For the six months ended 30 June 2016 compared with the six months ended 30 June 2015

REVENUE

Attributable equivalent gold production increased marginally from 1,036,000 ounces for the six months ended 30 June 2015 to 1,044,000 ounces for the six months ended 30 June 2016. South Deep and Darlot produced more gold in the six months ended 30 June 2016.

Gold production at South Deep in South Africa, increased by 87 per cent from 2,332 kilograms (75,000 ounces) to 4,356 kilograms (140,000 ounces).

Attributable gold production at the West African operations decreased by 7 per cent from 335,200 for the six months ended 30 June 2015 to 310,900 ounces for the six months ended 30 June 2016 due to lower production at both Tarkwa and Damang. Attributable equivalent gold production at Cerro Corona in Peru decreased by 15 per cent from 149,400 ounces for the six months ended 30 June 2015 to 126,900 ounces for the six months ended 30 June 2016. Gold production at the Australian operations decreased by 2 per cent from 476,400 ounces for the six months ended 30 June 2015 to 466,100 ounces for the six months ended 30 June 2016 due to lower production at all the operations except Darlot.

At the South Africa region, production at South Deep increased by 87 per cent from 2,332 kilograms (75,000 ounces) for the six months ended 30 June 2015 to 4,356 kilograms (140,000 ounces) for the six months ended 30 June 2016 due to increased volumes and grades.

At the West Africa region, managed gold production at Tarkwa decreased by 6 per cent from 292,000 ounces for the six months ended 30 June 2015 to 273,500 ounces for the six months ended 30 June 2016 mainly due to lower tonnes mined and lower plant throughput at a lower yield. At Damang, managed gold production decreased by 11 per cent from 80,500 ounces for the six months ended 30 June 2015 to 71,900 ounces for the six months ended 30 June 2016 mainly due to lower tonnes mined and processed as well as lower yield.

At the South America region, total managed gold equivalent production at Cerro Corona decreased by 15 per cent from 150,200 ounces for the six months ended 30 June 2015 to 127,500 ounces for the six months ended 30 June 2016 mainly due to the lower copper price relative to the gold price (price factor) and lower gold head grades, a function of planned changes in the mining sequence as the pit floor is lowered across the footprint.

At the Australia region, St Ives' gold production decreased by 6 per cent from 187,900 ounces for the six months ended 30 June 2015 to 175,900 ounces for the six months ended 30 June 2016 mainly due to decreased tonnes processed and lower grades. At Agnew/Lawlers, gold production decreased by 4 per cent from 113,400 ounces for the six months ended 30 June 2015 to 109,300 ounces for the six months ended 30 June 2016 mainly due to decreased tonnes mined and processed, partially offset by higher grades. At Darlot, gold production increased by 31 per cent from 28,500 ounces for the six months ended 30 June 2015 to 37,200 ounces for the six months ended 30 June 2016 mainly due to increased tonnes mined and processed as well as higher grades. At Granny Smith, gold production decreased by 2 per cent from 146,600 ounces for the six months ended 30 June 2015 to 143,700 ounces for the six months ended 30 June 2016 due to lower grades mined and processed.

The average US dollar gold price achieved by the Group increased by 3 per cent from US$1,186 per equivalent ounce for the six months ended 30 June 2015 to US$1,218 per equivalent ounce for the six months ended 30 June 2016. The average rand gold price increased by 31 per cent from R460,152 per kilogram to R601,187 per kilogram. The average Australian dollar gold price increased by 8 per cent from A$1,540 per ounce to A$1,657 per ounce. The average US dollar gold price for the Ghanaian operations increased by 1 per cent from US$1,207 per ounce for the six months ended 30 June 2015 to US$1,217 per ounce for the six months ended 30 June 2016. The average equivalent US dollar gold price, net of treatment and refining charges, for Cerro Corona increased by 16 per cent from US$1,059 per equivalent ounce for the six months ended 30 June 2015 to US$1,227 per equivalent ounce for the six months ended 30 June 2016. The average US dollar/Rand exchange rate weakened by 29 per cent from R11.89 for the six months ended 30 June 2015 to R15.39 for the six months ended 30 June 2016. The average Australian/US dollar exchange rate weakened by 5 per cent from A$1.00 = US$0.78 to A$1.00 = US$0.74.

