Final Results
Antofagasta PLC
5 March 2002
PRELIMINARY RESULTS ANNOUNCEMENT
FOR THE YEAR TO 31 DECEMBER 2001
5 March 2002
• Turnover of US$769.5 million (2000 - US$766.1 million).
• Operating cash flow of US$265.9 million (2000 - US$326.6 million).
• Profit before tax of US$ 113.5 million (2000 - US$223.3 million).
• Earnings per share of 31.4 cents (2000 -70.0 cents).
• El Tesoro now operating at full capacity, with banking completion
achieved in December.
• Final dividend of 24.75 cents, comprising an ordinary dividend of
14.75 cents and a special dividend of 10 cents (2000 - final dividend of
32.45 cents, comprising an ordinary dividend of 14.42 cents and a
special dividend of 18.03 cents)* .
• Total dividend for year of 32 cents per share including special
dividend (2000 - total dividend of 37.37 cents including special dividend).
*Dividends are paid in both US dollars and sterling. A conversion rate of £1=
US$1.4301 will be applied to the final dividend of 24.75 cents, giving
shareholders who receive dividends in sterling a final dividend of 17.3065p.
The Group's copper production increased by 26% from 351,100 tonnes in 2000 to
445,000 in 2001, as a result of higher output from Los Pelambres and initial
production from El Tesoro, which is now operating at full capacity. Group
weighted average cash costs were reduced marginally to 38.8 cents per pound
(2000 - 39.2 cents per pound). Results were affected by lower copper prices
during the year, including their effect on provisionally-priced sales of
concentrates. The average LME copper price for the year was 71.6 cents per
pound, compared with 82.3 cents per pound in 2000. No dividend income was
received from Quinenco (2000 - dividend received US$31.3 million, equating to
15.9 cents earnings per share).
Mr Jean-Paul Luksic, CEO of the mining division commented, 'Despite the effect
of lower copper prices on results, 2001 was a very satisfactory year for
Antofagasta. The El Tesoro project was completed on schedule and under budget,
and the mine is now running above design capacity. Group production next year
is expected to increase to about 460,000 tonnes. Costs are among the lowest in
the sector and cash flow remains strong. The Group is well placed to benefit
from an upturn in copper prices.'
Antofagasta is a UK-listed mining group based in Chile. In addition to copper
mining, its interests include railway and other transport operations. It also
has a 33.6% interest in Quinenco S.A. (LQ - NYSE), a diversified industrial and
financial group listed in Santiago and New York with interests in the Southern
Cone of Latin America and Brazil.
Enquiries - London Enquiries - Santiago
Antofagasta plc Antofagasta Minerals S.A.
Tel: +44 20 7382 7862 Tel +562 377 5145
Alejandro Rivera
Philip Adeane Chief Financial Officer
Managing Director Email: arivera@aminerals.cl
Email: nwakefield@antofagasta.co.uk
Issued by Bankside Consultants Ltd
Hussein Barma Keith Irons
Chief Financial Officer Email: keith@bankside.com
Email: hbarma@antofagasta.co.uk Tel: +44 20 7444 4155
DIRECTORS' COMMENTS for the year to 31 December 2001
The Group's copper production in 2001 increased by 26% to 445,000 tonnes
compared with 351,100 tonnes in 2000, due to higher production from Los
Pelambres and intial production from El Tesoro. Group weighted average cash
costs for the year were reduced marginally to 38.8 cents per pound, from 39.2
cents in 2000, while the LME copper price averaged 71.6 cents compared with 82.3
cents last year. Group profit before tax was US$113.5 million, compared with
US$223.3 million in 2000 when the Group received a substantial dividend of
US$31.3 million from its investment in Quinenco S.A. Earnings per share were
31.4 cents compared with 70.0 cents (54.1 cents excluding the Quinenco dividend)
in 2000.
Review of Operations
Los Pelambres
Improved throughput and higher ore grades combined to increase annual production
of payable copper in concentrates from 298,900 tonnes in 2000 to 361,500 tonnes
in 2001 at the 60% owned Los Pelambres mine. Optimisation measures, including
the successful introduction of a pebble crusher in July, enabled throughput to
average 104,700 tonnes per day (tpd) compared with 93,100 tpd in 2000.
Temporary production problems at the No. 4 Ball Mill had a marginal impact on
the final quarter, and have now been resolved. Los Pelambres' cash costs in
2001 remained low at 35.3 cents per pound (2000 - 35.6 cents), helped by
continuing low treatment and refining charges (TC/RCs). Total costs (including
depreciation and financial expenses) fell to 52.7 cents per pound compared with
59.7 cents in 2000, due mainly to lower interest costs and the increase in
production volumes.
Los Pelambres shipped concentrates containing 360,900 tonnes of payable copper
in the period, compared with 306,200 tonnes last year. Tonnages shipped may
differ from tonnages produced in any period because of loading schedules at the
port. Revenues at Los Pelambres were US$564.8 million (2000 - US$603.9
million), and included copper revenues of US$523.7 million (2000 - US$566.6
million). The decrease in revenues resulted mainly from lower copper prices,
including their effect on provisionally invoiced shipments. In line with
industry practice, copper concentrate sales agreements generally provide for
provisional pricing at the time of shipment with final pricing settlement based
on the average LME copper price for specified future periods. Copper revenues
on provisionally priced shipments are adjusted monthly until final settlement.
