Anglo Platinum Annual Results

Anglo American PLC 16 February 2004 News Release 16 February 2004 Anglo American plc ("Anglo American") notification: Anglo Platinum annual results 2003 Anglo American wishes to draw attention to Anglo Platinum's announcement of their results for the 12 months to 31 December 2003, attached hereto. Anglo American Platinum Corporation Limited ("Anglo Platinum") (Incorporated in the Republic of South Africa) (Registration number 1946/022452/06) JSE Code: AMS ISIN: ZAE000013181 A member of the Anglo American plc group Results for the year ended 31 december 2003 Equivalent refined platinum production* increases by 8,0% * Mines' production and purchases of metal in concentrate converted to equivalent refined production using Anglo Platinum's standard smelting and refining recoveries. • Dividend cover maintained • Earnings adversely affected by strong rand Consolidated Income Statement Audited Audited Year Year ended ended 31 December 31 December % R millions Notes 2003 2002 Change Gross sales revenue 16 508,6 20 285,7 Commissions paid (408,2) (733,0) Net sales revenue 16 100,4 19 552,7 (18) Cost of sales (Segmental information) (12 190,5) (10 129,9) (20) Gross profit on metal sales 3 909,9 9 422,8 (59) Other net expenditure 5 (269,3) (754,7) Market development and promotional (257,5) (266,5) expenditure Operating profit 3 383,1 8 401,6 (60) Net interest (paid)/received 6 (236,9) 155,7 Income from associates 35,0 181,6 Profit before taxation 3 181,2 8 738,9 (64) Taxation (1 089,3) (2 998,9) 64 Net profit 2 091,9 5 740,0 (64) Headline earnings 2 091,7 5 630,4 (63) Number of ordinary shares in issue 215,4 214,9 (millions) Weighted average number of ordinary shares 215,1 214,5 in issue (millions) Earnings per share (cents) - Basic 972,5 2 676,0 (64) - Headline 972,4 2 624,9 (63) - Diluted (basic) 971,2 2 671,0 (64) - Diluted (headline) 971,1 2 620,0 (63) Dividends per share (cents) 640 1 800 (64) - Interim 370 900 - Final 270+ 900 Dividend cover (headline earnings) 1,5 1,5 Reconciliation between basic and headline earnings Net profit 2 091,9 5 740,0 Adjustments: Profit on disposal of mineral rights (64,6) (98,0) Goodwill amortization 13,1 - Negative goodwill amortization (11,6) (11,6) Scrapping of property, plant and equipment 62,9 - Carrying amount 89,8 - Deferred taxation effect (26,9) - Headline earnings 2 091,7 5 630,4 + Proposed ordinary dividend. Segmental Information+/- (audited) Purchased metals in R millions Mined concentrate Total For the year ended 2003 GROSS SALES REVENUE 16 161,3 347,3 16 508,6 Commissions paid (399,2) (9,0) (408,2) NET SALES REVENUE 15 762,1 338,3 16 100,4 COST OF SALES (11 923,1) (267,4) (12 190,5) On-mine (9 968,9) - (9 968,9) Cash operating costs (9 027,1) - (9 027,1) Amortization (941,8) - (941,8) Purchase of metals in concentrate - (291,6) (291,6) Smelting (1 015,9) (21,2) (1 037,1) Cash operating costs (891,5) (18,6) (910,1) Amortization (124,4) (2,6) (127,0) Treatment and refining (857,2) (16,9) (874,1) Cash operating costs (781,1) (15,2) (796,3) Amortization (76,1) (1,7) (77,8) Increase in metal inventories 511,0 73,9 584,9 Other costs (592,1) (11,6) (603,7) GROSS PROFIT ON METAL SALES 3 839,0 70,9 3 909,9 Gross profit margin (%) 23,8 20,4 23,7 Cost of sales per Pt ounce sold 5 305 5 735 5 313 (Rand) For the year ended 2002 GROSS SALES REVENUE 20 194,4 91,3 20 285,7 Commissions paid (723,3) (9,7) (733,0) NET SALES REVENUE 19 471,1 81,6 19 552,7 COST OF SALES (10 049,2) (80,7) (10 129,9) On-mine (8 017,7) - (8 017,7) Cash operating costs (7 369,4) - (7 369,4) Amortization (648,3) - (648,3) Purchase of metals in concentrate - (121,9) (121,9) Smelting (690,0) (7,8) (697,8) Cash operating costs (633,6) (7,0) (640,6) Amortization (56,4) (0,8) (57,2) Treatment and refining (808,3) (2,0) (810,3) Cash operating costs (750,2) (1,8) (752,0) Amortization (58,1) (0,2) (58,3) Increase in metal inventories 55,4 53,7 109,1 Other costs (588,6) (2,7) (591,3) GROSS PROFIT ON METAL SALES 9 421,9 0,9 9 422,8 Gross profit margin (%) 46,7 1,0 46,5 Cost of sales per Pt ounce sold 4 485 8 495 4 502 (Rand) +/- The Group produces PGMs primarily in South Africa. The risks and rewards associated with the individual operations are not sufficiently dissimilar to warrant identification of seperate geographical segments. Therefore, only business segments are reported. Group Statement of Changes in Equity (audited) Unrealized Share Share hedging Accumulated R millions capital premium deficit profits Total Balance as at 31 December 2001 - previously 21,4 1 203,6 - 11 296,6 12 521,6 reported Change in accounting 215,4 215,4 policy with respect to recognizing metals in concentrate as inventory on the balance sheet (Note 2) Gross 322,1 322,1 Taxation (106,7) (106,7) Balance as at 31 21,4 1 203,6 - 11 512,0 12 737,0 December 2001 - restated Net profit 5 740,0 5 740,0 Dividends paid in (5 362,9) (5 362,9) cash Share capital issued 0,1 74,8 74,9 Repurchase of - (524,4) 519,5 (4,9) ordinary shares Cost of shares sold 0,2 491,8 492,0 by wholly owned subsidiary to Company Unrealized after-tax 27,7 27,7 Group profit on disposal of Company shares Shares repurchased (0,2) (524,4) (524,6) by Company from wholly owned subsidiary (cancelled) Balance as at 31 21,5 754,0 - 12 408,6 13 184,1 December 2002 After-tax changes in (164,0) (164,0) forward metal prices (Note 9) Net profit 2 091,9 2 091,9 Dividends paid in (2 731,6) (2 