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Harmony - Review for the quarter ended 31 March 2005
Release Date: 25/04/2005 08:30:24 Code(s): HARHarmony - Review for the quarter ended 31 March 2005
Harmony Gold Mining Company Limited
Registration number 1950/038232/06
Incorporated in the Republic of South Africa
ISIN: ZAE000015228
JSE Securities Exchange South Africa: HAR
REVIEW FOR THE QUARTER ENDED 31 MARCH 2005
OPERATING AND FINANCIAL RESULTS (Rand/metric)
Underground production - South Africa
Quality Growth
Ounces Projects
Ore milled - t"000 Mar-05 1 570 323
Dec-04 1 815 360
Gold produced - kg Mar-05 9 819 2 119
Dec-04 11 676 2 022
Yield - g/tonne Mar-05 6.25 6.56
Dec-04 6.43 5.62
Cash operating costs - R/kg Mar-05 76 518 91 828
Dec-04 65 224 93 376
Cash operating costs - R/tonne Mar-05 479 602
Dec-04 420 524
Working revenue (R"000) Mar-05 818 078 176 389
Dec-04 979 664 169 677
Cash operating costs (R"000) Mar-05 751 329 194 583
Dec-04 761 558 188 806
Cash operating profit (R"000) Mar-05 66 749 (18 194
Dec-04 218 106 (19 129
Capital expenditure (R"000) Mar-05 34 933 74 870
Dec-04 50 790 106 448
Leve-
raged
Ounces Sub total
Ore milled - t"000 1 062 2 955
1 426 3 601
Gold produced - kg 5 481 17 419
6 956 20 654
Yield - g/tonne 5.16 5.89
4.88 5.74
Cash operating costs - R/kg 107 805 88 226
98 600 79 222
Cash operating costs - R/tonne 556 520
481 454
Working revenue (R"000) 459 366 1 453 833
584 249 1 733 590
Cash operating costs (R"000) 590 878 1 536 790
685 859 1 636 223
Cash operating profit (R"000) (131 512) (82 957)
(101 610) 97 367
Capital expenditure (R"000) 1 809 111 612
13 214 170 452
Quality Ounces - Evander Shafts, Randfontein Cooke Shafts, Target, Tshepong,
Masimong Growth Projects - Doornkop shaft and South Reef Project, Elandsrand
shaft and New Mine Project, Phakisa shaft, Tshepong Decline Project Leveraged
Ounces - Bambanani, Joel, Kudu/Sable, West, Nyala, St Helena, Harmony 2,
Merriespruit 1 and 3, Unisel, Brand 3 and 5, Saaiplaas 3, Evander 9, Orkney 2
and 4
OPERATING AND FINANCIAL RESULTS (Rand/metric)
South South Austr-
Africa Africa alia Harmony
Surface Total Total Total
Ore milled -
t"000 Mar-05 1 533 4 488 975 5 463
Dec-04 1 334 4 935 981 5 916
Gold produced -
kg Mar-05 1 564 18 983 2 143 21 126
Dec-04 1 454 22 108 2 496 24 604
Yield - g/tonne Mar-05 1.02 4.23 2.20 3.87
Dec-04 1.09 4.48 2.54 4.16
Cash operating Mar-05 76 187 87 233 73 729 85 863
costs - R/kg Dec-04 80 183 79 284 60 859 77 415
Cash operating Mar-05 78 369 162 332
costs - R/tonne Dec-04 87 355 155 322
Working revenue Mar-05 128 104 1 581 937 177 293 1 759 230
(R"000) Dec-04 122 780 1 856 370 211 123 2 067 493
Cash operating Mar-05 119 157 1 655 947 158 002 1 813 949
costs (R"000) Dec-04 116 586 1 752 809 151 904 1 904 713
Cash operating Mar-05 8 947 (74 010) 19 291 (54 719)
profit (R"000) Dec-04 6 194 103 561 59 219 162 780
Capital
expenditure Mar-05 0 111 612 44 590 156 202
(R"000) Dec-04 0 170 452 60 060 230 512
TOTAL OPERATIONS - QUARTERLY FINANCIAL RESULTS(Rand/metric) (unaudited)
Quarter Quarter Quarter
ended ended ended
31 March 31 December 31 March
2005 2004 2004
Ore milled t"000 5 463 5 916 7 770
Gold produced kg 21 126 24 604 24 735
Gold price received R/kg 83 273 84 031 88 277
Cash operating costs R/kg 85 863 77 415 82 852
R million R million R million
Gold sales 1 759 2 068 2 183
Cash operating costs 1 814 1 905 2 049
Cash operating (loss)/profit (55) 163 134
Other income - net 9 11 62
Employment termination and
restructuring costs (171) (109) (14)
Corporate, marketing, new business
expenditure (46) (41) (34)
