TIDMHRM
Harmony Gold Mining Company Limited
("Harmony" or "Company")
Incorporated in the Republic of South Africa
Registration number 1950/038232/06
JSE Share code: HAR
NYSE Share code: HMY
ISIN: ZAE000015228
RESULTS FOR THE PERIOD ENDED 30 SEPTEMBER 2011
KEY FEATURES
- Record operating profits
* 45% increase in operating profit to R1.3 billion
- Highest ever revenue
- Headline earnings per share (HEPS) increased by 217% to 95 SA cents
- Production in line with forecast despite industrial action
* turnaround at Joel; shaft-equipping completed
* continued build-up at Phakisa, Kusasalethu and Doornkop
- Bambanani restructured - crews transferred to build-up operations
- More exciting exploration results from PNG
- Wafi-Golpu pre-feasibility study on track
Financial review for the period ended 30 September 2011
Quarter Quarter
September June Q-on-Q
2011 2011 Variance
%
Gold produced (1) - kg 10 207 10 152 0.5
- oz 328 162 326 394 0.5
Cash operating costs - R/kg 265 288 242 851 (9.2)
- US$/oz 1 156 1 115 (3.7)
Gold sold - kg 9 948 10 412 (4.5)
- oz 319 836 334 752 (4.5)
Gold price received - R/kg 396 405 329 536 20.3
- US$/oz 1 727 1 513 14.1
Operating profit - R million 1 306 901 45.0
- US$ million 183 133 37.6
Basic earnings/(loss)per
share - SAc/s 111 (10) >100.0
- USc/s 16 (1) >100.0
Headline profit - Rm 411 130 >100.0
- US$m 58 19 >100.0
Headline earnings per
share - SAc/s 95 30 >100.0
- USc/s 13 4 >100.0
Exchange rate - R/US$ 7.14 6.78 5.3
(1) Production statistics for Steyn 2 have been included. Steyn 2 is currently
in a build-up phase and revenue and costs are capitalised for this period.
Quarter ending September 2011: 36 kg (June 2011 - 27 kg).
Shareholder information
Issued ordinary
share capital at 430 272 715
30 September 2011
Issued ordinary
share capital at 430 084 628
30 June 2011
Market capitalisation
At 30 September 2011 ZARm 41 027
At 30 September 2011 US$m 5 103
Harmony ordinary share
and ADR prices
12 month high
(1 October 2010 - R106.00
30 September 2011)
for ordinary shares
12 month low
(1 October 2010 - R74.77
30 September 2011)
for ordinary shares
12 month high
(1 October 2010 - US$15.57
30 September 2011)
for ADRs
12 month low
(1 October 2010 - US$10.56
30 September 2011)
for ADRs
Free float
Ordinary shares 100%
ADR ratio 1:1
JSE Limited HAR
Range for quarter
(1 July 2011 - R85.80 - R106.00
30 September 2011
closing prices)
Average daily volume
for the quarter 1 744 855 shares
(1 July 2011 -
30 September 2011)
New York Stock Exchange,
Inc including other HMY
US trading
Range for quarter
(1 July 2011 - US$11.50 -
30 September 2011 US$14.87
closing prices)
Average daily volume
for the quarter 2 915 266 shares
(1 July 2011 -
30 September 2011)
Forward-looking statements
This quarterly report contains forward-looking statements within the meaning of
the United States Private Securities Litigation Reform Act of 1995 with respect
to Harmony's financial condition, results of operations, business strategies,
operating efficiencies, competitive positions, growth opportunities for
existing services, plans and objectives of management, markets for stock and
other matters. Statements in this quarter that are not historical facts are
"forward-looking statements" for the purpose of the safe harbour provided by
Section 21E of the U.S. Securities Exchange Act of 1934, as amended, and
Section 27A of the U.S. Securities Act of 1933, as amended. Forward-looking
statements are statements that are not historical facts.
These statements include financial projections and estimates and their
underlying assumptions, statements regarding plans, objectives and expectations
with respect to future operations, products and services, and statements
regarding future performance. Forward-looking statements are generally
identified by the words "expect", "anticipates", "believes", "intends",
"estimates" and similar expressions. These statements are only predictions. All
forward-looking statements involve a number of risks, uncertainties and other
factors and we cannot assure you that such statements will prove to be correct.
Risks, uncertainties and other factors could cause actual events or results to
differ from those expressed or implied by the forward-looking statements.
These forward-looking statements, including, among others, those relating to
the future business prospects, revenues and income of Harmony, wherever they
may occur in this quarterly report and the exhibits to this quarterly report,
are necessarily estimates reflecting the best judgment of the senior management
of Harmony and involve a number of risks and uncertainties that could cause
actual results to differ materially from those suggested by the forward-looking
statements. As a consequence, these forward-looking statements should be
considered in light of various important factors, including those set forth in
this quarterly report.
Important factors that could cause actual results to differ materially from
estimates or projections contained in the forward-looking statements include,
without limitation: overall economic and business conditions in the countries
in which we operate; the ability to achieve anticipated efficiencies and other
cost savings in connection with past and future acquisitions; increases or
decreases in the market price of gold; the occurrence of hazards associated
with underground and surface gold mining; the occurrence of labour disruptions;
availability, terms and deployment of capital; changes in government
regulation, particularly mining rights and environmental regulations;
fluctuations in exchange rates; currency devaluations and other macroeconomic
monetary policies; and socio-economic instability in the countries in which we
operate.
