Interim Results
Antofagasta PLC
03 September 2002
3 September 2002
ANTOFAGASTA PLC
Interim Results Announcement
for the six months ended 30 June 2002
HIGHLIGHTS
• Turnover of US$418.7 million (2001 - US$342.6 million).
• Operating cash flow of US$148.8 million (2001 - US$129.7 million).
• Profit before tax of US$94.8 million (2001 - US$50.6 million).
• Earnings per share of 26.6 cents (2001 - 14.4 cents).
• Interim dividend of 10 cents per share (2001 -7.25 cents per share)*.
* Dividends are paid in either sterling or US dollars. A conversion rate of £1=
US$1.532 will be applied to the interim dividend giving shareholders who
receive dividends in sterling an interim dividend of 6.5274 pence.
The Group increased copper production by 9 per cent from 193,900 tonnes in the
first half of 2001 to 210,900 tonnes this period. Group weighted average cash
costs remained low at 39.2 cents per pound (2001 half year - 41.0 cents per
pound). Group results benefited from the contribution of the El Tesoro mine,
which was under development during the first half of last year, higher
molybdenum revenues and positive pricing adjustments on close out of provisional
concentrate sales at Los Pelambres. These factors offset the lower LME copper
price, which averaged 71.9 cents per pound in the period (2001 half year - 77.6
cents).
Jean-Paul Luksic, CEO of the mining division, commented, 'These results
demonstrate the strength of the Group despite the current period of low copper
prices. With costs among the lowest in the industry, both profits and cash flow
generation remain healthy and the Group is well-placed to benefit from any
improvement in prices.'
Antofagasta is a Chilean-based mining Group listed in the United Kingdom. In
addition to copper mining, its interests include rail and road transport
operations and a 33.6% interest in Quinenco S.A. (LQ - NYSE).
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 HALF YEAR TO 30 JUNE 2002
Group copper production during the period increased 9% to 210,900 tonnes
compared with 193,900 tonnes in the first six months of 2001 when El Tesoro was
still under development. Group weighted average cash costs were lower at 39.2
cents per pound (2001 half year - 41.0 cents). These factors together with
improved realised copper prices and by-product sales of molybdenum at Los
Pelambres offset the effect of the weaker LME copper price, which averaged 71.9
cents compared with 77.6 cents in the first six months of 2001. As a result,
the Group increased profit before tax from US$50.6 million last period to
US$94.8 million, and earnings per share rose from 14.4 cents to 26.6 cents.
Interim Review of Operations
Los Pelambres
Los Pelambres produced 144,800 tonnes of payable copper compared with 170,000
tonnes in the 2001 first half. The decrease was due mainly to the reduction in
the ore grade from 1.07% to 0.86% under the current phase of the mine plan,
partly offset by a higher throughput level at the plant as a result of the
continuing optimisation programme that has been in place since the mine began
production two years ago. Cash costs, which are stated net of by-product
credits, remained very low at 35.4 cents per pound (2001 half year - 37.0
cents). Higher prices for molybdenum which spiked in June averaged US$3.40 per
pound (2001 half year - US$2.40 per pound) and compensated for higher mining
costs resulting from the lower ore grades.
Los Pelambres shipped concentrates containing 144,600 tonnes of payable copper
in the period, compared with 167,000 tonnes in the first half of 2001. In line
with industry practice, copper concentrate sales agreements generally provide
for provisional pricing at the time of shipment with final pricing based on the
average LME copper price for specified future periods. Sales volumes are also
adjusted based on the final metallurgical content of the concentrate. Copper
revenues on provisionally priced shipments are adjusted monthly until final
settlement. During the first half of last year, there were significant adverse
adjustments to provisionally invoiced shipments including US$16.2 million
relating to sales open at the beginning of that year. In contrast, following
the deterioration in copper prices through the remainder of 2001, prices
strengthened in the first six months of this year and consequently revenues this
year included positive adjustments including US$10.5 million relating to sales
open at 31 December 2001. This enabled Los Pelambres to achieve an effective
realised copper price of 74.8 cents per pound compared with 68.2 cents in the
first six months of 2001. These factors, together with the low cash costs,
enabled Los Pelambres to achieve operating profits of US$84.5 million compared
with US$80.3 million despite the decrease in production. At 30 June, copper
sales totalling 67,540 tonnes remained to be finally priced, and were recorded
at that date at an average price of 72.8 cents. A one-cent change in the
average realised price of these provisionally-priced tonnes would have an
approximate effect on turnover and profit before tax in the second half of the
year of US$1.5 million.
Los Pelambres has continued to reduce its project borrowings with a further
principal repayment in June of US$43.7 million and nearly US$200 million of the
original US$946 million project borrowings have been repaid since operations
began in 2000. In June, Los Pelambres also declared a dividend of US$43.7
million paid to its shareholders in July, and the Group's share amounted to
US$26.2 million. Total distributions since Los Pelambres started production
amounted to US$195.8 million.
