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HAR - Harmony Gold Mining Company - Financial Review For The Second Quarter And
Release Date: 06/02/2009 07:05:03 Code(s): HARHAR - Harmony Gold Mining Company - Financial Review For The Second Quarter And
Six Months Ended 31 December 2008
Harmony Gold Mining Company Limited
(Incorporated in the Republic of South Africa)
Registration number 1950/038232/06
ISIN ZAE000015228 Issuer code: HAPS
TRADING SYMBOLS: Ordinary Shares: JSE Limited: HAR,
New York Stock Exchange, Inc., HMY, London Stock Exchange plc: HRM
Euronext Paris: HG, Euronext Brussels: HMY, Berlin Stock Exchange: HAM1,
NASDAQ: HMY
Financial review for the second quarter and six months ended 31 December 2008
The quarter at a glance:
* Safety performance improves
* Net debt reduction of R1.1 billion
* Total headline earnings of R492 million (>100%)
* Cash operating profit of R1.1 billion (+38%)
* Operating margin of 35%
* Rand Uranium transaction concluded (R901 million profit ex-tax)
* 8% decline in total gold production
* 7% increase in cash operating costs (R/kg)
Financial review for the second quarter and six months ended 31 December 2008
(All results exclude Discontinued Operations, unless otherwise stated)
Quarter Quarter 6 months 6 months Year on
December September Q-on-Q December December year
2008 2008 variance* 2008 2007 variance*
Gold produced - kg 11 267 12 287 (8%) 23 554 25 635 (8%)
- oz 362 242 395 035 (8%) 757 277 824 181 (8%)
Cash costs - R/kg 168 299 157 279 (7%) 162 550 136 877 (19%)
- $/oz 527 629 16% 580 614 6%
Gold sold - kg 12 415 12 342 1% 24 757 26 186 (5%)
- oz 399 150 396 803 1% 795 953 841 896 (5%)
Cash operating- Rm 1 113 808 38% 1 921 725 >100%
profit - US$m 112 104 8% 216 105 >100%
Basic - SAc/s 81 118 (31%) 199 (188) >100%
profit/(loss) - USc/s 8 15 (46%) 23 (27) >100%
Headline - SAc/s 101 8 >100% 109 (83) >100%
profit/(loss) - USc/s 10 1 >100% 12 (12) >100%
* Note that where the variance exceeded 100%, it has been indicated by >100%.
Harmony`s Annual Report, Notice of Meeting, Sustainable Development Report
and its Annual Report filed on a Form 20F with the United States` Securities
and Exchange Commission for the year ended 30 June 2008 are available on our
website at www.harmony.co.za
CHIEF EXECUTIVE`S REVIEW
Overview
Harmony concluded two major transactions in the past six months, raised almost
R1 billion by issuing shares and our share price increased by 38% over the
year, in spite of market volatility.
We realise there is continuing market uncertainty, particularly with regard to
commodities. We are often asked what we are doing in these uncertain times.
Harmony weathered a storm of its own in late 2007. We have made the tough
decisions, restructured and decided to continue investing in the mines which
will be the future of Harmony.
We do not plan further job reductions, provided the gold price remains strong,
and we intend keeping our capital expenditure plans intact. We have created a
reasonable margin and continue to secure our future amidst turmoil and
uncertain times.
Each of our mines has its own targets, compiled by and committed to by the
shaft employees themselves. These targets are the driving force behind our
teams. Some of the results have not been seen in our financial figures as yet,
but we will continue to focus on the fundamentals.
Safety
Our behaviour-based safety initiative that has been rolled out to all of the
shafts and the efforts put into leading by example are proving to have a
positive effect. The main aim is to change the attitude and mindset of people
and to create a safer working place as a whole. All stakeholders are involved
and the continuous communication on safety in the working place as well as off
the job is receiving priority attention from all parties.
The past quarter was marked by some outstanding safety performances. I am very
grateful to all who assisted in reducing Harmony`s Fatality Injury Frequency
Rate from 0.18 to 0.10 year on year and its Lost Time Injury Frequency Rate
from 10.0 to 9.13 quarter on quarter.
However, we have not yet reached our target of zero fatalities. It is with deep
regret that we report that three of our colleagues died in work-related
incidents during the quarter under review. On behalf of the Board and
Management, I extend my heartfelt condolences to their families and friends.
