Wrap Text
Q2 FY15 Results for the the second quarter
and six months ended 31 December 2014
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 FY15 RESULTS FOR THE SECOND QUARTER
and six months ended 31 DECEMBER 2014
KEY FEATURES
Quarter on quarter
- South African operations record a fatal-free quarter
- Restructuring for safe, profitable ounces continues
- Gold production decreased by 10% quarter on quarter due to stoppages at Kusasalethu and Hidden Valley
- Majority of operations perform in line with plans, with grade remaining consistent
- Production profit of R618 million
- Headline loss of R496 million, due to lower production and restructuring
RESULTS FOR THE SECOND QUARTER ENDED 31 DECEMBER 2014
Q-on-Q Six months Six months
Quarter Quarter variance Ended Ended Variance
Dec-14 Sep-14 % Dec-14 Dec-13 %
– kg 8 459 9 435 (10) 17 894 19 150 (7)
Gold produced – oz 271 963 303 341 (10) 575 304 615 686 (7)
– R/kg 357 111 355 693 – 356 364 316 517 (13)
Cash operating costs – US$/oz 990 1 028 4 1 008 981 (3)
– kg 8 580 9 987 (14) 18 567 19 151 (3)
Gold sold – oz 275 851 321 089 (14) 596 940 615 717 (3)
Underground grade – g/t 4.78 4.84 (1) 4.81 4.69 3
– R/kg 437 708 418 910 (4) 427 797 382 407 (12)
Total costs and capital – US$/oz 1 213 1 210 – 1 210 1 185 (2)
– R/kg 455 202 431 063 (6) 442 218 401 021 (10)
All-in sustaining costs – US$/oz 1 262 1 245 (1) 1 251 1 242 (1)
– R/kg 432 963 443 690 (2) 438 733 422 386 4
Gold price received – US$/oz 1 200 1 282 (6) 1 241 1 309 (5)
– R million 618 913 (32) 1 532 2 022 (24)
Production profit – US$ million 55 85 (35) 138 201 (31)
– SAc/s (197) (61) >(100) (258) (18) >(100)
Basic loss per share – USc/s (18) (6) >(100) (23) (2) >(100)
– Rm (496) (266) (86) (763) (71) >(100)
Headline loss – US$m (44) (25) (76) (69) (7) >(100)
– SAc/s (114) (61) (87) (175) (16) >(100)
Headline loss per share – USc/s (10) (6) (67) (16) (2) >(100)
Harmony's Integrated Annual Report and the Form 20-F filed with the United States' Securities and Exchange
Commission for the financial year ended 30 June 2014 are available on our website at
http://www.harmony.co.za/investors/reporting/annual-reports.
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.
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 S Lushaba*^,
C Markus*^, M Msimang*^, K T Nondumo*^,
V P Pillay *^, J L Wetton*^, A J Wilkens*
* Non-executive
^ Independent
(1) Mozambican
Investor relations team
Email: HarmonyIR@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
Bobo Ndinisa
Investor Relations
Tel: +27 (0)11 411 2137 / 057 904 4023
Mobile: +27 (0)79 783 2051
Email: bobo@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 86 154 6572
Fax: +27 86 674 2450
Email: meetfax@linkmarketservices.co.za
ADR(2) 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
(2) ADR: American Depository Receipts
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 11 507 0300
Fax: +27 11 507 0503
Trading Symbols
JSE Limited: HAR
New York Stock Exchange, Inc: HMY
Berlin Stock Exchange: HAM1
Registration number
1950/038232/06
Incorporated in the Republic of South Africa
ISIN
ZAE000015228
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). In
South Africa Harmony appoints an ore reserve manager at each of its operations who takes responsibility for the compilation and reporting of
mineral resources and mineral reserves at their operations. In Papua New Guinea, competent persons are appointed for the mineral resources and
mineral reserves for specific projects and operations.
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, BSc (Hons), MSc, MBA, Pr. Sci. Nat., who has 19 years' relevant experience and is registered
with the South African Council for Natural Scientific Professions (SACNASP) and a member of the South African Institute of Mining and Metallurgy
(SAIMM).
Resources and Reserves Papua New Guinea: Gregory Job, BSc, MSc, who has 26 years relevant experience and is a member of the Australian
Institute of Mining and Metallurgy (AusIMM). Mr Job has sufficient experience which is relevant to the styles of mineralisation and types of deposits
under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the Australasian
Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the "JORC Code").
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 2014 has not changed.
SHAREHOLDER INFORMATION
Issued ordinary share capital at 31 December 2014 436 094 323
Issued ordinary share capital at 30 September 2014 435 825 447
Market capitalisation
At 31 December 2014 (ZARm) 9 424
At 31 December 2014 (US$m) 815
At 30 September 2014 (ZARm) 10 765
At 30 September 2014 (US$m) 953
Harmony ordinary shares and ADR prices
12-month high (1 January 2014 –
31 December 2014) for ordinary shares 40.32
12-month low (1 January 2014 –
31 December 2014) for ordinary shares 17.00
12-month high (1 January 2014 –
31 December 2014) for ADRs 3.77
12-month low (1 January 2014 –
31 December 2014) for ADRs 1.56
Free float 100%
ADR ratio 1:1
JSE Limited HAR
Range for quarter (1 October–
31 December 2014 closing prices) R17.00 – R24.15
Average daily volume for the quarter (1 October –
31 December 2014) 2 977 951 shares
Range for quarter (1 July – 30 September 2014
closing prices) R24.70 – R35.21
Average daily volume for the quarter
(1 July – 30 September 2014) 706 279 shares
New york stock exchange including other
US trading platforms HMY
Range for quarter (1 October– 31 December 2014
closing prices) US$1.56 – US$2.20
Average daily volume for the quarter
(1 October – 31 December 2014) 4 492 693
Range for quarter (1 July – 30 September 2014
closing prices) US$2.16 – US$3.29
Average daily volume for the quarter
(1 July – 30 September 2014) 1 771 208
Investors' calendar 2015
Q3 FY15 presentation (webcast and conference
calls only) 8 May 2015
Q4 FY15 live presentation from Johannesburg 18 August 2015
Q1 FY15 presentation (webcast and conference
calls only) 5 November 2015
Annual General Meeting 20 November 2015
MESSAGE FROM THE CHIEF EXECUTIVE OFFICER
1. SAFETY
Harmony recorded a fatal-free quarter in South Africa – a major
achievement for a deep level underground gold mining company.
