Wrap Text
Results For The Second Quarter Fy13 And Six Months Ended 31 December 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
RESULTS FOR THE SECOND QUARTER FY13 AND SIX MONTHS ENDED 31 DECEMBER 2012
KEY FEATURES
Quarter on quarter#:
- 28% increase in headline earnings per share* to 158 SA cents (18 US cents)
- Doornkops build-up takes its production to over a tonne of gold for the quarter
- 6% increase in underground grade third consecutive quarter of grade improvements
- Gold production decreased by 9% to 9 074kg (291 734oz)
- South African operations (excluding Kusasalethu) increased gold production by 3%
- Operating profit¹ 16% higher at R1.6 billion (US$188 million)
- Cash operating cost improved by 4% to R2.8 billion (US$323 million)
- Committed to more housing projects
- Interim dividend of 50 SA cents declared
# All figures represent continuing operations unless stated otherwise
* Includes discontinued operations
¹ Operating profit is comparable to the term production profit in the segment report in the financial statements and not to the
operating profit line in the income statement
FINANCIAL SUMMARY FOR THE SECOND QUARTER FY13
ENDED 31 DECEMBER 2012
Quarter Quarter Q-on-Q 6 months 6 months
December September variance December December Variance
2012# 2012# % 2012# 2011# %
kg 9 074 10 013 (9) 19 087 19 114 (1)
Gold produced
oz 291 734 321 924 (9) 613 658 614 529 (1)
Cash operating R/kg 310 858 294 404 (6) 302 226 261 785 (15)
costs US$/oz 1 115 1 110 (1) 1 111 1 070 (4)
kg 9 614 9 704 (1) 19 318 19 173 1
Gold sold
oz 309 097 311 992 (1) 621 089 616 427 1
Gold price R/kg 479 801 440 868 9 460 244 418 719 10
received US$/oz 1 722 1 663 4 1 692 1 712 (1)
Operating R million 1 633 1 408 16 3 041 3 015 1
profit ¹ US$ million 188 171 10 360 396 (9)
Basic earnings SAc/s 169 121 40 290 354 (18)
per share* USc/s 19 15 27 34 46 (26)
Headline Rm 680 529 29 1 209 1 452 (17)
profit/(loss)* US$m 78 64 22 143 191 (25)
Headline earnings SAc/s 158 123 28 281 337 (17)
per share* USc/s 18 15 20 33 44 (25)
Exchange rate R/US$ 8.67 8.25 5 8.46 7.61 11
# 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
* Including discontinued operations
Shareholder information
Issued ordinary share capital at
31 December 2012 435 257 691
Issued ordinary share capital at
30 September 2012 435 064 236
Market capitalisation
At 31 December 2012 (ZARm) 32 209
At 31 December 2012 (US$m) 3 796
At 30 September 2012 (ZARm) 30 381
At 30 September 2012 (US$m) 3 682
Harmony ordinary share and ADR prices
12-month high (1 January 2011
31 December 2012) for ordinary shares R101.75
12-month low (1 January 2011
31 December 2012) for ordinary shares R65.20
12-month high (1 January 2011
31 December 2012) for ADRs US$13.31
12-month low (1 January 2011
31 December 2012) for ADRs US$7.50
Free float 100%
ADR ratio 1:1
JSE Limited HAR
Range for quarter (1 October 2012
31 December 2012 closing prices) R65.20 74.05
Average daily volume for the quarter
(1 October 2012 31 December 2012) 1 558 920 shares
Range for quarter (1 July 2012
30 September 2012 closing prices) R66.90 R70.99
Average daily volume for the quarter
(1 July 2012 30 September 2012) 2 411 137 shares
New York Stock Exchange, Inc
including other US trading platforms HMY
Range for quarter (1 October 2012
31 December 2012 closing prices) US$7.50 US$8.96
Average daily volume for the quarter
(1 October 2012 31 December 2012) 2 392 671 shares
Range for quarter (1 July 2012
30 September 2012 closing prices) US$7.85 US$8.40
Average daily volume for the quarter
(1 July 2012 30 September 2012) 2 440 148 shares
Investors' calendar 2013
Q3 FY13 results 3 May 2013#
Q4 FY13 results 14 August 2013#
Investor Day 28 August 2013#
Q1 FY14 8 November 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
"During the past quarter our underground grade improved by 6%,
cash operating unit costs of underground operations increased by 5%
and the Rand gold price received was 9% higher quarter on quarter.
We recorded an operating profit of R1.6 billion and have declared an interim
dividend of 50 SA cents. Overall a strong financial quarter for Harmony,
notwithstanding the negative impact on operating performance due to labour
disruption at Kusasalethu", said Graham Briggs, chief executive
officer of Harmony.