Those who died were: Elandsrand employee Amandio Julai Massingue, an
underground assistant; Bambanani employee Moeti Mololo, a rock drill operator;
and Tshepong employee Matli Lazaro, a scraper winch operator.
Gold market
While the gold price had weakened in terms of the US Dollar during the quarter,
the average Rand gold price remained strong. In the current faltering global
economy all the signs are that the metal retains its status as a safe haven and
store of wealth. This demand pattern, combined with declining supply as juniors
struggle to explore or continue with project development due to a lack of
funding, adds credence to the argument that the gold price is likely to rise in
the medium to long term.
During the quarter our average gold price received was R253 441/kg, 17% higher
than the previous quarter, due to the weaker average Rand/$ exchange rate of
R9.93/$. The weaker exchange rate was a great benefit to us, notwithstanding
the negative impact on the cost of imported supplies.
Looking forward
Overall, I believe calendar 2009 has every prospect to be a good year for
Harmony. Commodity prices have come down and this should reflect in our mining
input costs. Elandsrand should be a safer and improved production business once
it has completed its "intensive care" phase. Two of our growth mines, Doornkop
and Phakisa, will have most of their shaft infrastructure completed, and
finally Hidden Valley will be in production as from mid-2009, resulting in an
increase in production.
The world finds itself in very uncertain times and it is clear that the rules
of our game will be:
* conserving our cash;
* having a reasonable margin;
* being debt-free;
* keeping the company as simple as possible;
* rewarding our shareholders.
During the last six months we have looked at a number of assets that may
potentially fit the Harmony portfolio. Our strategy is not restricted to any
particular area, but is aimed at acquiring long-life assets that offer higher
margins. The financial climate has put a lot of companies into dire straits,
and although a number of due diligences are being performed at the moment,
Harmony is unlikely to make any acquisitions before June 2009. We believe that
the number of opportunities may increase, but we will not make any rushed
decisions. Our aim is to have net zero debt by June 2009 and reward our
shareholders for their loyalty in financial year 2009/2010.
Chief Executive Officer
Graham Briggs
CONDENSED CONSOLIDATED INCOME STATEMENT (Rand)
Quarter ended
December September December
2008 2008 2007
(Unaudited) (Unaudited) (Unaudited)
Notes R million R million R million
Continuing operations
Revenue 3 146 2 682 2 116
Cost of sales 2 (2 383) (2 225) (2 009)
Production cost (2 033) (1 874) (1 687)
Amortisation and
depreciation (310) (308) (228)
Employment termination
and restructuring costs (16) (12) (75)
Other items (24) (31) (19)
Gross profit 763 457 107
Corporate,
administration
and other expenditure (92) (91) (68)
Exploration expenditure (75) (45) (42)
Other
income/(expenses) -
net 3 78 505 (95)
Operating profit/(loss) 674 826 (98)
(Loss)/profit from
associates (52) 1 -
Profit on sale of
investment
in associate - 1 -
Impairment of
investment
in associate 6 - (112) -
Mark-to-market of
listed
investments (116) - -
Loss on sale of listed
investments - - -
Investment income 107 77 74
Finance cost (61) (85) (138)
Profit/(loss) before
taxation 552 708 (162)
Taxation (220) (234) (54)
Net profit/(loss) from
continuing operations 332 474 (216)
Discontinued operations 4
Profit/(loss) from
discontinued
operations 984 (72) 262
Net profit/(loss) 1 316 402 46
Earnings/(loss) per
ordinary
share (cents) 5
- Earnings/(loss) from
continuing operations 81 117 (54)
- Earnings/(loss) from
discontinued operations 243 (18) 65
Total earnings/(loss)
per ordinary share
(cents) 324 100 11
Diluted earnings/(loss)
per ordinary share
(cents) 5
- Earnings/(loss) from
continuing
operations 81 117 (54)
- Earnings/(loss) from
discontinued
operations 242 (18) 65
Total diluted
earnings/(loss)
per ordinary share
(cents) 323 99 11
