TIDMHRM
HARMONY
Incorporated in the Republic of South Africa
Registration number 1950/038232/06
("Harmony" or "Company")
JSE Share code: HAR
NYSE Share code: HMY
ISIN: ZAE 000015228
Results for the quarter and the year ended 30 June 2011
SHAREHOLDER INFORMATION
Issued ordinary shares
at 30 June 2011 430 084 628
Issued ordinary shares
at 31 March 2011 429 807 371
Issued ordinary shares
at 30 June 2010 428 654 779
Market capitalisation
At 30 June 2011 (ZARm) 38 686
At 30 June 2011 (US$m) 5 724
At 31 March 2011 (ZARm) 42 676
At 31 March 2011 (US$m) 6 304
At 30 June 2010 (ZARm) 34 888
At 30 June 2010 (US$m) 4 530
Harmony ordinary share
and ADR prices
12 month high (1 July 2010 to R103.25
30 June 2011) for ordinary shares
12 month low (1 July 2010 to R71.90
30 June 2011) for ordinary shares
12 month high (1 July 2010 to US$15.57
30 June 2011) for ADRs
12 month low (1 July 2010 to US$9.72
30 June 2011) for ADRs
Free float
Ordinary shares 100%
ADR ratio 1:1
JSE Limited HAR
Range for quarter (1 April to R83.29 -
30 June 2011 closing prices) R103.25
Average daily volume for the 1 546 143
quarter (1 April to 30 June 2011) shares
Range for quarter (1 April to R68.65 -
30 June 2010 closing prices) R81.40
Average daily volume for the 1 918 132
quarter (1 April to 30 June 2010) shares
New York Stock Exchange, Inc
including other US trading HMY
Range for quarter (1 April to US$12.34 -
30 June 2011 closing prices) US$15.57
Average daily volume for the 2 771 880
quarter (1 April to 30 June 2011) shares
Range for quarter (1 April to US$9.04 -
30 June 2010 closing prices) US$10.57
Average daily volume for the 1 072 003
quarter (1 April to 30 June 2010) shares
Key features
Of the quarter...
- Gold production 3% higher at 10 152 kg (326 394 ounces)
- Grade remained steady
- R/kg cost higher at R242 851/kg ($1 115/oz) due to increased electricity and
stores costs, as well as inclusion of Target 3
- Cash operating profit 5% higher at R901m (US$133m)
Of the year...
- Improved safety rates
- Operations in build-up showed 22% improvement in production
- Improved underground grade at 4.60g/t
- Net profit of R617m/US$87m (loss of R192m/US$24m in FY10)
- Basic earnings per share at R1.44 (loss of 46c in FY10)
- Headline earnings of R957m/US$137m (R4m in FY10)
- Wafi-Golpu resource at more than 1 billion tonnes
- Created financial flexibility: US$300m debt facility
Financial summary for the fourth quarter and year ended 30 June 2011
Quarter Quarter Q on Q
June March Variance
2011 2011 %
Gold produced (1) - kg 10 152 9 857 3
- oz 326 394 316 909 3
Cash costs - R/kg 242 851 217 802 (12)
- US$/oz 1 115 970 (15)
Gold sold - kg 10 412 9 716 7
- oz 334 752 312 378 7
Gold price - R/kg 329 536 312 029 6
received - US$/oz 1 513 1 389 9
Operating - R million 901 855 5
profit - US$ million 133 122 9
Basic - SAc/s (10) 55 <(100)
(loss)/earnings - USc/s (1) 8 <(100)
per share*
Headline profit* - Rm 130 390 (67)
- US$m 19 56 (66)
Headline earnings - SAc/s 30 91 (67)
per share* - USc/s 4 13 (69)
Exchange rate - R/US$ 6.78 6.99 (3)
Year ended Year ended Y on Y
June June variance
2011 2010 %
Gold produced (1) - kg 40 535 44 433 (9)
- oz 1 303 228 1 428 545 (9)
Cash costs - R/kg 226 667 195 162 (16)
- US$/oz 1 009 801 (26)
Gold sold - kg 41 043 43 969 (7)
- oz 1 319 563 1 413 633 (7)
Gold price - R/kg 307 875 266 009 16
received - US$/oz 1 370 1 092 25
Operating - R million 3 275 2 926 12
profit - US$ million 468 386 21
Basic - SAc/s 139 (38) >100
(loss)/earnings - USc/s 20 (5) >100
per share*
Headline profit* - Rm 957 4 >100
- US$m 137 1 >100
Headline earnings - SAc/s 223 1 >100
per share* - USc/s 32 - 100
Exchange rate - R/US$ 6.99 7.58 (8)
* Reported amounts include continuing operations only
(1) Production statistics for Steyn 2 and Target 3 have been included. Steyn 2
is currently in a build-up phase and Target 3 was in build-up phase up to the
end of March 2011. Revenue and costs are capitalised for the period that these
mines are in build-up phase. Revenue capitalised includes: Quarter ending June
2011 Steyn 2, 27 kg (Mar 2011 - 14 kg) and Target 3, 0 kg (Mar 2011 - 250 kg),
year ended June 2011 Steyn 2, 90 kg (June 2010 - 33 kg) and Target 3, 531 kg
(June 2010 - 117 kg).