Competent person's declaration
Harmony reports in terms of the South African Code for the Reporting of
Exploration results, Mineral Resources and Ore Reserves (SAMREC).
Harmony employs an ore reserve manager at each of its operations who takes
responsibility for reporting mineral resources and mineral reserves at his
operation.
The mineral resources and mineral reserves in this report are based on
information compiled by the following competent persons:
Reserves and resources South Africa:
Jaco Boshoff, Pri Sci Nat, who has 16 years' relevant experience and is
registered with the South African Council for Natural Scientific Professions
(SACNASP).
Reserves and resources PNG:
Stuart Hayward for the Wafi-Golpu mineral resources, Gregory Job for the Golpu
mineral reserve, James Francis for the Hidden Valley mineral resources and
Anton Kruger for the Hidden Valley mineral reserve. Messers Job, Francis and
Kruger are corporate members of the Australian Institute of Mining and
Metallurgy and Mr Hayward is a member of the Australian Institute of
Geoscientists. All have relevant experience in the type and style of
mineralisation for which they are reporting, and are competent persons as
defined by the code.
These competent persons consent to the inclusion in the report of the matters
based on the information in the form and context in which it appears. Mr
Boshoff and Mr Job are full-time employees of Harmony Gold Mining Company
Limited and Mr Hayward is a full-time employee of Wafi-Golpu Services Limited.
Mr Francis and Mr Kruger are full-time employees of Newcrest Mining Limited
(Newcrest). Newcrest is Harmony's joint venture partner in the Morobe Mining
Joint Venture on the Hidden Valley mine and Wafi-Golpu project.
Chief Executive's Review
Introduction
The increased R/kg gold price received during the September 2011 quarter
continued to strengthen Harmony's profit levels. A record operating profit was
generated this quarter with production remaining steady despite industrial
action. This is an indication of our improved operational efficiency and gives
us confidence for the future.
As our growth projects come on stream, and our existing mines operate to
tailored business plans, we remain confident of reaching our long-term targets.
Safety
It is with deep regret that I report that two of our colleagues died in
work-related incidents during the quarter. Those who died were: Matoane
Thabana, a locomotive guard at Unisel and Andries Bhambatha, water jet operator
at Tshepong. I would like to extend my deepest condolences to their families,
friends and colleagues.
Operational and financial overview
The gold price received increased by 20.3% to R396 405/kg in the September 2011
quarter from R329 536/kg received in the previous quarter. The increase in the
gold price resulted in revenues increasing by 14.8% or R506.9 million.
Operating profit for the September 2011 quarter increased by 45.0% (R405.7
million) to R1 306.4 million, compared to the R900.7 million recorded in
the June 2011 quarter.
Production for the September 2011 quarter was only slightly higher than the
previous quarter. Our targeted increase in production was negatively impacted
by the wage strike in August 2011, which resulted in approximately 500kg being
lost. As expected, higher electricity (due to winter tariffs) and labour costs
resulted in the R/kg costs being 9.2% higher at R265 288/kg compared to R242
851/kg in the June 2011 quarter.
We continue to spend in a responsible manner, with total capital expenditure
for the September 2011 quarter decreasing by 16.4% (R137.5 million) to R700.1
million, compared to the previous quarter (R837.6 million).
Exploration
Wafi Transfer Exploration (Morobe Mining JV Exploration
(Harmony 50%)
Prospect development work continued at Zimake, and Bavaga on the Wafi Transfer
structure. Results received from Zimake have outlined a significant new high
tenor Cu-Au anomaly over a 1.5 km2 area. The anomaly is associated with a
bulls-eye magnetic target, contains surface soil results up to 0.5 g/t Au and
0.2% Cu, and is prospective for porphyry copper-gold mineralisation similar to
Golpu.
Papua New Guinea (PNG) exploration (Harmony 100%)
Drilling at the Mt Hagen project has intersected anomalous intervals of
porphyry copper style mineralisation and alteration. The drill core contains
disseminated chalcopyrite and molybdenum associated with biotite-magnetite
(potassic) altered metasediments and is highly encouraging. Assays received to
date resulted in 285m @ 0.1% Cu, 83 ppm Mo from 72m (PNDD001).
Wafi-Golpu
The resource drilling programme continues to target orebody extension to the
north and infill of deeper sections (indicatively in the Lift 2 and Lift 3 cave
zones). Geotechnical investigation drilling is continuing along the access/
conveyor decline route. Five drill rigs are currently at work at Wafi-Golpu
with two additional drill rigs that have arrived on site that will commence
drilling in the forthcoming quarter. Generally the drilling results are
confirming the resource shell as outlined in the resource declaration (refer to
the Integrated Annual Report at www.harmony.co.za).
The results of the significant borehole were:
WR406 861m @ 1.51g/t Au, 1.48% Cu including 199m @ 2.87g/t Au and 2.57% Cu from
1 286m (Some assays are still pending).
Gold market
We remain bullish on the gold price, despite the recent fears that there is a
gold bubble. We believe that the gold price will continue to strengthen as the
fundamentals that drove the gold price up are still in place. Gold remains an
attractive investment and a currency in these times of economic uncertainty. A
number of record high gold prices were seen throughout the first quarter, with
a record level of around $1 900/oz at the beginning of September 2011. Despite
the sharp decline in the gold price towards the end of September 2011, the
Rand gold price performed well due to the benefit of the weakening of the R/$
exchange rate around the same time. Harmony's South African assets
represent 92% of total production. The combination of a higher gold price and a
weaker Rand, as well as steady production worked to our advantage
during the quarter.