Sales volumes are also adjusted based on the final metallurgical content of the
concentrate. Revenues in the year 2001 included adverse adjustments to sales of
concentrates open at 31 December 2000 totalling US$16.5 million, affecting
profit after tax and minorities by US$8.2 million (equivalent to 4.2 cents
earnings per share). At 31 December 2001, copper sales totalling 75,300 tonnes
remained to be finally priced, and were recorded at that date at an average
price of 64.3 cents. A one cent change in the average price realised for these
provisionally-priced tonnes would have an approximate effect on revenues in 2002
of US$1.7 million and on profit after tax and minorities of US$0.8 million
(equivalent to 0.4 cents earnings per share).
In 2001, Los Pelambres contributed US$163.0 million (2000 - US$241.8 million) to
Group operating profit, reflecting the effect of lower copper prices in the
year.
Los Pelambres has continued to reduce its project borrowings, with two further
principal repayments during the year totalling US$87.4 million. Of the US$946
million originally drawn down to finance Los Pelambres, US$791.3 million remains
outstanding. Los Pelambres also paid a dividend of US$43.7 million to its
shareholders in July, of which US$26.2 million was received by the Group.
The higher throughput achieved during the second half of 2001 following the
installation of a pebble crusher should be maintained and throughput in 2002 is
forecast to average 112,000 tpd. Average ore grades under the current phase of
the mine plan will, however, decrease to approximately 0.90 per cent from 1.05
per cent in 2001. As a result, production of payable copper is expected to be
about 327,000 tonnes and cash costs are expected to average approximately 39
cents per pound.
El Tesoro
Construction at the 61% owned El Tesoro mine, which began in 1999, was completed
during the year at a total development cost of US$282 million, US$14 million
under its original budget of US$296 million. During the commissioning period to
30 June, El Tesoro produced 9,000 tonnes of cathodes and made initial shipments
of 2,350 tonnes. El Tesoro became operational from July, and during the second
half it produced 34,000 tonnes of cathodes at average cash costs of 39.6 cents
per pound and shipped 39,300 tonnes. Total costs were 68.8 cents per pound. El
Tesoro generated revenues of US$58.1 million in the second half with an
operating profit for the Group of US$12.9 million. Design capacity of 75,000
tonnes per year was reached in October.
El Tesoro drew down a total of US$197 million from the available project
financing facilities of US$205 million. These borrowings became non-recourse to
the Group in December when all requisite certification was delivered to the
Trustee, two months ahead of schedule. Principal repayments will begin in
August 2002 with US$12.3 million semi-annual repayments. In January 2002, El
Tesoro returned surplus funds of US$24.4 million (which had been provided to
develop the project) to its shareholders, of which the Group's 61 per cent share
was US$14.9 million.
El Tesoro is a standard heap-leach operation with a 21-year mine life. It is
expected to produce 85,000 tonnes of cathodes in 2002, at cash costs of
approximately 39 cents per pound. Cash costs are expected to average 40 cents
in the first five years.
Michilla
Michilla produced 49,600 tonnes of cathodes during the year, compared to total
production of 52,200 tonnes of copper in 2000 when a small quantity of
concentrates were also produced before the concentrator was mothballed at the
start of that year. Cash costs at Michilla averaged 64.5 cents per pound during
2001, compared with 59.8 cents the previous year. The increase was due mainly
to lower grades and higher stripping ratios under the current phase of the mine
plan. Total costs were 81.0 cents per pound compared to 79.9 cents in 2000.
Michilla made an operating loss of US$14.4 million (2000 - profit of US$1.3
million), before incurring costs of US$3.4 million (2000 - US$2.9 million) as
part of its exploration programme.
In response to low copper prices, Michilla implemented a cost reduction
programme in the last quarter of the year, including the re-negotiation of
contracts with suppliers, essential cost-cutting and the reduction of personnel
by 25% in November. As a result, cash costs in the last quarter were 58.8 cents
per pound, compared with 71.6 cents at the start of the year. The Group has
decided to keep Michilla operating at normal levels and expects to produce
52,000 tonnes of cathodes in 2002 at average cash costs under 60 cents per
pound.
Exploration
The Group spent US$9.7 million in the year (2000 - US$8.3 million) on its
exploration programmes in Chile and Peru.
The main focus remains the Esperanza deposit located near the El Tesoro open
pit. A 13,900 metre drilling campaign was completed in 2001 and Esperanza is
estimated to have mineable reserves of 295 million tonnes of sulphides, with an
average copper grade of 0.66% and 0.31g/t of gold, and 73 million tonnes of
oxides with an average copper grade of 0.41%. A conceptual study for a 50,000
tpd project has been completed showing good potential for developing an open pit
mine. Exploration is continuing in surrounding properties which have potential
for identifying further reserves.
In Peru, the 16,000 metre Phase 3 drilling programme at Magistral was completed
in the year and the Group now has a 51% interest in this project. The resource
estimate has been reduced to 105 million tonnes of sulphides with an average
copper grade of 0.74% and a molybdenum grade of 0.052%. 60% of the reserves are
now in the demonstrated category.
Railway and other transport services
Rail tonnages were maintained at 3.9 million tons (2000 -3.9 million tons).
Marginal increases in rail volumes in Chile, including traffic from El Tesoro,
were offset by reductions in Bolivian rail volumes due to adverse weather
conditions at the start of the year. Turnover remained substantially unchanged
at US$69.1 million (2000 - US$70.0 million). Rail tonnages are expected to
increase in 2002 with a full year's contribution from El Tesoro and other
expansions in the Antofagasta region.