Improved ore grades under the mining plan towards the end of the year should
enable Los Pelambres to produce around 325,000 tonnes of payable copper this
year. Molybdenum prices have fallen back from their peak in early June of over
US$8.00 per pound but are still trading at the US$4.40 level, and this should
enable cash costs for the year to remain below 36 cents per pound, compared with
an original forecast of 39 cents.
El Tesoro
El Tesoro produced 40,600 tonnes of cathodes in the period to June 2002. During
the first six months of last year, the mine was under development while second
half production amounted to 34,000 tonnes. Cash costs in the first six months
of this year were 39.7 cents per pound, virtually unchanged from the second half
of 2001 when cash costs averaged 39.6 cents. This allowed El Tesoro to
contribute US$20.9 million to operating profits compared to US$12.9 million in
the second half of 2001 when average copper prices were lower.
The El Tesoro project was completed at the end of last year at a total
development cost of US$282 million, US$14 million under the original budget of
US$296 million. As part of its development, El Tesoro borrowed US$197 million
under project financing facilities and these loans became non-recourse to the
Group when the project achieved banking completion at the end of 2001. This
enabled El Tesoro to return surplus funds of US$24.4 million to its shareholders
in January this year of which the Group's share amounted to US$14.9 million. In
August, El Tesoro made its first principal repayment of US$12.3 million in
addition to on-going interest payments.
On 21 August, El Tesoro signed a re-financing agreement with respect to the
remaining balance of US$184.7 million. The loans will be repayable in
semi-annual instalments over a period of 71/2 years and will enable El Tesoro to
benefit from lower interest rate margins and more flexible covenants.
El Tesoro remains on course to produce 85,000 tonnes of cathodes this year, 13%
above its design capacity, at forecast cash costs of around 40 cents per pound.
Michilla
Michilla produced 25,500 tonnes of cathodes to June compared with 23,800 tonnes
in the first half of 2001. Cash costs averaged 60.3 cents per pound this period
compared to 69.4 cents per pound in the first six months of last year, and
followed the cost reduction programme implemented at the end of 2001. Lower
costs enabled Michilla to reduce its operating loss from US$6.3 million to
US$1.1 million despite the lower copper price compared with the first six months
of last year. During the first months of 2002, the Cuprochlor process, which
has been developed and patented by Michilla, has resulted in higher recoveries
of sulphide ores. Approximately 12% of Michilla's ore is now being treated
using the Cuprochlor process with recoveries obtained of over 80%. Forecast
production for this year remains around 52,000 tonnes at average cash costs of
around 60 cents.
Exploration
The Group spent US$1.6 million in the six months to June 2002. This was
primarily on exploration in the Sierra Gorda District in Chile and mainly along
the West fissure, one of the most prolific copper districts in the world
together with ongoing exploration at Michilla to extend its ore reserves.
In June, Antofagasta announced a new joint venture in Peru with Companhia Vale
do Rio Doce ('CVRD'), the world's largest producer and exporter of iron ore and
pellets, based in Brazil. The joint venture, called Cordillera de las Minas
S.A., will develop mineral exploration activities in an area of approximately
60,000 square kilometres near Cuzco in southern Peru. Under the agreement
Antofagasta transferred its mining rights in the area to Cordillera and CVRD
committed to invest US$6.7 million over a period of three years in mineral
exploration. In exchange CVRD was granted an option to acquire a 50% stake in
Cordillera. The agreement with CVRD significantly complements Antofagasta's
existing exploration activities in Peru, and confirms its strategy of
participating in the development of the mining industry in Latin America.
Railway and Other Transport Services
Rail tonnages grew 13% to 2.1 million tons with most of the increase related to
increased production from the El Tesoro and Zaldivar mines. The Railway is
currently evaluating the potential of several new mining prospects including
Codelco's Gaby Project and BHP's Spence Project both located near Sierra Gorda
on the mainline to Calama.
The contract to transport 250,000 tonnes of zinc concentrates annually for
COMSUR in Bolivia has been renewed for a further three years and an additional
six General Motors G.R. 22 locomotives and 75 sulphuric acid tank cars entered
service to satisfy the increased demand for transportation services in the
region.
Train Ltda. the road transport subsidiary had a record half year with sales
volumes mainly from deliveries of beer and soft drinks increasing by 45% over
2001.
Investments
The Group holds a 33.6% interest in Quinenco S.A., a diversified industrial and
financial group listed in Santiago and New York. Income from Quinenco is
accounted for on a dividends received basis and in May 2002, the Group received
a dividend of US$3.2 million in respect of the 2001 financial year. The merger
of Banco de Chile and Banco Edwards was successfully completed in January and
the new Banco de Chile is now the country's leading financial institution.
During the first half of 2002, Quinenco's businesses were affected by the
extremely unfavourable economic and political conditions in the region, in
particular Argentina and Brazil.
Dividends
An interim dividend of 10 cents (2001 interim - 7.25 cents) will be paid on 11
October to ordinary shareholders on the Register at the close of business on 13
September 2002. Dividends are payable in either US dollars or sterling, and
shareholders who receive dividends in sterling will be paid an interim dividend
of 6.5274 pence per share, based on an exchange rate of £1=US$1.532. Further
details are given in Note 10 to the Interim Report.