Conclusion
Harmony has a solid portfolio of producing assets and a successful
international exploration programme. The rapid progress we have made in PNG, in
particular, is proof of the benefits mining can deliver in an enabling
environment when all stakeholders work together. The Wafi-Golpu project has the
potential to change this company materially.
In addition, the exploration results in PNG have been pleasing and we look
forward to more exciting news from the region.
In the next few months we will be focussing on improving our grades, as well as
improving costs per tonnes milled - all in line with our strategy, as well as
progressing the pre-feasibility study at Wafi-Golpu.
Graham Briggs
Chief Executive Officer
Note:
Harmony updated the market on its strategy, operations and exploration on
24 August 2011. You are encouraged to view the presentations and information
shared at www.harmony.co.za to allow you to make an informed decision on your
investment or possible investment in Harmony.
Results for the period
ended 30 September 2011
Safety and health
Safety
Safety remains Harmony's number one priority. To accelerate the execution of
Harmony's safety and health strategy and to further improve its safety
performance, Harmony appointed Alwyn Pretorius as the Executive for safety and
health in August 2011, a newly created executive position. Alwyn has more than
18 years' experience in the mining industry and has a good understanding of
underground conditions and the working environment our underground workers are
exposed to.
Our safety strategy includes behavioural aspects, competency training and
development, as well as research and new technologies. We believe safety in the
workplace can be addressed only through a cooperative approach that ensures the
right infrastructure is in place - from systems and planning, to communication
and training. We also believe management and employees must accept joint
responsibility for their actions. It is therefore imperative that the working
environment empowers people - management, supervisors, workers and union
representatives - to stop work and withdraw from the mining area when they feel
it is unsafe, or prevent others from acting in an unsafe way.
Equally, safety is about attitudes and mindsets. We have renewed our focus on
implementing, communicating and reinforcing safety in the workplace, and
created a centralised safety function to coordinate initiatives between regions
and mines.
Given the high-risk nature of many of our deep-level operations, the safety,
health and well-being of our people are our foremost priority: Safety is a key
performance indicator for management and a key component of performance reward
for our people.
Tragically, two fatalities occurred at the South African operations during the
September 2011 quarter, which indicates that even more needs to be done to
ensure a safe working environment day after day.
We have made progress in terms of safety, with Harmony's Lost Time Injury
Frequency Rate (LTIFR) (per million hours worked) remaining a single digit, for
the twelfth consecutive quarter. In South Africa, our LTIFR improved by 6%
quarter on quarter, from 9.64 to 9.06. The Reportable Injury Frequency Rate
(RIFR) (per million hours worked) improved by 18% quarter on quarter (from 5.39
to 4.44). The Fatal Injury Frequency Rate (FIFR) improved by 31% (0.17 to 0.09)
quarter on quarter.
Safety achievements for the quarter included:
South African (SA) underground
operations: 1 000 000 fatality free shifts
Harmony SA surface operations: 3 000 000 fatality free shifts
Kusasalethu: 500 000 fatality free shifts
Evander total operations: 1 000 000 fatality free shifts
Kalgold plant: 1 000 000 fatality free shifts
Target 1: 750 000 fatality free shifts
Phakisa: 500 000 fatality free shifts
Bambanani: 500 000 fatality free shifts
The following operations completed the quarter without an injury:
- Target plant
- Harmony One plant
- Free State commercial services and transport
- Evander workshops.
Health
The health and well-being of our workforce is essential to us, as they are the
cornerstone of our ongoing business success. We continually invest in the
wellness of our employees, through various health programmes and initiatives to
ensure the well-being of each employee. Our focus is on preventative rather
than curative health care and we encourage employees to live a healthy
lifestyle, through health education and raising awareness. During the quarter
our pro-active approach to health and wellness of our employees continued. Our
objective remains to improve health management programmes and effectively
utilise clinical information. This includes the review of policies, procedures
and processes as well as training. These efforts have resulted in improved
health and a better quality of life for our employees.
See our Sustainable Development Report FY11 for more details on our website
www.harmony.co.za.
Financial overview
Operating profit increased by 45% to R1 306 million in the September 2011
quarter, with an increase in revenue being the main contributor.
Revenue
The increase in revenue from R3 422 million to R3 929 million is due to an
14.3% higher US dollar gold price received and a weaker Rand, with the average
R/kg gold price received increasing over 20% to R396 405/kg.
Cost of sales
Production cost is slightly higher at R2 623 million, mainly due to increased
winter electricity rates that resulted in a R133 million increase in
electricity cost for the quarter.
Employment termination and restructuring costs for the September quarter
amounted to R34 million. The cost is as a result of the restructuring process
at Bambanani shaft.
Reversal of impairment of investment in associate
The reversal of impairment of R48 million for the September 2011 quarter
relates to foreign exchange movements relating to the agreed sale of 40% of
Rand Uranium (Pty) Ltd to Gold One International Limited.
Net loss on financial instruments
The loss for the September 2011 quarter is due to the changes in fair value of
the Nedbank Equity Linked Deposits held by the Environmental Trusts.
Earnings per share
Basic earnings per share increased from a loss of 10 SA cents to earnings of
111 SA cents per share. Headline earnings per share increased from 30 SA cents
per share to 95 SA cents per share, an increase of 217%.
