Wrap Text
Results for the first Quarter ended FY13 ended 30 September 2012
Harmony Gold Mining Company Limited
("Harmony" or "Company")
Incorporated in the Republic of South Africa
Registration number 1950/038232/06
JSE Share code: HAR
NYSE Share code:HMY
ISIN: ZAE000015228
Q1 FY13
RESULTS FOR THE FIRST QUARTER FY13 ENDED 30 SEPTEMBER 2012
KEY FEATURES
Quarter on quarter
- Gold production increased by 8% to 10 013kg (321 924oz)
- Operating profit 9% higher at R1.4bn (US$171 million)
- Cash operating costs increased by 6% to R294 404/kg
(US$1 110/oz) due to:
- two months of winter electricity tariffs
- annual wage increase on 1 July 2012
- Increase in headline earnings per share* to 123 SA cents
(15 US cents)
* Including discontinued operations
All the figures used in this report represent continuing operations, unless
specified otherwise.
FINANCIAL SUMMARY FOR THE FIRST QUARTER
ENDED 30 SEPTEMBER 2012
Quarter Quarter Q on Q
September June variance
2012# 2012# %
kg 10 013 9 269 8
Gold produced
oz 321 924 298 006 8
R/kg 294 404 278 091 (6)
Cash operating costs
US$/oz 1 110 1 065 (4)
kg 9 704 9 333 4
Gold sold
oz 311 992 300 062 4
R/kg 440 868 421 565 5
Gold price received
US$/oz 1 663 1 615 3
R million 1 408 1 295 9
Operating profit¹
US$ million 171 159 7
SAc/s 121 25 >100
Basic earnings per share*
USc/s 15 3 >100
Rm 529 (27) >100
Headline profit/(loss)*
US$m 64 (3) >100
SAc/s 123 (6) >100
Headline earnings per share*
USc/s 15 (1) >100
Exchange rate R/US$ 8.25 8.12 2
* Including discontinued operations
# Figures represent continuing operations unless stated otherwise
1 Operating profit is comparable to the term production profit in the segment report in the financial statements and not to the
operating profit line in the income statement
Shareholder information
Issued ordinary share capital at
435 064 236
30 September 2012*
Issued ordinary share capital at
431 564 236
30 June 2012
* The increase in the issued shares is due to the shares issued to the
Tlhakanelo Employee Share Trust
Market capitalisation
At 30 September 2012 (ZARm) 30 381
At 30 September 2012 (US$m) 3 682
At 30 June 2012 (ZARm) 33 015
At 30 June 2012 (US$m) 4 037
Harmony ordinary share and ADR prices
12-month high (1 October 2011
R115.75
30 September 2012) for ordinary shares
12-month low (1 October 2011
R66.90
30 September 2012) for ordinary shares
12-month high (1 October 2011
US$14.37
30 September 2012) for ADRs
12-month low (1 October 2011
US$7.85
30 September 2012) for ADRs
Free float 100%
ADR ratio 1:1
JSE Limited HAR
Range for quarter (1 July 2012
R66.90 R70.99
30 September 2012 closing prices)
Average daily volume for the quarter
2 411 137 shares
(1 July 2012 30 September 2012)
Range for quarter (1 April 2012
R72.84 R89.00
30 June 2012 closing prices)
Average daily volume for the quarter
1 491 325 shares
(1 April 2012 30 June 2012)
New York Stock Exchange, Inc
HMY
including other US trading platforms
Range for quarter (1 July 2012
US$7.85 US$8.40
30 September 2012 closing prices)
Average daily volume for the quarter
2 440 148 shares
(1 July 2012 30 September 2012)
Range for quarter (1 April 2012
US$8.70 US$11.04
30 June 2012 closing prices)
Average daily volume for the quarter
2 069 561 shares
(1 April 2012 30 June 2012)
Investors' calendar 2012/2013
Annual general meeting 28 November 2012
Q2 FY13 results 4 February 2013#
Q3 FY13 results 8 May 2013#
Q4 FY13 results 14 August 2013#
Investor Day 28 August 2013#
#These dates may change in future
Harmony's Integrated Annual Report,
Notice of Annual General Meeting, its
Sustainable Development Report and its Annual
Report filed on a Form 20F with the United
States' Securities and Exchange Commission
for the year ended 30 June 2012
are available on our website:
www.harmony.co.za
Forward-looking statements
This quarterly report contains forward-looking statements within
the meaning of the United States Private Securities Litigation Reform
Act of 1995 with respect to Harmony's financial condition, results of
operations, business strategies, operating efficiencies, competitive
positions, growth opportunities for existing services, plans and objectives
of management, markets for stock and other matters. Statements in this
quarter that are not historical facts are "forward-looking statements"
for the purpose of the safe harbour provided by Section 21E of the
U.S. Securities Exchange Act of 1934, as amended, and Section 27A
of the U.S. Securities Act of 1933, as amended. Forward-looking
statements are statements that are not historical facts.
These statements include financial projections and estimates and their
underlying assumptions, statements regarding plans, objectives and
expectations with respect to future operations, products and services,
and statements regarding future performance. Forward-looking
statements are generally identified by the words "expect", "anticipates",
"believes", "intends", "estimates" and similar expressions. These
statements are only predictions. All forward-looking statements involve
a number of risks, uncertainties and other factors and we cannot assure
you that such statements will prove to be correct. Risks, uncertainties
and other factors could cause actual events or results to differ from
those expressed or implied by the forward-looking statements.
