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Non-GAAP disclosure
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From time to time, AngloGold Ashanti Limited may publicly disclose certain 'Non-GAAP financial measures' in the course of its financial presentations, earnings releases, earnings conference calls and otherwise.
The group utilises certain Non-GAAP performance measures and ratios in managing the business and may provide users of this financial information with additional meaningful comparisons between current results and results in prior operating periods. The Non- GAAP financial measures (headline earnings and gross profit) are used to adjust for fair value movements on the convertible bond as well as the highly volatile marked-to-market movements on unrealised non-hedge derivatives and other commodity contracts which can only be measured with certainty on settlement of the contracts. Non-GAAP financial measures should be viewed in addition to, and not as an alternative to, the reported operating results or cash flow from operations or any other measure of performance prepared in accordance with IFRS. In addition, the presentation of these measures may not be comparable to similarly titled measures other companies use.
| 2007 | 2008 | Figures in million | 2008 | 2007 |
|---|---|---|---|---|
| SA Rands | US Dollars | |||
| 1. Headline (loss) earnings adjusted for the gain (loss) on unrealised non-hedge derivatives, other commodity contracts and fair value adjustment on convertible bond (1) (adjusted headline earnings) | ||||
| (4,136) | (4,375) | Headline loss (group note 14) | (30) | (648) |
| 7,202 | (3,885) | (Gain) loss on unrealised non-hedge derivatives and other commodity contracts | (978) | 1,083 |
| (681) | 1,216 | Deferred tax on unrealised non-hedge derivatives and other commodity contracts | 132 | (100) |
| (89) | 31 | Associate's and equity accounted joint ventures share of loss (gain) on unrealised non-hedge derivatives and other commodity contracts in associates | 4 | (11) |
| 8 | (2) | Associate's and equity accounted joint ventures share of deferred tax on unrealised non-hedge derivatives and other commodity contracts | – | 1 |
| (333) | (185) | Fair value adjustment on option component of convertible bond | (25) | (47) |
| 1,971 | (7,197) | Headline (loss) earnings adjusted for the gain (loss) on unrealised non-hedge derivatives, other commodity contracts and fair value adjustment on convertible bond. | (897) | 278 |
(1) Gain (loss) on unrealised non-hedge derivatives and other commodity contracts in the income statement comprises the change in fair value of all non-hedge derivatives and other commodity contracts.
- – From the previous reporting date or date of recognition (if later) through to the current reporting date.
Headline (loss) earnings adjusted for the effect of unrealised non- hedge derivatives, other commodity contracts and fair value adjustment on convertible bond, is intended to illustrate earnings after adjusting for:
- – The unrealised fair value change in contracts that are still open at the reporting date as well as the unwinding of the historic marked-to-market value of the positions settled in the period;
- – The unrealised fair value change on the option component of the convertible bond amounted to $25m, R185m (2007: $47m, R333m); and
- – The unrealised fair value change on the onerous uranium contracts.
Management considers this an important measure to investors as it is used by management in assessing the performance of the operations after removing certain accounting volatility that does not directly impact on the operations.
| 2007 | 2008 | Figures in million | 2008 | 2007 |
|---|---|---|---|---|
| SA Rands | US Dollars | |||
| 1. Headline (loss) earnings adjusted for the gain (loss) on unrealised non-hedge derivatives, other commodity contracts and fair value adjustment on convertible bond (1) (adjusted headline earnings) (continued) | ||||
| 700 | (2,269) | Cents per share | (283) | 99 |
| This calculation is based on adjusted headline loss of $897m, R7,197m, (2007: adjusted headline earnings $278m, R1,971m) and 317,203,948 (2007: 281,455,107) shares being the weighted average number of ordinary shares in issue during the financial year. | ||||
