2006 Annual Report

Company financial statements

Notes to the company financial statements

For the year ended 31 December

  Figures in million 2006 2005
    SA Rands
1 Revenue    
  Revenue consists of the following principal categories:    
  Gold income 9,151 7,359
  By-products (note 2) 265 224
  Interest received (note 26) 52 28
  Dividend received from subsidiaries (note 26) 52 731
    9,520 8,342
       
2 Cost of sales    
  Cash operating costs 5,137 5,115
  By-products (note 1) (265) (224)
    4,872 4,891
  Other cash costs 40 34
  Total cash costs 4,912 4,925
  Retrenchment costs (note 7) 49 158
  Rehabilitation and other non-cash costs 22 99
  Production costs 4,983 5,182
  Amortisation of tangible assets (notes 6, 9 and 26) 1,634 1,109
  Total production costs 6,617 6,291
  Inventory change (71) (20)
    6,546 6,271
       
3 Other operating expenses    
  Pension and medical defined benefit provisions 50 46
       
4 Operating special items    
  Performance related option expense 129 –
  Cost of E-shares issued to Izingwe (Pty) Ltd, a Black Economic Empowerment company    
  (group note 11) 131 –
  Impairment of tangible assets (note 9) 10 45
  Loan waived 1 3
  Profit on disposal of tangible assets (30) –
  Recovery of exploration loan previously expensed (2) –
  Profit on sale of loan – (4)
  Impairment of investment in associate (note 10) – 2
    239 46
       
5 Finance costs and unwinding of decommissioning and restoration obligations    
  Finance costs on bank loans and overdrafts 14 44
  Finance costs on corporate bond 214 215
  Finance costs on interest rate swap (1) – 19
  Other finance costs 14 15
    242 293
  Less: amounts capitalised (note 9) (39) (102)
    203 191
  Unwinding of decommissioning obligation (note 21) 38 19
  Unwinding of restoration obligation (note 21) 14 8
  (note 26) 255 218
 
(1) Interest received on the interest rate swap entered into against the corporate bond, which has not been designated as a fair value hedge, was nil (2005: R24 million). The swap was unwound in April 2005.
   
       
6 Profit before taxation    
  Profit before taxation is arrived at after taking account of:    
  Auditors' remuneration    
  – Audit fees (1) 39 19
  – Under provision prior year 1 1
  – Other assurance services 6 3
    46 23
  Amortisation of tangible assets (notes 2, 9 and 26)    
  Owned assets 1,634 1,109
  Grants for educational and community development 21 27
  Operating lease charges 180 258
  (1)Includes fees for services in respect of Section 404 of the Sarbanes-Oxley Act.    
       
7 Employee benefits    
  Employee benefits including executive directors' salaries and other benefits 3,262 3,257
  Health care and medical scheme costs    
  – current medical expenses 308 229
  – defined benefit post-retirement medical expenses 95 87
  Contributions to pension and provident plans    
  – defined contribution 201 122
  – defined benefit pension plan expense 12 22
  Retrenchment costs (note 2) 49 158
  Share-based payment expense (1) 200 12
  Included in cost of sales, other operating expenses and operating special items 4,127 3,887
  Actuarial defined benefit plan expense analysis    
  Defined benefit post-retirement medical expense    
  – current service cost 7 7
  – interest cost 88 80
    95 87
  Defined benefit pension plan expense    
  – current service cost 50 40
  – interest cost 108 88
  – expected return on plan assets (146) (106)
    12 22
  Actual return on plan assets    
  – South Africa defined benefit pension plan 417 366
  Refer to the remuneration report for details of directors' emoluments    
 
(1) Details of the equity settled share-based payment arrangements of the group have been disclosed in group note 11. These arrangements consist of awards by the company to employees of various group companies. The income statement expense of R200 million (2005: R12 million) for the company is only in respect of awards made to employees of the company.
   
       
8 Taxation    
  Current taxation    
  Normal 369 –
  Under provision prior year 57 264
  (note 25) 426 264
       
  Deferred taxation    
  Temporary differences 569 217
  Unrealised non-hedge derivatives and other commodity contracts (771) (200)
  Impairment of tangible assets – (15)
  Change in estimated deferred taxation (1) 412 (74)
  Change in statutory tax rate – (79)
  (note 23) 210 (151)
    636 113
 

Tax reconciliation

A reconciliation of the mining and non-mining tax rate compared to that charged in the income statement is set out in the following table:

    2006   2005  
    Non-mining Mining Non-mining Mining
    %   %  
           
  Estimated corporate tax rate (1) 37 37 37 37
  Disallowable items (6) 5 9 (57)
  Mining capital allowances without tax cover – – – 124
  Dividends received 2 – (43) –
  Taxable items not forming part of the income statement 20 – 7 (21)
  Impairments – – – (15)
  Impact of prior year under provisions (6) – – (228)
  Change in estimated deferred tax rate (2) – 28 – 64
  Change in statutory tax rate – – (10) 15
  Other (4) – 7 23
  Effective tax rate 43 70 7 (58)
 
(1)

Mining tax on mining income in South Africa is determined according to a formula based on the profit and revenue from mining operations.

