In accordance with provision C.2.2 of the UK Corporate Governance Code published in September 2014
(Code), the directors have assessed the viability of the group and have selected a period of five years for this
assessment. While the group maintains a full business model based predominantly on the life of mine plans for
each of its significant business units, the group also operates a detailed rolling five year strategic plan which is
scrutinised by the board on a quarterly basis.
The plan is used as the basis to undertake the viability assessment on an annual basis. The assessment
conducted considered the group’s operating profit, revenue, EBITDA, cash flows, capital investment
requirements, dividend cover and other relevant key financial assumptions over the five year period. These
metrics were subjected to downside stress and sensitivity analysis over the assessment period, taking account
of the group’s current position, the group’s experience of managing adverse conditions in the past and the
impact of a number of severe yet plausible scenarios, based on the principal risks and uncertainties set out
on pages 181 to 184 of this annual report. Although the review considered all the principal risks identified by
the group, the following were focused on for enhanced stress testing: gold price, production profile, recovered
grade, capital investment, exchange rate, oil price, other mining costs, health and safety, and political
environment. The stress testing considered the principal risks assessed both individually and in combination.
The chairman’s statement, the chief executive’s review, finance review, along with the key performance
indicators on pages 8, 12, 22 and 4 and 5 respectively of this annual report, set out details of the group’s
financial performance, operational performance, capital management, business environment and outlook.
The group’s business model has proven to be strong and defensive in the long term and the group has
consistently demonstrated its ability to manage costs whilst retaining solid capital investment in future
operations during challenging market conditions. During 2015 cash generated from operations was
$397.0 million and for the past five years the cash generated from operations has never been less than
$317.6 million per annum and has averaged $451.6 million with a peak of $582.0 million in 2011. Cash and
cash equivalents at 31 December 2015 were $213.4 million and the group has access to an unsecured
revolving credit facility of $400.0 million which matures in December 2018 and at the date of this annual report
During 2015 cash costs per ounce were $679/oz and from 2011 the cash cost per ounce has never been more
than $735/oz and has averaged $701/oz.
The group operates in dynamic geographical markets and derives all of its revenues from the production and
sale of gold and therefore is subject to the risks associated with commodity price fluctuations. The group’s
viability depends on the global economy and markets continuing to function. The directors believe that the
group would remain viable even in the event of the current depressed gold price being sustained as it would be
able to continue to operate based on its current business model which is predominately based on a gold price
of $1 000/oz. However, long term significant devaluation of the gold price and long-term cost inflation would
cause a threat to the group (please refer to the gold market overview on page 28 of this annual report).
The group has a robust risk control framework which has the objectives of reducing the likelihood and impact
of: poor judgement in decision making; risk-taking that exceeds the levels agreed by the board; human error; or
control processes being deliberately circumvented which enhances its viability.
During 2015 and in making this statement, the company’s board of directors carried out a robust assessment
of the principal risks and uncertainties facing the group, including those that would threaten the group’s
business model, future performance, solvency or liquidity. The board confirmed that its assessment of the
principal risks facing the company was vigorous and remains appropriate. While this review does not consider
all the risks that the group may face, having taken into account the current economic outlook and the inherent
uncertainty involved, the company’s directors believe that the group is well positioned to manage its business
risks successfully. Taking into account the company’s current position, principal risks, and the analysis outlined
above, the directors have a reasonable expectation that the company will be able to continue in operation and
meet its liabilities over the five year period.