| 2. Gross profit (loss) adjusted for the gain (loss) on unrealised non-hedge derivatives and other commodity contracts (adjusted gross profit) | ||||
| Reconciliation of gross profit (loss) to gross profit (loss) adjusted for the gain (loss) on unrealised non-hedge derivatives and other commodity contracts | ||||
| (1,309) | 939 | Gross profit (loss) | 594 | (248) |
| 7,202 | (3,885) | (Gain) loss on unrealised non-hedge derivatives and other commodity contracts | (978) | 1,083 |
| 5,893 | (2,645) | Gross (loss) profit adjusted for the gain (loss) on unrealised non-hedge derivatives and other commodity contracts (1) | (384) | 835 |
| Gross (loss) profit adjusted for the gain (loss) on unrealised non-hedge derivatives and other commodity contracts is intended to illustrate earnings after adjusting for: | ||||
| – The unrealised fair value change in contracts that are still open at the reporting date as well as the unwinding of the historic marked-to-market value of the positions settled in the period; and – The unrealised fair value change on the onerous uranium contracts. | ||||
| Gross (loss) profit adjusted for the (gain) loss on unrealised non-hedge derivatives and other commodity contracts is analysed by origin as follows: | ||||
| 2,845 | (253) | South Africa | (55) | 403 |
| 338 | (260) | Argentina | (34) | 48 |
| 960 | (480) | Australia | (61) | 137 |
| 987 | 472 | Brazil | 53 | 141 |
| 25 | (1,210) | Ghana | (145) | 3 |
| 101 | 222 | Guinea | 27 | 14 |
| 646 | (252) | Mali | (34) | 92 |
| 90 | 12 | Namibia | (2) | 13 |
| 52 | (1,545) | Tanzania | (181) | 6 |
| 518 | 155 | USA | 16 | 74 |
| 28 | 23 | Other, including corporate and non-gold producing subsidiaries | 4 | 4 |
| 6,590 | (3,140) | (412) | 935 | |
| (697) | 195 | 28 | (100) | |
| 5,893 | (2,945) | (384) | 835 | |
| 3. Loss on non-hedge derivatives and other commodity contracts is summarised as follows: | ||||
| Group: | ||||
| 2,033 | (1,275) | (Loss) gain on realised non-hedge derivatives | (155) | 291 |
| – | (253) | Realised loss on other commodity contracts | (32) | – |
| – | (8,634) | Realised loss on accelerated settlement of non-hedge derivatives | (1,088) | – |
| (7,305) | 3,774 | Gain (loss) on unrealised non-hedge derivatives | 965 | (1,099) |
| 23 | 74 | Unrealised gain on other commodity physical borrowings | 8 | 3 |
| 80 | 37 | Provision reversed for loss on future deliveries and other commodities | 5 | 13 |
| (5,169) | (6,277) | Loss on non-hedge derivatives and other commodity contracts per the income statement | (297) | (792) |
| Company: | ||||
| 506 | 95 | Gain on realised non-hedge derivatives | 9 | 74 |
| – | (253) | Realised loss on other commodity contracts | (32) | – |
| – | (3,882) | Realised loss on accelerated settlement of non-hedge derivatives | (489) | – |
| (1,814) | 2,297 | Gain (loss) on unrealised non-hedge derivatives | 434 | (278) |
| 23 | 74 | Unrealised gain on other commodity physical borrowings | 8 | 3 |
| 80 | 37 | Provision reversed for loss on future deliveries and other commodities | 5 | 13 |
| (1,205) | (1,632) | Loss on non-hedge derivatives and other commodity contracts per the income statement | (65) | (188) |
| 4. Price received | ||||
| 21,101 | 29,774 | Gold income per income statement | 3,619 | 3,002 |
| (889) | (1,078) | Adjusted for minority interests | (131) | (127) |
| 20,212 | 28,696 | 3,488 | 2,875 | |
| 2,033 | (1,275) | (Loss) gain on realised non-hedge derivatives | (155) | 291 |
| – | (8,634) | Realised loss on accelerated settlement of non-hedge derivatives | (1,088) | – |
| 1,951 | 1,568 | Associates’ and equity accounted joint ventures share of gold income including realised non-hedge derivatives | 185 | 278 |
| 24,196 | 20,355 | 2,430 | 3,444 | |
| 170,265 | 155,954 | Attributable gold sold – kg and oz (000) | 5,014 | 5,474 |
| 142,107 | 130,522 | Revenue price per unit – R/kg and $/oz | 485 | 629 |
| 5. Total costs | ||||
| 12,889 | 17,405 | Total cash costs (group note 4) | 2,113 | 1,836 |
| (249) | (741) | Adjusted for minority interests and non-gold producing companies | (90) | (34) |
| (1,070) | 1,538 | Associate's and equity accounted joint ventures share of total cash costs | 187 | 152 |
| 13,713 | 18,202 | Total cash costs adjusted for minority interests and non- gold producing companies | 2,210 | 1,954 |