These forward-looking statements, including, among others, those
relating to the future business prospects, revenues and income of
Harmony, wherever they may occur in this quarterly report and the
exhibits to this quarterly report, are necessarily estimates reflecting the
best judgment of the senior management of Harmony and involve a
number of risks and uncertainties that could cause actual results to differ
materially from those suggested by the forward-looking statements.
As a consequence, these forward-looking statements should be
considered in light of various important factors, including those set forth
in this quarterly report.
Important factors that could cause actual results to differ materially
from estimates or projections contained in the forward-looking
statements include, without limitation: overall economic and business
conditions in the countries in which we operate; the ability to achieve
anticipated efficiencies and other cost savings in connection with past
and future acquisitions; increases or decreases in the market price of
gold; the occurrence of hazards associated with underground and
surface gold mining; the occurrence of labour disruptions; availability,
terms and deployment of capital; changes in government regulations,
particularly mining rights and environmental regulations; fluctuations
in exchange rates; currency devaluations and other macro-economic
monetary policies; and socio-economic instability in the countries in
which we operate.
Competent person's declaration
Harmony reports in terms of the South African Code for the Reporting
of Exploration results, Mineral Resources and Ore Reserves (SAMREC).
Harmony employs an ore reserve manager at each of its operations who
takes responsibility for reporting mineral resources and mineral reserves
at his operation.
The mineral resources and mineral reserves in this report are based on
information compiled by the following competent persons:
Reserves and resources South Africa:
Jaco Boshoff, Pri Sci Nat, who has 16 years' relevant experience and
is registered with the South African Council for Natural Scientific
Professions (SACNASP).
Reserves and resources PNG:
Stuart Hayward for the Wafi-Golpu mineral resources, Gregory Job
for the Golpu mineral reserve, James Francis for the Hidden Valley
mineral resources and Anton Kruger for the Hidden Valley mineral
reserve. Messers Job, Francis and Kruger are corporate members of
the Australian Institute of Mining and Metallurgy and Mr Hayward is a
member of the Australian Institute of Geoscientists. All have relevant
experience in the type and style of mineralisation for which they are
reporting, and are competent persons as defined by the code.
These competent persons consent to the inclusion in the report of
the matters based on the information in the form and context in
which it appears. Mr Boshoff and Mr Job are full-time employees of
Harmony Gold Mining Company Limited and Mr Hayward is a full-time
employee of Wafi-Golpu Services Limited. Mr Francis and Mr Kruger are
full-time employees of Newcrest Mining Limited (Newcrest). Newcrest is
Harmony's joint venture partner in the Morobe Mining Joint Venture on
the Hidden Valley mine and Wafi-Golpu project.
There has been no material changes in the mineral reserves
declared as at 30 June 2012.
Chief executive officer's review
Harmony produced solid results for FY12, and improved on these in
the first quarter of FY13. The company continues to generate strong
cash flow, with low debt and undrawn lending facilities and a rand/
dollar exchange rate that is working in our favour.
The past quarter has been a tumultuous time in the mining industry
after unprotected strikes at one platinum mine spread across almost
the entire mining industry, including our own Kusasalethu mine. In
addition to the tragic loss of life at some operations in the mining
industry and the economic cost of these actions, the scale of violence
and intimidation has made media headlines around the world with
concomitant impacts on investor sentiment, South Africa's sovereign
credit rating, and national and industry reputations. These events have
been extremely unfortunate not only for the industry and its employees,
but also for future growth and development in South Africa, given the
critical role of gold mining in our country's economic development.
At Harmony, some 5 400 employees at Kusasalethu mine near
Carletonville embarked on an unprotected strike at the beginning of
October 2012. We urged our employees to honour existing collective
agreements entered into through the Chamber of Mines as well as
existing bargaining structures. In addition, we continued to encourage
all employees participating in this unlawful strike to act in a safe,
responsible and peaceful manner, and to engage through established
channels. The majority of striking workers returned to Kusasalethu
on 25 October 2012. Safety inspections, safety inductions and health
checks were done during the first few days of the workers' return, but
production start-up has been slow.
Encouragingly, Harmony's other operations have remained at work
during difficult times arguably an indication that work done on
building a common culture and values is producing benefits. I thank
management teams and all employee representatives for the good
relationships they have with each other and for being 'connected'.
On 25 October 2012, the Chamber of Mines, representing Harmony,
AngloGold Ashanti Ltd and Gold Fields Ltd, together with the National
Union of Mineworkers, Solidarity and UASA, signed an agreement
to give effect to clause 11 of the 2011 2013 Chamber Gold Wage
Agreement to put an end to the national strikes in the gold industry. The
adjustment effectively increases Harmony's wages by approximately
R10 million per month.
Everything we do at Harmony is based on our values safety, honesty,
achievement, accountability and connectedness. This means we
do what is right for our shareholders and other stakeholders, our
employees, our assets and our business.
We were able to demonstrate these values in action effectively
using concrete examples during an analyst visit to our Papua New
Guinea (PNG) operations in September. Harmony's chairman and
management recently visited PNG and had the opportunity to meet
with the prime minister, the Honourable Peter O'Neill, and members
of his cabinet. The official party visited our Hidden Valley mine and
Wafi-Golpu project, which was indeed an honour and privilege for
us. Harmony is committed to building a mutually beneficial long-term
partnership with the government of PNG, the communities living near
our operations, our employees and other stakeholders.