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 2010 are
available on our website (www.harmony.co.za).
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 macro- economic monetary policies; and
- socio-economic instability in the countries in which we operate.
Chief Executive's Review
With another financial year that has drawn to a close, it is important to take
stock of what we have achieved and to assess the progress made against our
ambition to create a company capable of generating earnings that fund growth
and dividends on a sustainable basis.
During financial year 2011, we:
- commissioned excellent gold mines in South Africa and Papua New Guinea (PNG);
- expanded the world class Wafi-Golpu resource to 9 million tonnes (Mt) of
copper and 26.6 million ounces (Moz) of gold (100%);
- increased production from growth projects by 22% year on year;
- tailored each mine's business plans to its unique requirements;
- pro-actively addressed industry challenges;
- improved production and productivity at most of our mines, and continue to
work at replicating that level of success across the board;
- increased Harmony's exploration exposure in PNG - a country with world class
exploration potential - to 8000 km²;
- improved the quality of our asset portfolio through the disposal and closure
of non-core assets;
- celebrated Harmony's 60th year in operation on 25 August 2010.
We made good progress in getting the company where we want it to be - producing
better quality ounces. Hidden Valley in PNG is now an operating mine, Harmony's
first greenfields offshore development, which was formally opened in September
2010; in South Africa we have Kusasalethu, Doornkop and Phakisa projects, all
of which are in build-up, and Tshepong and Masimong which have been steady
contributors to production. We dealt with the challenges at mines such as
Evander, Target and Joel to ensure these mines are positioned to deliver on
their production targets.
Harmony has invested a great deal in the expansion of its production base in
South Africa and PNG. The investment in exploration continues to pay dividends,
with the Wafi-Golpu resource showing a phenomenal 57% increase to over 1
billion tonnes during the year. Golpu's grade is over 1% copper, confirming it
is one of the highest grade copper gold porphyry systems in South East Asia.
These excellent results validate our long-held belief that PNG is a
game-changing region for Harmony.
On a 100% basis, Golpu alone now hosts a resource of 869Mt, containing 19.3Moz
of gold and 9.0Mt of copper (62Moz on a gold equivalent (note 1) basis). This
represents a significant year-on-year increase, with an additional 368Mt (73%
increase), comprising 8 956kt copper (88% increase) and 10.5Moz ounces of gold
(119% increase). Our resource base in PNG now represent 10% of Harmony's total
gold resources (or 21% of the resource on a gold equivalent basis), which is in
line with the Company's strategy to increase its geographic
diversification.
Annual production was lower than planned at 1.3Moz, largely due to safety
stoppages and under-performance at some of the shafts. We continue to improve
the business planning process, using benchmarks and targets we believe to be
realistic. Our `life of mine' plans support our commitment to improving the
grades from our underground operations, lowering our cost base and benchmarking
our costing parameters internally across our operations as well as externally
against other gold producers. Our focus remains on producing safe, profitable
ounces and our operations in build-up will add to our production in future.
Safety
Tragically, three employees (South Africa) and one contractor (PNG) lost their
lives during the final quarter of the financial year. The deceased were Mbuzeni
Sihoyiya, a locomotive guard at Kusasalethu, Michael Sello Matea, underground
assistant at Joel, Mbuyiseli Malungisa, a locomotive guard at Masimong and
Kerry Kowitz, a contractor working on the Wafi-Golpu access road. I would like
to extend my deepest condolences to their families, friends and colleagues.