Management and employees are commended for their efforts and
commitment to achieving zero harm.
There was one fatality at Hidden Valley in Papua New Guinea
(PNG). An employee was fatally injured when struck by a reversing
loader in the milling area. The matter was investigated and safety
standards were reinforced.
2. GOLPU – A GAME CHANGER
The results of the updated Golpu prefeasibility study (PFS) were
announced on the 15th of December 2014. Please refer to our
website for more details: www harmony.co.za.
The updated PFS supports our view that Golpu is a spectacular ore
body with a large copper component, affordable and mineable.
Our emphasis in preparing the PFS was to create flexibility to allow
the size of the project to adapt to different levels of gold and
copper prices, allowing Golpu to grow over time.
Key objectives of the study have been achieved by reducing the
capital of the project, lowering operating costs and improving
the rate of return. Harmony intends to fund the earlier stages of
the project from internal cash flows, and reviewing other funding
options for the latter stages.
Our application for an environmental permit has been submitted
to the Papua New Guinean Department of Environment and
Conservation. The permit relates to advanced exploration and
feasibility support activities, comprising development of access
roads, decline development to the ore body and associated works.
The Stage 2 Concept Study was completed and demonstrated
a technically feasible and economically viable plan to mine and
process the remaining portion of the Golpu copper-gold reserve
after depletion of Stage 1.
The Golpu project is a significant value accretive game-changer
for Harmony.
3. OPERATIONAL RESULTS
Most of the South African operations delivered in line with their
operational plans. Tshepong had an exceptional performance,
beating its production plan by 16%. Masimong and Unisel
delivered a consistent performance quarter on quarter, with
Bambanani being our most profitable mine at a cash operating
cost of R253 000/kg. Target 3 was placed on care and maintenance
as planned.
On 2 December 2014, Harmony announced that a new plan
would be implemented to return Kusasalethu to profitability.
The new plan will entail mining lower volumes at higher grades
at a reduced cost. Kusasalethu has not returned to profitability
after various setbacks. The underperformance of the mine was
further exacerbated by four fires and associated illegal mining
activities during the past quarter. Harmony's intention is to restore
Kusasalethu to profitability by the end of the fourth quarter of
the current financial year and we have commenced with a Section
189 process in terms of the Labour Relations Act to restructure
the mine.
Hidden Valley also contributed to the quarter's lower production,
due to a fatality and a belt tear on the overland conveyor (OLC).
Both resulted in production stoppages at the mine. There was
no structural damage to the OLC, but belt replacement work
was not completed until January 2015. Maintenance scheduled
for the OLC and the metallurgical plant in the first half of 2015
was brought forward and conducted while the belt was being
replaced. Ore was hauled to the mill by truck during this period,
adversely impacting costs.
Gold production during the March 2015 quarter is expected to
be higher once Kusasalethu's restructuring is finalised and Hidden
Valley returns to full production, positioning our operations to
benefit from higher gold prices.
Lower gold production quarter on quarter and a lower gold price
resulted in a decrease in production profit to R618 million in the
December 2014 quarter, compared to R913 million in the previous
quarter.
Cash operating cost for the December 2014 quarter improved
(decreased) by 10% when compared to the previous quarter.
The decrease is due to lower electricity tariffs for the summer
months, amounting to R200 million. Labour cost also decreased
by R63 million in the December 2014 quarter. Capital expenditure
for the December 2014 quarter increased by 14% to R682 million,
compared to R596 million in the September 2014 quarter, due
to major capital being spent at Phakisa and maintenance capital
expenditure at most of the operations. However, we are still below
the planned capital expenditure for FY15.
4. FINANCIAL RESULTS
Revenue
Revenue decreased by R716 million (16%) to R3 715 million as
a result of the 14% decrease in gold sold to 8 580kg and a 2%
decrease in the Rand gold price received to R432 963/kg in the
December 2014 quarter.
Production costs
The decrease in production costs in the December 2014 quarter is
mainly a result of the decrease in the electricity cost of R200 million
due to the decrease in the electricity price tariffs and Target 3
having been placed on care and maintenance at the end of the
September 2014 quarter.
Other items
Other items included in cost of sales increased to R272 million
in the December 2014 quarter, mainly as a result of employment
termination and restructuring costs of R182 million which include
the retrenchments of management in service areas and employees
at Kusasalethu, Target 3 and Ernest Oppenheimer Hospital.
Scrapping of property, plant and equipment
We embarked on a life-of-mine optimisation process which was
completed during the December 2014 quarter. The optimisation
resulted in a greater focus on mining profitable and higher grade
areas at our South African operations. It also resulted in removing
lower grade and unprofitable areas from the mine plan for most
of the operations. In the case of Kusasalethu and Masimong the
optimisation lead to the abandonment of levels and areas with
a carrying value and such areas were accordingly identified for
scrapping.
Other expenses – net
The decrease to R52 million in expenses in the December 2014
quarter is mainly due to a reduced foreign exchange translation
loss recorded on the US$ syndicated loan of R69 million compared
to R192 million in the September 2014 quarter. The Rand
weakened from US$/R11.32 at 30 September 2014 to US$/R11.57
at 31 December 2014.
Loan to associate
During the December 2014 quarter, Rand Refinery Proprietary
Limited drew down on the shareholders loan, of which Harmony's
portion is R120 million.
Borrowings
The increase in the amount recorded on the balance sheet is due
to the translation effect on the drawn amount of US$ 270 million.
Harmony secured a new revolving credit facility of up to US$250
million with a three year duration. The facility matures in February
2018.
5. GOLD MARKET
During the December 2014 quarter the average US dollar gold
price received decreased by 6% to US$1 200/oz, in comparison to
US$1 282/oz in the previous quarter. The decrease was partially
offset by the weakening of the rand dollar exchange rate to
R11.22/US$, compared to R10.77/US$ in the September 2014
quarter. As a result, the rand gold price received decreased quarter
on quarter from R443 690/kg to R432 963/kg.
The company is positioned to remain competitive in times of low
gold prices and benefit from higher gold prices.
6. RESTRUCTURING FOR PROFITABILITY
6.1 Closure of Target 3
The restructuring process, which began in August 2014, was
concluded during the December 2014 quarter following the
signing of the agreement with all representative trade unions.
The majority of the affected employees were absorbed at other
operations.
