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AngloGold Limited - Report to shareholders for the quarter and six months ended
30 June 2003
AngloGold Limited
Registration No. 1944/017354/06
Incorporated in the Republic of South Africa
ISIN: ZAE000043485
JSE share code: ANG
Report to shareholders for the quarter and six months ended 30 June 2003
Group results for the quarter
* Operating profit(1) down 4% to $140m and total cash costs up 6% to $223/oz,
due to stronger currencies against the US dollar in operating regions
* Operations steady, with higher volume mined offsetting lower grades -
Production increased 2% to 1.43Moz
* Received gold price(2) up 3% to $354/oz
* Further 7% reduction in hedge book to 8.73Moz
and for the six months
* Headline earnings(3) down 20% to $140m or 63 US cents per share
* Lower grades and stronger currencies reduced operating profit to $286m and
increased total cash costs to $217/oz
* Gold production slightly higher at 2.84Moz
* Interim dividend declared at R3.75 or 51 US cents per share
Six Six
Quarter Quarter months months
ended ended ended ended
June March June June
2003 2003 2003 2002
Rand / Metric
Gold
Produced - kg / oz (000) 44,613 43,605 88,218 87,185
Price
received2 - R/kg / $/oz 87,983 91,962 89,948 104,305
Total cash
costs - R/kg / $/oz 55,502 56,100 55,797 55,085
Total
production costs - R/kg / $/oz 65,654 66,520 66,082 68,629
Operating profit - R / $ million 1,094 1,208 2,302 3,460
Operating profit
excluding
unrealised
non-hedge
derivatives - R / $ million 1,082 1,216 2,298 3,383
Net profit - R / $ million 444 547 991 1,638
Headline earnings - R / $ million 513 605 1,118 1,973
Headline earnings
before unrealised
non-hedge
derivatives - R / $ million 516 614 1,130 1,932
Capital expenditure - R / $ million 538 488 1,026 1,297
Earnings per
ordinary share
Basic - cents per share 199 246 445 740
Headline - cents per share 230 272 502 891
Headline before
unrealised non-hedge
derivatives - cents per share 232 276 507 872
Dividends - cents per share 375 675
Six Six
Quarter Quarter months months
ended ended ended ended
June March June June
2003 2003 2003 2002
Dollar / Imperial
Gold
Produced - kg / oz (000) 1,434 1,402 2,836 2,803
Price received2 - R/kg / $/oz 354 344 349 296
Total cash costs - R/kg / $/oz 223 210 217 156
Total production
costs - R/kg / $/oz 264 248 256 195
Operating profit - R / $ million 142 145 287 316
Operating profit
excluding
unrealised
non-hedge
derivatives - R / $ million 140 146 286 309
Net profit - R / $ million 57 66 123 150
Headline earnings - R / $ million 66 73 139 180
Headline earnings
before unrealised
non-hedge
derivatives - R / $ million 66 74 140 176
Capital expenditure - R / $ million 69 59 128 118
Earnings per
ordinary share
Basic - cents per share 26 30 55 68
Headline - cents per share 30 33 62 81
Headline before
unrealised non-hedge
derivatives - cents per share 30 33 63 79
Dividends - cents per share 51 64
Note: 1. Operating profit excluding unrealised non-hedge derivatives
2. Price received including realised non-hedge derivatives
3. Headline earnings before unrealised non-hedge derivatives
$ represents US dollar, unless otherwise stated
Letter from Chairman and CEO
Dear Shareholder
AngloGold has, for a second successive quarter, produced results, which are
operationally sound, with gold production 2% higher, despite the expected lower
grades at many of the operations. Again this quarter, as we anticipated in our
report for the first three months of 2003, the company"s results were adversely
affected by local currency strength in seven of the eight countries in which we
do business - total cash costs rose 6% to $223/oz and operating profit was 4%
lower at $140m. Headline earnings were 11% down, to $66m for the quarter.
The effects of the lower grade and stronger currencies were moderated by a
higher received price for gold, which was 3% higher, at $354/oz, despite the
marginal decline in the average spot gold price for the quarter. Going forward,
we expect the company"s prudent management of its hedge book, which declined by
a further 610,000oz this quarter, to ensure that the price we receive for gold
will continue to be close to the dollar spot price. The Board has decided to
change the targeted level of hedging commitments from 50% to 30% of five years"
production. It was also confirmed that management would continue to have the
latitude to put new contracts in place where circumstances make this prudent.
We were disappointed with the company"s safety performance during the
quarter, as reflected in both our fatal accident and lost time injury
frequencies. Workplace safety remains a priority and operating management has
measures in place to improve our performance in this critical area.
Looking ahead to the operations for the rest of the year, we expect
performance to improve as the grade at Geita strengthens and production levels
at CC&V increase during the third and fourth quarters.
This year"s biennial wage negotiations for our South African operations have
now been completed. The agreement will have the effect of increasing employment
costs at these operations by approximately 10% per annum, including the
provisions for increased leave and employer contributions to retirement funding.
It remains management"s commitment, as in previous years to ensure that this
increase does not lead to a material increase in unit labour costs on
AngloGold"s South African operations, through continuing productivity
improvement programmes, which have seen individual employee productivity improve
by 18% over the last five years.
We understand that Ashanti Goldfields has been advised by the Government of
Ghana that it has appointed a consortium led by Societe Generale to act as
advisors to the Government as a shareholder, holder of the golden share in
Ashanti and as a regulator of the mining industry in Ghana, and to assist the
Government in arriving at a decision on the proposed merger of Ashanti and
AngloGold.
As we note elsewhere in this report, AngloGold and our partners in the
Jerritt Canyon joint venture, Meridian Gold, have concluded the sale of Jerritt
Canyon to Queenstake Resources. With the consequent rationalising of AngloGold"s
regional activities, our offices in Denver are being right sized. Jim Komadina,
who had the position of President, AngloGold North America, has left the
company. We take this opportunity to thank Jim for his contribution to AngloGold
and wish him well in the future.