Safety is a top priority at Harmony. We have put in place a number of safety
initiatives, which have resulted in excellent safety achievements. Fatalities
do, however, continue to occur. As a result, we appointed Alwyn Pretorius
(previously the chief operating officer: North region), who is very familiar
with Harmony's underground working environment, to assist in further improving
and accelerating the execution of our safety and health strategy.
Gold price
Increasing global economic uncertainty is making gold an even stronger
investment option than it already was. At over $1 700/oz, gold remains a
currency and we believe the gold price will continue its strength. Investors in
Harmony have complete exposure to the spot gold price, as the company does not
hedge its gold. During the past quarter the gold price received strengthened
from R312 029/kg to R329 536/kg.
Operational results
Quarter on quarter
Gold production for the June 2011 quarter is 3% higher than the previous
quarter, despite days lost to public holidays. The past quarter saw excellent
improvements in development metres, mainly at the build-up operations. Build-up
at Phakisa, Doornkop, Kusasalethu and Hidden Valley progressed well.
Grade remained steady at 2.08g/t.
Year on year
Tonnes milled for the year under review increased by 7% or 1 317 000 tonnes
when compared to the previous financial year. The main contributors were:
- Doornkop: The build-up resulted in an additional 178 000 tonnes (33%) being
milled for the year under review;
- Target 3: The inclusion of its first commercial production during the June
2011 quarter (75 000 tonnes);
- Free State surface operations: Tonnes increased by 1.2 million tonnes, mainly
waste rock dumps;
- Hidden Valley: Recorded a full year of production and tonnes milled increased
by 1.4 million tonnes to 1.7 million tonnes, achieving its production guidance
for the year.
The operations in build-up showed an increase in gold production. Hidden
Valley produced 3 118kg, an additional 1 215kg (64%) in comparison to the
1 903kg it produced in the previous financial year. Doornkop's production
increased by 562kg (29%), Phakisa's by 391kg (29%) and Kusasalethu's by 165kg
(3%). Gold production for the year under review decreased by 9% (3 898kg),
mainly as a result of the shafts that were closed in the 2011 financial
year. Closed shafts accounted for a decrease in gold produced of 4 092kg
year on year. Underground grade increased year-on-year to 4.60g/t.
Financial overview
Quarter on quarter
Quarter on quarter, cash operating costs in R/kg terms were 12% higher, mainly
due to higher electricity and stores costs, as well as the inclusion of Target
3 (which reached commercial production during the quarter) in our operating
results. Higher stores costs are due to additional maintenance performed during
public holidays. Electricity costs are higher due to a 25% increase in tariffs
as from April 2011 and the inclusion of one month's winter tariff.
Operating profit at R901 million was 5% higher, mainly due to the increase in
the average Rand gold price received to R329 536/kg.
Year on year
Cash operating costs in Rand terms increased by R686 million or 8%, mainly due
to restructuring costs, the inclusion of Target 3, higher electricity costs and
higher labour costs. This resulted in the cash operating cost in R/kg terms
increasing by 16% from R195 162/kg in FY10 to R226 667/kg in FY11. Rand per
tonne unit costs remained stable at R469/tonnes.
Capital expenditure for FY11 decreased by R317 million (10%) compared to the
previous financial year. This is mainly attributed to a reduction in capital
spent on Hidden Valley of 47% or R252 million. Capital from the South African
operations decreased by R65 million (2%), due to reduced expenditure at Phakisa
(R117 million), Doornkop (R50 million) and Kusasalethu (R50 million).
Reserves and resources
As at 30 June 2011, Harmony's mineral reserves amounted to 41.6Moz of gold,
spread across Harmony's assets in South Africa and PNG. The reserves of
Kusasalethu, Doornkop, Tshepong and Phakisa in South Africa and Hidden Valley
in PNG now constitute 45% of Harmony's total mineral reserves. Once the
pre-feasibility study of Wafi-Golpu has been completed, more ounces from PNG
will be added to Harmony's reserves.
The reserve declaration excludes Rand Uranium reserves (the asset which is
being held for sale), as well as some Evander projects which are no longer
included in Harmony's long term mining plans. These exclusions, together with
mine depletion, resulted in a decrease of 6.5Moz year on year, allowing Harmony
to refocus on growing, developing and operating its portfolio of quality
assets.