Investments
The Group holds a 33.6% interest in Quinenco S.A., a diversified industrial and
financial group listed in Santiago and New York with interests in the Southern
Cone of Latin America and Brazil. The market value of the Group's investment
was US$265.3 million at 31 December 2001 and US$212.3 million at 28 February
2002.
Income from Quinenco is accounted for on a dividends-received basis. During
2000, Quinenco's results were affected by a restructuring programme at Madeco,
the copper wire and tube manufacturer, and a net loss on the sale of Quinenco's
food operations in Argentina. Quinenco reported a net loss of US$9.8 million
and did not pay a dividend in 2001. In 2000, the Group received a dividend of
US$31.3 million due to significant gains realised by Quinenco through the sale
of its banking and cable television interests the previous year.
Quinenco has not yet announced its results for 2001, but nine-month results to
30 September 2001 reported a profit after tax and minorities of US$55.0 million.
During this period, Quinenco sold an 8% stake in Entel S.A., a Chilean
telecommunications company, reducing its holding to 5.7%. Proceeds from the
sale amounted to approximately US$125 million and the corresponding gain on sale
was over US$71 million. Quinenco's brewery division also disposed of its 6.7%
interest in Backus & Johnson in Peru. In March, Quinenco acquired a controlling
52.7% interest in Banco de Chile, the second largest banking institution in the
country. Since then, Banco de Chile has been merged with Banco Edwards, the
fifth-ranked Chilean bank acquired by Quinenco in 1999. The merger was
effective on 1 January, 2002 and the new Banco de Chile, in which Quinenco has a
52.2% interest, is now the country's leading financial institution with a 20%
market share in terms of loans, deposits and investments.
Dividends
The Board is recommending a final dividend of 24.75 cents per ordinary share
(2000 - 32.45 cents) payable on 14 June 2002 to shareholders on the Register at
the close of business on 10 May 2002. The final dividend comprises an ordinary
dividend of 14.75 cents and a special dividend of 10.00 cents. Dividends may be
paid in either US dollars or sterling, and shareholders receiving dividends in
sterling will be paid a final dividend of 17.3065p, based on an exchange rate of
£1=US$1.4301.
Dividends for the year are as follows:
US Dollars Sterling
2001 2000 2001 2000
cents cents pence pence
Ordinary
Interim 7.25 4.92 5.02 3.25
Final 14.75 14.42 10.31 10.00
22.00 19.34 15.33 13.25
Special
Final 10.00 18.03 6.99 12.50
Total 32.00 37.37 22.32 25.75
Sterling amounts for 2001 shown above have been rounded for presentation.
Further details are given in Note 9 to the Preliminary Announcement.
Current Trading Prospects
Copper prices fell sharply during 2001 from 82.0 cents per pound at the start of
the year to a low of 59.8 cents in mid-November, but averaged 71.6 cents for the
year. Demand for base metals declined as the United States moved into recession
and as markets weakened in Europe and the Far East. LME stocks also increased
from 357,000 tonnes at the start of the year to 799,000 tonnes by the end of
December. Following announcements of cutbacks by producers during the last
quarter, prices recovered to 66.3 cents by the end of the year and have since
averaged 69.5 cents in the first two months of 2002. Although most commentators
believe the cuts in output announced last year will be sufficient to balance the
market in 2002, LME stocks remain at historically high levels and any
significant increase in prices is unlikely until demand improves. As a low cost
producer, the Group remains well placed in this current period of low prices to
benefit from a subsequent upturn.
FINANCIAL COMMENTARY for the year to 31 December 2001
Results
Group turnover increased marginally from US$766.1 million in 2000 to US$769.5
million in 2001. Revenues from the mining division were US$700.4 million (2000
- US$696.1 million). Although copper volumes sold were up 26% to 450,800 tonnes
in 2001 (including 39,300 tonnes from El Tesoro in the second half of the year),
this was offset by lower copper prices compared with 2000 and their effect on
provisionally invoiced shipments of concentrates at Los Pelambres. As explained
above, 2001 revenues also included adverse adjustments of US$16.5 million
relating to settlement of concentrate sales open at 31 December 2000. Turnover
from the transport division was US$69.1 million (2000 - US$70 million),
reflecting similar cargo volumes as the previous year.
Operating profits were US$165.2 million (2000 - US$246 million). Profits for
the mining division decreased from US$224.9 million in 2000 to US$143.2 million.
The decrease in operating profits resulted from a combination of lower copper
prices and the effect of adjustments to prior year concentrate sales, partly
compensated by increased production volumes. Group weighted average cash costs
remained similar to the previous year at 38.8 cents per pound (2000 - 39.2
cents) and did not significantly affect the change in operating profits. The
contribution from the transport division was substantially unchanged from the
previous year.
Operating profit is stated after depreciation and the loss on disposal of fixed
assets, giving EBITDA (earnings before interest, tax, depreciation and
amortisation) of US$283.1 million (2000 - US$354.9 million).
Income from fixed asset investments was US$0.1 million, compared with US$31.5
million in 2000 when a dividend of US$31.3 million was received from Quinenco
S.A..
The Group sold a surplus property owned by its Railway in the centre of the city
of Antofagasta resulting in a profit of US$3.5 million (US$2.8 million after
tax) which is disclosed separately as an exceptional item. In 2000, surplus
assets at El Chacay were sold resulting in an exceptional profit of US$4.1
million (US$3.5 million after tax).
Net interest expense was US$55.3 million, compared with US$58.3 million in 2000.