731,6) cash Share capital issued -+ 42,3 42,3 Balance as at 31 21,5 796,3 (164,0) 11 768,9 12 422,7 December 2003 + Less than R50 000. Consolidated Balance Sheet Audited Audited as at as at 31 December 31 December R millions Notes 2003 2002 ASSETS Non-current assets 22 493,9 16 192,3 Property, plant and equipment 14 550,8 10 503,1 Capital work-in-progress 7 249,2 4 941,5 Platinum Producers' Environmental Trust 113,4 89,3 Investment in associates 7 484,0 557,6 Non-current accounts receivable 96,5 100,8 Current assets 5 295,7 5 017,6 Inventories 2 2 439,6 1 819,9 Accounts receivable 2 286,7 1 617,7 Cash and cash equivalents 569,4 1 580,0 Total assets 27 789,6 21 209,9 EQUITY AND LIABILITIES Share capital and reserves Share capital 21,5 21,5 Share premium 796,3 754,0 Unrealized hedging deficit (164,0) - Accumulated profits before proposed ordinary 11 768,9 12 408,6 dividend and related secondary tax on companies (STC) Accumulated profits after proposed ordinary 11 114,6 10 232,7 dividend and related STC Proposed ordinary dividend 581,6 1 934,1 STC in respect of proposed ordinary dividend 72,7 241,8 Shareholders' equity 12 422,7 13 184,1 Non-current liabilities 5 560,8 4 687,5 Deferred taxation 4 438,9 3 870,0 Environmental obligations 308,7 192,8 Employees' service benefit obligations 488,9 488,3 Obligations due under finance leases 324,3 136,4 Current liabilities 9 806,1 3 338,3 Interest bearing borrowings 8 7 168,1 - Accounts payable 1 903,4 1 857,4 Other financial liabilities 9 336,2 36,3 Taxation 398,4 1 444,6 Total equity and liabilities 27 789,6 21 209,9 Consolidated Cash Flow Statement Audited Audited Year Year ended ended 31 December 31 December R millions 2003 2002 CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from customers 15 476,5 20 004,9 Cash paid to suppliers and employees (12 117,2) (10 387,5) Cash from operations 3 359,3 9 617,4 Interest paid (277,4) (35,4) Taxation paid (1 474,9) (3 304,1) Net cash from operating activities 1 607,0 6 277,9 CASH FLOWS USED IN INVESTING ACTIVITIES Purchase of property, plant and equipment (7 423,6) (5 994,1) To maintain operations (3 952,7) (2 140,9) To expand operations (3 270,4) (3 853,2) Interest capitalized (200,5) - Proceeds from sale of plant, equipment and mineral rights 134,8 778,4 Investment in associates (1,5) (312,4) Interest received 106,7 195,4 Growth in Platinum Producers' Environmental Trust 11,2 7,7 Capital reduction by Northam Platinum Limited 28,7 39,0 Dividends received 47,3 89,7 Net cash used in investing activities (7 096,4) (5 196,3) CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES Proceeds from the issue of share capital -+ 0,1 Increase in share premium 42,3 74,8 Raised from current interest bearing borrowings 7 168,1 - Dividends paid (2 731,6) (5 362,9) Net cash from/(used in) financing activities 4 478,8 (5 288,0) Net decrease in cash and cash equivalents (1 010,6) (4 206,4) Cash and cash equivalents at beginning of year 1 580,0 5 786,4 Cash and cash equivalents at end of year 569,4 1 580,0 MOVEMENT IN NET DEBT Net cash at beginning of year 1 443,6 5 786,4 Net cash from operating activities 1 607,0 6 277,9 Net cash used in investing activities (7 096,4) (5 196,3) Other (2 877,2) (5 424,4) Net (debt)/cash at end of year (6 923,0) 1 443,6 Made up as follows: Cash and cash equivalents 569,4 1 580,0 Interest bearing borrowings (7 168,1) - Obligations due under finance leases (324,3) (136,4) (6 923,0) 1 443,6 + Less than R50 000. Notes (audited) 1. The preliminary report is prepared on the historical cost basis, except for certain financial instruments that are fairly valued, using accounting polices that comply with International Financial Reporting Standards issued by the International Accounting Standards Board, South African Statements of Generally Accepted Accounting Practice and the requirements of the South African Companies Act and the JSE Securities Exchange, South Africa Listings Requirements. Except for the change in accounting policy described below, the policies are consistent with those applied in the financial statements for the year ended 31 December 2002. 2. Change in accounting policy The Group is increasingly entering into agreements to purchase significant quantities of concentrate from joint venture partners. When such material is on hand at the end of a reporting period, it is recognized as inventory on the Group's balance sheet. To ensure that the accounting treatment of 'purchased' and 'produced' concentrate is congruent, the Group has changed its accounting policy to recognize its own production of metals in concentrate within inventory. This change in accounting policy results in improved matching of costs with revenue. The change in accounting policy resulted in a net credit to accumulated profits at 1 January 2002 of R215,4 million, after tax of R106,7 million. Opening retained earnings, inventory and taxation have been restated, but no restatement of earnings for the year ended 31 December 2002 was carried out as the change in accounting policy is not material to those results. Gross Taxation Net Rm Rm Rm Effect of the change in accounting policy with respect to recognizing purchased and produced concentrate inventory: Opening retained earnings 2002 322,1 (106,7) 215,4 Earnings for the year ended 31 December 2003 110,9 (33,3) 77,6 Audited Audited Year ended Year ended 31 December 31 December 2003 2002 Rm Rm 3. Directors' emoluments