Non-GAAP disclosures

For the year ended 31 December

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 uses 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 that other companies use.

2008	2009	Figures in million		2009	2008
SA Rands				US Dollars
		1.	Headline loss adjusted for unrealised non-hedge derivatives, other commodity contracts and fair value adjustment on convertible bond (1) (adjusted headline earnings)
(4,375)	(6,790)		Headline loss (group note 14)	(852)	(30)
(3,885)	8,095		Loss (gain) on unrealised non-hedge derivatives and other commodity contracts	990	(978)
1,219	(1,765)		Deferred tax on unrealised non-hedge derivatives and other commodity contracts (group note 12)	(221)	132
31	–		Associates and equity accounted joint ventures’ share of loss on unrealised non-hedge derivatives and other commodity contracts	–	4
(2)	–		Associates and equity accounted joint ventures’ share of deferred tax on unrealised non-hedge derivatives and other commodity contracts	–	–
(185)	249		Fair value adjustment on option component of convertible bond	33	(25)
(7,197)	(211)		Headline loss adjusted for unrealised non-hedge derivatives, other commodity contracts and fair value adjustment on convertible bond.	(50)	(897)

⁽¹⁾ Loss (gain) 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 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 $33m, R249m (2008: $25m, R185m);
• the unrealised fair value change on the onerous uranium contracts; and
• the unrealised fair value change of warrants on shares and the embedded derivative.

Management considers this an important measure for investors as it is used to assess the performance of the operations after the removal of certain accounting volatility that does not directly impact on the operations.