| 131 | 72 | Retrenchment costs (group note 4) | 9 | 19 |
| 422 | 218 | Rehabilitation and other non-cash costs (group note 4) | 28 | 61 |
| 3,980 | 4,620 | Amortisation of tangible assets (group note 4) | 560 | 567 |
| 14 | 21 | Amortisation of intangible assets (group note 4) | 2 | 2 |
| (146) | (209) | Adjusted for minority interests and non-gold producing companies | (25) | (21) |
| 186 | 343 | Associates’ and equity accounted joint ventures share of production costs | 40 | 27 |
| 18,300 | 23,267 | Total production costs adjusted for minority interests and non-gold producing companies | 2,824 | 2,609 |
| 170,415 | 150,149 | Gold produced – kg and oz (000) | 4,982 | 5,477 |
| 80,490 | 117,462 | Total cash cost per unit – R/kg and $/oz | 444 | 357 |
| 107,415 | 150,149 | Total production cost per unit – R/kg and $/oz | 567 | 476 |
| 6. EBITDA | ||||
| (3,360) | (16,709) | Operating loss per the income statement | (1,220) | (542) |
| 3,980 | 4,620 | Amortisation of tangible assets (group note 4) | 560 | 567 |
| 14 | 21 | Amortisation of intangible assets (group note 4) | 2 | 2 |
| 6 | 14,792 | Impairment net of reversals of tangible assets (group notes 6, 14 and 16) | 1,493 | 1 |
| – | 1,080 | Impairment of intangible assets (group notes 14 and 17) | 109 | – |
| – | 42 | Impairment of investments (group notes 14 and 19) | 6 | – |
| 7,202 | (3,885) | (Gain) loss on unrealised non-hedge derivatives and other commodity contracts (note 3) | (978) | 1,083 |
| – | 253 | Loss on realised other commodity contracts (note 3) | 32 | – |
| – | 8,634 | Realised loss on accelerated settlement of non-hedge derivatives (note 3) | 1,088 | – |
| (56) | (381) | Profit on disposal and abandonment of assets (group note 6) | (52) | (7) |
| – | (19) | Nufcor Uranium Trust contributions by other members (group note 6) | (3) | – |
| – | (14) | Profit on disposal of investment in associate (group note 6) | (2) | – |
| 802 | 820 | Share of associates' EBITDA | 98 | 115 |
| 30 | (17) | Discontinued operations (EBITDA component) (group note 13) | (2) | 5 |
| 8,618 | 9,237 | 1,131 | 1,224 | |
Management considers EBITDA to be an important measure to investors as it is used by the suppliers of funding as a requirement for the calculation of compliance with debt covenants being net debt to EBITDA (covenant threshold 3:1). Net debt to EBITDA for 2008 is 1.13:1 (2007: 1.08:1).
| 2007 | 2008 | Figures in million | 2008 | 2007 |
|---|---|---|---|---|
| SA Rands | US Dollars | |||
| 7. Interest cover | ||||
| 8,618 | 9,237 | EBITDA (note 6) | 1,131 | 1,224 |
| 845 | 926 | Finance costs (group note 7) | 114 | 120 |
| 68 | 263 | Capitalised finance costs (group notes 7 and 16) | 32 | 10 |
| 913 | 1,189 | 146 | 130 | |
| 9 | 8 | Interest cover – times | 8 | 9 |
| 8. Equity and net capital employed | ||||
| 16,204 | 22,956 | Shareholders' equity per balance sheet | 2,428 | 2,379 |
| Adjusted to exclude: | ||||
| 1,011 | 355 | – Other comprehensive income (group note 27) | 38 | 148 |
| 108 | 347 | – Actuarial losses (group note 27) | 37 | 16 |
| 17,323 | 23,658 | 2,503 | 2,543 | |
| 7,100 | 5,838 | Deferred tax (group note 31) | 617 | 1,042 |
| Adjusted to exclude: | ||||
| 2,262 | 967 | – Deferred tax on derivatives and other comprehensive income | 102 | 332 |
| 64 | 190 | – Deferred tax on actuarial losses | 20 | 9 |
| 26,749 | 30,653 | Equity | 3,242 | 3,926 |
| 429 | 790 | Minorities (group note 27) | 83 | 63 |
| 10,416 | 8,224 | Borrowings – long-term portion (group note 28) | 870 | 1,529 |
| 2,173 | 10,046 | Borrowings – short-term portion (group note 28) | 1,063 | 319 |
| 39,767 | 49,713 | Capital employed | 5,258 | 5,837 |
| (3,246) | (5,438) | Cash and cash equivalents (group note 24) | (575) | (477) |
| 36,521 | 44,275 | Net capital employed (group note 38) | 4,683 | 5,360 |
| 9. Net debt | ||||
| 10,416 | 8,224 | Borrowings – long-term portion (group note 28) | 870 | 1,529 |
| 2,173 | 10,046 | Borrowings – short-term portion (group note 28) | 1,063 | 319 |
| 12,589 | 18,270 | Total borrowings | 1,933 | 1,848 |
| (249) | (254) | Corporate office lease (group note 28) | (27) | (37) |
| 157 | (38) | Unamortised portion of the convertible bond | (4) | 23 |
| (264) | (415) | Cash restricted for use (group note 23) | (44) | (39) |
| (3,246) | (5,438) | Cash and cash equivalents (group note 24) | (575) | (477) |
