Annual Report 2003 - Antofagasta plc

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Financial ReviewDividendsDividends on ordinary shares for the year are as follows:Per shareTotal2003 2002 2003 2002cents cents US$m US$mInterim 11 10 21.7 19.7Final 24 18 47.3 35.535 28 69.0 55.2Demerger (consolidated book value of assets demerged) 181.5 –250.5 55.2Dividends on ordinary shares are payable in either US dollars or sterling. Further details, includingconversion rates for dividends payable in sterling, are given in the Report of the Directors on page 32 andin Note 7 to the financial statements.The cost of ordinary dividends paid and proposed in 2003 (excluding the demerger dividend) will be US$69.0million, compared with US$55.2 million in 2002. The 2003 dividend will be covered 2.6 times compared with1.8 times in 2002.DemergerIn order to focus on its core mining and mining-related activities, the Group announced in September 2003a proposal to demerge its investment in Quiñenco S.A. via a special dividend of shares in Andsberg Limited,an unlisted Jersey-registered subsidiary whose principal asset was the Group’s 33.6% interest in Quiñenco.Shareholder approval was obtained for the demerger on 1 October 2003 and following the resolution,ordinary shareholders in Antofagasta plc received one share in Andsberg for each share held in Antofagastaon that date.ANTOFAGASTA PLC Annual Report and Financial Statements 2003The Andsberg shares carried a redemption right until 30 October 2003 at a fixed price of US$1.11 pershare. Valid redemption forms were received in respect of 58,691,813 shares and payment was made on6 November 2003. Shareholders who requested payment of redemption proceeds in sterling received65.4134 pence per share, based on an exchange rate of US$1.6969 per share. The redemption was fundedby entities connected with the Luksic family which subscribed for additional Andsberg shares.The demerger dividend is recorded in the Group financial statements at the consolidated book value ofAndsberg Limited and its subsidiaries of US$181.5 million, representing the book value of the investment inQuiñenco S.A. (US$180.1 million) and bank balances (US$1.4 million). The costs of the demerger amountedto US$1.2 million and have been included in the profit and loss account as a charge to operating profit.Quiñenco did not pay a dividend during 2003. In 2002, the Group received a dividend of US$3.2 million.22
Acquisition of Water ConcessionIn November 2003, the Group successfully bid for a 30 year Concession to operate the water rightsand facilities in the Antofagasta Region previously controlled by the state-owned Empresa de ServiciosSanitarios de Antofagasta S.A. (ESSAN). The award followed a competitive tender managed by Sistema deEmpresas Publicas (SEP), a Chilean government entity, as part of the current privatisation programme.The Concession contract was signed and control of the assets and operation was assumed on 29 December2003 by Aguas de Antofagasta S.A., a newly-formed wholly owned subsidiary of the Group. The cost of theConcession was Ch$116.6 billion (US$193.8 million) and was satisfied in cash on the same date. The costincludes IVA (Chilean value added tax) of 19% which is estimated to be recoverable over eight years aspart of the normal trading cycle. In the three day period from 29 December 2003, Aguas de Antofagastacontributed US$0.4 million to Group turnover and US$0.2 million to Group operating profit.Cash FlowsThe Group cash flow statement is presented on page 52. The key features may be summarised as follows:2003 2002US$m US$mNet debt at the beginning of the year (712.9) (808.7)Changes in net debt relating to cash flowsNet cash inflow from operating activities 510.2 350.3Capital expenditure and financial investment (78.2) (67.3)Acquisition of water concession (193.8) –Equity dividends paid (58.2) (69.8)Other items (123.0) (112.1)Exchange and other non-cash movements (5.9) (5.3)Net debt at the end of the year (661.8) (712.9)Analysed as followsCurrent asset investments (time deposits) and cash at bank 195.7 252.4Long and short term loans (857.5) (965.3)(661.8) (712.9)Net cash inflow from operating activities increased by 46% to US$510.2 million compared with US$350.3million in 2002. This reflected the improved operating results adjusted for depreciation, the non-exceptionalloss on disposal of fixed assets and normal working capital movements in debtors, creditors and stocks.Net capital and financial investment expenditures in 2003 were US$78.2 million. Of this amount,US$62.4 million related to capital expenditure at Los Pelambres, which included expenditure relating tothe completion of the optimisation programme to increase ore throughput to approximately 120,000tonnes per day by the end of 2003. Net capital expenditure for 2002 was US$67.3 million.ANTOFAGASTA PLC Annual Report and Financial Statements 200323
Page 1 and 2: Copper 1 a malleable ductile reddis
Page 3 and 4: Highlights 2003Total copper product
Page 5 and 6: Selected Financial and Operating Da
Page 7 and 8: consumption and low interest rates
Page 9 and 10: y an amount equivalent to 16.3 cent
Page 11 and 12: Selected Data for Mining Operations
Page 13 and 14: Exploration Projects - 2004KEYMININ
Page 15 and 16: FCAB Rail NetworkKEY85-90 POUND RAI
Page 17 and 18: Demerger of Quiñenco S.A.Following
Page 19 and 20: Cash Costs and Realised Copper Pric
Page 21 and 22: In 2003, sales of copper concentrat
Page 23: The Group’s borrowings relate mai
Page 27 and 28: Balance SheetThe Group’s balance
Page 29 and 30: As explained in the Chairman’s Re
Page 31 and 32: The Group also commenced a process
Page 33 and 34: Mining Reserves and ResourcesAt 31
Page 35 and 36: DirectorsThe Directors who served d
Page 37 and 38: Special Business at the Annual Gene
Page 39 and 40: Corporate GovernanceThe Board of Di
Page 41 and 42: c) Relations with ShareholdersThe E
Page 43 and 44: Report on Remuneration and Related
Page 45 and 46: Between 8 March 2004 and 30 April 2
Page 47 and 48: In addition, the Group paid Jara de
Page 49 and 50: Basis of Audit OpinionWe conducted
Page 51 and 52: Consolidated Statement of Total Rec
Page 53 and 54: Parent Company Balance SheetAt 31 D
Page 55 and 56: Notes to the Financial Statements1
Page 57 and 58: 1 Accounting Policies (continued)De
Page 59 and 60: 1 Accounting Policies (continued)s)
Page 61 and 62: 2 Segmental Information (continued)
Page 63 and 64: 2 Segmental Information (continued)
Page 65 and 66: 5 Directors’ Remuneration2003 200
Page 67 and 68: 7 Dividends 2003 2003 2002 2002cent
Page 69 and 70: 11 Tangible Fixed AssetsLand Buildi
Page 71 and 72: 12 Investment in Subsidiaries (cont
Page 73 and 74: 14 StocksGroup Group2003 2002US$m U
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17 Loans (continued)b) (continued)U
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18 Financial Instruments and Risk M
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18 Financial Instruments and Risk M
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20 Called Up Share Capital (continu
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22 Notes to the Consolidated Cash F
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23 Acquisition (continued)The asset
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24 Demerger of Andsberg Limited (co
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28 Ultimate Parent CompanyAt 31 Dec
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2003 2002 2001 2000 1999Consolidate
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a) will expire 15 months after the
Page 95 and 96:
f) Article 83 be amended by inserti
Page 97 and 98:
A notice given under this Article 1
Page 99 and 100:
Produced by Royle Financial Print L
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