Fees, salaries, benefits, bonuses and other 33,5 22,0 Profit or share options exercised 16,8 52,5 50,3 74,5 4. Amortization and depreciation of property, plant and equipment Amortization of mining and process property, plant and equipment consists of the following categories: Operating assets 1 146,6 763,8 Mining 941,8 648,3 Smelting 127,0 57,2 Treatment and refining 77,8 58,3 Amortization included in other costs 38,2 - Depreciation - non-mining assets 41,8 33,4 1 226,6 797,2 Notes (audited) (continued) Audited Audited Year ended/ Year ended/ as at as at 31 December 31 December R millions 2003 2002 5. Other net expenditure Other net (expenditure)/income consists of the following principal categories: Realized and unrealized foreign exchange (417,2) (879,1) losses Restructuring costs++ (111,4) - Profit on commodity contracts 157,3 - Profit on disposal of mineral rights 64,6 98,0 Other 37,4 26,4 (269,3) (754,7) ++Restructuring costs mainly relate to costs incurred as a result of the slowdown of expansion projects. 6. Net interest (paid)/received Net interest (paid)/received consists of the following principal categories: Interest expensed (286,9) (35,4) Interest paid (487,4) (35,4) Less: Capitalized 200,5 - Time value of money adjustment to environmental obligations (68,3) (13,4) Decommissioning (62,9) (10,7) Restoration (5,4) (2,7) Interest received 106,7 195,4 Growth in Platinum Producers' Environmental Trust 11,2 7,7 Dividends received 0,4 1,4 (236,9) 155,7 7. Investment in associates Listed - Ordinary shares (Market value: R515,8 million (2002: R972,8 million)) 240,6 259,3 Unlisted (Directors' valuation: R243,4 million (2002: R298,3 million)) 243,4 298,3 Ordinary shares 159,8 201,6 Redeemable preference shares 83,6 96,7 484,0 557,6 2003 2003 2002 Facility Utilized Utilized 8. Interest bearing borrowings The Group has the following available and utilized borrowing facilities: Bank overdrafts: 10 173,6 7 168,1 - At the end of 2002, the Group had borrowing facilities of R2 735 million available, none of which had been utilized. The weighted average borrowing rate at 31 December 2003 was 8,6925%. Borrowing powers The borrowing powers in terms of the Articles of Association of the Company and its subsidiaries are unlimited. Audited Audited as at as at 31 December 31 December 2003 2002 9. Other financial liabilities Fair value of forward foreign exchange contracts(S) 90,4 36,3 Fair value of forward metal contracts designated as 245,8 - cash flow hedges # 336,2 36,3 (S) Forward foreign exchange contracts (FEC's): The fair value of FEC's represents the movement between contracted rates and year-end forward rates. These movements are recognized in the income statement. # Forward metal contracts: Changes in the value of forward metal contracts caused by movements in forward prices since inception of the contracts are recognized in the unrealized hedging deficit. The net amount of R164,0 million charged to the unrealized hedging deficit is made up of R234,3 million less deferred taxation of R70,3 million. Changes in the value caused by translating the value of the forward contracts to rand are recognized in the income statement. This amounts to a charge of R11,5 million less taxation of R3,5 million. At 31 December 2003 the Group held forward contracts to fix the US$ price of future sales relating to a nickel supply agreement. The objective is to hedge the Group against variability in future cash flows. The terms of the forward contracts are to sell 11 088 tons of nickel at US$ 12 540 per ton. The forward metal contracts are valued using forward metal prices that match the contractual maturity dates. 10. Commitments Mining and process property, plant and equipment Contracted for 1 800,0 2 094,3 Not yet contracted for 11 943,4 14 850,6 Authorized by the directors 13 743,4 16 944,9 Allocated for: Expansion of capacity 7 424,8 13 913,9 - within one year 2 844,3 5 013,9 - thereafter 4 580,5 8 900,0 Maintenance of capacity 6 318,6 3 031,0 - within one year 3 457,9 1 570,1 - thereafter 2 860,7 1 460,9 Other Operating lease rentals - buildings 711,5 177,7 - within one year 35,6 25,1 - within two to five years 160,5 64,5 - thereafter 515,4 88,1 Information Technology Service Providers 126,6 139,4 - within one year 33,4 42,9 - thereafter 93,2 96,5 These commitments will be funded from cash resources, future operating cash flows, borrowings and any other funding strategies embarked on by the Group. 11. Contingent liabilities Letters of comfort have been issued to financial institutions to cover certain banking facilities. There are no encumbrances of Group assets, other than the houses held under finance leases by the Group. The Group provided guarantees in favour of Changing Tides 166 (Proprietary) Limited, a wholly owned subsidiary of Group Five. The guarantee provides security for lease payments to Group Five by the Anglo Platinum Housing Trust (APHT). The probability of any obligation arising under this guarantee is considered remote. The Group provided a guarantee in favour of Nedcor Limited (Nedcor) for financing provided by Nedcor to Salene Mining (Proprietary) Limited (Salene). The Group provided the guarantee to enable Salene to put mining infrastructure in place. The guarantee is valid until 1 July 2006 or earlier, on repayment by Salene of the loan. Salene will sell all ore production from the mine to the Group. The facility granted by Nedcor to Salene