Wrap Text
Results for the Third Quarter FY13 and Nine Months Ended 31 March 2013
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 THIRD QUARTER FY13 AND NINE MONTHS ENDED 31 MARCH 2013
KEY FEATURES
Quarter on quarter
- Lowest recorded quarterly LTIFR²
- Evander sale transaction completed
- 6% decrease in underground grade after increasing
3 consecutive quarters
- Gold production decreased by 15% to 7 699kg (247 529oz)
- Headline loss per share* of 47 SA cents (5 US cents)
- Operating profit¹ lower at R821 million (US$92 million)
- Substantial reduction in services costs, corporate costs and
capital expenditure planned
- Watershed agreement signed with Kusasalethu labour
All figures represent continuing operations unless stated otherwise
* Includes discontinued operations
¹ Operating profit is comparable to the term production profit in the segment report in the financial statements and not to the
operating profit line in the income statement
² LTIFR = Lost Time Injury Frequency Rate
FINANCIAL SUMMARY FOR THE THIRD QUARTER FY13 AND NINE MONTHS
ENDED 31 MARCH 2013
9 months 9 months
Quarter Quarter Q-on-Q YTD² YTD²
March December variance March March Variance
2013# 2012# % 2013# 2012# %
kg 7 699 9 074 (15) 26 786 27 004 (1)
Gold produced
oz 247 529 291 734 (15) 861 188 868 230 (1)
R/kg 362 491 310 858 (17) 319 548 273 625 (17)
Cash operating costs
US$/oz 1 264 1 115 (13) 1 154 1 112 (4)
kg 7 506 9 614 (22) 26 824 26 849
Gold sold
oz 241 322 309 097 (22) 862 379 863 247
Underground grade g/t 4.50 4.77 (6) 4.60 4.28 7
R/kg 470 030 479 801 (2) 462 982 419 007 10
Gold price received
US$/oz 1 639 1 722 (5) 1 672 1 703 (2)
R million 821 1 633 (50) 3 863 3 964 (3)
Operating profit¹
US$ million 92 188 (51) 449 519 (13)
Basic (loss)/earnings SAc/s (29) 169 >(100) 262 589 (56)
per share* USc/s (3) 19 >(100) 30 77 (62)
Rm (202) 680 >(100) 1 008 2 460 (59)
Headline (loss)/profit*
US$m (23) 78 >(100) 117 322 (64)
Headline (loss)/earnings SAc/s (47) 158 >(100) 234 571 (59)
per share* USc/s (5) 18 >(100) 27 75 (64)
Exchange rate R/US$ 8.92 8.67 3 8.61 7.65 13
# 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
* Includes discontinued operations
² YTD: year to date
Shareholder information
Issued ordinary share capital at
31 March 2013 435 257 691
Issued ordinary share capital at
31 December 2012 435 257 691
Market capitalisation
At 31 March 2013 (ZARm) 25 728
At 31 March 2013 (US$m) 2 804
At 31 December 2012 (ZARm) 32 209
At 31 December 2012 (US$m) 3 796
Harmony ordinary share and ADR prices
12-month high (1 April 2012
31 March 2013) for ordinary shares 89.00
12-month low (1 April 2012
31 March 2013) for ordinary shares 53.40
12-month high (1 April 2012
31 March 2013) for ADRs 10.78
12-month low (1 April 2012
31 March 2013) for ADRs 5.94
Free float 100%
ADR ratio 1:1
JSE Limited HAR
Range for quarter (1 January
31 March 2013 closing prices) R53.40 R75.64
Average daily volume for the quarter
(1 January 31 March 2013) 1 580 745 shares
Range for quarter (1 October
31 December 2012 closing prices) R65.20 R74.05
Average daily volume for the quarter
(1 October 31 December 2012) 1 577 597 shares
New York Stock Exchange, Inc
including other US trading platforms HMY
Range for quarter (1 January
31 March 2013 closing prices) US$5.94 US$8.88
Average daily volume for the quarter
(1 January 31 March 2013) 2 423 016
Range for quarter (1 October
31 December 2012 closing prices) US$7.50 US$8.96
Average daily volume for the quarter
(1 October 31 December 2012) 2 392 671
Investors' calendar 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 judgement
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:
Gregory Job for the Wafi-Golpu and Hidden Valley mineral resources,
German Flores for the Golpu mineral reserve 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.
