ASA Limited Annual Report 2003 ASA Limited Incorporated in the Republic of South Africa (Registration No. 1958/01920/06) Annual Report and Financial Statements November 30, 2003 Directors Robert J.A. Irwin (U.S.A.) Henry R. Breck (U.S.A.) Harry M. Conger (U.S.A.) Chester A. Crocker (U.S.A.) Joseph C. Farrell (U.S.A.) James G. Inglis (South Africa) Malcolm W. MacNaught (U.S.A.) Ronald L. McCarthy (South Africa) Robert A. Pilkington (U.S.A.) A. Michael Rosholt (South Africa) Contents Directors’ report 2 Chairman’s report 2 Portfolio changes (Unaudited) 5 Certain investment policies and restrictions 6 Report of independent public accountants 6 Schedule of investments 7 Statements of assets and liabilities 8 Statements of operations 9 Statements of surplus 10 Statements of changes in net assets 10 Notes to financial statements 11 Financial highlights 13 Supplementary information 13 Certain tax information for United States shareholders 14 Dividend reinvestment plan 16 Privacy notice 16 Forward-looking statements 17 Board of directors 18 Officers Robert J.A. Irwin, Chairman of the Board and Treasurer Ronald L. McCarthy, Managing Director and South African Secretary Chester A. Crocker, United States Secretary Paul K. Wustrack, Jr., Assistant United States Secretary Dorothy Faith Kenny, Assistant South African Secretary Auditors Ernst & Young LLP, New York, NY, U.S.A. Ernst & Young, Johannesburg, South Africa Counsel Werksmans, Johannesburg, South Africa Kirkpatrick & Lockhart LLP, Washington, DC, U.S.A. Custodian J.P. Morgan Chase Brooklyn, NY, U.S.A. Subcustodian Standard Bank of South Africa Limited Johannesburg, South Africa Fund Accountants Kaufman Rossin & Co., PA Miami, FL, U.S.A. Shareholder Services LGN Associates Florham Park, NJ, U.S.A. (973) 377-3535 Registered Office 36 Wierda Road West, Sandton 2196, South Africa Website-http://www.asaltd.com Transfer Agent EquiServe Trust Company, N.A. 525 Washington Boulevard, Jersey City, NJ 07310, U.S.A. Copies of the Semi-annual and Annual Reports of the Company and the lat- est valuation of net assets per share may be requested from the Company, at its Registered Office (011) 27-11 784-0500/1/2, or from LGN Associates, Lawrence G. Nardolillo, C.P.A., P.O. Box 269, Florham Park, New Jersey 07932 (973) 377-3535. Shareholders are reminded to notify EquiServe Trust Company, N.A. of any change of address. 1 Chairman’s report (unaudited) The Gold Bullion Market Following the sound performance of the gold price during 2002, the price of gold bullion continued to rise in 2003. The gold price tracked from US$318/oz at the beginning of the fiscal year to US$398/oz at the end of November 2003. Technically, the gold price remains in an uptrend. The strong fundamentals for gold remain in place. The producers are continuing to de-hedge, although the pace of de-hedging slowed in the third quarter of 2003. The con- tango remained unattractive during the third quarter of 2003 and lease rates remain sluggish. A number of the larger pro- ducers have stated that they will reduce forward positions while the US dollar gold price remains high. The net position on the New York Mercantile Exchange (Comex) (which seems to correlate with the trend in the gold price) is long and has been in this position since the gold price bottomed in 2001. Recent supply and demand data shows that gold demand is being driven by net investment demand while fabrication demand has risen, chiefly in Turkey and India. Mine supply in the third quarter of 2003 was flat. Industry consolidation has continued during 2003, which augurs well for producer discipline. The U.S. dollar continues to weaken against the curren- cies of all of its trading partners of consequence. The dollar gold price obviously has been affected positively by this weakness. At the same time, gold priced in other major cur- rencies has, at least for the past year, been much less buoy- ant. Strong U.S. economic statistics, strong equity markets and strong debt markets, at one time considered bullish for the dollar, no longer seem to provide support. As long as the dollar’s decline continues, it is reasonable to expect that the price of gold will remain firm. The Gold Share Market Despite the 25% rise in the dollar gold price during the fis- cal year, the South African gold shares struggled to perform. The stronger rand dollar exchange rate offset the rise in the dollar gold price, and, as a result, the rand gold price fell 14% during the fiscal year. This, along with higher costs, led to narrowing margins at the South African gold mines. Lower profits were reflected in the share price performances. The share prices of Gold Fields and Harmony suffered reversals during the fiscal year with falls of 14.6% and 16.5% (in rand terms), respectively. AngloGold’s share price rose by 23.6% (in rand terms) during the fiscal year but this rise occurred largely during November when the group was finalizing its merger with Ashanti. Gold Fields and Harmony concluded Black Economic Empowerment deals towards the end of fiscal 2003, but this corporate activity did not lead to a recovery in the share prices of these stocks. During the fiscal year the Philadelphia Stock Exchange gold and silver index (XAU) rose 73%, indicating that the North American gold producers performed strongly. Directors’ report (unaudited) The Directors submit herewith their report together with audited financial statements for the fiscal years ended November 30, 2003 and 2002. In addition to the financial statements there are statements setting forth: (1) certain investment policies and restrictions, (2) portfolio changes during the year, (3) financial highlights for the fiscal years ended 1999 through 2003, (4) supple- mentary information, (5) certain tax information for United States shareholders, the Company’s dividend reinvestment plan, (7) privacy notice and (8) forward-looking statements. information regarding (6) ASA Limited is incorporated in the Republic of South Africa. The accompanying financial statements are reported in United States dollars. (See Notes (l)B and (3) to the finan- cial statements for additional information.) At November 30, 2003 the Company’s net assets were equivalent to $51.54 per share. The closing price of our Company’s stock was $47.16 per share at November 30, 2003, which represented a 8.5% discount to the net asset value. This compares with $33.48 per share at November 30, 2002 at which time the closing price was $30.06, a discount of 10.2% to the net asset value. For the fiscal year ended November 30, 2003 the net assets of the Company per share in United States dollar terms increased by 54%. Net investment income for the fiscal year ended November 30, 2003 was equivalent to $.84 per share, as compared to $.85 per share for the fiscal year ended November 30, 2002. There were no realized gains from investments for the fiscal year ended November 30, 2003 as compared to $.51 per share for fiscal year ended November 30, 2002. Net realized gain from foreign currency transac- tions was $.32 per share for the fiscal year ended November 30, 2003 as compared to a (loss) of ($1.13) per share for the fiscal year ended November 30, 2002. The Company paid dividends totaling $.80 per share in U.S. currency during the fiscal year ended November 30, 2003. For the fiscal year ended November 30, 2002, the div- idend payments also totaled $.80 per share. (See Certain tax information for United States shareholders (pages 14 and 15) for further comments.) 