2008	2009	Figures in million			2009	2008
SA Rands				US Dollars
		1.	Headline loss adjusted for unrealised non-hedge derivatives, other commodity contracts and fair value adjustment on convertible bond (1) (adjusted headline earnings) (continued)
(2,269)	(58)		Cents per share		(14)	(283)
			This calculation is based on adjusted headline loss of $50m, R211m, (2008: $897m, R7,197m) and 361,228,295 (2008: 317,023,948) shares being the weighted average number of ordinary shares in issue during the financial year.
		2.	Gross (loss) profit adjusted for unrealised non-hedge derivatives and other commodity contracts (adjusted gross profit)
			Reconciliation of gross (loss) profit to gross profit (loss) adjusted for unrealised non-hedge derivatives and other commodity contracts
939	(4,409)		Gross (loss) profit		(578)	594
(3,885)	8,095		Loss (gain) on unrealised non-hedge derivatives and other commodity contracts		990	(978)
(2,945)	3,686		Gross profit (loss) adjusted for unrealised non-hedge derivatives and other commodity contracts (1)		412	(384)
			Gross profit (loss) adjusted for 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;
			–	The unrealised fair value change on the onerous uranium contracts; and
			–	The unrealised fair value change of warrants on shares and the embedded derivative.
			Gross profit (loss) adjusted for unrealised non-hedge derivatives and other commodity contracts is analysed by origin as follows:
(265)	2,414		Southern Africa		268	(57)
(2,798)	443		Continental Africa		47	(344)
(554)	(112)		Australasia		(17)	(70)
99	494		North America		58	10
211	1,512		South America		184	19
167	244		Other, including corporate and non-gold producing subsidiaries		28	20
(3,140)	4,995				568	(412)
195	(1,309)		Less equity accounted investments		(156)	28
(2,945)	3,686				412	(384)
		3.	Loss on non-hedge derivatives and other commodity contracts is summarised as follows:
			Group:
(1,275)	2,476		Gain (loss) on realised non-hedge derivatives		254	(155)
(253)	–		Realised loss on other commodity contracts		–	(32)
(8,634)	(6,315)		Loss on hedge buy-back costs		(797)	(1,088)
3,774	(8,095)		(Loss) gain on unrealised non-hedge derivatives		(990)	965
74	–		Unrealised gain on other commodity physical borrowings		–	8
37	–		Provision reversed for loss on future deliveries and other commodities		–	5
(6,277)	(11,934)		Loss on non-hedge derivatives and other commodity contracts per the income statement		(1,533)	(297)
			Company:
95	58		Gain on realised non-hedge derivatives		7	9
(253)	–		Realised loss on other commodity contracts		–	(32)
(3,882)	–		Loss on hedge buy-back costs		–	(489)
2,297	(4,148)		(Loss) gain on unrealised non-hedge derivatives		(495)	434
74	–		Unrealised gain on other commodity physical borrowings		–	8
37	–		Provision reversed for loss on future deliveries and other commodities		–	5
(1,632)	(4,090)		Loss on non-hedge derivatives and other commodity contracts per the income statement		(488)	(65)
		4.	Price received
29,774	30,745		Gold income per income statement		3,768	3,619
(1,078)	(1,056)		Adjusted for non-controlling interests		(132)	(131)
28,696	29,689				3,636	3,488
(1,275)	2,476		Gain (loss) on realised non-hedge derivatives		254	(155)
(8,634)	(6,315)		Loss on hedge buy-back costs		(797)	(1,088)
1,568	2,975		Associates and equity accounted joint ventures’ share of gold income including realised non-hedge derivatives		357	185
20,355	28,825				3,450	2,430
155,954	142,837		Attributable gold sold – kg and oz (000)		4,592	5,014
130,522	201,805		Revenue price per unit – R/kg and $/oz		751	485
		5.	Total costs
17,405	18,905		Total cash costs (group note 4)		2,283	2,113
(741)	(777)		Adjusted for non-controlling interests and non-gold producing companies		(91)	(90)
1,538	1,412		Associates and equity accounted joint ventures’ share of total cash costs		171	187
18,202	19,540		Total cash costs adjusted for non-controlling interests and non-gold producing companies		2,363	2,210
72	110		Retrenchment costs (group note 4)		14	9
218	182		Rehabilitation and other non-cash costs (group note 4)		22	28
4,620	4,615		Amortisation of tangible assets (group note 4)		555	560
21	18		Amortisation of intangible assets (group note 4)		2	2
(209)	(108)		Adjusted for non-controlling interests and non-gold producing companies		(12)	(25)
343	218		Associates and equity accounted joint ventures’ share of production costs		26	40
23,267	24,575		Total production costs adjusted for non-controlling interests and non-gold producing companies		2,970	2,824
154,958	143,049		Gold produced – kg and oz (000)		4,599	4,982
117,462	136,595		Total cash cost per unit – R/kg and $/oz		514	444
150,149	171,795		Total production cost per unit – R/kg and $/oz		646	567
		6.	EBITDA
(16,709)	(1,859)		Operating loss per the income statement		(209)	(1,220)
4,620	4,615		Amortisation of tangible assets (group note 4)		555	560
21	18		Amortisation of intangible assets (group note 4)		2	2
14,792	(5,115)		Impairment net of reversals of tangible assets (group notes 6, 14 and 16)		(683)	1,493
1,080	–		Impairment of intangible assets (group notes 14 and 17)		–	109
42	–		Impairment of investments (group notes 14 and 19)		–	6
(3,885)	8,095		Loss (gain) on unrealised non-hedge derivatives and other commodity contracts (note 3)		990	(978)
253	–		Loss on realised other commodity contracts (note 3)		–	32
8,634	6,315		Loss on hedge buy-back costs (note 3)		797	1,088
–	728		RMB physical delivery restructuring costs		94	–
(381)	(420)		Profit on disposal and abandonment of assets (group note 6)		(49)	(52)
(19)	–		Nufcor Uranium Trust contributions by other members (group note 6)		–	(3)
(14)	–		Profit on disposal of investment in associate (group note 6)		–	(2)
820	1,394		Share of associates’ EBITDA		166	98
(17)	–		Discontinued operations (EBITDA component) (group note 13)		–	(2)
9,237	13,771				1,663	1,131

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 2009 is 0.52:1 (2008: 1.13:1).