AngloGold has declared an interim dividend of 375 South African cents per
share, or 51 US cents per share1 (the interim dividend paid in 2002 was 675
South African cents per share, or 63.8 US cents per share). This level of
dividend is consistent with AngloGold"s established practice of paying out a
significant proportion of its earnings to shareholders, after providing for its
organic growth objectives.
Russell Edey Bobby Godsell
Chairman Chief Executive Officer
30 July 2003
1 See note 5 on page 9.
Operations at a glance for the quarter ended 30 June 2003
Price received Production
% %
$/oz Variance oz (000) Variance
** **
Great Noligwa 364 6 196 8
TauTona 357 4 161 6
Morila* 337 (1) 95 -
Mponeng 358 5 128 5
Cripple Creek & Victor* 344 6 78 24
Cerro Vanguardia* 343 3 49 (18)
Morro Velho 357 (6) 55 4
Sunrise Dam 366 (2) 84 (12)
Kopanang 364 6 115 (8)
Tau Lekoa 363 5 82 1
Serra Grande* 357 (5) 24 -
Sadiola* 347 (3) 39 (3)
Geita* 307 - 62 (3)
Yatela* 346 (3) 30 43
Jerritt Canyon* 346 7 56 10
Union Reefs 362 (3) 28 47
Navachab 346 - 21 17
Ergo 351 5 49 (14)
Savuka 358 4 53 10
Other 29 (9)
AngloGold Group 354 3 1,434 2
Total cash costs EBITDA Operating profit
% % %
$/oz Variance $m Variance $m Variance
** ** **
Great Noligwa 214 4 29 7 27 8
TauTona 186 2 27 17 25 14
Morila* 94 12 23 (4) 17 (6)
Mponeng 233 7 16 14 12 20
Cripple Creek & Victor* 188 - 14 56 3 200
Cerro Vanguardia* 152 27 12 (20) 6 (33)
Morro Velho 143 13 12 (14) 9 (18)
Sunrise Dam 244 23 12 (8) 6 (25)
Kopanang 268 12 11 (15) 9 (25)
Tau Lekoa 271 10 7 - 6 -
Serra Grande* 104 12 7 17 5 -
Sadiola* 213 3 6 - 3 (25)
Geita* 230 6 5 - 3 (20)
Yatela* 198 (3) 4 33 2 68
Jerritt Canyon* 270 - 3 50 (2) 33
Union Reefs 233 (40) 3 400 3 400
Navachab 220 (8) 3 (25) 2 (50)
Ergo 351 22 (1) (200) (1) (200)
Savuka 384 (4) (1) 67 (2) (100)
Other (24) (100) 7 (42)
AngloGold Group 223 6 168 (1) 140 (4)
* Attributable
** Variance June 2003 quarter on March 2003 quarter Increase (decrease)
Review of the gold market
The closing spot price of gold of $345/oz for this quarter was US$8 higher
than the opening price; the average price for the quarter of $347/oz was
slightly lower than the average for the previous quarter. These price markers
conceal an active quarter, however, and the gold price within the quarter was
again volatile, reaching a high of $374/oz, and covering a range of $56/oz.
Currency markets showed similar volatility, with the US dollar reaching an all-
time low against the Euro of $1.19, or almost 10% weaker than its opening rate
of $1.09 to the Euro. The Australian dollar was similarly active, gaining 10%
against the US dollar, whilst the rand exchange rate against the US dollar
ranged by almost 20% between its strongest point of R7.02 and the weakest rate
of R8.33 to the US currency.
The Rand gold price covered a range of almost 30% between the high for the
quarter of R97,240/kg and the low of R75,375/kg. The local price closed the
quarter close to the lows at R82,770/kg.
Activity in the market reflected ongoing interest in gold in a period of
widespread financial, economic and political uncertainty. With the exception of
the spur to the spot price at the time of the announcement of Newmont Mining"s
offer of settlement to the Yandal creditors, the gold price was driven mostly by
movement of the US dollar against the Euro. The weakening dollar has been good
for a range of commodities, including base metals and oil, but investor and
speculator interest has been particularly focussed on gold as the most
consistent beneficiary of the weaker dollar.
Expectations of the gold price for the next 12 to 24 months are tied closely
to the fate of the US dollar and, more broadly, of the US economy. As the dollar
weakens, so the gold price is expected to rise.
The overwhelming consensus of commentators on currency markets is for a
continued weakening of the US currency, specifically against the Euro, with some
major players looking for exchange rates as low as $1.40 against the Euro by the
end of 2004. These forecasts seem to ignore some of the fundamental weaknesses
in the European economies today (particularly as a stronger Euro will continue
to squeeze growth in Europe), which would argue against further strengthening of
the common European currency. However, the reality is that many of the Asian
economies - Japan and China especially - are resisting the re-valuation of their
currencies against the dollar by actively buying US bonds, and as a result the
Euro might well have to bear a disproportionate burden of the market"s concerns
over the US dollar. For that reason, the Euro could move to an overvalued
exchange rate against the dollar.
Whilst the weakening of the US dollar has been the indicator for gold price
movements, the vehicle for effecting those price movements has been the New York
Comex. Speculators and investors who trade gold on the Comex have so far shown a
consistent pattern in gold buying, with a core net long holding since 2001 of
some 4-5Moz, and opportunistic trading up to aggregate net long positions of 10-
14Moz. It will be important for gold that Comex continue to support the price by
sustained buying as the economic indicators continue to favour gold.