2 The Gold Mining Industry Economic Environment The trend of industry consolidation continued during 2003, both globally and in South Africa. The major deal of the year was the AngloGold and Ashanti merger. Early in the year Harmony merged with ARMgold (a South African gold producer). In November 2003, Harmony announced a deal whereby the assets of the Company together with those of African Rainbow Minerals Investments (a resource company) and Anglovaal Mining Ltd (Avmin) (a South African Mining House) are to form part of a scheme of arrangement. Arising out of this scheme, Anglovaal Mining’s gold shareholdings in Avgold Ltd will be merged into Harmony and Armgold with Harmony’s platinum assets reverting to Avmin. The Gold Fields transaction involves the sale of 15% of Gold Fields’ South African assets to Mvelaphanda Resources. Both the Harmony and Gold Fields deals are Black Economic Empowerment transactions. The Platinum Industry At the end of the fiscal year, the platinum price was US$765/oz, which is up 29% from the price at the start of the year. Estimates of supply and demand by the platinum com- panies in South Africa suggest that the market should remain in deficit for 2003 and therefore, the price is expected to remain robust. The demand for autocatalysts should enjoy longer-term growth, because demand for catalysts in China is strong as is the growth potential in diesel catalysts in Europe. Jewelry demand in China grew strongly in 2002, but this market is price sensitive and demand may slip in 2003 due to the cur- rent high price. The stronger rand offset the strong performance of the dol- lar platinum price, and therefore the action of the share prices was disappointing during fiscal 2003. Anglo American Platinum lost 18.9% while Impala gained a mere 3.0% dur- ing the period. Portfolio Movements During fiscal 2003 the Company increased its holding in Placer Dome, and made a new acquisition in Avgold, a well known and long established gold mining company in South Africa. Avgold is mining an ore body of exceptional value with cash costs of US$175/oz. In its latest annual report, its Chairman had this to say: “We own and will have access to the last unexploited gold area located between two of the largest gold fields in the world: the Klerksdorp and Welkom gold fields. This is one of the most extensive undeveloped gold resources in the world.” As mentioned above, the company is expected to be merged into Harmony. The South African mining companies have begun to implement the requirements of the Socio-Economic Empowerment Charter. Although the companies can fulfill the requirements of the charter through a scorecard approach, there have been a number of headline-capturing empowerment ownership deals during the year. These empowerment deals are expected to fulfill the ownership cri- teria outlined in the charter. These are important deals as failure to fulfill the obligations of the Charter could result in the government withholding the new mining rights. As noted above, Gold Fields has recently announced its deal with Mvelaphanda, while Harmony has been instrumental in the Avmin, ARMgold and Harmony tie-up. Impala Platinum, in partnership with Lonmin PLC, has also announced a major Black Economic Empowerment deal. The Money Bill outlining the royalty payments that must be made by the industry has been published and should be passed by Parliament in 2004. At present, different minerals will carry different royalties, with gold mines expected to pay 3% of revenue and platinum mines 4%. The Finance Minister’s GDP growth target of 2.2% in 2003 is unlikely to be achieved as a result of downward revi- sions (by the South African statistical authorities) to growth in the first and second quarters. GDP growth in the second quarter was revised down from 1.1% to 0.5% while growth in the first quarter was revised down from 1.5% to 0.9% on a seasonally adjusted annualized basis. Third quarter growth, at 1.1%, was held back by a contraction in the agricultural sec- tor and lower exports as a result of the strong rand. The rand has strengthened from ZAR9.28 per USD at the start of the fiscal year to ZAR6.39 per USD at the end of November. This strengthening has negatively impacted South African exporters and mining companies. The strong rand has capped revenue, while high cost inflation brought about by the weak rand last year has contributed to narrow- ing margins. Inflation, as measured by the CPIX (consumer prices less mortgage payments) has fallen sharply to a record low of 4.4% in October. This is within the Reserve Bank’s 3% to 6% target range. Producer prices, as recorded by the PPI, fell 1.8% in October 2003. Producer price deflation and lower consumer inflation is a function of the strong rand and tight monetary policy. In 2002, the Reserve Bank hiked interest rates by 400 basis points, but has recently begun to lower interest rates with a 150 basis points drop in October 2003. The market believes that further interest rate cuts are possible. The Company’s Tax Status On December 17, 2003 the South African Income Tax Act of 1962 was amended by the Revenue Laws Amendment Bill 71 of 2003 and signed into law by the President of South Africa. This amendment extends until November 30, 2004 the Company’s exemptions from certain taxes imposed in South Africa. Shareholders’ attention is directed to Note 2 to the Financial Statements. 3 The Company announced earlier this year that, in view of its tax situation, it had filed an application for an exemptive order with the Securities and Exchange Commission to per- mit the Company to move from the Republic of South Africa to the Commonwealth of Bermuda by reorganizing itself into a newly formed company incorporated in Bermuda. The move would not involve any material change in the Company’s investment policies. The relocation to Bermuda is subject to a number of conditions, including (1) receiving the requested relief from the Securities and Exchange Commission; (2) receiving approval to list the shares of the new Bermuda company on the New York Stock Exchange; and (3) satisfying shareholder approval requirements. No assurance can be given that these conditions will be satisfied. * * * The Annual Meeting of Shareholders will be held on Friday, February 6, 2004 at 10:00 A.M. at the offices of UBS Securities LLC 1285 Avenue of the Americas, 14th Floor, New York, New York USA. We look forward to having you in attendance. ROBERT J.A. IRWIN, Chairman of the Board and Treasurer 4 Philadelphia Gold & Silver Index (XAU): Monthly average price (unaudited) 2000 2001 2002 2003 London free market gold price: Monthly average $ per ounce (unaudited) 120 100 80 60 40 20 0 400 370 340 310 280 250 2000 2001 2002 2003 Portfolio changes (unaudited) Net changes during the year ended November 30, 2003 Ordinary shares of gold mining companies Anglogold Limited Avgold Limited Placer Dome Incorporated Compania de Minas Buenaventura—ADRs Number of Shares Increase Decrease 1 194 917(1) 2 671 230 100 000 450 000(2) (1) Received as 2 for 1 Stock Split, effective December 27, 2002. (2) Received as 2 for 1 Stock Split, effective November 12, 2003. 