Revenue increased by 3 per cent from US$1,270 million for the six months ended 30 June 2015 to US$1,305 million for the six months ended 30 June 2016 mainly due to the higher gold price achieved.

OPERATING COSTS

Net operating costs decreased by 11 per cent from US$748 million for the six months ended 30 June 2015 to US$666 million for the six months ended 30 June 2016. The US$82 million lower net operating costs were due to lower mining costs of US$28 million in local currencies and the exchange rate effect of US$54 million on translation into US dollars. The gold-in-process credit to cost of US$25 million for the six months ended 30 June 2016 compared with a charge of US$34 million for the six months ended 30 June 2015. This change in gold-in-process was mainly at St Ives due to the processing of low grade stockpiles while the Invincible pit was being stripped in the six months to June 2015. Sufficient ore to fill the mill and to create stockpiles was mined in the six months ended June 2016.

At the South Africa region, net operating costs at South Deep increased by 46 per cent from R1,340 million (US$113 million) for the six months ended 30 June 2015 to R1,959 million (US$127 million) for the six months ended 30 June 2016 mainly due to higher production, annual salary increases and an increase in employees and contractors in line with the strategy to sustainably improve all aspects of the operation.

At the West Africa region, net operating costs decreased by 12 per cent from US$262 million for the six months ended 30 June 2015 to US$230 million for the six months ended 30 June 2016. This decrease in net operating costs was mainly due to lower production, continued business process re-engineering, as well as a build-up of inventory of US$8 million for the six months ended 30 June 2016 compared with a drawdown of US$2 million for the six months ended 30 June 2015.

At the South America region, net operating costs at Cerro Corona decreased by 11 per cent from US$71 million for the six months ended 30 June 2015 to US$63 million for the six months ended 30 June 2016 mainly due to a build-up of concentrate of US$6 million for the six months ended 30 June 2016 compared with US$nil million for the six months ended 30 June 2015.

At the Australia region, net operating costs decreased by 13 per cent from A$387 million (US$303 million) for the six months ended 30 June 2015 to A$337 million (US$247 million) for the six months ended 30 June 2016 mainly due to gold-in-process movements. At St Ives, the gold-in-process credit to cost of A$16 million (US$12 million) for the six months ended June 2016 compared with a charge of A$38 million (US$30 million) for the six months ended June 2015. In the six months ended June 2015, St Ives processed low grade stockpiles, whereas enough ore was mined to fill the mill and to create stockpiles in the six months ended June 2016. At Granny Smith, the gold-in-process credit to cost of A$2 million (US$1 million) for the six months ended June 2016 compared with a charge of A$6 million (US$5 million) for the six months ended June 2015. This A$8 million (US$6 million) change in gold-in-process was mainly due to timing of the campaign milling. At Agnew/Lawlers, a gold-in-process charge of A$4 million (US$3 million) for the six months ended 30 June 2016 compared with a credit to cost of A$1 million (US$1 million) for the six months ended 30 June 2015. At Darlot, a goldin- process charge of A$1 million (US$nil million) for the six months ended 30 June 2016 compared with A$2 million (US$1 million) for the six months ended 30 June 2015.

OPERATING PROFIT

Operating profit for the Group increased by 22 per cent from US$522 million for the six months ended 30 June 2015 to US$639 million for the six months ended 30 June 2016 due to the increase in revenue and the decrease in net operating costs.

AMORTISATION

Amortisation for the Group increased by 6 per cent from US$283 million for the six months ended 30 June 2015 to US$300 million for the six months ended 30 June 2016. This increase of US$17 million was due to actual amortisation increases of US$34 million due to the change in estimate in the depreciation at Cerro Corona and in Australia mainly due to lower reserves at St Ives, partially offset by an exchange rate effect of US$17 million.

OTHER

Net interest expense for the Group decreased by 9 per cent from US$34 million for the six months ended 30 June 2015 to US$31 million for the six months ended 30 June 2016. Interest expense of US$41 million, partially offset by interest income of US$3 million and interest capitalised of US$7 million for the six months ended 30 June 2016 compared with interest expense of US$46 million, partially offset by interest income of US$3 million and interest capitalised of US$9 million for the six months ended 30 June 2015.

The share of equity accounted losses decreased by 50 per cent from US$4 million for the six months ended 30 June 2015 to US$2 million for the six months ended 30 June 2016 due to downscaling of activities at Far Southeast project (FSE) and mainly related to ongoing study and evaluation costs.