As at 30 June 2011 Harmony's attributable gold mineral resources were 163.9Moz.
Gold resources in PNG increased 51% year on year to 16.3Moz and now comprise
10% of the group's total resource base.
Harmony's PNG resource inventory also includes economically significant copper,
molybdenum and silver that co-occur with gold. Attributable copper resources
grew by 2.1Mt to 4.5Mt, up 86% year on year (and equates to 9.75Moz on a gold
equivalent basis (note 1)). Molybdenum increased to 84 000 tonnes (up 50%) and
silver increased to 55.16Moz (up 7.8%).
These increases were driven by resource expansions at Hidden Valley and
Wafi-Golpu.
Creating financial flexibility
Harmony has strengthened its financial flexibility through obtaining a 4 year
US$300 million revolving credit facility with Nedbank Limited and FirstRand
Bank Limited. The loan agreement was signed on 11 August 2011. This facility
is specifically ear-marked for Harmony's activities in PNG.
Dividend
We are pleased to declare a dividend of 60 SA cents per ordinary share for the
year ended 30 June 2011.
Looking ahead
Post year-end, following a five day strike, Harmony signed a two year wage
agreement with the National Union of Mineworkers (NUM), Solidarity and UASA
(collectively referred to as the "Unions") on the 2nd of August 2011. The
increase in wages will be off-set by improvements in productivity aimed at the
more effective utilization of our mining assets. Approximately 500kg of
production was lost due to the strike.
The wage agreement between Harmony and the Unions also includes a profit share
scheme in which all employees in the bargaining unit will share on a quarterly
basis. The profit share will be based on 1% of operating profits less capital
expenditure from the company's South African assets.
We look forward to having the Unions as our partners in creating a sustainable
mining industry.
Financial year 2011 was filled with great achievements. We have improved our
safety rates, secured excellent exploration results, continue to build up our
operations and future production potential and certain operations have
generated free operational cash flow.
Financial year 2012 promises to be equally exciting. We remain focussed on
continuing to deliver on our long term targets and to maximise shareholder
value.
Graham Briggs
Chief Executive Officer
Note 1. Gold equivalent ounces are calculated assuming a US$1150/oz Au, US$2.50
/lb Cu and US$13.50/oz Ag with 100% recovery for all metals
Safety and health
Safety
The provision of safe and healthy working places remains a key priority for
Harmony, as does the elimination of all workplace injuries and work-related ill
health effects. This has always been an important area of focus for Harmony.
Harmony will continue to implement and maintain safety initiatives and is in
the process of rolling out a new improved fall of ground strategy to further
reduce fall of ground incidents - one of the main contributors to fatal
accidents.
It is with deep regret that we report four fatalities during the June 2011
quarter, bringing total fatalities for the 2011 financial year to 16. This is
an improvement on the previous financial year, which recorded 22 fatalities.
However, we need to continue to work towards avoiding these incidents
altogether.
Harmony's Lost Time Injury Frequency Rate (LTIFR) in South Africa remains a
single digit, for the eleventh consecutive quarter. Quarter on quarter the
LTIFR rate regressed from 8.65 to 9.64, whilst LTIFR also regressed with 8% to
8.32 when compared to the previous year.
The Reportable Injury Frequency Rate (RIFR) (per million hours worked) in South
Africa regressed by 13% when compared to the previous year (from 4.19 to 4.73)
and by 17% quarter-on-quarter (from 4.62 to 5.39).
The Fatal Injury Frequency Rate (FIFR) improved by 19% when compared to the
previous year, but regressed by 44% quarter-on- quarter (from 0.09 to 0.13)
Safety achievements for the quarter included:
South African underground operations: 1 000 000 fatality free shifts
Doornkop shaft operations: 1 000 000 fatality free shifts
Doornkop total operations: 1 000 000 fatality free shifts
Phakisa: 500 000 fatality free shifts
Target: 500 000 fatality free shifts
Ongoing behavioural-based safety, competency training and development and
research, together with the vigilant co-operation of our stakeholders, will
continue to enable Harmony to become an even safer company to work for.
Health
Our pro-active approach to the health and wellness of our employees continues.
Various programmes and initiatives are supported and sponsored by the company
to ensure the wellbeing of our employees. Our objective remains to improve
health management programs and effectively utilise clinical information. This
includes the review of policies, procedures, and processes, as well as
training, on an ongoing basis.
