Financial review
 		 | Contents |
The 2001 financial year was characterised by sound operational performance, supported by new, low-cost production in Africa and the disposal of low-margin assets in South Africa. 

Results for the year

  • Headline earnings before unrealised hedging activities increased by 13% to $286m or 267 US cps (2000: $254m or 237 US cps).
     
  • Net profit for the year of $245m is a 48% improvement on the previous year.
     
  • Return on capital improved from 11% to 14%.
     
  • Return on equity improved from 11% to 16%.

Dividends  

The board declared a final dividend of R11 per share (illustrative $0.96 per share), bringing the total dividend for the year to R18 per share (illustrative $1.81 per share).The dividend for the year represents a continuation of the policy of paying a high dividend as well as ensuring sustainable growth and offering investors long-term value. 

Gold income  

  • The average gold price received decreased to $286/oz in 2001 from $308/oz in the previous year. See Review of Gold Market on page 8.
     
  • Gold income declined by $167m during the 2001 financial year to $2,041m, in line with lower production and lower price received. Contributions to gold income by region were as follows:
Gold income Variance
($m) 2001 2000 %
South Africa 1,298 1,587 (18)
Africa 250 111 125
Australia 155 172 (10)
North America 161 165 (2)
South America 177 173 2
Total 2,041 2,208 (8)
 
Cost of sales  

Cost of sales, comprising total cash costs, retrenchment and rehabilitation costs, change in gold inventories and amortisation of mining assets, decreased from $1,740m in 2000 to $1,519m in 2001, a decrease of 13%, analysed as follows:

- Total cash costs decreased from $1,521m in 2000 to $1,255m in 2001, following the reduction in gold produced from 7.243Moz in 2000 to 6.983Moz in 2001. This decline is largely attributable to the sale of Elandsrand and Deelkraal, the closures of some of the shafts at Matjhabeng and downsizing of the Joel operations.
- The total cash costs per ounce improved from $213/oz to $178/oz.
- Retrenchment and rehabilitation costs increased from $19m in 2000 to $35m in 2001, mainly owing to retrenchments at the Matjhabeng and Joel mines.
- Gold inventory movement was $9m in 2001. This is partially attributable to the sale of Elandsrand and Deelkraal, the impending closure of shafts at Matjhabeng and the downsizing of the Joel operations.
- Amortisation of mining assets increased from $217m in 2000 to $220m in 2001, as a result of the inclusion of Geita's amortisation charge for the full year and Morila's charge now being included for a full year as opposed to two months in the previous year.
 
Operating profit  
  • Despite a lower gold price received, operating profit for 2001 increased by 12% to $522m, $54m higher than the previous year. This is due to improvements in cost control and productivity and the effects of the devaluation of the rand.
     
  • The operating margin for the AngloGold group was 26% for 2001 and 21% for 2000. The margin varies from operation to operation and is summarised in the table on page 11. 

Net profit  

Net profit of $245m (2000: $166m) is arrived at after making the following adjustments to operating profit:

  • Total exploration expenditure was $32m (2000: $63m) of which $6m (2000: $19m) was capitalised. 
     
  • Interest received decreased to $20m, mainly as a result of the funds required for the acquisition of Geita and Morila in 2000. 
     
  • Finance costs increased by $3m to $72m, attributable to the additional borrowings required to acquire Geita and Morila. This was partially offset by decreases in interest rates.
     
  • With the adoption of IAS 39, an unrealised loss on hedging activities of $10m was recognised. 
     
  • Asset impairments effected during the year amounted to $1m compared with $93m in 2000. 
     
  • The taxation charge increased by $38m to $111m in 2001, owing mainly to an increase in earnings for the year. During the 2000 financial year, the tax charge included a deferred tax credit of $26m on impairment of mining assets. 

Cash flow

  • Operating activities 

Cash generated from operations was derived from profits from operations of $458m per the income statement, adjusted for changes in working capital and non-cash flow items. The most significant non-cash flow item was the amortisation of mining assets of $220m. 

Cash generated from operations of $673m was increased by interest receivable of $20m, but reduced by various payments to outside stakeholders detailed as follows:

- Finance costs of $73m;
- Mining and normal taxes of $111m; and
- Dividends of $167m,resulting in a net cash inflow of $333m.
  • Investing activities

The funds generated from operating activities of $333m were utilised to grow the group by investing in capital projects amounting to $298m. Major project expenditure in 2001 comprised:

- Moab Khotsong $43m;
- Sunrise Dam Project $31m; and
- Cripple Creek & Victor Expansion $78m.
The funds generated were further adjusted by:
- $109m which was received for the sale of Elandsrand and Deelkraal; and
- $43m which was received from the repayment of loans advanced.
 The net cash inflow after investment activities amounted to $185m.
  • Financing activities
- A three-year $400m syndicated loan facility was signed in May 2001. By year-end, $215m had been drawn.
- Major loans repaid were the Dresdner Bank Gold loan of $150m and Dresdner Bank loan of $110m.

The net result of the operating, investing and financing activities and translation for 2001 amounted to an outflow of $4m which, when deducted from the cash balance at 31 December 2000 of $195m, resulted in cash on hand of $191m at 31 December 2001. 

Balance sheet

  • AngloGold sold Elandsrand and Deelkraal mines to Harmony Gold Mining Company Limited. The effective date of this transaction was 1 February 2001. 
     
  • With the first-time adoption of IAS 39, financial derivatives have been raised as current assets and current liabilities. Shareholders' equity was also affected by other comprehensive income.
     
  • All debentures were redeemed during the year. 
     
  • Net debt to capital employed is 34%. This will reduce to 26% after the sale of the Free State assets and the Normandy shares. 
2001  2000
Operating Gold Operating Gold
profit income Margin profit income Margin
$m $m % $m $m %
South Africa 331 1,298 26 298 1,587 19
Africa 87 250 35 48 111 43
Australia 25 155 16 34 172 20
North America 16 161 10 19 165 11
South America 63 177 35 69 173 40
Total 522 2,041 26 468 2,208 21
Jonathan Best

Jonathan Best
Executive Director:
Finance

 

 

Headline earnings before unrealised hedging and dividends declared (US cps-illustrative)

Headline earnings before 
unrealised hedging 
and dividends declared 
(US cps-illustrative)

 

 

 

Richard Duffy

Richard Duffy
 Executive Officer: 
Business Planning

 

 

 

Steve Lenahan

Steven Lenahan
 Executive Officer: 
Corporate Affairs

 

 

 
Capex ($m)

Capex ($m)

 

| Contents |