Current Trading Prospects
Base metal prices, including copper, continue to be affected by the slowdown in
the United States and uncertainty in equity markets. However, in the absence of
new global supply, copper prices should steadily recover as world industrial
demand picks up in the next twelve to eighteen months and the Group's low cost
base will enable it to benefit from any improvement in prices.
3 September 2002
FINANCIAL COMMENTARY FOR THE HALF YEAR TO 30 JUNE 2002
Results
Turnover increased from US$342.6 million to US$418.7 million. The increase was
due mainly to revenues of US$66.4 million from El Tesoro, which was under
development during the first half of 2001. At Los Pelambres, turnover increased
by US$8.8 million, as higher by-product revenues and the positive pricing
adjustments relating to provisionally invoiced concentrate sales offset the
impact of lower LME copper prices and reduced production due to lower ore
grades. Revenues at Michilla and the transport division were similar to 2001.
Operating profits were US$112.6 million (2001 half year - US$77.4 million),
including US$20.9 million in respect of El Tesoro. Los Pelambres' operating
profit was US$4.2 million higher than the first half of 2001, reflecting the
combined effect of higher realised copper prices and lower cash costs set
against lower production volumes. Michilla's operating loss was reduced by
US$5.2 million mainly due to lower cash costs following the implementation of
its cost reduction programme at the end of 2001. The results of the other
operating divisions did not differ significantly from the first half of 2001.
Operating profit is stated after depreciation and disposal of fixed assets,
giving EBITDA (earnings before interest, tax, depreciation and amortisation) of
US$175.6 million (2001 half year - US$136.2 million).
Income from fixed asset investments was US$3.2 million, compared with US$0.1
million in the 2001 half year when no dividend was received from Quinenco.
Net interest expense was US$21.0 million, compared with net interest expense of
US$26.9 million in the 2001 half year. Interest costs relate mainly to the
project loans which financed the Los Pelambres and El Tesoro mines. Net
interest expense at Los Pelambres was US$15.9 million (2001 half year - US$33.1
million), benefiting from lower interest rates and regular principal repayments.
Net interest costs also included US$7.5 million relating to El Tesoro. In the
first half of 2001, all interest costs in El Tesoro were capitalised as the
project remained under development.
As a result of these factors profit before tax for the period was US$94.8
million compared to US$50.6 million in the first six months of 2001.
Tax amounted to US$16.8 million (2001 half year - US$8.4 million), representing
an effective tax rate (including deferred tax) of 17.7% (2001 half year -
16.6%), compared with the present statutory Chilean tax rate of 16% (2001 -
15%). During the second half of 2001, legislation was announced in Chile to
increase statutory rates of tax to 16% in 2002, 16.5% in 2003 and 17% from 2004.
Since deferred tax balances are measured at the rates which apply in the
period in which timing differences are expected to reverse, the effect of the
rate changes is to increase the percentage at which deferred tax (which relates
mainly to Los Pelambres and El Tesoro) is calculated.
Earnings per share were 26.6 cents compared with 14.4 cents for the
corresponding period last year, reflecting the higher profit after tax and
minority interests.
Cash Flows
Net cash inflow from operating activities was US$148.8 million in the first six
months of 2002 compared with US$129.7 million in the same period last year,
reflecting the improved operating results adjusted for depreciation and normal
working capital movements.
Net capital expenditures were US$33.6 million in the period. Net capital
expenditures in the first half of 2001 amounted to US$82.6 million which
included US$37.7 million relating to the El Tesoro development.
Cash and Debt
At 30 June 2002, the Group had cash and deposits of US$240.5 million (2001 -
US$236.1 million). Excluding the minority share in each partly-owned operation,
the Group's share of this total balance at the half year was US$207.4 million
(2001 - US$205.1 million).
Total Group debt at 30 June 2002 was US$1,032.5 million (2001 - US$1,085.3
million); of this, US$604.9 million (2001 - US$633.8 million) is proportionally
attributable to the Group after excluding the minority share of partly-owned
operations. The decrease in debt is mainly due to continued principal
repayments at Los Pelambres of US$87.3 million in the past twelve months.
During June 2002, Los Pelambres refinanced the amount due to Endesa for the
purchase of a power line in 2000 with an unsecured bank facility; this resulted
in a reclassification of US$28.7 million from other creditors to loans. At 30
June 2002, the total borrowings of US$1,032.5 million included US$747.7 million
under the Los Pelambres non-recourse project financing arrangements of which 40%
is attributable to minority shareholders and US$197.0 million under the El
Tesoro non-recourse project financing arrangements of which 39% is attributable
to minority shareholders.
Balance Sheet
Shareholders' funds increased from US$929.3 million at the beginning of the year
to US$960.5 million, relating mainly to profit after tax and minorities for the
period less the interim dividend declared.
