Anglo American shareholders smile with distributions ballooning as commodity bull run continues

Mining behemoth Anglo American announced its half-year results earlier today, with the resource counter beating expectations, with the share price rising by around 4% by 14:00 SAST on the JSE. Veteran mining executive and the man in charge of Anglo American Mark Cutifani said that the strong financial position of the business allowed for generous distributions to shareholders, including an ordinary and special dividend as well as implementing a share buyback program. This follows a consistent trend of commodity counters distributing its excess cash to shareholders, instead of chasing growth through acquisitions, which have proved to be value destructive in previous commodity bull markets. – Justin Rowe-Roberts

Anglo American’s SENS statement:

Anglo American to return an additional $2bn to shareholders

Anglo American plc (“Anglo American”) announces its intention to return an additional $2bn to its shareholders through: (i) an on-market irrevocable and non-discretionary share buyback programme of $1bn (the “Buyback Programme”); and (ii) a special dividend of $0.80 per ordinary share, equal to $1bn (the “Special Dividend”).

Mark Cutifani, Chief Executive of Anglo American, said: “We entered this period of strong demand and prices for many of our products with a strong balance sheet and we are therefore in a position to deliver both the investment in our sequence of margin-enhancing growth projects and also return excess cash to our shareholders. Today’s additional return of $2bn demonstrates our applied capital discipline and the Board’s confidence in the business.”

Stephen Pearce, Finance Director of Anglo American, added: “As a result of our prudent approach to capital allocation, including our commitment to our established base dividend policy of returning 40% of Underlying Earnings to our shareholders, our balance sheet is in a strong position. Aligned with that dividend policy, and as Anglo American continues to deliver outstanding financial performance, we will continue to assess all forms of returns. Given the current levels of cash generation and our balanced approach for discretionary capital across investment and additional shareholder returns, we think it appropriate to return excess cash of $2bn to shareholders.”

“Recognising the different preferences of our shareholders, we will split this additional return equally between a share buyback programme and special dividend. Combined with our base dividend of $2.1bn, today’s $4.1bn return recognises the resilience of our position and brings the cash that we will have returned to shareholders since mid-2017 to $10.3bn.”

Buyback programme

The Buyback Programme will begin immediately and will end no later than 14 February 2022. The sole purpose of the Buyback Programme is to reduce the issued share capital of Anglo American.

Anglo American has given irrevocable and non-discretionary instructions to Goldman Sachs International (“Goldman Sachs”) in relation to the Buyback Programme. Goldman Sachs will act as principal and will purchase shares on the Johannesburg Stock Exchange and UK trading venues1 in line with the proportion of Anglo American’s shareholder register in South Africa and the United Kingdom and will make its trading decisions concerning the timing of the purchases of Anglo American’s ordinary shares independently of Anglo American. The purchased shares will be cancelled.

The number of ordinary shares permitted to be purchased by Anglo American, pursuant to the authority granted by the shareholders at the annual general meeting of Anglo American on 5 May 2021 (the “2021 AGM”), is 204 331 400 ordinary shares.

Any purchases of ordinary shares by Anglo American in relation to this announcement will be effected within certain pre-set parameters and in accordance with the authority granted by shareholders at the 2021 AGM, the Market Abuse Regulation 596/2014 as it forms part of UK domestic law and Chapter 12 of the Listing Rules and will be discontinued in the event that Anglo American ceases to have the necessary general authority to repurchase ordinary shares.

Special dividend

The Special Dividend of $1bn is in addition to the $2.1bn interim base dividend of 40% of underlying earnings announced today with Anglo American’s half year financial report for the six months ended 30 June 2021 (the “H1 Results”).

The timetable for the Special Dividend will follow the same timetable as for the payment of Anglo American’s interim dividend. The Special Dividend will be paid on: (i) 24 September 2021 to holders of ordinary shares recorded on Anglo American’s UK register (the “UK Register”); and (ii) 27 September 2021 to holders of ordinary shares recorded on Anglo American’s South African branch register (the “SA Branch”,) as at the close of business on 20 August 2021. The ordinary shares will go ex-dividend on: (i) the London Stock Exchange on 19 August 2021; and (ii) the Johannesburg Stock Exchange on 18 August 2021, respectively. The Special Dividend will be paid in cash.

Shareholders on the UK Register with an address in the UK will be paid in pound sterling and those with an address in a country in the European Union which has adopted the Euro will be paid in Euros. Such shareholders may, however, elect to be paid their dividends in US dollars provided the UK registrars, Equiniti Limited, receive such election by 3 September 2021. Shareholders with an address elsewhere will be paid in US dollars except those registered on the SA Branch who will be paid in South African rand.

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