is for a maximum amount of R120 million. In the event that Nedcor calls up the guarantee, the Group holds bonds over sufficient assets of Salene to make good any obligations that may be incurred. It is unlikely that the Group will incur obligations under this guarantee. As a result of the slowdown of capital projects, contracts with suppliers are being renegotiated. As a part of the negotiations certain cancellation costs may result. The amount of this will only be known and recognised during the course of 2004. Aquarius Platinum (South Africa) (Proprietary) Limited holds a put option to put their interest in the pooling and sharing arrangement to the Group in the case of termination of that relationship. The probability of the option being exercised is considered remote. The amount of such an obligation is dependent on a discounted cash flow valuation at that point in time. 12. Comparative figures Comparatives figures have been restated in accordance with the change in accounting policy. Corporate Governance The Board is of the view that the Company and its subsidiaries are fully compliant with the recommendations as set out in the Code of Corporate Practices and Conduct contained in King 2. Report of the Independent Auditors To the members of Anglo American Platinum Corporation Limited The summarized financial statements of Anglo American Platinum Corporation Limited and its subsidiaries set out above have been derived from the annual financial statements of the Group for the year ended 31 December 2003. We have audited the annual financial statements in accordance with statements of South African Auditing Standards. In our report dated 13 February 2004, we expressed an unqualified opinion on the financial statements from which the summarized annual financial statements were derived. Audit opinion In our opinion, the accompanying summarized financial statements are consistent, in all material respects, with the annual financial statements from which they were derived. For a better understanding of the scope of our audit and the Group's financial position, the results of its operations and cash flows for the year, the summarized financial statements should be read in conjunction with our audit report and the annual financial statements from which the summarized financial statements were derived. Deloitte & Touche Registered Accountants and Auditors Chartered Accountants (SA) Johannesburg 13 February 2004 COMMENTARY 1. SAFETY Anglo Platinum's continuous focus on safety programmes resulted in a significant improvement in the lost-time injury frequency rate per 200 000 hours worked (" LTIFR") for the period under review. The LTIFR was 0,7 for 2003 compared with 1,2 for 2002. Notwithstanding the overall improvement in safety, The board reports with deep regret that 24 employees died at managed operations as a result of work related accidents, and extends its deepest condolences to the families, friends and colleagues of the deceased. The Group is wholly committed, as a matter of the highest priority, to ongoing education and improvements in safety and to eliminating fatalities at work. It is management's firm belief that continued focus on the Behaviour-Based Safety process will deliver the mindset change required to reduce the number of injuries and fatal accidents in 2004. 2. RESULTS SUMMARY Total platinum received at the smelters, including platinum purchased from joint venture partners, increased by 8,0%, and was equivalent to refined platinum production of 2,36 million ounces at standard processing recoveries. 53 000 of these ounces were permanently absorbed into the production pipeline because of higher volumes and the new Polokwane Smelter. Refined platinum output amounted to 2,31 million ounces, slightly ahead of the target announced in July 2003. The temporary increase in pipeline stock levels reported with the interim results was successfully processed by the end of 2003, resulting in a significant increase in production and sales volumes in the second half of the year. The average rand / US dollar exchange rate achieved on sales for 2003 was 28,2% lower than for 2002. Had the average rand / US dollar exchange rate been the same as that for 2002, gross sales revenue would have been R5,72 billion higher than the R16,51 billion recorded. Cost of sales rose to R12,19 billion, mainly because of increased production from ramp up operations and inflationary cost pressures. Headline earnings declined by 62,8% to R2,09 billion. Headline earnings per share decreased by 63,0% to 972 cents per share. Dividend cover has been maintained at 1,5 in line with last year, and accordingly a final dividend of 270 cents per share has been declared. This brings the total dividend declared for 2003 to 640 cents per share. 