Minority interests increased from US$305.3 million at the beginning of the year
to US$312.5 million, principally reflecting the minority's share of profit after
tax less the minority's share of the dividend declared by Los Pelambres in the
period.
3 September 2002
Group Profit and Loss Account
Notes Unaudited Unaudited Audited
half year half year to year to
to 30.6.01 31.12.01
30.6.02 US$'m US$'m
US$'m
Turnover 3 418.7 342.6 769.5
Operating profit 3,5 112.6 77.4 165.2
Profit on disposal of fixed assets 6 - - 3.5
(exceptional)
Income from other fixed asset 3.2 0.1 0.1
investments
Net interest payable 7 (21.0) (26.9) (55.3)
Profit on ordinary activities before tax 94.8 50.6 113.5
Tax 6,8 (16.8) (8.4) (21.1)
Profit on ordinary activities after tax 78.0 42.2 92.4
Minority interests - equity (25.5) (13.7) (30.3)
Profit for the financial period 52.5 28.5 62.1
Dividends
Preference non equity (0.1) (0.1) (0.2)
Ordinary equity 10 (19.7) (14.3) (63.1)
Transferred to/(from) reserves 32.7 14.1 (1.2)
Earnings per share excluding exceptional 9 26.6c 14.4c 30.0c
items
Earnings per share 9 26.6c 14.4c 31.4c
Dividends per ordinary share 10 10.0c 7.25c 32.0c
Turnover and profit are derived from continuing operations.
The final dividend in 2001 included a special dividend of 10 cents per share
Other recognised gains and losses
Other recognised gains and losses in the period (translation differences)
amounted to a loss of US$1.5 million (2001 half year - a loss of US$1.0
million), and are shown in Note 15 together with other movements in
shareholders' funds.
Group Balance Sheet
Unaudited Unaudited Audited
30.6.02 30.6.01 31.12.01
US$'m US$'m US$'m
Notes
Fixed assets
Tangible fixed assets 11 1,879.5 1,954.2 1,916.8
Other investments 12 185.5 185.6 185.5
2,065.0 2,139.8 2,102.3
Current assets
Stocks 55.7 61.0 49.3
Debtors 127.0 81.6 113.7
Current asset investments (including time deposits) 237.5 233.7 246.5
Cash at bank and in hand 3.0 2.4 2.2
423.2 378.7 411.7
Creditors - amounts falling due within one year
Trade and other creditors (79.5) (89.4) (79.0)
Loans 13 (117.8) (90.9) (104.2)
Dividends (19.7) (14.3) (48.8)
(217.0) (194.6) (232.0)
Net current assets 206.2 184.1 179.7
Total assets less current liabilities 2,271.2 2,323.9 2,282.0
Creditors - amounts falling due after more
than one year
Other creditors - (26.0) (25.3)
Loans 13 (914.7) (994.4) (953.2)
Provisions for liabilities and charges 14 (83.5) (52.7) (68.9)
1,273.0 1,250.8 1,234.6
Capital and reserves
Called up share capital 18.1 16.7 17.2
Share premium 258.5 238.3 245.3
Reserves 683.9 706.6 666.8
Shareholders' funds - including non-equity 15 960.5 961.6 929.3
interests
Minority interests - equity 312.5 289.2 305.3
1,273.0 1,250.8 1,234.6
Approved by the Board of Directors on 3 September 2002, P J Adeane, Director.
Group Cash Flow Statement
Notes Unaudited Unaudited Audited year
half year half year to
to to 31.12.01
30.6.02 30.6.01 US$'m
US$'m US$'m
Net cash inflow from operating 16 148.8 129.7 265.9
activities
Dividends received from other fixed asset investments 3.2 0.1 0.1
Interest received (including capitalised interest in 2001) 4.0 8.5 13.3
Interest paid (including capitalised interest in 2001) (24.2) (40.7) (74.4)
Dividends paid to minority interests (0.2) (1.1) (18.5)
Preference dividends paid (0.1) (0.1) (0.2)
Net cash outflow from returns on investment and servicing of finance (17.3) (33.3) (79.7)
Tax paid (3.1) (1.3) (0.9)
Purchase of tangible fixed assets (35.0) (82.6) (123.1)
Sale of tangible fixed assets 1.4 - 9.2
Net cash outflow from capital expenditure and financial investment (33.6) (82.6) (113.9)
Equity dividends paid (49.6) (63.7) (77.5)
Cash inflow/(outflow) before management of liquid resources 45.2 (51.2) (6.1)
Management of liquid resources - Net decrease in time deposits 8.9 64.2 49.1
New loans drawn down 28.7 34.1 47.6
Repayment of amounts borrowed (55.7) (45.2) (89.7)
Repayment of principal element of (0.9) (1.5) (1.9)
finance leases
Repayment of other creditors (29.9) - -
Net cash outflow from financing (57.8) (12.6) (44.0)
Net cash (outflow)/inflow in the 17 (3.7) 0.4 (1.0)
period
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. Share capital is 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 10, dividends may be paid in
either US dollars or sterling.
b) Accounting policies
The profit and loss account, balance sheet and cash flow statement for the half
year to 30 June 2002 have been prepared on the basis of the accounting policies
set out in the Group's statutory accounts for the year to 31 December 2001.
