Wrap Text
Results for the second quarter FY14 and six months ended 31 December 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
Q2 FY14
Results for the second quarter FY14 and six months ended 31 December 2013
KEY FEATURES
Quarter-on-quarter
Safety improved quarter-on-quarter
Gold production remained steady at 9 515kg (305 913/oz)
- increase in underground recovered grade of 7% to 4.85g/t
- Hidden Valley back on track
Reduced overall costs quarter-on-quarter
- cash operating costs decreased by 5% to R308 665/kg (US$949/oz)
- reduced all-in sustaining cost from R404 694/kg to R397 503/kg (US$1 264/oz
to US$1 222/oz)
- restructured by reducing low grade mining
Operating profit(1) decreased from R1 037 million (US$104 million)
to R986 million (US$97 million)
Headline loss per share of 21 SA cents (US$2 cents)
All figures represent continuing operations unless stated otherwise
(1) Operating profit is comparable to the term production profit in the segment report in the financial statements and not to the
operating profit line in the income statement
RESULTS FOR THE SECOND QUARTER ENDED 31 DECEMBER 2013
6 months 6 months
Quarter Quarter Q-on-Q ended ended
Dec Sep % Dec Dec %
2013 2013 Variance 2013 2012* Variance
Gold produced - kg 9 515 9 635 (1) 19 150 19 087 -
- oz 305 913 309 773 (1) 615 686 613 658 -
Cash operating - R/kg 308 665 324 272 5 316 517 301 393 (5)
costs - US$/oz 949 1 013 6 981 1 108 11
- kg 9 798 9 353 5 19 151 19 318 (1)
Gold sold
Underground - oz 315 014 300 703 5 615 717 621 089 (1)
grade - g/t 4.85 4.55 7 4.69 4.64 1
All-in sustaining - R/kg 397 503 404 694 2 401 021 396 968 (1)
costs - US$/oz 1 222 1 264 3 1 242 1 459 15
Gold price - R/kg 415 532 429 566 (3) 422 386 460 244 (8)
received - US$/oz 1 277 1 342 (5) 1 309 1 692 (23)
Operating - Rm 986 1 037 (5) 2 022 3 057 (34)
profit*(1) - US$m 97 104 (7) 201 362 (44)
Basic - SAc/s (21) 3 >(100) (18) 289 >(100)
(loss)/earnings
per share*(2) - USc/s (2) - (100) (2) 34 >(100)
Headline - Rm (91) 20 >(100) (71) 1 205 >(100)
(loss)/earnings*(2) - US$m (10) 2 >(100) (7) 142 >(100)
Headline - SAc/s (21) 5 >(100) (16) 280 >(100)
(loss)/earnings
per share*(2) - USc/s (2) 0.5 >(100) (2) 33 >(100)
Exchange rate - R/US$ 10.12 9.96 2 10.04 8.46 19
* Comparative figures in these line items for the six months ended December 2012 have been restated as a result of the adoption of
IFRIC 20 Stripping costs in the production phase of a surface mine.
(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) The six months ended December 2012 include discontinued operations.
Shareholder information
Issued ordinary share capital
435 693 819
at 31 December 2013
Issued ordinary share capital
435 289 890
at 30 September 2013
Market capitalisation
At 31 December 2013 (ZARm) 11 284
At 31 December 2013 (US$m) 1 077
At 30 September 2013 (ZARm) 15 083
At 30 September 2013 (US$m) 1 499
Harmony ordinary share and ADR prices
12-month high (1 January 2013 -
R75.64
31 December 2013) for ordinary shares
12-month low (1 January 2013 -
R24.48
31 December 2013) for ordinary shares
12-month high (1 January 2013 -
US$8.88
31 December 2013) for ADRs
12-month low (1 January 2013 -
US$2.36
31 December 2013) for ADRs
Free float 100%
ADR ratio 1:1
JSE Limited HAR
Range for quarter (1 October 2013 -
R24.48 - R36.14
31 December 2013 closing prices)
Average daily volume for the quarter
1 180 825 shares
(1 October 2013 - 31 December 2013)
Range for quarter (1 July 2013 -
R32.74 - R42.47
30 September 2013 closing prices)
Average daily volume for the quarter
1 680 746 shares
(1 July 2013 - 30 September 2013)
New York Stock Exchange including
HMY
other US trading platforms
Range for quarter (1 October 2013 -
US$2.36 - US$3.67
31 December 2013 closing prices)
Average daily volume for the quarter
2 722 889
(1 October 2013 - 31 December 2013)
Range for quarter (1 July 2013 -
US$3.30 - US$4.33
30 September 2013 closing prices)
Average daily volume for the quarter
3 824 973
(1 July 2013 - 30 September 2013)
Investors' calendar 2014
Q3 FY14 presentation
7 May
(webcast and conference calls only)
Q4 FY14 and year-end live presentation
14 August
in Johannesburg
Q1 FY15 presentation
5 November
(webcast and conference calls only)
Annual General Meeting 21 November
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 (0)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*^, K T Nondumo*^,
V P Pillay *^, J Wetton*^, A J Wilkens*
* Non-executive
^ Independent
1 Mozambican
Investor relations team
Email: HarmonyIR@harmony.co.za
Henrika Ninham
Investor Relations Manager
Tel: +27 (0)11 411 2314
Mobile: +27 (0)82 759 1775
Email: henrika@harmony.co.za
Marian van der Walt
Executive: Corporate and Investor Relations
Tel: +27 (0)11 411 2037
Mobile: +27 (0)82 888 1242
Email: marian@harmony.co.za
Company Secretary
Riana Bisschoff
Telephone: +27 (0)11 411 6020
Mobile: +27 (0)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 (0)86 154 6572
Fax: +27 (0)86 674 4381
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
Email queries: db@amstock.com
Toll free: +1-800-937-5449
Intl: +1-718-921-8137
Fax: +1-718-921-8334
Sponsor
J.P. Morgan Equities South Africa (Pty) Ltd
1 Fricker Road, corner Hurlingham Road
Illovo
Johannesburg, 2196
Private Bag X9936, Sandton, 2146, South Africa
Telephone: +27 (0)11 507 0300
Fax: +27 (0)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
Harmony's Integrated Annual Report,
Notice of Annual General Meeting and its
Annual Report filed on a Form 20F with the United States'
Securities and Exchange Commission for the year ended
30 June 2013 were released on 25 October 2013.
www.harmony.co.za/investors
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:
Resources and Reserves South Africa: Jaco Boshoff, Pr. Sci. Nat., who has
18 years' relevant experience and is registered with the South African
Council for Natural Scientific Professions (SACNASP).
Resources and Reserves Papua New Guinea: Gregory Job, BSc, MSc,
who has 25 years relevant experience and is a member of the Australian
Institute of Mining and Metallurgy (AusIMM).
Mr Boshoff and Mr Job are full-time employees of Harmony Gold Mining
Company Limited. 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.
Mineral Resource and Reserve information as at 30 June 2013 has not
changed.
Message from the chief executive officer
Harmony has been in operation for 63 years - and we are positioned
to remain sustainable for many years to come. We manage costs and
production to ensure profitability at all gold prices. That is what our
approach to management is all about. At the same token, changes
to our operations and operating parameters are not affected at the
expense of safety. Safety is a core value.
We focus on profitable ounces and on operating margins. We reward
our mining teams to the extent that they contribute to improving
productivity and profitability. We hold our people accountable for the
company's safe and profitable operations.
Harmony is sustainable and is thriving with gold in its current price
range of US$1 200/oz to US$1 250/oz - 20% down on year-ago levels. We
are confident that we can continue to manage our operations so as to
remain profitable even should the gold price come under further pressure.
In fact, five of our mines are very profitable and are thriving at an all-in
cost of below US$1 000/oz. At present Target 1 (US$854/oz), Bambanani
(US$742/oz), Joel (US$921/oz), Steyn 2 (US$811/oz) and Phoenix
(US$861/oz) are each operating at an all-in sustaining costs of less than
US$1 000/oz.
Our group average all-in sustaining cost is less than US$1 250/oz or lower
than the R400 000/kg on which our current near-term strategic planning
is based. By this financial year's end (June 2014) we are planning
on having reduced our costs to a sustainable average of between
US$1 100/oz and US$1 150/oz or R380 000/kg. Our core competency is
on mining profitably and managing our production and costs. We are
nimble enough to respond and adjust to changes.
We have restructured and right-sized Hidden Valley in Papua New
Guinea (PNG) so that its costs are now less than US$1 200/oz. We are
continuing to refine our Golpu gold and copper resource knowledge
in PNG.