3. OPERATIONS Mining operations Total platinum ounces delivered to the smelters increased by 8,0% in 2003, with the Rustenburg UG2 project, Modikwa, Bafokeng-Rasimone, Potgietersrust and Union Section all producing more ounces than in 2002. The increasing shift to UG2 mining resulted in a lower head grade and associated lower concentrating recovery. This led to a 3,8% decrease in the ratio of platinum ounces produced to tons milled in 2003, with its concomitant impact on cost per platinum ounce produced. Mining costs The cash on-mine costs per ton milled at steady state operations increased by 8,6%, primarily because of the 9,5% annual wage increase negotiated in 2002, the cost to equalise retirement fund contribution rates across the Group and above-inflation increases in steel costs. In addition, the Group raised the level of expenditure in key areas such as safety, training and health. As a result of the lower grade and recovery arising from increased UG2 production, the cash cost per equivalent refined platinum ounce at steady state operations increased by 12,0 %. Cash on-mine costs at ramp-up operations increased owing to higher production. Unit costs at these operations were relatively high as they continue to ramp up to steady state production. Process operations The key feature of the performance of the process operations in 2003 is the significant increase in smelting capacity that has been put in place with the commissioning of the Polokwane Smelter, the Anglo Platinum Converting Process (ACP) plant and the Slag-cleaning Furnace. The commissioning activity caused a temporary build-up of some 160 000 equivalent refined platinum ounces at the end of June, which were all released by the end of the year. As a result of higher production levels and bringing Polokwane Smelter into operation, metals in the process pipeline increased by some 53 000 equivalent refined platinum ounces. The base and precious metals refineries performed well throughout 2003. Process costs During 2003 the old converters and acid plant were operated in tandem with the new ACP converter to provide dual processing capability during the ramp-up of the new plant. Together with the commissioning of the Polokwane Smelter, this resulted in an increase in cash smelting costs of R269,5 million to R910,1 million. The old converters and acid plant will be retained on standby until substituted by a standby converter at the ACP plant in 2005, to ensure the availability of converting capacity in the event of downtime at the new ACP converter. The Group's total installed smelting and converting capacity is greater than the mines' short term requirements and consequently unit costs per ton smelted will not reduce significantly until increased concentrate deliveries from the expansion programme result in a more economic alignment of throughput to capacity. Smelting costs are being vigorously reviewed to reduce them in line with actual throughput as far as possible. Cash treatment and refining costs increased by 5,9%, from R752,0 million to R796.3 million. The cash treatment and refining cost per refined platinum ounce was contained below CPIX, and increased by 3,3% per ounce. Total operating costs The cost of sales per refined platinum ounce sold, excluding the sales volume and costs attributable to purchased ounces, increased by 18,3% in 2003. This is due to the combined impact of the factors discussed above - cost increases greater than inflation in respect of labour, steel, safety, health and training; increased volumes at ramp-up operations with high unit costs; lower grade and recovery owing to the ongoing increase in UG2 production; and a large increase in smelting costs attributable to the new capacity commissioned during the year. In addition amortisation of operating assets increased in line with the Group's capital expenditure programme and includes amortisation on new operations brought into use in 2003. Clearly, increases of this magnitude are not acceptable, particularly with the increased pressure on margins due to the strong rand. Management has initiated a comprehensive review of costs and structures across the Group. The short term target of this exercise, taking into account the effect of wage increases and contract prices that are already locked in for the first half of 2004, is to achieve a unit cash cost increase in line with CPIX for 2004. 4. FINANCIAL RESULTS Gross sales revenue decreased by R3,78 billion to R16,51 billion. The decrease was caused primarily by the stronger rand (R5,72 billion), partly offset by an increase in US dollar revenues for metals sold (R1,33 billion) and higher sales volumes (R0,61 billion). The net sales revenue per platinum ounce sold ("basket price") decreased by 19,3%, from R8 690 in 2002 to R7 017 in 2003. Cost of sales rose by R2,06 billion to R12,19 billion: Cash mining, smelting and refining costs increased by R1,97 billion to R10,73 billion as explained in the Operations section of the commentary. Purchases of metal in concentrate increased by R169,7 million to R291,6 million, owing mainly to higher purchases from the Modikwa Joint Venture. Amortisation of operating assets rose by R382,8 million. Amortization of smelting assets increased by 122,0% or R69,8 million as a result of bringing the Polokwane Smelter and the ACP Converter into use in 2003. Amortization of mining assets increased by R293,5 million owing to higher amortisation of the Modikwa and the Rustenburg UG2 project, which were only in use for part of 2002, and a general increase in amortisation charges across the operations resulting from ongoing capital expenditure. The value of metals in inventory increased by R584,9 million during 2003 as a result of higher stocks and cost increases. Other net expenditure in 2003 amounted to R269,3 million compared with R754,7 million in 2002. This primarily reflects lower foreign exchange losses resulting from a lower appreciation of the rand than in the previous period. Profits of R157,3 million realised on commodity contracts were largely offset by costs of R111,4 million incurred as a result of the slow-down of the rate of implementation of the expansion projects. Net interest paid during the review period amounted to R236,9 million, compared with net interest received of R155,7 million in 2002, as a result of the Group moving into a borrowed position. Interest paid is net of R200,5 million of interest on borrowings allocated to capital projects under construction. 