2. Production and sales statistics (neither audited nor reviewed)
(See notes following table 2(d).)
a) Copper production volumes
Half year to Half year to Year to
30.6.02 30.6.01 31.12.01
'000 tonnes '000 tonnes '000 tonnes
Los Pelambres 144.8 170.0 361.5
El Tesoro 40.6 - 34.0
Michilla 25.5 23.8 49.6
Group total 210.9 193.9 445.0
b) Copper sales volumes
Half year to Half year to Year to
30.6.02 30.6.01 31.12.01
'000 tonnes '000 tonnes '000 tonnes
Los Pelambres 144.6 167.0 360.9
El Tesoro 40.9 - 39.3
Michilla 24.1 24.1 50.6
Group total 209.6 191.1 450.8
c) Cash costs per pound
Half year to Half year to Year to
30.6.02 30.6.01 31.12.01
cents cents cents
Los Pelambres 35.4 37.0 35.3
El Tesoro 39.7 - 39.6
Michilla 60.3 69.4 64.5
Group weighted average 39.2 41.0 38.8
d) LME and realised copper price per pound
Half year to Half year to Year to
30.6.02 30.6.01 31.12.01
cents cents cents
Los Pelambres 74.8 68.2 65.8
El Tesoro 73.6 - 67.1
Michilla 73.4 78.5 72.6
Group weighted average 74.4 69.5 66.7
LME average 71.9 77.6 71.6
Notes to the production and sales statistics
(i) The production and sales figures represent full volumes,
not the Group's attributable share of each mine. The Group owns 60% of Los
Pelambres, 61% of El Tesoro and 74.2% of Michilla.
(ii) Los Pelambres produces copper concentrate, and the figures
for Los Pelambres are expressed in terms of payable copper contained in
concentrate. El Tesoro and Michilla produce copper cathodes.
(iii) El Tesoro remained under development for the first six
months of 2001, producing 9,000 tonnes and shipping 2,350 tonnes of cathodes
during the commissioning period in the second quarter. This tonnage has not
been included in the El Tesoro and Group tables for 2001.
(iv) Cash costs are a measure of the cost of operational
production expressed in terms of cents per pound of payable copper produced.
Cash costs are stated net of by-product credits and exclude depreciation,
financial income and expenses, exchange gains and losses and corporation tax.
(v) Realised copper prices are determined by comparing turnover
from copper sales with sales volumes for each mine in the period.
(vi) The individual figures are sometimes more specific than the
rounded numbers shown; hence small differences may appear in the totals.
3. Segmental analysis
a) Turnover by geographical destination
Unaudited Unaudited Audited
half year to half year to year to
30.6.02 30.6.01 31.12.01
US$'m US$'m US$'m
UK 12.4 2.9 12.4
Rest of Europe 99.9 83.1 205.2
Chile 59.1 30.7 103.4
Rest of Latin America 31.6 22.9 48.8
North America 21.2 23.3 50.2
Asia Pacific / other 194.5 179.7 349.5
418.7 342.6 769.5
b) Turnover by operation
Unaudited Unaudited Audited
half year to half year to year to
30.6.02 30.6.01 31.12.01
US$'m US$'m US$'m
Los Pelambres 278.0 269.2 564.8
El Tesoro 66.4 - 58.1
Michilla 39.0 39.1 77.5
Mining 383.4 308.3 700.4
Railway and other transport services 35.3 34.3 69.1
418.7 342.6 769.5
Notes to turnover by operation
(i) Turnover from Railway and other transport services is
stated after eliminating inter-segment sales to the mining division of US$2.3
million (2001 half year - US$0.5 million).
(ii) Los Pelambres produces molybdenum, gold and silver as
by-products from its copper concentrate operation, and turnover by type of
mineral is analysed below. El Tesoro and Michilla do not produce by-products
from their copper cathode operations.