Costs at Kalgold and Unisel are already below US$1 200/oz, and at
Doornkop we have eliminated the unprofitable lowest grade reserves
(the Kimberley reef). Target 3 and Masimong will follow suit.
At Kusasalethu and Tshepong we have introduced management and
technical changes to increase production and consequently, lower unit
costs. Phakisa is on the same road, though it is spending on capital
during its production build-up phase.
We have already limited our spending on exploration, corporate
overheads, support services, electricity and capital. In the process,
Harmony has become South Africa's most productive deep level miner
measured in terms of R/tonne costs, which is where we intend to stay.
Harmony's strength has always been its ability to adjust quickly and
efficiently to adverse conditions. Harmony has positioned itself to
thrive at current prices and provide investors with handsome returns
when market conditions improve. We will continue to be able to react
optimally to any further adverse market conditions.
1. SAFETY
It is with regret that I report that three employees lost their lives as a
result of mine accidents during the quarter, bringing the total amount
of fatalities for financial year 2014 to seven. On behalf of management
and the Board, I wish to express our sincere condolences to the families
and colleagues of Gcinokuhle Vincent Ngqulunga (driller at Phakisa),
Sehla Mchithakau (driller at Tshepong) and Vincent Tsoeute (driller
at Joel).
The safety performance at Harmony's South African operations
improved quarter-on-quarter. Management changes that were already
effected at operations and ongoing safety risk training will certainly
contribute to an improvement in safety at those operations in future.
Some operations continue to do well in safety, such as Target 3,
Bambanani, Steyn 2, Unisel, Tshepong and Target 1, who reached
1 million and more fatal free shift milestones during the quarter.
2. OPERATIONAL AND FINANCIAL RESULTS
Gold production remained steady quarter-on-quarter, with a 7%
increase in grade. Gold production for the December 2013 quarter
decreased slightly by 1% (120kg) to 9 515kg in comparison to 9 635kg
in the September 2013 quarter. Underground recovered grade improved
by 7% to 4.85g/t for a third consecutive quarter.
Production at Hidden Valley showed a marked improvement following
the restructuring at the mine over the last couple of quarters. Closing
the Kimberley Reef at Doornkop resulted in a 13% increase in recovered
grade, with Target 1, Bambanani and Unisel performing very well.
Operating profit for the December 2013 quarter was 5% lower than
in the previous quarter at R986 million, due to a 3% decrease in the
gold price received as well as gold production being stable quarter-on-
quarter.
The rand gold price received decreased by 3% from R429 566/kg in the
September 2013 quarter to R415 532/kg in the quarter under review.
The US dollar gold price decreased by 5% from US$1 342/oz in the
September 2013 quarter to US$1 277/oz. The rand weakened by 2%
against the US dollar in the December 2013 quarter to R10.12/US$
from R9.96/US$ in the September 2013 quarter.
Cash operating costs decreased by 6% or R187 million in the
December 2013 quarter.
Capital expenditure for the December 2013 quarter remained fairly
constant at R640 million (R622 million in the September 2013 quarter).
South African operations increased expenditure by 8% or R48 million,
whilst Hidden Valley recorded a 61% (R29 million) decrease in capital
to R19 million.
Our focus on driving our all-in-sustaining cost lower has resulted in an
all-in sustaining cost of R397 503/kg for the December 2013 quarter,
a 2% improvement compared to the R404 694/kg recorded in the
September 2013 quarter and a 15% improvement over the last three
quarters.
3. EMPLOYEE RELATIONS
The Association of Mineworkers and Construction Union (AMCU) sought to
proceed with strike action on a number of gold mining operations with
effect from 20 January 2014 in relation to the wage agreement that was
finalised in September 2013 in the gold sector between the employers and
the National Union of Mineworkers,UASA and Solidarity and which was applied
to all employees in the represented bargaining units. Together,these three
unions represented 72% of employees in the sector. The agreed increases and
improved benefits were backdated to 1 July 2013 and all employees, irrespective
of union affiliation, have been in receipt of these since September 2013.
On 30 January 2014 South Africa's Labour Court ruled that a strike threatened
by the AMCU at our Kususalethu and Masimong mines would be unprotected, and
that employees should continue to proceed to work. The ruling ruled that AMCU
must return to court on 14 March 2014 to explain why this interim interdict that
was applied for by the Chamber of Mines should not be made permanent.
We welcome this interim ruling and remain firm in the company's belief that the
wage agreement is fair and valid. Harmony and the unions can get this industry
working. By actively contributing to the success of the company, employees can
and will share in its fortunes.
4. WAFI-GOLPU
On 6 December 2013 Harmony and Newcrest announced plans to
complete a feasibility study to evaluate an underground exploration
programme for the Wafi-Golpu Project in PNG.
This next phase of work requires a feasibility study on underground
exploration access and associated underground staging platforms
to complete deep underground drilling and bulk sampling of the ore
body. Underground access to the orebody through an exploration shaft
would generate essential ore body knowledge required to support a
future development decision. Geotechnical drilling to identify a suitable
exploration shaft location has commenced.
The Johannesburg office of the engineering consulting firm
WorleyParsons TWP has been engaged to prepare the feasibility study
for the proposed underground exploration access for consideration
and approval by the joint venture. Their engagement also includes
a review of an associated lower capital expenditure development
option for the Golpu deposit to underpin the commercial decision for
underground access.
The joint venture anticipates a final investment decision for the proposed
underground access during the second half of calendar 2014, subject to
receipt of necessary regulatory approvals.
The joint venture also aims to finalise an agreement to provide a
framework for the underground exploration phase, ongoing technical
and economic studies and, ultimately, the future development and
operation of the project.
These planning and study activities are accommodated within the 2014
exploration budget for the project. In parallel to these planning and
study activities, the joint venture will continue with investment in the
community in the Wafi-Golpu project area.
5. ENVIRONMENTAL MANAGEMENT
Harmony demonstrated an improved performance in the Carbon
Disclosure Project year on year since 2010 in both the disclosure and
performance leadership indices. This year we maintained a score of 98%
(holding a joint third position) Gold rating on the Disclosure Index and
an A-Band Platinum rating on the Performance and Leadership Index.
Harmony and Anglo American are the only two mining companies of
the JSE top 100 that achieved A-Band performance. Of the JSE top 100,
only eight companies achieved A-Band ratings.
Graham Briggs
Chief executive officer
Financial overview
Net (loss)/profit
The net loss for the December 2013 quarter was R91 million,
compared to a net profit of R13 million in the September 2013 quarter,
mainly due to the foreign exchange translation loss recorded on the
US$-denominated loan and gold stock adjustments as a result of more
gold sold than produced during the December 2013 quarter.
Other (expenses)/income - net
Included in other expenses in the December 2013 quarter is a
loss of R111 million for the foreign exchange movement on the
US$-denominated syndicated loan, resulting from the Rand weakening
from US$/R10.05 to US$/R10.46 at 31 December 2013.
Non-current assets classified as held for sale
During the December 2013 quarter, Sibanye Gold Limited (Sibanye)
made a cash offer to purchase the entire issued ordinary share capital
of Witwatersrand Consolidated Gold Resources Limited (Wits Gold).
The transaction is subject to regulatory approvals and is expected to be
completed within 12 months. The group's investment in Wits Gold has
subsequently been classified as a non-current asset held for sale.
Borrowings
During the December 2013 quarter, the Nedbank R850 million facility
was refinanced with a new three year R1.3 billion Nedbank facility on
substantially the same terms as the previous facility. The new revolving
credit facility matures in December 2016. The outstanding amount on
the Nedbank Term Loan of R458 million was settled by drawing against
the new facility. The covenants on both the US$ denominated loan and
Rand facilities were renegotiated and are as follows:
- The group's interest cover shall ratio not be less than five times (EBITDA/Total
interest);
- Current ratio shall not be less than one (current assets/current
liabilities);
- Cash flow from operating activities shall be above R100 million for
the six months prior to the evaluation date;
- Total net debt shall not exceed R3 billion plus the rand equivalent of
US$300 million;
- Tangible net worth to net debt ratio shall not be less than six times.