Property, plant and equipment
The increase in property, plant and equipment is largely due to currency
movements of R836 million as a result of the strengthening of the Kina against
the South African Rand. The corresponding entry was recorded in other reserves
through other comprehensive income.
Borrowings
Borrowings increased as a result of a net draw down of R100 million on the
Nedbank facility and a US$50 million draw down on the US dollar Revolving
Credit Facility.
CONDENSED CONSOLIDATED INCOME STATEMENTS (Rand)
Three months ended Three months ended
30 September 30 June
2011 2011
Figures in million Note (Unaudited) (Unaudited)
Continuing operations
Revenue 3 929 3 422
Cost of sales 2 (3 192) (3 491)
Production costs (2 623) (2 521)
Amortisation and depreciation (475) (477)
Impairment of assets - (264)
Employment termination and
restructuring costs (34) -
Other items (60) (229)
Gross profit/(loss) 737 (69)
Corporate, administration and
other expenditure (84) (71)
Social investment expenditure (15) (18)
Exploration expenditure 3 (97) (102)
Profit on sale of property, plant
and equipment 26 5
Other income/(expenses) - net 18 33
Operating profit/(loss) 585 (222)
Loss from associates - -
Reversal of
impairment/(impairment) of
investment in associate 5 48 18
Net (loss)/gain on financial
instruments (26) 22
Gain on farm-in option - -
Investment income 16 24
Finance cost (73) (89)
Profit/(loss) before taxation 550 (247)
Taxation (72) 205
Normal taxation (40) 10
Deferred taxation (32) 195
Net profit/(loss) from continuing
operations 478 (42)
Discontinued operations
(Loss)/profit from discontinued
operations - -
Net profit/(loss) for the period 478 (42)
Attributable to:
Owners of the parent 478 (42)
Non-controlling interest - -
Earnings/(loss) per ordinary
share (cents) 6
Earnings/(loss) from continuing
operations 111 (10)
(Loss)/earnings from discontinued
operations - -
Total earnings/(loss) per
ordinary share (cents) 111 (10)
Diluted earnings/(loss) per
ordinary share (cents) 6
Earnings/(loss) from continuing
operations 111 (10)
(Loss)/earnings from discontinued
operations - -
Total diluted earnings/(loss) per
ordinary share (cents) 111 (10)
Year ended
30 September 30 June
2010 2011
Figures in million (Unaudited) (Audited)
Continuing operations
Revenue 3 083 12 445
Cost of sales (2 995) (11 615)
Production costs (2 431) (9 170)
Amortisation and depreciation (426) (1 776)
Impairment of assets - (264)
Employment termination and restructuring costs (78) (158)
Other items (60) (247)
Gross profit/(loss) 88 830
Corporate, administration and other expenditure (94) (354)
Social investment expenditure (16) (84)
Exploration expenditure (99) (353)
Profit on sale of property, plant and equipment 16 29
Other income/(expenses) - net (54) (24)
Operating profit/(loss) (159) 44
Loss from associates (8) (51)
Reversal of impairment/(impairment) of investment
in associate - (142)
Net (loss)/gain on financial instruments 38 141
Gain on farm-in option 273 273
Investment income 14 140
Finance cost (59) (288)
Profit/(loss) before taxation 99 117
Taxation 6 480
Normal taxation (9) (12)
Deferred taxation 15 492
Net profit/(loss) from continuing operations 105 597
Discontinued operations
(Loss)/profit from discontinued operations (3) 20
Net profit/(loss) for the period 102 617
Attributable to:
Owners of the parent 102 617
Non-controlling interest - -
Earnings/(loss) per ordinary share (cents)
Earnings/(loss) from continuing operations 24 139
(Loss)/earnings from discontinued operations (1) 5
Total earnings/(loss) per ordinary share (cents) 23 144
Diluted earnings/(loss) per ordinary share (cents)
Earnings/(loss) from continuing operations 24 139
(Loss)/earnings from discontinued operations (1) 5
Total diluted earnings/(loss) per ordinary share (cents) 23 144
The accompanying notes are an integral part of these condensed consolidated
financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Rand)
Three months ended Three months ended
30 September 30 June 30
2011 2011
Figures in million (Unaudited) (Unaudited)
Net profit/(loss) for the period 478 (42)
Other comprehensive income for the
period,
net of income tax 955 418
Foreign exchange translation 924 473
Fair value movement of
available-for-sale
investments 31 (55)
Total comprehensive income for the period 1 433 376
Attributable to:
Owners of the parent 1 433 376
Non-controlling interest - -
Year ended Year ended
September 30 June
2010 2011
Figures in million (Unaudited) (Audited)
Net profit/(loss) for the period 102 617
Other comprehensive income for the period,
net of income tax 106 368
Foreign exchange translation 106 470
Fair value movement of available-for-sale
investments - (102)
Total comprehensive income for the period 208 985
Attributable to:
Owners of the parent 208 985
Non-controlling interest - -
The accompanying notes are an integral part of these condensed consolidated
financial statements.