Net interest costs at Los Pelambres were US$55.5 million compared with US$72.1
million the previous year, benefiting from lower interest rates and regular
principal repayments since December 2000. Net interest costs also included
US$9.7 million relating to El Tesoro in the second half of 2001. Prior to 1
July, all interest costs at El Tesoro were capitalised as the project remained
under development.
As a result of these factors, profit before tax was US$113.5 million compared
with US$223.3 million in 2001.
Tax (including deferred tax) amounted to US$21.1 million (2000 - US$29.0
million). This represents an effective tax rate of 18.6% (2000 - 13%), compared
with the Chilean statutory tax rate of 15%. During the second half of 2001,
legislation was announced in Chile to increase future statutory tax rates to 16%
in 2002, 16.5% in 2003 and 17% from 2004. Since deferred tax balances are
measured at the rates expected to apply in the period in which timing
differences are expected to reverse, the effect of the tax rate increases has
been to increase the deferred tax charge (which relates mainly to Los Pelambres)
for this year as cumulative provisions are reassessed.
Earnings per share were 31.4 cents in 2001 compared with 70.0 cents the previous
year, reflecting the lower profit net of tax and minority interests.
Cash Flows
Net cash inflow from operating activities was US$265.9 million compared with
US$326.6 million in 2000, reflecting the impact of lower copper prices. Net
cash inflow in the year was also affected by the build-up of stocks and debtors
as part of the El Tesoro start-up, while in 2000 net cash inflow was similarly
affected by the start-up of Los Pelambres.
Net capital expenditure in the period was US$113.9 million, including US$58.9
million to complete the El Tesoro development. Net capital expenditure in 2000
was US$314.5 million, which related mainly to El Tesoro and final construction
costs at Los Pelambres.
Cash and Debt
At 31 December 2001, the Group held cash and deposits of US$248.7 million (2000
- US$300.1 million). After taking into account the minority share of non-wholly
owned operations, the Group's share of the total balance was US$219.5 million
(2000 - US$267.4 million).
Total Group debt at 31 December 2001 was US$1,057.4 million (2000 - US$1,095.7
million). US$615.8 million (2000 - US$641.6 million) is proportionately
attributable to the Group after taking the minority share of partly-owned
operations into account. The total Group borrowings included US$791.3 million
under the Los Pelambres non-recourse project financing arrangements of which 40
per cent is attributable to minority shareholders and US$197.0 million under the
El Tesoro project financing arrangements of which 39 per cent is attributable to
minority shareholders. The El Tesoro borrowings became non-recourse when
completion was achieved in December 2001.
Balance Sheet
Shareholders' funds decreased from US$948.5 million at the beginning of the year
to US$929.3 million, principally reflecting profit attributable to shareholders
less currency translation adjustments and dividends for the year. Further
details are given in Note 14 to the Preliminary Announcement.
Minority interests increased from US$292.8 million at the beginning of the year
to US$305.3 million, principally reflecting the minority share of profits at the
mining operations less the minority share of the dividend paid by Los Pelambres
during the year.
Group Profit and Loss Account - US Dollars
Unaudited year to Audited year to 31.12.00
31.12.01
Notes Before Exceptional Before Exceptional
exceptional items exceptional items
items Note 5 Total items Note 5 Total
US$'m US$'m US$'m US$'m US$'m US$'m
Turnover 3 769.5 - 769.5 766.1 - 766.1
Operating profit 3,4 165.2 - 165.2 246.0 - 246.0
Profit on disposal of fixed 5 - 3.5 3.5 - 4.1 4.1
assets
Income from other fixed 0.1 - 0.1 31.5 - 31.5
asset investments
Net interest payable 6 (55.3) - (55.3) (58.3) - (58.3)
Profit on ordinary 110.0 3.5 113.5 219.2 4.1 223.3
activities before tax
Tax 5,7 (20.4) (0.7) (21.1) (28.4) (0.6) (29.0)
Profit on ordinary 89.6 2.8 92.4 190.8 3.5 194.3
activities after tax
Minority interests - equity (30.3) - (30.3) (56.1) - (56.1)
Profit for the financial 59.3 2.8 62.1 134.7 3.5 138.2
year
Dividends
Preference - non equity (0.2) - (0.2) (0.2) - (0.2)
Ordinary - equity 9 (63.1) - (63.1) (73.7) - (73.7)
Retained profit (4.0) 2.8 (1.2) 60.8 3.5 64.3
Earnings per share 8 30.0c 31.4c 68.2c 70.0c
Dividend per ordinary share 9 32.0c 37.37c
Turnover and profit are derived from continuing operations.
The dividend in 2001 includes a special dividend of 10 cents per share (2000 -
special dividend of 18.03 cents). Further details are given in Note 9.
Other recognised gains and losses
Other recognised gains and losses in the period (translation differences)
amounted to a loss of US$7.6 million (2000 - a gain of US$18.0 million) and are
shown in Note 14 together with other movements in shareholders' funds.