2008	2009	Figures in million		2009	2008
SA Rands				US Dollars
		7.	Interest cover
9,237	13,771		EBITDA (note 6)	1,663	1,131
926	1,146		Finance costs (group note 7)	139	114
263	135		Capitalised finance costs (group note 7 and 16)	15	32
1,189	1,281			154	146
8	11		Interest cover – times	11	8
		8.	Equity and net capital employed
22,956	21,558		Shareholders’ equity per statement of financial position	2,900	2,428
			Adjusted to exclude:
355	(1,023)		– Comprehensive income	(138)	38
347	285		– Actuarial losses	38	37
23,658	20,820			2,800	2,503
5,838	5,599		Deferred tax (group note 30)	753	617
			Adjusted to exclude:
			– Deferred tax on derivatives and other comprehensive
967	2,475		income	333	102
190	217		–Deferred tax on actuarial losses	29	20
30,653	29,111		Equity	3,915	3,242
790	966		Non-controlling interests	130	83
8,224	4,862		Borrowings – long-term portion (group note 27)	654	870
10,046	9,493		Borrowings – short-term portion (group note 27)	1,277	1,063
49,713	44,432		Capital employed	5,976	5,258
(5,438)	(8,176)		Cash and cash equivalents (group note 24)	(1,100)	(575)
44,275	36,256		Net capital employed (group note 37)	4,876	4,683
		9.	Net debt
8,224	4,862		Borrowings – long-term portion (group note 27)	654	870
10,046	9,493		Borrowings – short-term portion (group note 27)	1,277	1,063
18,270	14,355		Total borrowings	1,931	1,933
(254)	(258)		Corporate office lease (group note 27)	(35)	(27)
(38)	1,019		Unamortised portion of the convertible bond	137	(4)
(415)	(481)		Cash restricted for use (group note 23)	(65)	(44)
(5,438)	(8,176)		Cash and cash equivalents (group note 24)	(1,100)	(575)
12,125	6,459		Net debt (note 37)	868	1,283
		10.	Net asset value – cents per share
23,746	22,524		Total equity per statement of financial position	3,030	2,511
357	366		Number of ordinary shares in issue (millions) (group note 26)	366	357
6,643	6,153		Net asset value – cents per share	828	702
			Number of ordinary shares in issue consists of: 362,240,669 (2008: 353,483,410) ordinary shares (group note 26) 3,794,998 (2008: 3,966,941) E ordinary shares (group note 26).
		11.	Net tangible asset value – cents per share
23,746	22,524		Total equity per statement of financial position	3,030	2,511
(1,403)	(1,316)		Intangible assets (group note 17)	(177)	(148)
22,343	21,208			2,853	2,363
357	366		Number of ordinary shares in issue (millions) (group note 26)	366	357
6,251	5,794		Net tangible asset value – cents per share	779	661
		12.	Return on net capital employed
(7,197)	(211)		Headline loss adjusted for unrealised non-hedge derivatives, other commodity contracts and fair value adjustment on convertible bond (note 1)	(50)	(897)
926	1,146		Finance costs (group note 7)	139	114
7,266	6,006		Cost of hedge buy-back net of taxation	758	916
995	6,941		Adjusted headline earnings excluding hedge buy-back costs	847	133
44,275	36,256		Net capital employed (note 8)	4,876	4,683
40,398	40,266		Average net capital employed	4,780	5,022
			Note – Net capital employed for 2007 amounted to $5,360m, R36,521m
3	18		Return on net capital employed – %	18	3
			The 2009 return on net capital employed is 2% as a result of the hedge buy-back costs. If these costs are excluded, the return would be 18%. Management have stated that they are targeting a return on capital of 15% and this measure provides investors with the calculation of management’s performance.
		13.	Free cash flow
(3,127)	3,781		Net cash inflow (outflow) from operating activities per cash flow	502	(529)
(4,452)	(5,078)		Stay-in-business capital expenditure per cash flow	(606)	(540)
(7,579)	(1,297)			(104)	(1,069)
		14.	Cash generated to cash invested
(3,127)	3,781		Net cash inflow (outflow) from operating activities per cash flow	502	(529)
(455)	(474)		Dividends paid	(56)	(58)
(3,582)	3,307		Net cash generated (utilised)	446	(587)
(8,640)	(2,000)		Net cash outflow from investing activities	(195)	(1,041)
0.4	1.7			2.3	0.6
		15.	Market capitalisation
353	362		Number of listed ordinary shares in issue at year-end (millions) (group note 26)	362	353
			Closing share price as quoted on the JSE and New York
252.00	306.29		Stock Exchange	40.18	27.71
89,078	110,951		Market capitalisation	14,555	9,795
		16.	Average number of employees
			Southern Africa	38,003	37,609
			Continental Africa	14,689	15,162
			Australasia	1,776	1,198
			North America	562	421
			South America	5,322	5,167
			Other, including corporate and non-gold producing subsidiaries	3,012	3,338
				63,364	62,895