Understanding the importance of delivering on our promises, we
are focused on meeting our guidance to the investment community
of delivering 1.7 million ounces of gold by 2016. An important
component in reaching this milestone lies in the development work
being done throughout the company to ensure our grade continues
to improve. We trust that delivering on our targets will contribute to
investors recognising the value in Harmony's share price.
Progress made towards our strategic objectives as at 30 June 2012 are:
Ore reserves Increased by 27%
Dividends Increased by 50%
Growth Net debt Lowered by R823m (US$123m)
Funded entirely by operations
Capital expenditure
R3.2bn (US$414m)
Expenditure Increased by 54%
Number of gold and
Increased
copper targets
Exploration Diversity geographic
Improved
and copper
US$6 per equivalent resource
Discovery cost
ounce
Fatalities down, improved
Improved safety
lost-time injury frequency rate
Disposed of non-core
Evander and Rand Uranium
assets
Optimising Improved margin 26% in FY11, 35% in FY12
operational
36% increase in R/kg gold
delivery
price = 80% increase in rand
profit
Leverage to gold price
23% increase in US$/oz gold
price = 62% increase in US$
profit
World-class gold/copper project, long life
Lowest industry quartile operating cost (gold and
Golpu copper)
Significant upside potential Golpu and the Wafi
transfer structure
This year (FY13) we plan to produce 1.3 million ounces of gold from
continuing operations. This quarter's results show that we are on
course, however the strike at Kusasalethu will impact on our target
(±25 000oz).
Safety and values
Regrettably, Harmony recorded three fatalities in the quarter.
Mzwandile Bhudaza was a rock driller at Unisel and Sera Nkhache and
Simon Retselisitsoe Molefi were contractors at Joel mine. We extend
our deepest sympathy to their families and colleagues.
Given the current turmoil in the mining industry, we need to be
even more vigilant about safety. It is the most important aspect of
our business, and one of Harmony's values, which requires everyone
to make safety the foremost priority in all circumstances. Safety
awareness campaigns are on-going.
Phakisa has now reached 27 months without a fatality (1.75 million
shifts), while Masimong reached 1 million fatality-free shifts in June
a milestone that took 17 months to reach. Tshepong recorded 1 million
fatality-free shifts in September 2012 after nine months. At the time
of writing this report, Target 1 achieved three years without a fatality
(more than 1 million fatality-free shifts). Through an increased focus on
safety, behavioural improvements, reviewing accidents and potential
dangerous areas, communication and remedial action, we are steadily
improving the company's safety environment.
Gold market
The rand gold price received increased by 5% from R421 565/kg
in the June 2012 quarter to R440 868/kg in the September 2012
quarter. During this period, the rand weakened 2% from R8.12/US$ to
R8.25/US$. A 3% increase in the US dollar gold price to US$1 663/oz
(US$1 615/oz in the June 2012 quarter) resulted in the higher rand per
kilogram gold price.
Operational and financial results
The September 2012 quarter was a solid start to the new financial
year, despite the noted industry challenges. Gold production from
underground was 9% higher than the prior quarter, mainly driven
by improved grade. Operating profit increased by 12% compared to the
June 2012 quarter to more than R1.55 billion (including discontinued
operations). Cash operating costs increased quarter on quarter, mainly
due to two months of winter electricity tariffs and labour increases
implemented on 1 July. This resulted in the rand per kilogram unit cost
increasing by 6% from R278 091/kg in the June 2012 quarter to R294 404/kg
in this quarter.
Wafi-Golpu
Results from the resource definition programme have been extremely
encouraging and the resource potential at Wafi-Golpu continues to
improve with ongoing drilling.
In Harmony's latest statement of mineral resources and reserves, we
declared jointly-held Golpu's reserve of 450Mt at 1.21% copper and
0.86g/t gold for 12.4Moz gold and 5.4Mt copper. At 30 June 2012,
Harmony's attributable gold equivalent mineral reserves in South
Africa and PNG were 52.9Moz, a 31% annual increase in declared
reserves. This is largely due to the increase in mineral reserves in PNG
after completing the pre-feasibility study at Golpu. As drilling at Golpu
continues, more ounces from PNG may be added to reserves.
Exploration
The New Guinea mobile belt represents a fertile porphyry copper/gold
belt with significant exploration upside and the opportunity to repeat
our success at Wafi-Golpu.
Given that investing in greenfields exploration remains a significant part
of our growth strategy, Harmony's PNG exploration portfolio currently
comprises three quality projects in the New Guinea mobile belt:
- Mt Hagen mineralised porphyry copper system with highly
anomalous mineralisation and alteration patterns
- Amanab structurally hosted Au vein system
- Lake Kopiago area potential OK Tedi/Grasberg-style target
developed with detailed airborne magnetics
In South Africa, a surface drilling exploration process is under way at
Masimong to prove up the extension of the known B Reef value trend
in this area.
Evander transaction
In May 2012, Harmony concluded an agreement with Pan African
Resources plc to dispose of its 100% interest in Evander Gold Mines
Limited for R1.5 billion. Following competition authority approval in
July 2012, the remaining conditions precedent are expected to be
fulfilled during the third quarter of FY13.
Conclusion
In recent years, Harmony has built a reputation as a leading gold
mining company in both South Africa and PNG. These results confirm
that Harmony is guided by a clear strategy and expert management
teams delivering sustainable and competitive results.