The physical market continues to react negatively to higher prices. Ongoing
spot price volatility has also not helped the physical markets to adjust their
buying thresholds to new price ranges. During May, Indian imports all but
ceased, and offtake is unlikely to resume until post-monsoon seasonal buying in
August. Italian offtake for the first quarter of 2003 declined by 27% year-on-
year, and there are indications that consumer offtake of gold jewellery in the
USA has been weak.
This fall in offtake has been offset by sustained de-hedging from producers.
After a reduction of some 430t in net gold producer hedge positions during 2002,
the first quarter of 2003 saw hedges fall by a further 143t. This has provided
an important offset to weaker physical demand, as well as assisting to balance
sharply higher flows of scrap gold onto the physical markets throughout 2002.
This was particularly so in the first quarter of 2003, when scrap flows reached
a rate equivalent to almost 1,000tpa. The current levels of scrap sales or
recycling of gold exceed by a significant margin the previous record levels of
selling seen during the Asian currency crises of late 1997 - 1998. With producer
sales reduced by de-hedging, these scrap sales have been absorbed by the market,
but some long-term equilibrium will be required in the physical market in order
for this level of selling not to weigh on the price of the metal.
The currency markets continue to be dominated by movements in the value of
the US dollar. During May, the US currency reached an all time low of $1.19 to
the Euro. Although it closed the quarter at $1.15 to the Euro, at its weakest it
had lost over 40% in value against the European currency over the past 24
months. As observed above, expectations are that this devaluation will continue.
The weakness of the US dollar translated to a strengthening of both the
Australian dollar, which touched A$0.67 to the US currency late in the quarter,
and to the rand, which might otherwise have been expected to weaken on the back
of favourable corrections to South African consumer inflation rate measurement,
and a rate cut of 150 basis points during the quarter. As it was, the South
African currency ended the quarter at R7.55 to the dollar, compared with an
intra-quarter low of R8.33. As a result, South African producers remain under
pressure as the strong local currency continues to impact negatively on the
competitiveness of local production costs.
Hedging
As at 30 June 2003, the net delta hedge position of AngloGold was 8.73Moz,
0.61Moz or 18.9t lower than the hedge position at 31 March 2003. The marked-to-
market valuation of this position as at 30 June 2003 was negative $179m. These
figures reflect the ongoing reduction in forward price commitments of the
company.
At a meeting of the AngloGold board on 30 July 2003, a decision was taken to
review the current hedging upper limit of 50% of five years gold production. In
the light of the enduring strength of the dollar spot gold price and the
stability of AngloGold"s operations, it has been decided to change the targeted
level of forward-price commitments to 30% of five years production. In addition,
it was confirmed that management would continue to have the latitude to put new
forward-pricing contracts in place where the gold price and operating
circumstances make this necessary or prudent.
Hedge position
As at 30 June 2003, the group had outstanding, the following forward-pricing
commitments against future production. The total net delta tonnage of the hedge
on this date was 8.73Moz or 271.6t (at 31 March 2003: 9.34Moz or 290.5t).
The marked-to-market value of all hedge transactions making up the hedge
positions was a negative $179.3m (negative R1.35bn) as at 30 June 2003 (as at 31
March 2003: negative $251.5m - negative R1.97bn).
These values were based on a gold price of $346/oz, exchange rates of R/$7.55
and A$/$0.6761 and the prevailing market interest rates and volatilities at the
time.
Year 2003 2004 2005 2006
DOLLAR GOLD
Forward contracts Amount (kg) 16,811 26,576 19,862
$ per oz $311 $324 $333
Put options
purchased Amount (kg) 1,266 3,906 757 563
$ per oz $383 $376 $291 $291
*Delta (kg) 890 2,302 110 90
Put options sold Amount (kg) 12,006 10,886
$ per oz $328 $340
*Delta (kg) 3,307 4,065
Call options
purchased Amount (kg) 1,267 572
$ per oz $339 $360
*Delta (kg) 795 256
Call options sold Amount (kg) 16,289 9,250 16,360 14,681
$ per oz $349 $337 $322 $329
*Delta (kg) 8,005 5,716 11,614 10,030
Year 2003 2004 2005 2006
RAND GOLD
Forward contracts Amount (kg) 4,593 11,076 9,078 4,500
Rand per kg R60,137 R94,277 R116,891 R96,436
Put options
purchased Amount (kg) 1,875 1,875 1,875 1,875
Rand per kg R93,602 R93,602 R93,602 R93,602
*Delta (kg) 1,125 749 575 439
Put options sold Amount (kg)
Rand per kg
*Delta (kg)
Call options
purchased Amount (kg) 1,244
Rand per kg R77,162
*Delta (kg) 1,244
Call options sold Amount (kg) 5,909 4,688 4,687 4,688
Rand per kg R100,045 R115,284 R131,944 R132,647
*Delta (kg) 1,176 1,273 1,448 1,744
Year 2007 2008-2012 Total
DOLLAR GOLD
Forward contracts Amount (kg) 18,974 25,878 108,101
$ per oz $337 $355 $333
Put options
purchased Amount (kg) 728 7,220
$ per oz $292 $354
*Delta (kg) 119 3,511
Put options sold Amount (kg) 22,892
$ per oz $334
*Delta (kg) 7,372
Call options
purchased Amount (kg) 1,839
$ per oz $345
*Delta (kg)
Call options sold Amount (kg) 14,308 54,245 125,133
$ per oz $336 $363 $347
*Delta (kg) 9,568 35,115 80,048
Year 2007 2008-2012 Total
RAND GOLD
Forward contracts Amount (kg) 4,541 3,732 37,520
Rand per kg R114,915 R119,580 R100,843
Put options