Los Pelambres turnover by type of mineral Unaudited Unaudited Audited
half year to half year to year to
30.6.02 30.6.01 31.12.01
US$'m US$'m US$'m
Copper 238.5 251.1 523.8
Molybdenum 32.3 13.4 33.5
Gold and silver 7.2 4.7 7.5
278.0 269.2 564.8
c) Earnings before tax, interest, depreciation and amortisation
(EBITDA) by operation
Unaudited Unaudited Audited
half year to half year to year to
30.6.02 30.6.01 31.12.01
US$'m US$'m US$'m
Los Pelambres 125.6 120.9 239.4
El Tesoro 30.5 - 27.2
Michilla 7.2 3.8 3.7
Exploration (1.6) (3.1) (9.7)
Corporate and other (2.3) (2.5) (7.4)
Mining 159.4 119.1 253.2
Railway and other transport services 16.2 17.1 29.9
175.6 136.2 283.1
d) Depreciation and amortisation by operation
Unaudited Unaudited Audited
half year to half year to year to
30.6.02 30.6.01 31.12.01
US$'m US$'m US$'m
Los Pelambres 41.2 37.6 76.0
El Tesoro 9.6 - 14.3
Michilla 8.3 10.0 18.5
Corporate and other 0.5 0.6 1.2
Mining 59.6 48.2 110.0
Railway and other transport services 3.5 4.4 6.8
Total depreciation and amortisation 63.1 52.6 116.8
(Profit)/loss on disposal of fixed assets included in operating profit (0.1) 6.2 1.1
63.0 58.8 117.9
e) Operating profit by operation
Unaudited Unaudited Audited
half year to half year to year to
30.6.02 30.6.01 31.12.01
US$'m US$'m US$'m
Los Pelambres 84.5 80.3 163.0
El Tesoro 20.9 - 12.9
Michilla (1.1) (6.3) (14.4)
Exploration (1.6) (3.1) (9.7)
Corporate and other (2.8) (4.8) (8.6)
Mining 99.9 66.1 143.2
Railway and other transport services 12.7 11.3 22.0
112.6 77.4 165.2
f) Capital expenditure by operation
Notes Unaudited Unaudited Audited
half year to half year to year to
30.6.02 30.6.01 31.12.01
US$'m US$'m US$'m
Los Pelambres 21.2 27.6 43.6
El Tesoro 3.5 44.4 61.0
Michilla 4.4 6.7 11.0
Corporate and other - 0.5 0.6
Mining 11 29.1 79.2 116.2
Railway and other transport services 11 5.1 10.0 13.3
11 34.2 89.2 129.5
g) Net assets by operation
Unaudited Unaudited Audited
half year to half year to year to
30.6.02 30.6.01 31.12.01
US$'m US$'m US$'m
Los Pelambres 1,342.4 1,344.0 1,334.4
El Tesoro 353.5 351.1 358.7
Michilla 95.4 105.7 99.9
Corporate and other 9.2 9.5 4.9
Mining 1,800.5 1,810.3 1,797.9
Railway and other transport services 98.7 118.4 108.7
Operating net assets 1,899.2 1,928.7 1,906.6
Other fixed asset investments 185.5 185.6 185.5
Net debt (792.0) (849.2) (808.7)
Unallocated liabilities - Group dividend (19.7) (14.3) (48.8)
Net assets 1,273.0 1,250.8 1,234.6
Net assets are stated before deducting minority interests.
4. Provisional pricing and commodity hedging
a) Provisional pricing
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 concentrate.
Revenues in the six months to 30 June 2002 included positive adjustments to
sales of concentrates open at 31 December 2001 totalling US$10.5 million.
Revenues in the six months to 30 June 2001 included adverse adjustments to sales
of concentrates open at 31 December 2000 totalling US$16.2 million.
At 30 June 2002, copper sales totalling 67,540 tonnes remained to be finally
priced, and were recorded at that date at an average price of 72.8 cents. At 30
June 2001, copper sales totalling 79,500 tonnes remained to be finally priced,
and were recorded at that date at an average price of 70.8 cents.
b) Commodity hedging
The Group periodically enters into commodity hedging contracts to manage its
exposure to the copper price. Turnover for the mining division for the six
months to 30 June 2002 included adverse adjustments of US$1.0 million relating
to commodity hedging activities. Turnover was not affected by hedging
activities for the first six months of 2001.
At 30 June 2002, the Group had hedged 3,000 tonnes of copper production using
futures with a price of 76.9 cents per pound and an outstanding duration of one
month. The Group had also hedged 32,150 tonnes of production using min/max
options with a weighted average floor and ceiling of 71.9 cents and 78.3 cents
respectively, and an average duration of 2.6 months. The unrealised
mark-to-market gain on these instruments at that date was US$0.2 million. There
were no outstanding commodity price hedges at 30 June 2001.
5. Operating profit
Unaudited Unaudited Audited
half year to half year to year to
30.6.02 30.6.01 31.12.01
US$'m US$'m US$'m
Turnover 418.7 342.6 769.5
Cost of sales (264.8) (223.7) (506.5)
Gross profit 153.9 118.9 263.0
Administrative expenses (36.4) (37.5) (83.8)
Closure provision (Note 14) (0.5) (0.5) (1.1)
Severance charges (Note 14) (0.7) (0.5) (1.7)
Exploration costs (1.6) (3.1) (9.7)
Other net operating (expenditure)/income (2.1) 0.1 (1.5)
Operating profit 112.6 77.4 165.2
Depreciation charges in the six months to 30 June 2002 amounted to US$63.1
million. Of this amount, US$56.2 million is included in cost of sales and
US$6.9 million is included in administrative expenses. Depreciation charges in
the six months to 30 June 2001 amounted to US$52.6 million. Of this amount,
US$47.8 million is included in cost of sales and US$4.8 million is included in
administrative expenses.
