Annual Report 2003 - Antofagasta plc

Demerger of Quiñenco S.A.Following a review of the Group’s operations,the Board decided that the investment inQuiñenco was no longer an integral part ofAntofagasta’s main businesses of mining andtransportation. Accordingly it was decidedthat the holding in Quiñenco, a diversifiedChilean financial and industrial group, shouldbe demerged to shareholders. A circular givingdetails of the proposed demerger was sentto Antofagasta’s shareholders on 2 September2003 and shareholders approved the demergerat an Extraordinary General Meeting on1 October 2003. At the time of the demerger,the Group’s 33.6 per cent investment inQuiñenco was indirectly held through a whollyowned subsidiary, Andsberg Limited. Inaccordance with the terms of the demerger,all the shares of Andsberg were distributed toordinary shareholders by way of a SpecialDividend on the basis of one Andsberg sharefor each Antofagasta ordinary share. Ordinaryshareholders were given a right to redeemtheir Andsberg shares for cash at a fixed priceof US$1.11 per share or the sterling equivalentof 65.4134 pence, and approximately 85 percent of shareholders not related to the Luksicfamily exercised their right to redeem. Theredemption monies were provided by theLuksic family interests which subscribed foran equivalent number of new additionalAndsberg shares.production soared 17 per cent and this appearslikely to continue but perhaps at a slower rate,as China becomes an increasingly more importantcentre for manufacturing. Although the worldpolitical environment still remains very unsettled,the future for commodities is now more positivethan at any time in the past five years, and weare confident that the Group’s low cost productionshould enable it to achieve satisfactory resultsin 2004, based on existing commodity pricesand exchange rates.DividendsA final dividend of 24 cents will be proposedat the Annual General Meeting on 9 June 2004which, if approved, will be paid to ordinaryshareholders on 10 June 2004. An interimdividend of 11 cents was paid in October 2003.The total dividend for the year will thereforebe 35 cents per ordinary share (covered 2.6times) compared to 28 cents per ordinary sharein 2002. As previously stated a dividend inspecie was also paid on 1 October 2003 witha redemption value of US$1.11 per share.Antofagasta’s TeamOnce again, our appreciation is due to allour executive staff and employees for theirindividual contribution and hard workduring the year.OutlookThe positive outlook for copper and othercommodities provides a good basis for 2004.Economic growth in the USA and Japan hasimproved and the industrial performance ofChina which had real GDP growth in 2003 of9.1 per cent has been the outstanding featureof commodity markets. Chinese industrialA A LuksicChairman6 May 2004ANTOFAGASTA PLC Annual Report and Financial Statements 200315