Safety
The number of safety achievements increased significantly over the past
12 months. We have demonstrated through our decision at Kusasalethu
that safety is our main priority. More needs to be done however. It is
with deep regret and disappointment that Harmony has recorded three
fatalities during the quarter. We extend our deepest sympathy to the
families and colleagues of: Kelvin Mwale (boiler maker at Evander), Eliot
Zungu (driller at Kusasalethu) and Sechaba Moses Nkhatho (long haul
drive operator at Tshepong).
Read more about our safety initiatives on page 4.
Operational and financial results
Gold production decreased by 9% (939kg) in the December 2012
quarter to 9 074kg from 10 013kg in the September 2012 quarter.
This was all as a result of the unprotected strike and labour disruptions
at Kusasalethu.
Operating profit for the December 2012 quarter increased by
R225 million or 16% to R1 633 million. The increase in operating profit
was due to a decrease in cash operating costs and an increase in the
gold price received.
Cash operating costs in the December 2012 quarter decreased by
R127 million, mainly as a result of lower electricity costs (summer
tariffs).
The rand per kilogram unit cost for the December 2012 quarter
increased by 6% from R294 404/kg in the September 2012 quarter
to R310 858/kg in the December quarter, due to the decrease in gold
production.
Capital spent for the quarter increased as expected, from R764 million
to R867 million as the underspending in the September 2012 quarter
came through in the December 2012 quarter.
Kusasalethu
Our Kusasalethu mine in South Africa has experienced a pattern of
violence and unprotected industrial action by some employees and
contractors during the December 2012 quarter.
The mine was temporarily closed on 20 December 2012 for security
and safety reasons and employees were informed not to return to work
until further notice. The on-going unlawful events caused management
to give serious consideration to both the operational and financial
position of the mine and the future viability of Kusasalethu.
On 7 January 2013, the Company announced that Kusasalethu will
remain closed until such time as it is safe enough for its employees
to commence mining activities. Bilateral discussions with labour and a
Section 189 process in terms of the Labour Relations Act 66 of 1995
(LRA) commenced on 7 January 2013. At the last meeting held on
29 January 2013 the unions accepted Harmony's rationale for issuing
the section 189 in terms of the LRA. The conditions under which the
mine could be re-opened were also discussed. We have made some
progress and we are one step closer to finding a sustainable solution
to re-opening Kusasalethu. However, the mine remains closed until
an agreement has been reached and all the conditions of re-opening
it have been agreed upon and committed to by all the unions and
other stakeholders involved. The unions and Harmony have until
7 March 2013 to make a decision about the future of Kusasalethu.
Should the afore-mentioned process of discussion and consultation with
labour fail to achieve agreement on and undertakings to comply fully
with the specified conditions for the mine to resume safe production,
the Section 189A process will have to continue and be concluded. This
could lead to Kusasalethu's possible indefinite closure, with possible
significant job losses and negative impacts across a broad front on the
mine's host community.
Gold market
The United States (US) dollar gold price reached its 12th year of
consecutive price gains towards the end of calendar year 2012. Given
the uncertainty in the global economy, we believe that gold will become
more attractive as an investment option and that the gold price may
increase further during calendar year 2013.
The Rand gold price received increased to R479 801/kg in the
December 2012 quarter, in comparison to R440 868/kg in the previous
quarter. During the December 2012 quarter the Rand weakened by
5% to US$/R8.67 (US$/R8.25 in the September 2012 quarter). The
weaker Rand combined with a 4% increase in the US dollar gold price
to US$1 722/oz (US$1 663/oz in the September 2012 quarter) resulted
in the higher rand per kilogram gold price received.
Environmental management
At Harmony, we are committed to building a robust, sustainable
company for our current stakeholders and for future generations
through exploration, development and operating gold mines. When the
orebody is depleted, we ensure that the decommissioning and closing
of operations are done safely and responsibly. We aim to provide
shared value for the Company and its shareholders, the country in
which we operate and our host communities, as well as the biophysical
environment.
The Free State Rehabilitation Project began in May 2010, its impetus
coming from several shaft closures within the Virginia operations and
amongst the old shafts that had been acquired by Harmony over the
previous 10 years. Once mining operations ceased at these shafts, they
had to be decommissioned and appropriately shut down, in terms of
legislation.
While this project revolves around the closure of mining operations and
all that this entails, it also seeks to mitigate the impact such closures
have on the socio-economic sustainability of communities that depend
on mining in the Free State.
The project is progressing well and has resulted in a further reduction of
the environmental liability as determined for the Department of Mineral
Resources by R24 million in the last six months (total of R124 million
cumulatively since the inception of the project). More information
on our environmental management can be found on our website
www.harmony.co.za.
