Anglo Platinum (Angloplat), the world's largest platinum producer, on Monday reported a 95 percent fall in diluted headline earnings per share to 297 cents for the year to end December 2009 from 5 586 cents in the year to end December 2008.

Headline earnings decreased by 95 percent to R710 million, or 298 cents, from R13.29 billion, or 5 609 cents a share, a year ago.

The company's refined platinum production was up 3 percent to 2.45 million ounces.

Refined platinum sales for the year amounted to 2.57 million ounces compared to 2.22 million ounces in 2008, representing an increase of 16 percent.

The increase was due to unsold metal at the end of 2008 being available for sale in 2009 and the achievement of higher refined production volumes.

Net sales revenue decreased by R14.1 billion to R36.7 billion, primarily the result of lower US dollar metal prices achieved on metals sold, which accounted for R21 billion, offset by higher volumes of metals sold increasing revenue by R7 billion.

Operating profit dived 95 percent to R921 million from R17.65 billion last year while profit for the year fell 79 percent to R3.13 billion from R14.66 billion a year ago.

No dividend was declared and the company said payments would be resumed when market conditions and the operating environment permit.

The company said the main factors contributing to the dive in headline earnings were lower US dollar prices realised on metals sold, offset by higher sales volumes and the receipt of insurance income.

Headline earnings exclude profits of R2.5 billion realised on the conclusion of Anglo Platinum's BEE transactions with Anooraq Resources Corporation and Mvelaphanda Resources.

Basic earnings per share, which include the profits on the transactions, amounted to 1 269 cents, down 79 percent on 2008's 6 011 cents.

"While the global financial crisis that started during the last quarter of 2008 curbed demand for platinum group metals (PGMs) and caused prices to decline significantly, the second half of 2009 brought early signs of economic recovery, with a consequential increase in demand and recovery in prices with platinum increasing by 60 percent from $922 per ounce at the beginning of 2009 to $1 475 at end December 2009," Angloplat said.

The average prices achieved on platinum, palladium, rhodium and nickel sales for the year were $1 199 per ounce, $257 per ounce, $1 509 per ounce and $14 424 per tonne respectively.

The 2009 average rand basket price achieved was R14 115 per platinum ounce, a reduction of 37 percent when compared with the R22 348 price in 2008.

The company's focus on cost management, inbound supply chain projects and asset optimisation initiatives started to bear fruit during the year with the cash operating cost per equivalent refined platinum ounce remaining essentially flat at R11 236 compared with 2008.

"This was achieved despite upward inflationary pressure caused by wage and electricity tariff increases in excess of consumer price inflation," Angloplat said.

Cost of sales increased by 3 percent to R34.7 billion.

Net debt at the end of 2009 increased to R19.3 billion from R13.5 billion at the end of December 2008.

While operating activities produced a positive cash flow of R4.7 billion, this was down 73 percent from 2008 and funding of some R9.7 billion of capital expenditure was largely through increased debt.

This cash outflow was mitigated by the proceeds from the successful conclusion of the BEE transactions with Mvela and Anooraq.

During the second half of 2009, the company said that it was considering balance sheet restructuring options and has consequently announced its intention to issue equity to the value of R12.5 billion in a rights offer.

"After considering the current level of Anglo Platinum's debt, our Board believes that raising additional equity through a rights issue will provide the company with a more balanced capital structure," Angloplat said.

The proceeds from the rights offer will be used to repay long-term debt.

As at end December 2009 Anglo Platinum had gross debt of R23 billion, of which R20 billion was outstanding under facilities provided by our largest shareholder Anglo American and R3 billion outstanding under facilities provided by other financial institutions.

"Anglo Platinum experienced very challenging market conditions during 2009 but used the opportunity to reconfigure the cost base, improve production and take a significant step forward in safety efforts," Angloplat said in its results commentary.

"While our financial results are significantly below those of previous years, our operating performance improved and we increased production and sales while keeping unit costs essentially flat," it said.

As part of the restructuring process, Angloplat optimised the source of ounces across its portfolio.

This included placing three of its high cost shafts into 'care and maintenance' indefinitely.

These shafts included Siphumelele 3 shaft, Siphumelele 2 Shaft, and Khuseleka 2 Shaft at Khuseleka Mine.

Overall the company reduced its labour complement by 15 752 people during the year or by 18 786 people from October 2008.

Looking ahead, Angloplat said it expects the platinum market in 2010 to return to a position of deficit as a result of a moderate increase in supply but a significant recovery in demand.

"South African production is expected to remain constrained as producers adapt to a safer working environment and as lower rand metal prices result in production being restricted at high cost operations across the industry," the company said.

Given the market conditions Angloplat said it believes that the appropriate level of production for 2010 is 2.5 million ounces of refined platinum.

It said it is also aiming to produce this volume at a unit cost of just over R11 000 an ounce, the same level as in the preceding 2 years and with labour reductions largely complete, the company said it would spend the year working on improved productivity.