6.2 Closure of Ernest Oppenheimer Hospital (EOH)
Our employees have access to medical hubs at our operations,
which provide medical care and wellness advice to our employees.
This strategy was implemented some two years ago. Keeping our
employees healthy as well as our improved safety, resulted in EOH
having fewer and fewer patients.
The hospital was licensed for 450 patients. Occupancy had,
however dropped to below 100. The unit was therefore
economically inefficient. As a result, we decided to close EOH.
Most of the functions that EOH rendered have been moved to
other hospitals in the Welkom area.
Discussions with the Department of Health as new potential owners
of EOH are advanced. Should the transaction be concluded, it will
enhance the ability of the province to supply healthcare to the
community.
6.3 Restructuring of Kusasalethu
On 2 December 2014, notice was given to all representative trade
unions of our intention to restructure Kusasalethu. Agreement was
reached on the establishment of a task team to oversee the fair
implementation of any mitigating alternatives to retrenchment,
which includes transfers to other operations, voluntary separations,
early retirements and re-skilling.
6.4 Voluntary separations for management
There were 59 management employees who opted for voluntary
retrenchment or early retirement packages as part of the central
services management restructuring process.
6.5 Financial effects of the restructuring
Our decision to restructure and optimise our operations,
will contribute to a more profitable Harmony in the future.
Unprofitable areas have been scrapped to the value of R214 million
at Kusasalethu and R216 million at Masimong. Refer to financial
results above. Retrenchment costs of R182 million have been
recorded for the quarter.
7. WAGE NEGOTIATIONS 2015
Preparations for this year's wage negotiations are under way, with
the Gold Wage Caucus meeting regularly, both under the auspices
of the Chamber of Mines and independently.
Harmony is engaging with all union shop stewards on the
fundamentals of gold mining, Harmony's cost structures and
the marginality of our operations. We have also increased our
internal communication efforts to ensure that employees are
aware of the importance of being at work, being productive and
earning their salaries and bonuses.
8. POWER SUPPLY
Since November 2014, the electricity supply in South Africa has
been under pressure, with load shedding occurring at short notice.
The power supplier, Eskom, announced that this will continue in
the medium term. Load shedding has resulted in production losses
during the quarter.
To ensure that our employees remain safe, especially while a shift
is underground and that production continues, electricity needs to
be managed efficiently, thus we have implemented the following
mitigating measures:
- We are focusing our efforts on the reduction and optimisation
of the use of electricity at each operation. Our emphasis is on
reducing our electricity demand especially during peak times.
- We continue to look for and implement opportunities for
load shifting where an opportunity presents itself and can be
implemented with the least disruption to the operation and
employees.
- Remaining industrial geysers are being replaced with heat
pumps which will be finalised in March 2015.
- We have commissioned a study to identify direct purchase
opportunities from Independent Power Producers and other
opportunities to source electricity outside of Eskom. The study
also focuses on bringing renewable energy into our energy
portfolio.
- Harmony is a member of the EIUG (Energy Intensive User Group
of Southern Africa), who are collaborating with the Minister
of Energy to implement plans in an attempt to stabilise the
electricity supply risks in South Africa.
9. SILICOSIS
Harmony, Anglo American South Africa, AngloGold Ashanti, Gold
Fields and Sibanye Gold announced in November 2014, that they
have formed an industry working group to address issues relating
to compensation and medical care for occupational lung disease in
the gold mining industry in South Africa.
The companies have begun to engage all stakeholders on these
matters, including government, organised labour, other mining
companies and legal representatives of claimants who have filed
legal suits against the companies. These legal proceedings are
being defended.
Essentially, the companies are seeking a comprehensive solution
which deals both with the legacy compensation issues and future
legal frameworks and which, while being fair to employees, also
ensure the future sustainability of companies in the industry.
10. MORE EXCITEMENT FROM PNG
(Harmony's 100% owned exploration area)
Drilling at Kili Teke is currently in progress with 732m completed
by quarter end. At this very early stage of the drilling program, the
broad zones of anomalism and their associated alteration styles
and intensity are highly encouraging.
Post quarter end, drill results included 255m @ 0.24% Cu, 0.15 g/t
Au from 146m. The entire drillhole is mineralised below the
overthrust limestone. The intercept contains solid intervals of
higher grade including 55m @ 0.45% Cu, 0.32 g/t Au from 160m,
and some smaller intervals assaying in excess of 1% copper. From
the outset, the drilling has outlined a sequence of highly altered
and mineralized diorite porphyry together with narrower zones of
copper-gold skarn mineralization. This greenfield project has the
potential to develop into a major new copper gold find. Drilling
continues.
11.CONCLUSION
In the current environment of volatile gold prices and possible
deflationary trends, we are focussed – more than ever – on cost
control and cash generation at existing operations. In addition,
shareholder value is created through investing in Golpu, securing
a sustainable, profitable future for Harmony.
Graham Briggs
Chief Executive Officer
THE INVESTMENT CASE FOR HARMONY
Firstly, we are the most efficient South African gold miner, by
focusing on ways to improve our safety, production and cash
operating costs. In addition, we are a company that's focused
on the future. An investment in us is not just for short-term gain
– we aim to provide increasing long-term benefits. We are able
to do this primarily by funding our own capital, which puts us in
control of our business and enables us to make decisions that
have a real impact on our profitability.
Secondly, we produce more than one million ounces of gold and
being a leveraged gold company means that should the gold
price rise our margins would improve dramatically in percentage
terms. Management clearly understands this and we continue to
make tough decisions in loss-making operations when the gold
price softens. However, Harmony has a huge potential upside
when the gold price strengthens, as we believe it will in the
medium to long term.
One of our key strengths at Harmony is our understanding of
where we operate – on both an economic and a social level.
The countries in which we operate and have experience, South
Africa and Papua New Guinea, are both emerging economies.
They are developing countries and we are able to contribute to
local communities in a way that can make a lasting difference.
For this reason, we wholeheartedly embrace our social licences
to mine and endeavour to go beyond compliance.
The final reason to invest in Harmony is Golpu. It's a resource that
we're sure will develop into a world-class copper gold mine, and
will allow us to sustain our business well into the future.