Our post-mining land use objectives are based on factors including:
- compatibility with surrounding uses; community expectations;
- biodiversity protection; and regulatory requirements. Consistent
with sustainable development principles, mining operations should
be regarded as transient land use, implying that, post-mining, the
land should be restored so that its value is equivalent to or better
than pre-mining.
We see the value of land as being measured both in economic and
socio-ecological terms. In this case, rehabilitation entails restoring
the land to its future value-adding use. Our programme goes beyond
the process of demolition of infrastructure and backfilling of inert
material to smoothing out the landscape; it also identifies the socio-
economic value-add that can be created on rehabilitated land. Harmony
participated in the Carbon Disclosure Programme (Top 100 JSE
Companies) and was placed 3rd with a 98% score. Influenced by this
achievement, Harmony was again included into the Nedbank BettaBeta
Green Exchange Traded Fund (BGREEN EFT), propelling Harmony into
the top 20 of the fund with it finishing in the Top 10 (placed 8th).
Wafi-Golpu
Drilling performance continued to show a noticeable improvement
and will remain an important focus, with geotechnical data acquisition
and additional mineral resources being key priorities. The next phase
of the metallurgical test work program, focusing on testing alternative
flowsheets to improve gold recovery commenced in November 2012.
Evander
Harmony entered into an agreement to sell its 100% interest in Evander
Gold Mines Limited (Evander) to Emerald Panther Investments 91
(Proprietary) Limited (EP), a wholly owned subsidiary of Pan African
Resources Plc, for R1.5 billion during May 2012. The transaction
remains subject to the consent of the Minister of Mineral Resources
in accordance with section 11 of the Mineral and Petroleum Resources
Development Act. Once the transaction becomes unconditional, EP will
be required to pay the purchase consideration in cash to Harmony.
Silicosis
Harmony has been served with an application for a certification of
a class action by applicants claiming to have suffered from a silica
induced ailment called silicosis by two law firms in two separate class
certification applications.
We took advice in this regard and are following the normal legal
processes and will defend the matters on their merits.
Harmony regards the safety and health of each and every one of its
employees paramount to its business and continues to do whatever is
reasonably possible to provide a safe and healthy environment in which
to work. We play an active role within the Chamber of Mines' structure
to continuously engage with relevant stakeholders, i.e. organised labour
and government to find a lasting solution to the safety and health of
the mining industry.
Dividend
We are pleased to report that the board has agreed to paying an interim
dividend of 50 SA cents.
Conclusion
Our focus in the next quarter will be on saving Kusasalethu. The
investment rationale for Harmony remains unchanged, we:
- are one of the world's largest gold miners;
- have high-grade mines in South Africa and PNG;
- own a world-class exploration project (Golpu in PNG);
- support meaningful and responsible corporate social investment;
- minimise and mitigate the impacts to the environment;
- pay dividends;
- remain unhedged with low debt;
- are supported by a strong, focused management team.
We will continue to apply our values (safety, accountable, achievement,
connected and honesty) even at the cost of production.
As one of the largest employers in the South African mining industry,
Harmony has accepted not only its legal responsibility but also its
moral obligation to contribute to the transformation of the mining
industry, whilst supporting the country's imperatives in respect of social
development. Apart from supporting our social license to operate, we
promote good corporate citizenship, respecting the fragility of the
environment and the dignity and rights of the communities in which
we operate.
We put back more than what we take out.
Graham Briggs
Chief executive officer
Safety and health
The safety and well-being of our workforce is our main priority.
At Harmony our commitment to safety and health is a fundamental part
of our culture and we are committed to providing a safe and healthy
workplace for our employees.
During the quarter, workshops have been conducted with IRCA
Global on the individual modules of the occupational health and
safety management systems to improve the quality of the system.
This system reaffirms and formally documents corporate standards
for the management of health and safety at Harmony's South Africa
operations, which also ensures standardisation of the management
system at all operations.
A high level audit has been conducted at Masimong during the quarter
and audit reviews were done at Target 1 and Target 3 shafts and the
Target metallurgical plant by the chief executive officer and various
other executives.
All safety parameters improved quarter on quarter and year to date,
except for the Fatality Injury Frequency Rate (FIFR) and the rail bound
equipment injury rate.
It is with deep regret that we report that three fatalities occurred in
three separate incidences at Evander, Kusasalethu and Tshepong
respectively during the December 2012 quarter, which kept the FIFR
the same quarter on quarter at 0.13 (including Evander). The 2013 year
to date FIFR rate, however improved by 19% when compared to the
actual figure for the previous year (from 0.16 to 0.13).