purchased Amount (kg) 7,500
Rand per kg R93,602
*Delta (kg) 2,888
Put options sold Amount (kg)
Rand per kg
*Delta (kg)
Call options
purchased Amount (kg) 1,244
Rand per kg R77,162
*Delta (kg) 1,244
Call options sold Amount (kg) 2,986 11,944 34,902
Rand per kg R173,119 R209,288 R154,391
*Delta (kg) 379 2,615 8,635
Year 2003 2004 2005 2006
A DOLLAR GOLD
Forward contracts Amount(kg) 6,853 5,443 6,221 9,331
A$ per oz A$501 A$549 A$683 A$664
Put options purchased Amount (kg)
A$ per oz
*Delta (kg)
Put options sold Amount (kg) 933
A$ per oz A$530
*Delta(kg) 705
Call options purchased Amount(kg) 3,888 3,110 6,221
A$ per oz A$701 A$724 A$673
*Delta (kg) 13 382 1,994
Call options sold Amount (kg) 6,532
A$ per oz A$634
*Delta (kg) 624
Delta (kg) 17,202 39,050 55,239 44,002
Total net gold: Delta (oz) 553,058 1,255,473 1,775,977 1,414,706
The following table indicates the group"s currency hedge position at 30 June
2003
Year 2003 2004 2005 2006
RAND DOLLAR (000)
Forward contracts
Amount ($)
Rand per $
Put options purchased Amount ($)
Rand per $
*Delta ($)
Put options sold Amount ($)
Rand per $
*Delta ($)
Call options purchased Amount ($)
Rand per $
*Delta ($)
Call options sold Amount (kg) 20,000
Rand per $ R7.97
*Delta ($) 5,802
A DOLLAR (000)
Forward contracts Amount ($) 29,428 29,275 10,847
$ per A$ A$0.59 A$0.59 A$0.51
Year 2007 2008-2012 Total
A DOLLAR GOLD
Forward contracts Amount(kg) 8,398 13,343 49,589
A$ per oz A$635 A$654 A$624
Put options purchased Amount (kg)
A$ per oz
*Delta (kg)
Put options sold Amount (kg) 933
A$ per oz A$530
*Delta(kg) 705
Call options purchased Amount(kg) 3,732 11,197 28,148
A$ per oz A$668 A$702 A$693
*Delta (kg) 1,408 5,186 8,983
Call options sold Amount (kg) 6,532
A$ per oz A$634
*Delta (kg) 624
Delta (kg) 40,571 75,498 271,562
Total net gold: Delta (oz) 1,304,399 2,427,312 8,730,925
The following table indicates the group"s currency hedge position at 30 June
2003
Year 2007 2008-2012 Total
RAND DOLLAR (000)
Forward contracts
Amount ($)
Rand per $
Put options purchased Amount ($)
Rand per $
*Delta ($)
Put options sold Amount ($)
Rand per $
*Delta ($)
Call options purchased Amount ($)
Rand per $
*Delta ($)
Call options sold Amount (kg) 20,000
Rand per $ R7.97
*Delta ($) 5,802
A DOLLAR (000)
Forward contracts Amount ($) 69,550
$ per A$ A$0.58
* The Delta position indicated above reflects the nominal amount of the option
multiplied by the mathematical probability of option being exercised. This is
calculated using the Black-Scholes option formula with the ruling market prices,
interest rates and volatilities as at 30 June 2003.
Notes
The results included herein for the quarter and six months ended 30 June
2003, which are unaudited, are prepared using the accounting policies which are
in accordance with International Financial Reporting Standards (IFRS) and South
African Generally Accepted Accounting Practices (SA GAAP).
1. During the quarter, 21,400 ordinary shares were allotted in terms of the
AngloGold Share Incentive Scheme.
2. Orders placed and outstanding on capital contracts as at 30 June 2003
totalled R1,123m (31 March 2003: R927m), equivalent to $150m (31 March 2003:
$117m) at the rate of exchange ruling on that date.
3. Although AngloGold holds a 66.7% interest in Cripple Creek & Victor Gold
Mining Company Limited, it is currently entitled to receive 100% of the cash
flow from the operation until the loan, extended to the joint venture by
AngloGold North America Inc., is repaid.
4 During the quarter, AngloGold made the following announcements:
4.1 On 16 May 2003, AngloGold issued a cautionary announcement to shareholders
in which it confirmed that the boards of Ashanti Goldfields Company Limited and
AngloGold were in discussion regarding the proposed merger of the two companies
at a ratio of 26 AngloGold shares for every 100 Ashanti ordinary shares and
global depositary securities. These proposals may or may not lead to a proposal
being made for the entire issued share capital of Ashanti. This announcement was
followed by a further cautionary announcement on 13 June 2003 in which AngloGold
advised that the Government of Ghana, a substantial shareholder and regulator of
Ashanti, was taking appropriate professional advice in considering the proposed
merger.
4.2 On 23 May 2003, AngloGold announced that it had signed an agreement to sell
its wholly owned Amapari Project to Mineracao Pedra Branca do Amapari, for the
total consideration of $18.2m. The Amapari project is located in the State of
Amapa, North Brazil. Since acquiring the property from Minorco, the Company has
sought to prove up additional reserve ounces in order to get it to a size and
life that would justify the management resources needed to run it effectively.
This was not achieved and AngloGold, on receiving a fair offer from a purchaser
who could constructively turn this orebody to account, agreed to sell.
4.3 On 6 June 2003, AngloGold announced that it had finalised the sale of its
49% stake in the Gawler Craton Joint Venture, including the Tunkillia project
located in South Australia to Helix Resources Limited. Consideration for the
sale comprised cash of $500,000 (A$750,000), 1.25m fully-paid Helix shares
issued at A$0.20 per share and 1.25m Helix options exercisable at A$0.25 per
option before 30 November 2003 with an additional payment of $335,000
(A$500,000) deferred to the delineation of a mineable resource of 350,000
ounces. Helix"s proposed acquisition of AngloGold"s rights to the Tarcoola
Project, 60km to the south, was excluded from the final agreement. This resulted
in a restructure of the original agreement terms, as announced on 8 April 2003.