5 Certain investment policies and restrictions (unaudited) statements contained The following is a summary of certain of the Company’s investment policies and restrictions and is subject to the more complete the Company’s Memorandum of Association (Charter), Articles of Association (By-Laws) and Registration Statement under the United States Investment Company Act of 1940, each as amended: in 1. To invest over 50% of the value of its total assets in the common shares or securities convertible into common shares of companies conducting, as the major portion of their business, gold mining and related activities in the Republic of South Africa. It is expected that most of such companies will have reached the production stage. The bal- ance of the Company’s total assets, other than minor amounts which may be held in cash, may (i) be invested in common shares or securities convertible into common shares of companies engaged in other business of varied types in the Republic of South Africa, (ii) be held in the form of gold bullion or certificates of deposit therefor to be purchased, directly or indirectly, with South African rand (provided that the Company’s holdings in the form of gold bullion or certificates of deposit therefor may not exceed 25% of the value of the Company’s total assets) and/or (iii) Report of independent public accountants To the Shareholders and the Board of Directors of ASA Limited: We have audited the accompanying statements of assets and liabilities of ASA Limited (incorporated in the Republic of South Africa) as of November 30, 2003 and 2002, includ- ing the schedule of investments as of November 30, 2003, and the related statements of operations, surplus and changes in net assets, financial highlights and supplementary infor- mation for each of the two years in the period ended November 30, 2003. These financial statements, financial highlights and supplementary information are the responsi- bility of the Company’s management. Our responsibility is to express an opinion on these financial statements, financial highlights and supplementary information based on our audits. The financial highlights for years presented prior to November 30, 2002 were audited by other auditors who have ceased operations and whose report dated December 18, 2001 expressed an unqualified opinion on those financial highlights. We conducted our audits in accordance with auditing stan- dards generally accepted in the United States. Those standards require that we plan and perform the audits to obtain reason- able assurance about whether the financial statements, finan- cial highlights and supplementary information are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, financial highlights and supplementary information. Our procedures included the confirmation of 6 be invested in common shares or securities convertible into common shares of companies primarily engaged outside of South Africa in extractive or related industries or in the holding or development of real estate (provided that the Company’s investment in such companies may not exceed 20% of the value of the Company’s total assets). If invest- ment considerations warrant, the Company may deviate from the foregoing to the extent it temporarily holds its assets in cash, cash equivalents or securities issued or guar- anteed by the Government of South Africa (South African Government Securities). 2. Not to invest in securities, except South African govern- ment securities, of any issuer if as a result over 20 per cent in value of the Company’s total assets would at the time be invested in securities of such issuer provided that no more than 40 per cent of the Company’s assets would at the time be invested in securities of companies, each of which exceeds 10 per cent of such value. 3. Not to invest in securities of any class of any issuer (except securities of or guaranteed by the Government of South Africa or an instrumentality thereof) if as a result the Company would at the time own over 10 per cent of such securities out- standing. securities owned as of November 30, 2003 and 2002, by cor- respondence with the custodians and brokers. An audit also includes assessing the accounting principles used and signifi- cant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements, financial highlights and supplementary information referred to above present fairly, in all material respects, the financial position of ASA Limited as of November 30, 2003 and 2002, the results of its operations, the surplus and changes in its net assets, financial highlights and supplementary information for each of the two years in the period then ended, in conformity with accounting principles generally accepted in the United States. Ernst & Young LLP New York, N.Y., U.S.A. Ernst & Young Johannesburg, SA December 23, 2003 Schedule of investments (Note 1) November 30, 2003 Name of Company Ordinary shares of gold mining companies Australian Gold Mines Newcrest Mining Limited – ADRs United States Gold Mines Newmont Mining Corporation South African Gold Mines Anglogold Limited Avgold Limited Gold Fields Limited Harmony Gold Mining Company Limited Harmony Gold Mining Company Limited – ADRs Canadian Gold Mines Barrick Gold Corporation Placer Dome Incorporated South American Gold Mines Compania de Minas Buenaventura – ADRs Ordinary shares of other companies South African Mining Anglo American PLC Anglo American Platinum Corporation Limited Impala Platinum Holdings Limited Total investments Cash and other assets less liabilities Net assets There is no assurance that the valuations at which the Company’s investments are carried could be realized upon sale. The notes to the financial statements form an integral part of these statements. Number of Shares Market Value Percent of Net Assets 3 000 000 $ 28 500 000 520 368 2 389 894 2 671 230 10 344 977 1 336 2 166 400 730 000 1 065 312 900 000 1 280 000 820 500 262 700 28 500 000 25 050 516 25 050 516 114 544 340 4 178 605 142 407 297 21 150 34 294 112 295 445 504 16 308 200 19 335 413 35 643 613 26 199 000 410 838 633 27 281 392 35 168 123 24 656 497 87 106 012 497 944 645 (3 160 556) $494 784 089 5.8% 5.8 5.1 5.1 23.2 .8 28.8 — 6.8 59.6 3.3 3.9 7.2 5.3 83.0 5.5 7.1 5.0 17.6 100.6 (.6) 100.0% 7 November 30, 2003 November 30, 2002 $410 838 633 $253 534 199 87 106 012 497 944 645 6 864 615 175 216 177 852 505 162 328 612 977 1 027 362 121 313 8 616 587 10 378 239 494 784 089 3 360 000 27 489 156 59 083 301 (48 181 979) 115 112 525 337 205 016 716 070 $494 784 089 $51.54 63 462 990 316 997 189 8 225 357 138 999 31 885 325 393 430 289 074 — 219 954 3 461 175 3 970 203 321 423 227 3 360 000 27 489 156 58 663 135 (51 220 869) 115 112 525 166 709 091 1 