The year on year Lost Time Injury Frequency Rate (LTIFR) improved at
most of the South African operations. The LTIFR for 2013 year to date
improved by 19% from 7.29 to 5.92 and the rate for the quarter is
at its lowest level ever at 5.73, which is a 6% improvement from the
previous quarter.
The number of safety achievements has increased significantly over the
past 12 months and has encouraged us to improve our performance
even more. Additional focus has been placed on the communication
of these achievements within Harmony to ensure there is a balanced
health and safety message within the group.
Significant safety achievements during the quarter were:
- Phakisa achieved 2 000 000 fatality free shifts.
- Tshepong, Kusasalethu and Doornkop achieved 1 000 000 fatality
free shifts.
- Doornkop achieved 5 500 000 fall of ground fatality free shifts.
Harmony will continue to promote the safety and health of our
workforce, by maintaining a safe working environment and proactively
supporting the physical and emotional wellbeing of our people.
Financial overview
Net profit
The net profit for the December 2012 quarter was R731 million,
40% higher than the previous quarter. A 9% increase in the rand
gold price received at R479 801/kg and the decrease in cash operating
cost of R127 million, offset the effect of the decrease in production
of 939kg, or 9%, following the unprotected strike and lawlessness at
Kusasalethu in October 2012.
Exploration expenditure
During the December 2012 quarter, the drilling programme at
Wafi-Golpu continued along with drilling at our other sites in PNG. We
spent R152 million in the South-east Asia region during the quarter,
compared with R128 million in the prior quarter.
Profit on sale of property, plant and equipment
The amount of R69 million includes R60 million for the sale of the
Merriespruit South mining right to Witswatersrand Consolidated
Gold Resources Limited (Wits Gold), which was concluded during the
December 2012 quarter.
Impairment of investments
The impairment of investments amounting to R48 million in September
2012 quarter recorded in the income statement is the reduction in the
fair market value on the investment in Wits Gold. During the current
quarter, the value of the investment increased by R13 million and this
increase was recorded in fair value reserves.
Net gain on financial instruments
The net gain on financial instruments was R92 million in the
December 2012 quarter. The gain of R92 million is due to the increased
market value of the rehabilitation trust funds' Equity-Linked Deposits,
resulting from the JSE reaching an all-time high.
Earnings per share
Total basic earnings per share increased from 121 SA cents to
169 SA cents per share in the December 2012 quarter. Total headline
earnings per share increased from 123 SA cents to 158 SA cents
per share.
Investment in financial assets
During the December 2012 quarter, Harmony purchased an additional
3.9% interest in Rand Refinery for R39 million.
Borrowings and cash
Cash and cash equivalents increased by R245 million to R2 511 million
at 31 December 2012 following good operational results by the
majority of the group's mines. A drawdown of US$40 million from
the US$ syndicated revolving credit facility resulted in an increase in
borrowings, offset by a payment of R153 million on the Nedbank
term facilities. The cash in excess of debt for the group improved to
R138 million.
Assets and liabilities of disposal groups held for sale
Increases in the cash balances and mining assets resulted in an increase
in the net assets of the disposal group for Evander Gold Mines Limited
during the December 2012 quarter.
NOTICE OF CASH DIVIDEND
Declaration of Ordinary Dividend No. 85
The board has approved and declared an interim dividend of 50
SA cents per ordinary share (gross) in respect of the six months
ended 31 December 2012.
The dividend will be subject to the new Dividends Tax that was
introduced with effect from 1 April 2012. In accordance with
paragraphs 11.17 (a)(i) to (x) and 11.17(c) of the JSE Listings
Requirements the following additional information is disclosed:
The dividend has been declared out of income reserves;
The local Dividends Tax rate is 15% (fifteen per centum);
There are no Secondary Taxation on Companies (STC)
credits available;
The gross local dividend amount is 50 SA cents per ordinary
share for shareholders exempt from the Dividends Tax;
The net local dividend amount is 42.5 SA cents per ordinary
share for shareholders liable to pay the Dividends Tax;
Harmony has currently 435 257 691 ordinary shares in issue
(which includes 3 547 381 treasury shares); and
Harmony Gold Mining Company Limited's income tax
reference number is 9240/012/60/0.
Dividend No. 85 of 50 SA cents per ordinary share, being the
dividend for the six months ended 31 December 2012, has
been declared payable on Monday, 11 March 2013 to those
shareholders recorded in the books of the company at the close
of business on Friday, 8 March 2013. The dividend is declared
in the currency of the Republic of South Africa. Any change in
address or dividend instruction to apply to this dividend must be
received by the company's transfer secretaries or registrar not
later than Friday, 1 March 2013.