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. Mr Flores 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
"My message to employees is a simple one produce safe, profitable
gold ounces in line with our company values. Keep your eyes off the
gold price and on your plans. We continue to focus on what we can
control production and costs. We knew that the March 2013 quarter
may be difficult and our results reaffirmed that we need to do more to
meet expectations", said Graham Briggs, chief executive officer
of Harmony.
1. SAFETY
It is with regret that I report that two people were fatally injured during
the quarter. They are John Naile, a contractor at the Saaiplaas demolition
site and Rameno Steven Tapolosi, a driller at Masimong. We extend our
deepest sympathy to their families and colleagues.
All quarter on quarter and year on year safety parameters showed
improvement, with some significant safety achievements, which
includes the lowest quarterly lost time injury frequency rate of 5.15 in
Harmony's history. See Health and Safety below for more details.
2. OPERATIONAL AND FINANCIAL RESULTS
Gold production for the March 2013 quarter was 15% lower compared
to the December 2012 quarter at 7 699kg, mainly as a result of the
temporary closure of Kusasalethu due to safety and security reasons,
the damage to the ventilation shaft at Phakisa and a slow start-up at
the other operations post the festive season.
Cash operating cost in the March 2013 quarter decreased by R30 million
when compared to the previous quarter. This was mainly as a result of
a decrease in consumables, due to lower volumes, as well as a saving in
electricity at Kusasalethu.
The rand per kilogram unit cost for the March 2013 quarter increased
by 17% to R362 491/kg. The costs are however skewed, as Kusasalethu
was not in production during the March 2013 quarter. If we were to
exclude Kusasalethu from both the second and the third quarters, the
cash cost would have been R322 767/kg (U$1 125/oz) in quarter 3 versus
R285 498/kg (US$1 024/oz) in quarter 2 of financial year 2013. Capital
expenditure for the March 2013 quarter was R677 million, R189 million
less than the December 2012 quarter.
3. EMPLOYEE RELATIONS
3.1 Kusasalethu
The temporary closure of Kusasalethu, due to safety and security
reasons, was resolved after a watershed agreement was signed with all
the unions on 14 February 2013, which facilitated the re-opening of the
mine. The process of returning Kusasalethu to production is underway
and remains peaceful.
A pre-condition for reopening the mine was the acceptance by all
employees of various conditions, all broadly relating to employees
committing to full compliance with policies and procedures and safe
and orderly conduct. These conditions were agreed to by the unions. In
terms of the agreement, it was also agreed that each employee would
sign a code of conduct to show their individual commitment to ensuring
that Kusasalethu is mined in a safe and secure way with full respect for
the rule of law.
Closing the mine was a difficult and costly decision, but we believe that
it has re-established our employer-employee relationship and gave us
an opportunity to ensure that the mine is operated in a safe and
profitable manner, supported by healthy employee relations.
The Association of Mineworkers and Construction Union (AMCU) has
gained the majority union status at Kusasalethu, representing close to
60% of the workforce at the mine and as a result, approximately 10%
of Harmony's total workforce.
3.2 Wage negotiations
It is envisaged that the wage negotiations in the gold sector will start
early in June 2013. This is amidst uncertainties due to new role players
(companies as well as unions) and union rivalry.
Harmony has implemented measures to ensure stable industrial
relations, such as engaging unions on the Harmony reality, obtaining
agreement on a code of conduct similar to that of Kusasalethu and to
continue building strong relationships with both our employees and the
unions.
4. BENEFICIATION
All of Harmony's South African gold is currently refined and sold by
Rand Refinery (Pty) Limited (Rand Refinery). Rand Refinery plays a key
role in gold beneficiation. With access to gold within a secure
environment, they have established an initiative called the Gold Zone.
The aim is for the Gold Zone to become a major hub for precious metal
fabrication in South Africa for global export, while at the same time
assisting local communities with skills development. Entrepreneurs,
start-up businesses, jewellery manufacturers and tourism will all benefit
from this initiative in the future.
Up to November 2012, Harmony held only 1.8% of the total shares in
Rand Refinery, even though all our South African gold production is refined
there. Rand Refinery has been and will continue to have good
returns and is thus a good investment. We therefore decided to increase
our holding in Rand Refinery to 9%, not only from an investment point
of view, but also from a beneficiation perspective.
5. WAFI-GOLPU
The drill fleet at Wafi-Golpu in Papua New Guinea (PNG) achieved
14 664m for the quarter the best quarterly drill production ever
recorded by the project. The gold recovery test work program
determined a material improvement in both gold and copper recoveries.