The gain on financial instruments of US$6 million for the six months ended 30 June 2016 was mainly due to the South Deep currency hedge of US$70 million at an average price of R16.8273 to the US$. This compared with a loss of US$1 million for the six months ended 30 June 2015 which related to the mark to market adjustment on the diesel hedges that the Australian operations entered into on 10 September 2014 and 26 November 2014. The diesel hedges came to an end on 30 June 2015.

Share-based payments for the Group was similar at US$6 million while long-term employee benefits increased from US$3 million to US$20 million. The two schemes combined were at US$26 million for the six months ended 30 June 2016 compared with US$9 million for the six months ended 30 June 2015 due to upward mark to market adjustments on the long-term employee incentive scheme.

Other costs for the Group increased from US$19 million to US$24 million, mainly due to the write-off of bank facility fees of US$5 million as a result of refinancing the off-shore credit facility.

EXPLORATION AND PROJECT COSTS

Exploration and project costs increased from US$33 million for the six months ended 30 June 2015 to US$41 million for the six months ended 30 June 2016 mainly due to increased expenditure of US$8 million at Salares Norte.

NON-RECURRING ITEMS

Non-recurring income of US$6 million for the six months ended 30 June 2016 compared with non-recurring expenses of US$11 million for the six months ended 30 June 2015. The non-recurring income for the six months ended 30 June 2016 included profit of US$18 million on the buy-back of the bond which was partially offset by retrenchment costs of US$10 million at Damang.

The non-recurring expenses for the six months ended 30 June 2015 included impairment of the Group's investment in Hummingbird (US$7 million) to its fair value and retrenchment costs of A$3 million (US$3 million) at St Ives.

ROYALTIES

Government royalties for the Group decreased from US$40 million for the six months ended 30 June 2015 to US$39 million for the six months ended 30 June 2016.

TAXATION

The taxation charge for the Group of US$68 million for the six months ended 30 June 2016 compared with US$87 million for the six months ended 30 June 2015. Normal taxation increased from US$64 million to US$83 million due to higher taxable income. The deferred tax credit of US$15 million for the six months ended 30 June 2016 compared with a charge of US$23 million for the six months ended 30 June 2015. The deferred tax credit for the six months ended 30 June 2016 arose mainly due to the strengthening of the Peruvian Nuevo Sol, as well as the change in the corporate tax rate from 35 per cent to 32.5 per cent in Ghana as a result of the conclusion of the Development Agreement in the March 2016 quarter.

The tax returns for Cerro Corona are filed in Peruvian Nuevo Sol (Soles) and the functional currency for accounting purposes is the US dollar. For accounting purposes the unredeemed capital allowance balance in respect of the operation must be converted from Soles to dollars at the closing rate at quarter end. Therefore, the US dollar equivalent of the unredeemed capital allowance balance fluctuates due to movements in the exchange rate between the Peruvian Nuevo Sol and the US dollar. This resulted in a change in the temporary taxation differences for non-monetary assets on translation. A deferred tax credit of US$5 million arose due to the strengthening of the exchange rate from 3.38 Nuevo Sol to 3.28 Nuevo Sol in the six months to June 2016, compared with a deferred tax charge of US$26 million which arose due to the weakening of the exchange rate from 2.84 Nuevo Sol to 3.17 Nuevo Sol in the six months ended June 2015. It has no cash effect.

EARNINGS

Net earnings attributable to owners of the parent of US$115 million or US$0.14 per share for the six months ended 30 June 2016 compared with net losses of US$2 million or US$0.00 per share for the six months ended 30 June 2015.

Headline earnings attributable to owners of the parent of US$124 million or US$0.16 per share for the six months ended 30 June 2016 compared with headline earnings of US$5 million or US$0.01 per share for the six months ended 30 June 2015.

Normalised earnings of US$103 million or US$0.13 per share for the six months ended 30 June 2016 compared with US$8 million or US$0.01 per share for the six months ended 30 June 2015.

CASH FLOW

Cash inflow from operating activities of US$384 million for the six months ended 30 June 2016 compared with US$342 million for the six months ended 30 June 2015. This increase was mainly due to an increase in operating profit of US$117 million and non-recurring income of US$6 million for the six months ended 30 June 2016 compared with non-recurring expense of US$11 million for the six months ended 30 June 2015, partially offset by an investment into working capital of US$13 million for the six months ended 30 June 2016 compared with a release of working capital of US$43 million for the six months ended 30 June 2015 as well as higher tax paid (US$127 million versus US$119 million).