Last date to trade ordinary shares
Friday, cum dividend Friday, 1 March 2013
Ordinary shares trade ex-dividend Monday, 4 March 2013
Currency conversion date in respect
of the UK own name shareholders Monday, 4 March 2013
Record date Friday, 8 March 2013
Payment date Monday, 11 March 2013
No dematerialisation or rematerialisation of share certificates may
occur between Monday, 4 March 2013 and Friday, 8 March 2013,
both dates inclusive, nor may any transfers between registers take
place during this period.
CONDENSED CONSOLIDATED INCOME STATEMENTS (Rand)
Quarter ended Six months ended Year ended
31 December 30 September 31 December¹ 31 December 31 December¹ 30 June
2012 2012 2011 2012 2011 2012
Figures in million Note (Unaudited) (Unaudited) (Unaudited) (Audited)
Continuing operations
Revenue 4 613 4 278 4 439 8 891 8 013 15 169
Cost of sales 2 (3 524) (3 490) (3 116) (7 014) (6 091) (12 137)
Production costs (2 980) (2 870) (2 558) (5 850) (4 998) (9 911)
Amortisation and depreciation (501) (481) (497) (982) (942) (1 921)
Other items (43) (139) (61) (182) (151) (305)
Gross profit 1 089 788 1 323 1 877 1 922 3 032
Corporate, administration and other
expenditure (111) (106) (85) (217) (165) (352)
Social investment expenditure (25) (20) (14) (45) (28) (72)
Exploration expenditure (160) (136) (99) (296) (195) (500)
Profit on sale of property, plant
and equipment 4 69 55 2 124 29 63
Other (expenses)/income net (47) 3 11 (44) 28 (50)
Operating profit 815 584 1 138 1 399 1 591 2 121
Reversal of impairment of investment
in associate 2 50 56
Impairment of investments 5 (48) (48) (144)
Net gain on financial instruments 92 74 61 166 38 86
Investment income 38 33 22 71 38 97
Finance cost (75) (58) (80) (133) (150) (286)
Profit before taxation 870 585 1 143 1 455 1 567 1 930
Taxation 6 (221) (152) (256) (373) (313) 123
Normal taxation (115) (111) (60) (226) (100) (199)
Deferred taxation (106) (41) (196) (147) (213) 322
Net profit from continuing operations 649 433 887 1 082 1 254 2 053
Discontinued operations
Profit from discontinued operations 7 82 89 159 171 270 592
Net profit for the period 731 522 1 046 1 253 1 524 2 645
Attributable to:
Owners of the parent 731 522 1 046 1 253 1 524 2 645
Earnings per ordinary share (cents) 8
Earnings from continuing operations 150 100 206 250 291 477
Earnings from discontinued operations 19 21 37 40 63 137
Total earnings 169 121 243 290 354 614
Diluted earnings per ordinary share
(cents) 8
Earnings from continuing operations 150 100 205 250 290 476
Earnings from discontinued operations 19 21 37 40 63 136
Total diluted earnings 169 121 242 290 353 612
¹ The comparative figures are re-presented due to Evander being reclassified as a discontinued operation. See note 7 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 Six months ended Year ended
31 December 30 September 31 December 31 December 31 December 30 June
2012 2012 2011 2012 2011 2012
Figures in million Note (Unaudited) (Unaudited) (Unaudited) (Audited)
Net profit for the period 731 522 1 046 1 253 1 524 2 645
Other comprehensive income for the
period, net of income tax 197 26 179 223 1 134 1 587
Foreign exchange translation 174 26 212 200 1 136 1 485
Gain/(loss) on fair value movement
of available-for-sale investments 5 23 (33) 23 (2) (42)
Impairment of available-for-sale
investments recognised in profit or loss 5 144
Total comprehensive income for
the period 928 548 1 225 1 476 2 658 4 232
Attributable to:
Owners of the parent 928 548 1 225 1 476 2 658 4 232
The accompanying notes are an integral part of these condensed consolidated financial statements.
All items in Other comprehensive income will be reclassified subsequently to profit or loss when specific conditions are met.
The condensed consolidated financial statements have been prepared by Harmony Gold Mining Company Limited's
corporate reporting team headed by Mr Herman Perry, supervised by the financial director, Mr Frank Abbott. They have
been approved by the Board of Harmony Gold Mining Company Limited. The condensed consolidated financial statements
for the six months ended 31 December 2012 were reviewed by the group's external auditors, PricewaterhouseCoopers
Incorporated (see note 16).