4.4 On 2 July 2003, AngloGold announced that it had concluded the sale of its
interest in the Jerritt Canyon Joint Venture to Queenstake Resources USA Inc.
effective 30 June 2003. This followed negotiations originally announced on 27
February 2003. Queenstake paid the Jerritt Canyon Joint Venture partners,
AngloGold and Meridian Gold, $1.5m in cash and 32m shares issued by a
subsidiary, Queenstake Resources Limited, with $6m in deferred payments and $4m
in future royalty payments. Queenstake accepted full closure and reclamation
liabilities. AngloGold"s shareholding represents approximately 9.2% of
Queenstake Resources Limited"s issued share capital and, although it does not
currently have any intention to acquire additional shares in Queenstake,
depending on the market price of Queenstake shares, general economic and
industry conditions and other factors, and subject to applicable securities
laws, AngloGold may either sell its shares in Queenstake or acquire additional
shares.
5. Dividend:
The directors have today declared Interim Dividend No. 94 of 375 (Interim
Dividend No. 92: 675) South African cents per ordinary share for the six months
ended 30 June 2003. In compliance with the requirements of STRATE, the salient
dates for payment of the dividend are as follows:
To holders of ordinary shares and to holders of CHESS Depositary Interests
(CDIs)
Each CDI represents one-fifth of an ordinary share.
2003
Currency conversion date for UK pounds
and Australian dollars Thursday 7 August
Last date to trade ordinary shares cum dividend Friday 15 August
Last date to register transfers of certificated
securities cum dividend Friday 15 August
Ordinary shares trade ex dividend Monday 18 August
Record date Friday 22 August
Payment date Friday 29 August
On the payment date, dividends due to holders of certificated securities on
the South African share register will either be electronically transferred to
shareholders" bank accounts or, in the absence of suitable mandates, dividend
cheques will be posted to such shareholders.
Dividends in respect of dematerialised shareholdings will be credited to
shareholders" accounts with the relevant CSDP or broker.
To comply with the further requirements of STRATE, between Monday, 18 August
2003 and Friday, 22 August 2003, both days inclusive, no transfers between the
South African, United Kingdom and Australian share registers will be permitted
and no ordinary shares pertaining to the South African share register may be
dematerialised or rematerialised.
To holders of American Depositary Shares
Each American Depositary Share (ADS) represents one ordinary share.
2003
Ex dividend on New York Stock Exchange Wednesday 20 August
Record date Friday 22 August
Approximate date for currency conversion Friday 29 August
Approximate payment date of dividend Friday 12 September
Assuming an exchange rate of R7.305/$1, the dividend payable on an ADS is
equivalent to 51 US cents. This compares with the interim dividend of 63.81 US
cents per ADS paid on 10 September 2002. However, the actual rate of payment
will depend on the exchange rate on the date for currency conversion.
6. This report contains a summary of the results of AngloGold"s operations. A
detailed report appears on the Internet and is obtainable in printed format from
the investor relations contacts, whose details, along with the website address,
appear at the end of this report.
By order of the board
R P EDEY R M GODSELL
Chairman Chief Executive Officer
30 July 2003
GROUP INCOME STATEMENT
Quarter Quarter Six months Six months
ended ended ended ended
June March June June
SA Rand million 2003 2003 2003 2002
Gold income 3,907 3,938 7,845 8,543
Cost of sales (2,932) (2,885) (5,817) (5,880)
Cash operating costs 2,429 2,378 4,807 4,736
Other cash costs 63 70 133 117
Total cash costs 2,492 2,448 4,940 4,853
Retrenchment costs 2 3 5 25
Rehabilitation and other
non-cash costs 25 24 49 26
Production costs 2,519 2,475 4,994 4,904
Amortisation of mining assets 444 449 893 1,175
Total production costs 2,963 2,924 5,887 6,079
Inventory change (31) (39) (70) (199)
975 1,053 2,028 2,663
Non-hedge derivatives 119 155 274 797
Operating profit * 1,094 1,208 2,302 3,460
Corporate administration
and other expenses (82) (85) (167) (113)
Market development costs (25) (40) (65) (88)
Exploration costs (72) (75) (147) (143)
Interest receivable 63 71 134 204
Other net expense (66) (31) (97) (12)
Finance costs (71) (69) (140) (260)
Abnormal item -
settlement of claim - - - (102)
Profit before exceptional items 841 979 1,820 2,946
Amortisation of goodwill (56) (58) (114) (153)
Impairment of mining assets (95) - (95) -
Profit (loss) on disposal
of assets 56 - 56 (137)
Termination of retirement
benefit plans - - - 2
Profit on ordinary
activities before taxation 746 921 1,667 2,658
Taxation (266) (338) (604) (955)
Normal taxation (151) (245) (396) (740)
Deferred taxation (126) (92) (218) (179)
Deferred tax on unrealised
non-hedge derivatives (15) (1) (16) (36)
Taxation on abnormal item - - - 47
Taxation on exceptional items 26 - 26 (47)
Profit on ordinary
activities after taxation 480 583 1,063 1,703
Minority interest (36) (36) (72) (65)
Net profit 444 547 991 1,638
* Operating profit
excluding unrealised
non-hedge derivatives 1,082 1,216 2,298 3,383
Headline earnings
The net profit has been
adjusted by the following
to arrive at headline
earnings:
Net profit 444 547 991 1,638