While the gold price, rand/dollar exchange rate, geographic and
currency diversification will always be key factors in our company's
performance, we are confident that the people, policies, systems and
infrastructure in place will ensure Harmony's competitiveness and
sustainability for many years to come.
We are committed to creating value for our shareholders and we
are honouring our obligations to our employees, communities living
near our mines and other stakeholders. In recent years, Harmony has
invested millions of rands into improving the living standards of many
communities in South Africa and Papua New Guinea through local
development initiatives and our social and labour plans (see our 2012
sustainable development report on www.harmony.co.za).
We measure, we measure up and we deliver growing gold production,
reserves, profits and stakeholder benefits is our plan for FY13.
Graham Briggs
Chief executive officer
Safety and health
Harmony is committed to the health and wellbeing of our employees
as it promotes a safe and productive workplace and supports a positive
workplace culture. At Harmony we aim to provide a positive, supportive
working environment that values the safety, health and wellbeing of
our employees.
During the quarter it was decided to integrate all safety behaviour and
culture initiatives into the Harmony culture programme of which safety
is the first value. The work done on the integration will continue during
the December 2012 quarter.
Regrettably three employees were fatally injured during the quarter in
two separate incidents at Unisel and Joel, compared to one at Evander
in the previous quarter. This marks a deterioration in the Fatal
Injury Frequency Rate (FIFR) quarter on quarter to 0.13, from 0.04 in
the previous quarter. The FIFR year to date improved by 19% to 0.13,
when compared to the actual figure for the previous year of 0.16.
Year on year Harmony's total FIFR showed a continued improvement
and the year to date is at the lowest level ever, but still well above the
2013 industry milestone target of 0.03. All efforts are directed towards
achieving the industry-target.
The Lost Time Injury Frequency Rate (LTIFR) regressed by 3% quarter
on quarter from 5.90 to 6.10 while the year to date LTIFR improved
by 16% to 6.10, when compared to the actual figure for the previous
year of 7.29. The year on year LTIFR improved at most South African
operations with Kalgold, Masimong and Bambanani improving by 50%
or more.
During the quarter, the follow-up audits on the gap analysis performed
by the International Register of Certificated Auditors (IRCA) were
completed at all operations and workshops with representatives from
each operation were held to get additional inputs to further improve
the Harmony Occupational Health and Safety Management system.
A final document has been compiled for approval and implementation.
High level safety and health audits were completed on three
operations during the quarter and four audit reviews were done at the
applicable operations by the chief executive officer (CEO) and various
other executives. The CEO used this opportunity to meet with full-
time health and safety representatives and union officials at the mine
to discuss safety related matters. This effort is a first-rate example of
visible felt leadership with safety being led from the top.
The most significant safety achievements during the quarter were:
- Randfontein surface operations achieved 4 750 000 fatality free
shifts
- Phakisa achieved 1 750 000 fall of ground fatality free shifts
- Masimong achieved 1 000 000 fatality free shifts
Our pro-active approach to the health and wellness of our employees
continues through a diverse array of measures, programmes and
initiatives which are supported and invested in by the Company to
promote the good health of our employees. By taking a pro-active
approach to our workplace health and safety, we are minimising and
eliminate risks before they occur.
Financial overview
Net profit
The net profit for the September 2012 quarter was R522 million, 388%
higher than the previous quarter. This reflects the increase in gold sold
of 371kg (4%) as well as an increase in the gold price received of 5%
to R440 868/kg.
Share-based payments
Share-based payments increased from R21 million to R105 million in
the September 2012 quarter. This includes a cost of R81 million relating
to the new Employee Share Ownership Plan (ESOP) awards that were
granted in August 2012. In terms of the ESOP rules, all employees other
than management were awarded a minimum of 100 Scheme Shares
and 200 Share Appreciation Rights (SARs). In addition these employees
qualify for an additional cash bonus under the SARs in the event that
the share price growth is less than R18 per share.
Harmony issued 3.5 million shares to the Tlhakanelo Share Trust on
31 August 2012. In terms of IFRS 2, Share-based Payment, the SARs
includes an equity-settled portion as well as a cash-settled portion
relating to the cash bonus. The cash-settled portion has been
recognised in the balance sheet as a derivative financial liability.
Impairment of investments
The impairment of investments amounting to R48 million in the
September 2012 quarter and R144 million in the June 2012 quarter
recorded in the income statement is the reduction in the fair market
value of the investment in Witwatersrand Consolidated Gold
Resources Limited.
Net gain on financial instruments
The net gain on financial instruments of R74 million in the
September 2012 quarter is due to the increased market value of the
rehabilitation funds' equity-linked deposits invested with Nedbank.
Profit on discontinued operations
Profit from discontinued operations is R89 million in the September
2012 quarter and R180 million in the June 2012 quarter. The amounts
represent the net profit after taxation for Evander Gold Mines Limited.
Included in the amount for the June 2012 quarter is the profit on sale
of Evander 6 and Twistdraai to Taung Gold Limited of R159 million (net
of taxation).
Earnings per share
Total basic earnings per share increased from 25 SA cents to
121 SA cents per share in the September 2012 quarter. Total headline
earnings per share increased from a loss of 6 SA cents to earnings
of 123 SA cents per share.
Borrowings and cash
The long-term portion of borrowings increased from R1 503 million
to R1 840 million in the September 2012 quarter, mainly due to a
drawdown of US$40 million on the US dollar syndicated revolving
credit facility. During the same period cash and cash equivalents
increased from R1 773 million to R2 266 million as a result of strong
cash flow generated by operating activities, resulting in a positive net
cash position of R120 million at quarter-end.