6. Non-operating exceptional items
Unaudited Unaudited Audited
half year half year year to
to to
31.12.01
30.6.02 30.6.01
US$'m
US$'m US$'m
- -
Profit on sale of land by Railway - - 3.5
Tax effect - - (0.7)
- - 2.8
The exceptional profit in the second half of 2001 of US$3.5 million related to
the disposal of a surplus property owned by the Railway in the centre of the
city of Antofagasta. The net book value of this property was US$0.1 million.
7. Net interest payable
Unaudited Unaudited Audited
half year to half year to year to
30.6.02 30.6.01 31.12.01
US$'m US$'m US$'m
Interest receivable 3.6 8.1 13.2
Interest payable (24.6) (34.9) (67.4)
Foreign exchange (0.4) 0.3 (0.2)
Discount charge relating to provisions (Note 0.4 (0.4) (0.9)
14)
(21.0) (26.9) (55.3)
There was no interest capitalised in the 2002 half year. In the 2001 half year,
interest payable capitalised in the period amounted to US$8.4 million and
interest receivable credited against fixed assets amounted to US$0.5 million
while El Tesoro remained under development.
8. Tax
The tax charge of US$16.8 million (2001 half year - US$8.4 million) represents
an effective rate (including deferred tax) of 17.7% (2001 half year - 16.6%) on
profit before tax, as compared with the Chilean statutory tax rate of 16% (2001
half year - 15%). Legislative changes at the end of 2001 increased the statutory
rate from 15% to 16% in 2002, 16.5% in 2003 and 17% from 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
has increased the effective tax rate in the first half of 2002.
9. Earnings per share
Earnings per share is calculated on profit after tax, minority interest and
preference dividends giving earnings of US$52.4 million (2001 half year -
US$28.4 million) and based on 197,171,339 (2001 half year - 197,171,339)
ordinary shares in issue throughout the period. Earnings per share excluding
exceptional items is calculated on the same basis but excluding any exceptional
items after tax and minority interests. Details of exceptional items affecting
each period are given in Note 6.
10. Dividends
Dividends are declared in US dollars but may be paid in either dollars or
sterling. Shareholders on the register of members with an address in the United
Kingdom receive dividend payments in sterling, unless they elect to be paid in
dollars. All other shareholders are paid by cheque in dollars, unless they have
previously instructed the Company's registrar to pay dividends by bank transfer
to a sterling bank account, or they elect for payment by cheque in sterling. The
Company's registrar must receive any such election before the record date of 13
September 2002.
The Board has declared an interim dividend of 10 cents per ordinary share for
payment on 11 October 2002 to shareholders on the Register at the close of
business on 13 September 2002. Dividends are declared and paid gross. The
exchange rate to be applied for the conversion of dividends will be £1 = US$
1.532, giving those shareholders who will be paid in sterling an interim
dividend of 6.5274 pence per ordinary share. In 2001, the Board declared an
interim dividend of 7.25 cents per share, equivalent to a dividend of 5.0170
pence per share based on an exchange rate of £1=US$1.4451.
11. Tangible fixed assets
Railway
Net book value and other
Mining transport Total
US$'m US$'m US$'m
1 January 2002 (audited) 1,813.8 103.0 1,916.8
Additions 29.1 5.1 34.2
Transfer to stocks - (2.0) (2.0)
Disposals (1.0) (0.3) (1.3)
Depreciation (59.6) (3.5) (63.1)
Exchange - (5.1) (5.1)
30 June 2002 (unaudited) 1,782.3 97.2 1,879.5
12. Other investments
US$'m
1 January 2002 (audited) and 30 June 2002 (unaudited) 185.5
The above investments are quoted. The market value of these investments at 30
June 2002 was US$181.8 million (2001 half year - US$277.8 million). These
investments include a 33.61 per cent interest in Quinenco S.A.
13. Loans
Unaudited Unaudited Audited
half year half year year to
to to
31.12.01
30.6.02 30.6.01
US$'m
US$'m US$'m
Los Pelambres
Projects loans (747.7) (835.0) (791.3)
Other loans (28.7) - -
El Tesoro
Project loans (197.0) (181.5) (197.0)
Subordinated debt (31.6) (37.9) (39.7)
Finance leases (16.4) (17.5) (17.0)
Michilla
Finance leases (2.5) (1.9) (1.6)
Railway and other transport services
Loans (8.6) (11.5) (10.8)
(1,032.5) (1,085.3) (1,057.4)
Maturity of loans
Unaudited Unaudited Audited
half year half year year to
to to
31.12.01
30.6.02 30.6.01
US$'m
US$'m US$'m
Due within one year (117.8) (90.9) (104.2)
Due after more than one year (914.7) (994.4) (953.2)
(1,032.5) (1,085.3) (1,057.4)
US$31.1 million of project loans have been fixed at a rate of 5.56% for a
remaining period of 3.5 years, and finance leases are also mainly fixed rate.
The remainder of the loans are predominantly floating rate. However, the Group
periodically enters into interest rate hedging contracts to manage its exposure
to interest rates. At 30 June 2002, the Group had hedged US$170 million of its
borrowings using collars for a remaining weighted average period of 3.7 years.