Extract from the Integrated Report for the financial year 2014
"Chief executive officer discusses the major issues of
FY14 and beyond"
www.harmony.co.za
Q2 FY15 RAND RESULTS FOR THE SECOND QUARTER
AND SIX MONTHS ENDED 31 December 2014
Operating results (Rand/Metric) (US$/Imperial)
South Africa
Underground production Surface production
Three Total
months Kusasa- Total Total South Hidden Total
Ended lethu Doornkop Phakisa Tshepong Masimong Target 1 Bambanani Joel Unisel Target 3 Underground Phoenix Dumps Kalgold Surface Africa Valley Harmony
Dec-14 186 162 142 269 188 203 56 139 111 9 1 465 1 555 666 366 2 587 4 052 384 4 436
Ore milled – t’000 Sep-14 290 136 158 259 185 183 59 146 114 81 1 611 1 609 636 393 2 638 4 249 521 4 770
Dec-14 775 727 773 1 210 705 1 010 664 629 471 41 7 005 223 218 343 784 7 789 670 8 459
Gold produced – kg Sep-14 1 334 619 855 1 078 698 1 042 727 533 477 442 7 805 233 222 326 781 8 586 849 9 435
Dec-14 24 917 23 374 24 852 38 902 22 666 32 472 21 348 20 223 15 143 1 318 225 215 7 170 7 009 11 028 25 207 250 422 21 541 271 963
Gold produced – oz Sep-14 42 889 19 901 27 489 34 658 22 441 33 501 23 374 17 136 15 336 14 211 250 936 7 491 7 137 10 481 25 109 276 045 27 296 303 341
Dec-14 4,17 4,49 5,44 4,50 3,75 4,98 11,86 4,53 4,24 4,56 4,78 0,14 0,33 0,94 0,30 1,92 1,74 1,91
Yield – g/tonne Sep-14 4,60 4,55 5,41 4,16 3,77 5,69 12,32 3,65 4,18 5,46 4,84 0,14 0,35 0,83 0,30 2,02 1,63 1,98
Cash operating Dec-14 590 241 360 688 369 639 327 527 351 210 283 716 252 893 294 693 346 295 386 049 352 329 317 238 376 101 362 942 353 601 352 457 411 216 357 111
– R/kg Sep-14 414 573 440 977 346 363 369 139 367 828 285 610 242 113 369 818 371 111 349 385 356 054 328 605 385 590 373 819 363 676 356 748 345 028 355 693
Cash operating Dec-14 1 636 1 000 1 025 908 973 786 701 817 960 1 071 977 879 1 042 1 006 980 977 1 140 990
costs – $/oz Sep-14 1 198 1 274 1 001 1 067 1 063 825 699 1 069 1 072 1 009 1 029 949 1 114 1 080 1 051 1 031 997 1 028
Cash operating Dec-14 2 459 1 619 2 012 1 473 1 317 1 412 2 999 1 334 1 469 1 759 1 685 45 123 340 107 678 717 681
costs – R/tonne Sep-14 1 907 2 007 1 874 1 536 1 388 1 626 2 983 1 350 1 553 1 907 1 725 48 135 310 108 721 562 704
Dec-14 844 716 774 1 211 705 992 665 655 472 40 7 074 221 215 324 760 7 834 746 8 580
Gold sold – Kg Sep-14 1 433 697 868 1 096 709 1 090 739 630 485 462 8 209 258 239 358 855 9 064 923 9 987
Dec-14 27 135 23 020 24 885 38 934 22 666 31 893 21 380 21 059 15 175 1 286 227 433 7 105 6 912 10 417 24 434 251 867 23 984 275 851
Gold sold – oz Sep-14 46 072 22 409 27 907 35 237 22 795 35 044 23 759 20 255 15 593 14 854 263 925 8 295 7 684 11 510 27 489 291 414 29 675 321 089
Dec-14 368 922 310 710 334 833 523 472 305 679 428 602 288 451 283 735 204 258 17 519 3 066 181 95 610 92 441 139 917 327 968 3 394 149 320 670 3 714 819
Revenue (R’000) Sep-14 635 948 309 439 385 455 486 350 314 566 483 669 328 079 279 430 215 453 204 975 3 643 364 114 586 106 905 158 640 380 131 4 023 495 407 641 4 431 136
Cash operating Dec-14 457 437 262 220 285 731 396 308 247 603 286 553 167 921 185 362 163 105 15 828 2 468 068 70 744 81 990 124 489 277 223 2 745 291 275 515 3 020 806
costs (R’000) Sep-14 553 041 272 965 296 140 397 932 256 744 297 606 176 016 197 113 177 020 154 428 2 779 005 76 565 85 601 121 865 284 031 3 063 036 292 929 3 355 965
Inventory Dec-14 24 957 (5 034) 5 278 1 831 2 797 (2 277) 4 359 11 097 2 143 (321) 44 830 (319) (393) (4 271) (4 983) 39 847 35 755 75 602
movement (R’000) Sep-14 29 247 35 654 1 826 9 085 1 274 13 923 (1 481) 25 540 (11) 7 238 122 295 9 620 6 603 9 954 26 177 148 472 13 517 161 989
Dec-14 482 394 257 186 291 009 398 139 250 400 284 276 172 280 196 459 165 248 15 507 2 512 898 70 425 81 597 120 218 272 240 2 785 138 311 270 3 096 408
Operating costs (R’000) Sep-14 582 288 308 619 297 966 407 017 258 018 311 529 174 535 222 653 177 009 161 666 2 901 300 86 185 92 204 131 819 310 208 3 211 508 306 446 3 517 954
Dec-14 (113 472) 53 524 43 824 125 333 55 279 144 326 116 171 87 276 39 010 2 012 553 283 25 185 10 844 19 699 55 728 609 011 9 400 618 411
Production profit (R’000) Sep-14 53 660 820 87 489 79 333 56 548 172 140 153 544 56 777 38 444 43 309 742 064 28 401 14 701 26 821 69 923 811 987 101 195 913 182
Dec-14 (10 112) 4 770 3 905 11 170 4 927 12 862 10 353 7 777 3 476 179 49 307 2 244 967 1 756 4 967 54 274 838 55 112
Production profit ($’000) Sep-14 4 984 76 8 127 7 370 5 253 15 991 14 264 5 275 3 571 4 023 68 934 2 638 1 366 2 490 6 494 75 428 9 400 84 828
Capital Dec-14 122 185 73 259 127 836 87 070 48 441 69 120 39 338 59 654 31 380 – 658 283 414 2 487 8 770 11 671 669 954 11 814 681 768
expenditure (R’000) Sep-14 124 368 55 554 85 185 83 513 40 526 73 614 24 540 30 778 29 229 20 437 567 744 634 503 6 420 7 557 575 301 21 153 596 454
Capital Dec-14 10 888 6 528 11 392 7 759 4 317 6 160 3 506 5 316 2 796 – 58 662 37 222 782 1 041 59 703 1 053 60 756
expenditure ($’000) Sep-14 11 553 5 160 7 913 7 758 3 765 6 838 2 280 2 859 2 715 1 898 52 739 59 47 596 702 53 441 1 965 55 406