Assets and liabilities of disposal group classified as held for sale
Assets and liabilities of disposal groups classified as held for sale at
30 September 2012 represents the assets and liabilities of Evander
Gold Mines Limited that were classified as held for sale and includes
increases in cash balances as well as mining assets.
CONDENSED CONSOLIDATED INCOME STATEMENTS (Rand)
Quarter ended Year ended
30 September 30 June 30 September(1) 30 June
2012 2012 2011 2012
Figures in million Note (Unaudited) (Unaudited) (Unaudited) (Audited)
Continuing operations
Revenue 4 278 3 934 3 574 15 169
Cost of sales 2 (3 490) (3 325) (2 975) (12 137)
Production costs (2 870) (2 639) (2 440) (9 911)
Amortisation and depreciation (481) (548) (445) (1 921)
Reversal of impairment of assets 60 60
Employment termination and restructuring costs (7) (11) (34) (81)
Share-based payments 3 (105) (21) (22) (87)
Other items (27) (166) (34) (197)
Gross profit 788 609 599 3 032
Corporate, administration and other expenditure (106) (91) (80) (352)
Social investment expenditure (20) (22) (14) (72)
Exploration expenditure (136) (161) (96) (500)
Profit on sale of property, plant and equipment 55 34 26 63
Other income/(expenses) net 3 (74) 18 (50)
Operating profit 584 295 453 2 121
Reversal of impairment of investment in associate 48 56
Impairment of investments 4 (48) (144) (144)
Net gain/(loss) on financial instruments 74 12 (23) 86
Investment income 33 33 16 97
Finance cost (58) (69) (70) (286)
Profit before taxation 585 127 424 1 930
Taxation 5 (152) (200) (57) 123
Normal taxation (111) (83) (40) (199)
Deferred taxation (41) (117) (17) 322
Net profit/(loss) from continuing operations 433 (73) 367 2 053
Discontinued operations
Profit from discontinued operations 6 89 180 111 592
Net profit for the period 522 107 478 2 645
Attributable to:
Owners of the parent 522 107 478 2 645
Earnings per ordinary share (cents) 7
Earnings/(loss) from continuing operations 100 (17) 85 477
Earnings from discontinued operations 21 42 26 137
Total earnings 121 25 111 614
Diluted earnings per ordinary share (cents) 7
Earnings/(loss) from continuing operations 100 (17) 85 476
Earnings from discontinued operations 21 42 26 136
Total diluted earnings 121 25 111 612
(1) The comparative figures are re-presented due to Evander being reclassified as a discontinued operation. See note 6 in this regard.
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Rand)
Quarter ended Year ended
30 September 30 June 30 September 30 June
2012 2012 2011 2012
Figures in million Note (Unaudited) (Unaudited) (Unaudited) (Audited)
Net profit for the period 522 107 478 2 645
Other comprehensive income for the period, net of income tax 26 606 955 1 587
Foreign exchange translation 26 506 924 1 485
(Loss)/gain on fair value movement of available-for-sale
investments (44) 31 (42)
Impairment of available-for-sale investments recognised in
profit or loss 4 144 144
Total comprehensive income for the period 548 713 1 433 4 232
Attributable to:
Owners of the parent 548 713 1 433 4 232
The accompanying notes are an integral part of these condensed consolidated financial statements.
The unaudited condensed consolidated financial statements for the quarter ended 30 September 2012 have been prepared
by Harmony Gold Mining Company Limited's corporate reporting team headed by Mr Herman Perry. This process was
supervised by the financial director, Mr Frank Abbott and approved by the board of Harmony Gold Mining Company
Limited. These financial statements have not been audited or independently reviewed.
CONDENSED CONSOLIDATED BALANCE SHEETS (Rand)
At At At
30 September 30 June 30 September
2012 2012 2011
Figures in million Note (Unaudited) (Audited) (Unaudited)
ASSETS
Non-current assets
Property, plant and equipment 33 334 32 853 32 278
Intangible assets 2 194 2 196 2 171
Restricted cash 36 36 31
Restricted investments 1 919 1 842 1 860
Deferred tax assets 523 486 1 287
Investments in financial assets 4 98 146 215
Inventories 58 58 168
Trade and other receivables 20 28 24
Total non-current assets 38 182 37 645 38 034
Current assets
Inventories 1 185 996 1 006
Trade and other receivables 1 165 1 245 876
Income and mining taxes 8 118 100
Cash and cash equivalents 2 266 1 773 1 325
4 624 4 132 3 307
Assets of disposal groups classified as held for sale 6 1 658 1 423 314
Total current assets 6 282 5 555 3 621
Total assets 44 464 43 200 41 655
EQUITY AND LIABILITIES
Share capital and reserves
Share capital 28 331 28 331 28 314
Other reserves 2 515 2 444 1 741
Retained earnings 3 611 3 307 1 313
Total equity 34 457 34 082 31 368
Non-current liabilities
Deferred tax liabilities 3 166 3 106 4 300
Provision for environmental rehabilitation 1 895 1 865 2 046
Retirement benefit obligation 181 177 167
Other provisions 33 30 7
Derivative financial liabilities 3 54
Borrowings 8 1 840 1 503 1 684
Total non-current liabilities 7 169 6 681 8 204
Current liabilities
Borrowings 8 306 313 331
Income and mining taxes 110 1 3
Derivative financial liabilities 3 16
Trade and other payables 1 966 1 747 1 733
2 398 2 061 2 067
Liabilities of disposal groups classified as held for sale 6 440 376 16
Total current liabilities 2 838 2 437 2 083
Total equity and liabilities 44 464 43 200 41 655
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Rand) (Unaudited)
for the quarter ended 30 September 2012
Share Other Retained
Figures in million capital reserves earnings Total
Balance 30 June 2012 28 331 2 444 3 307 34 082
Share-based payments 45 45
Net profit for the period 522 522
Other comprehensive income for the period 26 26
Dividends paid1 (218) (218)
Balance 30 September 2012 28 331 2 515 3 611 34 457
Balance 30 June 2011 28 305 762 1 093 30 160
Issue of shares 9 9
Share-based payments 24 24
Net profit for the period 478 478
Other comprehensive income for the period 955 955
Dividends paid2 (258) (258)