Exploration expenditure (13) (20) (14)
Income from associates - - 33
Loss on sale of ARM Ltd (111) - -
Interest paid (96) (104) (97)
Depreciation and amortisation (197) (216) (251)
Provision for rehabilitation costs (14) (14) (12)
Gain/(loss) on financial instruments 51 (29) 48
Profit/(loss) on foreign exchange 21 14 (11)
Impairment of fixed assets (1 513) - -
Loss before tax (2 135) (345) (156)
Current tax - (expense)/benefit (5) 56 11
Deferred tax - benefit 443 12 67
Net loss before minority interests (1 697) (277) (78)
Minority interests - - (3)
Net loss (1 697) (277) (81)
TOTAL OPERATIONS - QUARTERLY FINANCIAL RESULTS (Rand/metric) (unaudited)
Quarter ended Quarter ended Quarter ended
31 March 31 December 31 March
2005 2004 2004
Loss per share (cents)*
- Basic loss (432) (80) (31)
- Basic loss before
impairment (131) (80) (31)
- Headline loss (107) (88) (16)
- Fully diluted loss** *** (432) (80) (31)
Dividends per share
(cents)
- Interim - - 40
- Proposed final - - -
Prepared in accordance with International Financial Reporting Standards.
* Calculated on weighted average number of shares in issue at quarter
end March 2005: 393.2 million (December 2004: 345.0 million)
(March 2004: 258.4 million).
** Calculated on weighted average number of diluted shares in issue at
quarter end March 2005: 392.9 million(December 2004: 344.7 million)
(March 2004: 257.0 million).
*** The effect of the dilution of shares is anti-dilutive.
Reconciliation of
headline loss:
Net loss (1 697) (277) (81)
Adjustments:
- Profit on sale of assets (18) (25) (2)
- Loss on sale of ARM Ltd
- net of tax 111 - -
- Amortisation of
goodwill - - 42
- Impairment of fixed assets
- net of tax 1 182 - -
Headline loss (422) (302) (41)
TOTAL OPERATIONS - YEAR TO DATE FINANCIAL RESULTS (Rand/metric) (unaudited)
Year to date Year to date
31 March 31 March
2005 2004
Ore milled t"000 17 943 22 809
Gold produced kg 71 552 76 754
Gold price received R/kg 83 450 86 481
Cash operating costs R/kg 80 082 78 370
R million R million
Gold sales 5 971 6 638
Cash operating costs 5 730 6 015
Cash operating profit 241 623
Other income - net 57 199
Employment termination and restructuring costs (434) (41)
Corporate, marketing, new business expenditure (125) (104)
Exploration expenditure (57) (63)
Loss from associates - (8)
Profit on sale of Highland and High River - 522
Profit on Australian listed investments 4 -
Loss on sale of ARM Ltd (111) -
Interest paid (300) (259)
Depreciation and amortisation (652) (639)
Provision for rehabilitation costs (42) (35)
Gain/(loss) on financial instruments 23 (113)
Gain/(loss) on foreign exchange 34 (93)
Impairment of fixed assets (1 513) -
Loss before tax (2 875) (11)
Current tax - benefit/(expense) 34 (90)
Deferred tax - benefit 527 162
Net (loss)/income before minority interests (2 314) 61
Minority interests - (25)
Net (loss)/income (2 314) 36
TOTAL OPERATIONS - YEAR TO DATE FINANCIAL RESULTS (Rand/metric) (unaudited)
Year to date Year to date
31 March 31 March
2005 2004
(Loss)/earnings per share (cents)*
- Basic (loss)/earnings (656) 15
- Basic (loss)/earnings before impairment (321) 15
- Headline loss (305) (141)
- Fully diluted (loss)/earnings** (656) 15
Dividends per share (cents)
- Interim - 40
- Proposed final - -
Prepared in accordance with International Financial Reporting Standards.
* Calculated on weighted number of shares in issue at year ended March 2005:
352.7 million (March 2004:240.5 million).
** Calculated on weighted average number of diluted shares in issue at year
ended March 2005: 352.7 million
(March 2004: 239.2 million).
