Anglo American plc notification: De Beers results for the 6 months ended 30 June 2006
28 July, 2006
De Beers Société Anonyme (“Dbsa”) today reported underlying earnings for the six months ended 30 June 2006 of US$308 million.
Anglo American plc (“AA plc”) arrives at its underlying earnings in respect of De Beers by accounting for the interests arising from the ordinary shares and the 10% preference shares it holds in DB Investments (“DBI”).
AA plc will therefore report underlying earnings of US$164 million for the six months ended 30 June 2006 from its investment in DBI, as reconciled in the table below:
| Reconciliation of underlying earnings for the six months ended 30 June 2006 | ||
|---|---|---|
| US$ million | 6 months ended 30.6.06 |
6 months ended 30.6.05 |
| DBI underlying earnings (100%)(1) | 308 | 357 |
| Adjustments(2) | 9 | 4 |
| DBI underlying earnings – AA plc basis (100%) | 317 | 361 |
| AA plc's 45% ordinary share interest | 143 | 162 |
| Income from preference shares | 21 | 26 |
| AA plc underlying earnings | 164 | 188 |
(1)DBI underlying earnings is stated before costs of $45m in relation to the amended class action settlement agreement, and profits of $229m relating to the Ponahalo BEE transaction concluded in April 2006.
(2)Adjustments include the reclassification of the actuarial gains and losses booked to the income statement by Dbsa under the corridor mechanism of IAS19.
On 30 June 2006, Dbsa redeemed a further 25% of the preference shares originally in issue, taking the total redemption to 75% of the issue, and on that date AA plc received US$175 million, representing 25% of its original US$701 million preference share interest. AA plc now holds US$175 million of preference shares in Dbsa.
In the six months ended 30 June 2006, AA plc received a total of US$238 million in distributions from DBI. These comprised US$26 million dividends, being the second payment on preference shares for 2005 (US$17million) and an early dividend for 2006 on the redeemed preference shares (US$9million), and a share premium repayment of $212 million relating to the proceeds from the Black Economic Empowerment transaction. This transaction, which concluded on 18th April 2006, resulted in 26% of De Beers Consolidated Mines Limited being sold to Ponahalo Consortium for R3.7 billion.
In the six months ended 30 June 2005, AA plc received from DBI a US$90 million final dividend on ordinary shares relating to FY 2004, US$26 million dividends representing the second payment on preference shares for 2004, and US$9 million representing the first dividend for 2005 on the redeemed preference shares. In the second half of 2005, AA plc received a US$68 million interim dividend on ordinary shares relating to FY 2005, a US$17 million interim dividend on preference shares, and a combined ordinary dividend and share premium repayment of $112m.
Underlying Earnings
Underlying Earnings is net profit attributable to equity shareholders, adjusted for the effect of special items and remeasurements, and any related tax and minority interests. Special items are those items of financial performance which are material by nature or amount and should therefore be separately presented. These principally relate to impairment and significant closure costs, exceptional legal provisions and profit or loss on disposals. Remeasurements include (i) adjustments to ensure that the unrealised gains or losses on non-hedge derivative instruments are recorded in underlying earnings in the same period as the underlying transaction against which these instruments provide an economic, but not formally designated, hedge and (ii) foreign currency gains and losses arising on the retranslation of dollar denominated De Beers preference shares held by a rand functional currency subsidiary of the Group.
The above figures are unaudited.