All the issued A and B redeemable preference shares are held by a wholly-owned subsidiary.

Unissued capital
As at 31 December 1998, there were 102 146 801 unissued ordinary shares. Of these, the directors have specific authority from the shareholders to issue 2 690 962 shares in accordance with the Share Incentive Scheme. The remaining 99 455 839 unissued shares are under the control of the directors until the next annual general meeting which is to be held on 30 April 1999. At that meeting members will be asked to renew the directors' control over the unissued ordinary shares, exclusive of the number of shares as may be required to be allotted and issued by the company pursuant to the Share Incentive Scheme.

In terms of the Listings Requirements of the Johannesburg Stock Exchange, shareholders may, subject to certain conditions, authorise the directors to issue the unissued shares held under their control for cash other than by means of a rights offer to members. In order that the directors of the company may be placed in a position to take advantage of favourable circumstances which may arise for the issue of such shares for cash without restriction for the benefit of the company, members will be asked to consider an ordinary resolution to this effect at the forthcoming annual general meeting. The necessary ordinary resolution has been incorporated as item No. 4 in the notice of meeting on pages 96 and 97.

Share premium
The company's share premium account before the merger rose from R539,7 million at 31 December 1997 to R3 909,2 million primarily as a result of the method adopted for the combination of the participating companies on the formation of AngloGold, which is the uniting of interest method for accounting for mergers in terms of International Accounting Standard No. 22 ? Business Combinations. The surplus arising on merger accounting between the nominal share capital and share premium issued by AngloGold and the nominal value of the share capital and share premium of the participating companies acquired has been reflected as a merger adjustment and set-off against shareholders' equity.

Full details of the authorised, issued and unissued shares, as well as the share premium, are given in note 15 of the statutory annual financial statements.

Share incentive scheme
At the general meeting held on 4 June 1998, shareholders approved the introduction of the AngloGold Limited Share Incentive Scheme for the purpose of providing an incentive to employees of the company and its subsidiaries to identify themselves more closely with the fortunes of the group and its continued growth, and also to promote the retention of employees by giving them an opportunity to acquire shares in the company. Employees participate in the scheme to the extent that they are granted options or offered automatically convertible unsecured debentures and accept them.

The maximum number of ordinary shares which have been made available for the purposes of the scheme is 2 690 962, equivalent to 2,75 per cent of the total number of ordinary shares in issue. The maximum aggregate number of shares which may be acquired by any one participant in the scheme is 150 000.

During the period since the implementation of the scheme to 31 December 1998, employees of the company, who previously participated in the AAC Executive Share Incentive Scheme in terms of their employment with AAC, were granted options to subscribe for 673 000 ordinary shares of 50 cents each, at prices varying between R208,00 and R256,00 per share and on comparable terms to the AAC scheme. A total of 13 800 ordinary shares of 50 cents each were issued to certain of these employees who exercised their options. As at 31 December 1998, participants in the scheme have accepted a total of 420 500 fully paid automatically convertible unsecured debentures at values varying between R216,00 and R297,60 per debenture.

The options granted may be exercised and the debentures accepted may be converted as follows:

The equity component of the automatically convertible debentures is not sufficiently material to warrant reporting a portion of the issued debentures as equity and the balance as debt. The interest on these debentures is payable annually at the official interest rate per the seventh schedule of the Income Tax Act which approximates market rates.

All options, however, which have not been exercised within ten years from the date on which they were granted automatically lapse. Debentures which have not been converted within a similar period of acceptance will be ceded to the AngloGold Limited Employees' Share and Debenture Trust established by the company for purposes of the scheme.

At the year end, the unallocated balance of shares subject to the scheme amounted to 1 611 262.

Between the year end and the date of this report, employees have accepted a further 26 000 debentures have been allocated at prices varying between R235,80 and R257,00 per debenture.

Financial results
Group profit for the year ended 31 December 1998 after taxation, appropriation for capital expenditure and equity earnings was R1 660,8 million (1997: R1 385,1 million) or 1 697 (1997: 1 416) cents per share.

The group's results are analysed under the Financial Review section on page 3.

Dividends
Details of dividends declared in respect of the year under review are given in note 7 to the statutory annual financial statements.

Borrowing powers
In terms of the articles of association, the borrowing powers of the company are unlimited.

At 31 December 1998, the group's borrowings totalled R719 million (1997: R695 million).

International accounting standards
The statutory annual financial statements are prepared in conformity with South African generally accepted accounting practice for the mining industry and in the manner required by the South African Companies Act. These financial figures are also shown in US dollars. For the benefit of international investors, also included with this report are financial statements prepared to comply with International Accounting Standards.

Fixed assets
A schedule giving details of the group's mining rights and property is available for inspection at the company's registered office.

Acquisitions
With effect from 1 July 1998, the company purchased certain assets, including gold slimes material and surface rights, on the East Rand from East Daggafontein Mines Limited for an aggregate consideration of R106 million. East Daggafontein purchased 420 947 ordinary shares in the capital of the company, previously held by a wholly-owned subsidiary, at R251,81 per share, being the average closing price for the 30 trading days which ended on 2 September 1998. In terms of the agreement of sale the existing processing arrangement between the companies was cancelled.

Disposals
The undermentioned mine shafts and related infrastructure were sold during the year under review as being uneconomic to operate from the company's perspective:

As part of the transaction concluded in July 1998 for the disposal by AAC and companies associated with it of their 63,1 per cent interest in The Afrikander Lease Limited to Benoryn Investment Holdings (Proprietary) Limited, the group sold to the purchaser its gold recovery plant and associated mining and township infrastructure for R460 000 and certain mineral and mining rights for R30 000.

In terms of the agreement of sale signed with African Rainbow Minerals & Exploration (Proprietary) Limited (ARM) in January 1998, the Vaal Reefs No. 2 shaft was tributed to ARM on the basis that 40 per cent of all revenue, costs and capital expenditure would accrue to ARM, with the balance to the company.