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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): HAR
HAR - 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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