All mining capital expenditure is deducted to the extent that it does not result in an assessed loss, and depreciation is ignored when calculating the South African mining income. Capital expenditure not deducted from the mining income is carried forward as unredeemed capital to be deducted from future mining income.

The formula for determining the South African mining tax is:

Y = 45 – 225/X

where Y is the percentage rate of tax payable and X is the ratio of mining profit net of any redeemable capital expenditure to mining revenue expressed as a percentage.

The maximum statutory mining tax rate is 45%, non-mining statutory tax rate 37% and statutory company tax rate 29%, all unchanged from prior year.

 
(2) During the 2005 and 2006 financial year estimates were revised in South Africa to reflect the future anticipated taxation rate at the time the temporary differences reverse.
             
9. Tangible assets          
    Mine   Mineral    
  Figures in million development Mine rights and    
    costs infrastructure dumps Land Total
  Cost          
  Balance at 1 January 2005 13,031 3,704 701 20 17,456
  Additions          
  – project expenditure 634 168 – – 802
  – stay-in-business expenditure 1,252 61 – – 1,313
  Disposals – (26) – – (26)
  Transfers and other movements (1) (5) 227 (156) – 66
  Finance costs capitalised (note 5) 102 – – – 102
  Balance at 31 December 2005 15,014 4,134 545 20 19,713
  Accumulated amortisation          
  Balance at 1 January 2005 4,321 2,326 151 – 6,798
  Amortisation for the year (notes 2, 6 and 26) 950 123 36 – 1,109
  Impairments (note 4) 45 – – – 45
  Impairments reversal (group note 13) – (115) – – (115)
  Transfers and other movements (1) (2) – (54) – (56)
  Balance at 31 December 2005 5,314 2,334 133 – 7,781
  Net book value at 31 December 2005 9,700 1,800 412 20 11,932
  Cost          
  Balance at 1 January 2006 15,014 4,134 545 20 19,713
  Additions          
  – project expenditure 357 52 – – 409
  – stay-in-business expenditure 1,471 225 – – 1,696
  Disposals (1) (60) – (4) (65)
  Transfers and other movements (1) (15) 110 – – 95
  Finance costs capitalised (note 5) 39 – – – 39
  Balance at 31 December 2006 16,865 4,461 545 16 21,887
  Accumulated amortisation          
  Balance at 1 January 2006 5,314 2,334 133 – 7,781
  Amortisation for the year (notes 2, 6 and 26) 1,425 176 33 – 1,634
  Impairments (note 4) 6 4 – – 10
  Transfers and other movements (1) (14) (9) – 1 (22)
  Balance at 31 December 2006 6,731 2,505 166 1 9,403
  Net book value at 31 December 2006 10,134 1,956 379 15 12,484
 

The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is 10.65% (2005: 10.65%).

(1) Transfers and other movements comprise amounts from deferred stripping, change in estimates and asset reclassifications.
  Figures in million 2006 2005
    SA Rands
  Impairments include the following:    
  Write off of various minor tangible assets and equipment. 10 –
  Goedgenoeg drilling and 1650 level decline drilling – 14
  An impairment charge was recognised in 2005 during the assessment and review of exploration properties as Goedgenoeg will not generate future cash flows.    
     
  East of Bank Dyke at TauTona – 31
  Due to a change in original mine plan, the East of Bank Dyke access development has been impaired as it will not generate future cash flows.    
    10 45
  The impairment calculation methodology is included in group note 16.    
  A register containing details of properties is available for inspection by shareholders or their duly authorised agents during business hours at the registered office of the company.  
 
       
10 Investment in associate    
  The company has a 25.0% (2005: 25.0%) interest in Oro Group (Proprietary) Limited which is involved in the manufacture and wholesale of jewellery. The year-end of Oro Group (Proprietary) Limited is 31 March.    
  The carrying value of the associate consists of Unlisted shares at cost less impairments (1) 15 15
  Loans advanced (2) 15 20
    30 35
  Directors' valuation of unlisted associate 30 35
  (1) During 2005, the Oro Group (Proprietary) Limited investment was impaired. The impairment test considered the investment's fair value and future cash flow. An impairment of R2 million was recorded (note 4).    
     
