Entire Annual Report - Anglo American Platinum

Corporate" Finance Review . . .Financial strategyThe Group’s revenues are exposed to volatility in US dollar commodity pricesand rand/US dollar exchange rates. Accordingly, the Group’s strategy is tomaintain a strong balance sheet so that it can meet working capital requirementsand provide internal funding for ongoing and expansion capital projects.Owing to its low gearing, the Group has substantial debt capacity which itwill utilise where circumstances are such that the obligations are matched tospecific requirements in an appropriate manner without creating undue risk.Finance ReviewIt is the Group’s policy to declare dividends twice a year. The dividend isdetermined after due consideration of current earnings, immediate and longtermprospects, capital commitments and cash flow requirements associatedwith opportunities for growth.Investments, which are evaluated by means of long-term pricing models, aretargeted to yield at least a specified after-tax real return per annum (currently12%) over the economic life of the investment.To facilitate a better understanding of the Group by both local and internationalinvestors, the financial statements have been prepared in compliance with thestandards required by the International Accounting Standards Committee.Key indicators are:Financial year2000 1999Cash and cash equivalents (Rm) 6 122,8 2 214,5Return on average shareholders’ equity % 73,2 40,9Operating profit to average operating assets % 117,6 49,1Debt to equity ratio 1:346 1:152Dividend cover 1,3 1,7Compound growth % %From 1995:Headline earnings per share 58,8 40,0Dividends per share 61,1 33,3Total assets 41,1 35,9Cash and cash equivalents 65,0 45,0Gross sales revenue 34,7 24,6TreasuryTreasury has the ongoing task of ensuring that the Group focuses on timeousidentification, measurement and valuation of market and operational riskswithin Treasury’s area of responsibility. The scope of this function has beenenhanced in view of the current methodologies being applied in the industry.Market and credit risks, being the main risks managed within Treasury, are thesubject of renewed focus.Treasury provides analyses of market trends and makes strategic recommendationsto the Risk Committee, which in turn submits recommendations to the ExecutiveCommittee.Treasury manages the Group’s banking relationships, which are developed andmaintained with highly rated financial institutions.110