Amortisation of goodwill 56 58 114 153
Impairment of mining assets 95 - 95 -
(Profit) loss on disposal
of assets (56) - (56) 137
Termination of retirement
benefit plans - - - (2)
Taxation on exceptional items (26) - (26) 47
Headline earnings 513 605 1,118 1,973
Unrealised non-hedge derivatives (12) 8 (4) (77)
Deferred tax on unrealised
non-hedge derivatives 15 1 16 36
Headline earnings before
unrealised non-hedge
derivatives 516 614 1,130 1,932
Earnings per ordinary
share - cents
- Basic 199 246 445 740
- Headline 230 272 502 891
- Headline before
unrealised non-hedge
derivatives 232 276 507 872
Dividends
- Rm 835 1,506
- cents per share 375 675
The results have been prepared in accordance with International Financial
Reporting Standards (IFRS)
GROUP INCOME STATEMENT
Quarter Quarter Six months Six months
ended ended ended ended
June March June June
US Dollar million 2003 2003 2003 2002
Gold income 505 472 977 779
Cost of sales (380) (346) (726) (537)
Cash operating costs 314 286 600 432
Other cash costs 9 8 17 11
Total cash costs 323 294 617 443
Retrenchment costs 1 - 1 2
Rehabilitation and other
non-cash costs 3 3 6 3
Production costs 327 297 624 448
Amortisation of mining assets 57 54 111 107
Total production costs 384 351 735 555
Inventory change (4) (5) (9) (18)
125 126 251 242
Non-hedge derivatives 17 19 36 74
Operating profit * 142 145 287 316
Corporate administration
and other expenses (11) (10) (21) (11)
Market development costs (3) (5) (8) (8)
Exploration costs (9) (9) (18) (13)
Interest receivable 9 8 17 19
Other net expense (11) (3) (14) -
Finance costs (9) (8) (17) (24)
Abnormal item -
settlement of claim - - - (10)
Profit before exceptional items 108 118 226 269
Amortisation of goodwill (7) (7) (14) (14)
Impairment of mining assets (12) - (12) -
Profit (loss) on disposal
of assets 7 - 7 (12)
Termination of retirement
benefit plans - - - -
Profit on ordinary
activities before
taxation 96 111 207 243
Taxation (34) (41) (75) (87)
Normal taxation (20) (29) (49) (72)
Deferred taxation (15) (12) (27) (13)
Deferred tax on
unrealised non-hedge
derivatives (2) - (2) (3)
Taxation on abnormal item - - - 5
Taxation on exceptional items 3 - 3 (4)
Profit on ordinary
activities after taxation 62 70 132 156
Minority interest (5) (4) (9) (6)
Net profit 57 66 123 150
* Operating profit
excluding unrealised
non-hedge derivatives 140 146 286 309
Headline earnings
The net profit has been
adjusted by the following
to arrive at headline
earnings:
Net profit 57 66 123 150
Amortisation of goodwill 7 7 14 14
Impairment of mining assets 12 - 12 -
(Profit) loss on disposal
of assets (7) - (7) 12
Termination of retirement
benefit plans - - - -
Taxation on exceptional items (3) - (3) 4
Headline earnings 66 73 139 180
Unrealised non-hedge derivatives (2) 1 (1) (7)
Deferred tax on
unrealised non-hedge
derivatives 2 - 2 3
Headline earnings before
unrealised non-hedge
derivatives 66 74 140 176
Earnings per ordinary
share - cents
- Basic 26 30 55 68
- Headline 30 33 62 81
- Headline before
unrealised non-hedge
derivatives 30 33 63 79
Dividends
- $m 114 142
- cents per share 51 64
The results have been prepared in accordance with International Financial
Reporting Standards (IFRS)
GROUP BALANCE SHEET
June March June June March June
2003 2003 2002 2003 2003 2002
SA Rand million US Dollar million
Non-current assets
18,283 18,902 20,382 Mining assets 2,443 2,394 1,965
2,980 3,023 4,093 Goodwill 398 383 395
155 156 171 Investments in 21 20 17
associates
219 182 178 Other investments 29 23 17
292 286 227 AngloGold Environmental 39 36 22
Rehabilitation Trust
592 596 1,550 Derivatives 79 75 149
565 469 492 Other non-current assets 75 59 47
23,086 23,614 27,093 3,084 2,990 2,612
Current assets
1,954 2,162 1,251 Derivatives 261 274 121
1,523 2,107 2,575 Trade and other 203 267 248
receivables
1,778 1,818 1,975 Inventories 238 230 190
67 3 4 Current portion of 9 - -
other non-current
assets
2,330 2,686 3,508 Cash and cash 311 340 338
equivalents
7,652 8,776 9,313 1,022 1,111 897
30,738 32,390 36,406 Total assets 4,106 4,101 3,509
EQUITY AND LIABILITIES
12,146 11,717 13,498 Shareholders" equity 1,622 1,484 1,300
304 325 317 Minority interests 41 41 31
12,450 12,042 13,815 1,663 1,525 1,331
Non-current liabilities
4,122 6,643 7,595 Borrowings 551 841 732
1,798 1,977 2,053 Provisions 240 250 198
3,953 3,767 2,919 Deferred taxation 528 477 282
1,200 1,398 3,464 Derivatives 160 177 334
11,073 13,785 16,031 1,479 1,745 1,546
Current liabilities
2,294 2,472 2,025 Derivatives 307 313 195
2,181 2,205 2,339 Trade and other payables 291 279 225
2,547 616 1,174 Current portion 340 78 113
of borrowings
193 1,270 1,022 Taxation 26 161 99
7,215 6,563 6,560 964 831 632
30,738 32,390 36,406 Total equity 4,106 4,101 3,509
and liabilities
The results have been prepared in accordance with International Financial
Reporting Standards (IFRS)
GROUP CASH FLOW STATEMENT
Quarter Quarter Six months Quarter Quarter Six months
ended ended ended ended ended ended
June March June June March June
2003 2003 2002 2003 2003 2002
SA Rand million US Dollar million
Cash flows
from operating
activities
1,106 1,477 2,583 Cash generated 130 181 311
from operations
53 62 115 Interest received 7 7 14
Environmental
contributions and
(33) (50) (83) expenditure (4) (6) (10)
Dividends received
- 9 9 from associates - 1 1
(58) (86) (144) Finance costs (8) (10) (18)
Recoupment tax