5. CAPITAL EXPENDITURE Capital expenditure amounted to R7,42 billion (2002: R5,99 billion). Expenditure to maintain operations increased from R2,14 billion to R3,95 billion owing to increased expenditure on projects to replace production at steady state mines, including the Rustenburg UG2 project. Expansion capital expenditure amounted to R3,27 billion (2002: R3,85 billion) and interest of R0,20 billion was capitalised (2002: nil). 6. FINANCIAL STRUCTURE During the year ended 31 December 2003, the Group moved from a net cash position of R1,44 billion to a net debt position of R6,92 billion - a net outflow of R8,36 billion. Cash generated by operations amounted to R3,36 billion (2002: R9,62 billion). Payments consisted mainly of capital expenditure totalling R7,42 billion (2002: R5,99 billion), dividends of R2,73 billion (2002: R5,36 billion) and taxation of R1,47 billion (2002: R3,30 billion). Borrowings at the end of 2003 consist primarily of short term debt facilities. A financing programme has been selected in conjunction with - external financiers and with Anglo Platinum's major shareholder, Anglo American plc. The proposed financing programme includes the raising of R4 billion through a rights issue and a dividend reinvestment election in respect of the final dividend for the 2003 financial year. The R4 billion is to be raised through the issue of convertible perpetual preference shares. All existing shareholders will have the opportunity to participate. Anglo American plc has agreed to reinvest its portion of the Group's final dividend and to take up its portion of the Group's rights issue. 7. NEW MINERALS LEGISLATION AND EMPOWERMENT OF HISTORICALLY DISADVANTAGED SOUTH AFRICANS Anglo Platinum continues to work closely with the Department of Minerals and Energy and good progress is being made towards meeting the ownership and attributable production requirements of the Mineral and Petroleum Resources Development Act and Broad Based Economic Empowerment Charter. All of the required mining licences in respect of "old-order" mineral rights have been granted and the Group is preparing itself to convert these to "new-order" rights in accordance with the requirements of the new Act. Several significant ventures with Historically Disadvantaged South African (HDSA) partners have commenced, and other agreements are being negotiated. Employment equity targets are being vigorously pursued. Anglo Platinum maintains a positive attitude towards the Minerals and Petroleum Resources Development Act, the Mining Charter and Scorecard. The Group continues to engage Government on the Mineral and Petroleum Royalty Bill. 8. SOCIAL RESPONSIBILITY AND HIV/AIDS Anglo Platinum continues to invest significantly in social upliftment programmes encompassing home ownership around the Group's operations, local economic development, the provision of healthcare and the economic development of areas providing migrant labour. The Group acknowledges the need to manage the business impacts of HIV/AIDS and a comprehensive programme is in place to address all aspects of this pandemic. Free antiretroviral treatment for employees was introduced in 2003. 9. PROJECTS During 2003 a strategy review was conducted in the context of the strong rand, which has a significant impact on operating margins, cash generation and the funding requirements of new projects. The review confirmed Anglo Platinum's confidence in the robustness of current and future demand for platinum , and accordingly Anglo Platinum remains firmly committed to expanding its production base. However, in view of the current strength of the rand and uncertainty as to its movements, the rate of implementation of the expansion projects has been slowed. Production of refined platinum in 2006 is now planned to be 2,9 million ounces, which represents a compound annual production growth rate of 8% from 2003 to 2006. Significant progress was made with the project programme. The Polokwane Smelter, designed to process concentrate from Eastern Limb operations, was successfully commissioned in March. The slag-cleaning furnace at Rustenburg was commissioned. The ACP converter plant was brought on stream and is ramping up to full production. Phase 1 of the Western Limb Tailings Project was commissioned ahead of schedule. Agreement was reached with Aquarius Platinum to jointly mine contiguous properties in the Kroondal area with effect from November 2003 and the Bafokeng-Rasimone, Rustenburg UG2 and Modikwa projects have continued to increase production levels. 10. DIVIDEND The Group is committed to large capital expenditures for several years in order to increase production volumes. During this period cash generated by operations may vary considerably, depending on short-term metal prices and the rand / US dollar exchange rate. The declaration of cash dividends will continue to be considered by the Board in conjunction with an evaluation of current and future funding requirements, and will be adjusted to levels considered appropriate at the time of the declaration. Dividends will be paid out of cash generated from operations. Accordingly, the Board has declared a final cash dividend of 270 cents per ordinary share, with the option to reinvest the dividend in the company's equity. This brings the total dividend declared for 2003 to 640 cents per ordinary share. 