CONDENSED CONSOLIDATED BALANCE SHEETS (Rand)
At At At At
31 December 30 September 30 June 31 December
2012 2012 2012 2011
Figures in million Note (Unaudited) (Audited)
ASSETS
Non-current assets
Property, plant and equipment 34 028 33 334 32 853 32 830
Intangible assets 2 192 2 194 2 196 2 185
Restricted cash 37 36 36 31
Restricted investments 2 020 1 919 1 842 1 929
Deferred tax assets 554 523 486 1 179
Investments in financial assets 9 159 98 146 183
Inventories 57 58 58 169
Trade and other receivables 13 20 28 28
Total non-current assets 39 060 38 182 37 645 38 534
Current assets
Inventories 1 085 1 185 996 990
Trade and other receivables 1 292 1 165 1 245 1 131
Income and mining taxes 8 118 194
Cash and cash equivalents 2 511 2 266 1 773 1 205
4 888 4 624 4 132 3 520
Assets of disposal groups classified as held for sale 7 1 822 1 658 1 423 315
Total current assets 6 710 6 282 5 555 3 835
Total assets 45 770 44 464 43 200 42 369
EQUITY AND LIABILITIES
Share capital and reserves
Share capital 28 331 28 331 28 331 28 326
Other reserves 2 797 2 515 2 444 1 945
Retained earnings 4 342 3 611 3 307 2 359
Total equity 35 470 34 457 34 082 32 630
Non-current liabilities
Deferred tax liabilities 3 270 3 166 3 106 4 452
Provision for environmental rehabilitation 1 912 1 895 1 865 2 092
Retirement benefit obligation 184 181 177 174
Other provisions 40 87 30 3
Borrowings 10 2 072 1 840 1 503 991
Total non-current liabilities 7 478 7 169 6 681 7 712
Current liabilities
Borrowings 10 301 306 313 323
Income and mining taxes 16 110 1 3
Trade and other payables 2 050 1 982 1 747 1 684
2 367 2 398 2 061 2 010
Liabilities of disposal groups classified as held for sale 7 455 440 376 17
Total current liabilities 2 822 2 838 2 437 2 027
Total equity and liabilities 45 770 44 464 43 200 42 369
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Rand)
for the six months ended 31 December 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 130 130
Net profit for the period 1 253 1 253
Other comprehensive income for the period 223 223
Dividends paid ¹ (218) (218)
Balance 31 December 2012 28 331 2 797 4 342 35 470
Balance 30 June 2011 28 305 762 1 093 30 160
Issue of shares 21 21
Share-based payments 49 49
Net profit for the period 1 524 1 524
Other comprehensive income for the period 1 134 1 134
Dividends paid ² (258) (258)
Balance 31 December 2011 28 326 1 945 2 359 32 630
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 Six months ended Year ended
31 December 30 September 31 December 31 December 31 December 30 June
2012 2012 2011 2012 2011 2012
Figures in million (Unaudited) (Unaudited) (Unaudited) (Audited)
Cash flow from operating activities
Cash generated by operations 1 392 1 337 1 566 2 729 2 658 4 551
Interest and dividends received 30 26 12 56 28 80
Interest paid (29) (29) (36) (58) (77) (141)
Income and mining taxes (paid)/refunded (221) 108 (149) (113) (149) (277)
Cash generated by operating activities 1 172 1 442 1 393 2 614 2 460 4 213
Cash flow from investing activities
Restricted cash transferred to disposal group (90) (162) (252)
Proceeds on disposal of investment in associate 222
Proceeds on disposal of Evander 6 and Twistdraai 125
Proceeds on disposal of Merriespruit South 61 61
Other investing activities (45) 3 (45) 3 (85)
Net additions to property, plant and equipment (1 047) (893) (779) (1 940) (1 447) (3 140)
Cash utilised by investing activities (1 121) (1 055) (776) (2 176) (1 444) (2 878)
Cash flow from financing activities
Borrowings raised 348 330 678 799 1 443
Borrowings repaid (164) (9) (718) (173) (1 070) (1 248)
Ordinary shares issued net of expenses 11 20 26
Dividends paid (218) (218) (258) (431)
Cash generated/(utilised) by financing
activities 184 103 (707) 287 (509) (210)
Foreign currency translation adjustments 10 3 (30) 13 5 (45)
Net increase in cash and cash equivalents 245 493 (120) 738 512 1 080
Cash and cash equivalents beginning of period 2 266 1 773 1 325 1 773 693 693
Cash and cash equivalents end of period 2 511 2 266 1 205 2 511 1 205 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 31 December 2012 (Rand)
1. Accounting policies
Basis of accounting
The condensed consolidated financial statements for the six months ended 31 December 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 Six months ended Year ended
31 December 30 September 31 December1 31 December 31 December1 30 June
2012 2012 2011 2012 2011 2012
Figures in million (Unaudited) (Unaudited) (Unaudited) (Audited)
Production costs excluding royalty 2 912 2 814 2 513 5 726 4 922 9 791
Royalty expense 68 56 45 124 76 120
Amortisation and depreciation 501 481 497 982 942 1 921
Reversal of impairment of assets (60)
Rehabilitation (credit)/expenditure (1) 7 1 6 7 (17)
Care and maintenance cost of
restructured shafts 16 20 20 36 49 88
Employment termination and
restructuring costs 7 17 7 51 81
Share-based payments2 21 105 23 126 44 87
Other 7 7 126
Total cost of sales 3 524 3 490 3 116 7 014 6 091 12 137
1. The comparative figures are re-presented due to Evander being reclassified as a discontinued operation. See note 7 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 10 years receiving an additional 10%. Both the Entitlement 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 in the balance sheet, the fair value of which will be re-measured at each reporting date. At the
annual general meeting on 28 November 2012, the shareholders authorised the acceleration of the vesting from August to March each year.