310 189 $321 423 227 $33.48 Statements of assets and liabilities Assets Investments, at market value (Note 1) Gold mining companies – Cost $125 445 039 in 2003 $120 148 921 in 2002 Other companies – Cost $26 678 003 in 2003 and 2002 Cash Dividends and interest receivable Other assets Total assets Liabilities Accounts payable and accrued liabilities Payable for securities purchased Current year South African tax liability Deferred South African tax liability Total liabilities Net assets (shareholders’ investment) Ordinary (common) shares R 0.25 nominal (par) value Authorized: 24 000 000 shares Issued and Outstanding: 9 600 000 shares Share premium (capital surplus) Undistributed net investment income Undistributed net realized (loss) from foreign currency transactions Undistributed net realized gain from investments Net unrealized appreciation on investments Net unrealized appreciation on translation of assets and liabilities in foreign currency Net assets Net assets per share The closing price of the Company’s shares on the New York Stock Exchange was $47.16 and $30.06 on November 30, 2003 and 2002, respectively. The notes to the financial statements form an integral part of these statements. 8 Statements of operations Years ended November 30, 2003 and 2002 Investment income Dividend income Interest income Total investment income Expenses Shareholders’ report and proxy expenses Directors’ fees and expenses Salaries and benefits Other administrative expenses Transfer agent, registrar and custodian Professional fees and expenses Insurance Contributions Other Total expenses Net investment income before South African tax South African tax Net investment income Net realized gain from investments Proceeds from sales Cost of securities sold South African tax Net realized gain from investments Net realized gain (loss) from foreign currency transactions Investments Foreign currency South African tax refund (tax) Net realized gain (loss) from foreign currency transactions Net increase in unrealized appreciation on investments Balance, beginning of year Balance, end of year Increase Deferred South African tax Net increase in unrealized appreciation from investments Net increase (decrease) in unrealized appreciation on translation of assets and liabilities in foreign currency South African tax benefit Net increase (decrease) in unrealized appreciation on translation of assets and liabilities in foreign currency Net realized and unrealized gain from investments and foreign currency transactions Net increase in net assets resulting from operations The notes to the financial statements form an integral part of these statements. 2003 2002 $ 10 947 308 704 772 11 652 080 122 387 462 872 468 678 442 500 127 291 1 023 897 144 417 117 619 347 267 3 256 928 8 395 152 (294 986) 8 100 166 — — — — — 1 399 249 1 639 641 3 038 890 170 170 266 345 821 603 175 651 337 (5 155 412) 170 495 925 (594 119) — (594 119) 172 940 696 $181 040 862 $ 10 423 088 499 036 10 922 124 103 129 538 420 297 796 373 250 107 433 511 274 104 595 80 793 311 444 2 428 134 8 493 990 (376 213) 8 117 777 13 409 630 (8 399 743) (71 956) 4 937 931 (9 832 299) 505 300 (1 515 713) (10 842 712) 53 028 160 170 170 266 117 142 106 (3 461 175) 113 680 931 743 200 1 521 577 2 264 777 110 040 927 $118 158 704 9 Statements of surplus and statements of changes in net assets Years ended November 30, 2003 and 2002 Statements of surplus Share premium (capital surplus) Balance, beginning and end of year Undistributed net investment income Balance, beginning of year Net investment income for the year Dividends paid Balance, end of year Undistributed net realized (loss) from foreign currency transactions Balance, beginning of year Net realized gain (loss) for the year Balance, end of year Undistributed net realized gain from investments (Computed on identified cost basis) Balance, beginning of year Net realized gain for the year Balance, end of year Net unrealized appreciation on investments Balance, beginning of year Net increase for the year Balance, end of year Net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currency Balance, beginning of year Net unrealized appreciation (depreciation) for the year Balance, end of year Statements of changes in net assets Net investment income Net realized gain from investments Net realized gain (loss) from foreign currency transactions Net increase in unrealized appreciation on investments Net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currency Net increase in net assets resulting from operations Dividends paid Net increase in net assets Net assets, beginning of year Net assets, end of year The notes to the financial statements form an integral part of these statements. November 30, 2003 November 30, 2002 $ 27 489 156 $ 27 489 156 $ 58 663 135 8 100 166 (7 680 000) $ 59 083 301 $ (51 220 869) 3 038 890 $ (48 181 979) $115 112 525 — $115 112 525 $166 709 091 170 495 925 $337 205 016 $ 1 310 189 (594 119) $ 716 070 2003 $ 8 100 166 — 3 038 890 170 495 925 (594 119) 181 040 862 (7 680 000) 173 360 862 321 423 227 $494 784 089 $ 58 225 358 8 117 777 (7 680 000) $ 58 663 135 $ (40 378 157) (10 842 712) $ (51 220 869) $110 174 594 4 937 931 $115 112 525 $ 53 028 160 113 680 931 $166 709 091 $ (954 588) 2 264 777 $ 1 310 189 2002 $ 8 117 777 4 937 931 (10 842 712) 113 680 931 2 264 777 118 158 704 (7 680 000) 110 478 704 210 944 523 $321 423 227 10 Notes to financial statements Years ended November 30, 2003 and 2002 1 Summary of significant accounting policies The following is a summary of the Company’s significant account- ing policies: A. Investments Security transactions are recorded on the respective trade dates. Securities owned are reflected in the accompanying financial statements at quoted market value. The difference between cost and current market value is reflected separately as net unreal- ized appreciation from investments. The net realized gain or loss from the sale of securities is determined on the identified cost basis. Quoted market value of those shares traded represents the last recorded sales price on the financial statement date, or the mean between the closing bid and asked prices of those securities not traded on that date. In the event that a mean price cannot be computed due to the absence of either a bid or an asked price, then the bid price plus 1% or the ask price less 1%, as appli- cable, is used. There is no assurance that the valuation at which the Company’s investments are carried could be realized upon sale. B. Exchange Gains and Losses The Company records exchange gains and losses in accordance with the provisions of the American Institute of Certified Public Accountants Statement of Position 93-4, Foreign Currency Accounting and Financial Statement Presentation for Investment Companies (“SOP”). The SOP requires separate disclosure in the accompanying financial statements of net realized gain (loss) from foreign currency transactions, and inclusion of unrealized gain (loss) on the translation of currency as part of net unreal- ized appreciation (depreciation) on translation of assets and liabilities in foreign currency. C. Security Transactions and Investment Income During the year ended November 30, 2003 there were no sales of securities and purchases of securities amounted to $5,296,118. During the year ended November 30, 2002 sales of securities amounted to $13,409,639 and purchases of securities amounted to $19,129,051. Dividend income is recorded on the ex-dividend date (the date on which the securities would be sold ex-divi- dend) net of withholding taxes, if any. Interest income is recognized on the accrual basis. D. Distributions to Shareholders Dividends to shareholders are recorded on the ex-dividend date. E. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the period. Actual results could differ from those estimates. 2. Tax status of the Company Pursuant to the South African Income Tax Act, as amended, the Company is subject to tax on dividends received from sources other than South Africa. In addition, in terms of the residence based system of taxation, beginning with the fiscal year ended November 30, 2002, the Company is subject to tax on interest earned on cash deposits. A provision for South African taxes of $294,986 and $376,213 for these items has been included in the accompanying financial statements for the fiscal years ended November 30, 2003 and November 30, 2002, respectively. In addition, the Company had previously provided for and paid taxes on foreign exchange gains. However, the Company was assessed by the South African Revenue Service (“SARS”) on the basis that it is exempt from tax on foreign exchange gains and in November 2003, after the completion of a refund audit performed by SARS, the Company received a refund in respect of the overpayment of tax in the amount of $1,639,641, plus interest. A tax provision of -0- and $71,956 has been included in the accompanying financial statements for realized capital gains dur- ing the fiscal years ended November 30, 2003 and November 30, 2002, respectively. Also, a deferred tax liability of $8,616,587 and $3,461,175 has been included for the tax on unrealized capital gains on securities for the fiscal years ended November 30, 2003 and November 30, 2002, respectively. SARS has held that, effective October 1, 2001, the Company became subject to a tax on capital gains realized since that date on the disposal of South African and foreign securities. However, after numerous representations with SARS as well as the Treasury Department, the Company has been successful in negotiating relief from this tax. On December 17, 2003, the South 11 African Income Tax Act of 1962 was amended by the Revenue Laws Amendment Bill 71 of 2003 and signed into law by the President of South Africa. This amendment provides the Company with an exemption from the Capital Gains Tax until November 30, 2004. The Company has commenced actions necessary to relocate its place of business to Bermuda before the expiration of its exemption. (See Note 5.) While it is management’s intention to complete this relocation before the November 30, 2004 expi- ration date, no assurance can be given that all conditions will be satisfied. Therefore, the Company will continue to provide deferred South African tax on unrealized capital gains on securities subsequent to November 30, 2003. The reporting for financial statement purposes of distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate reporting for U.S. federal income tax purposes. The difference are caused primarily by the separate line items reporting for financial statement purposes of foreign exchange gains or losses. See pages 14 and 15 for additional tax information for United States shareholders. 3 Currency exchange There are exchange control regulations restricting the transfer of funds from South Africa. In 1958 the South African Reserve Bank, in the exercise of its powers under such regulations, advised the Company that the exchange control authorities would permit the Company to transfer to the United States in dollars both the Company’s capital and its gross income, whether received as dividends or as profits on the sale of investments, at the current official exchange rate prevailing from time to time. Future implementation of exchange control policies could be influenced by national monetary considera- tions that may prevail at any given time. 4 Retirement plans Effective April 1, 1989, the Company established a defined contribution plan (the “Plan”) to replace its previous pension plan. The Plan covers all full-time employees. The Company will contribute 15% of each covered employee’s salary to the Plan. The Plan provides for immediate vesting by the employee without regard to length of service. During the years ended November 30, 2003 and 2002 there were no covered employees under the plan and, consequently, no retirement expense was incurred. In 1994, the Company entered into a supplemental non-qualified pension agreement with its Chairman. Under the terms of the agreement, the Company agreed to credit $25,000 per year for five years, beginning December 1, 1993, to a Supplemental Pension Account with interest credited at an annual rate of 3.5%. The Board of Directors approved increases in the amount of the annual credit as follows: $28,125 in May 1999; $31,250 in February 2002 and $45,000 in March 2003. As a result, the Company has recorded expense amounts of $41,562 and $29,688 for the years ended November 30, 2003 and November 30, 2002, respectively. The Company has an asset in the amount of $145,000 related to the retirement obligation liability of $315,900 as of November 30, 2003. 5 Company Reorganization The Company announced earlier this year that, in view of its tax situation, it had filed an application for an exemptive order with the Securities and Exchange Commission to permit the Company to move from the Republic of South Africa to the Commonwealth of Bermuda by reorganizing itself into a newly formed company incorporated in Bermuda. The move would not involve any material change in the Company’s investment policies. The relocation to Bermuda is subject to a number of conditions, including (1) receiving the requested relief from the Securities and Exchange Commission; (2) receiving approval to list the shares of the new Bermuda company on the New York Stock Exchange and (3) satisfying share- holder approval requirements. No assurance can be given that these conditions will be satisfied. In connection with the reorganization, the Company has incurred approximately $575,000 in legal and other professional fees as of November 30, 2003. 6 Commitments The Company’s lease for office space in Johannesburg expired in February 2003. The Company has renewed the lease for a two year period at an annual cost of approximately $55,000. 