Six months ended
December December
2008 2007
R million R million
Continuing operations
Revenue 5 828 4 255
Cost of sales (4 608) (4 073)
Production cost (3 907) (3 531)
Amortisation and depreciation (618) (429)
Employment termination
and restructuring costs (28) (75)
Other items (55) (38)
Gross profit 1 220 182
Corporate, administration
and other expenditure (183) (140)
Exploration expenditure (120) (86)
Other income/(expenses) - net 583 (110)
Operating profit/(loss) 1 500 (154)
(Loss)/profit from associates (51) -
Profit on sale of investment
in associate 1 -
Impairment of investment
in associate (112) -
Mark-to-market of listed
investments (116) 33
Loss on sale of listed investments - (459)
Investment income 184 141
Finance cost (146) (259)
Profit/(loss) before taxation 1 260 (698)
Taxation (454) (52)
Net profit/(loss) from
continuing operations 806 (750)
Discontinued operations
Profit/(loss) from discontinued
operations 912 230
Net profit/(loss) 1 718 (520)
Earnings/(loss) per ordinary
share (cents)
- Earnings/(loss) from continuing
operations 199 (188)
- Earnings/(loss) from discontinued
operations 225 57
Total earnings/(loss)
per ordinary share (cents) 424 (131)
Diluted earnings/(loss)
per ordinary share (cents)
- Earnings/(loss) from continuing
operations 198 (186)
- Earnings/(loss) from discontinue
operations 224 56
Total diluted earnings/(loss)
per ordinary share (cents) 422 (130)
The accompanying notes are an integral part of these condensed consolidated
financial statements.
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME (Rand)
Quarter ended
December September December
2008 2008 2007
(Unaudited) (Unaudited) (Unaudited)
R million R million R million
Net profit/(loss) for the period 1 316 402 46
Attributable to:
Owners of the parent 1 316 402 46
Non-controlling interest - - -
Other comprehensive
(loss)/income
for the period, net of income
tax (115) 88 52
Foreign exchange translation
(loss)/profit (208) 119 (15)
Mark-to-market of
available-for-sale
investments 93 (31) 67
Total comprehensive
income/(loss)
for the period 1 201 490 98
Attributable to:
Owners of the parent 1 201 490 98
Non-controlling interest - - -
Six months ended
December December
2008 2007
R million R million
Net profit/(loss) for the period 1 718 (520)
Attributable to:
Owners of the parent 1 718 (520)
Non-controlling interest - -
Other comprehensive (loss)/income
for the period, net of income tax (27) 415
Foreign exchange translation
(loss)/profit (89) (110)
Mark-to-market of available-for-sale
investments 62 525
Total comprehensive income/(loss)
for the period 1 691 (105)
Attributable to:
Owners of the parent 1 691 (105)
Non-controlling interest - -
CONDENSED CONSOLIDATED BALANCE SHEET (Rand)
At At At
December September June
2008 2008 2008
(Unaudited) (Audited)
Notes R million R million R million
ASSETS
Non-current assets
Property, plant and
equipment 27 786 26 886 27 556
Intangible assets 2 223 2 213 2 209
Restricted cash 169 181 78
Restricted
investments 1 567 1 512 1 465
Investments in
financial assets 28 48 67
Investments in
associates 6 228 34 145
Trade and other
receivables 56 127 137
32 057 31 001 31 657
Current assets
Inventories 898 752 693
Trade and other
receivables 2 732 875 875
Income and mining
taxes 108 54 82
Cash and cash
equivalents 7 1 645 1 186 413
5 383 2 867 2 063
Non-current assets
classified as held
for sale 4 407 1 408 1 537
5 790 4 275 3 600
Total assets 37 847 35 276 35 257
EQUITY AND
LIABILITIES
Share capital and
reserves
Share capital 27 126 25 904 25 895
Other reserves 671 777 676
Accumulated loss (114) (1 430) (1 832)
27 683 25 251 24 739
Non-current
liabilities
Borrowings 8 188 176 242
Deferred income tax 3 699 3 008 2 990
Provisions for
other liabilities
and charges 1 342 1 297 1 273
5 229 4 481 4 505
Current liabilities
Trade and other
payables 1 613 1 394 1 372
Provisions and
accrued liabilities 273 295 287
Borrowings 8 2 671 3 363 3 857
4 557 5 052 5 516
Liabilities
directly associated
with non-current
assets classified
as held for sale 4 378 492 497
4 935 5 544 6 013
Total equity and