4. Profit on sale of property, plant and equipment
During December 2012, the transaction for the sale of the Merriespruit South mining right to Witwatersrand Consolidated Gold Resources
Limited (Wits Gold) was completed, resulting in a profit of R60 million.
5. Impairment of investments
As at 30 June 2012, management impaired the investment in Wits Gold. A decline in the fair value of the investment on the JSE during the
September 2012 quarter was recorded in the income statement. The increase in the value of the investment during the December 2012 quarter
has been recognised in the fair value reserve.
6. 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 being recognised in the June 2012 quarter as an adjusting event. Unredeemed capital deductions
are not allowed against non-mining income. However these deductions will be allowable against future mining income.
7. 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, less certain distributions made by Evander to Harmony between 1 April 2012 and
the close of the transaction.
Certain regulatory approvals were still outstanding at the reporting date.
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.
8. Earnings and net asset value per share
Quarter ended Six months ended Year ended
31 December 30 September 31 December1 31 December 31 December1 30 June
2012 2012 2011 2012 2011 2012
(Unaudited) (Unaudited) (Unaudited) (Audited)
Weighted average number of shares (million) 431.6 431.5 430.5 431.6 430.2 430.8
Weighted average number of diluted
shares (million) 432.6 432.3 432.3 432.6 431.9 432.0
Total earnings per share (cents):
Basic earnings 169 121 243 290 354 614
Diluted earnings 169 121 242 290 353 612
Headline earnings 158 123 242 281 337 565
from continuing operations 139 102 205 241 275 465
from discontinued operations 19 21 37 40 62 100
Diluted headline earnings 157 123 241 280 336 563
from continuing operations 138 102 204 240 274 463
from discontinued operations 19 21 37 40 62 100
Figures in million
Reconciliation of headline earnings:
Continuing operations
Net profit 649 433 887 1 082 1 254 2 053
Adjusted for:
Reversal of impairment of investment
in associate* (2) (50) (56)
Impairment of investments* 48 48 144
Reversal of impairment of assets (60)
Taxation effect on reversal of impairment
of assets (34)
Profit on sale of property, plant
and equipment (69) (55) (2) (124) (29) (63)
Taxation effect of profit on sale of property,
plant and equipment 18 14 32 8 16
Headline earnings 598 440 883 1 038 1 183 2 000
Discontinued operations
Net profit 82 89 159 171 270 592
Adjusted for:
Profit on sale of property, plant and
equipment (1) (1) (232)
Taxation effect of profit on sale of property,
plant and equipment 72
Headline earnings 82 89 158 171 269 432
Total headline earnings 680 529 1 041 1 209 1 452 2 432
1 The comparative figures are re-presented due to Evander being reclassified as a discontinued operation. See note 7 in this regard.
* There is no taxation effect on these items.
Net asset value per share
At At At At
31 December 30 September 30 June 31 December
2012 2012 2012 2011
(Unaudited) (Audited)
Number of shares in issue 435 257 691 435 064 236 431 564 236 431 312 677
Net asset value per share (cents) 8 150 7 920 7 897 7 565
9. Investments in financial assets
During the December 2012 quarter, an additional 3.9% interest in Rand Refinery was purchased for R39 million. The investment is classified as
an available-for-sale investment and subsequent changes in fair value will be recorded in reserves.
10. Borrowings
The Nedbank revolving credit facility of R850 million is available until December 2013.
The balance on the Nedbank term facilities at 31 December 2012 is R610 million, following a payment of R153 million at the end of
December 2012.
Two draw downs of US$40 million each (R330 million and R348 million) were made from the US$300 million syndicated revolving credit facility
during the September and December 2012 quarters, respectively. This takes the outstanding amount to US$210 million. The facility is repayable
by September 2015.