Cash operating Dec-14 747 899 461 457 535 016 399 486 419 921 352 151 312 137 389 533 412 919 386 049 446 303 319 094 387 509 388 510 368 487 438 470 428 849 437 708
cost and capital – R/kg Sep-14 507 803 530 725 445 994 446 609 425 888 356 257 275 868 427 563 432 388 395 622 428 796 331 326 387 856 393 512 373 352 423 752 369 943 418 910
Cash operating Dec-14 2 073 1 279 1 483 1 107 1 164 976 865 1 080 1 144 1 071 1 237 884 1 074 1 077 1 021 1 215 1 189 1 213
cost and capital – $/oz Sep-14 1 467 1 533 1 289 1 290 1 231 1 029 797 1 235 1 249 1 143 1 239 957 1 121 1 137 1 079 1 224 1 069 1 210
All-in sustaining Dec-14 743 336 470 383 503 210 416 470 443 880 374 820 303 254 376 107 435 600 405 170 454 139 320 538 404 276 414 402 384 243 447 513 535 921 455 202
costs – R/kg Sep-14 516 475 542 644 455 711 467 277 443 372 369 043 271 532 402 722 446 757 410 359 438 942 336 607 398 180 404 573 382 277 433 919 403 002 431 063
All-in sustaining Dec-14 2 060 1 304 1 395 1 154 1 230 1 039 841 1 042 1 207 1 123 1 259 889 1 121 1 149 1 065 1 240 1 486 1 262
costs – $/oz Sep-14 1 492 1 568 1 317 1 350 1 281 1 066 785 1 164 1 291 1 186 1 268 973 1 150 1 169 1 104 1 254 1 163 1 245
The unaudited condensed consolidated financial statements for the six months ended 31 December 2014 have been prepared by
Harmony Gold Mining Company Limited’s corporate reporting team headed by Herman Perry. This process was supervised by the
financial director, Frank Abbott and approved by the board of Harmony Gold Mining Company Limited. These financial statements have
not been audited or independently reviewed.
CONDENSED CONSOLIDATED INCOME STATEMENTS (Rand)
Quarter ended Six months ended
31 Dec 30 Sep 31 Dec 31 Dec 31 Dec 30 June
2014 2014 2013 2014 2013 2014
Figures in million Note (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Reviewed) (Audited)
Revenue 3 715 4 431 4 071 8 146 8 089 15 682
Cost of sales 2 (3 970) (4 319) (3 817) (8 289) (7 552) (16 088)
Production costs (3 096) (3 518) (3 086) (6 614) (6 067) (11 888)
Amortisation and depreciation (602) (650) (565) (1 252) (1 142) (2 143)
Impairment of assets – – – – – (1 439)
Other items (272) (151) (166) (423) (343) (618)
Gross (loss)/profit (255) 112 254 (143) 537 (406)
Corporate, administration and other
expenditure (83) (111) (102) (194) (210) (430)
Social investment expenditure (15) (24) (21) (39) (59) (88)
Exploration expenditure (95) (85) (112) (180) (254) (458)
Profit on sale of property, plant and
equipment 1 – – 1 – 30
Loss on scrapping of property, plant and
equipment 4 (430) – – (430) – –
Other expenses (net) 6 (52) (187) (140) (239) (139) (208)
Operating loss (929) (295) (121) (1 224) (125) (1 560)
Profit/(loss) from associates 5 – – 4 – 7 (109)
(Impairment)/profit on disposal of
investments – – – – (7) 7
Net gain on financial instruments 8 7 39 15 113 170
Investment income 59 51 50 110 95 220
Finance cost (67) (65) (57) (132) (117) (277)
Loss before taxation (929) (302) (85) (1 231) (34) (1 549)
Taxation 73 36 (6) 109 (44) 279
Normal taxation (4) 1 – (3) (49) (24)
Deferred taxation 77 35 (6) 112 5 303
Net loss for the period (856) (266) (91) (1 122) (78) (1 270)
Attributable to:
Owners of the parent (856) (266) (91) (1 122) (78) (1 270)
Loss per ordinary share (cents) 3
Basic loss (197) (61) (21) (258) (18) (293)
Diluted loss (197) (61) (21) (258) (18) (293)
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
31 Dec 30 Sep 31 Dec 31 Dec 31 Dec 30 June
2014 2014 2013 2014 2013 2014
Figures in million (Unaudited) (Unaudited) (Uaudited) (Unaudited) (Reviewed) (Audited)
Net loss for the period (856) (266) (91) (1 122) (78) (1 270)
Other comprehensive (loss)/income for the
period, net of income tax (114) 179 378 65 (317) (140)
Items that may be reclassified subsequently to
profit or loss: (114) 179 378 65 (317) (109)
Foreign exchange translation (114) 179 370 65 (324) (108)
Movements on investments – – 8 – 7 (1)
Items that will be reclassified
to profit or loss: – – – – – (31)
Actuarial loss recognised during the year – – – – – (38)
Deferred tax thereon – – – – – 7
Total comprehensive
(loss)/income for the period (970) (87) 287 (1 057) (395) (1 410)
Attributable to:
Owners of the parent (970) (87) 287 (1 057) (395) (1 410)
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Rand)
for the six months ended 31 December 2014 (unaudited)
(Accumulated
loss)/
Share Other retained
Figures in million capital reserves earnings Total
Balance – 30 June 2014 28 325 3 539 (822) 31 042
Share-based payments – 129 – 129
Net loss for the period – – (1 122) (1 122)
Other comprehensive income for the period – 65 – 65
Balance – 31 December 2014 28 325 3 733 (1 944) 30 114
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
The accompanying notes are an integral part of these condensed consolidated financial statements.
The condensed consolidated statement of changes in equity for the six months ended 31 December 2013 has been reviewed.