Balance 30 September 2011 28 314 1 741 1 313 31 368
1. Dividend of 50 SA cents declared on 13 August 2012.
2. Dividend of 60 SA cents declared on 12 August 2011.
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (Rand)
Quarter ended Year ended
30 September 30 June 30 September 30 June
2012 2012 2011 2012
Figures in million (Unaudited) (Unaudited) (Unaudited) (Audited)
Cash flow from operating activities
Cash generated by operations 1 337 1 211 1 092 4 551
Interest and dividends received 26 20 16 80
Interest paid (29) (38) (41) (141)
Income and mining taxes refunded/(paid) 108 (163) (277)
Cash generated by operating activities 1 442 1 030 1 067 4 213
Cash flow from investing activities
Cash transferred to disposal group (162)
Proceeds on disposal of investment in associate 29 222
Proceeds on disposal of Evander 6 and Twistdraai 125 125
Other investing activities (56) (85)
Net additions to property, plant and equipment (893) (952) (668) (3 140)
Cash utilised by investing activities (1 055) (854) (668) (2 878)
Cash flow from financing activities
Borrowings raised 330 342 799 1 443
Borrowings repaid (9) (161) (352) (1 248)
Ordinary shares issued net of expenses 3 9 26
Dividends paid (218) (258) (431)
Cash generated/(utilised) by financing activities 103 184 198 (210)
Foreign currency translation adjustments 3 (14) 35 (45)
Net increase in cash and cash equivalents 493 346 632 1 080
Cash and cash equivalents beginning of period 1 773 1 427 693 693
Cash and cash equivalents end of period 2 266 1 773 1 325 1 773
The accompanying notes are an integral part of these condensed consolidated financial statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 30 September 2012 (Rand)
1. Accounting policies
Basis of accounting
The condensed consolidated financial statements for the quarter ended 30 September 2012 have been prepared in accordance with IAS 34,
Interim Financial Reporting, JSE Listings Requirements and in the manner required by the Companies Act of South Africa. They should be read
in conjunction with the annual financial statements for the year ended 30 June 2012, which have been prepared in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS). The accounting policies are consistent with
those described in the annual financial statements, except for the adoption of applicable revised and/or new standards issued by the International
Accounting Standards Board.
2. Cost of sales
Quarter ended Year ended
30 September 30 June 30 September(1) 30 June
2012 2012 2011 2012
Figures in million (Unaudited) (Unaudited) (Unaudited) (Audited)
Production costs excluding royalty 2 814 2 623 2 409 9 791
Royalty expense 56 16 31 120
Amortisation and depreciation 481 548 445 1 921
Reversal of impairment of assets (60) (60)
Rehabilitation expenditure 7 20 5 (17)
Care and maintenance cost of restructured shafts 20 19 29 88
Employment termination and restructuring costs 7 11 34 81
Share-based payments(2) 105 21 22 87
Other 127 126
Total cost of sales 3 490 3 325 2 975 12 137
1. The comparative figures are re-presented due to Evander being reclassified as a discontinued operation. See note 6 in this regard
2. Refer to note 3 for details
3. Share-based payments
This includes the cost relating to the new Employee Share Ownership Plan (ESOP) awards that were granted in August 2012. In terms of the
ESOP rules, all employees other than management were awarded a minimum of 100 Scheme Shares and 200 Share Appreciation Rights (SARs),
with employees with service longer than ten years receiving an additional ten percent. Both the Scheme Shares and SARs vest in five equal
portions on each anniversary of the award. In addition these employees qualify for an additional cash bonus under the SARs in the event that
the share price growth is less than R18 per share. The effect of the bonus puts the employees in the position they would have been in had the
share price increased by R18 per share since issue date.
Harmony issued 3.5 million shares to the Tlhakanelo Share Trust, on 31 August 2012. In addition, 6 817 880 SARs were issued. In terms of
IFRS 2, Share-based Payment, the SARs includes an equity-settled portion as well as a cash-settled portion related to the cash bonus. The cash-
settled portion has been recognised on the balance sheet as a derivative financial liability, the fair value of which will be re-measured at each
reporting date.
4. Impairment of investments
The impairment of the investment in Witswatersrand Consolidated Gold Resources Limited (Wits Gold) results from the decline in the fair value
of the investment on the JSE.