12 Financial highlights Per Share Operating Performance Year Ended November 30 2003 2002 2001 2000 1999 Net asset value, beginning of year $ 33.48 $ 21.97 $ 17.58 $ 22.51 $ 19.01 Net investment income Net realized gain from investments Net realized gain (loss) from foreign currency transactions Net increase (decrease) in unrealized appreciation on investments Net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currency Net increase (decrease) in net assets resulting from operations Less dividends .84 — .32 17.76 (.06) 18.86 (.80) .85 .51 (1.13) 11.84 .24 12.31 (.80) 1.00 3.05 (.24) 1.40 (.02) 5.19 (.80) .61 1.00 (1.02) (4.88) (.04) (4.33) (.60) .58 .62 (.95) 3.84 .01 4.10 (.60) Net asset value, end of year $ 51.54 $ 33.48 $ 21.97 $ 17.58 $ 22.51 Market value per share, end of year $47.16 $30.06 $19.83 $ 14.56 $ 19.125 Total Investment Return(1) Based on market value per share Ratios to Average Net Assets(1) Expenses Net investment income Supplemental Data Net assets, end of year (000 omitted) Portfolio turnover rate 59.91% 55.72% 41.76% (21.06%) 3.44% .84% 2.09% .91% 2.63% 1.10% 4.61% 1.15% 3.06% 1.13% 3.02% $494 784 — $321 423 4.41% $210 944 11.18% $168 726 7.43% $216 051 6.66% Per share calculations are based on the 9,600,000 shares outstanding. (1) Determined in U.S. dollar terms. Supplementary information Years ended November 30, 2003 and 2002 Certain fees incurred by the Company Directors’ fees Officers’ remuneration Ranquin Associates (a company of which an officer is an affiliated person) Auditors 2003 $288 500 500 220 37 800 110 000 2002 $ 220 000 285 018 35 000 50 000 The notes to the financial statements form an integral part of these statements. 13 Certain tax information for United States shareholders (unaudited) From December 1, 1963 through November 30, 1987, the Company was treated as a “foreign investment company’’ for United States federal income tax purposes pursuant to Section 1246 of the Internal Revenue Code. Under that section, a United States shareholder who has held his shares in the Company for more than one year is subject to tax at ordinary income tax rates on his profit (if any) on a sale of his shares to the extent of his “ratable share’’ of the Company’s earnings and profits accumulated for the period during which he held those shares between December 1, 1963 and November 30, 1987. If such shareholder’s profit on the sale of his shares exceeds such ratable share and he held his shares for more than one year, then, subject to the discussion below regarding the United States federal income tax rules applicable to tax- able years of the Company beginning after November 30, 1987, he is subject to tax at long-term capital gain rates on the excess. The Company’s per share earnings and profits accumulated (undistributed) in each of the taxable years from 1964 through 1987 is given below in United States currency. All the per share amounts give effect to the two-for-one stock splits that became effective on May 10, 1966, May 10, 1973 and May 9, 1975. All the per share amounts reflect distributions through November 30, 2002. Year ended November 30 Per year Per day 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 14 $ .042 .067 .105 .277 .241 .461 .218 .203 .445 .497 1.151 .851 .370 .083 .357 .219 1.962 .954 .102 -0- -0- (.151) -0- -0- $.00012 .00019 .00029 .00076 .00066 .00126 .00060 .00056 .00122 .00136 .00316 .00233 .00101 .00023 .00098 .00060 .00538 .00261 .00028 -0- -0- (.00041) -0- -0- Under rules enacted by the Tax Reform Act of 1986, the Company became a “passive foreign investment company’’ (a “PFIC’’) on December 1, 1987*. The manner in which these rules apply depends on whether a United States share- holder (1) elects to treat the Company as a qualified electing fund (“QEF’’) with respect to his Company shares, or (2) for taxable years of such United States shareholder beginning after December 31, 1997, elects to “mark-to-market’’ his Company shares as of the close of each taxable year, or (3) makes neither election. In general, if a United States shareholder of the Company does not make either such election, any gain realized on the direct or indirect disposition of his Company shares will be treated as ordinary income. In addition, such shareholder will be subject to an “interest charge” on part of his tax lia- bility with respect to such gain, as well as with respect to certain “excess distributions” made by the Company. Furthermore, shares held by such shareholder may be denied the benefit of any otherwise applicable increase in tax basis at death. Under proposed regulations, a “disposition” would include a U.S. taxpayer’s becoming a nonresident alien. As noted, the general tax consequences described in the preceding paragraph apply to an “excess distribution” on Company shares, which is defined as a distribution by the Company for a taxable year that is more than 125% of the average amount it distributed for the three preceding taxable years.** If the Company makes an excess distribution in a taxable year, a United States shareholder who has not made a QEF or mark-to-market election would be required to allo- cate the excess amount ratably over the entire holding period for his shares. That allocation would result in tax being payable at the highest applicable rate in the prior years to which the distribution is allocated and interest charges being imposed on the resulting “underpayment” of taxes made in those years. In contrast, a distribution that is not an excess distribution would be taxable to a United States shareholder as a normal dividend (see above), with no interest charge. If a United States shareholder elects to treat the Company as a QEF with respect to his shares therein for the first year he holds his shares during which the Company is a PFIC (or who later makes the QEF election and also elects to treat his shares generally as if they were sold for their fair market value on the first day of the first taxable year of the Company for which the QEF election is effective), the rules described in the preceding paragraphs generally will not apply. Instead, the electing United States shareholder will include annually in his gross income his pro rata share of the Company’s ordinary earnings and net capital gain (his “QEF’’ inclusion) regardless of whether such income or gain was actually distributed. A United States shareholder who makes a valid QEF election * Because the Company is a PFIC, dividends it pays will not qualify for the recently enacted 15% maximum U.S. federal income tax rate on dividends that individuals receive. ** For example, the Company made annual distributions of $.80, $.80 and $.60 per share during the taxable years ended November 30, 2002, 2001 and 2000, respectively, an average per year of $.733 per share. Accordingly, any distribution in excess of $.917 per share (125% of $.733) would be treated as an excess distribution for the taxable year ended November 30, 2003. (All amounts in U.S. currency.) will recognize capital gain on any profit from the actual sale of his shares if those shares were held as capital assets, except to the extent of the shareholder’s ratable share of the earnings and profits of the Company accumulated for the period during which he held those shares between December 1, 1963 and November 30, 1987, as described above. QEF inclusion for the year to which the election applies. In order to allow United States shareholders to make the QEF elections and to comply with the applicable annual reporting requirements, the Company