Group Profit and Loss Account - Sterling
Unaudited year to 31.12.01 Audited year to 31.12.00
Notes Before Exceptional Before Exceptional
exceptional items exceptional items
items Note 5 Total items Note 5 Total
£'m £'m £'m £'m £'m £'m
Turnover 3 534.3 - 534.3 505.4 - 505.4
Operating profit 3,4 114.6 - 114.6 162.4 - 162.4
Profit on disposal of fixed 5 - 2.4 2.4 - 2.7 2.7
assets
Income from other fixed 0.1 - 0.1 20.1 - 20.1
asset investments
Net interest payable 6 (38.3) - (38.3) (38.4) - (38.4)
Profit on ordinary
activities before tax 76.4 2.4 78.8 144.1 2.7 146.8
Tax 5,7 (14.2) (0.5) (14.7) (18.7) (0.4) (19.1)
Profit on ordinary 62.2 1.9 64.1 125.4 2.3 127.7
activities after tax
Minority interests - equity (21.1) - (21.1) (37.0) - (37.0)
Profit for the financial 41.1 1.9 43.0 88.4 2.3 90.7
year
Dividends
Preference - non equity (0.1) - (0.1) (0.1) - (0.1)
Ordinary - equity 9 (44.0) - (44.0) (50.8) -
(50.8)
Retained profit (3.0) 1.9 (1.1) 37.5 2.3 39.8
Earnings per share 8 20.7p 21.8p 44.8p 45.9p
Dividend per ordinary share 9 22.32p 25.75p
Turnover and profit are derived from continuing operations.
The dividend in 2001 includes a special dividend of 6.9925 pence per share (2000
- 12.5 pence). Further details are given in Note 9.
Other recognised gains and losses
Other recognised gains and losses in the period (translation differences)
amounted to a gain of £9.1 million (2000 - a gain of £29.6 million), and are
shown in Note 14 together with other movements in shareholders' funds.
Group Balance Sheet
US Dollars Sterling
Unaudited Audited Unaudited Audited
31.12.01 31.12.00 31.12.01 31.12.00
US$'m US$'m £'m £'m
Notes
Fixed assets
Tangible fixed assets 10 1,916.8 1,926.7 1,323.9 1,286.8
Other investments 11 185.5 185.5 108.2 108.2
2,102.3 2,112.2 1,432.1 1,395.0
Current assets
Stocks 49.3 41.6 34.1 27.8
Debtors 113.7 110.1 78.5 73.7
Current asset investments (including time deposits) 246.5 297.1 170.3 198.9
Cash at bank and in hand 2.2 3.0 1.5 2.0
411.7 451.8 284.4 302.4
Creditors - amounts falling due within one year
Trade and other creditors (79.0) (87.1) (54.6) (58.3)
Loans 12 (104.2) (92.2) (72.0) (61.7)
(21.1)
Dividends (48.8) (64.0) (34.1) (44.4)
(232.0) (243.3) (160.7) (164.4)
Net current assets 179.7 208.5 123.7 138.0
Total assets less current liabilities 2,282.0 2,320.7 1,555.8 1,533.0
Creditors - amounts falling due after more than one year
Other creditors (25.3) (28.5) (17.5) (19.1)
Loans 12 (953.2) (1,003.5) (658.4) (671.8)
Provisions for liabilities and charges 13 (68.9) (47.4) (47.6) (31.6)
1,234.6 1,241.3 832.3 810.5
Capital and reserves
Called up share capital 17.2 17.7 11.9 11.9
Share premium 245.3 253.1 169.4 169.4
Reserves 666.8 677.7 440.1 433.2
Shareholders' funds - including non-equity 14 929.3 948.5 621.4 614.5
interests
Minority interests - equity 305.3 292.8 210.9 196.0
1,234.6 1,241.3 832.3 810.5
Approved by the Board of Directors on 5 March, 2002.
P J Adeane Director.
Group Cash Flow Statement
US Dollars Sterling
Notes Unaudited Audited Unaudited Audited
year to year to year to year to
31.12.01 31.12.00 31.12.01 31.12.00
US$'m US$'m £'m £'m
Net cash inflow from operating activities 15 265.9 326.6 184.6 215.4
Returns on investment and servicing of finance
Dividends received from other fixed asset investments 0.1 31.5 0.1 20.1
Interest received (including capitalised interest) 13.3 22.3 9.2 14.7
Interest paid (including capitalised interest) (74.4) (86.0) (51.7) (56.7)
Dividends paid to minority interests (18.5) (10.2) (12.8) (6.7)
Preference dividends paid (0.2) (0.2) (0.1) (0.1)
Net cash outflow from returns on investment and servicing (79.7) (42.6) (55.3) (28.7)
of finance
Tax (paid)/ recovered (0.9) 1.1 (0.6) 0.7
Net cash outflow from capital expenditure and financial (113.9) (314.5) (79.1) (207.5)
investment
Acquisitions and disposals
Net cash balances acquired with subsidiary - 0.9 - 0.5
Equity dividends paid (77.5) (26.6) (54.3) (17.7)
Cash outflow before management of liquid resources (6.1) (55.1) (4.7) (37.3)
Management of liquid resources
Net decrease in time 49.1 40.2 34.6 26.5
deposits
Financing
Contribution from minority interests - 8.0 - 5.3
Net (repayments)/borrowings in the year (44.0) 9.8 (30.6) 6.4
Net cash (outflow)/inflow from financing (44.0) 17.8 (30.6) 11.7
Net cash (outflow)/inflow in the year 16 (1.0) 2.9 (0.7) 0.9
Notes
1 Reporting currency and accounting policies
a) Reporting currency
The functional reporting currency of the Group is US dollars, the principal
currency in which the Group operates and in which assets and liabilities are
held. These preliminary results have also been presented in sterling on a
supplementary basis. Share capital remains denominated in sterling and, for the
purposes of reporting in US dollars, share capital and share premium are
translated at the period end rate of exchange. As explained in Note 9,
dividends are paid in both US dollars and sterling.
b) Accounting policies
The profit and loss account, balance sheet and cash flow statement for the year
to 31 December 2001 have been prepared on the basis of the accounting policies
set out in the Group's statutory accounts for the year to 31 December 2000.