received:
681 - 681 Free State assets 91 - 91
Recoupment tax paid:
Free State
(681) - (681) assets (91) - (91)
(547) (81) (628) Taxation paid (62) (10) (72)
Net cash inflow
from operating
521 1,331 1,852 activities 63 163 226
Cash flows from
investing
activities
(538) (488) (1,026) Capital expenditure (69) (59) (128)
Proceeds from
disposal of mining
14 - 14 assets 2 - 2
(3) - (3) Investments acquired - - -
8 - 8 Disposal of subsidiary 1 - 1
(6) (2) (8) Loans advanced (1) - (1)
7 - 7 Repayment of 1 - 1
loans advanced
Net cash outflow
from investing
(518) (490) (1,008) activities (66) (59) (125)
Cash flows from
financing
activities
3 17 20 Proceeds from issue - 2 2
of share capital
(1) (1) (2) Share issue expenses - - -
75 73 148 Proceeds from 9 9 18
borrowings
(305) (108) (413) Repayment of (38) (13) (51)
borrowings
(38) (1,522) (1,560) Dividends paid (5) (185) (190)
Net cash outflow
from financing
(266) (1,541) (1,807) activities (34) (187) (221)
Net decrease in
cash and cash
(263) (700) (963) equivalents (37) (83) (120)
(93) (158) (251) Translation 8 10 18
2,686 3,544 3,544 Opening cash and 340 413 413
cash equivalents
2,330 2,686 2,330 Closing cash and 311 340 311
cash equivalents
The results have been prepared in accordance with International Financial
Reporting Standards (IFRS)
NOTES TO THE CASH FLOW STATEMENT
Quarter Quarter Six months Quarter Quarter Six months
ended ended ended ended ended ended
June March June June March June
2003 2003 2002 2003 2003 2002
SA Rand million US Dollar million
Cash generated
from operations
746 921 1,667 Profit on ordinary 96 111 207
activities before
taxation
Adjusted for:
(15) (58) (73) Non-cash movements (2) (7) (9)
444 449 893 Amortisation of 57 54 111
mining assets
(63) (71) (134) Interest receivable (9) (8) (17)
26 44 70 Other net income 4 5 9
71 69 140 Finance costs 9 8 17
(26) 11 (15) Movement on non-hedge (3) 1 (2)
derivatives
56 58 114 Amortisation of 7 7 14
goodwill
95 - 95 Impairment of 12 - 12
mining assets
(56) - (56) Profit on disposal (7) - (7)
of assets
(172) 54 (118) Movement in working (34) 10 (24)
capital
1,106 1,477 2,583 130 181 311
Movement in working
capital:
(99) 84 (15) (Increase) decrease (28) (11) (39)
in trade and other
receivables
26 30 56 (Increase) decrease (9) (15) (24)
in inventories
(99) (60) (159) Increase (decrease) 3 36 39
in trade and other
payables
(172) 54 (118) (34) 10 (24)
STATEMENT OF CHANGES IN SHAREHOLDERS" EQUITY
Ordinary Non- Foreign Other Retained Total
share distri- currency comprehensive earnings
capital and butable translation income
premium reserves
SA Rand million
Balance at
31 Dec 2002 9,607 138 360 (1,583) 3,853 12,375
Movements on
other
comprehensive
income 666 666
Net profit 991 991
Dividends paid (1,500) (1,500)
Ordinary shares
issued 18 18
Translation (540) 135 1 (404)
Balance at
30 June 2003 9,625 138 (180) (782) 3,345 12,146
US Dollar million
Balance at
31 December 2002 1,120 16 43 (185) 449 1,443
Movements on
other
Comprehensive
income 94 - 94
Net profit 123 123
Dividends paid (183) (183)
Ordinary shares
issued 2 2
Translation 164 2 (67) (14) 58 143
Balance at
30 June 2003 1,286 18 (24) (105) 447 1,622
The results have been prepared in accordance with International Financial
Reporting Standards (IFRS)
AngloGold
Riches of Africa
Jewellery Design Competition
A leader in gold marketing internationally, AngloGold is involved in a range of
projects to increase consumer demand for gold jewellery through enhancing its
image and desirability. These have included the sponsorship of a number of gold
jewellery competitions, which the company has found to be an effective way of
encouraging designers to experiment with new styles and techniques in gold.
When AngloGold established the Riches of Africa gold jewellery design
competition in South Africa in 1998, there were further objectives in mind.
These were to use the competition to enhance local skills and to support the
local gold jewellery industry, and to use the event to showcase the design and
goldsmithing capabilities of South Africans.
With the recent unveiling of the fifth gold jewellery collection - Riches of
Africa 2003 - in Johannesburg, it seems appropriate to reflect on what has been
achieved since the competition was launched. Support for the event has grown,
with the number of entries growing from 204 in 1999 to 1,112 in 2003.
Unquestionably, if the collections of the first and fifth competitions are
compared the pieces of 2003 are more innovative, more visually arresting and
definitely bolder than those of 1999.
This does not detract from the achievements of the first winners. The
progress is testimony to the great value of competitions, challenging people to
try ever harder to improve standards and to innovate. It is also a consequence
of changes to the rules every year. These changes have been made in the
interests of fine-tuning competition conditions to give entrants every chance to
produce the best work possible. Important changes that have been made are the
introduction of a theme; the holding of workshops for all entrants; the opening
of the competition to non-jewellers, making the event accessible to people
involved in all design disciplines; and the scrapping of separate categories for
professionals and amateurs. The most significant development in 2003 has been to
allow participants to include both white and coloured gold in their designs.