Dividends paid of US$11 million for the six months ended 30 June 2016 compared with US$18 million for the six months ended 30 June 2015. Dividends paid to owners of the parent decreased from US$13 million for the six months ended 30 June 2015 to US$11 million for the six months ended 30 June 2016. Dividends paid to non-controlling interest holders of US$nil million for the six months ended 30 June 2016 compared with US$5 million 30 June 2015.

Cash outflow from investing activities decreased from US$340 million for the six months ended 30 June 2015 to US$321 million for the six months ended 30 June 2016 due to a decrease in capital expenditure from US$333 million for the six months ended 30 June 2015 to US$316 million for the six months ended 30 June 2016. This decrease of US$17 million related to a decrease of US$24 million due to currency changes, partially offset by actual increased capital expenditure of US$7 million in local currency. Environmental payments decreased from US$9 million for the six months ended June 2015 to US$8 million for the six months ended 30 June 2016.

Cash inflow from operating activities less net capital expenditure and environmental payments of US$60 million for the six months ended 30 June 2016 compared with US$1 million for the six months ended 30 June 2015 mainly due to higher profit and lower capital expenditure, partially offset by higher royalties and taxation paid and negative working capital adjustments. The US$60 million for the six months ended 30 June 2016 comprised: US$163 million net cash generated by the eight mining operations (after royalties, taxes, capital expenditure and environmental payments), less US$37 million of net interest paid, US$28 million for exploration mainly at Salares Norte (this excludes any mine based brownfields exploration which is included in the US$163 million above) and US$38 million on non-mine based costs of which US$29 million was due to working capital movements. The US$1 million for the six months ended 30 June 2015 comprised: US$70 million generated by the eight mining operations less US$39 million of interest paid (this excludes any interest paid by the mines), US$18 million for exploration (this excludes any mine based brownfields exploration which is included in the US$70 million above) and US$12 million on non-mine based costs.

In the South Africa region at South Deep, capital expenditure increased from R419 million (US$35 million) for the six months ended 30 June 2015 to R682 million (US$44 million) for the six months ended 30 June 2016 due to higher expenditure on fleet, the refurbishment of the man winder at Twin shaft and higher expenditure on new mine development.

At the West Africa region, capital expenditure decreased from US$141 million to US$102 million. At Tarkwa, capital expenditure decreased from US$133 million to US$91 million due to higher fleet expenditure for the six months to June 2015 related to timing of deliveries and orders. Capital expenditure for the six months to June 2016 was mainly incurred on pre-stripping. Capital expenditure at Damang increased from US$8 million to US$11 million mainly due to waste stripping at Amoanda pit.

In the South America region at Cerro Corona, capital expenditure decreased from US$19 million to US$14 million. The majority of the expenditure was on the construction of further raises to the tailings dam.

At the Australia region, capital expenditure increased from A$176 million (US$138 million) for the six months ended 30 June 2015 to A$214 million (US$157 million) for the six months ended 30 June 2016. At St Ives, capital expenditure increased from A$77 million (US$60 million) for the six months ended 30 June 2015 to A$94 million (US$69 million) for the six months ended 30 June 2016 due to increased pre-strip at Neptune, Invincible and A5. At Agnew/Lawlers, capital expenditure increased from A$44 million (US$34 million) to A$54 million (US$40 million) due to increased decline development. At Darlot, capital expenditure increased marginally from A$13 million (US$10 million) to A$14 million (US$10 million) and at Granny Smith, capital expenditure increased from A$43 million (US$34 million) for the six months ended 30 June 2015 to A$51 million (US$38 million) for the six months ended 30 June 2016 due to increased capital development, the new fresh air intake ventilation raise and the completion of the new gas fired power station.

Net cash inflow from financing activities of US$7 million for the six months ended 30 June 2016 compared with outflow from financing activities of US$18 million for the six months ended 30 June 2015. The inflow for the six months ended 30 June 2016 related to a drawdown of US$422 million and proceeds on the issue of shares of US$152 million, partially offset by the repayment of US$567 million on offshore and local loans. The outflow for the six months ended June 2015 related to a net repayment of loans.