The drilling has increased and improved the orebody knowledge,
showing an increase in the content of both gold and copper.
In the current gold market climate, the project team was given a revised
project development brief, which is aimed at optimising capital cost and
improving the risk profile to align with owner and investor expectations,
prior to starting with the feasibility study phase. The revised approach
presents an opportunity to reconsider a new strategic approach for the
project, possibly a staged approach. The project team is in the process
of defining the scope, cost and schedule to complete an
optimisation study.
6. PROPOSED CHANGE IN MOROBE MINING JOINT VENTURE
(MMJV) MANAGEMENT STRUCTURE (Harmony holds 50%)
The MMJV has been in operation since August 2008, based on a
management model agreed to as part of the joint venture agreement
with Newcrest Limited (Newcrest). At that stage, in-country activity was
mainly focused on the Hidden Valley mine development, with a limited
exploration program that incorporated Wafi-Golpu. The management
structure consisted of various general managers in the business
reporting through various operating committees to the joint venture
committee, which had representatives of Harmony and Newcrest
as members.
The scope of the business has dramatically changed since then. With
the Hidden Valley mine in operation, the world-class Golpu project on
the development track and a significant exploration portfolio, a rethink
of an appropriate management structure for the MMJV was required.
It was agreed to establish a unified and empowered management team
responsible for managing all MMJV activities under the direction of a
chief executive officer who is responsible to the Operating Committee
and ultimately the Joint Venture Committee. The MMJV (incorporating
Hidden Valley operations, Wafi-Golpu project, Morobe exploration and
related support services) will be managed by an empowered unified
in-country management team led by its own chief executive officer as
one integrated, independent Papua New Guinean business. This
business will be supported by an integrated centralised support service.
7. EVANDER TRANSACTION
The agreement in terms of which Harmony disposed of its 100%
interest in Evander Gold Mines Limited ("Evander") to Pan African
Resources Plc ("PAR") became unconditional on 14 February 2013 and
closed on 28 February 2013. Harmony is in receipt of the full
consideration price.
8. DOWNTURN IN THE GOLD PRICE
The rand gold price received during the March 2013 quarter decreased
by 2% to R470 030/kg (R479 801/kg in the December 2012 quarter).
The rand average weakened by 3%, from R8.67/US$ in the December
2012 quarter to R8.92/US$ in the March 2013 quarter. The US dollar
gold price decreased by 5% from US$1 722/oz to US$1 639/oz in the
quarter under review.
However, since the end of the March 2013 quarter, the gold price has
been fluctuating dramatically. Harmony is a high cost producer with our
total all-in cost (cash costs and capital costs) for the first six months of
financial year 2013 being R393 354/kg (or U$1 446/oz), excluding
exploration and corporate costs. We have therefore initiated action to
reduce costs and capital using a planned gold price of R400 000/kg.
Immediate actions to reduce costs were implemented during April
2013. Some of the actions include: reducing services and corporate
cost, various labour initiatives and renewing/renegotiating all external
consultants and supply contracts. Our aim is to reduce services and
corporate costs in South Africa by R400 million and overall capital
expenditure in both South Africa and PNG by R1.4 billion for the
financial year 2014. Larger cost-cutting measures such as shaft or mine
closures are not envisaged at present.
Hidden Valley in PNG has been underperforming. Three areas of
improvement are being focused on to return the mine to profitability:
1. the primary crusher is being replaced, which will allow full use of
the overland conveyor, this will result in a huge cost saving, as ore
will no longer have to be hauled to the plant and will also enable
the ramp-up of mining and improved mining grades;
2. improvement projects in the plant and improvement of mobile equipment; and
3. restructuring the operations and removing 20% or more of the cost
and returning the mine to profitability.
9. CONCLUSION
We cannot influence or predict the future price of gold. For the past
year the high gold price has assisted us in producing strong margins.
With the gold price decreasing to levels close to $1 400/oz, it means
that we have to do more to improve production while reducing costs at
the same time. We are using our annual budgeting sessions, which
takes place from April to June every year, to find ways of doing just that.
Harmony has been able to fund its capital, exploration and dividends
while maintaining its balance sheet strength. Our aim is to continue to
focus on strengthening our earnings per share and pay dividends.
Graham Briggs
Chief executive officer
Health and Safety
At Harmony we are dedicated to providing and maintaining a safe and
healthy work environment for our employees, who deserve to work in
the safest possible environment. We regard their safety, health and well-
being as a core value of our business success. Safety is Harmony's first
priority and it is in no way compromised.