CONDENSED CONSOLIDATED BALANCE SHEETS (Rand)
At At At
30 September 30 June 30 September
2011 2011 2010
Figures in million Note (Unaudited) (Audited) (Unaudited)
ASSETS
Non-current assets
Property, plant and
equipment 4 32 278 31 221 29 873
Intangible assets 2 171 2 170 2 199
Restricted cash 31 31 116
Restricted investments 1 860 1 883 1 787
Investments in associates - - 377
Deferred tax assets 1 287 1 149 734
Investments in financial assets 215 185 296
Inventories 168 172 237
Trade and other receivables 24 23 67
Total non-current assets 38 034 36 834 35 686
Current assets
Inventories 1 006 837 902
Trade and other receivables 876 1 073 649
Income and mining taxes 100 139 73
Cash and cash equivalents 1 325 693 772
3 307 2 742 2 396
Assets of disposal groups
classified as
held-for-sale 5 314 268
Total current assets 3 621 3 010 2 396
Total assets 41 655 39 844 38 082
EQUITY AND LIABILITIES
Share capital and reserves
Share capital 28 314 28 305 28 269
Other reserves 1 741 762 395
Retained earnings 1 313 1 093 578
Total equity 31 368 30 160 29 242
Non-current liabilities
Deferred tax liabilities 4 300 4 216 4 306
Provision for environmental
rehabilitation 2 046 1 971 1 723
Retirement benefit
obligation and other
provisions 174 174 169
Borrowings 7 1 684 1 229 970
Total non-current
liabilities 8 204 7 590 7 168
Current liabilities
Borrowings 7 331 330 207
Income and mining taxes 3 2 13
Trade and other payables 1 733 1 746 1 452
2 067 2 078 1 672
Liabilities of disposal
groups classified as held-for-sale 16 16 -
Total current liabilities 2 083 2 094 1 672
Total equity and
liabilities 41 655 39 844 38 082
The accompanying notes are an integral part of these condensed consolidated
financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Rand) (Unaudited)
for the three months ended 30 September 2011
Share Other
Figures in million Note capital reserves
Balance - 30 June 2011 28 305 762
Issue of shares 9 -
Share-based payments - 24
Net profit for the period - -
Other comprehensive income for the period - 955
Dividends paid - -
Balance - 30 September 2011 28 314 1 741
Balance - 30 June 2010 28 261 258
Issue of shares 8 -
Share-based payments - 31
Net profit for the period - -
Other comprehensive income for the period - 106
Dividends paid - -
Balance - 30 September 2010 28 269 395
Retained
Figures in million earnings Total
Balance - 30 June 2011 1 093 30 160
Issue of shares - 9
Share-based payments - 24
Net profit for the period 478 478
Other comprehensive income for the period - 955
Dividends paid (258) (258)
Balance - 30 September 2011 1 313 31 368
Balance - 30 June 2010 690 29 209
Issue of shares - 8
Share-based payments - 31
Net profit for the period 102 102
Other comprehensive income for the period - 106
Dividends paid (214) (214)
Balance - 30 September 2010 578 29 242
The accompanying notes are an integral part of these condensed consolidated
financial statements.
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (Rand)
Three months Three months
ended ended
30 September 30 June 30
2011 2011
Figures in million (Unaudited) (Unaudited)
Cash flow from operating activities
Cash generated by operations 1 092 1 052
Interest and dividends received 16 24
Interest paid (41) (35)
Income and mining taxes paid - (19)
Cash generated by operating activities 1 067 1 022
Cash flow from investing activities
(Increase)/decrease in restricted cash - (4)
Proceeds on disposal of investment in - -
subsidiary
Proceeds on disposal of available-for-sale
financial assets - -
Prepayment for Evander 6 and Twistdraai - 100
transaction
Other investing activities - (10)
Net additions to property, plant and (668) (829)
equipment
Cash utilised by investing activities (668) (743)
Cash flow from financing activities
Borrowings raised 799 150
Borrowings repaid (352) (415)
Ordinary shares issued - net of expenses 9 15
Dividends paid (258) -
Cash generated/(utilised) by financing
activities 198 (250)
Foreign currency translation adjustments 35 8
Net increase/(decrease) in cash and cash
equivalents 632 37
Cash and cash equivalents - beginning of 693 656
period
Cash and cash equivalents - end of period 1 325 693
Year ended Year ended
September 30 June
2010 2011
Figures in million (Unaudited) (Audited)
Cash flow from operating activities
Cash generated by operations 703 2 418
Interest and dividends received 14 140
Interest paid (30) (134)
Income and mining taxes paid (4) (45)
Cash generated by operating activities 683 2 379
Cash flow from investing activities
(Increase)/decrease in restricted cash 30 116
Proceeds on disposal of investment in
subsidiary 229 229
Proceeds on disposal of available-for-sale
financial assets - 16
Prepayment for Evander 6 and Twistdraai transaction - 100
Other investing activities 10 (5)
Net additions to property, plant and
equipment (748) (3 110)
Cash utilised by investing activities (479) (2 654)
Cash flow from financing activities
Borrowings raised - 925
Borrowings repaid (7) (546)
Ordinary shares issued - net of expenses 8 44
Dividends paid (214) (214)
Cash generated/(utilised) by financing activities (213) 209
Foreign currency translation adjustments 11 (11)
Net increase/(decrease) in cash and cash
equivalents 2 (77)
Cash and cash equivalents - beginning of period 770 770
Cash and cash equivalents - end of period 772 693
The accompanying notes are an integral part of these condensed consolidated
financial statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED 30 SEPTEMBER 2011 (Rand)
1. Accounting policies
Basis of accounting
The condensed consolidated financial statements for the three months ended 30
September 2011 have been prepared in accordance with IAS 34, Interim Financial
Reporting, JSE Listings Requirements and in the manner required by the
Companies Act of South Africa. They should be read in conjunction with the
annual financial statements for the year ended 30 June 2011, which have been
prepared in accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board (IFRS). The accounting
policies are consistent with those described in the annual financial
statements, except for the adoption of applicable revised and/or new standards
issued by the International Accounting Standards Board.