5. Taxation
The Supreme Court of Appeal's decision on Freegold's appeal regarding the South African Revenue Service's (SARS) application of mining
tax ringfencing was received on 1 October 2012 and the Court found in favour of SARS. This resulted in additional normal taxes of R94 million
offset by deferred tax credits of R154 million.
Unredeemed capital deductions are not allowed against non-mining income. However these deductions will be allowable against future mining
income.
6. Disposal groups classified as held for sale and discontinued operations
Evander Gold Mines Limited
The assets and liabilities of Evander Gold Mines Limited (Evander), a wholly-owned subsidiary of Harmony Gold Mining Company Limited
(Harmony), have been classified as held for sale following signing of a sale of shares and claims agreement on 30 January 2012. On 30 May 2012,
Harmony announced the signing of a new sale of shares and claims agreement with Pan African Resources plc (Pan African).The disposal will
be for an aggregate purchase consideration of R1.5 billion, excluding the proceeds of the Taung Gold Limited transaction.
The transaction is subject to, among others, the following conditions precedent:
- Pan African obtaining the requisite shareholder approval for the acquisition; and
- obtaining all relevant regulatory approvals
The operation also meets the requirements to be classified as a discontinued operation. The comparative figures in the income statement have
been re-presented as a result.
7. Earnings/(loss) and net asset value per share
Quarter ended Year ended
30 September 30 June 30 September(1) 30 June
2012 2012 2011 2012
(Unaudited) (Unaudited) (Unaudited) (Audited)
Weighted average number of shares (million) 431.5 431.4 431.1 430.8
Weighted average number of diluted shares (million) 432.3 432.3 431.6 432.0
Total earnings/(loss) per share (cents):
Basic earnings 121 25 111 614
Diluted earnings 121 25 111 612
Headline earnings/(loss) 123 (6) 95 565
from continuing operations 102 (11) 70 465
from discontinued operations 21 5 25 100
Diluted headline earnings/(loss) 123 (6) 95 563
from continuing operations 102 (11) 70 463
from discontinued operations 21 5 25 100
Figures in million
Reconciliation of headline earnings:
Continuing operations
Net profit/(loss) 433 (73) 367 2 053
Adjusted for:
Reversal of impairment of investment in associate* (48) (56)
Impairment of investments* 48 144 144
Reversal of impairment of assets (60) (60)
Taxation effect on impairment of assets (34) (34)
Profit on sale of property, plant and equipment (55) (34) (26) (63)
Taxation effect of profit on sale of property, plant and equipment 14 9 7 16
Headline earnings/(loss) 440 (48) 300 2 000
Discontinued operations
Net profit 89 180 111 592
Adjusted for:
Profit on sale of property, plant and equipment (230) (232)
Taxation effect of profit on sale of property, plant and equipment 71 72
Headline earnings 89 21 111 432
Total headline earnings/(loss) 529 (27) 411 2 432
(1) The comparative figures are re-presented due to Evander being reclassified as a discontinued operation. See note 6 in this regard
* There is no taxation effect on these items
Net asset value per share
At At At
30 September 30 June 30 September
2012 2012 2011
(Unaudited) (Audited) (Unaudited)
Number of shares in issue 435 064 236 431 564 236 430 272 715
Net asset value per share (cents) 7 920 7 897 7 290
8. Borrowings
The Nedbank revolving credit facility was repaid in full during the December 2011 quarter and the full R850 million facility is available until
December 2013.
The balance on the Nedbank term facilities at 30 September 2012 is R762 million.
US$40 million of the US$300 million syndicated revolving credit facility was drawn during the September 2012 quarter, taking the drawn down
level to US$170 million. The facility is repayable by August 2015.
9. Commitments and contingencies
At At At
30 September 30 June 30 September
2012 2012 2011
Figures in million (Unaudited) (Audited) (Unaudited)
Capital expenditure commitments:
Contracts for capital expenditure 510 519 290
Authorised by the directors but not contracted for 2 263 2 257 3 570
2 773 2 776 3 860
This expenditure will be financed from existing resources and, where appropriate, borrowings.
Contingent liability
For a detailed disclosure on contingent liabilities refer to Harmony's annual report for the financial year ended 30 June 2012, available on the
group's website (www.harmony.co.za). There were no significant changes in contingencies since 30 June 2012.
10. Related parties
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the
group, directly or indirectly, including any director (whether executive or otherwise) of the group. During the September 2012 quarter, Harmony
shares were purchased by certain directors as set out below:
Graham Briggs 14 347 shares
Frank Abbott 73 900 shares
Ken Dicks 12 500 shares
11. Subsequent events
(a) Tax court judgement refer to note 5 for the details.
(b) On 2 October 2012 employees at our Kusasalethu operation went on strike. This will affect production in the December 2012 quarter.
Refer to the CEO's review on page 3 for further details.
12. Segment report
The segment report follows on the page 25.
13. Reconciliation of segment information to consolidated income statements
30 September 30 September(1)
2012 2011
Figures in million (Unaudited) (Unaudited)
The "Reconciliation of segment information to consolidated income statements" line item in
the segment report is broken down in the following elements, to give a better understanding of
the differences between the income statement and segment report:
Reconciliation of production profit to gross profit
Total segment revenue 4 619 3 929
Total segment production costs (3 070) (2 623)
Production profit per segment report 1 549 1 306
Discontinued operations (141) (172)
Production profit from continuing operations 1 408 1 134
Cost of sales items, other than production costs and royalty expense (620) (535)
Gross profit as per income statements* 788 599
(1) The comparative figures are re-presented due to Evander being reclassified as a discontinued operation. See note 6 in this regard
* The reconciliation was done up to the first recognisable line item on the income statement. The reconciliation will follow the income statement after that.