Despite our best efforts to curb fatalities, it is with deep regret that we
report two fatalities which occurred in two separate incidences at the
Saaiplaas demolition site and Masimong in South Africa. We continually
pursue improvements in health and safety by regularly reviewing our
policies, setting objectives and targets and providing the resources to
uphold and advance our health and safety performance.
All safety parameters showed improvements quarter on quarter and
several operations have recorded significant safety achievements. Fall of
ground free shifts have increased and we have achieved a number of
consecutive injury free days during the quarter. The year to date Fatality
Injury Frequency Rate (FIFR) improved by 25% from 0.16 to 0.12 when
compared to the previous year and by 23% quarter on quarter to 0.10
(from 0.13 in the preceding quarter).
The Lost Time Frequency Rate (LTIFR) for the year to date improved by
22% when compared to the actual figure in the previous year (from
5.73 to 5.15). The quarter on quarter LTIFR improved by 10%
(from 5.73 to 5.15) the lowest recorded quarterly rate in Harmony's
history.
During the quarter, high level safety audits were conducted at
Bambanani, Steyn 2 and Masimong by the chief executive officer and
various other executives. These on-going audits by the chief executive
officer and his executive team illustrate the commitment to safety at all
levels.
Other significant achievements during the quarter were:
- Masimong and Free State Metallurgy achieved 1 500 000 fatality
free shifts respectively;
- Target 3 achieved 1 000 000 fatality free shifts;
- Doornkop achieved 6 000 000 fall of ground fatality free shifts; and
- Bambanani and Target 3 achieved 1 000 000 fall of ground fatality
free shifts respectively.
Financial overview
Net loss
The net loss for the March 2013 quarter was R124 million compared to
a net profit of R731 million in the previous quarter. This was as a result
of a 22% decrease in gold sold and 2% decrease in the rand gold price
received in the March 2013 quarter. The decrease in gold sold was due
to a 15% decrease in gold production as well as an increase in gold
inventory.
Other expenses net
Included in other expenses net in the March 2013 quarter, is a foreign
exchange loss of R150 million (December 2012: R35 million) on the
US$ denominated loan, resulting from the Rand weakening from
R8.50/$1 to R9.22/$1 during the quarter.
Impairment of investments
The impairment of investments amounting to R39 million in the March
2013 quarter relates to the reduction in the fair market value on the
investment in Witwatersrand Consolidated Gold Resources Limited
(Wits Gold).
Discontinued operations
In February 2013, following the fulfilment of all conditions precedent,
the Evander sale to Pan African Resources plc was completed. Profit
from discontinued operations includes the group profit of R102 million
recorded on the sale of Evander. The remaining R41 million represents
profits for Evander for the two months ended February 2013.
Loss per share
Total basic loss per share was 29 SA cents per share in the March 2013
quarter compared with earnings of 169 SA cents in the December 2012
quarter. Total headline loss was 47 SA cents per share (December 2012:
earnings of 158 SA cents).
Investment in financial assets
Investment in financial assets decreased from R159 million to
R139 million at 31 March 2013, following the downward fair value
movement in the investment in Wits Gold. This was offset by the
purchase of additional shares in Rand Refinery for R33 million.
Borrowings and cash
Borrowings increased by R152 million to R2 525 million due to the
effect of translating the US dollar denominated borrowings into Rand.
Cash and cash equivalents increased by R588 million to R3 099 million
at 31 March 2013. This was mainly as a result of the receipt of proceeds
of R1 264 million on the sale of Evander. The net surplus cash position
of the group improved to R574 million.
Employee Share Option Plan (ESOP) shares vesting
In August 2012, qualifying employees were awarded Scheme Shares
(SS) and Share Appreciation Rights (SARs). The vesting of the first
tranche of SS and SARs in the ESOP took place at the end of March 2013
and the payments to all eligible employees were made in April 2013. All
qualifying employees received a minimum of R1 912 before tax,
amounting to a total of R58 million.