liabilities 37 847 35 276 35 257
Number of ordinary
shares in issue 417 637 697 403 424 148 403 253 756
Net asset value per
share (cents) 6 628 6 259 6 135
The accompanying notes are an integral part of these condensed consolidated
financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Rand)
Issued
share Other Accumulated
capital reserves loss Total
R million R million R million R million
Note 10
Balance - 30 June 2008 25 895 676 (1 832) 24 739
Issue of share capital 1 231 - - 1 231
Deferred share-based
payments - 22 - 22
Comprehensive
(loss)/income for the
period - (27) 1 718 1 691
Balance as at 31
December 2008 27 126 671 (114) 27 683
Balance - 30 June 2007 25 636 (349) (1 581) 23 706
Issue of share capital 41 - - 41
Deferred share-based
payments - 21 - 21
Comprehensive
income/(loss) for the
period - 415 (520) (105)
Balance as at 31
December 2007 25 677 87 (2 101) 23 663
CONDENSED CONSOLIDATED CASH FLOW STATEMENT (Rand)
Quarter ended
December September December
2008 2008 2007
(Unaudited) (Unaudited) (Unaudited)
Note R million R million R million
Cash flow from
operating
activities
Cash
generated/(utilised)
by operations 1 155 670 (376)
Interest and
dividends received 112 82 76
Interest paid (62) (112) (118)
Income and mining
taxes paid (142) (1) (9)
Cash
generated/(utilised)
by operating
activities 1 063 639 (427)
Cash flow from
investing
activities
Decrease/(increase)
in restricted cash 13 (103) (71)
Net proceeds on
disposal of listed
investments - - -
Net
(additions)/disposals
of property,
plant and equipment (840) 798 (734)
Other investing
activities 64 10 65
Cash
(utilised)/generated
by investing
activities (763) 705 (740)
Cash flow from
financing
activities
Cash
(utilised)/generated
by investing
activities (763) 705 (740)
Cash flow from
financing
activities
Long-term loans raised - - 10
Long-term loans repaid (698) (588) -
Ordinary shares issued
- net of expenses 980 8 5
Cash
generated/(utilised)
by financing
activities 282 (580) 15
Foreign currency
translation
adjustments (122) 7 16
Net
increase/(decrease)
in cash
and cash equivalents 460 771 (1 136)
Cash and cash
equivalents
- beginning of period 1 186 415 1 571
Cash and cash
equivalents
- end of period 7 1 646 1 186 435
Six months ended
December December
2008 2007
R million R million
Cash flow from operating
activities
Cash generated/(utilised)
by operations 1 825 (322)
Interest and dividends received 194 145
Interest paid (174) (177)
Income and mining taxes paid (143) (21)
Cash generated/(utilised)
by operating activities 1 702 (375)
Cash flow from investing
activities
Decrease/(increase) in restricted cash (90) 203
Net proceeds on disposal of listed
investments - 1 310
Net (additions)/disposals of property,
plant and equipment (42) (1 567)
Other investing activities 74 14
Cash (utilised)/generated by investing
activities (58) (40)
Cash flow from financing
activities
Cash (utilised)/generated by investing
activities (58) (40)
Cash flow from financing
activities
Long-term loans raised - 2 098
Long-term loans repaid (1 286) (1 802)
Ordinary shares issued
- net of expenses 988 24
Cash generated/(utilised) by financing
activities (298) 320
Foreign currency translation
adjustments (115) 36
Net increase/(decrease) in cash
and cash equivalents 1 231 (59)
Cash and cash equivalents
- beginning of period 415 494
Cash and cash equivalents
- end of period 1 646 435
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE PERIOD ENDED 31 DECEMBER 2008
1. Accounting policies
(a) Basis of accounting
The condensed consolidated interim financial statements for the period ended 31
December 2008 have been prepared using accounting policies that comply with
International Financial Reporting Standards (IFRS), which are consistent with
the accounting policies used in the audited annual financial statements for the
year ended 30 June 2008. These condensed consolidated interim financial
statements are prepared in accordance with IAS 34, Interim Financial Reporting
and should be read in conjunction with the financial statements for the year
ended 30 June 2008.