11. PROSPECTS The Group's refined platinum production is planned to increase to approximately 2,45 million ounces in 2004. Platinum prices are expected to remain firm due to the fundamental strength of demand for the metal. The market is experiencing historically high prices above $800 per ounce after a strong rally from around $600 per ounce in May 2003. The buoyant price is believed to be related partly to the weakness of the US dollar relative to the major currencies and the SA rand and partly to sustained physical offtake from all sectors, lower than expected production levels, and anticipation of recovering economic growth around the world. The prices of other PGMs, including palladium and rhodium, appear range bound, although palladium could potentially benefit from investor interest in anticipation of an increase in offtake of the metal by the automobile sector. Fundamental trends in the base metal markets, particularly nickel, are supportive of higher prices for these metals in 2004. Production performance at the beginning of 2004 has been encouraging. The planned increase in volumes and the anticipation of good US dollar metal prices are expected to impact positively on results in 2004. Earnings remain sensitive to the strength of the rand against the US dollar and US dollar metal prices. Should these remain at the levels achieved so far in 2004, earnings for 2004 will be higher than they were in 2003. R Havenstein B E Davison Johannesburg (Chief Executive Officer) (Chairman) 13 February 2003 Declaration of ordinary dividend (No. 102) and option to elect to reinvest dividend Notice is hereby given that on Friday, 13 February 2004 the Board of directors of Anglo Platinum has declared a final cash dividend of 270 cents (2002: 900 cents) per ordinary share in respect of the financial year ended 31 December 2003 (the cash dividend). In addition, the Board has proposed that shareholders be given the option to elect (the reinvestment election) to use the proceeds of the cash dividend to subscribe for new ordinary shares in Anglo Platinum (the subscription shares). The number of subscription shares to which the shareholders will become entitled, will be determined by the ratio that 270 cents per share multiplied by 1,05 bears to the issue price. The issue price is defined as the weighted average traded price of the ordinary shares of the Company on the JSE Securities Exchange South Africa (JSE) for the five business days ending Thursday, 4 March 2004. To the extent that shares cannot be subscribed for using the proceeds of the cash dividend, that portion of the cash dividend which is insufficient to subscribe for a whole share or an additional whole share (the cash dividend portion) will be posted to shareholders on the payment date. The subscription shares will be issued on Tuesday, 23 March 2004, and the adjusted number of shares will be listed on the JSE on that date. Documentation dealing with the subscription shares and election will be posted to shareholders on Monday, 16 February 2004. Only shareholders recorded in the register on Friday, 19 March 2004, will be entitled to receive the cash dividend or be able to make the reinvestment election. Salient Dates for South Africa and United Kingdom 2004 Circular incorporating a form of election posted to shareholders Monday, 16 February Election period opens at 09:00 Monday, 16 February Last day to trade to receive cash dividend and to be entitled to the reinvestment election Friday, 12 March Ordinary shares trade "ex" dividend Monday, 15 March Maximum number of new ordinary shares listed on the JSE in respect of the reinvestment election Monday, 15 March Election period closes as 12:00 (see note) Friday, 19 March Record date to receive the cash dividend for the reinvestment election Friday, 19 March Dividend cheques or, where applicable, share certificates and cheques in respect of the cash dividend portion posted to certified shareholders Tuesday, 23 March Safe custody accounts with the Central Securities Depository Participant (CSDP) or broker credited and/or updated Tuesday, 23 March Results announcement published on SENS Tuesday, 23 March Results announcement published in press Wednesday, 24 March Adjusted number of new ordinary shares listed on the JSE on or about Wednesday, 24 March No dematerialization or rematerialization of share certificates may take place between Monday, 15 March 2004, and Friday, 19 March 2004, both days inclusive. Note: Dematerialized shareholders are required to notify their duly appointed CSDP or broker of their acceptance of the offer in the manner and time stipulated in the agreement governing the relationship between the shareholder and his/her CSDP or broker. By order of the Board R A VenterJohannesburg Company Secretary13 February 2004 Annual General Meeting The Annual General Meeting of members of Anglo American Platinum Corporation Limited will be held on the 18th Floor, 55 Marshall Street, Johannesburg, on Tuesday, 16 March 2004. supplementary information Consolidated Statistics (unaudited) Year Year ended