Loss/earnings per share
The earnings per share of 3 SA cents decreased to a loss per share of
21 SA cents in the December 2013 quarter.
OPERATIONAL RESULTS (Rand/Metric) (US$/Imperial)
South Africa
Underground production Surface production
Three Total Total Total
months Kusasa- Bamba- under- Total South Hidden continuing
ended lethu Doornkop Phakisa Tshepong Masimong Target 1 nani Joel Unisel Target 3 Steyn 2 ground Phoenix Dumps Kalgold* surface Africa Valley* operations
Dec-13 302 238 137 219 161 193 54 149 107 75 12 1 647 1 482 755 364 2 601 4 248 506 4 754
Ore milled - t'000
Sep-13 329 236 156 249 189 191 51 159 108 82 12 1 762 1 544 873 364 2 781 4 543 503 5 046
Dec-13 1 140 872 706 962 684 1 241 697 674 512 350 147 7 985 217 226 315 758 8 743 772 9 515
Gold produced - kg
Sep-13 1 272 765 755 1 049 758 1 081 623 697 476 392 146 8 014 225 297 324 846 8 860 775 9 635
Dec-13 36 652 28 035 22 698 30 929 21 991 39 899 22 409 21 670 16 461 11 253 4 726 256 723 6 977 7 266 10 127 24 370 281 093 24 820 305 913
Gold produced - oz
Sep-13 40 896 24 595 24 274 33 726 24 370 34 755 20 030 22 409 15 304 12 603 4 694 257 656 7 234 9 549 10 417 27 200 284 856 24 917 309 773
Dec-13 3.77 3.66 5.15 4.39 4.25 6.43 12.91 4.52 4.79 4.67 12.25 4.85 0.15 0.30 0.87 0.29 2.06 1.53 2.00
Yield - g/tonne
Sep-13 3.87 3.24 4.84 4.21 4.01 5.66 12.22 4.38 4.41 4.78 12.17 4.55 0.15 0.34 0.89 0.30 1.95 1.54 1.91
Cash operating Dec-13 389 854 320 533 374 572 352 244 353 671 200 373 199 795 261 521 294 779 383 566 221 871 306 967 279 221 357 916 318 184 318 876 308 000 316 206 308 665
costs - R/kg
Sep-13 378 360 372 256 359 825 337 704 339 471 240 274 220 342 258 561 320 525 373 446 233 966 319 395 272 796 344 552 325 694 318 246 319 286 381 274 324 272
Cash operating Dec-13 1 198 985 1 151 1 083 1 087 616 614 804 906 1 179 682 943 858 1 100 978 980 947 972 949
costs - $/oz
Sep-13 1 182 1 163 1 124 1 055 1 060 750 688 808 1 001 1 166 731 998 852 1 076 1 017 994 997 1 191 1 013
Cash operating Dec-13 1 472 1 174 1 930 1 547 1 503 1 288 2 579 1 183 1 411 1 790 2 718 1 488 41 107 275 93 634 482 618
costs - R/tonne
Sep-13 1 463 1 207 1 741 1 423 1 361 1 360 2 692 1 133 1 413 1 785 2 847 1 453 40 117 290 97 623 587 619
Dec-13 1 184 888 740 1 009 717 1 384 730 681 537 390 154 8 414 180 224 269 673 9 087 711 9 798
Gold sold - kg
Sep-13 1 098 796 742 1 031 745 986 613 693 467 358 144 7 673 221 288 340 849 8 522 831 9 353
Dec-13 38 066 28 550 23 792 32 440 23 052 44 497 23 470 21 895 17 265 12 539 4 951 270 517 5 787 7 202 8 649 21 638 292 155 22 859 315 014
Gold sold - oz
Sep-13 35 301 25 592 23 856 33 147 23 952 31 701 19 708 22 280 15 014 11 510 4 630 246 691 7 105 9 259 10 931 27 295 273 986 26 717 300 703
Dec-13 494 357 364 818 306 991 418 452 297 349 575 876 302 668 283 124 222 669 162 260 63 875 3 492 439 75 268 96 949 113 108 285 325 3 777 764 293 622 4 071 386
Revenue (R'000)
Sep-13 471 091 342 177 318 272 442 614 319 160 423 239 263 048 297 079 200 535 153 520 61 532 3 292 267 95 253 124 269 146 634 366 156 3 658 423 359 304 4 017 727
Cash operating Dec-13 444 434 279 505 264 448 338 859 241 911 248 663 139 257 176 265 150 927 134 248 32 615 2 451 132 60 591 80 889 100 228 241 708 2 692 840 244 111 2 936 951
(R'000)
costs Sep-13 481 274 284 776 271 668 354 251 257 319 259 736 137 273 180 217 152 570 146 391 34 159 2 559 634 61 379 102 332 105 525 269 236 2 828 870 295 487 3 124 357
Inventory Dec-13 28 010 12 659 16 146 22 591 16 418 51 668 12 367 (6 288) 9 603 28 051 3 043 194 268 (11 068) 143 (13 675) (24 600) 169 668 (20 733) 148 935
(R'000)
movement Sep-13 (86 317) 3 625 (6 345) (8 697) 476 (34 582) (1 659) (1 589) (2 391) (19 548) (1 020) (158 047) (317) (4 017) 2 559 (1 775) (159 822) 16 283 (143 539)
Dec-13 472 444 292 164 280 594 361 450 258 329 300 331 151 624 169 977 160 530 162 299 35 658 2 645 400 49 523 81 032 86 553 217 108 2 862 508 223 378 3 085 886
Operating costs (R'000)
Sep-13 394 957 288 401 265 323 345 554 257 795 225 154 135 614 178 628 150 179 126 843 33 139 2 401 587 61 062 98 315 108 084 267 461 2 669 048 311 770 2 980 818
Dec-13 21 913 72 654 26 397 57 002 39 020 275 545 151 044 113 147 62 139 (39) 28 217 847 039 25 745 15 917 26 555 68 217 915 256 70 244 985 500
Operating profit (R'000)
Sep-13 76 134 53 776 52 949 97 060 61 365 198 085 127 434 118 451 50 356 26 677 28 393 890 680 34 191 25 954 38 550 98 695 989 375 47 534 1 036 909
Dec-13 2 164 7 178 2 609 5 632 3 856 27 227 14 924 11 180 6 140 (4) 2 788 83 694 2 544 1 572 2 623 6 739 90 433 6 941 97 374
Operating profit ($'000)
Sep-13 7 644 5 400 5 317 9 746 6 161 19 890 12 797 11 894 5 057 2 679 2 850 89 435 3 434 2 606 3 871 9 911 99 346 4 772 104 118
Capital Dec-13 130 309 63 513 98 511 78 740 40 571 64 190 29 220 37 936 24 652 36 768 641 605 051 931 2 463 12 607 16 001 621 052 19 082 640 134
expenditure (R'000)
Sep-13 120 048 60 100 90 762 67 598 37 819 61 509 31 922 42 056 17 228 35 411 562 565 015 - 129 8 023 8 152 573 167 48 478 621 645
Dec-13 12 876 6 276 9 734 7 780 4 009 6 343 2 887 3 748 2 436 3 633 63 59 785 92 243 1 246 1 581 61 366 1 885 63 251
Capital
($'000
expenditure Sep-13 12 055 6 035 9 114 6 788 3 798 6 176 3 205 4 223 1 730 3 556 56 56 736 - 13 806 819 57 555 4 868 62 423
Adjusted Dec-13 408 698 346 101 389 497 367 910 371 109 222 422 216 640 258 728 307 717 422 833 240 307 323 996 275 126 361 752 330 343 326 029 324 163 316 287 323 591
- R/kg
operating costs Sep-13 375 072 375 492 364 217 341 375 362 285 232 532 226 822 263 371 329 937 359 871 235 119 321 965 276 299 341 372 321 027 316 285 321 399 376 717 326 314
Dec-13 1 256 1 064 1 197 1 131 1 141 684 666 795 946 1 299 739 996 846 1 112 1 015 1 002 996 969 994
Adjusted
- $/oz
operating costs Sep-13 1 171 1 173 1 138 1 066 1 132 726 708 823 1 031 1 124 734 1 006 863 1 066 1 003 988 1 004 1 177 1 019
All-in sustaining Dec-13 533 624 416 838 503 058 458 501 447 878 278 028 241 303 299 632 373 246 526 404 263 910 400 445 280 299 386 310 393 782 360 943 397 713 394 820 397 503
costs - R/kg
Sep-13 499 528 453 515 497 604 418 042 428 681 306 233 248 992 299 968 380 985 470 106 253 014 400 649 276 299 352 628 359 453 335 492 393 978 514 593 404 694
Dec-13 1 640 1 281 1 546 1 409 1 376 854 742 921 1 147 1 618 811 1 231 861 1 187 1 210 1 109 1 222 1 209 1 222
All-in sustaining
costs - $/oz Sep-13 1 560 1 416 1 554 1 306 1 339 956 778 937 1 190 1 468 790 1 251 863 1 101 1 123 1 048 1 230 1 607 1 264
Commentary on operational results
Quarter-on-quarter
Harmony increased its underground recovered grade by 7% to 4.85g/t,
representing a third consecutive quarter of increased grade.