See our Sustainable Development Report for more details on our website
www.harmony.co.za.
Financial overview
Quarter on quarter
Cash operating profits increased by 5% quarter on quarter to R901 million,
mainly due to an increase in revenue driven by the 6% increase in the R/kg gold
price received. The increase in revenue was offset by an 18% increase in
production cost.
Earnings per share
Basic earnings per share decreased from 55 SA cents to a loss of 10 SA cents
per share. Headline earnings per share decreased from 91 SA cents to 30 SA
cents. Headline earnings have been adjusted for the impairment of assets as
well as the reversal of the impairment of investment in associate.
Revenue
Revenue increased from R2 949 million to R3 422 million, or 16%, mainly due to
the 6% increase in the rand gold price received to R329 536/kg. The increase of
gold sold by 7% or 696kg, together with the inclusion of the results of Target
3, also contributed to the higher revenue total for the June 2011 quarter.
Cost of sales
Cost of sales increased from R2 623 million to R3 491 million in the June 2011
quarter. The main reasons for this increase are:
- higher production costs, driven by higher electricity costs which include the
annual increase by Eskom as well as one month's winter tariff (R115 million
increase); increased labour costs of R67 million as a result of an increase in
employees due to the build-up at certain shafts; an increase in stores cost due
to higher production. Also contributing to the increase is the inclusion of
costs related to Target 3, amounting to R93 million for the June 2011 quarter.
- an increase in amortisation and depreciation from R431 million in the March
2011 quarter to R477 million. This increase relates primarily to an increase in
tonnes mined at several shafts as well as depreciation commencing at Target 3
as it was brought into commercial production;
- impairment of assets amounting to R264 million. The impairments relate to
President Steyn 1 and 2 shafts (R99 million and R103 million respectively) and
St Helena (R61 million of which R9 million relates to goodwill);
- the annual adjustment on the rehabilitation provision amounting to R61
million;
- annual assessments of gold inventory balances resulting in write downs for
Steyn Plant (R41 million) and Target stockpile (R30 million) and an adjustment
on the gold in lock-up (R21 million).
Exploration expenditure
During the June 2011 quarter, R102 million was spent on exploration. Of the
amount spent during the quarter, R90 million relates to the PNG
projects. The expenditure for the March 2011 quarter was R77 million, R68
million of which related to PNG. The increase quarter on quarter relates
primarily to the pre-feasibility study being conducted at Wafi-Golpu.
Reversal of impairment/(impairment) of investment in associate
This movement relates to the limiting of costs relating to the Rand Uranium
transaction as well as some foreign exchange movements.
Net gain on financial instruments
The movement for the June 2011 quarter comprises of the changes in fair value
of the Nedbank Equity Linked Deposits held by the environmental trusts.
Investment income
Investment income for the June 2011 quarter was R24 million. This was a R40
million decrease quarter-on-quarter as the March 2011 quarter included amounts
related to the successful appeal against interest levied by SARS as well as
interest on outstanding diesel refunds, which were not repeated in the current
quarter.
Finance cost
Finance cost increased by R18 million quarter-on-quarter. This was
mainly due to the draw-down of additional funds from the Nedbank
facility during the previous quarter.
Taxation
The deferred taxation credit for the June 2011 quarter of R195 million credit
consists mainly of credits relating to the change in the Life-of-Mine rates,
amounting to R119 million, as well as additional temporary differences.
Capital expenditure
Capital expenditure increased from R667 million to R788 million in the June
2011 quarter, as expected.
Borrowings
The long term portion of borrowings decreased from R1 487 million to R1 229
million in the June 2011 quarter as a result of the net repayment of R100
million on the Revolving Credit Facility and the instalment payments on the
term facilities of R153 million.
Year on year
Cash operating profits increased by 12% to R3 275 million for 2011. This was
mainly due to an increase in revenue driven by the 16% increase in the rand/
kilogram gold price.
Earnings per share
Basic earnings per share increased from a loss of 46 SA cents to earnings of
144 SA cents per share. Headline earnings per share also increased from a loss
of 7 SA cents to earnings of 223 SA cents.