2 Production (unaudited)
The Group announced production volumes and cash costs for 2001 on 30 January
2002. Production information on mining operations for the year may be
summarised as follows:
a) Tonnes of payable copper produced
Year to Year to
31.12.01 31.12.00
'000 tonnes '000 tonnes
Los Pelambres
Payable copper in concentrates 361.5 298.9
Michilla
Copper cathodes 49.6 51.1
Payable copper in concentrates - 1.1
El Tesoro
Copper cathodes 34.0 -
Group total 445.0 351.1
El Tesoro remained under development for the first six months of the year,
producing 9,000 tonnes of cathodes during the commissioning period in the second
quarter. This production has not been included in the Group figures above.
The individual production figures are sometimes more specific than the rounded
numbers shown; hence small differences may appear in totals.
b) Cash costs per pound
Year to Year to
31.12.01 31.12.00
cents cents
Los Pelambres 35.3 35.6
Michilla 64.5 59.8
El Tesoro 39.6 -
Group weighted average 38.8 39.2
Cash costs are a measure of cost of operational production expressed in terms of
cents per pound of payable copper produced. Cash costs exclude depreciation,
financial income and expenses, exchange gains and losses, and corporation tax.
El Tesoro costs have been adjusted from the Q4 release of 30 January to include
offsite costs consistently with the other operations. The change has a marginal
impact on group weighted average cash costs (previously 38.6 cents per pound).
3 Segmental analysis
a) Turnover by geographical destination
US Dollars Sterling
Unaudited Audited Unaudited Audited
year to year to year to year to
31.12.01 31.12.00 31.12.01 31.12.00
US$'m US$'m £'m £'m
UK 12.4 5.7 8.6 3.7
Rest of Europe 205.2 169.1 142.5 111.6
Chile 103.4 78.2 71.8 51.6
Rest of Latin America 48.8 54.9 33.9 36.2
North America 50.2 38.4 34.9 25.4
Asia Pacific / other 349.5 419.8 242.6 276.9
769.5 766.1 534.3 505.4
b) Turnover and operating profit by class of business and geographical location
Operations are based in Latin America. Turnover and operating profit can be
analysed as follows:
US Dollars Sterling
Unaudited Audited Unaudited Audited
year to year to Year to year to
31.12.01 31.12.00 31.12.01 31.12.00
US$'m US$'m £'m £'m
Turnover
Mining 700.4 696.1 486.3 459.2
Railway and other transport services 69.1 70.0 48.0 46.2
769.5 766.1 534.3 505.4
Operating profit
Mining 143.2 224.9 99.3 148.4
Railway and other transport services 22.0 21.1 15.3 14.0
165.2 246.0 114.6 162.4
4 Operating profit
US Dollars Sterling
Unaudited Audited Unaudited Audited year
year to year to year to to 31.12.00
31.12.01 31.12.00 31.12.01
US$'m US$'m £'m £'m
Turnover 769.5 766.1 534.3 505.4
Cost of sales (506.5) (418.9) (351.7) (276.2)
Gross profit 263.0 347.2 182.6 229.2
Administrative expenses (83.8) (88.7) (58.2) (58.5)
Closure provision (Note 13) (1.1) (1.0) (0.8) (0.7)
Severance charges (Note 13) (1.7) (2.7) (1.2) (1.8)
Exploration costs (9.7) (8.3) (6.7) (5.5)
Other net operating expenses (1.5) (0.5) (1.1) (0.3)
Operating profit 165.2 246.0 114.6 162.4
Depreciation charges in 2001 amounted to US$116.8 million (£81.1 million). Of
this amount, US$106.1 million (£73.6 million) is included in cost of sales and
US$10.7 million (£7.5 million) is included in administrative expenses.
Depreciation charges in 2000 amounted to US$105.9 million (£69.7 million). Of
this amount, US$95.4 million (£62.9 million) is included in cost of sales and
US$10.5 million (£6.9 million) is included in administrative expenses.
In line with industry practice, copper concentrate sales agreements generally
provide for provisional pricing at the time of shipment with final pricing
settlement based on the average LME copper price for specified future periods.
Copper revenues on provisionally priced tonnages are adjusted monthly until
final settlement. Sales volumes are also adjusted on the final metallurgical
content of the concentrates. Revenues in the year to 31 December 2001 included
adjustments to sales of concentrates open at 31 December 2000 totalling US$16.5
million (£11.5 million).
5 Non-operating exceptional items
US Dollars Sterling
Unaudited Audited Unaudited Audited
year to year to year to year to
31.12.01 31.12.00 31.12.01 31.12.00
US$'m US$'m £'m £'m
Profit on disposal of fixed assets at El Chacay - 4.1 - 2.7
Profit on sale of land by Railway 3.5 - 2.4 -
Tax effect (0.7) (0.6) (0.5) (0.4)
2.8 3.5 1.9 2.3
6 Net interest payable
US Dollars Sterling
Unaudited Audited Unaudited Audited
year to year to year to year to
31.12.01 31.12.00 31.12.01 31.12.00
US$'m US$'m £'m £'m
Interest receivable 13.2 21.0 9.2 13.9
Interest payable (67.4) (80.5) (46.8) (53.1)
Foreign exchange (0.2) - (0.1) -
Discount charge relating to provisions (Note 13) (0.9) 1.2 (0.6) 0.8
(55.3) (58.3) (38.3) (38.4)
In addition to the above, interest payable capitalised in the period amounted to
US$6.8 million (£4.7 million; 2000 - US$15.3million; £10.1 million) and interest
receivable credited against fixed assets amounted to US$0.3 million (£0.2
million; 2000 - US$4.6 million; £3.0 million). These amounts related to the El
Tesoro development.