Harmony's production for the second quarter of financial year
2014 compared well with the previous quarter, with a 1% decrease
to 9 515kg.
Cash operating costs decreased by 5% to R308 665/kg mainly due to
the decrease in the electricity price tariffs, compared to the previous
quarter which included winter tariffs.
All-in sustaining costs decreased by 2% quarter-on-quarter from
R404 694/kg to R397 503/kg mainly due to a 5% increase in gold sold
during the quarter. Production delivery against a lower operating cost
base remains the key focus at all of our operations during the next
quarter.
SOUTH AFRICAN OPERATIONS
Kusasalethu
Kusasalethu's results were adversely affected by the spillage and
flooding of the return ventilation shaft and sub-shaft bottoms which
hampered rock hoisting during the quarter.
During the March 2014 quarter, management will focus on increasing
the availability of the engineering equipment in order to reduce
production downtime.
Doornkop
Doornkop had a good quarter, with a 14% increase in production
mainly due to a 13% increase in grade. Cash operating cost improved
by 14% to R320 533/kg while the all-in sustaining costs improved by
8% to R 416 838/kg.
The Kimberley Reef mine was always earmarked for closure as the new
South Reef mine increased production at a higher recovered grade.
Mechanized mining methods are used on the Kimberley Reef horizon
(mining high volumes at a much lower grade), which is extremely
sensitive to gold price fluctuations and in the current gold price
environment, the end of its economic life was brought closer.
Closing the Kimberley Reef will have a positive effect on both the costs
and grade of Doornkop. Production at the higher-grade South Reef
project is ramping up to scheduled full production in financial year
2016. Focus during the next quarter will be to achieve targets relating
to tonnes and grade, as well as to conclude the Kimberley Reef's
section 189 process.
Phakisa
Phakisa's 6% increase in recovered grade quarter-on-quarter (to
5.15g/t) partly countered the effect of a 12% decrease in tonnes milled,
resulting in gold production of 706kg of gold during the quarter.
All-in sustaining costs remained stable at R503 058/kg. During the
March 2014 quarter, on-going rehabilitation work to the Freddies.
3 ventilation shaft will continue. The scope of the rehabilitation work
increased after another smaller cavity was identified during the re-sink
and re-lining process.
Tshepong
Tshepong's gold production decreased due to a section 54 stoppage
after a fatality occurred. The decrease of 12% in tonnes milled, offset
by a 4% increase in recovered grade (at 4.39g/t) resulted in an 8%
decrease in gold production to 962kg.
Cash operating costs increased by 4% quarter-on-quarter while the
all-in sustaining costs increased by 10% to R458 501/kg, as a result
of lower volumes and higher capital expenditure during the quarter.
Tshepong's focus during the next quarter will be on creating stoping
face length in the higher grade areas of the mine and maintaining reef
meter development.
Masimong
Masimong had another challenging quarter with gold production being
10% less at 684kg, due to a 15% decrease in volumes quarter-on-
quarter. General underperformance and a fatality during the December
2013 quarter had a negative impact on production.
However, recovered grade increased by 6% quarter-on-quarter
to 4.25g/t.
The decrease in gold production resulted in a 4% increase in cash
operating cost at R353 671/kg and together with higher capital
expenditure quarter-on-quarter, a 4% increase in all-in sustaining costs
from R428 681/kg to R447 878/kg.
The focus in the next quarter will be to address the underperformance
to ensure a turnaround at the mine. Actions include: restructuring the
shaft, equipping and mining high grade pillars that were previously left
un-mined and reduce maintenance capital to an absolute minimum.
Target 1
Target 1 had another excellent quarter with a 14% increase in recovered
grade and a 15% increase in gold production.
The mine's sustained operational improvements resulted in a lower all-in
sustaining cost of R278 028/kg and a 17% reduction in cash operating
cost to R200 373/kg.
Bambanani
Gold production increased by 12% quarter-on-quarter, due to a 6%
increase in both volumes and recovered grade at 12.91g/t.
Bambanani has the lowest all-in sustaining cost in the company at
R241 303/kg, as well as the best cash operating cost at R199 795/kg.
During the March 2014 quarter Bambanani will continue its good
performance, through a further increase in volume.
Joel
Stoppages in December 2013 resulted in a 6% decrease in tonnes
milled at Joel. Recovered grade increased by 3% to 4.52g/t, resulting in
a 3% decrease in gold to 674kg.
Quarter-on-quarter cash operating cost increased slightly to R261 521/kg
and all-in sustaining costs remained stable at R299 632/kg.
Unisel
Unisel had a good production quarter due to a 9% increase in recovered
grade (from 4.41g/t to 4.79g/t), resulting in a 8% increase in gold
production to 512kg.
Cash operating costs improved by 8% to R294 779/kg quarter-on-
quarter and all-in sustaining costs decreased from R380 985/kg to
R373 246/kg.
Target 3
Target 3 had a very challenging quarter. Tonnes decrease by 9% (from
82 000t to 75 000t), the recovered grade decreased by 2% to 4.67g/t,
which resulted in an 11% decrease in gold production to 350kg.
Due to the underperformance in gold output the cash operating cost
also increased by 3% to R383 566/kg.
All-in sustaining cost increased by 12% to R526 404/kg.
A review of Target 3's performance was done in January to assess the
underperformance. The focus will be on opening up the Basal Reef.
Steyn 2
Tonnes milled remained steady quarter-on-quarter at 12 000t while the
recovered grade increased by 1% from 12.17g/t to 12.25g/t, resulting
in gold production remaining steady.
Cash operating costs improved by 5% quarter-on-quarter to R221 871/
kg and all-in sustaining costs increased from R253 014/kg to R263 910/
kg, due to higher capital spent quarter-on-quarter.
Phoenix (tailings)
Recovered grade remained stable at 0.15g/t while 4% less tonnes were
milled at Phoenix during the quarter, which resulted in a 4% decrease in
gold production to 217kg.
The decrease in gold output resulted in a 2% increase in cash operating
costs to R279 221/kg and a slight increase in all-in sustaining costs from
R276 299/kg to R280 299/kg in the quarter.
During the March 2014 quarter, focus will remain on optimising
efficiency, recovery and cost control.
Surface dumps
Quarter-on-quarter gold production decreased by 24% due to a 14%
decrease in tonnes milled. Grade was 12% lower at 0.30g/t.
The decrease in gold output resulted in a 4% increase in cash operating
costs to R357 916/kg and a 10% increase quarter-on-quarter in all-in
sustaining costs at R386 310/kg.
Kalgold
Kalgold's gold production decreased by 3% quarter-on-quarter to
315kg, as tonnes were in line with the previous quarter while recovered
grade was 2% lower at 0.87g/t for the December 2013 quarter.
Cash operating cost decreased by 2% to R318 184/kg while all-in
sustaining costs increased by 10% to R393 782/kg due to an increase in
the total capital expenditure on the new oxygen plant, costs incurred on
the new residue tank and other plant refurbishment projects.
During the quarter, a decision was taken to postpone the scheduled
replacements of A and B mills to the next financial year in line with the
capital reduction initiative throughout the Company.
INTERNATIONAL OPERATIONS
Hidden Valley (held in Morobe Mining Joint Ventures - 50% of
attributable production reflected)
Hidden Valley's tonnes milled and recovered grade at 1.53g/t was in
line with the previous quarter and resulted in gold production of 772kg
during the December 2013 quarter. Silver production at 272 710oz was
8%, higher than the previous quarter
Cash operating costs improved by 17% to R316 206/kg, while all-in
sustaining costs decreased by 23% to R394 820/kg during the quarter,due
to lower production stripping, increased silver by-product credits,
lower sustaining capital expenditure and continued cost reduction
efforts.
The operating performance of the overland conveyor improved during
the quarter and minor configuration changes to the crusher were
completed.
Exploration highlights
INTERNATIONAL (PAPUA NEW GUINEA)
Morobe Mining Joint Venture (MMJV) (50% Harmony)
Wafi-Golpu
In addition to what is said in the message from the chief executive
officer above.
Harmony and its joint venture partner, Newcrest Mining Limited, plan
to undertake a feasibility study to evaluate an underground exploration
program for the Wafi-Golpu Project. The underground exploration
program is proposed to include an exploration shaft to facilitate deep
drilling and bulk sampling of the orebody to generate essential orebody
knowledge required to support a future development decision.
Geotechnical drilling to identify a suitable exploration shaft location is
in progress.
A final investment decision for the proposed underground exploration
program is expected during the second half of calendar 2014, subject
to receipt of necessary government and regulatory approvals. Work is
continuing on a substantially lower capital expenditure development
option for Wafi-Golpu and drilling activity has been scaled down from
four rigs to only one drill assigned to resource definition continuing into
the third quarter.