CONDENSED CONSOLIDATED BALANCE SHEETS (Rand)
At At At At
31 Dec 30 Sep 30 June 31 Dec
2014 2014 2014 2013
Figures in million Note (Unaudited) (Unaudited) (Audited) (Reviewed)
ASSETS
Non-current assets
Property, plant and equipment 4 32 843 33 232 33 069 32 663
Intangible assets 883 885 886 2 193
Restricted cash 42 38 42 38
Restricted investments 2 366 2 329 2 299 2 180
Deferred tax assets 71 76 81 91
Investments in associates 5 – – – 115
Loan to associate 5 120 – – –
Investments in financial assets 5 4 4 4
Inventories 50 50 50 57
Total non-current assets 36 380 36 614 36 431 37 341
Current assets
Inventories 1 337 1 390 1 534 1 423
Trade and other receivables 822 693 951 1 149
Income and mining taxes 43 94 110 106
Restricted cash 15 15 15 15
Cash and cash equivalents 1 374 2 281 1 829 2 323
3 591 4 473 4 439 5 016
Non-current assets and assets of disposal groups classified as held for
sale – – – 46
Total current assets 3 591 4 473 4 439 5 062
Total assets 39 971 41 087 40 870 42 403
EQUITY AND LIABILITIES
Share capital and reserves
Share capital 28 325 28 325 28 325 28 325
Other reserves 3 733 3 787 3 539 3 270
(Accumulated loss)/retained earnings (1 944) (1 088) (822) 370
Total equity 30 114 31 024 31 042 31 965
Non-current liabilities
Deferred tax liabilities 2 562 2 640 2 680 3 000
Provision for environmental rehabilitation 2 170 2 148 2 098 2 016
Retirement benefit obligation 255 251 247 201
Other non-current liabilities 7 42 40 95 71
Borrowings 6 – – 2 860 3 280
Total non-current liabilities 5 029 5 079 7 980 8 568
Current liabilities
Borrowings 6 3 121 3 052 – –
Income and mining taxes – 9 – –
Trade and other payables 1 707 1 923 1 848 1 870
Total current liabilities 4 828 4 984 1 848 1 870
Total equity and liabilities 39 971 41 087 40 870 42 403
The accompanying notes are an integral part of these condensed consolidated financial statements.
Quarter ended Six months ended
Year ended
31 Dec 30 Sep 31 Dec 31 Dec 31 Dec 30 June
2014 2014 2013 2014 2013 2014
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Reviewed) (Audited)
Figures in million Restated* Restated#
Cash flow from operating activities
Cash (utilised)/generated by operations (64) 1 071 727 1 007 1 031 2 247
Interest and dividends received 30 25 32 55 58 139
Interest paid (23) (23) (21) (46) (50) (121)
Income and mining taxes refunded/(paid) 39 25 (28) 64 (28) 3
Cash (utilised)/generated by operating
activities (18) 1 098 710 1 080 1 011 2 268
Cash flow from investing activities
(Increase)/decrease in restricted cash (4) 4 – – – (6)
Decrease/(increase) in restricted investments – 1 – 1 – (24)
Proceeds on disposal of investments – – – – – 51
Loan to associate (120) – – (120) – –
Other investing activities – – (1) – (10) –
Net additions to property, plant and
equipment(1) (748) (651) (651) (1 399) (1 335) (2 661)
Cash utilised by investing activities (872) (646) (652) (1 518) (1 345) (2 640)
Cash flow from financing activities
Borrowings raised – – – – 612 612
Borrowings repaid – – (3) – (6) (468)
Cash (utilised)/generated by financing
activities – – (3) – 606 144
Foreign currency translation adjustments (17) – (20) (17) (38) (32)
Net (decrease)/increase in cash and cash
equivalents (907) 452 35 (455) 234 (260)
Cash and cash equivalents – beginning of
period 2 281 1 829 2 288 1 829 2 089 2 089
Cash and cash equivalents – end of period 1 374 2 281 2 323 1 374 2 323 1 829
(1) Includes capital expenditure for Wafi-Golpu and other international projects of R1 million in the December 2014 quarter (September 2014 quarter: R15 million)
(December 2013 quarter: Rnil) and R12 million in the year ended 30 June 2014.
* Cash generated by operating activities and cash utilised by investing activities previously reported as R683 million and (R625 million) restated to R710 million and
(R652 million) respectively in the December 2013 quarter. This is mainly related to the change in accounting policy for IFRIC 20.
# Cash generated by operating activities and cash utilised by investing activities previously reported as R918 million and (R1 252 million) restated to R1 011 million and
(R1 345 million) respectively in the six months ended 31 December 2013. This is mainly related to the change in accounting policy for IFRIC 20.
The accompanying notes are an integral part of these condensed consolidated financial statements.
1. Accounting policies
Basis of accounting
The condensed consolidated financial statements for the six months ended 31 December 2014 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 Financial Pronouncements as issued by the Financial Reporting Standards Council, 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 2014, 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 2014 and had no impact on the financial results of the group:
IFRSs Annual Improvements 2010 – 2012 Cycle
IAS 32 Amendment – Presentation – Offsetting Financial Assets and Financial Liabilities
IAS 36 Amendment – Impairment of Assets – Recoverable amount disclosures for non-financial assets
IFRIC 21 Levies
2. Cost of sales
Quarter ended Six months ended
Year ended
31 Dec 30 Sep 31 Dec 31 Dec 31 Dec 30 June
2014 2014 2013 2014 2013 2014
Figures in million (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Reviewed) (Audited)
Production costs – excluding royalty 3 074 3 486 3 047 6 560 5 990 11 761
Royalty expense 22 32 39 54 77 127
Amortisation and depreciation 602 650 565 1 252 1 142 2 143
Impairment of assets – – – – – 1 439
Rehabilitation expenditure/(credit)(1) 5 14 (15) 19 – 8
Care and maintenance cost of
restructured shafts 20 17 18 37 35 66
Employment termination and
restructuring costs(2) 182 48 50 230 144 274
Share-based payments 66 73 113 139 164 270
Other (1) (1) – (2) – –
Total cost of sales 3 970 4 319 3 817 8 289 7 552 16 088
(1) Included in the December 2014 quarter is a credit of R11 million as a result of work performed in the Free State and at Deelkraal, resulting in a reduction in
the rehabilitation liability.
(2) The September 2014 quarter total includes amounts provided for employees of Target 3. The December 2014 quarter total includes amounts relating to
management retrenchments and retrenchment of employees at Target 3, Ernest Oppenheimer Hospital and a provision for Kusasalethu.