Results for the third quarter FY13 and nine months ended 31 March 2013
CONDENSED CONSOLIDATED INCOME STATEMENTS (Rand)
Quarter ended Nine months ended Year ended
31 March 31 December 31 March 31 March 31 March 30 June
2013 2012 2012 2013 2012 2012
Figures in million Notes (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Continuing operations
Revenue 3 528 4 613 3 222 12 419 11 235 15 169
Cost of sales 2 (3 283) (3 524) (2 721) (10 295) (8 811) (12 137)
Production costs (2 707) (2 980) (2 273) (8 556) (7 271) (9 911)
Amortisation and depreciation (459) (501) (431) (1 441) (1 373) (1 921)
Other items (117) (43) (17) (298) (167) (305)
Gross profit 245 1 089 501 2 124 2 424 3 032
Corporate, administration and other
expenditure (121) (111) (96) (338) (261) (352)
Social investment expenditure (25) (25) (22) (70) (50) (72)
Exploration expenditure (157) (160) (143) (454) (339) (500)
Profit on sale of property,
plant and equipment 4 15 69 139 28 63
Other (expenses)/income net 5 (138) (47) (5) (182) 24 (50)
Operating (loss)/profit (181) 815 235 1 219 1 826 2 121
Reversal of impairment of investment
in associate 6 56 56
Impairment of investments 6 (39) (88) (144)
Net gain on financial instruments 15 92 36 181 73 86
Investment income 47 38 25 118 64 97
Finance cost (65) (75) (65) (198) (214) (286)
(Loss)/profit before taxation (223) 870 237 1 232 1 805 1 930
Taxation (44) (221) 636 (416) 323 123
Normal taxation (124) (115) (16) (349) (115) (199)
Deferred taxation 80 (106) 652 (67) 438 322
Net (loss)/profit from continuing
operations (267) 649 873 816 2 128 2 053
Discontinued operations
Profit from discontinued operations 7 143 82 141 314 410 592
Net (loss)/profit for the period (124) 731 1 014 1 130 2 538 2 645
Attributable to:
Owners of the parent (124) 731 1 014 1 130 2 538 2 645
(Loss)/earnings per ordinary share
(cents) 8
(Loss)/earnings from continuing
operations (62) 150 202 189 494 477
Earnings from discontinued operations 33 19 33 73 95 137
Total (loss)/earnings (29) 169 235 262 589 614
Diluted (loss)/earnings per ordinary
share (cents) 8
(Loss)/earnings from continuing
operations (62) 150 202 188 492 476
Earnings from discontinued operations 33 19 32 73 95 136
Total (loss)/diluted earnings (29) 169 234 261 587 612
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Rand)
Quarter ended Nine months ended Year ended
31 March 31 December 31 March 31 March 31 March 30 June
2013 2012 2012 2013 2012 2012
Figures in million Note (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Net (loss)/profit for the period (124) 731 1 014 1 130 2 538 2 645
Other comprehensive income/(loss) for the
period, net of income tax 510 197 (153) 733 981 1 587
Foreign exchange translation 523 174 (157) 723 979 1 485
(Loss)/gain on fair value movement of
available-for-sale investments 6 (52) 23 4 (29) 2 (42)
Impairment of available-for-sale
investments recognised in profit or loss 6 39 39 144
Total comprehensive income for the period 386 928 861 1 863 3 519 4 232
Attributable to:
Owners of the parent 386 928 861 1 863 3 519 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.
CONDENSED CONSOLIDATED BALANCE SHEETS (Rand)
At At At At
31 March 31 December 30 June 31 March
2013 2012 2012 2012
Figures in million Notes (Unaudited) (Audited) (Unaudited)
ASSETS
Non-current assets
Property, plant and equipment 34 911 34 028 32 853 31 949
Intangible assets 2 190 2 192 2 196 2 194
Restricted cash 38 37 36 30
Restricted investments 2 050 2 020 1 842 1 808
Deferred tax assets 652 554 486 1 042
Investments in financial assets 9 139 159 146 187
Inventories 57 57 58 165
Trade and other receivables 6 13 28 35
Total non-current assets 40 043 39 060 37 645 37 410
Current assets
Inventories 1 206 1 085 996 1 086
Trade and other receivables 1 482 1 292 1 245 1 259
Income and mining taxes 3 118 142
Cash and cash equivalents 3 099 2 511 1 773 1 427
5 790 4 888 4 132 3 914
Assets of disposal groups classified as held for sale 7 1 822 1 423 1 326
Total current assets 5 790 6 710 5 555 5 240
Total assets 45 833 45 770 43 200 42 650
EQUITY AND LIABILITIES
Share capital and reserves
Share capital 28 331 28 331 28 331 28 329
Other reserves 3 392 2 797 2 444 1 815
Retained earnings 4 002 4 342 3 307 3 200
Total equity 35 725 35 470 34 082 33 344
Non-current liabilities
Deferred tax liabilities 3 244 3 270 3 106 3 568
Provision for environmental rehabilitation 1 961 1 912 1 865 1 905
Retirement benefit obligation 188 184 177 177