The overall winner of this year"s competition was Cape Town-based Johan Louw,
for a neckpiece inspired by the wings of dragonflies. Noeline Kruger, also from
Cape Town, took second place and Alet-Marie van Zyl, from Johannesburg, was
placed third.
The Minister of Minerals and Energy, Phumzile Mlambo-Ngcuka, speaking at the
award ceremony, recognised the significant contribution made by AngloGold to the
development of South African jewellery design talent. She applauded AngloGold"s
involvement with OroAfrica and that company"s success in growing its jewellery
exports to the United States during the past two years.
The Riches of Africa collections are exhibited throughout South Africa and
abroad, either in fashion shows where they are teamed with designer garments or
in exhibitions. AngloGold is proud of the role that Riches of Africa has played
in bringing the talents of South African jewellery designers and goldsmiths to
the attention of a wide audience.
Administrative information:
AngloGold Limited
Registration No. 1944/017354/06
Incorporated in the Republic of South Africa
ISIN: ZAE000043485
Share codes:
JSE: ANG
LSE: 79 LK
NYSE: AU
ASX: AGG
Euronext Paris: VA FP
Euronext Brussels: ANG BB
JSE Sponsor: UBS
Contacts:
South Africa
Steve Lenahan
Telephone: +27 11 637 6248
Fax: +27 11 637 6400
E-mail: slenahan@anglogold.com
Peta Baldwin
Telephone: +27 11 637 6647
Fax: +27 11 637 6399
E-mail: pbaldwin@anglogold.com
Europe / Asia
Tomasz Nadrowski
Telephone: +1 212 750 7999
Fax: +1 212 750 5626
E-mail: tnadrowski@anglogold.com
United States of America
Charles Carter
Telephone: (800) 417 9255 (toll free in USA and Canada)
or +1 212 750 7999
Fax: +1 212 750 5626
E-mail: cecarter@anglogold.com
Australia
Andrea Maxey
Telephone: +61 8 9425 4604
Fax: +61 8 9425 4662
E-mail: amaxey@anglogold.com.au
General E-mail enquiries:
investors@anglogold.com
AngloGold website:
http://www.anglogold.com
Directors:
Executive:
R M Godsell (Chief Executive Officer)
J G Best
D L Hodgson
K H Williams
Non-Executive:
R P Edey* (Chairman)
Dr T J Motlatsi (Deputy Chairman)
F B Arisman#
Mrs E le R Bradley
C B Brayshaw
A W Lea (Alternate: P G Whitcutt)
W A Nairn (Alternate: A H Calver*)
J Ogilvie Thompson (Alternate: D D Barber)
N F Oppenheimer
A J Trahar
* British # American
Offices:
Registered and Corporate
Managing Secretary
Ms Y Z Simelane
Company Secretary:
C R Bull
11 Diagonal Street
Johannesburg 2001
(PO Box 62117, Marshalltown 2107)
South Africa
Telephone: +27 11 637 6000
Fax: +27 11 637 6624
Australia:
Level 13, St Martins Tower
44 St George"s Terrace
Perth, WA 6000
(PO Box Z5046, Perth WA 6831)
Australia
Telephone: +61 8 9425 4604
Fax: +61 8 9425 4662
United Kingdom Secretaries
St James"s Corporate Services Limited
6 St James"s Place
London SW1A 1NP
England
Telephone: +44 20 7499 3916
Fax: +44 20 7491 1989
Share Registrars:
South Africa
Computershare Limited
Ground Floor, 70 Marshall Street
Johannesburg 2001
(PO Box 61051, Marshalltown 2107)
South Africa
Telephone: +27 11 370 7700
Fax: +27 11 688 7722
United Kingdom
Computershare Investor Services PLC
P O Box 82
The Pavilions
Bridgwater Road
Bristol BS99 7NH
England
Telephone: +44 870 702 0001
Fax: +44 870 703 6119
Australia
Computershare Investor Services Pty Limited
Level 2, 45 St George"s Terrace
Perth, WA 6000
(GPO Box D182 Perth, WA 6840)
Australia
Telephone: +61 8 9323 2000
Telephone: 1300 55 7010 (in Australia)
Fax: +61 8 9323 2033
ADR Depositary:
The Bank of New York
101 Barclay Street
22nd Floor
New York, NY 10286
United States of America
Telephone: +1 888 269 2377
Fax: +1 212 571 3050/3052
Global BuyDIRECTSM
The Bank of New York maintains a direct share purchase and dividend
reinvestment plan for AngloGold. For additional information, please visit The
Bank of New York"s website at
www.globalbuydirect.com or call Shareholder Relations Department at
1-888-BNY-ADRS or write to:
The Bank of New York
Church Street Station, PO Box 11258
New York, NY 10286-1258
United States of America
Fax: +1 302 738 7210
Certain statements contained in this document, including, without limitation,
those concerning the economic outlook for the gold mining industry, expectations
regarding gold prices and production, the completion and commencement of
commercial operations of certain of AngloGold"s exploration and production
projects, and its liquidity and capital resources and expenditure, contain
certain forward-looking statements regarding AngloGold"s operations, economic
performance and financial condition. Although AngloGold believes that the
expectations reflected in such forward-looking statements are reasonable, no
assurance can be given that such expectations will prove to have been correct.
Accordingly, results could differ materially from those set out in the forward-
looking statements as a result of, among other factors, changes in economic and
market conditions, success of business and operating intiatives, changes in the
regulatory environment and other government actions, fluctuations in gold prices
and exchange rates, and business and operational risk management. For a
discussion on such risk factors, refer to the annual report on Form 20-F for the
year ended 31 December 2002, which was filed with the Securities and Exchange
Commission on 7 April 2003.
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