3. (Loss)/earnings per share
Quarter ended Six months ended
Year ended
31 Dec 30 Sep 31 Dec 31 Dec 31 Dec 30 June
2014 2014 2013 2014 2013 2014
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Reviewed) (Audited)
Weighted average number of shares
(million) 434.2 434.1 432.9 434.1 432.8 433.2
Weighted average number of diluted
shares (million) 435.2 435.4 433.4 436.1 433.8 434.7
Total (loss)/earnings per share (cents):
Basic loss (197) (61) (21) (258) (18) (293)
Diluted loss (197) (61) (21) (258) (18) (293)
Headline (loss)/earnings (114) (61) (21) (175) (16) 26
Diluted headline (loss)/earnings (114) (61) (21) (175) (16) 26
Figures in million
Reconciliation of headline (loss)/
earnings:
Net loss (856) (266) (91) (1 122) (78) (1 270)
Adjusted for:
Impairment/(profit on disposal) of
investments1 – – – – 7 (7)
Impairment of assets – – – – – 1 439
Taxation effect on impairment of assets – – – – – (24)
Profit on sale of property, plant and
equipment (1) – – (1) – (30)
Taxation effect of profit on sale of
property, plant and equipment – – – – – 6
Loss on scrapping of property, plant and
equipment 430 – – 430 – –
Taxation effect on loss of scrapping of
property, plant and equipment (69) – – (69) – –
Headline (loss)/earnings (496) (266) (91) (763) (71) 114
(1) There is no taxation effect on these items.
4. Loss on scrapping of property, plant and equipment
During the financial year, management and the South African operations embarked on a life-of-mine optimisation process which
was finalised at the end of the December 2014 quarter. The optimisation ensured greater focus on mining profitable and higher
grade areas at our operations and therefore resulted in the abandonment of lower grade and unprofitable areas from the life-of-
mine plan for most of the operations.
In the case of Kusasalethu and Masimong, the optimisation lead to the abandonment of levels and areas with a carrying value. The
abandonment of these areas, resulted in the derecognition of property, plant and equipment as no future economic benefits are
expected from its use or disposal and a loss on scrapping of property, plant and equipment of R214 million on Kusasalethu and
R216 million on Masimong was recorded in the December 2014 quarter.
5. Investment in associate
Harmony holds a 10.38% share in Rand Refinery Proprietary Limited (Rand Refinery). Due to the issues experienced at Rand Refinery
following the implementation of a new Enterprise Resource Planning (ERP) system on 1 April 2013, Harmony provided for its full
share of loss for the inventory discrepancy and recognised a R127 million loss in the June 2014 quarter.
As a precautionary measure following the challenges experienced by the implementation of the software system, Rand Refinery's
shareholders have extended Rand Refinery an irrevocable, subordinated loan facility of up to R1.2 billion. The facility is convertible
to equity after a period of two years. The agreements relating to the facility were signed on 23 July 2014.
During the December 2014 quarter, Rand Refinery Proprietary Limited drew down R1.02 billion on the shareholders loan. Harmony's
portion of the shareholders' loan was R120 million. Interest on the facility is JIBAR plus a margin of 3.5%.
6. Borrowings
The drawn level on the US$ syndicated revolving credit facility remains at US$270 million. The weakening of the Rand against the
US$ resulted in a foreign exchange translation loss of R69 million being recorded in the December 2014 quarter (September 2014
quarter: R192 million), increasing the borrowings balance and Other expenses (net). The facility is repayable by September 2015. As
a result, the borrowings balance was reclassified to current liabilities.
Harmony secured a new revolving credit facility of up to US$250 million with a three-year duration. The facility matures in
February 2018.
The debt covenants on all facilities are as follows:
- The interest cover ratio shall not be less than five. (EBITDA to interest paid).
- Leverage: total net debt to EBITDA ratio shall not be more than 2.5.
- Tangible net worth to net debt ratio shall not be less than six times or eight times when dividends are paid.
At 31 December 2014, the full amount was available on the Nedbank revolving credit facility of R1.3 billion. The facility is available
until December 2016.
7. Other non-current liabilities
During the September 2014 quarter, negotiations were entered into with the claimants in the matter relating to the pumping and
treatment cost of fissure water in the Klerksdorp, Orkney, Stilfontein and Hartbeesfontein (KOSH) Basin. Payment of R24 million was
made to Simmer and Jack Investments (Pty) Limited as full and final settlement during the September 2014 quarter. The amount
owing to Anglogold Ashanti Limited was reclassified to trade and other payables at 30 September 2014 and the full and final
settlement of R30 million was made in October 2014.
8. 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 Dec 30 Sep 30 June 31 Dec
2014 2014 2014 2013
Figures in million (Unaudited) (Unaudited) (Audited) (Reviewed)
Available-for-sale financial assets(1)
Level 1 – – – 46
Level 2 – – – –
Level 3 5 4 4 4
Fair value through profit or loss(2)
Level 1 – – – –
Level 2 375 632 798 934
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.
(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.
9. Commitments and contingencies
At At At At
31 Dec 30 Sep 30 June 31 Dec
2014 2014 2014 2013
Figures in million (Unaudited) (Unaudited) (Audited) (Reviewed)
Capital expenditure commitments:
Contracts for capital expenditure 172 206 157 322
Authorised by the directors but not contracted for 1 646 2 359 519 1 152
1 818 2 565 676 1 474
This expenditure will be financed from existing resources and, where appropriate, borrowings.
Contingent liabilities
For a detailed disclosure on contingent liabilities refer to Harmony's annual financial statements for the financial year ended
30 June 2014, available on the group's website (www.harmony.co.za). There were no significant changes in contingencies since
30 June 2014.
10. Related parties
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the group, directly or indirectly, including any director (whether executive or otherwise) of the group. There have been
no transactions with related parties during the six months ended 31 December 2014.
11. Subsequent events
There were no subsequent events to report.
12. Segment report
The segment report follows below.
13. Reconciliation of segment information to condensed consolidated income statements and balance sheets
Six months ended
31 Dec 31 Dec
2014 2013
Figures in million (Unaudited) (Reviewed)
The “Reconciliation of segment information to condensed 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 (loss)/profit
Total segment revenue 8 146 8 089
Total segment production costs (6 614) (6 067)
Production profit per segment report 1 532 2 022
Depreciation (1 252) (1 142)
Other cost of sales items (423) (343)
Gross (loss)/profit as per income statements(1) (143) 537
(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.
