Annual Report 2003 - Antofagasta plc

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Financial ReviewThe consideration for the water concession acquired in December 2003 amounted to US$193.8 millionand was satisfied in cash.Equity dividends paid in the year were US$58.2 million (2002 – US$69.8 million, which included thepayment of the 2001 special dividend).Other items include dividends received from investments, interest receipts and payments, dividends paid bysubsidiaries to minority shareholders and tax payments. These are analysed in the review of performanceabove and in the notes to the cash flow statement on pages 80 to 82.Foreign currency exchange differences and other non-cash movements are analysed in the reconciliationof net cash flow to movement in net debt on page 52.Financial PositionAt 31 December 2003, the Group held cash and deposits of US$195.7 million (2002 – US$252.4 million).After taking into account the minority share of non-wholly owned operations, the Group’s share of thetotal balance was US$173.4 million (2002 – US$235.1 million).Total Group debt at 31 December 2003 was US$857.5 million (2002 – US$965.3 million). Of this amount,US$518.0 million (2002 – US$568.7 million) is proportionately attributable to the Group after taking theminority share of partly-owned operations into account. The total Group borrowings included US$594.9million (2002 – US$704.0 million) under the Los Pelambres non-recourse project financing arrangements,of which 40% is attributable to minority shareholders, and US$156.6 million (2002 – US$184.7 million)under the non-recourse El Tesoro project financing arrangements, of which 39% is attributable tominority shareholders. The Los Pelambres borrowings are repayable over a remaining period of six toeight years and the El Tesoro borrowings are repayable over 6.5 remaining yearsANTOFAGASTA PLC Annual Report and Financial Statements 2003US$166.7 million of the total Group debt of US$857.5 million is repayable within one year. This includesUS$84.1 million under the Los Pelambres project borrowings and US$28.0 million under the El Tesoroproject. As explained above in relation to net interest payable, Group cash and debt is mainly floating rateand almost entirely denominated in US dollars.On a consolidated basis, gearing (calculated as Group net debt to shareholders funds and minority interests)was marginally reduced from 56% at the end of 2002 to 53% at the end of 2003, as continued debtrepayments were offset by the payment of consideration on the acquisition of the water concession and theeffect of distributing assets on the demerger of Andsberg Limited. On an attributable basis (calculated as theGroup’s proportional share of net debt to shareholders’ funds), gearing increased from 35% at the end of2002 to 38% at the end of 2003, since debt repayments relate principally to the partly owned subsidiarieswhile the acquisition and demerger affected cash balances and net assets respectively at the corporate level.24
Balance SheetThe Group’s balance sheet is set out on page 50. Consolidated shareholders’ funds decreased from US$960.4million at the beginning of the year to US$905.9 million, principally reflecting profit attributable toshareholders, foreign exchange movements and dividends for the year, including the demerger dividend.Minority interests increased from US$314.3 million at the beginning of the year to US$343.1 million,principally reflecting the minority’s share of profit after tax less the minority share of distributions fromthe partly owned operations.Treasury Management and HedgingThe Group uses derivative financial instruments to reduce exposure to foreign exchange, interest rate andcommodity price movements. Derivative instruments are entered into for hedging purposes only and not fortrading purposes. Details of derivative instruments outstanding at 31 December 2003 are given in Note 18to the financial statements.Antofagasta Minerals S.A. manages commodity and treasury operations on behalf of the mining divisionwhile the FCAB (the Railway in Chile) manages treasury operations on behalf of the transport division.Policies are set by a central Risk Management Committee and reviewed by each divisional board.Foreign Currency Exchange DifferencesExchange rates used to translate the results denominated in foreign currencies are given in Note 1(c) tothe financial statements. The currency translation gain of US$15.5 million (2002 – loss of US$10.3 million)results mainly from the re-translation of peso-denominated subsidiaries at year-end rates. The Chilean pesostrengthened by 21% from Ch$719 = US$1 at the beginning of 2003 to Ch$594 = US$1 at the end of 2003.Going ConcernAfter making appropriate enquiries, the Directors consider that the Company and the Group have adequateresources to continue in operational existence for the foreseeable future and that it is appropriate to adoptthe going concern basis in preparing the financial statements. In forming this opinion, the Directors havetaken into account the financial position of the Group including borrowing facilities in place, the currentcopper price and market expectations in the medium-term.ANTOFAGASTA PLC Annual Report and Financial Statements 200325
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 and 24: The Group’s borrowings relate mai
Page 25: Acquisition of Water ConcessionIn N
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
Page 75 and 76: 17 Loans (continued)b) (continued)U
Page 77 and 78:
18 Financial Instruments and Risk M
Page 79 and 80:
18 Financial Instruments and Risk M
Page 81 and 82:
20 Called Up Share Capital (continu
Page 83 and 84:
22 Notes to the Consolidated Cash F
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23 Acquisition (continued)The asset
Page 87 and 88:
24 Demerger of Andsberg Limited (co
Page 89 and 90:
28 Ultimate Parent CompanyAt 31 Dec
Page 91 and 92:
2003 2002 2001 2000 1999Consolidate
Page 93 and 94:
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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