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IAS financial statements
|The IAS financial statements are prepared on the
historical cost basis. The group's accounting policies set out below are consistent in all
material respects with those applied in the previous financial year. The policies adopted
comply with the standards issued by the International Accounting Standards (IAS)
The method adopted for the combination of the scheme companies on the formation of the AngloGold group 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 the company and the nominal value of the share capital and share premium of the scheme companies acquired has been reflected as the merger adjustment and set-off against shareholders' equity.
Where an investment in a subsidiary or a joint venture is acquired or disposed of during the financial year, its results are included from, or to the date control became, or ceased to be effective. Where an investment in a subsidiary or a joint venture is made during the financial year, any excess of the purchase price compared with the fair value of the attributable net assets is recognised as goodwill and amortised as an expense over the lesser of its useful life or 20 years.
All intergroup transactions and balances are eliminated on consolidation. Unearned profits that arise between group entities are eliminated.
The income statement includes the group's proportionate share of the results of operations, the attributable share of taxation thereon, and outside shareholders' interest in net income of associates. The equity-accounted retained earnings of associates, which are not available for distribution by way of a dividend to the company's shareholders, less any provisions, are transferred to a non-distributable reserve.
Results of associates are equity accounted from their most recent audited annual financial statements or unaudited interim statements. Any losses of associates are brought to account until the investment in and loans to such associates are written down to a nominal amount. Thereafter losses are accounted for only insofar as the group is committed to providing financial support to such associates.
The carrying values of the investments in associates
represent the cost of each investment, including unamortised goodwill, the share of
post-acquisition retained earnings and any other movements in reserves. The carrying value
is compared with the associate's market value or directors' valuation. Where, in the
opinion of the directors, the value of an associate
3. Mining assets
Mine development costs
Proved and probable reserves reflect estimated quantities of economically recoverable reserves, which can be recovered in future from known mineral deposits.
Mineral rights, dumps and other
Operating lease rentals are charged against operating profits in a systematic manner related to the period of use of the assets concerned.
Gold on hand, uranium oxide and sulphuric acid are valued on an average production cost method
Gold in process is valued at the average production cost of the relevant stage of production.
Consumable stores are valued at the lower of average cost or net realisable value.
5. Environmental expenditure
Annual contributions are made to the group's Environmental Trust Fund, created in accordance with the statutory requirements, to provide for the estimated cost of pollution control and rehabilitation during and at the end of the life of the mine. Interest earned on monies paid to the trust fund is accrued on an annual basis and is set off against future liability of the group.
6. Post-retirement benefits
Defined contribution plans
Defined benefit plans
Post-retirement medical aid costs
The post-retirement medical aid liability in respect of existing employees is recognised as an expense systematically over the expected remaining service period of those employees, using the projected unit credit method. The liability in respect of retired employees is recognised immediately as an expense.
7. Revenue recognition
Dividends are recognised when the right to receive payment is established.
Interest is recognised
on a time proportion basis, taking account of the
8. Deferred taxation
9. Hedging transactions
Gains and losses on gold hedging instruments that effectively establish prices for future production, are recognised in income at the earlier of any cash flow or delivery of the related hedged production.
Hedged positions below current cost of production are recognised in the period in which the loss arises.
Foreign currency derivative financial instruments are translated at contract rates. Gains and losses on these contracts are recognised in income as a component of the related gold transaction.
10. Foreign currency
The balance sheets and income statements of foreign subsidiaries are translated on the following bases:
Assets and liabilities (both monetary and non-monetary) are translated at the closing rate. Income statement items are translated at a weighted average rate of exchange for the period. Exchange differences are taken directly to a foreign currency translation reserve which is included with non-distributable reserves.
Monetary items of these operations are translated using the closing rate of exchange. Non-monetary items are translated at the rate of exchange at the historical transaction date. Income statement items are translated at a weighted average rate of exchange for the period. All exchange differences are taken to the income statement for the period.
11. Translation into US dollars
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