2. Cost of sales
Quarter ended
December September December
2008 2008 2007
(Unaudited) (Unaudited) (Unaudited)
R million R million R million
Production costs 2 033 1 874 1 687
Amortisation and depreciation 310 308 228
Provision for rehabilitation
costs 4 6 -
Care and maintenance cost of
restructured shafts 10 12 10
Employment termination and
restructuring costs 16 12 75
Share-based compensation 9 13 9
Provision for post-retirement
benefits 1 - -
Total cost of sales 2 383 2 225 2 009
Six months ended
December December
2008 2007
R million R million
Production costs 3 907 3 531
Amortisation and depreciation 618 429
Provision for rehabilitation costs 10 -
Care and maintenance cost of
restructured shafts 22 19
Employment termination and
restructuring costs 28 75
Share-based compensation 22 19
Provision for post-retirement benefits 1 -
Total cost of sales 4 608 4 073
3. Other income/(expenses) - net
Included in other income/(expenses) in the September 2008 quarter is R523
million profit on sale of 30.01% of Harmony`s Papua New Guinea gold and copper
assets to Newcrest Mining Limited.
4. Non-current assets held for sale and discontinued operations
The assets and liabilities related to Mount Magnet (operations in Australia)
have been presented as held for sale following approval of the Group`s
management and Board of Directors on 20 April 2007.
During fiscal 2008, we entered into an agreement with Monarch Gold Mining
Company (Monarch) for the sale of these operations. However, during July 2008
we were advised that Monarch had placed itself in voluntary administration and
on 1 August 2008 the Administrator indicated that Monarch would not proceed
with the proposed purchase, and consequently the purchase agreement has been
terminated. Management is still intent on the disposal of Mount Magnet despite
the asset being classified as held for sale for more than 12 months.
The assets and liabilities relating to the Cooke 1, Cooke 2, Cooke 3, Cooke
plant and relating surface operations (operations in the Gauteng area) have
been presented as held for sale following the approval of the Group`s
management on 16 October 2007. These operations were also deemed to be
discontinued operations.
The conditions precedent on the sale of Randfontein`s Cooke assets to Rand
Uranium have been fulfilled and the transaction became effective on 21 November
2008.
In exchange for 60% of the issued share capital of Rand Uranium, Harmony
received US$40 million out of the total purchase consideration of US$209
million on the effective date of the transaction. A further US$157 million,
plus interest thereon at 5% per annum, will be received by 22 April 2009.
The balance of the purchase consideration of approximately US$12 million is due
as soon as the second stage of the transaction, which relates to its Old
Randfontein assets, is finalised, which is anticipated to be on or shortly
after 22 April 2009. Pamodzi Resources Fund 1, LLP`s (PRF) investors,
affiliates of First Reserve and AMCI Capital, have provided Harmony with a
guarantee in respect of the payment of the above amounts. In addition, PRF
pledged its shares in Rand Uranium to Harmony as security for RPF`s obligation
to pay the purchase consideration to Harmony.
As a result of the transaction, the Group recognised a profit on sale of assets
of R1 722 million before tax in the income statement in the December 2008
quarter.
Included in profit/(loss) from discontinued operations for the September 2008
quarter is an impairment charge for the Mount Magnet assets for R152 million,
relating to the decrease in the fair value less cost to sell.
5. Earnings/(loss) per ordinary share
Earnings/(loss) per ordinary share is calculated on the weighted average number
of ordinary shares in issue for the quarter ended 31 December 2008: 406.8
million (30 September 2008: 403.1 million, 31 December 2007: 399.8 million) and
the six months ended 31 December 2008: 405.0 million (31 December 2007: 399.7
million).