2. Cost of sales
Three months Three months
ended ended
30 September 30 June
2011 2011
Figures in million (Unaudited) (Unaudited)
Production costs 2 591 2 508
Royalty expense 32 13
Amortisation and depreciation 475 477
Impairment of assets(1) - 264
Rehabilitation expenditure 5 61
Care and maintenance cost of restructured 31 37
shafts
Employment termination and restructuring 34 -
costs(2)
Share-based payments 24 45
Other(3) - 86
Total cost of sales 3 192 3 491
Year ended Year ended
30 September 30 June
2010 2011
Figures in million (Unaudited) (Audited)
Production costs 2 408 9 074
Royalty expense 23 96
Amortisation and depreciation 426 1 776
Impairment of assets(1) - 264
Rehabilitation expenditure 4 74
Care and maintenance cost of restructured shafts 25 124
Employment termination and restructuring costs(2) 78 158
Share-based payments 31 136
Other(3) - (87)
Total cost of sales 2 995 11 615
(1) During the June 2011 quarter, an impairment of R264 million relating to
President Steyn 1 and 2 shafts and St Helena was recorded.
(2) The amount of R34 million in September 2011 quarter relates to
restructuring at the Bambanani shaft.
(3) Included in Other for the June 2011 quarter is R41 million for the write
down of the Steyn plant demolishment project.
3. Exploration expenditure
Three months Three months
ended ended
30 September 30 June
2011 2011
Figures in million (Unaudited) (Unaudited)
Total exploration expenditure 105 111
Less: Expenditure capitalised(1) (8) (9)
Exploration expenditure per income 97 102
statement
Year ended Year ended
30 September 30 June
2010 2011
Figures in million (Unaudited) (Audited)
Total exploration expenditure 106 398
Less: Expenditure capitalised(1) (7) (45)
Exploration expenditure per income statement 99 353
(1) Relates to brownfields exploration at Hidden Valley.
4. Property, plant and equipment
During the September quarter the Rand had weakened over 20% against the Kina
and resulted in an increase of R836 million in the carrying amount. The
corresponding entry was recorded in other reserves through other comprehensive
income.
5. Disposal groups classified as held for sale and discontinued operations
Investment in associate
The investment in Rand Uranium has been classified as held for sale following a
decision by the shareholders of the company to commence with a process to sell
the company. In terms of the binding offer accepted by the shareholders on 21
April 2011, the capital portion of the subordinated shareholder's loan of R61
million due to the group will be repaid out of the sale proceeds. The group's
attributable portion of the sale proceeds amounts to US$37.25 million. The
investment is carried at the lower of carrying value and fair value less cost
to sell. At each reporting date, the carrying value is remeasured for possible
impairment or reversal of impairment. An impairment of R142 million has been
recognised for the 2011 year. During September 2011 quarter, a reversal of
impairment of R48 million was recognised resulting from changes in the US$/R
exchange rate.
6. Earnings/(loss) and net asset value per share
Earnings/(loss) per share is calculated on the weighted average number of
shares in issue for the three months ended 30 September 2011: 430.1 million (30
June 2011: 430.0 million, 30 September 2010: 428.7 million), and the year ended
30 June 2011: 429.3 million.
The diluted earnings/(loss) per share is calculated on weighted average number
of diluted shares in issue for the three months ended 30 September 2011: 431.6
million (30 June 2011: 431.4 million, 30 September 2010: 429.9 million), and
the year ended 30 June 2011: 430.4 million.
Three months Three months
ended ended
30 September 30 June
2011 2011
(Unaudited) (Unaudited)
Total earnings/(loss) per share (cents):
Basic earnings/(loss) 111 (10)
Diluted earnings/(loss) 111 (10)
Headline earnings 95 30
- from continuing operations 95 30
- from discontinued operations - -
Diluted headline earnings 95 30
- from continuing operations 95 30
- from discontinued operations - -
Figures in million
Reconciliation of headline earnings:
Continuing operations
Net profit/(loss) 478 (42)
Adjusted for:
Profit on sale of property, plant and (26) (5)
equipment
Taxation effect of profit on sale of
property, plant and equipment 7 1
Net gain on financial instruments - (6)
Taxation effect of net gain on financial - 2
instruments
(Reversal of impairment)/impairment of
investment in associate* (48) (18)
Foreign exchange loss reclassified from
other comprehensive income* - -
Impairment of assets - 264
Taxation effect of impairment of assets - (66)
Headline earnings 411 130
Discontinued operations
Net (loss)/profit - -
Adjusted for:
Profit on sale of investment in subsidiary - -
Taxation effect of profit on sale of
investment in subsidiary - -
Foreign exchange loss reclassified from
other comprehensive income - -
Headline earnings - -
Total headline earnings 411 130
Year ended Year ended
30 September 30 June
2010 2011
(Unaudited) (Audited)
Total earnings/(loss) per share (cents):
Basic earnings/(loss) 23 144
Diluted earnings/(loss) 23 144
Headline earnings 33 223
- from continuing operations 33 223
- from discontinued operations - -
Diluted headline earnings 33 222
- from continuing operations 33 222
- from discontinued operations - -
Figures in million
Reconciliation of headline earnings:
Continuing operations
Net profit/(loss) 105 597
Adjusted for:
Profit on sale of property, plant and equipment (16) (29)
Taxation effect of profit on sale of property,
plant and equipment 5 7
Net gain on financial instruments - (7)
Taxation effect of net gain on financial instruments - 2
(Reversal of impairment)/impairment of investment
in associate* - 142
Foreign exchange loss reclassified from other
comprehensive income* 47 47
Impairment of assets - 264
Taxation effect of impairment of assets - (66)
Headline earnings 141 957
Discontinued operations
Net (loss)/profit (3) 20
Adjusted for:
Profit on sale of investment in subsidiary (138) (138)
Taxation effect of profit on sale of investment in
subsidiary 34 34
Foreign exchange loss reclassified from other
comprehensive income 107 84
Headline earnings - -
Total headline earnings 141 957
* There is no taxation effect on these items.