annually will provide to them a “PFIC Annual Information Statement’’ containing certain information required by Treasury regulations. Alternatively, if a United States shareholder makes the mark-to-market election with respect to Company shares for taxable years beginning on or after January 1, 1998, such shareholder will be required annually to report any unrealized gain with respect to his shares as ordinary income, and any unrealized loss would be permitted as an ordinary loss, but only to the extent of previous inclusions of ordinary income. Any gain subsequently realized by the electing United States shareholder on a sale or other disposition of his Company shares also would be treated as ordinary income, but such shareholder would not be subject to an interest charge on his resulting tax liability. Special rules apply to a United States shareholder that held his PFIC stock prior to the first taxable year for which the mark-to-market election was effective. A United States shareholder with a valid QEF election in effect would not be taxed on any distributions paid by the Company to the extent of any QEF inclusions, but any distri- butions out of accumulated earnings and profits in excess thereof would be treated as taxable dividends. Such a share- holder would increase the tax basis in his Company shares by the amount of any QEF inclusions and reduce such tax basis by any distributions to him that are not taxable as described in the preceding sentence. Special rules apply to United States shareholders who make the QEF election and wish to defer the payment of tax on their annual QEF inclusions. Each shareholder who desires QEF treatment must individ- ually elect such treatment. The QEF election must be made for the taxable year of the shareholder in which or with which the taxable year of the Company ends. A QEF election is effective for the shareholder’s taxable year for which it is made and all subsequent taxable years of the shareholder and may not be revoked without the consent of the Internal Revenue Service. A shareholder of the Company who first held his Company shares after November 30, 2002 and who files his tax return on the basis of a calendar year may make a QEF election on his 2003 tax return. A shareholder of the Company who first held his Company shares on or before November 30, 2002 may also make the QEF election on his 2003 tax return but should consult his tax advisor concerning the tax conse- quences and special rules that apply when a QEF election could have been made with respect to such shares for an ear- lier taxable year. The QEF election must be made by the due date, with extensions, of the federal income tax return for the taxable year for which the election is to apply. Under Treasury regu- lations, the QEF election is made on Internal Revenue Service Form 8621, which must be completed and attached to a timely filed income tax return in which the shareholder reports his In early 2004 the Company will send to United States shareholders the PFIC Annual Information Statement for the Company’s 2003 taxable year. Such annual information statement may be used for purposes of completing Form 8621. A shareholder who either is subject to a prior QEF elec- tion or is making a QEF election for the first time must attach a completed Form 8621 to his income tax return each year. Other United States shareholders also must attach completed Forms 8621 to their tax returns each year, but shareholders not electing QEF treatment will not need to report QEF inclu- sions thereon. Special rules apply to United States persons who hold Company shares through intermediate entities or persons and to United States shareholders who directly or indirectly pledge their shares, including those in a margin account. Ordinarily, the tax basis that is obtained by a transferee of property on the death of the owner of that property is adjusted to the property’s fair market value on the date of death (or alternate valuation date). If a United States share- holder dies owning shares with respect to which he did not elect QEF treatment (or elected such treatment after the first year in which he owned shares in which the Company was a PFIC and did not elect to recognize gain as described above), the transferee of those shares will not be entitled to adjust the tax basis in such shares to the fair market value on the date of death (or alternate valuation date). In that case, in general, the transferee of such shares will take a basis in the shares equal to the shareholder’s basis therein immediately before his death. If a United States shareholder dies owning Company shares for which a valid QEF election was in effect for all taxable years in such shareholder’s holding period during which the Company was a PFIC (or the share- holder elected to treat the shares as if sold on the first day of the first taxable year of the Company for which the QEF election was effective), then the basis increase generally will be available unless the holding period for his shares began on or prior to November 30, 1987. In the latter case, in gen- eral, any otherwise applicable basis increase will be reduced to the extent of the shareholder’s ratable share of the earn- ings and profits of the Company accumulated for the period during which he held those shares between December 1, 1963 and November 30, 1987. DUE TO THE COMPLEXITY OF THE APPLICABLE TAX RULES, UNITED STATES SHAREHOLDERS OF THE COMPANY ARE STRONGLY URGED TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE IMPACT OF THESE RULES ON THEIR INVESTMENT IN THE COMPANY AND ON THEIR INDIVIDUAL SITUATIONS. 15 Dividend Reinvestment Plan EquiServe Trust Company, N.A. (“EquiServe”) has been engaged to offer a dividend reinvestment plan (the “Plan’’) to shareholders. Shareholders must elect to participate in the Plan by signing an authorization. The authorization appoints EquiServe as agent to apply to the purchase of common shares of the Company in the open market (i) all cash dividends (after deduction of the service charge described below) that become payable to such participant on the Company’s shares (includ- ing shares registered in his or her name and shares accumu- lated under the Plan) and (ii) any voluntary cash payments ($50 minimum, $3,000 maximum per dividend period) received from such participant within 30 days prior to such dividend payment date. For the purpose of making purchases, EquiServe will com- mingle each participant’s funds with those of all other partici- pants in the Plan. The price per share of shares purchased for each participant’s account shall be the average price (includ- ing brokerage commissions and any other costs of purchase) of all shares purchased in the open market with the net funds available from a cash dividend and any voluntary cash pay- ments being concurrently invested. Any stock dividends or split shares distributed on shares held in the Plan will be cred- ited to the participant’s account. For each participant, a service charge of 5% of the com- bined amount of the participant’s dividend and any voluntary payment being concurrently invested, up to