These limit the variability of the interest rate to a weighted average minimum
(a floor) of 5.01% and a weighted average (a cap) of 5.99%. The Group had also
entered into swaps to fix the interest rate of US$300 million of its borrowings
at a rate of 2.29% for a remaining period of 5.5 months.
14. Provisions for liabilities and charges
Decommis-sioning
and site
rehabilitation Severance Deferred
indemnities
US$'m tax Total
US$'m
US$'m US$'m
1 January 2002 (audited) (8.1) (10.3) (50.5) (68.9)
Charge to operating profit in period (Note 5) (0.5) (0.7) - (1.2)
Release of discount to net interest in period (Note (0.2) 0.6 - 0.4
7)
Charge to tax on profit in period - - (14.3) (14.3)
Utilised in period - 0.4 - 0.4
Exchange - - 0.1 0.1
30 June 2002 (unaudited) (8.8) (10.0) (64.7) (83.5)
15. Reconciliation of movements in shareholders' funds
Unaudited Unaudited Audited
half year to half year to year to
30.6.02 30.6.01 31.12.01
US$'m US$'m US$'m
Profit for the financial period 52.5 28.5 62.1
Other recognised gains relating to the period
- currency translation adjustment (1.5) (1.0) (18.0)
Total recognised gains and losses 51.0 27.5 44.1
Dividends (19.8) (14.4) (63.3)
31.2 13.1 (19.2)
Opening shareholders' funds 929.3 948.5 948.5
Closing shareholders' funds 960.5 961.6 929.3
16. Reconciliation of operating profit to net cash inflow from operating
activities
Unaudited Unaudited Audited
half year to half year to year to
30.6.02 30.6.01 31.12.01
US$'m US$'m US$'m
Operating profit 112.6 77.4 165.2
Depreciation 63.1 52.6 116.8
Loss on disposal of tangible fixed assets (0.1) 6.2 1.1
Increase in stocks (4.3) (17.0) (9.9)
(Increase)/decrease in debtors (14.9) 27.1 (20.0)
(Decrease)/increase in creditors and provisions (7.6) (16.6) 12.7
Net cash inflow from operating activities 148.8 129.7 265.9
17. Reconciliation of net cash flow to movement in net debt
Unaudited Unaudited Audited
half year half year year to
to to
31.12.01
30.6.02 30.6.01
US$'m
US$'m US$'m
Net cash (outflow)/inflow in the period (3.7) 0.4 (1.0)
Cash outflow from decrease in debt 27.9 12.6 44.0
Cash inflow from decrease in liquid resources (8.9) (64.2) (49.1)
Change in net debt resulting from cash flows 15.3 (51.2) (6.1)
Reclassification - - 0.6
Interest accrued on long-term loan balances (1.5) (1.7) (3.4)
New leases (1.3) (1.5) (3.4)
Exchange 4.2 0.8 (0.8)
Movement in net debt in the period 16.7 (53.6) (13.1)
Net debt at the beginning of the period (808.7) (795.6) (795.6)
Net debt at the end of the period (792.0) (849.2) (808.7)
Composition of net debt
Unaudited Unaudited Audited
30.6.02 30.6.01 31.12.01
US$'m US$'m US$'m
Cash in hand and demand deposits 3.0 2.4 2.2
Current asset investments 237.5 233.7 246.5
Long and short term loans including finance leases (Note 13) (1,032.5) (1,085.3) (1,057.4)
Net debt at the end of the period (792.0) (849.2) (808.7)
18. Financial information
The Group's statutory accounts for the year to 31 December 2001 have been filed
with the Registrar of Companies. The auditors' report on these accounts was
unqualified and did not include a statement under s237(2) or (3) of the
Companies Act 1985. The 31 December 2001 profit and loss account, balance sheet
and cash flow statement shown in this interim report are an abridged version of
these statutory accounts. The financial information contained in this statement
does not constitute statutory accounts within the meaning of s240 of the
Companies Act 1985.
19. Currency translation
Results denominated in foreign currencies have been translated into dollars at
the average rate for each period.
Period end rates Average rates
30.6.02 US$1.53 = £1; US$1 = Ch$688 US$1.44 = £1; US$1 = Ch$665
30.6.01 US$1.41 = £1; US$1 = Ch$629 US$1.44 = £1; US$1 = Ch$591
31.12.01 US$1.45 = £1; US$1 = Ch$655 US$1.44 = £1; US$1 = Ch$635
20. Distribution
These results will be sent by first class post to all shareholders on 3
September 2002. Copies of this report will be available for members of the
public who are not shareholders at the Company's Registered Office, Park House,
16 Finsbury Circus, London EC2M 7AH.
Independent Review Report to Antofagasta plc
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 30 June 2002 which comprises the profit and loss account,
the balance sheet, the cash flow statement and related notes 1 to 17, with the
exception of Note 2. We have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
Directors' Responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom auditing standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2002.
Deloitte & Touche
Chartered Accountants
London
3 September 2002
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