Drilling during the quarter delivered the following results.
North-south resource definition hole confirms continuity of porphyry
and high grade mineralisation
- 943.49m @ 1.28g/t Au and 1.44% Cu from 996m (WR499)2
- Including 560m @1.88g/t Au and 2.13% Cu from 1252m
New zone of higher grade gold mineralisation identified between Golpu
and Wafi
- 54m @ 3.61g/t Au from 146m (WR502)
Results for the
second quarter FY14 and
six months ended
31 December 2013
(Rand)
CONDENSED CONSOLIDATED INCOME STATEMENTS (Rand)
Quarter ended Six months ended Year ended
31 December 30 September 31 December 31 December 31 December 30 June
2013 2013 2012 2013 2012 2013
(Unaudited) (Unaudited) (Unaudited) (Audited)
Figures in million Note (Restated)* (Restated)* (Restated)*
Continuing operations
Revenue 4 071 4 018 4 613 8 089 8 891 15 902
Cost of sales 3 (3 817) (3 735) (3 508) (7 552) (7 018) (16 448)
Production costs (3 086) (2 981) (2 956) (6 067) (5 834) (11 321)
Amortisation and depreciation (565) (577) (509) (1 142) (1 002) (2 001)
Impairment of assets - - - - - (2 733)
Other items (166) (177) (43) (343) (182) (393)
Gross profit/(loss) 254 283 1 105 537 1 873 (546)
Corporate, administration and other
expenditure (102) (108) (111) (210) (217) (465)
Social investment expenditure (21) (38) (25) (59) (45) (127)
Exploration expenditure (112) (142) (160) (254) (296) (673)
Profit on sale of property,
plant and equipment - - 69 - 124 139
Other (expenses)/income - net 6 (140) 1 (47) (139) (44) (350)
Operating (loss)/profit (121) (4) 831 (125) 1 395 (2 022)
Profit from associates 4 3 - 7 - -
Impairment of investments - (7) - (7) (48) (88)
Net gain on financial instruments 39 74 92 113 166 173
Investment income 50 45 38 95 71 185
Finance cost (57) (60) (75) (117) (133) (256)
(Loss)/profit before taxation (85) 51 886 (34) 1 451 (2 008)
Taxation (6) (38) (221) (44) (373) (655)
Normal taxation - (49) (115) (49) (226) (271)
Deferred taxation (6) 11 (106) 5 (147) (384)
Net (loss)/profit from continuing
operations (91) 13 665 (78) 1 078 (2 663)
Discontinued operations
Profit from discontinued operations - - 82 - 171 314
Net (loss)/profit for the period (91) 13 747 (78) 1 249 (2 349)
Attributable to:
Owners of the parent (91) 13 747 (78) 1 249 (2 349)
(Loss)/earnings per ordinary
share (cents) 4
(Loss)/earnings from continuing
operations (21) 3 154 (18) 249 (616)
Earnings from discontinued
operations - - 19 - 40 73
Total (loss)/earnings (21) 3 173 (18) 289 (543)
Diluted (loss)/earnings per
ordinary share (cents) 4
(Loss)/earnings from continuing
operations (21) 3 154 (18) 249 (616)
Earnings from discontinued
operations - - 19 - 40 73
Total diluted (loss)/earnings (21) 3 173 (18) 289 (543)
* The audited June 2013 annual results, interim December 2012 and unaudited December 2012 quarter results have been restated due to a change in accounting policy. Refer to note 2 for details.
The restatements to the comparative information have not been audited.
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
2013 2013 2012 2013 2012 2013
(Unaudited) (Unaudited) (Unaudited) (Audited)
Figures in million (Restated)* (Restated)* (Restated)*
Net (loss)/profit for the period (91) 13 747 (78) 1 249 (2 349)
Other comprehensive income/(loss)
for the period, net of income tax 378 (695) 195 (317) 220 737
Foreign exchange translation 370 (694) 172 (324) 197 742
Movements on investments 8 (1) 23 7 23 (5)
Total comprehensive
income/(loss) for the period 287 (682) 942 (395) 1 469 (1 612)
Attributable to:
Owners of the parent 287 (682) 942 (395) 1 469 (1 612)
* The audited June 2013 annual results, interim December 2012 and unaudited December 2012 quarter results have been restated due to a change in accounting policy. Refer to note 2 for details.
The restatements to the comparative information have not been audited.
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.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Rand)
for the six months ended 31 December 2013
Other Retained
Figures in million Note Share capital reserves earnings Total
Balance - 30 June 2013 as previously reported 28 325 3 464 522 32 311
Restatement for IFRIC 20 2 - (22) (74) (96)
Restated balance - 30 June 2013 28 325 3 442 448 32 215
Share-based payments - 145 - 145
Net loss for the period - - (78) (78)
Other comprehensive loss for the period - (317) - (317)
Balance - 31 December 2013 28 325 3 270 370 31 965
Balance - 30 June 2012 as previously reported 28 331 2 444 3 307 34 082
Restatement for IFRIC 20 2 - (15) (94) (109)
Restated balance - 30 June 2012 28 331 2 429 3 213 33 973
Share-based payments - 130 - 130
Net profit for the period - - 1 249 1 249
Other comprehensive income for the period - 220 - 220
Dividends paid1 - - (218) (218)
Balance - 31 December 2012 28 331 2 779 4 244 35 354
1 Dividend of 50 SA cents declared on 13 August 2012.
The accompanying notes are an integral part of these condensed consolidated financial statements.
The condensed consolidated financial statements for the six months ended 31 December 2013 have been prepared by
Harmony Gold Mining Company Limited's corporate reporting team headed by Mr Herman Perry. This process was supervised
by the financial director, Mr Frank Abbott and approved by the board of Harmony Gold Mining Company Limited. The
condensed consolidatied financial statements for the six months ended 31 December 2013 were reviewed by the group's
external auditors, PricewaterhouseCoopers Incorporated (see note 13).
CONDENSED CONSOLIDATED BALANCE SHEETS (Rand)
At At At At
31 December 30 September 30 June 31 December
2013 2013 2013 2012
(Unaudited) (Audited)
Figures in million Note (Restated)* (Restated)*
ASSETS
Non-current assets
Property, plant and equipment 32 663 32 195 32 732 33 931
Intangible assets 2 193 2 191 2 191 2 192
Restricted cash 38 38 37 37
Restricted investments 2 180 2 143 2 054 2 020
Deferred tax assets 91 93 104 554
Investments in associates 115 112 109 -
Investments in financial assets 4 42 49 159
Inventories 57 57 57 57
Trade and other receivables - - - 13
Total non-current assets 37 341 36 871 37 333 38 963
Current assets
Inventories 1 423 1 482 1 417 1 066
Trade and other receivables 1 149 1 238 1 162 1 292
Income and mining taxes 106 103 132 -
Restricted cash 15 - - -
Cash and cash equivalents 2 323 2 288 2 089 2 511
5 016 5 111 4 800 4 869
Non-current assets and assets of disposal groups classified
as held for sale 5 46 - - 1 822
Total current assets 5 062 5 111 4 800 6 691
Total assets 42 403 41 982 42 133 45 654
EQUITY AND LIABILITIES
Share capital and reserves
Share capital 28 325 28 325 28 325 28 331
Other reserves 3 270 2 790 3 442 2 779
Retained earnings 370 461 448 4 244
Total equity 31 965 31 576 32 215 35 354
Non-current liabilities
Deferred tax liabilities 3 000 2 998 3 021 3 270
Provision for environmental rehabilitation 2 016 1 990 1 997 1 912
Retirement benefit obligation 201 198 194 184
Other provisions 71 63 55 40
Borrowings 6 3 280 2 868 2 252 2 072
Total non-current liabilities 8 568 8 117 7 519 7 478
Current liabilities
Borrowings 6 - 291 286 301
Income and mining taxes - 24 4 16
Trade and other payables 1 870 1 974 2 109 2 050
1 870 2 289 2 399 2 367
Liabilities of disposal groups classified as held for sale - - - 455
Total current liabilities 1 870 2 289 2 399 2 822
Total equity and liabilities 42 403 41 982 42 133 45 654
* The audited June 2013 annual results and interim December 2012 results have been restated due to a change in accounting policy. Refer to note 2 for details. The restatements to the comparative
information have not been audited.