a maximum charge of $2.50 per participant, will be deducted (and paid to EquiServe) prior to each purchase of shares. Shareholder sales of shares held by EquiServe in the Plan are subject to a fee of Privacy Notice ASA Limited (the “Company”) is committed to protecting the financial privacy of its shareholders. to process transactions, We do not share any nonpublic, personal information that we may collect about shareholders with anyone, including our affiliates, except to service and administer shareholders’ share accounts, to comply with shareholders’ requests or legal requirements or for other limited purposes permitted by law. For example, the Company may disclose a shareholder’s name, address, social security number and the number of shares owned to its administrator, transfer agent or other service providers in order to provide the shareholder with proxy statements, tax reporting forms, annual $10.00 plus applicable brokerage commissions deducted from the proceeds of the sale. Additional nominal fees are charged by EquiServe for specific shareholder requests such as requests for information regarding share cost basis detail in excess of two prior years and for replacement Forms 1099 older than three years. Participation in the Plan may be terminated by a participant at any time by written instructions to EquiServe. Upon termi- nation, a participant will receive a certificate for the full num- ber of shares credited to his or her account, unless he or she requests the sale of all or part of such shares. Dividends reinvested by a shareholder under the Plan will generally be treated for U.S. federal income tax purposes in the same manner as dividends paid to such shareholder in cash. See “Certain tax information for United States share- holders’’ for more information regarding tax consequences to U.S. investors of an investment in shares of the Company, including the effect of the Company’s status as a PFIC. The amount of the service charge is deductible for U.S. federal income tax purposes, subject to limitations. To participate in the Plan an investor may not hold his or her shares in a “street name’’ brokerage account. Additional information regarding the Plan may be obtained from EquiServe Dividend Reinvestment Plan, 150 Royall St., Canton, MA 02021. Information may also be obtained by call- ing EquiServe’s Telephone Response Center at 800-446-2617 between 8:30 a.m. and 5 p.m., Eastern time, Monday through Friday. reports or other information about the Company. This policy applies to all of the Company’s shareholders and former shareholders. We keep nonpublic personal information in a secure envi- ronment. We restrict access to nonpublic personal information to Company officers, agents and service providers who have a need to know the information based on their role in servicing or administering shareholders’ accounts. The Company also maintains physical, electronic and procedural safeguards that comply with federal regulations and established security stan- dards to protect the confidentiality of nonpublic personal information. 16 Forward-Looking Statements This report contains “forward-looking statements” within the meaning of The Securities Act of 1933 and The Securities Exchange Act of 1934. By their nature all forward-looking statements involve risks, uncertainties and other factors which may cause actual results, performance or achievements of management’s plans to be materially different from those contemplated by the forward-looking statements. Such factors include, but are not limited to, the performance of the companies whose securities comprise the Company’s portfolio, the conditions in the U.S., South Africa and other international securities and foreign exchange markets, the price of gold, platinum and other precious metals, changes in tax law and the Company’s efforts to move from South Africa to Bermuda. 17 The Board of Directors of ASA Limited Each of the individuals listed below serves as a director for ASA Limited. The address of each director is c/o LGN Associates, P.O. Box 269, Florham Park, NJ 07932. Interested Directors Robert J.A. Irwin (76) Position held with the Company: Chairman & Treasurer Director since: 1987 Principal Occupations During Past 5 Years: Chairman of ASA Limited Other Directorships held by Director: Former Director of Niagara Share Corporation Chester A. Crocker (62) Position held with the Company: Director and U.S. Secretary since 1999 Director since: 1996 Principal Occupations During Past 5 Years: James R. Schlesinger Professor of Strategic Studies, School of Foreign Service, Georgetown University; President of Crocker Group (consultants) Other Directorships held by Director: Chairman and Director of United States Institute of Peace, Director of Ashanti Goldfields, Ltd., Director of Africa Holdings Ltd., Director of Modern Africa Growth & Income Fund Ronald L. McCarthy (70) Position held with the Company: Director and Managing Director since 1988 Director since: 1988 Principal Occupations During Past 5 Years: Managing Director of ASA Limited Other Directorships held by Director: None Independent Directors Henry R. Breck (66) Position held with the Company: Director Director since: 1996 Principal Occupations During Past 5 Years: Chairman and a director of Ark Malcolm W. MacNaught (66) Position held with the Company: Director Director since: 1998 Principal Occupations During Past 5 Years: Former Vice President Asset Management Co., (registered investment adviser) and Portfolio Manager at Fidelity Investments Other Directorships held by Director: Director of Butler Capital Corp. Other Directorships held by Director: Director of Meridian Gold Harry M. Conger (73) Position held with the Company: Director Director since: 1984 Principal Occupations During Past 5 Years: Chairman and CEO Emeritus of Homestake Mining Company Other Directorships held by Director: Director of Apex Silver Mines, Trustee of the California Institute of Technology Joseph C. Farrell (68) Position held with the Company: Director Director since: 1999 Principal Occupations During Past 5 Years: Chairman, President and CEO of The Pittston Company Other Directorships held by Director: Director of Universal Corporation James G. Inglis (59) Position held with the Company: Director Director since: 1998 Principal Occupations During Past 5 Years: Chairman of Melville Douglas Investment Management (Pty) Ltd. Other Directorships held by Director: None Corporation Robert A. Pilkington (58) Position held with the Company: Director Director since: 1979 Principal Occupations During Past 5 Years: Investment banker and Managing Director of UBS Securities LLC or predecessor companies since 1985 Other Directorships held by Director: Director of Avocet Mining PLC A. Michael Rosholt (83) Position held with the Company: Director Director since: 1982 Principal Occupations During Past 5 Years: Chairman of the National Business Initiative (South Africa), a non-profit organization Other Directorships held by Director: Former Chairman of Barlow Rand Limited 18 [This page intentionally left blank] [This page intentionally left blank]