Net asset value per share (cents)
At At At
30 September 30 June 30 September
2011 2011 2010
(Unaudited) (Audited) (Unaudited)
Number of shares in issue 430 272 715 430 084 628 428 850 584
Net asset value per share (cents) 7 290 7 013 6 819
7. Borrowings
At At At
30 September 30 June 30 September
2011 2011 2010
Figures in million (Unaudited) (Audited) (Unaudited)
Total long-term borrowings 1 684 1 229 970
Total current portion of borrowings 331 330 207
Total borrowings (1) (2) 2 015 1 559 1 177
(1) At 30 September 2011, R300 million (30 June 2011: R400 million, 30
September 2010: R300 million) of the Nedbank facilities had not been drawn
down.
On 11 August 2011, the group entered into a US$300 million syndicated revolving
credit facility, which was jointly arranged by Nedbank Limited and Firstrand
Bank Limited (acting through its Rand Merchant Bank division). The facility is
repayable after four years and attracts interest at LIBOR plus 260 basis
points, which is payable quarterly.
At 30 September 2011, US$250 million of this facility had not been drawn down.
(2) Included in the borrowings is R52 million (30 June 2011: R51 million;
September 2010: R74 million) owed to Westpac Bank Limited in terms of a finance
lease agreement.
The future minimum lease payments are as follows:
At At At
30 September 30 June 30 September
2011 2011 2010
Figures in million (Unaudited) (Audited) (Unaudited)
Due within one year 31 29 30
Due between one and five years 22 23 46
53 52 76
Future finance charges (1) (1) (2)
Total future minimum lease payments 52 51 74
8. Commitments and contingencies
At At At
30 September 30 June 30 September
2011 2011 2010
Figures in million (Unaudited) (Audited) (Unaudited)
Capital expenditure commitments:
Contracts for capital expenditure 290 194 369
Authorised by the directors but
not contracted for 3 570 1 504 2 070
3 860 1 698 2 439
This expenditure will be financed from existing resources and borrowings where
necessary.
Contingent liability
For a detailed disclosure on contingent liabilities refer to Harmony's
integrated annual report for the year ended 30 June 2011, available on the
group's website at www.harmony.co.za. There were no significant changes in
contingencies since 30 June 2011.
9. Dividends paid
On 12 August 2011, the board approved a payment of dividend of 60 SA cents per
share for the year ended 30 June 2011. The total dividend amounting to R258
million was paid on 19 September 2011.
10. Subsequent events
There are no subsequent events to report.
11. Segment reports
The segment reports follows after note 12.
12. Reconciliation of segment information to consolidated income statements
30 September 30 September
2011 2010
Figures in million (Unaudited) (Unaudited)
The "Reconciliation of segment information to
consolidated income statement" line item in the
segment report is broken down in the following
elements, to give a better understanding of
the differences between the income statement
and segment report:
Reconciliation of production profit to gross profit:
Total segment revenue 3 929 3 083
Total segment production costs and royalty expense (2 623) (2 431)
Production profit per segment report 1 306 652
Cost of sales items other than production costs
and royalty expense (569) (564)
Amortisation and depreciation (475) (426)
Employment termination and restructuring costs (34) (78)
Share-based payments (24) (31)
Rehabilitation costs (5) (4)
Care and maintenance costs of restructured shafts (31) (25)
Gross profit as per income statements * 737 88
* The reconciliation was done up to the first recognisable line item on the
income statement. The reconciliation will follow the income statement after
that.