  (2) The Oro loan bears interest at a rate determined by the Oro Group (Proprietary) Limited’s board of directors and is repayable at their discretion.    
     
  The company's effective share of certain balance sheet items of its associate at 30 September 2006,is as follows:
 
  Non-current assets 14 15
  Current assets 63 59
  Total assets 77 74
  Non-current liabilities 24 29
  Current liabilities 29 28
  Total liabilities 53 57
  Net assets 24 17
       
11 Other investments    
  Unlisted investments available-for-sale    
  Balance at beginning of year 2 3
  Disposals – (1)
  Balance at end of year 2 2
  The available-for-sale investments primarily consists of:    
  The Chamber of Mines Building Company Limited    
  Unlisted investments-held to maturity    
  Balance at beginning of year 14 14
  Balance at end of year 14 14
  Total other investments (note 29) 16 16
  Directors' valuation of unlisted investments 16 16
  The investments held to maturity primarily consists of:    
  Gold of Africa Museum    
       
12 Inventories    
  Gold in process 219 174
  Gold on hand 45 2
  By-products 27 77
  Total metal inventories 291 253
  Consumable stores 114 89
    405 342
  The amount of the write-down of by-products and gold on hand to net realisable value, and recognised as an expense is R13 million (2005: nil). This expense is included in cost of sales which is disclosed in note 2.    
     
     
       
13 Investment in Environmental Rehabilitation Trust Fund    
  Balance at beginning of year 284 265
  Contributions 25 45
  Rehabilitation expenditure reclaimed – (26)
  Balance at end of year 309 284
  The fund is managed by Rand Merchant Bank and mainly invested in government long bonds and    
  other fixed-term deposits.    
       
14 Other non-current assets    
  AngloGold Ashanti Pension Fund asset (note 22) 267 51
  Loans and receivables    
  Other non-interest bearing loans and receivables – repayable on various dates (note 29) 7 5
  Stone and Allied, unsecured amount (note 29) – 4
    274 60
       
15 Trade and other receivables    
  Non-current    
  Other debtors 21 –
    21 –
  Current    
  Trade debtors 47 231
  Prepayments and accrued income 98 74
  Amounts due from related parties 10 –
  Interest receivable 8 –
  Recoverable tax, rebates, levies and duties 49 43
  Other debtors 24 13
    236 361
  Total trade and other receivables 257 361
  Current trade debtors are non-interest bearing and are generally on terms less than 90 days.    
       
16 Cash and cash equivalents    
  Cash and deposits on call 810 12
  Money market instruments 450 –
  (note 29) 1,260 12
       
17 Non-current assets held for sale    
  Effective 30 June 2005, the investment in the Weltevreden mining rights of R100 million (2005: R100 million) was classified as held for sale. This investment was previously recognised as a tangible asset. Weltevreden's rights were sold to Aflease Gold and Uranium Resources Limited on 15 June 2005. On 19 December 2005, Aflease was acquired by SXR Uranium One (formerly Southern Cross Inc.). In terms of these sale agreements, the purchase price will be paid in the form of SXR Uranium One shares to be issued to AngloGold Ashanti. This will take place when the conditions precedent to the agreement have been met. The Weltevreden mining rights form part of an old order mining rights conversion application, and the conditions precedent are that upon the government granting the conversion of these to new order mining rights, AngloGold Ashanti will cede the Weltevreden mining rights to SXR Uranium One.

The Director-General of Minerals and Energy notified the company that the new order mining rights were granted to AngloGold Ashanti Limited. However, the signing of the notarial agreement and the registration of the converted mining right has still to be completed. Once these have been completed, the new order mining rights will then be ceded to SXR Uranium One, and the related SXR Uranium One shares will then be issued to AngloGold Ashanti Limited as full settlement of the purchase price.

  
100 100
       
18 Share capital and premium    
  Share capital    
  Authorised    
  400,000,000 ordinary shares of 25 SA cents each 100 100
  4,280,000 E ordinary shares of 25 SA cents each 1 –
  2,000,000, A redeemable preference shares of 50 SA cents each 1 1
  5,000,000 B redeemable preference shares of 1 SA cent each – –
    102 101
  Issued and fully paid    
  276,236,153 (2005: 264,938,432) ordinary shares of 25 SA cents each 69 66
  4,185,770 (2005: nil) E ordinary shares of 25 SA cents each 1 –
  2,000,000 (2005: 2,000,000) A redeemable preference shares of 50 SA cents each 1 1
  778,896 (2005: 778,896) B redeemable preference shares of 1 SA cent each – –
    71 67
  Share premium    
  Balance at beginning of year 19,293 19,233
  Ordinary shares issued 3,330 60
  E ordinary shares issued 353 –
  Balance at end of year 22,976 19,293
  Share capital and premium 23,047 19,360
  The rights and restrictions applicable to the A and B redeemable preference shares.