Reconciliation of headline (loss)/earnings:
Net (loss)/earnings (2 314) 36
Adjustments:
- Profit on sale of assets (52) (15)
- Loss on sale of ARM Ltd - net of tax 111 -
- Profit on disposal of Highland and High
River - net of tax - (444)
- Profit on Australian listed investments (4) -
- Amortisation of goodwill - 84
- Impairment of fixed assets - net of tax 1 182 -
Headline loss (1 077) (339)
ABRIDGED BALANCE SHEET AT 31 MARCH 2005 (Rand)
At 31 March At 31 December At 31 March
2005 2004 2004
R million R million R million
(unaudited) (unaudited) (unaudited)
ASSETS
Non-current assets
Property, plant and
equipment 21 058 22 390 14 821
Intangible assets 2 268 2 268 2 761
Investments 6 531 6 364 1 130
Investments in associates - - 2 604
29 857 31 022 21 316
Current assets
Inventories 571 550 455
Receivables 614 383 452
Cash and cash equivalents (233) 296 2 337
952 1 229 3 244
Total assets 30 809 32 251 24 560
EQUITY AND LIABILITIES
Share capital and reserves
Issued capital 25 325 25 313 14 678
Fair value and other reserves (1 501) (2 061) (376)
Retained (loss)/earnings (1 333) 364 1 637
22 491 23 616 15 939
Minority interest - - 147
Non-current liabilities
Long-term borrowings 2 944 2 861 2 795
Net deferred taxation
liabilities 2 141 2 549 2 706
Net deferred financial
liabilities 452 529 299
Long-term provisions 847 825 852
6 384 6 764 6 652
Current liabilities
Payables and accrued
liabilities 1 943 1 834 1 770
Income and mining taxes (18) 27 44
Shareholders for dividends 9 10 8
1 934 1 871 1 822
Total equity and liabilities 30 809 32 251 24 560
Number of ordinary shares
in issue 393 231 894 392 993 004 258 469 684
Net asset value per share
(cents) 5 720 6 009 6 217
Basis of accounting
The unaudited results for the quarter have been prepared on the International
Financial Reporting Standards (IFRS) basis. These consolidated quarterly
statements are prepared in accordance with IFRS 34, Interim Financial Reporting.
The accounting policies are consistent with those applied in the previous
financial year.
CONDENSED STATEMENT OF CHANGES IN EQUITY
FOR THE NINE MONTHS ENDED 31 MARCH 2005 (unaudited)
Issued Fair value
share and other Retained
capital reserves earnings Total
R million R million R million R million
Balance at 1
July 2004 20 889 (1 186) 1 078 20 781
Issue of share
capital 4 436 - - 4 436
Currency
translation
adjustment and
other - (315) - (315)
Net earnings - - (2 315) (2 315)
Dividends paid - - (96) (96)
Balance at 31
March 2005 25 325 (1 501) (1 333) 22 491
Balance at 1
July 2003 6 874 (242) 1 996 8 628
Issue of share
capital 7 804 - - 7 804
Currency
translation
adjustment and
other - (134) - (134)
Net earnings - - 36 36
Dividends paid - - (395) (395)
Balance at 31
March 2004 14 678 (376) 1 637 15 939
Issued Fair value
share and other Retained
capital reserves earnings Total
US$ million US$ million US$ million US$ million
Balance at 1
July 2004 3,361 (191) 173 3,343
Issue of share
capital 713 - - 713
Currency
translation
adjustment and
other - (50) - (50)
Net earnings - - (372) (372)
Dividends paid - - (15) (15)
Balance at 31
March 2005 4,074 (241) (214) 3,619
Balance at 1
July 2003 1,088 (38) 316 1,366
Issue of share
capital 1,234 - - 1,234
Currency
translation
adjustment and
other - (21) - (21)
Net earnings - - 5 5
Dividends paid - - (63) (63)
Balance at 31
March 2004 2,322 (59) 258 2,521
Balances translated at closing rates of: March 2005: US$1 = R6.22
(March 2004: US$1 = R6.32).