The fully diluted earnings/(loss) per ordinary share is calculated on weighted
average number of diluted ordinary shares in issue for the quarter ended 31
December 2008: 409.1 million (30 September 2008:
404.6 million, 31 December 2007: 402.1 million) and the six months ended 31
December 2008: 407.1 (31 December 2007: 402.4 million)
Quarter ended
December September December
2008 2008 2007
(Unaudited) (Unaudited) (Unaudited)
R million R million R million
Total earnings/(loss) per
ordinary share (cents):
Basic earnings/(loss) 324 100 11
Fully diluted earnings/(loss) 323 99 11
Headline earnings/(loss) 121 24 14
- Continuing operations 101 8 (48)
- Discontinued operations 20 16 62
Reconciliation of headline
earnings/(loss):
Continuing operations
Net profit/(loss) 332 474 (216)
Adjusted for (net of tax):
Loss/(profit) on sale of
property, plant
and equipment 78 (553) (29)
Loss on sale of listed
investment - - -
Profit on sale of associate - (1) -
Impairment of investment in
associates - 112 -
Provision for doubtful debt - - 53
Headline profit/(loss) 410 32 (192)
Discontinued operations
Net profit/(loss) 984 (72) 262
Adjusted for (net of tax):
(Profit)/loss on sale of
property, plant
and equipment (901) (14) 51
Impairment of property, plant
and equipment (1) 152 (66)
Headline profit 82 66 247
Total headline profit/(loss) 492 98 55
Six months ended
December December
2008 2007
R million R million
Total earnings/(loss) per ordinary
share (cents):
Basic earnings/(loss) 424 (131)
Fully diluted earnings/(loss) 422 (130)
Headline earnings/(loss) 145 (27)
- Continuing operations 109 (83)
- Discontinued operations 36 56
Reconciliation of headline
earnings/(loss):
Continuing operations
Net profit/(loss) 806 (750)
Adjusted for (net of tax):
Loss/(profit) on sale of property, plant
and equipment (476) (27)
Loss on sale of listed investment - 392
Profit on sale of associate - -
Impairment of investment in associates 112 -
Provision for doubtful debt - 53
Headline profit/(loss) 442 (332)
Discontinued operations
Net profit/(loss) 912 230
Adjusted for (net of tax):
(Profit)/loss on sale of property, plant
and equipment (915) 51
Impairment of property, plant and equipment 151 (59)
Headline profit 148 222
Total headline profit/(loss) 590 (110)
6. Investment in associate
Harmony Gold Mining Company owns 32.4% of Pamodzi Gold Limited. At 30 September
2008, management tested for impairment of the investment in associate and an
amount of R112 million was impaired. During the December 2008 quarter the Group
recognised a loss of R34 million, its share of the associate loss, resulting in
a carrying value of R0.
On 21 November 2008, Harmony Group sold 60% of the issued share capital of Rand
Uranium to PRF.
Refer to note 4 for details. This resulted in the Group owning 40% of Rand
Uranium. The book value of the investment at 31 December 2008 was R228 million.
7. Cash and cash equivalents
Comprises of:
December September June
2008 2008 2008
(Unaudited) (Audited)
R million R million R million
Continuing operations 1 645 1186 413
Discontinued operations 1 - 2
Total cash and cash equivalents 1 646 1 186 415
8. Borrowings
December September June
2008 2008 2008
(Unaudited) (Audited)
R million R million R million
Unsecured borrowings
Convertible unsecured fixed rate
bonds 1 672 1 649 1 626
Africa Vanguard Resources
(Proprietary) Limited 32 32 32
1 704 1 681 1 658
Less: Short-term portion (1 672) (1 649) (1 626)
Total unsecured long-term borrowings 32 32 32
Secured borrowings
Westpac Bank Limited* 198 183 258
Africa Vanguard Resources
(Doornkop) (Pty) Limited
(Nedbank Limited) 209 201 194
Nedbank Limited 750 1 482 2 000
Less: Unamortised transaction costs (2) (8) (11)
1 155 1 858 2 441
Less: Short-term portion (999) (1 714) (2 231)
Total secured long-term borrowings 156 144 210
Total long-term borrowings 188 176 242
Total current portion of borrowings 2 671 3 363 3 857
Total long-term borrowings 2 859 3 539 4 099
* The future minimum lease payments to Westpac Bank Limited are as follows:
December September June
2008 2008 2008
(Unaudited) (Audited)
R million R million R million
Due within one year 63 46 57
Due between two and five years 156 156 228
219 202 285
Future finance charges (21) (19) (27)
Total future minimum lease payments 198 183 258
9. Commitments and contingencies
December September June
2008 2008 2008
(Unaudited) (Audited)
R million R million R million
Capital expenditure commitments
Contracts for capital expenditure 692 512 1 164
Authorised by the directors but not
contracted for 1 689 2 132 1 720
2 381 2 644 2 884
This expenditure will be financed
from existing resources
and where appropriate, borrowings.
Contingent liabilities
Guarantees and suretyships 18 18 18
Environmental guarantees 305 303 171
323 321 189
Contingent liability
On 18 April 2008, Harmony Gold Mining Company Limited was made aware that it
has been named or may be named as a defendant in a lawsuit filed in the U.S.