11. Commitments and contingencies
At At At At
31 December 30 September 30 June 31 December
2012 2012 2012 2011
Figures in million (Unaudited) (Audited)
Capital expenditure commitments:
Contracts for capital expenditure 576 510 519 291
Authorised by the directors but not contracted for 1 572 2 263 2 257 3 373
2 148 2 773 2 776 3 664
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, with the exception of the items
discussed below.
Following management's decision to keep Kusasalethu closed after the Christmas break and to commence with a process in terms of
Section 189A of the Labour Relations Act, 66 of 1995, there is a possibility that the mine may be closed and placed on care and maintenance,
which would result in retrenchments. Management estimated that the costs of the retrenchment would be approximately R325 million. At the
date of reporting, management and employees representatives were engaged in discussions facilitated by the Commission of Conciliation,
Mediation and Arbitration (CCMA).
12. Subsequent events
(a) On 1 February 2013, the Board approved an interim divided of 50 cents, amounting to approximately R218 million, payable on
11 March 2013.
(b) Kusasalethu has been temporarily closed. Refer to note 11 for further discussion.
13. Segment report
The segment report follows on the page 25.
14. Reconciliation of segment information to consolidated income statements
Six months ended
31 December 31 December 1
2012 2011
Figures in million
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 9 542 8 749
Total segment production costs (6 231) (5 366)
Production profit per segment report 3 311 3 383
Discontinued operations (270) (368)
Production profit from continuing operations 3 041 3 015
Cost of sales items, other than production costs and royalty expense (1 164) (1 093)
Gross profit as per income statements* 1 877 1 922
1 The comparative figures are re-presented due to Evander being reclassified as a discontinued operation. See note 7 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.
15. 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
16. Review report
The condensed consolidated financial statements for the six months ended 31 December 2012 on pages 16 to 25 have been reviewed in
accordance with International Standards on Review Engagements 2410 "Review of interim financial information performed by the
Independent Auditors of the entity" by PricewaterhouseCoopers Inc. Their unqualified review report is available for inspection at the company's
registered office.
Segment report (Rand/Metric)
for the six months ended 31 December 2012
Revenue Production cost Production profit/(loss) Capital expenditure# Kilograms produced* Tonnes milled *
31 December 31 December 31 December 31 December 31 December 31 December
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 976 1 099 840 660 136 439 217 211 2 003 2 822 466 587
Doornkop 886 746 542 448 344 298 151 139 1 875 1 763 517 509
Phakisa 638 501 491 389 147 112 158 149 1 367 1 184 270 239
Tshepong 1 077 1 164 751 631 326 533 149 135 2 310 2 738 567 593
Masimong 925 715 519 438 406 277 80 122 1 978 1 690 477 464
Target 1 979 822 465 422 514 400 188 128 2 157 1 960 356 418
Bambanani 426 322 306 365 120 (43) 70 143 911 825 98 132
Joel 821 612 343 299 478 313 79 28 1 750 1 418 321 297
Unisel 453 343 299 251 154 92 35 34 962 802 233 192
Target 3 364 225 262 213 102 12 68 36 798 537 169 154
Surface
All other surface operations 730 744 474 466 256 278 200 62 1 645 1 767 4 800 4 619
Total South Africa 8 275 7 293 5 292 4 582 2 983 2 711 1 395 1 187 17 756 17 506 8 274 8 204
International
Hidden Valley 616 720 558 416 58 304 236 93 1 331 1 608 947 889
Total international 616 720 558 416 58 304 236 93 1 331 1 608 947 889
Total continuing operations 8 891 8 013 5 850 4 998 3 041 3 015 1 631 1 280 19 087 19 114 9 221 9 093
Discontinued operations
Evander 651 736 381 368 270 368 109 88 1 480 1 811 300 319
Total discontinued operations 651 736 381 368 270 368 109 88 1 480 1 811 300 319
Total operations 9 542 8 749 6 231 5 366 3 311 3 383 1 740 1 368 20 567 20 925 9 521 9 412
Reconciliation of the segment
information to the consolidated
income statement (refer to note 14) (651) (736) (381) (368)
8 891 8 013 5 850 4 998
* Production statistics are unaudited.
# Capital expenditure for international operations excludes expenditure spend on Wafi-Golpu of R255 million (2011: R114 million).
4 February 2013
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 Manager
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 09:00 am 17:30 pm, Monday to Friday)
or +44 (0) 20 8639 3399 (calls from overseas)
E-mail: shareholder.services@capitaregistrars.com
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: db@amstock.com
Toll Free: +1-800-937-5449
Intl: +1-718-921-8137
Fax: +1-718-921-8334
Sponsor
JP Morgan Equities South Africa Proprietary 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: 04/02/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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