The net cash inflow for the Group of US$59 million for the six months ended 30 June 2016 compared with an outflow of US$34 million for the six months ended 30 June 2015. After accounting for a positive translation adjustment of US$4 million on non-US dollar cash balances, the cash inflow for the six months ended 30 June 2016 was US$63 million. The cash balance was US$415 million at 30 June 2015 compared with US$503 million at 30 June 2016.

ALL-IN SUSTAINING AND TOTAL ALL-IN COST

The Group all-in sustaining costs decreased by 8 per cent from US$1,083 per ounce for the six months ended 30 June 2015 to US$992 per ounce for the six months ended 30 June 2016 mainly due to lower net operating costs and lower sustaining capital expenditure, partially offset by lower by-product credits and higher cash remuneration (long term employee benefits). Total all-in cost decreased by 8 per cent from US$1,108 per ounce for the six months ended 30 June 2015 to US$1,024 per ounce for the six months ended 30 June 2016 for the same reasons as all-in sustaining costs.

In the South Africa region, at South Deep, all-in sustaining costs decreased by 17 per cent from R731,017 per kilogram (US$1,912 per ounce) to R608,825 per kilogram (US$1,229 per ounce) mainly due to increased gold sold, partially offset by higher operating costs and higher sustaining capital expenditure. The total all-in cost decreased by 19 per cent from R772,702 per kilogram (US$2,020 per ounce) to R622,453 per kilogram (US$1,257 per ounce) due to the same reasons as for all-in sustaining costs as well as lower nonsustaining capital expenditure.

At the West Africa region, all-in sustaining costs and total all-in cost decreased by 9 per cent from US$1,156 per ounce for the six months ended 30 June 2015 to US$1,052 per ounce for the six months ended 30 June 2016 mainly due to lower net operating costs and lower capital expenditure, partially offset by lower gold sold.

At the South America region, all-in sustaining costs and total all-in cost increased by 16 per cent from US$423 per ounce to US$489 per ounce mainly due to lower gold sold and lower by-product credits, partially offset by lower net operating costs. All-in sustaining costs and total all-in cost per equivalent ounce increased by 9 per cent from US$666 per equivalent ounce to US$728 per equivalent ounce mainly due to the same reasons as above, other than lower by-product credits as well as lower equivalent ounces sold.

At the Australia region, all-in sustaining costs and total all-in cost increased marginally from A$1,263 per ounce (US$990 per ounce) for the six months ended 31 December 2015 to A$1,265 per ounce (US$928 per ounce) for the six months ended 30 June 2016 mainly due to higher capital expenditure and lower gold sold.

FREE CASH FLOW MARGIN.

The free cash flow (FCF) margin is revenue less cash outflow divided by revenue expressed as a percentage.

The FCF for the Group for the six months ended June 2016 is calculated as follows:

  US$’m   US$/oz  
Revenue* 1,247.8   1,225  
Less: Cash outflow (1,078.5)   1,059  
AIC (1,042.8)   (1,024)  
Adjusted for        
Share-based payments (as non-cash) 5.6   5  
Long-term employee benefits 20.1   20  
Exploration, feasibility and evaluation costs outside of existing operations 28.0   28  
Tax paid (excluding royalties which is included in AIC above) (89.4)   (88)  
Free cash flow** 169.3   166  
FCF margin 14%      
Gold sold only – 000’ounces 1,018.4      

*
Revenue from income statement at US$1,304.9 million less revenue from by-products in AIC at US$57.1 million equals US$1,247.8 million.
**
Free cash flow does not agree with cash flows from operating activities less capital expenditure in the statement of cash flows on page 17 mainly due to working capital adjustments and non-recurring items included in statement of cash flows.

The FCF margin of 14 per cent for the six months ended 30 June 2016 at a gold price of US$1,218 per ounce compared with 4 per cent in the for the six months ended 30 June 2015 at a gold price of US$1,186 per ounce.

The higher FCF margin for the six months ended 30 June 2016 was mainly due to lower net operating costs, lower capital expenditure and the higher gold price received.

BALANCE SHEET

Net debt (long-term loans plus the current portion of long-term loans less cash and deposits) decreased from US$1,477 million for the six months ended 30 June 2015 to US$1,155 million for the six months ended 30 June 2016, a US$322 million decrease.

NET DEBT/EBITDA

The net debt/EBITDA ratio of 1.05 at 30 June 2016 compared with 1.38 at the end of the financial year ended 31 December 2015.