.9 billion in cash from its operations, which was R597 million more than the R7.3 billion generated in 2013. These cash flows were used to pay taxation of R2.7 billion; fund our capital expenditure of R6.9 billion (including capitalised interest); contribute towards the funding of our joint-venture and associate operations (R546 million); and settle interest of R497 million (net of interest capitalised) to our debt providers during 2014. As a result, net debt closed R3.2 billion up on 2013 at R14.6 billion.

Operational Review

2014 was another record year for safety for the Company which managed to halve its fatality rate against 2013, and again reduce LTIFR. Work continues towards the ultimate aim of zero harm.

Equivalent refined platinum production for 2014 was 1.84 million ounces, 21 per cent lower than 2013. This was mainly due to the industrial action and the successful consolidation of Rustenburg and Union mines in 2013.

Despite the challenging environment of the industrial action, the effect of business improvement initiatives was evident across all operations. Mogalakwena had a record performance, producing 370 koz, up 10%, as a result of better mine performance through higher grade, higher volume and improved throughput at the concentrator. JVs and associates produced 769 koz, up 2%, another record performance. The ramp up of strike affected mines was completed ahead of schedule, and fourth quarter production at these mines also showed operational improvements, up 12% on a normalised basis against prior year.

The revised marketing strategy aimed at improving margins and increase future demand for PGMs continues to have a positive impact. Commissions reduced substantially during the year from R418 million to R14 million in 2014. Minor PGMs were targeted as a value creation opportunity and sales of these metals increased by R638 million.

During the year, Anglo American Platinum prioritised all existing asset-optimisation, supply chain programmes and initiatives identified in the 2012 Platinum Review. The firm foundations of delivery embedded in 2013 allowed for a further R2.3 billion of value to be delivered. The Platinum Review initiatives which targeted benefits of R3.8 billion by 2015 have now seen total cumulative value creation of R4.2 billion in 2014 (measured against a 2011 base line), one year ahead of schedule.

Commenting on the results, Anglo American Platinum CEO Chris Griffith said: "While the strike had a significant impact on the year, we navigated through this difficult period and are well positioned to deliver on our aspirations for the business. The industrial action did not impact all of our operations and we delivered record production performances from Mogalakwena and the JV portfolio. Further, following the successful ramp-up, we saw underlying performance improvements across the whole portfolio in the fourth quarter, with a 12 per cent improvement in production on a normalised basis compared to the comparable period last year. Market fundamentals for PGMs are improving and we are confident that we can continue our positive momentum into 2015."

Outlook

The average US dollar sales price achieved for platinum for the year was $1,386/oz, falling in the second half largely due to macroeconomic factors and the return of supply from strike affected mines. Firmer palladium and rhodium prices reduced the impact and the overall dollar basket price increased by 4% and with the rand weakening the average realised rand basket price increased by 16% to R26, 219 in 2014.

Indications suggest that market fundamentals for platinum strengthened during the year, and we should see the price react to these fundamentals in 2015. The cumulative oversupply from 2006 has been eliminated in the past three years, and demand for PGMs continues to be strong.

The restructuring of the operations is now largely complete, with the consolidation of Rustenburg from five mines into three and Union Mine from two mines into one. As part of the next phase of optimising these assets to improve profitability and sustainability, the respective mine plans have been reviewed and refined. Implementation of these optimised plans has commenced, for example the closure of the last decline section of Union Mine during the fourth quarter of 2014. The decline section was producing loss-making ounces, and the closure has helped the viability of the mine by focusing on value through improved grades and not volume.

Anglo American Platinum continues to make progress towards repositioning its portfolio of assets, which includes the disposal of non-core assets. The objective is to exit Union and Rustenburg mines in the most appropriate manner, whether separately or together, through either a sale or listing. Interested parties are currently undertaking due diligence on each of these assets and a decision on the mechanism for exit will be made in the first half of 2015.

Commenting on the outlook for the Company, Griffith continued: "We continue with the implementation of our value-driven strategy, cost reduction programmes and improve operating efficiencies. Our focus remains on the restructuring and repositioning of our portfolio. We have the high quality assets to enable us to do this, and a new capital optimisation programme to ensure we allocate our scarce capital to the highest potential assets and projects."

Finance Director

As was previously announced, Finance Director, Bongani Nqwababa resigned on 29 September 2014. Mr Nqwababa will continue in his role until 28 February 2015. Mr Ian Botha has been appointed as the incoming Finance Director and will commence his role on 1 May 2015. Mr Botha joins the Company from his current role as Group Financial Controller at Anglo American plc based in London.

Mr Martin Poggiolini, the Company's Head of Finance, will act as Finance Director in the interim.