Other provisions 48 40 30 4
Borrowings 10 2 238 2 072 1 503 1 277
Total non-current liabilities 7 679 7 478 6 681 6 931
Current liabilities
Borrowings 10 287 301 313 318
Income and mining taxes 92 16 1 7
Trade and other payables 2 050 2 050 1 747 1 543
2 429 2 367 2 061 1 868
Liabilities of disposal groups classified as held for sale 7 455 376 507
Total current liabilities 2 429 2 822 2 437 2 375
Total equity and liabilities 45 833 45 770 43 200 42 650
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Rand) (Unaudited)
for the nine months ended 31 March 2013
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 215 215
Net profit for the period 1 130 1 130
Other comprehensive income for the period 733 733
Dividends paid ¹ (435) (435)
Balance 31 March 2013 28 331 3 392 4 002 35 725
Balance 30 June 2011 28 305 762 1 093 30 160
Issue of shares 24 24
Share-based payments 72 72
Net profit for the period 2 538 2 538
Other comprehensive income for the period 981 981
Dividends paid ² (431) (431)
Balance 31 March 2012 28 329 1 815 3 200 33 344
1. Dividend of 50 SA cents declared on 13 August 2012 and 50 SA cents on 1 February 2013
2. Dividend of 60 SA cents declared on 12 August 2011 and 40 SA cents on 2 February 2012
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (Rand)
Quarter ended Nine month hs ended Year ended
31 March 31 December 31 March 31 March 31 March 30 June
2013 2012 2012 2013 2012 2012
Figures in million (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Cash flow from operating activities
Cash generated by operations 204 1 392 682 2 933 3 340 4 551
Interest and dividends received 34 30 32 90 60 80
Interest paid (27) (29) (26) (85) (103) (141)
Income and mining taxes (paid)/refunded (70) (221) 35 (183) (114) (277)
Cash generated by operating activities 141 1 172 723 2 755 3 183 4 213
Cash flow from investing activities
Restricted cash transferred from/(to)
disposal group 252 (90)
Proceeds on disposal of Evander 1 264 1 264
Proceeds on disposal of investment in associate 193 193 222
Proceeds on disposal of Evander 6 and Twistdraai 125
Proceeds on disposal of Merriespruit South 61 61
Purchase of investments in financial assets (33) (39) (72)
Other investing activities 3 (6) (33) (3) (30) (85)
Net additions to property, plant and equipment(1) (835) (1 047) (740) (2 775) (2 187) (3 140)
Cash generated/(utilised) by investing
activities 651 (1 121) (580) (1 525) (2 024) (2 878)
Cash flow from financing activities
Borrowings raised 348 302 678 1 101 1 443
Borrowings repaid (4) (164) (17) (177) (1 087) (1 248)
Ordinary shares issued - net of expenses 3 23 26
Dividends paid (217) (173) (435) (431) (431)
Cash (utilised)/generated by financing
activities (221) 184 115 66 (394) (210)
Foreign currency translation adjustments 17 10 (36) 30 (31) (45)
Net increase in cash and cash equivalents 588 245 222 1 326 734 1 080
Cash and cash equivalents - beginning of period 2 511 2 266 1 205 1 773 693 693
Cash and cash equivalents - end of period 3 099 2 511 1 427 3 099 1 427 1 773
1. Includes capital expenditure for Wafi-Golpu and other international projects of R148 million in the March 2013 quarter (December 2012: R124 million) (March 2012: R78 million)
and R403 million in the nine months ended 31 March 2013 (March 2012: R192 million)
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 March 2013 (Rand)
1. Accounting policies
Basis of accounting
The condensed consolidated financial statements for the nine months ended 31 March 2013 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 Nine months ended Year ended
31 March 31 December 31 March 31 March 31 March 30 June
2013 2012 2012 2013 2012 2012
Figures in million (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Production costs excluding royalty 2 658 2 912 2 244 8 384 7 166 9 791
Royalty expense 49 68 29 172 105 120
Amortisation and depreciation 459 501 431 1 441 1 373 1 921
Reversal of impairment of assets (60)
Rehabilitation expenditure/(credit) 10 (1) (43) 16 (37) (17)
Care and maintenance cost of
restructured shafts 16 16 20 52 69 88
Employment termination and
restructuring costs1 19 7 70 81
Share-based payments2 95 21 21 221 66 87
Other (4) 7 2 (1) 126
Total cost of sales 3 283 3 524 2 721 10 295 8 811 12 137
1. The amounts for the 2012 financial year relates to restructuring at the Bambanani shaft
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 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.