District Court in the Southern District of New York on behalf of certain
purchasers and sellers of Harmony`s American Depositary Receipts (ADRs).
Harmony has retained legal counsel, who will advise Harmony on further
developments in the U.S.
10. Share capital
Wafi-Golpu royalty
On 1 December 2008, Harmony issued 3 364 675 shares to Rio Tinto Limited. The
Harmony shares were issued to cancel the Rio Tinto royalty rights over
Wafi-Golpu in Papua New Guinea. The value of issued shares was R242 million
(US$24 million) at R71.98 per share.
Capital raising
Harmony engaged in capital raising between 25 November 2008 and 19 December
2008 by issuing shares into the open market following the resolution passed by
shareholders at the Annual General Meeting held on 24 November 2008. In the
capital raising, 10 504 795 Harmony shares were issued at an average
subscription price of R93.20, resulting in R979 million before costs being
raised. The number of shares issued is equivalent to 2.6% of Harmony`s issued
share capital. The cost of the issue was R15 million or 1.5% of the value of
shares issued.
11. Segment report
The Group early adopted IFRS 8 - Operating Segments in the 2008 financial year.
The standard requires a "management approach", under which segment information
is presented on the same basis as that used for internal reporting to the chief
operating decision maker (CODM).
The Group has only one product, being gold. In order to determine operating and
reportable segments, management reviewed various factors, including
geographical location as well as managerial structure.
It was determined that an operating segment consists of a shaft or a group of
shafts managed by a single general manager and management team.
After applying the quantitative thresholds from the standard, the reportable
segments were determined as:
Tshepong, Phakisa, Bambanani, Masimong, Target, Doornkop, Elandsrand, Evander,
Virginia, Cooke (held for sale and discontinued) and Papua New Guinea. All
other operating segments have been grouped together under other - underground
or other - surface, under their classification as either continuing or
discontinued.
The comparative segment reports have been restated for these changes.
When assessing profitability, the CODM considers the revenue and production
costs of each segment. The net of these amounts is the cash operating profit or
loss. Therefore, cash operating profit has been disclosed in the segment report
as the measure of profit or loss.
The CODM does not consider depreciation or impairment and therefore these
amounts have not been disclosed in the segment report.
12. Review report
The condensed consolidated financial statements for the six months ended 31
December 2008 have been reviewed in accordance with International Standards on
Review Engagements 2410 - "Review of interim financial information performed by
the Independent Auditors of the entity" by PricewaterhouseCoopers Inc. Their
unqualified review opinion is available for inspection at the Company`s
registered office.
SEGMENT REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2008 (Rand/Metric)
Production Operating
Continuing operations Revenue cost profit
South Africa R million R million R million
Underground
Tshepong 903 501 402
Phakisa 60 43 17
Bambanani 509 342 167
Doornkop 157 138 19
Elandsrand 720 565 155
Target 296 250 46
Masimong 592 336 256
Evander 804 522 282
Virginia 1 043 758 285
Other(1) 271 190 81
Surface
Other (2) 473 262 211
Total South Africa 5 828 3 907 1 921
International
Papua New Guinea(3) - - -
Total international - - -
Total continuing operations 5 828 3 907 1 921
Discontinued operations
Cooke 614 447 167
Total discontinued operations 614 447 167
Total operations 6 442 4 354 2 088
Capital Tonnes
Continuing operations expenditure Kilograms milled
South Africa R million sold t`000
Underground
Tshepong 117 3 833 697
Phakisa 237 254 66
Bambanani 20 2 180 264
Doornkop 217 657 253
Elandsrand 211 3 086 503
Target 166 1 281 318
Masimong 68 2 485 457
Evander 111 3 425 610
Virginia 82 4 387 1 149
Other(1) 24 1 155 275
Surface
Other (2) 31 2 014 4 198
Total South Africa 1 284 24 757 8 790
International
Papua New Guinea(3) 933 - -
Total international 933 - -
Total continuing operations 2 217 24 757 8 790
Discontinued operations
Cooke 87 2 667 1 287
Total discontinued operations 87 2 667 1 287
Total operations 2 304 27 424 10 077
Notes:
(1) Includes Joel and St Helena.