7 Tax
The tax charge of US$21.1 million (£14.7 million; 2000 - US$ 29.0 million; £19.1
million) represents an effective rate (including deferred tax) of 18.6% (2000 -
13.0%) on profit before tax, as compared with the current Chilean statutory tax
rate of 15%. Legislative changes during 2001 will result in the statutory rate
increasing to 16% in 2002, 16.5% in 2003 and 17% in 2004. Deferred tax is
measured at the rates expected to apply in the period in which timing
differences are expected to reverse, and the application of these higher rates
in the 2001 results has increased the effective tax rate for this year. The
effective tax rate in 2000 was below the Chilean statutory rate of 15%
principally because the dividend of US$31.3 million (£19.9 million) received
from Quinenco was paid out of that company's post-tax profits and was not
subject to further tax on receipt.
8 Earnings per share
Earnings per share is calculated on profit after tax, minority interest and
preference dividends giving earnings of US$61.9 million (£43.0 million; 2000 -
US$138.0 million ; £90.6 million) and is based on 197,171,339 ordinary shares
(2000 - 197,171,339) in issue throughout the period. Earnings per share
excluding exceptional items is calculated on the same basis but excluding an
exceptional gain after tax and minority interests of US$2.8 million (£1.9
million; 2000 - US$3.5 million; £2.3 million).
9 Dividends
Dividends are declared in US dollars but may be paid in either dollars or
sterling. Shareholders on the register of members with an address in the United
Kingdom receive dividend payments in sterling, unless they elect to be paid in
dollars. All other shareholders are paid by cheque in dollars, unless they have
previously instructed the Company's registrar to pay dividends by bank transfer
to a sterling bank account, or they elect for payment by cheque in sterling.
The Company's registrar must receive any such intsruction before the record date
of 10 May 2002.
The Board will recommend a final dividend of 24.75 cents per ordinary share,
comprising an ordinary dividend of 14.75 cents and a special dividend of 10
cents (2000 - 32.45 cents, comprising an ordinary dividend of 14.42 cents and a
special dividend of 18.03 cents) for payment on 14 June 2002 to shareholders on
the Register at the close of business on 10 May 2002. Dividends are declared
and paid gross. The exchange rate to be applied for the conversion of dividends
will be £1 = US$1.4301, giving a final dividend to those shareholders paid in
sterling of 17.3065 pence per ordinary share (2000 - 22.5 pence).
10 Tangible fixed assets
US dollars
Railway
and other
Mining transport Total
Net book value US$'m US$'m US$'m
1 January 2001 (audited) 1,810.8 115.9 1,926.7
Additions 114.6 13.3 127.9
Closure and severance provisions capitalised 1.6 - 1.6
(Note 13)
Transfer from stocks - 2.1 2.1
Disposals (3.2) (3.6) (6.8)
Depreciation (110.0) (6.8) (116.8)
Provision for closure - 0.9 0.9(18.0)
Exchange - (17.9) (17.9)
31 December 2001 (unaudited) 1,813.8 103.0 1,916.8
Sterling
Railway
and other
Mining transport Total
£'m £'m £'m
Net book value
1 January 2001(audited) 1,212.2 74.6 1,286.8
Additions
Total
£'m
79.6 9.2 88.8
Closure and severance provisions capitalised 1.1 - 1.1
(Note 13)
Transfer from stocks - 1.5 1.5
Disposals (2.2) (2.5) (4.7)
Depreciation (76.4) (4.7) (81.1)
Provision for closure -
Exchange 38.5 (7.0) 31.5
31 December 2001 (unaudited) 1,252.8 71.1 1,323.9
11 Other investments
US$'m £'m
1 January 2001 (audited) and 31 December 2001 (unaudited) 185.5 108.2
8
The above investments are quoted. The market value of these investments at 31
December 2001 was US$268.5 million (£152.2 million; 2000 - US$256.9 million;
£172.4 million). These investments include a 33.61 per cent interest in Quinenco
S.A.