During the March 2013 quarter, the first portion of the Scheme Shares and SARs awarded in August 2012 vested, resulting in all qualifying
employees receiving a minimum of R1 912 before tax, amounting to a total of R58 million paid in April 2013. During March 2013, new
qualifying employees who have not previously received an offer were awarded 80 Scheme Shares and 160 SARs which will vest in four equal
portions on each anniversary of the award. A total of 97 040 Scheme Shares and 194 080 SARs were issued by the Tlhakanelo Share Trust.
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. Other expenses net
Included in the March 2013 quarter is a foreign exchange loss of R150 million (December 2012: R35 million) on the US dollar denominated loan.
6. Impairment of investments
A decline in the fair value of the investment in Witwatersrand Consolidated Gold Resource Limited (Wits Gold) during the March 2013 quarter
resulted in a loss of R52 million. This was offset against the fair value increase that was recognised in the fair value reserve during the
December 2012 quarter. The net cumulative loss of R39 million was reclassified to the income statement.
7. Disposal groups classified as held for sale and discontinued operations
Evander Gold Mines Limited
Harmony entered into an agreement to sell its 100% interest in Evander Gold Mines Limited (Evander) to a wholly owned subsidiary of Pan
African Resources Plc for R1.5 billion, less certain distributions, during May 2012. On 14 February 2013 Harmony received the necessary
consent of the Minister of Mineral Resources to transfer the interest in accordance with section 11 of the Mineral and Petroleum Resources
Development Act, the last remaining condition precedent. The transaction was completed on 28 February 2013. In terms of the agreement
Harmony received a distribution of R210 million and a purchase consideration of R1 314 million. A group profit of R102 million was recorded
in the March 2013 quarter.
8. Earnings and net asset value per share
Quarter ended Nine months ended Year ended
31 March 31 December 31 March 31 March 31 March 30 June
2013 2012 2012 2013 2012 2012
Figures in million (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Weighted average number of shares
(million) 431.8 431.6 431.3 431.6 430.6 430.8
Weighted average number of diluted shares
(million) 432.8 432.6 432.8 432.8 432.2 432.0
Total (loss)/earnings per share (cents):
Basic (loss)/earnings (29) 169 235 262 589 614
Diluted (loss)/earnings (29) 169 234 261 587 612
Headline (loss)/earnings (47) 158 234 234 571 565
from continuing operations (56) 139 201 185 477 465
from discontinued operations 9 19 33 49 94 100
Diluted headline (loss)/earnings (47) 157 233 233 569 563
from continuing operations (56) 138 200 184 475 463
from discontinued operations 9 19 33 49 94 100
Figures in million
Reconciliation of headline
(loss)/earnings:
Continuing operations
Net (loss)/profit (267) 649 873 816 2 128 2 053
Adjusted for:
Reversal of impairment of investment in
associate* (6) (55) (56)
Impairment of investments* 39 88 144
Reversal of impairment of assets (60)
Taxation effect on reversal of impairment of
assets (34)
Profit on sale of property, plant and
equipment (15) (69) (139) (28) (63)
Taxation effect of profit on sale of property,
plant and equipment 18 (1) 31 7 16
Headline (loss)/earnings (243) 598 866 796 2 052 2 000
Discontinued operations
Net profit 143 82 141 314 410 592
Adjusted for:
Profit on sale of property, plant and
equipment (2) (232)
Taxation effect of profit on sale of property,
plant and equipment 72
Profit on sale of investment in subsidiary* (102) (102)
Headline earnings 41 82 141 212 408 432
Total headline (loss)/earnings (202) 680 1 007 1 008 2 460 2 432
* There is no taxation effect on these items.