Revenue
Revenue increased from R11 284 million to R12 445 million, or 10%, mainly due
to the 16% increase in the rand gold price received to R307 875/kg. This
increase was offset by the 7% decrease in gold sold.
Cost of sales
Cost of sales increased from R10 484 million to R11 615 million for 2011. This
is mainly due to increases in production costs (driven by increased labour,
electricity and stores costs) and amortisation and depreciation.
Exploration expenditure
During 2011, R353 million was spent on exploration with R296 million for PNG.
The exploration expense in the income statement for 2010 was R219 million, with
R165 million being spent in PNG.
Net gain on financial instruments
The movement in net gain on financial instruments for 2011 was R414 million,
which includes R273 million recognised on the Witsgold transaction. The balance
of the total relates to the changes in fair value of the Nedbank Equity Linked
Deposits held by the Environmental Trusts.
Taxation
The deferred taxation credit for the year amounted to R492 million of which
approximately R363 million relates to the change in the Freegold unredeemed
capital allowance. The 2010 deferred tax charge of R251 million primarily
related to increases in average deferred tax rates, notably at Evander.
Notice of cash dividend
Dividend No. 82 of 60 cents per ordinary share, being the dividend for the year
ended 30 June 2011, has been declared payable on Monday, 19 September 2011 to
those shareholders recorded in the books of the company at the close of
business on Friday, 16 September 2011. The dividend is declared in the currency
of the Republic of South Africa. Any change in address or dividend instruction
to apply to this dividend must be received by the company's transfer
secretaries or registrar not later than Friday, 9 September 2011.
Last date to trade ordinary shares cum dividend Friday, 9 September
2011
Ordinary shares trade ex dividend Monday, 12 September
2011
Currency conversion date in respect of the UK own name Monday, 12 September
shareholders 2011
Record date Friday, 16 September
2011
Payment date Monday, 19 September
2011
No dematerialisation or rematerialisation of share certificates may occur
between Monday, 12 September 2011 and Friday, 16 September 2011, both dates
inclusive, nor may any transfers between registers take place during this
period.
CONDENSED CONSOLIDATED INCOME STATEMENTS (Rand)
Quarter ended Quarter ended Quarter ended
30 June 31 March 30 June
2011 2011 2010
(Unaudited) (Unaudited) (Unaudited)
Note R million R million R million
Continuing operations
Revenue 3 422 2 949 3 045
Cost of sales 2 (3 491) (2 623) (2 649)
Production costs (2 508) (2 064) (2 075)
Royalty expense (13) (30) (28)
Amortisation and
depreciation (477) (431) (383)
Impairment of assets (264) - (30)
Employment termination
and restructuring costs - (26) (82)
Other items (229) (72) (51)
Gross (loss)/profit (69) 326 396
Corporate, administration
and other expenditure (71) (93) (124)
Social investment
expenditure (18) (27) (28)
Exploration expenditure 3 (102) (77) (60)
Profit on sale of
property, plant and
equipment 5 8 101
Other income/(expenses)
- net 33 (8) 40
Operating (loss)/profit (222) 129 325
(Loss)/profit from
associates - (24) (7)
Reversal of impairment/
(impairment) of investment
in associate 6 18 (160) -
Loss on sale of investment
in subsidiary - - -
Net gain on financial
instruments 4 22 3 11
Investment income 24 64 25
Finance cost (89) (71) (94)
(Loss)/profit before
taxation (247) (59) 260
Taxation 205 297 (227)
Normal taxation 10 (12) (20)
Deferred taxation 5 195 309 (207)
Net (loss)/profit from
continuing operations (42) 238 33
Discontinued operations
(Loss)/profit from
discontinued operations 6 - - (20)
Net (loss)/profit (42) 238 13
Attributable to:
Owners of the parent (42) 238 13
Non-controlling interest - - -
(Loss)/earnings per
ordinary share (cents) 7
- (Loss)/earnings from
continuing operations (10) 55 8
- (Loss)/earnings from
discontinued operations - - (5)
Total (loss)/earnings
per ordinary share (cents) (10) 55 3
Diluted (loss)/earnings
per ordinary share (cents) 7
- (Loss)/earnings from
continuing operations (10) 55 8
- (Loss)/earnings from
discontinued operations - - (5)
Total diluted(loss)/earnings
per ordinary share (cents) (10) 55 3
Quarter ended Quarter ended
30 June 30 June
2011 2010
(Audited)
R million R million
Continuing operations
Revenue 12 445 11 284
Cost of sales (11 615) (10 484)
Production costs (9 074) (8 325)
Royalty expense (96) (33)
Amortisation and
depreciation (1 776) (1 375)
Impairment of assets (264) (331)
Employment termination
and restructuring costs (158) (205)
Other items (247) (215)
Gross (loss)/profit 830 800
Corporate, administration
and other expenditure (354) (382)