SEGMENT REPORT (Rand/Metric) (Unaudited)
for the quarter ended 30 September 2012
Revenue Production cost Production profit/(loss) Capital expenditure Kilograms produced Tonnes milled
30 September 30 September 30 September 30 September 30 September 30 September
2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011
R million R million R million R million kg t'000
Continuing operations
South Africa
Underground
Kusasalethu 684 575 434 335 250 240 116 98 1 601 1 554 328 331
Doornkop 374 348 249 230 125 118 78 65 871 866 245 277
Phakisa 298 206 251 188 47 18 78 74 679 526 142 113
Tshepong 509 466 383 305 126 161 75 59 1 159 1 183 313 287
Masimong 436 314 258 215 178 99 36 50 987 796 261 232
Target 1 443 366 224 206 219 160 87 63 1 071 939 178 210
Bambanani 194 175 148 201 46 (26) 32 77 438 498 43 92
Joel 375 283 162 149 213 134 38 13 900 691 167 147
Unisel(1) 190 136 146 121 44 15 16 16 430 340 116 92
Target 3 151 93 124 105 27 (12) 28 12 367 241 87 78
Surface
All other surface operations 337 353 230 242 107 111 93 26 821 863 2 390 2 431
Total South Africa 3 991 3 315 2 609 2 297 1 382 1 018 677 553 9 324 8 497 4 270 4 290
International
Hidden Valley 287 259 261 143 26 116 87 40 689 792 491 415
Other 131 69
Total international 287 259 261 143 26 116 218 109 689 792 491 415
Total continuing operations 4 278 3 574 2 870 2 440 1 408 1 134 895 662 10 013 9 289 4 761 4 705
Discontinued operations
Evander 341 355 200 183 141 172 53 38 817 918 159 165
Total discontinued operations 341 355 200 183 141 172 53 38 817 918 159 165
Total operations 4 619 3 929 3 070 2 623 1 549 1 306 948 700 10 830 10 207 4 920 4 870
Reconciliation of the segment
information to the consolidated
income statement (refer to
note 13) (341) (355) (200) (183)
4 278 3 574 2 870 2 440
(1) The Virginia segment comprised of several mines, including Unisel. The other mines were placed on care and maintenance, the last in October 2010. As their results are no longer included in the comparative information, Unisel now becomes a
segment on its own.
CONTACT DETAILS
Corporate Office
Randfontein Office Park
PO Box 2, Randfontein, 1760, South Africa
Corner Main Reef Road/Ward Avenue, Randfontein, 1759, South Africa
Telephone: +27 11 411 2000
Website: www.harmony.co.za
Directors
P T Motsepe* Chairman
M Motloba*^ Deputy Chairman
G P Briggs Chief Executive Officer
F Abbott Financial Director
H E Mashego Executive Director
F F T De Buck*^ Lead independent director
J A Chissano*1^, K V Dicks*^, Dr D S Lushaba*^, C Markus*^,
M Msimang*^, J Wetton*^, A J Wilkens*
* Non-executive
^ Independent
1 Mozambican
Investor relations team
Henrika Basterfield
Investor Relations Officer
Telephone: +27 11 411 2314
Fax: +27 11 692 3879
Mobile: +27 82 759 1775
E-mail: henrika@harmony.co.za
Marian van der Walt
Executive: Corporate and Investor Relations
Telephone: +27 11 411 2037
Fax: +27 86 614 0999
Mobile: +27 82 888 1242
E-mail: marian@harmony.co.za
Company Secretary
Riana Bisschoff
Telephone: +27 11 411 6020
Mobile: +27 83 629 4706
E-mail: riana.bisschoff@harmony.co.za
South African Share Transfer Secretaries
Link Market Services South Africa (Proprietary) Limited
(Registration number 2000/007239/07)
13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein, 2001
PO Box 4844, Johannesburg, 2000, South Africa
Telephone: +27 86 154 6572
Fax: +27 86 674 4381
United Kingdom Registrars
Capita Registrars
The Registry, 34 Beckenham Road, Beckenham
Kent BR3 4TU, United Kingdom
Telephone: 0871 664 0300 (UK) (calls cost 10p a minute plus network
extras, lines are open 8:30am 5:30pm, Monday to Friday)
or +44 (0) 20 8639 3399 (calls from overseas)
Fax: +44 (0) 20 8639 2220
ADR Depositary
Deutsche Bank Trust Company Americas
c/o American Stock Transfer and Trust Company, Peck Slip Station
PO Box 2050, New York, NY 10272-2050
E-mail Queries: adr@db.com
Toll Free: +1-866-243-9656
Intl: +1-718-921-8200
Fax: +1-718-921-8334
Sponsor
JP Morgan Equities Limited
1 Fricker Road, corner Hurlingham Road, Illovo, Johannesburg, 2196
Private Bag X9936, Sandton, 2146, South Africa
Telephone: +27 11 507 0300
Fax: +27 11 507 0503
Trading Symbols
JSE Limited: HAR
New York Stock Exchange, Inc: HMY
Euronext, Brussels: HMY
Berlin Stock Exchange: HAM1
Registration number
1950/038232/06
Incorporated in the Republic of South Africa
ISIN
ZAE000015228
Date: 07/11/2012 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