SUMMARISED CASH FLOW STATEMENT
FOR THE NINE MONTHS ENDED 31 MARCH 2005 (unaudited)
Nine Nine
months months
ended ended
31 March 31 March
2004 2005
US$ million US$ million
Cash flow from operating activities
Cash (utilised)/generated by operations 99 (149)
Interest and dividends received 22 17
Interest paid (34) (35)
Income and mining taxes paid (78) (8)
Cash (utilised)/generated by operating
activities 9 (171)
Cash flow from investing activities
Cash held by subsidiaries at acquisition 104 -
Net additions of listed investments 142 15
Net additions to property, plant and equipment (86) (87)
Other investing activities - -
Cash (utilised)/generated by investing
activities 160 (72)
Cash flow from financing activities
Long-term loans raised/(repaid) (22) 13
Ordinary shares issued - net of expenses 11 (6)
Dividends paid (57) (15)
Cash utilised by financing activities (68) (8)
Foreign currency translation adjustments 44 (4)
Net (decrease)/increase in cash and equivalents 145 (255)
Cash and equivalents - 1 July 225 217
Cash and equivalents - 31 March 370 (38)
Nine Nine
months months
ended ended
31 March 31 March
2005 2004
R million R million
Cash flow from operating activities
Cash (utilised)/generated by operations (914) 691
Interest and dividends received 104 152
Interest paid (192) (236)
Income and mining taxes paid (51) (542)
Cash (utilised)/generated by operating activities (1 053) 65
Cash flow from investing activities
Cash held by subsidiaries at acquisition - 729
Net additions of listed investments 92 994
Net additions to property, plant and equipment (536) (598)
Other investing activities 1 -
Cash (utilised)/generated by investing activities (443) 1 125
Cash flow from financing activities
Long-term loans raised/(repaid) 81 (155)
Ordinary shares issued - net of expenses (36) 78
Dividends paid (95) (395)
Cash utilised by financing activities (50) (472)
Foreign currency translation adjustments (101) (68)
Net (decrease)/increase in cash and equivalents (1 647) 650
Cash and equivalents - 1 July 1 414 1 687
Cash and equivalents - 31 March (233) 2 337
Operating activities translated at average rates of: March 2005:
US$1 = R6.14 (March 2004: US$1 = R6.98).
Closing balance translated at closing rates of: March 2005:
US$1 = R6.22 (March 2004: US$1 = R6.32).
SUMMARISED CASH FLOW STATEMENT
FOR THE THREE MONTHS ENDED 31 MARCH 2005 (unaudited)
Three Three
months months
ended ended
31 December 31 March
2004 2005
US$ million US$ million
Cash flow from operating activities
Cash utilised by operations (54) (87)
Interest and dividends received 4 7
Interest paid (10) (12)
Income and mining taxes paid - (8)
Cash utilised by operating activities (60) (100)
Cash flow from investing activities
Net proceeds on disposal of listed investments (9) 24
Net additions to property, plant and equipment (29) (21)
Cash (utilised)/generated by investing
activities (38) 3
Cash flow from financing activities
Long-term loans raised 3 10
Ordinary shares issued - net of expenses (6) -
Dividends paid - -
Cash (utilised)/generated by financing
activities (3) 10
Foreign currency translation adjustments (2) (4)
Net decrease in cash and equivalents (103) (91)
Cash and equivalents - beginning of quarter 156 53
Cash and equivalents - end of quarter 53 (38)
Three Three
months months
ended ended
31 March 31 December
2005 2004
R million R million
Cash flow from operating activities
Cash utilised by operations (532) (338)
Interest and dividends received 41 27
Interest paid (72) (64)
Income and mining taxes paid (51) -
Cash utilised by operating activities (614) (375)
Cash flow from investing activities
Net proceeds on disposal of listed investments 149 (57)
Net additions to property, plant and equipment (129) (183)
Cash (utilised)/generated by investing activities 20 (240)
Cash flow from financing activities
Long-term loans raised 63 18
Ordinary shares issued - net of expenses - (36)
Dividends paid - 1
Cash (utilised)/generated by financing activities 63 (17)
Foreign currency translation adjustments 2 (85)
Net decrease in cash and equivalents (529) (717)
Cash and equivalents - beginning of quarter 296 1 013
Cash and equivalents - end of quarter (233) 296
Operating activities translated at average rates of:
March 2005 quarter: US$1 = R6.00 (December 2004 quarter: US$1 = R6.03).
Closing balance translated at closing rates of:
March 2005: US$1 = R6.22 (December 2004: US$1 = R5.63).
