De Beers announcement
15 February, 2002
De Beers Société Anonyme (“DBsa”) announcement
Anglo American wishes to draw attention to DBsa's announcement of their results for the 12 months to 31 December 2001, attached hereto.
Accounting note:
DBsa reported today pro forma headline earnings for the 12 months to 31 December 2001 of US$837 million. These headline earnings include De Beers' diamond earnings for the 12 months to 31 December 2001 and De Beers' share of Anglo American's headline earnings for the six months to 31 December 2000.
The implications for Anglo American's results for the 12 months to 31 December 2001 to be announced on 13 March 2002 are as follows:-
- Headline diamond earnings: Anglo American's headline diamond earnings can be arrived at after eliminating De Beers' share of Anglo American's earnings for the six months to 31 December 2000, being US$342 million, from the US$837 million reported. Net of other minor adjustments, the headline diamond earnings will amount to some US$234 million for the year.
- In addition, as reported in Anglo American's interim results to 30 June 2001, Anglo American will include in headline earnings for the year to 31 December 2001 an amount of $65 million, being its interest in De Beers' share of Anglo American's headline earnings for the five months to 31 May 2001, the effective date of the elimination of the cross-holding between the two companies.
The above figures as they relate to Anglo American are unaudited.
DE BEERS Société Anonyme
(formerly DB Investments)
(Incorporated under the laws of Luxembourg)
(DB Investments acquired 100% ownership of De Beers Consolidated Mines Limited and De Beers Centenary AG on 8 June 2001)
Pro Forma Audited Results for the Year Ended 31 December 2001
An internal restructuring of shareholders' interests has taken place since the year end. DB Investments, the holding company of De Beers Consolidated Mines Limited (DBCM) and De Beers Centenary AG (DBCAG), has changed its name to De Beers Société Anonyme (DBsa) and a new company called DB Investments has been created by the shareholders (Anglo American plc, Central Holdings Limited and Debswana Diamond Company) to hold their interest in DBsa. The restructuring will have no effect on the operations or the cash flows of the De Beers Group.
2001 was a difficult year for the operations of De Beers and for the diamond industry in general. The year began against the background of a weakening global economy and an excess inventory of polished diamonds held mainly by the US trade. The economic uncertainty was aggravated by the terrorist attack on the US on 11th September. However, Christmas season retail sales of diamond jewellery were above expectations; in the crucial American market they appear to have been slightly better than Christmas 2000. Consequently, the reduction in global retail sales in 2001 was less than had been feared. On preliminary estimates it was some 5% down.
De-stocking by the retail trade and lower demand for diamond jewellery had a negative impact on the rough diamond market in the form of downward pressure on prices, shortage of liquidity and reduced profitability. In light of these factors, sales of rough diamonds by the DTC, the marketing arm of De Beers, were 21.5% lower than 2000 at $4,454 million.
The rough market has started the year in a more optimistic mood. Stocks of rough diamonds in the cutting centres are low. Although there is still an overhang of polished in the pipeline this is less than at the same time in 2001. DTC's sales prospects for 2002 will depend on the timing and extent of any recovery in the world economy and the level of polished stocks that the trade pipeline will be confident to carry.
During the past year, De Beers and LVMH received clearance from the European Commission to proceed with their joint venture to launch the De Beers brand at retail level. De Beers also made good progress with the European Commission on its Supplier of Choice strategy.
In December, De Beers and the Russian diamond producer, Alrosa, signed a new five year $4 billion trade agreement providing for annual sales to De Beers of $800 million. Under European Competition rules, the agreement is being notified to the European Commission for clearance.
Pro forma results for the year 2001 follow. However, because of the acquisition of DBCM and DBCAG by DBsa in June 2001, the results are not comparable with those of the previous year.
DE BEERS Société Anonyme
(formerly DB Investments)
Pro forma Consolidated Income Statement
for the year ended 31 December 2001
(Abridged and audited)
| US Dollar millions | ||
|---|---|---|
| Pro forma 12 months to 31 December 2001 | 12 months to 31 December 2000 | |
| Diamond sales | ||
| -DTC | 4,454 | 5,670 |
| -Other | 413 | 420 |
| Trade investment and other income | 639 | 681 |
| Deduct: | 5,506 | 6,771 |
| Cost of sales | 3,839 | 4,764 |
| Depreciation and amortisation (Note 1) | 198 | 115 |
| Sorting and marketing | 453 | 406 |
| Exploration and research | 130 | 164 |
| Net diamond account | ||
| Add: | 886 | 1,322 |
| Investment income (Note 2) | 164 | 263 |
| Net interest (paid) received | (65) | 69 |
| Surplus on realisation of fixed assets and investments | 94 | 66 |
| Deduct: | 1,079 | 1,720 |
| Corporate expenses (Note 3) | 149 | 41 |
| Net income before taxation | 930 | 1,679 |
| Taxation | 280 | 370 |
| Net income after taxation | 650 | 1,309 |
| Attributable to outside shareholders in subsidiaries | 8 | 20 |
| Own earnings | ||
| Share of income of associated companies and joint ventures (Note 2) | 642,134 | 1,289 617 |
| Total net earnings | 776 | 1,906 |
| Headline earnings | 837 | 1,707 |
| Cash available from operating activities | 638 | 2,237 |
De Beers Société Anonyme (DBsa) (formerly DB Investments) acquired 100% ownership of De Beers Consolidated Mines Limited (DBCM) and De Beers Centenary AG (DBCAG) on 8 June 2001. The results for DBsa shown above have been prepared on a pro forma basis to include the results of DBCM and DBCAG for the full twelve months ended 31 December 2001. The figures for 2000 reflect the previously published combined results of both DBCM and DBCAG.
Consolidated Balance Sheet
31 December 2001
(Abridged and audited)
| US Dollar millions 31 December 2001 | |
|---|---|
| Shareholders' interests | 3,578 |
| Outside shareholders' interests | 83 |
| 3,661 | |
| Provisions for liabilities and charges | 224 |
| Net interest bearing debt (Note 4) | 3,152 |
| 7,037 | |
| Fixed assets (Note 1) | 4,340 |
| Investments and loans | 42 |
| Diamond stocks and other net assets | 2,655 |
| 7,037 |
Notes and Comments
- The goodwill arising on the acquisition of DBCM and DBCAG by DBsa of $2.8 billion is being amortised over 20 years. An amount of $83 million has been expensed in the current period.
- The reduction in investment income and share of income of associated companies is mainly attributable to the distribution during the year of the group's investment in Anglo American plc.
- Corporate expenses include the cost in respect of the early redemption of DBCAG's Sterling Bonds and non recurring fees relating to the acquisition of DBCM and DBCAG by DBsa.
- Cash has been offset against interest bearing debt.
- The $3,550 million Senior Debt facility has been drawn against in full. The $1 billion revolving facility was not utilised during the period under review.
Disclaimer:
The information contained in press releases, annual or interim reports, analyst presentations, and financial information should not be deemed accurate or current except as of the date of issue. Anglo American plc does not, does not intend to, and specifically disclaims any duty to, update or correct such information.