A redeemable preference shares are entitled to:

  • an annual dividend, after payment in full of the annual dividend on the B preference shares,
    equivalent to the balance of after tax profits from mining the Moab Lease Area.
  • on redemption, the nominal value of the shares and a premium per share equal to the balance of the net proceeds from disposal of assets relating to the Moab Lease Area, after redemption in full of the B preference shares and payments of the nominal value of the A preference shares.

B redeemable preference shares are entitled to:

  • an annual dividend limited to a maximum of 5% of their issue price from the period that profits are
    generated from the Moab Lease Area.
  • on redemption, the nominal value of the shares and a premium of up to R249.99 per share provided
    by the net proceeds from disposal of the assets relating to the Moab Lease Area.

The Moab Lease Area consists of the Moab Khotsong mine operations.

   
19. Retained earnings and other reserves      
  Figures in million Retained
earnings		 Non-
distri-
butable
reserves (1)		 Actuarial
gain
(loss) (2)		 Other
compre-
hensive
income (3)		 Total
  SA Rands          
  Balance at December 2004 as previously reported (1,861) 141 (124) (37) (1,881)
  Change in comparative data (note 30) (69)       (69)
  As restated (1,930) 141 (124) (37) (1,950)
  Actuarial loss recognised     (176)   (176)
  Deferred taxation thereon (note 23)     68   68
  Profit for the year 201       201
  Ordinary dividends (group note 15) (926)       (926)
  Preference dividends (77)       (77)
  Net gain on cash flow hedges removed          
  from equity and reported in income       (102) (102)
  Net loss on cash flow hedges       (785) (785)
  Deferred taxation on cash flow          
  hedges (note 23)       340 340
  Share-based payment for share awards       15 15
  Balance at December 2005 (2,732) 141 (232) (569) (3,392)
  Actuarial gain recognised     283   283
  Deferred taxation thereon (note 23)     (102)   (102)
  Loss for the year (88)       (88)
  Ordinary dividends (group note 15) (742)       (742)
  Preference dividends (48)       (48)
  Net loss on cash flow hedges removed          
  from equity and reported in income       553 553
  Net loss on cash flow hedges       (969) (969)
  Deferred taxation on cash flow hedges (note 23)       165 165
  Share-based payment for share awards and BEE transaction       319 319
  Deferred issuance costs from ESOP Share Trust establishment       (630) (630)
  Deferred taxation on cost from ESOP Share Trust (note 23)       117 117
  Balance at December 2006 (3,610) 141 (51) (1,014) (4,534)
 
(1)
  		 Non-distributable reserves comprise a surplus on disposal of company shares of R141 million (2005: R141 million).
(2)
  		 With the adoption of IAS 19 revised, actuarial gain (loss) is accounted through equity reserves. Actuarial gain (loss) arises from a change in assumption parameters and the difference between the actual and expected return on plan assets.
(3)
  		 Other comprehensive income represents the effective portion of fair value gains or losses in respect of cash flow hedges until the underlying transaction occurs, upon which the gains or losses are recognised in earnings and the equity item for share-based payments.
       
20 Borrowings    
  Unsecured    
  Corporate Bond (1) 2,066 2,062
  Semi-annual coupons are paid at 10.5% per annum. The bond is repayable on    
  28 August 2008 and is rand-based.    
  Money-market short-term borrowings, at market-related rates and are rand-based – 805
  Total borrowings (note 29) 2,066 2,867
  Less: current portion of borrowings included in current liabilities 73 878
  Total long-term borrowings 1,993 1,989
  Amounts falling due:    
  Within one year 73 878
  Between two and five years 1,993 1,989
  (note 29) 2,066 2,867
  Undrawn facilities    
  There were no undrawn borrowing facilities as at 31 December 2006 (2005: nil).    
  (1) Corporate Bond    
  Senior unsecured fixed rate bond 2,000 2,000
  Less: unamortised discount and bond issue costs 7 11
    1,993 1,989
  Add: accrued interest 73 73
    2,066 2,062


Back to top
Notes to the company financial statementsNext > Notes 21-30Home
 

AngloGold Ashanti Annual Report 2006 - Annual Financial Statements