Social investment
expenditure (84) (81)
Exploration expenditure (353) (219)
Profit on sale of
property, plant and
equipment 29 104
Other income/(expenses)
- net (24) (58)
Operating (loss)/profit 44 164
(Loss)/profit from
associates (51) 56
Reversal of impairment/
(impairment) of investment
in associate (142) -
Loss on sale of investment
in subsidiary - (24)
Net gain on financial
instruments 414 38
Investment income 140 187
Finance cost (288) (246)
(Loss)/profit before
taxation 117 175
Taxation 480 (335)
Normal taxation (12) (84)
Deferred taxation 492 (251)
Net (loss)/profit from
continuing operations 597 (160)
Discontinued operations
(Loss)/profit from
discontinued operations 20 (32)
Net (loss)/profit 617 (192)
Attributable to:
Owners of the parent 617 (192)
Non-controlling interest - -
(Loss)/earnings per
ordinary share (cents)
- (Loss)/earnings from
continuing operations 139 (38)
- (Loss)/earnings from
discontinued operations 5 (8)
Total (loss)/earnings
per ordinary share (cents) 144 (46)
Diluted (loss)/earnings
per ordinary share (cents)
- (Loss)/earnings from
continuing operations 139 (38)
- (Loss)/earnings from
discontinued operations 5 (8)
Total diluted(loss)/earnings
per ordinary share (cents) 144 (46)
The accompanying notes are an integral part of these condensed consolidated
financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME (Rand)
Quarter ended
30 June 31 March 30 June
2011 2011 2010
(Unaudited) (Unaudited) (Unaudited)
R million R million R million
Net (loss)/profit for the period (42) 238 13
Other comprehensive
income/(loss) for the period,
net of income tax 418 6 (166)
Foreign exchange translation 473 22 (161)
Fair value movement of
available-for-sale investments (55) (16) (5)
Total comprehensive
income/(loss) for the period 376 244 (153)
Attributable to:
Owners of the parent 376 244 (153)
Non-controlling interest - - -
Year ended Year ended
30 June 30 June
2011 2010
(Audited)
R million R million
Net (loss)/profit for the period 617 (192)
Other comprehensive
income/(loss) for the period,
net of income tax 368 (131)
Foreign exchange translation 470 (127)
Fair value movement of
available-for-sale investments (102) (4)
Total comprehensive
income/(loss) for the period 985 (323)
Attributable to:
Owners of the parent 985 (323)
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 June 31 March 30 June
2011 2011 2010
(Unaudited) (Audited)
Note R million R million R million
ASSETS
Non-current assets
Property, plant and equipment 8 31 221 30 557 29 556
Intangible assets 8 2 170 2 188 2 210
Restricted cash 31 27 146
Restricted investments 1 883 1 866 1 742
Investments in financial
assets 185 236 12
Investments in associates - - 385
Inventories 9 172 227 214
Trade and other receivables 23 69 75
35 685 35 170 34 340
Current assets
Inventories 9 837 954 987
Trade and other receivables 1 073 1 111 932
Income and mining taxes 139 119 74
Cash and cash equivalents 693 656 770
2 742 2 840 2 763
Assets of disposal groups
classified as held for sale 6 268 174 245
3 010 3 014 3 008
Total assets 38 695 38 184 37 348
EQUITY AND LIABILITIES
Share capital and reserves
Share capital 28 305 28 290 28 261
Other reserves 762 299 258
Retained earnings 1 093 1 135 690
30 160 29 724 29 209
Non-current liabilities
Deferred tax liability 3 067 3 313 3 534
Provision for environmental
rehabilitation 10 1 971 1 785 1 692
Retirement benefit obligation
and other provisions 174 179 169
Borrowings 11 1 229 1 487 981
6 441 6 764 6 376
Current liabilities
Borrowings 11 330 336 209
Income and mining taxes 2 17 9
Trade and other payables 12 1 746 1 343 1 410
2 078 1 696 1 628
Liabilities of disposal
groups classified as held for
sale 6 16 - 135
2 094 1 696 1 763
Total equity and liabilities 38 695 38 184 37 348
The accompanying notes are an integral part of these condensed consolidated
financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Rand)
for the year ended 30 June 2011
Share Other Retained
capital reserves earnings Total
R million R million R million R million
Balance - 30 June 2010 28 261 258 690 29 209
Issue of shares 44 - - 44
Share-based payments - 136 - 136
Total comprehensive income
for the year - 368 617 985
Dividends paid - - (214) (214)
Balance as at 30 June 2011 28 305 762 1 093 30 160
Balance - 30 June 2009 28 091 339 1 095 29 525
Issue of shares 175 - - 175
Share-based payments (5) 148 - 143
Repurchase of equity
interest - (98) - (98)
Total comprehensive loss
for the year - (131) (192) (323)
Dividends paid - - (213) (213)
Balance as at 30 June 2010 28 261 258 690 29 209
The statement of changes in equity for the year ended 30 June 2010 has been
audited. The accompanying notes are an integral part of these condensed
consolidated financial statements.