ended 31 December 31 December % Total operations 2003 2002 change Marketing statistics Average market prices achieved Platinum (US$/oz) 696 544 27,9 Palladium (US$/oz) 198 329 (39,8) Rhodium (US$/oz) 527 831 (36,6) Nickel (US$/lb) 4,07 3,03 34,3 Net sales revenue per Pt ounce (US$) 948 843 12,5 sold Platinum (R/oz) 5 140 5 567 (7,7) Palladium (R/oz) 1 459 3 403 (57,1) Rhodium (R/oz) 3 967 8 683 (54,3) Nickel (R/lb) 30,76 31,92 (3,6) Net sales revenue per Pt ounce (R) 7 017 8 690 (19,3) sold Average exchange rate achieved on (R: $) 7,4055 10,3101 (28,2) sales Exchange rate at end of year (R: $) 6,6679 8,5775 (22,3) Financial statistics and ratios Gross profit margin (%) 23,7 46,5 (49,0) Earnings before interest, taxation, depreciation and amortization (R millions) 4 578,5 9 376,1 (51,2) (EBITDA) Operating profit to average operating assets (%) 20,2 68,5 (70,5) Return on average shareholders' (%) 16,3 44,3 (63,2) equity Return on capital employed (%) 10,5 43,1 (75,6) Interest cover - EBITDA 9,6 264,6 (96,4) Net debt to total capital employed (%) 34,9 (11,8) (395,8) Interest-bearing debt to (%) 60,3 - 100,0 shareholders' equity Analysis of operating (R millions) contribution by mine Rustenburg Section Steady State 1 130,0 2 794,2 (59,6) Union Section 413,7 1 059,3 (60,9) Amandelbult Section 2 106,7 3 886,2 (45,8) Potgietersrust Platinums 509,9 926,1 (44,9) Lebowa Platinum Mines 163,4 450,1 (63,7) Steady state operating 4 323,7 9 115,9 (52,6) contribution Bafokeng-Rasimone Platinum Mine 120,3 433,9 (72,3) Rustenburg UG2 Project 66,4 451,4 (85,3) Modikwa Platinum Mine 3,2 12,9 (75,2) Consolidated operating 4 513,6 10 014,1 (54,9) contribution - all operations Other costs 603,7 591,3 2,1 Gross profit on metal sales 3 909,9 9 422,8 (58,5) Refined production from mining operations Platinum (thousands) (oz) 2 264,7 2 238,5 1,2 Palladium (thousands) (oz) 1 150,6 1 103,1 4,3 Rhodium (thousands) (oz) 225,2 210,0 7,2 Gold (thousands) (oz) 114,8 106,7 7,6 Nickel (thousands) (tons) 21,9 19,4 12,9 Copper (thousands) (tons) 12,8 10,5 21,9 PGMs (thousands) (oz) 4 059,0 3 920,6 3,5 Refined production from purchased metals in concentrate Platinum (thousands) (oz) 43,1 12,6 242,1 Palladium (thousands) (oz) 40,3 12,2 230,3 Rhodium (thousands) (oz) 7,3 1,7 329,4 Gold (thousands) (oz) 1,3 0,4 225,0 Nickel (thousands) (tons) 0,2 - 100,0 Copper (thousands) (tons) 0,1 - 100,0 PGMs (thousands) (oz) 102,5 27,0 279,6 Total refined production + Platinum (thousands) (oz) 2 307,8 2 251,1 2,5 Palladium (thousands) (oz) 1 190,9 1 115,3 6,8 Rhodium (thousands) (oz) 232,5 211,7 9,8 Gold (thousands) (oz) 116,1 107,1 8,4 Nickel (thousands) (tons) 22,1 19,4 13,9 Copper (thousands) (tons) 12,9 10,5 22,9 PGMs (thousands) (oz) 4 161,5 3 947,6 5,4 PIPELINE CALCULATION Equivalent refined platinum (thousands) (oz) 2 360,5 2 185,5 8,0 production * Steady state operations (thousands) (oz) 1 831,0 1 835,6 (0,3) Rustenburg Section Steady (thousands) (oz) 571,3 611,5 (6,6) State Union Section (thousands) (oz) 318,2 276,7 15,0 Amandelbult Section (thousands) (oz) 644,7 677,6 (4,9) Potgietersrust Platinums (thousands) (oz) 191,8 164,7 16,5 Lebowa Platinum Mines (thousands) (oz) 105,0 105,1 (0,1) Ramp-up operations (thousands) (oz) 529,5 349,9 51,3 Bafokeng-Rasimone Platinum Mine (thousands) (oz) 183,5 161,5 13,6 Rustenburg UG2 Project (thousands) (oz) 255,0 161,1 58,3 Modikwa Platinum Mine (thousands) (oz) 91,0 27,3 233,3 Refined platinum production + (thousands) (oz) 2 307,8 2 251,1 2,5 Mining (thousands) (oz) 2 264,7 2 238,5 1,2 Purchase of concentrate (thousands) (oz) 43,1 12,6 242,1 Platinum pipeline movement (thousands) (oz) 52,7 (65,6) + Refined metal produced by the refinery and appointed toll treaters from mined material and purchased concentrate, as well as metals in product sold from the refinery. * Mines' production and purchases of metal in concentrate converted to equivalent refined production using Anglo Platinum's standard smelting and refining recoveries. Directors and Company Secretary EXECUTIVE DIRECTORS: R Havenstein (Chief Executive Officer), D T G Emmett, R G Mills, R H H Van Kerckhoven (Belgian), A I Wood (British). NON-EXECUTIVE DIRECTORS: B E Davison (Chairman), L Boyd, M W King, W A Nairn, A J Trahar, P L Zim. INDEPENDENT NON-EXECUTIVE DIRECTORS: T A Wixley (Deputy Chairman), C B Brayshaw, B A Khumalo, T H Nyasulu. ALTERNATE DIRECTORS: A H Calver (British), J M Halhead (British), R Pilkington, C B Sheppard, V P Uren. Company Secretary: R A Venter. Registered Office 55 Marshall Street, Johannesburg, 2001 (P.O. Box 62179, Marshalltown, 2107) Facsimile +27 11 373-5111 Telephone +27 11 373-6111 South African Registrars Computershare Limited (Registration No. 1958/003546/06) 70 Marshall Street, Johannesburg, 2001 (P.O. Box 61051, Marshalltown, 2107) Facsimile +27 11 836-0792/6145 Telephone +27 11 370-7700 London Secretaries Anglo American Services (UK) Limited, 20 Carlton House Terrace, London, SW1Y 5AN, England Facsimile +44 207 698-8755 Telephone +44 207 698-8888 United Kingdom Registrars Capita IRG plc, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU, England Facsimile +44 207 478-7717 Telephone +44 207 478-8241 Internet Address: http://www.angloplatinum.com E-mail enquiries should be directed to: mmtakati@angloplat.com This information is provided by RNS The company news service from the London Stock Exchange

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