| 8,987 | 12,125 | Net debt | 1,283 | 1,318 |
| 10. Net asset value – cents per share | ||||
| 16,633 | 23,746 | Total equity per balance sheet | 2,511 | 2,442 |
| 282 | 357 | Number of ordinary shares in issue (millions) (note 26) | 357 | 282 |
| 5,907 | 6,643 | Net asset value – cents per share | 702 | 867 |
| Number of ordinary shares in issue consists of: 353,483,410 (2007: 277,457,471) ordinary shares (group note 26) | ||||
| 3,966,941 (2007: 4,140,230) E ordinary shares (group note 26) | ||||
| 11. Net tangible asset value – cents per share | ||||
| 16,633 | 23,746 | Total equity per balance sheet | 2,511 | 2,442 |
| (2,859) | (1,403) | Intangible assets (group note 17) | (148) | (420) |
| 13,774 | 22,343 | 2,363 | 2,022 | |
| 282 | 357 | Number of ordinary shares in issue (millions) (note 26) | 357 | 282 |
| 4,891 | 6,251 | Net tangible asset value – cents per share | 661 | 718 |
| 12. Return on equity | ||||
| 1,971 | (7,197) | Headline (loss) earnings adjusted for the gain (loss) on unrealised non-hedge derivatives, other commodity contracts and fair value adjustment on convertible bond (note 1) | (897) | 278 |
| 26,749 | 30,653 | Equity (note 8) | 3,242 | 3,926 |
| 29,227 | 28,701 | Average equity | 3,584 | 4,228 |
| Note – equity for 2006 amounted to $4,529 million, | ||||
| R31,705 million | ||||
| 7 | (25) | Return on equity – % | (25) | 7 |
| The 2008 return on equity is a negative 25% as a result of the accelerated hedge settlements. Excluding the accelerated hedge settlements, the return would be 3%. | ||||
| Management considers this an important measure to investors as it is a measure by which management considers it should be judged. Management have stated that they are targeting a return on equity of 15% and this measure provides investors with the calculation of management’s performance. | ||||
| 13. Return on net capital employed | ||||
| 1,971 | (7,197) | Headline (loss) earnings adjusted for the gain (loss) on unrealised non-hedge derivatives, other commodity contracts and fair value adjustment on convertible bond (note 1) | (897) | 278 |
| 845 | 926 | Finance costs (group note 7) | 114 | 120 |
| 2,816 | (6,271) | Headline (loss) earnings adjusted for the gain (loss) on unrealised non-hedge derivatives, other commodity contracts, fair value adjustment on convertible bond and finance costs | (783) | 398 |
| 36,521 | 44,275 | Net capital employed (note 8) | 4,683 | 5,360 |
| 37,749 | 40,398 | Average net capital employed | 5,022 | 5,464 |
| Note – Net capital employed for 2006 amounted to $5,568m, R38,977m | ||||
| 7 | (16) | Return on net capital employed – % | (16) | 7 |
| The 2008 return on equity is a negative 16% as a result of the accelerated hedge settlements. Excluding the accelerated hedge settlements, the return would be 4%. | ||||
| 14. Free cash flow | ||||
| 6,085 | (3,127) | Net cash (outflow) inflow from operating activities per cash flow | (529) | 866 |
| (3,726) | (4,452) | Stay-in-business capital expenditure per cash flow | (540) | (530) |
| 2,359 | (7,579) | (1,069) | 336 | |
| 15. Cash generated to cash invested | ||||
| 6,085 | (3,127) | Net cash (outflow) inflow from operating activities per cash flow | (529) | 866 |
| (1,050) | (455) | Dividends paid | (58) | (144) |
| 5,035 | (3,582) | Net cash (utilised) generated | (587) | 722 |
| (7,142) | (8,640) | Net cash outflow from investing activities | (1,041) | (1,015) |
| 0.7 | 0.4 | 0.6 | 0.7 | |
| 16. Market capitalisation | ||||
| 277 | 353 | Number of listed ordinary shares in issue at year end (millions) (group note 26) | 353 | 277 |
| 293.00 | 252.00 | Closing share price as quoted on the JSE and New York Stock Exchange | 27.71 | 42.81 |
| 81,295 | 89,078 | Market capitalisation | 9,795 | 11,878 |
| 17. Average number of employees | ||||
| South Africa | 37,127 | 36,976 | ||
| Argentina | 1,072 | 1,017 | ||
| Australia | 1,198 | 781 | ||
| Brazil | 4,095 | 4,352 | ||
| Ghana | 7,502 | 7,549 | ||
| Guinea | 2,933 | 2,917 | ||
| Mali | 1,611 | 1,615 | ||
| Namibia | 482 | 409 | ||
| Tanzania | 3,116 | 3,226 | ||
| USA | 421 | 405 | ||
| Other, including corporate and non-gold producing susidiaries | 3,338 | 2,275 | ||
| 62,895 | 61,522 | |||
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ANGLOGOLD ASHANTI Annual Report 2008