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
2013 2013 2012 2013 2012 2013
(Unaudited) (Unaudited) (Unaudited) (Audited)
Cash flow from operating activities
Cash generated by operations 700 238 1 392 938 2 729 3154
Interest and dividends received 32 26 30 58 56 138
Interest paid (21) (29) (29) (50) (58) (125)
Income and mining taxes (paid) (28) - (221) (28) (113) (312)
Cash generated by operating activities 683 235 1 172 918 2 614 2 855
Cash flow from investing activities
Cash transferred to disposal group - - (90) - (252) -
Proceeds on disposal of investment in
subsidiary - - - - - 1 264
Purchase of investments - - - - - (86)
Other investing activities (1) (9) (45) (10) (45) (4)
Net additions to property, plant and
equipment(1) (624) (618) (986) (1 242) (1 879) (3 652)
Cash utilised by investing
activities (625) (627) (1 121) (1 252) (2 176) (2 478)
Cash flow from financing activities
Borrowings raised - 612 348 612 678 678
Borrowings repaid (3) (3) (164) (6) (173) (333)
Ordinary shares issued - net of expenses - - - - - 1
Option premium on BEE transaction - - - - - 2
Dividends paid - - - - (218) (435)
Cash generated/(utilised) by financing
activities (3) 609 184 606 287 (87)
Foreign currency translation adjustments (20) (18) 10 (38) 13 26
Net increase in cash and cash
equivalents 35 199 245 234 738 316
Cash and cash equivalents - beginning of
period 2 288 2 089 2 266 2 089 1 773 1 773
Cash and cash equivalents - end of
period 2 323 2 288 2 511 2 323 2 511 2 089
(1) Includes capital expenditure for Wafi-Golpu and other International projects of R0 million in the December 2013 quarter (September 2013: R0 million)(December 2012:
R7 million) and R537 million in the year ended 30 June 2013.
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 2013 (Rand)
1. Accounting policies
Basis of accounting
The condensed consolidated financial statements for the six months ended 31 December 2013 have been prepared in accordance with IAS 34,
Interim Financial Reporting, JSE Listings Requirements, SAICA Financial Reporting Guides as issued by the Accounting Practices Committee 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 2013, 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.
The following accounting standards, amendments to standards and new interpretations have been adopted with effect from 1 July 2013.
IFRS 7 Amendment - Disclosures - Offsetting Financial Assets and Financial Liabilities
IFRS 10 Consolidated Financial Statements
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Interests in Other Entities
IFRS 13 Fair Value Measurement
IFRSs Annual Improvements 2009 - 2011
IAS 19 Employee Benefits (Revised 2011)
IAS 27 Separate Financial Statements (Revised 2011)
IAS 28 Investments in Associates and Joint Ventures (Revised 2011)
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
New standards and amendments which have an impact on the condensed consolidated financial statements of the group are described below:
IAS 19 includes a number of amendments to the accounting for defined benefit plans, including actuarial gains and losses that are now
recognised in other comprehensive income (OCI). Actuarial gains and losses recognised in OCI will not be recycled to profit or loss.
The impact for the group was immaterial.
IFRS 11 requires joint operations to be accounted at the group's interest in the assets, liabilities, revenue and expenses of the joint operation.
Harmony previously accounted for joint operations using the proportional consolidation method. The change in accounting policy has not had an impact
on any previously reported numbers.
IFRIC 20 clarifies the requirements for accounting for costs of stripping activity in the production phase of surface mining. Stripping assets that
cannot be attributed to an identifiable component of the orebody will be written off to retained earnings on adoptions of IFRIC 20. Refer to
note 2 for further details.
2. Change in accounting policies
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
IFRIC 20 - Stripping Costs in the Production Phase of a Surface Mine ("IFRIC 20") which became effective on 1 January 2013, clarifies the
requirements for accounting for the costs of stripping activity in the production phase of surface mining when two benefits accrue: (i) usable
ore that can be used to produce inventory; and (ii) improved access to further quantities of material that will be mined in future periods.
Harmony has applied IFRIC 20 on a prospective basis from 1 July 2011 in compliance with the transitional requirements of IFRIC 20.
Harmony previously accounted for stripping costs incurred during the production phase to remove waste material by deferring these costs,
which were then charged to production costs on the basis of the average life-of-mine stripping ratio.
A stripping activity asset shall be recognised if all of the following are met:
(i) it is probable that the future economic benefit (improved access to the orebody) associated with the stripping activity will flow to the entity;
(ii) the entity can identify the component of the orebody for which access has been improved; and
(iii) the cost relating to the stripping activity associated with that component can be measure reliably.
The stripping asset shall be depreciated over the expected useful life of the identified component of the orebody based on the units of
production method.
Where there were no identifiable components of the orebody to which the predecessor asset relates, the asset was written off to retained
earnings at the beginning of the earliest period presented. An amount of R54 million was written off to retained earnings.
The comparative periods presented have been restated. The restatement had no effect on the condensed consolidated cash flow statements.
The results for the six months ended 31 December 2013, year ended 30 June 2013 and the financial position at those dates have been reviewed
and audited respectively, but the restatement of the results and balances affected by IFRIC 20 have not been audited.
Reconciliation of the effect of the change in accounting standard:
Condensed consolidated income statements
Quarter ended Six months ended Year ended
31 December 31 December 30 June
2012 2012 2013
(Unaudited) (Audited)
Cost of sales
Production costs
As previously reported (2 980) (5 850) (11 400)
IFRIC 20 adjustment 24 16 79
Restated (2 956) (5 834) (11 321)
Amortisation and depreciation
As previously reported (501) (982) (1 942)
IFRIC 20 adjustment (8) (20) (59)
Restated (509) (1 002) (2 001)
Increase/decrease in net profit/loss for the period* 16 (4) 20
* There is no material taxation effect on these items.
Condensed consolidated statements of comprehensive income
Quarter ended Six months ended Year ended
31 December 31 December 30 June
2012 2012 2013
(Unaudited) (Audited)
Increase/decrease in net profit/loss for the period* 16 (4) 20
Other comprehensive income for the period net of income tax
Foreign exchange translation
As previously reported 174 200 749
IFRIC 20 adjustment (2) (3) (7)
Restated 172 197 742
Increase/decrease in total comprehensive income/loss for the period 14 (7) 13
* There is no material taxation effect on these items.
Condensed consolidated balance sheets
At At
30 June 31 December
2013 2012
Figures in million (Audited)
Non-current assets
Property, plant and equipment
As previously reported 32 820 34 028
IFRIC 20 adjustment (88) (97)
Restated 32 732 33 931
Current assets
Inventories
As previously reported 1 425 1 085
IFRIC 20 adjustment (8) (19)
Restated 1 417 1 066
Share capital and reserves
Other reserves
As previously reported 3 464 2 797
IFRIC 20 adjustment(1) (22) (18)
Restated 3 442 2 779
Retained earnings
As previously reported 522 4 342
IFRIC 20 adjustment (74) (98)
Restated 448 4 244
Decrease in total equity (96) (116)
(1) Translation effect of the IFRIC 20 adjustments on foreign operations (Hidden Valley).
Earnings/(loss) and headline earnings per share
Quarter ended Six months ended Year ended
31 December 31 December 30 June
2012 2012 2013
(Unaudited) (Audited)
Total basic and diluted earnings/(loss) per share (cents)
As previously reported 169 290 (548)
IFRIC 20 adjustment 4 (1) 5
Restated 173 289 (543)
Total headline earnings
Figures in million
As previously reported 680 1 209 204
IFRIC 20 adjustment 16 (4) 20
Restated 696 1 205 224
Headline earnings per share (cents)
As previously reported 158 281 47
IFRIC 20 adjustment 4 (1) 5
Restated 162 280 52
Diluted headline earnings (cents)
As previously reported 157 280 47
IFRIC 20 adjustment 4 (1) 5
Restated 161 279 52
3. Cost of sales
Quarter ended Six months ended Year ended
31 December 30 September 31 December 31 December 31 December 30 June
2013 2013 2012 2013 2012 2013
(Unaudited) (Unaudited) (Unaudited) (Audited)
Figures in million (Restated)* (Restated)* (Restated)*
Production costs - excluding royalty 3 047 2 943 2 888 5 990 5 710 11 104
Royalty expense 39 38 68 77 124 217
Amortisation and depreciation 565 577 509 1 142 1 002 2 001
Impairment of assets - - - - - 2 733
Rehabilitation (credit)/expenditure(1) (15) 15 (1) - 6 (24)
Care and maintenance cost of
restructured shafts 18 17 16 35 36 68
Employment termination and
restructuring costs(2) 50 94 - 144 7 46
Share-based payments(3) 113 51 21 164 126 266
Other - - 7 - 7 37
Total cost of sales 3 817 3 735 3 508 7 552 7 018 16 448
* The audited June 2013 annual results, interim December 2012 and unaudited December 2012 quarter results have been restated due to a change in accounting policy. Refer to note 2
for details. The restatements to the comparative information have not been audited.