Net asset value per share
At At At At
31 March 31 December 30 June 31 March
2013 2012 2012 2012
(Unaudited) (Audited) (Unaudited)
Number of shares in issue 435 257 691 435 257 691 431 564 236 431 471 444
Net asset value per share (cents) 8 208 8 150 7 897 7 728
9. Investments in financial assets
During the March 2013 quarter, an additional 3.25% interest in Rand Refinery was purchased for R33 million in addition to the 3.9% interest
purchased for R39 million during the December 2012 quarter. 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 was repaid in full during the December 2011 quarter and the full R850 million facility is available until
December 2013. The balance on Nedbank term facilities at the end of March 2013 quarter is R610 million.
Two drawdowns 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 drawn level to US$210 million. The facility is repayable by
September 2015.
The weakening of the Rand against the US dollar resulted in a foreign exchange loss of R150 million being recorded against the borrowings
balance in the March 2013 quarter. The effect of foreign exchange changes for the nine months totals a loss of R190 million.
11. Commitments and contingencies
At At At At
31 March 31 December 30 June 31 March
2013 2012 2012 2012
Figures in million (Unaudited) (Audited) (Unaudited)
Capital expenditure commitments:
Contracts for capital expenditure 594 576 519 391
Authorised by the directors but not contracted for 958 1 572 2 257 3 032
1 552 2 148 2 776 3 423
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 the disclosure made in Harmony's annual report for the financial year ended 30 June 2012 relating to silicosis, Harmony and its
subsidiaries, alongside other mining companies operating in South Africa (other respondents) were served with another application to certify a
class during January 2013. Harmony, its subsidiaries and other respondents are awaiting a consolidated and supplemented certification
application of the two separate applications served.
12. Subsequent events
There are no subsequent events to report.
13. Segment report
Refer below for the segment report.
14. Reconciliation of segment information to consolidated income statements
Nine months ended
31 March 31 March
2013 2012
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 13 293 12 341
Total segment production costs (9 089) (7 834)
Production profit per segment report 4 204 4 507
Discontinued operations (341) (543)
Production profit from continuing operations 3 863 3 964
Cost of sales items, other than production costs and royalty expense (1 739) (1 540)
Gross profit as per income statements * 2 124 2 424
* 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
Segment report (Rand/Metric) (Unaudited)
for the nine months ended 31 March 2013
Revenue Production cost Production profit/(loss) Capital expenditure# Kilograms produced Tonnes milled
31 March 31 March 31 March 31 March 31 March 31 March
2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
R million R million R million R million kg t000
Continuing operations
South Africa
Underground
Kusasalethu 1 037 1 678 1 186 1 072 (149) 606 272 312 2 052 4 043 499 860
Doornkop 1 279 939 786 626 493 313 222 201 2 772 2 263 766 667
Phakisa 860 753 730 585 130 168 242 227 1 851 1 800 379 368
Tshepong 1 547 1 694 1 089 935 458 759 227 199 3 339 4 035 829 916
Masimong 1 290 1 032 740 635 550 397 124 166 2 777 2 466 658 702
Target 1 1 385 1 157 675 608 710 549 262 187 3 070 2 822 538 608
Bambanani 626 421 448 480 178 (59) 92 212 1 348 1 068 144 163
Joel 1 152 773 487 406 665 367 116 42 2 529 1 873 460 410
Unisel 647 479 429 366 218 113 57 51 1 386 1 134 332 282
Target 3 546 340 379 308 167 32 104 58 1 207 833 250 236
Surface
All other surface operations 1 152 1 074 747 678 405 396 222 96 2 533 2 569 7 365 6 997
Total South Africa 11 521 10 340 7 696 6 699 3 825 3 641 1 940 1 751 24 864 24 906 12 220 12 209
International
Hidden Valley 898 895 860 572 38 323 368 175 1 922 2 098 1 387 1 307
Total international 898 895 860 572 38 323 368 175 1 922 2 098 1 387 1 307
Total continuing operations 12 419 11 235 8 556 7 271 3 863 3 964 2 308 1 926 26 786 27 004 13 607 13 516
Discontinued operations
Evander 874 1 106 533 563 341 543 140 131 1 955 2 674 390 491
Total discontinued operations 874 1 106 533 563 341 543 140 131 1 955 2 674 390 491
Total operations 13 293 12 341 9 089 7 834 4 204 4 507 2 448 2 057 28 741 29 678 13 997 14 007
Reconciliation of the segment
information to the consolidated
income statement (refer to note 14) (874) (1 106) (533) (563)
12 419 11 235 8 556 7 271
# Capital expenditure for international operations excludes expenditure spent on Wafi-Golpu of R403 million (2012: R192 million).
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 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: 03/05/2013 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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