At At
31 Dec 31 Dec
2014 2013
Figures in million (Unaudited) (Reviewed)
Reconciliation of total segment mining assets to consolidated property, plant and equipment
Property, plant and equipment not allocated to a segment
Mining assets 791 1 133
Undeveloped property 5 139 5 139
Other non-mining assets 162 89
Wafi-Golpu assets 1 105 1 069
7 197 7 430
Segment report (Rand/Metric)
for the six months ended 31 December 2014 (unaudited)
Production Capital Kilograms
Revenue Production cost (loss)/profit Mining assets expenditure# produced Tonnes milled
31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec
2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013
R million R million R million R million R million kg t'000
South Africa
Underground
Kusasalethu 1 005 965 1 065 867 (60) 98 3 526 3 502 247 250 2 109 2 412 476 631
Doornkop 620 707 566 581 54 126 3 332 3 380 129 124 1 346 1 637 298 474
Phakisa 720 625 589 546 131 79 4 625 4 530 213 189 1 628 1 461 300 293
Tshepong 1 010 861 805 707 205 154 3 997 3 986 171 146 2 288 2 011 528 468
Masimong 620 617 508 516 112 101 879 1 021 89 78 1 403 1 442 373 350
Target 1 912 999 596 525 316 474 2 799 2 690 143 126 2 052 2 322 386 384
(a)
Bambanani 617 691 347 356 270 335 842 881 64 62 1 391 1 613 115 129
Joel 563 580 419 349 144 231 513 354 90 80 1 162 1 371 285 308
Unisel 420 423 342 311 78 112 625 347 61 42 948 988 225 215
Target 3 222 316 177 289 45 27 546 508 20 72 483 742 90 157
Surface
All other surface operations 709 652 582 485 127 167 475 472 19 25 1 565 1 604 5 225 5 382
Total South Africa 7 418 7 436 5 996 5 532 1 422 1 904 22 159 21 671 1 246 1 194 16 375 17 603 8 301 8 791
International
Hidden Valley 728 653 618 535 110 118 3 487 3 562 33 68 1 519 1 547 905 1 009
Total international 728 653 618 535 110 118 3 487 3 562 33 68 1 519 1 547 905 1 009
Total operations 8 146 8 089 6 614 6 067 1 532 2 022 25 646 25 233 1 279 1 262 17 894 19 150 9 206 9 800
Reconciliation of the segment
information to the condensed
consolidated financial statements
(refer to note 13) 7 197 7 430
8 146 8 089 6 614 6 067 32 843 32 663
# Capital expenditure for international operations excludes expenditure spend on Wafi-Golpu of R16 million (2013: Rnil).
(a) Includes Steyn 2 for the December 2013 amounts.
The segment report for the six months ended 31 December 2013 has been reviewed, except for production statistics.
DEVELOPMENT RESULTS (METRIC) DEVELOPMENT RESULTS (IMPERIAL)
Quarter ending December 2014 Quarter ending December 2014
Channel Channel
Reef Sampled Width Value Gold Reef Sampled Width Value Gold
Meters Meters (Cm's) (g/t) (Cmg/t) Feet Feet (Inch) (oz/t) (In.oz/t)
Tshepong Tshepong
Basal 221 212 7,17 131,56 943 Basal 723 696 3,00 3,61 11
B Reef 114 98 160,20 3,56 570 B Reef 374 322 63,00 0,10 7
All Reefs 335 310 55,55 14,85 825 All Reefs 1097 1017 22,00 0,43 9
Phakisa Phakisa
Basal 334 348 55,26 19,16 1 059 Basal 1097 1142 22,00 0,55 12
All Reefs 334 348 55,26 19,16 1 059 All Reefs 1097 1142 22,00 0,55 12
Doornkop Doornkop
South Reef 344 384 56,69 16,00 907 South Reef 1129 1260 22,00 0,47 10
All Reefs 344 384 56,69 16,00 907 All Reefs 1129 1260 22,00 0,47 10
Kusasalethu Kusasalethu
Vcr Reef 596 348 99,00 10,09 999 Vcr Reef 1955 1142 39,00 0,29 11
All Reefs 596 348 99,00 10,09 999 All Reefs 1955 1142 39,00 0,29 11
Total Target Total Target
(incl. Target 1 & Target 3) (incl. Target 1 & Target 3)
Elsburg 77 96 266,00 2,46 654 Elsburg 253 315 105,00 0,07 8
All Reefs 77 96 266,00 2,46 654 All Reefs 253 315 105,00 0,07 8
Masimong 5 Masimong 5
Basal 591 552 46,56 18,50 861 Basal 1938 1811 18,00 0,55 10
B Reef 202 198 59,36 21,81 1 295 B Reef 662 650 23,00 0,65 15
All Reefs 792 750 49,94 19,54 976 All Reefs 2599 2461 20,00 0,56 11
Unisel Unisel
Basal 273 216 170,15 3,31 563 Basal 896 709 67,00 0,10 6
Leader 498 402 231,82 6,31 1 463 Leader 1634 1319 91,00 0,18 17
All Reefs 771 618 210,27 5,46 1 149 All Reefs 2529 2028 83,00 0,16 13
Joel Joel
Beatrix 222 291 93,00 11,61 1 080 Beatrix 730 955 37,00 0,34 12
All Reefs 222 291 93,00 11,61 1 080 All Reefs 730 955 37,00 0,34 12
Total Harmony Total Harmony
Basal 1419 1328 62,65 14,01 878 Basal 4654 4357 25,00 0,40 10
Beatrix 222 291 93,00 11,61 1 080 Beatrix 730 955 37,00 0,34 12
Leader 498 402 231,82 6,31 1 463 Leader 1634 1319 91,00 0,18 17
B Reef 316 296 92,75 11,37 1 055 B Reef 1036 971 37,00 0,33 12
Elsburg 77 96 266,00 2,46 654 Elsburg 253 315 105,00 0,07 8
South Reef 344 384 56,69 16,00 907 South Reef 1129 1260 22,00 0,47 10
Vcr 596 348 99,00 10,09 999 Vcr 1955 1142 39,00 0,29 11
All Reefs 3472 3145 99,42 10,04 998 All Reefs 11390 10318 39,00 0,29 11
Date: 09/02/2015 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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