12 Loans
US Dollars Sterling
Unaudited Audited Unaudited Audited
31.12.01 31.12.00 31.12.01 31.12.00
US$'m US$'m £'m £'m
Los Pelambres
- Loans (791.3) (878.7) (546.5) (588.2)
El Tesoro
- Loans (197.0) (149.5) (136.1) (100.1)
- Subordinated debt (39.7) (36.2) (27.4) (24.3)
- Finance leases (17.0) (15.0) (11.8) (10.0)
Michilla
- Finance leases (1.6) (2.1) (1.1) (1.4)
- Loans - (0.1) - (0.1)
Railway and other transport services
- Loans (10.8) (14.1) (7.5) (9.4)
(1,057.4) (1,095.7) (730.4) (733.5)
Maturity of loans:
US Dollars Sterling
Unaudited Audited Unaudited Audited
31.12.01 31.12.00 31.12.01 31.12.00
US$'m US$'m £'m £'m
Due within one year (104.2) (92.2) (72.0) (61.7)
Due after more than one year (953.2) (1,003.5) (658.4) (671.8)
(1,057.4) (1,095.7) (730.4) (733.5)
13 Provisions for liabilities and charges
US Dollars
Decommi-ssioning
and site
rehabilitation Severance Deferred
indemnities tax Total
US$'m US$'m US$'m US$'m
1 January 2001 (audited) (5.3) (8.9) (33.2) (47.4)
Charge to operating profit in year (Note 4) (1.1) (1.7) - (2.8)
Release of discount to net interest in year (Note 6) (0.3) (0.6) - (0.9)
Charge to tax on profit in year - - (18.0) (18.0)
Utilised in year - 0.6 - 0.6
Capitalised in year (Note 10) (1.4) (0.2) - (1.6)
Exchange - 0.5 0.7 1.2
31 December 2001 (unaudited) (8.1) (10.3) (50.5) (68.9)
13 Provisions for liabilities and charges (continued):
Sterling
Decommi-sioning
and site
rehabilitation Severance Deferred
indemnities tax Total
£'m £'m £'m £'m
1 January 2001 (audited) (3.5) (5.9) (22.2) (31.6)
Charge to operating profit in year (Note 4) (0.8) (1.2) - (2.0)
Release of discount to net interest in year (Note 6) (0.2) (0.4) - (0.6)
Charge to tax on profit in year - - (12.5) (12.5)
Utilised in year - 0.4 - 0.4
Capitalised in year (Note 10) (1.0) (0.1) - (1.1)
Exchange (0.1) 0.1 (0.2) (0.2)
31 December 2001 (unaudited) (5.6) (7.1) (34.9) (47.6)
14 Reconciliation of movements in shareholders' funds
US Dollars Sterling
Unaudited Audited Unaudited Audited
year to year to year to year to
31.12.01 31.12.00 31.12.01 31.12.00
US$'m US$'m £'m £'m
Profit for the financial period 62.1 138.2 43.0 90.7
Other recognised gains relating to the period
- Currency translation adjustment (7.6) 18.0 9.1 29.6
Total recognised gains and losses 54.5 156.2 52.1 120.3
Dividends (63.3) (73.9) (44.1) (50.9)
(8.8) 82.3 8.0 69.4
Exchange movement on sterling-denominated share capital and (8.3) (21.1) - -
share premium
Exchange movement on revaluation reserve (2.1) - (1.1) -
Opening shareholders' funds 948.5 887.3 614.5 545.1
Closing shareholders' funds 929.3 948.5 621.4 614.5
15 Reconciliation of operating profit to net cash inflow from operating
activities
US Dollars Sterling
Unaudited Audited Unaudited Audited
year to year to year to year to
31.12.01 31.12.00 31.12.01 31.12.00
US$'m US$'m £'m £'m
Operating profit 165.2 246.0 114.6 162.4
Depreciation 116.8 105.9 81.1 69.7
Loss on disposal of tangible fixed assets 1.1 3.0 0.8 2.0
Increase in stocks (9.9) (6.0) (6.8) (4.0)
Increase in debtors (20.0) (70.5) (13.9) (46.5)
Increase in creditors and provisions 12.7 48.2 8.8 31.8
Net cash inflow from operating activities 265.9 326.6 184.6 215.4
16 Reconciliation of net cash flow to movement in net debt
US Dollars Sterling
Unaudited Audited Unaudited Audited
year to year to year to year to
31.12.01 31.12.00 31.12.01 31.12.00
US$'m US$'m £'m £'m
Net cash (outflow)/inflow in the year (1.0) 2.9 (0.7) 0.9
Cash outflow/(inflow) from decrease/(increase) in 44.0 (9.8) 30.6 (6.4)
debt
Cash inflow from decrease in liquid resources (49.1) (40.2) (34.1) (26.5)
Change in net debt resulting from cash flows (6.1) (47.1) (4.2) (32.0)
Capitalisation of subordinated debt - 10.3 - 6.8
Acquisition - 5.1 - 3.2
Reclassification 0.6 3.5 0.4 2.2
Interest accrued on long-term loan balances (3.4) (8.1) (2.4) (5.3)
New leases (3.4) (16.3) (2.4) (10.8)
Exchange (0.8) (3.5) (17.4) (37.6)
Movement in net debt in the year (13.1) (56.1) (26.0) (73.5)
Net debt at the beginning of the year (795.6) (739.5) (532.6) (459.1)
Net debt at the end of the year (808.7) (795.6) (558.6) (532.6)
17 Financial information
The financial information set out in this announcement does not constitute the
Group's statutory accounts for the years ended 31 December 2001 or 2000. The
financial information for the year ended 31 December 2000 is derived from the
statutory accounts for that year which have been delivered to the Registrar of
Companies. The auditors reported on those accounts; their report was unqualified
and did not contain a statement under s237(2) or (3) Companies Act 1985. The
statutory accounts for the year ended 31 December 2001 will be finalised on the
basis of the financial information presented by the Directors in this
preliminary announcement and will be delivered to the Registrar of Companies
following the Company's Annual General Meeting.
18 Currency translation
Assets and liabilities denominated in foreign currencies are translated into
dollars and sterling at the period end rates of exchange. Results denominated
in foreign currencies have been translated into dollars and sterling at the
average rate for each period.
Period end rates Average rates
31.12.01 US$1.45 = £1; US$1 = Ch$655 US$1.44 = £1; US$1 = Ch$635
31.12.00 US$1.49 = £1; US$1 = Ch$574 US$1.52 = £1; US$1 = Ch$540
19 Distribution
The Annual Report and Financial Statements, including the Notice of the Annual
General Meeting and Chairman's Statement for the year ended 31 December 2001,
will be posted to all shareholders in May 2002. The Annual General Meeting
will be held in the Armourers Hall, 81 Coleman Street, London EC2 at 10.30 a.m.
on 13 June 2002.
This information is provided by RNS
The company news service from the London Stock Exchange
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