(1) A credit of R24 million arose in the December 2013 quarter as a result of work performed in the Free State, resulting in a reduction in the rehabilitation liability.
(2) Included in the September and December 2013 quarters are amounts relating to the restructuring at Hidden Valley and the voluntary retrenchment packages offered in South Africa.
(3) This includes the cost relating to the Employee Share Ownership Plan (ESOP) awards that were granted in August 2012. The December 2013 quarter includes costs related to the
acceleration of vesting for employees who took voluntary retrenchment.
4. Earnings/(loss) and net asset value per share
Quarter ended Six months ended Year ended
31 December 30 September 31 December 31 December 31 December 30 June
2013 2013 2012 2013 2012 2013
(Unaudited) (Unaudited) (Unaudited) (Audited)
(Restated)* (Restated)* (Restated)*
Weighted average number
of shares ( million) 432.9 432.6 431.6 432.8 431.6 431.9
Weighted average number of diluted
shares ( million) 433.4 433.0 432.6 433.8 432.6 432.7
Total (loss)/earnings per share
(cents):
Basic (loss)/earnings (21) 3 173 (18) 289 (543)
Diluted (loss)/earnings (21) 3 173 (18) 289 (543)
Headline (loss)/earnings (21) 5 162 (16) 280 52
- from continuing operations (21) 5 143 (16) 240 3
- from discontinued operations - - 19 - 40 49
Diluted headline (loss)/earnings (21) 5 161 (16) 279 52
- from continuing operations (21) 5 142 (16) 239 3
- from discontinued operations - - 19 - 40 49
Figures in million
Reconciliation of headline
(loss)/earnings:
Continuing operations
Net (loss)/profit (91) 13 665 (78) 1 078 (2 663)
Adjusted for:
Impairment of investments(1) - 7 - 7 - 88
Impairment of assets - - - - 48 2 733
Taxation effect on impairment of assets - - - - - (38)
Profit on sale of property,
plant and equipment - - (69) - (124) (139)
Taxation effect of profit on sale of
property, plant and equipment - - 18 - 32 31
Headline (loss)/earnings (91) 20 614 (71) 1 034 12
Discontinued operations
Net profit - - 82 - 171 314
Adjusted for:
Profit on sale of investment in
subsidiary(1) - - - - - (102)
Headline earnings - - 82 - 171 212
Total headline (loss)/earnings (91) 20 696 (71) 1 205 224
(1) 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
2013 2013 2013 2012
(Unaudited) (Audited)
(Restated)* (Restated)*
Number of shares in issue 435 693 819 435 289 890 435 289 890 435 257 691
Net asset value per share (cents) 7 337 7 254 7 405 8 123
* The audited June 2013 annual results, interim December 2012 and unaudited December 2012 quarter results have been restated due to a change in accounting policy. Refer to note 2 for
details. The restatements to the comparative information have not been audited.
5. Non-current assets and assets of disposal groups classified as held for sale
During the December 2013 quarter, a cash offer for Witwatersrand Consolidated Gold Resources Limited's (Wits Gold) entire share capital was
made to all Wits Gold shareholders by Sibanye Gold Limited. Harmony has accepted the offer. Following this, R46 million which represents
Harmony's fair value stake in Wits Gold has been classified as a non-current asset held for sale (formerly classified as Investment in financial
assets) under IFRS 5. A regulatory process is being followed and the sale is expected to be completed within the next 12 months.
6. Borrowings
Two draw downs of US$30 million each were made from the US$300 million syndicated revolving credit facility during the September 2013
quarter. During the December 2013 quarter there were no draw downs and the drawn level remains at US$270 million. The weakening of the
Rand against the US$ resulted in a foreign exchange translation loss of R111 million being recorded, increasing the borrowings balance and
Other expenses-net. The facility is repayable by September 2015.
Harmony refinanced its Nedbank revolving credit facility and entered into a new agreement for R1.3 billion revolving credit facility during the
December 2013 quarter. The interest rate is equivalent to JIBAR + 350 basis points and is repayable by December 2016.
At the same time management also agreed an amended set of financial covenants with the lender group, to give the group more long-term
financial flexibility. Two of the financial covenants were re-negotiated as follows:
- The interest cover measure has been changed from EBIT to EBITDA(1) and the ratio of cover has changed from two times to five times.
- The ratio of Market Capitalisation to Net Debt has been replaced by the ratio of Tangible Net Worth(2) to Net Debt. The ratio remained the
same at six times.
(1) EBITDA as defined in the agreement excludes unusual items such as impairment and restructuring cost.
(2) Tangible Net Worth is defined as total equity less intangible assets.
The covenants applicable to all Harmony debt facilities are accordingly as follows:
- The group's interest cover ratio shall not be less than five (EBITDA/Total interest).
- Current ratio shall not be less than one (current assets/current liabilities).
- Cash flow from operating activities shall be above R100 million for the six months prior to the evaluation date.
- Total net debt shall not exceed R3 billion plus the rand equivalent of US$300 million.
- Tangible Net Worth to facilities outstanding ratio shall not be less than six times.
7. Financial risk management activities
Fair value determination
The following table presents the group's assets and liabilities that are measured at fair value by level within the fair value hierarchy:
Level 1: Quoted prices (unadjusted) in active markets for identical assets;
Level 2: Inputs other than quoted prices included within level (1) that are observable for the asset, either directly or indirectly (that is, as prices)
or indirectly (that is derived from prices);
Level 3: Inputs for the asset that are not based on observable market data (that is unobservable inputs).
At At At At
31 December 30 September 30 June 31 December
2013 2013 2013 2012
Figures in million (Unaudited) (Audited)
Available-for-sale financial assets(1)*
Level 1 46 37 44 96
Level 2 - - - -
Level 3 4 5 5 63
Fair value through profit and loss(2)*
Level 1 - - - -
Level 2 934 1 116 1 041 1 135
Level 3 - - - -
(1)Level 1 fair values are directly derived from actively traded shares on the JSE.
Level 3 fair values have been valued by the directors by performing independent valuations on an annual basis to ensure that significant prolonged decline in the value of the investments
has not occurred. The December 2012 balance includes the interest in Rand Refinery. At the end of the 2013 financial year, the investment in Rand Refinery was reclassified as an
investment in associate on obtaining significant influence.
(2)The majority of the level 2 fair values are directly derived from the Shareholders Weighted Top 40 index (SWIX 40) on the JSE and are discounted at market interest rate.
* Includes non-current assets or disposal groups held for sale where applicable.
8. Commitments and contingencies
At At At At
31 December 30 September 30 June 31 December
2013 2013 2013 2012
Figures in million (Unaudited) (Audited)
Capital expenditure commitments:
Contracts for capital expenditure 322 351 416 576
Authorised by the directors but not contracted for 1 152 1 835 1 545 1 572
1 474 2 186 1 961 2 148
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 integrated annual report for the financial year ended 30 June 2013,
available on the group's website (www.harmony.co.za). There were no significant changes in contingencies since 30 June 2013.
9. 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 2013 quarter, Frank
Abbott purchased 65 600 shares.
10. Subsequent events
There were no subsequent events to report.
11. Segment report
The segment report follows.
12. Reconciliation of segment information to consolidated income statements and balance sheets
Six months ended
31 December 31 December
2013 2012
Figures in million (Restated)*
The "Reconciliation of segment information to consolidated financial statements" line item in the
segment report is broken down in the following elements, to give a better understanding of the
differences between the financial statements and segment report:
Reconciliation of production profit to gross profit
Total segment revenue 8 089 9 542
Total segment production costs (6 067) (6 215)
Production profit per segment report 2 022 3 327
Discontinued operations - (270)
Production profit from continuing operations 2 022 3 057
Cost of sales items, other than production costs and royalty expense (1 485) (1 184)
Gross profit as per income statements(1) 537 1 873
(1) The reconciliation was done up to the first recognisable line item on the income statement. The reconciliation will follow the income statement after that.
31 December 31 December
2013 2012
Figures in million (Restated)*
Reconciliation of total segment mining assets to consolidated property, plant and equipment
Property, plant and equipment not allocated to a segment
Mining assets 1 133 942
Undeveloped property 5 139 5 139
Other non-mining assets 89 62
Wafi-Golpu assets 1 069 804
Less: Non-current assets previously classified as held for sale - (1 233)
7 430 5 714
* The interim December 2012 results have been restated due to a change in accounting policy. Refer to note 2 for details. The restatements to the comparative information have not been
audited.