RECONCILIATION BETWEEN CASH OPERATING PROFIT/(LOSS) AND CASH
(UTILISED)/GENERATED BY OPERATIONS - PERIOD ENDED 31 MARCH 2005
Nine Quarter Quarter Nine
months to ended ended months to
31 March 31 March 31 Dec 31 March
2005 2005 2004 2004
R million R million R million R million
Cash operating profit/(loss) 241 (55) 163 623
Other cash items per income statement:
Other income 91 30 25 106
Employment termination and
restructuring costs (434) (171) (109) (41)
Corporate, administration and other
expenditure (125) (46) (41) (104)
Exploration expenditure (57) (13) (20) (63)
Provision for rehabilitation costs (4) (1) (2) (9)
Cash flow statement adjustments:
Cost of Avgold currency hedge and close
out of hedges (146) (52) (49) (105)
Profit on sale of mining assets (52) (18) (25) (14)
Interest and dividends received (104) (41) (27) (152)
Other non-cash items (59) (16) (23) (81)
Effect of changes in operating working
capital items:
Receivables 246 (231) 19 544
Inventories (40) (21) (32) 29
Accounts payable and
accrued liabilities (471) 103 (217) (42)
Cash (utilised)/generated
by operations (914) (532) (338) 691
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED 31 MARCH 2005
Commodity contracts
Maturity schedule of the Harmony Group"s commodity contracts by type at
31 March 2005:
30 June 30 June 30 June 30 June
2006 2007 2008 2009 Total
Forward sales
agreements
Ounces 108,000 147,000 100,000 100,000 455,000
A$/ounce 510 515 518 518 515
Calls
contracts sold
Ounces 30,000 10,000 - - 40,000
A$/ounce 552 562 - - 554
138,000 157,000 100,000 100,000 495,000
These contracts are classified as speculative and the marked-to-market movement
is reflected in the income statement.
The mark-to-market of these contracts was a negative R225 million (US$36
million) at 31 March 2005. These values were based on a gold price of US$427
(A$553) per ounce, exchange rates of US$1/R6.2155 and A$1/US$0.7727 and
prevailing market interest rates at the time. These valuations were provided by
independent risk and treasury management experts.
Gold lease rates
Harmony holds certain gold lease rate swaps which were acquired through its
acquisition of New Hampton. These instruments are all treated as speculative.
The mark-to-market of the above contracts was a positive R500 000 (US$85,000)
at 31 March 2005, based on valuations provided by independent treasury and risk
management experts. During the March quarter, Harmony closed out the lease
rate swaps which were inherited through the acquisition of Hill 50.
Interest rate swaps
The Group has interest rate swap agreements to convert R600 million of its
R1.2 billion fixed rate bond to variable rate debt. The interest rate swap runs
over the term of the bond, interest is received at a fixed rate of 13% and the
company pays floating rate based on JIBAR plus a spread raging from 1.8% to
2.2%.
These transactions which mature in June 2006 are designated as fair value
hedges. The marked-to-market value of the transactions was a negative R43
million (US$7 million) at 31 March 2005, based on the prevailing interest rates
and volatilities at the time.
The directors of Harmony accept responsibility for the information contained
in this announcement. To the best of the knowledge and belief of the directors
of Harmony (who have taken all reasonable care to ensure that such is the
case), the information contained in this announcement is in accordance with
the facts and does not omit anything likely to affect the import of such
information
CONTACT DETAILS
Harmony Gold Mining Company Limited
Corporate Office
Suite No. 1
Private Bag X1
Melrose Arch, 2076
South Africa
First Floor
4 The High Street
Melrose Arch, 2196
Johannesburg
South Africa
Telephone: +27 11 684 0140
Fax: +27 11 684 0188
Website: http://www.harmony.co.za
Directors
P T Motsepe (Chairman)*
Z B Swanepoel (Chief Executive)
F Abbott*, F Dippenaar, V N Fakude*, T S A Grobicki
Dr D S Lushaba*, R P Menell*, M Motloba*, Dr M Z Nkosi*
M F Pleming*, N V Qangule, C M L Savage*
(*non-executive)
Investor Relations
Brenton Saunders
Executive - Investor Relations
Telephone: +27 11 684 0146
Fax: +27 11 684 0188
E-mail: brenton.saunders@harmony.co.za
Vusi Magadana
Investor Relations Officer
Telephone: +27 11 684 0149
Fax: +27 11 684 0188
E-mail: vusi.magadana@harmony.co.za
Marian van der Walt
Company Secretary
Telephone: +27 11 411 2037
Fax: +27 11 411 2398
E-mail: mvanderwalt@harmony.co.za
South African Share Transfer Secretaries
Ultra Registrars (Pty) Ltd
PO Box 4844
Johannesburg, 2000
Telephone: +27 11 832 2652
Fax: +27 11 834 4398
United Kingdom Registrars
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Telephone: +44 870 162 3100
Fax: +44 208 639 2342
ADR Depositary
The Bank of New York
101 Barclay Street
New York, NY 10286
United States of America
Telephone: +1888-BNY ADRS
Fax: +1 212 571 3050
Trading Symbols
JSE Securities Exchange South Africa HAR
New York Stock Exchange, Inc. HMY
London Stock Exchange plc HRM
Euronext Paris HG
Euronext Brussels HMY
Berlin Stock Exchange HAM1
Date: 25/04/2005 08:30:57 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department