2016 Interim Results
28 July, 2016
Balance sheet strengthened through capital and cost discipline – expected to deliver net debt of less than $10 billion at end 2016.
- Net debt at 30 June 2016 decreased to $11.7 billion (vs. $12.9 billion as at 31 December 2015) through cost discipline and working capital and capex reductions:
- Attributable free cash flow of $1.1 billion (vs. $0.2 billion in H1 2015)
- Disposal proceeds of $1.5 billion agreed and expect to be completed in H2 2016
- Group underlying EBIT(1) of $1.4 billion, a 27% decrease, due to lower commodity prices ($1.2 billion underlying EBIT impact), partially offset by weaker producer country currencies ($0.9 billion underlying EBIT benefit) and incremental cost reductions
- Operating performance and associated cost and capex reductions mitigating headwinds:
- Unit costs decreased by 19% (vs. H1 2015) in US dollar terms (Cu eq.)(2)
- Expect to deliver $1.6 billion(3) of cost and volume improvements in 2016
- $1.9 billion target included $300 million now reclassified as capex and working capital reduction
- $0.3 billion of cost and volume improvements delivered in H1 2016(4)
- Commodity price-driven impairment of $1.2 billion relating to Moranbah and Grosvenor coal assets contributing to a loss before tax of $364 million
| Financial highlights US$ million, unless otherwise stated |
6 months ended 30 June 2016 | 6 months ended 30 June 2015 |
Change |
|---|---|---|---|
| Underlying EBIT(1) | 1,382 | 1,883 | (27)% |
| Underlying earnings(5) | 698 | 904 | (23)% |
| Group revenue(6) | 10,617 | 13,346 | (20)% |
| Underlying EBITDA(7) | 2,450 | 3,280 | (25)% |
| Loss before tax(8) | (364) | (1,920) | 81% |
| Loss for the financial period attributable to equity shareholders of the Company(8) | (813) | (3,015) | 73% |
| Underlying earnings per share (US$)(5) | 0.54 | 0.70 | (23)% |
| Dividend per share (US$) | – | 0.32 | – |
| Attributable ROCE%(9) | 8% | 8% | – |
Notes to the highlights and table are shown at the bottom of this section.
Mark Cutifani, Chief Executive of Anglo American, said: "The decisive actions we have taken to strengthen the balance sheet put us well on track to achieve our net debt target of less than $10 billion at the end of 2016 – both through stringent capital and cost discipline and improved operational performance – and assuming the completion of announced non-core asset divestments. We are transforming Anglo American to be a more resilient business, with a core portfolio of world class assets in products where we are developing a sustainable competitive advantage – in De Beers, PGMs and copper.
"Sharply lower prices across our products were mitigated by our self-help actions on costs, volumes, working capital and capital expenditure, together contributing to the $1.1 billion of attributable free cash flow generated in the first half of 2016. Across the business, our copper equivalent unit costs have reduced by 19% in US dollar terms, representing a 36% total reduction since 2012.
"We have agreed $1.5 billion of non-core disposals in H1 2016, including the Niobium and Phosphates businesses in Brazil. We will continue to divest non-core assets using strict value thresholds as we continue to reduce our debt levels and position the core business on a foundation to deliver sustainably positive cash flows.
"Keeping our people safe at work has always been my absolute priority. Despite continued good progress across all recordable cases, we have tragically lost six colleagues in five separate incidents in South Africa in the first six months of the year. We are determined that our goal of zero harm is achievable and we are working with every employee to deliver that future."
(1) Underlying EBIT is operating profit presented before special items and remeasurements, and includes the Group’s attributable share of associates’ and joint ventures’ underlying EBIT. See notes 4 and 6 to the Condensed financial statements for underlying EBIT. For the definition of special items and remeasurements, see note 7 to the Condensed financial statements.
(2) Copper equivalent unit cost shown on a reported basis.
(3) The $1.9 billion target has been reduced by $0.3 billion due to $0.1 billion working capital reclass and $0.2 billion capital expenditure reclass.
(4) The $0.3 billion is shown gross of a $0.1 billion downside relating to a Platinum stock adjustment recognised in 2015. Q2 2016 run-rate achieved of $0.6 billion.
(5) See notes 6 and 10 to the Condensed financial statements for basis of calculation of underlying earnings.
(6) Includes the Group’s attributable share of associates’ and joint ventures’ revenue of $681 million (H1 2015: $1,788 million). See note 4 to the Condensed financial statements.
(7) Underlying EBITDA is underlying EBIT before depreciation and amortisation in subsidiaries and joint operations, and includes the Group’s attributable share of associates’ and joint ventures’ underlying EBIT before depreciation and amortisation.
(8) Stated after special items and remeasurements. See note 7 to the Condensed financial statements.
(9) Attributable ROCE is defined as the return on the capital employed attributable to the equity shareholders of Anglo American plc. It is calculated based on achieved prices and foreign exchange.
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