13. Review report
These condensed consolidated financial statements for the six months ended 31 December 2013 on pages 12 to 23 have been reviewed by
PricewaterhouseCoopers Inc., who expressed an unmodified conclusion thereon. A copy of the auditor's report on the condensed consolidated
financial statements is available for inspection at the company's registered office, together with the financial statements identified in the
auditor's report.
Segment report (Rand/Metric)
for the six months ended 31 December 2013
Production Capital Kilograms
Revenue Production cost* profit* Mining assets* expenditure@ produced# Tonnes milled#
31 December 31 December 31 December 31 December 31 December 31 December 31 December
2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
R million R million R million R million R million kg t'000
Continuing operations
South Africa
Underground
Kusasalethu 965 976 867 840 98 136 3 502 3 329 250 217 2 412 2 003 631 466
Doornkop 707 886 581 542 126 344 3 380 3 330 124 151 1 637 1 875 474 517
Phakisa 625 638 546 491 79 147 4 530 4 593 189 158 1 461 1 367 293 270
Tshepong 861 1 077 707 751 154 326 3 986 3 484 146 149 2 011 2 310 468 567
Masimong 617 925 516 519 101 406 1 021 998 78 80 1 442 1 978 350 477
Target 1 999 979 525 465 474 514 2 690 2 703 126 188 2 322 2 157 384 356
Bambanani(a) 691 426 356 306 335 120 881 1 004 62 70 1 613 911 129 98
Joel 580 821 349 343 231 478 354 260 80 79 1 371 1 750 308 321
Unisel 423 453 311 299 112 154 347 665 42 35 988 962 215 233
Target 3 316 364 289 262 27 102 508 398 72 68 742 798 157 169
Surface
All other surface operations 652 730 485 493 167 237 472 365 25 200 1 604 1 645 5 382 4 800
Total South Africa 7 436 8 275 5 532 5 311 1 904 2 964 21 671 21 129 1 194 1 395 17 603 17 756 8 791 8 274
International
Hidden Valley 653 616 535 523 118 93 3 562 5 855 68 236 1 547 1 331 1 009 947
Total international 653 616 535 523 118 93 3 562 5 855 68 236 1 547 1 331 1 009 947
Total continuing
operations 8 089 8 891 6 067 5 834 2 022 3 057 25 233 26 984 1 262 1 631 19 150 19 087 9 800 9 221
Discontinued operations
Evander - 651 - 381 - 270 - 1 233 - 109 - 1 480 - 300
Total discontinued
operations - 651 - 381 - 270 - 1 233 - 109 - 1 480 - 300
Total operations 8 089 9 542 6 067 6 215 2 022 3 327 25 233 28 217 1 262 1 740 19 150 20 567 9 800 9 521
Reconciliation of the
segment information to
the consolidated financial
statements (refer to note 12) - (651) - (381) 7 430 5 714
8 089 8 891 6 067 5 834 32 663 33 931
* The interim December 2012 results have been restated due to a change in accounting policy. Refer to note 2 for details. The restatements to the comparative information have not been audited.
# Production statistics are unaudited.
@ Capital expenditure for international operations excludes expenditure spend on Wafi-Golpu of R0 million (2012: R255 million).
(a) Includes Steyn 2.
DEVELOPMENT RESULTS (Metric)
Quarter ending December 2013
Channel
Reef Sampled Width Value Gold
Meters Meters (Cm's) (g/t) (Cmg/t)
Tshepong
Basal 418 407 8.81 189.19 1 667
B Reef 249 213 85.90 9.75 838
All Reefs 667 620 35.26 39.22 1 383
Phakisa
Basal 256 263 102.57 11.65 1 195
Leader 3 6 47.00 1.43 67
All Reefs 259 269 101.33 11.54 1 169
Total Bambanani
(Incl. Bambanani, Steyn 2)
Basal 16 16 58.71 11.68 685
All Reefs 16 16 58.71 11.68 685
Bambanani
Basal 16 16 58.71 11.68 685
All Reefs 16 16 58.71 11.68 685
Doornkop
South Reef 365 350 51.72 13.80 714
All Reefs 365 350 51.72 13.80 714
Kusasalethu
VCR Reef 558 497 107.66 10.75 1 157
All Reefs 558 497 107.66 10.75 1 157
Target
Elsburg 209 108 189.29 8.03 1 521
Basal 87 62 10.24 229.46 2 350
A Reef 83 41 141.95 7.38 1 047
B Reef 229 128 84.09 23.32 1 961
All Reefs 608 339 111.09 16.03 1 781
Target 1
Elsburg 132 64 251.70 7.14 1 797
All Reefs 132 64 251.70 7.14 1 797
Target 3
Elsburg 77 44 98.50 11.35 1 118
Basal 87 62 10.24 229.46 2 350
A Reef 83 41 141.95 7.38 1 047
B Reef 229 128 84.09 23.32 1 961
All Reefs 477 275 78.37 22.68 1 778
Masimong 5
Basal 386 348 48.63 15.87 772
B Reef 115 134 75.04 14.21 1 067
All Reefs 500 482 55.98 15.25 854
Unisel
Basal 322.8 258 192.95 9.25 1 784
Leader 463.7 399 200.22 6.19 1 239
Middle 47.0 32 214.75 13.27 2 849
All Reefs 833 689 198.17 7.66 1 518
Joel
Beatrix 260 258 157.88 8.50 1 342
All Reefs 260 258 157.88 8.50 1 342
Total Harmony
Basal 1 485 1 354 73.00 19.00 1 387
Beatrix 260 258 157.88 8.50 1 342
Leader 466 405 197.95 6.17 1 222
B Reef 593 475 82.34 14.64 1 205
A Reef 83.4 41 141.95 7.38 1 047
Middle 47.0 32 214.75 13.27 2 849
Elsburg 208.7 108 189.29 8.03 1 521
South Reef 365 350.25 51.72 13.80 714
VCR 558 497 107.66 10.75 1 157
All Reefs 4 067 3 520 103.30 12.14 1 254
DEVELOPMENT RESULTS (Imperial)
Quarter ending December 2013
Channel
Reef Sampled Width Value Gold
(feet) (feet) (inch) (oz/t) (In.oz/t)
Tshepong
Basal 1 371 1 335 3 6.38 19
B Reef 818 697 34 0.28 10
All Reefs 2 189 2 032 14 1.13 16
Phakisa
Basal 840 863 40 0.34 14
Leader 8 20 19 0.04 1
All Reefs 848 883 40 0.34 13
Total Bambanani
(Incl. Bambanani, Steyn 2)
Basal 52 52 23 0.34 8
All Reefs 52 52 23 0.34 8
Bambanani
Basal 52 52 23 0.34 8
All Reefs 52 52 23 0.34 8
Doornkop
South Reef 1 198 1 149 20 0.41 8
All Reefs 1 198 1 149 20 0.41 8
Kusasalethu
VCR Reef 1 831 1 631 42 0.32 13
All Reefs 1 831 1 631 42 0.32 13
Target
Elsburg 685 354 75 0.23 17
Basal 285 203 4 6.75 27
A Reef 273 135 56 0.21 12
B Reef 753 420 33 0.68 23
All Reefs 1 996 1 112 44 0.47 20
Target 1
Elsburg 432 210 99 0.21 21
All Reefs 432 210 99 0.21 21
Target 3
Elsburg 253 144 39 0.33 13
Basal 285 203 4 6.75 27
A Reef 273 135 56 0.21 12
B Reef 753 420 33 0.68 23
All Reefs 1 564 902 31 0.66 20
Masimong 5
Basal 1 265 1 142 19 0.47 9
B Reef 376 440 30 0.41 12
All Reefs 1 641 1 582 22 0.45 10
Unisel
Basal 1 059 846 76 0.27 20
Leader 1 521 1 309 79 0.18 14
Middle 154 105 85 0.38 33
All Reefs 2 734 2 261 78 0.22 17
Joel
Beatrix 853 846 62 0.25 15
All Reefs 853 846 62 0.25 15
Total Harmony
Basal 4 871 4 441 29.00 0.55 15.93
Beatrix 853 846 62.00 0.25 15.41
Leader 1 530 1 329 78.00 0.18 14.03
B Reef 1 947 1 558 32.00 0.43 13.84
A Reef 273 135 56.00 0.21 12.02
Middle 154 105 85.00 0.38 32.72
Elsburg 685 354 75.00 0.23 17.46
South Reef 1 198 1 149 20.00 0.41 8.19
VCR 1 831 1 631 42.00 0.32 13.29
All Reefs 13 342 11 548 41.00 0.35 14
Date: 03/02/2014 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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