SEGMENT REPORT (Rand/Metric) (Unaudited)
for the three months ended 30 September 2011
Revenue Revenue Production Production
cost cost
September September September September
2011 2010 2011 2010
R million R million R million R million
South Africa
Underground
Bambanani (1) 175 270 201 223
Doornkop 348 168 230 148
Evander 330 174 175 176
Joel 283 44 149 75
Kusasalethu 575 475 335 387
Masimong 314 374 215 202
Phakisa 206 112 188 111
Target (2) 459 244 311 189
Tshepong 466 500 305 294
Virginia 136 223 121 225
Surface
All other surface operations (3) 378 317 250 238
Total South Africa 3 670 2 901 2 480 2 268
International
Hidden Valley 259 182 143 163
Other - - - -
Total international 259 182 143 163
Total operations 3 929 3 083 2 623 2 431
Reconciliation of the segment
information
to the consolidated income
statement
(refer to note 12) - - - -
3 929 3 083 2 623 2 431
Production Production Capital Capital
profit profit expenditure expenditure
September September September September
2011 2010 2011 2010
R million R million R million R million
South Africa
Underground
Bambanani (1) (26) 47 77 83
Doornkop 118 20 65 70
Evander 155 (2) 38 59
Joel 134 (31) 13 18
Kusasalethu 240 88 98 104
Masimong 99 172 50 41
Phakisa 18 1 74 92
Target (2) 148 55 75 118
Tshepong 161 206 59 61
Virginia 15 (2) 16 30
Surface
All other surface 128 79 26 12
operations (3)
Total South Africa 1 190 633 591 688
International
Hidden Valley 116 19 40 61
Other - - 69 -
Total international 116 19 109 61
Total operations 1 306 652 700 749
Reconciliation of the
segment
information to the
consolidated
income statement (refer
to note 12)
Kilograms Kilograms Tonnes Tonnes
produced produced milled milled
September September September September
2011 2010 2011 2010
kg kg t'000 t'000
South Africa
Underground
Bambanani (1) 498 942 92 129
Doornkop 866 541 277 140
Evander 854 552 123 140
Joel 691 148 147 40
Kusasalethu 1 554 1 513 331 269
Masimong 796 1 263 232 243
Phakisa 526 377 113 86
Target (2) 1 180 947 288 205
Tshepong 1 183 1 688 287 338
Virginia 340 760 92 244
Surface
All other surface 927 1 069 2 473 2 837
operations (3)
Total South Africa 9 415 9 800 4 455 4 671
International
Hidden Valley 792 671 415 427
Other - - - -
Total international 792 671 415 427
Total operations 10 207 10 471 4 870 5 098
Reconciliation of the
segment
information to the
consolidated income
statement and
balance sheet
(refer to note 12)
(1) Production statistics for Steyn 2 have been included. This mine is in a
build-up phase and revenue and costs are currently capitalised, until
commercial production levels are reached.
(2) The September 2010 production statistics includes Target 3 for information
purpose. Target 3 was still in build-up phase with revenue and costs being
capitalised.
(3) Includes Kalgold, Phoenix, Dumps and President Steyn plant clean-up.
Harmony's strategy
Harmony's strategy is to produce 1.8 - 2 million* safe and profitable ounces of
gold by 2015. Following a review of assets during 2011, action was taken and
capital committed to increase production at existing operations, further the
development of current projects and advance scoping studies so as to ensure the
future production pipeline of tomorrow's gold by growing reserves and resources
and strengthening the quality of our asset base.
Our challenge going forward is to meet our targets and objectives and, more
specifically, to deliver consistent production results, improve productivity,
curb costs and to create and deliver value to shareholders.
* Excludes future acquisitions or disposals.
CONTACT DETAILS
Corporate Office
Randfontein Office Park
PO Box 2, Randfontein, 1760, South Africa
Corner Main Reef Road/Ward Avenue, Randfontein, 1759, South Africa
Telephone: +27 11 411 2000
Website: www.harmony.co.za
Directors
P T Motsepe Chairman*
G P Briggs Chief Executive Officer
H O Meyer Financial Director
H E Mashego Executive Director
F F T De Buck*^ Lead independent director
F Abbott*, J A Chissano*1^, K V Dicks*^, Dr D S Lushaba*^, C Markus*^,
M Motloba*^, M Msimang*^, D Noko*^, C M L Savage*^, J Wetton*^,
A J Wilkens*
* Non-executive
^ Independent
1 Mozambican
Investor relations team
Henrika Basterfield
Investor Relations Officer
Telephone: +27 11 411 2314
Fax: +27 11 692 3879
Mobile: +27 82 759 1775
E-mail: henrika@harmony.co.za
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
Company Secretary
iThemba Governance and Statutory Solutions (Pty) Ltd
Riana Bisschoff
Telephone : 011 411 2127
Mobile: +2783 629 4706
E-mail: riana@ithembaonline.co.za
South African Share Transfer Secretaries
Link Market Services South Africa (Proprietary) Limited
(Registration number 2000/007239/07)
13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein, 2001
PO Box 4844, Johannesburg, 2000, South Africa
Telephone: +27 86 154 6572
Fax: +27 86 674 4381
United Kingdom Registrars
Capita Registrars
The Registry, 34 Beckenham Road, Bechenham
Kent BR3 4TU, United Kingdom
Telephone: 0871 664 0300 (UK) (calls cost 10p a minute plus network
extras, lines are open 8:30am - 5:30pm, Monday to Friday)
or +44 (0) 20 8639 3399 (calls from overseas)
Fax: +44 (0) 20 8639 2220
ADR Depository
Deutsche Bank Trust Company Americas
c/o American Stock Transfer and Trust Company, Peck Slip Station
PO Box 2050, New York, NY 10272-2050
E-mail queries: db@amstock.com
Toll free: +1-886-249-2593
Int: +1-718-921-8137
Fax: +1-718-921-8334
Sponsor
JP Morgan Equities Limited
1 Fricker Road, corner Hurlingham Road, Illovo, Johannesburg, 2196
Private Bag X9936, Sandton, 2146
Telephone: +27 11 507 0300
Fax: +27 11 507 0503
Trading Symbols
JSE Limited: HAR
New York Stock Exchange, Inc: HMY
London Stock Exchange Plc: HRM
Euronext, Brussels: HMY
Berlin Stock Exchange: HAM1
Registration number
1950/038232/06
Incorporated in the Republic of South Africa
ISIN
ZAE 000015228
Harmony's Annual Report, Notice of Annual General Meeting, its 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 2011 are
available on our website: www.harmony.co.za
END
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