(2) Includes Kalgold, Phoenix and Dumps.
(3) Included in the capital expenditure is an amount of R694 million
contributed by Newcrest in terms of the farm-in agreement.
SEGMENT REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2007 (Rand/Metric)
Production Operating
Continuing operations Revenue cost profit/(loss)
South Africa R million R million R million
Underground
Tshepong 738 482 256
Phakisa 3 4 (1)
Bambanani 472 427 45
Doornkop 138 120 18
Elandsrand 371 374 (3)
Target 229 170 59
Masimong 326 354 (28)
Evander 714 502 212
Virginia 707 668 39
Other (1) 183 220 (37)
Surface
Other (2) 374 210 164
Total South Africa 4 255 3 531 724
International
Papua New Guinea - - -
Total international - - -
Total continuing operations 4 255 3 531 724
Discontinued operations
Cooke 681 467 214
Other 759 657 102
Total discontinued operations 1 440 1 124 316
Total operations 5 695 4 655 1 040
Capital Tonnes
Continuing operations expenditure Kilograms milled
South Africa R million sold t`000
Underground
Tshepong 102 4 547 774
Phakisa 123 18 6
Bambanani 64 2 870 537
Doornkop 165 846 248
Elandsrand 140 2 329 383
Target 84 1 413 310
Masimong 63 2 001 444
Evander 133 4 420 734
Virginia 81 4 319 1 138
Other (1) 26 1 134 258
Surface
Other (2) 70 2 289 4 195
Total South Africa 1 051 26 186 9 027
International
Papua New Guinea 436 - -
Total international 436 - -
Total continuing operations 1 487 26 186 9 027
Discontinued operations
Cooke 79 4 158 1 801
Other 145 4 683 1 685
Total discontinued operations 224 8 841 3 486
Total operations 1 711 35 027 12 513
Notes:
(1) Includes Joel and St Helena.
(2) Includes Kalgold, Phoenix and Dumps.
This report was approved by the Board of Directors and is signed on their
behalf by:
G Briggs F Abbott Randfontein
Chief Executive Officer Interim Financial Director 6 February 2009
CONTACT DETAILS
HARMONY GOLD MINING COMPANY LIMITED
Corporate Office
Randfontein Office Park
PO Box 2
Randfontein, 1760
South Africa
Corner Main Reef Road
and Ward Avenue
Randfontein, 1759
Johannesburg
South Africa
Telephone: +27 11 411 2000
Website: http://www.harmony.co.za
Investor Relations Team
Marian van der Walt
Executive: Corporate and Investor Relations
Telephone: +27 11 411 2037
Fax: +27 86 614 0999
Mobile: +27 82 888 1242
E-mail: marian@harmony.co.za
Esha Brijmohan
Investor Relations Officer
Telephone: +27 11 411 2314
Fax: +27 11 692 3879
Mobile: +27 82 922 4584
E-mail: esha@harmony.co.za
Company Secretary
Khanya Maluleke
Telephone: +27 11 411 2019
Fax: +27 11 411 2070
E-mail: khanya.maluleke@harmony.co.za
South African Share Transfer Secretaries
Link Market Services South Africa (Proprietary) Limited
(Registration number 2000/007239/07)
5th Floor, 11 Diagonal Street
Johannesburg, 2001
PO Box 4844
Johannesburg, 2000
South Africa
Telephone: +27 86 154 6572
Fax: +27 11 834 4389
ADR Depositary
The Bank of New York Mellon Inc
101 Barclay Street
New York, NY 10286
United States of America
Telephone: +1888-BNY-ADRS
Fax: +1 212 571 3050
Directors
P T Motsepe (Chairman)*
G Briggs (Chief Executive Officer)
F Abbott (Interim Financial Director)
J A Chissano*1
F F T De Buck*, Dr C Diarra*+,
K V Dicks*, Dr D S Lushaba*, C Markus*,
M Motloba*, C M L Savage*, A J Wilkens*
(* non-executive)
(1 Mozambican)
(+ US/Mali Citizen)
United Kingdom Registrars
Capita Registrars
The Registry
34 Beckenham Road
Bechenham
Kent BR3 4TU
United Kingdom
Telephone: +44 870 162 3100
Fax: +44 208 636 2342
Date: 06/02/2009 07:05:02 Supplied by www.sharenet.co.za
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