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (Rand)
Quarter ended Quarter ended Quarter ended
30 June 31 March 30 June
2011 2011 2010
(Unaudited) (Unaudited) (Unaudited)
Note R million R million R million
Cash flow from
operating activities
Cash generated by
operations 1 052 213 877
Interest and dividends
received 24 64 32
Interest paid (35) (34) (38)
Income and mining taxes
(paid)/refund (19) 8 (55)
Cash generated by
operating activities 1 022 251 816
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 - - 8
Prepayment for Evander
6 and Twistdraai
transaction 12 100 - -
Other investing
activities (10) 16 (11)
Net additions to
property, plant and
equipment (829) (687) (708)
Cash utilised by
investing activities (743) (671) (711)
Cash flow from
financing activities
Borrowings raised 150 250 300
Borrowings repaid (415) (17) (106)
Ordinary shares issued
- net of expenses 15 13 7
Dividends paid - - -
Cash
(utilised)/generated by
financing activities (250) 246 201
Foreign currency
translation adjustments 8 (7) (17)
Net increase/(decrease)
in cash and cash
equivalents 37 (181) 289
Cash and cash
equivalents - beginning
of period 656 837 481
Cash and cash
equivalents - end of
period 693 656 770
Year ended Year ended
30 June 30 June
2011 2010
(Audited)
R million R million
Cash flow from operating activities
Cash generated by operations 2 418 1 611
Interest and dividends received 140 187
Interest paid (134) (90)
Income and mining taxes (paid)/refund (45) (125)
Cash generated by operating activities 2 379 1 583
Cash flow from investing activities
(Increase)/decrease in restricted cash 116 15
Proceeds on disposal of investment in subsidiary 229 24
Proceeds on disposal of available-for-sale
financial assets 1 50
Prepayment for Evander 6 and Twistdraai
transaction 100 -
Other investing activities 10 (12)
Net additions to property, plant and equipment (3 110) (3 493)
Cash utilised by investing activities (2 654) (3 416)
Cash flow from financing activities
Borrowings raised 925 1 236
Borrowings repaid (546) (391)
Ordinary shares issued - net of expenses 44 18
Dividends paid (214) (213)
Cash (utilised)/generated by financing activities 209 650
Foreign currency translation adjustments (11) 3
Net increase/(decrease) in cash and cash
equivalents (77) (1 180)
Cash and cash equivalents - beginning of period 770 1 950
Cash and cash equivalents - end of period 693 770
The accompanying notes are an integral part of these condensed consolidated
financial statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE FOURTH
QUARTER AND YEAR ENDED 30 JUNE 2011
1. Accounting policies
Basis of accounting
The condensed consolidated financial statements for the year ended 30 June 2011
have been prepared in accordance with IAS 34, Interim Financial Reporting, JSE
Listing 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 2010, 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
Quarter ended Quarter ended Quarter ended
30 June 31 March 30 June
2011 2011 2010
(Unaudited) (Unaudited) (Unaudited)
R million R million R million
Production costs 2 508 2 064 2 075
Royalty expense 13 30 28
Amortisation and depreciation 477 431 383
Impairment of assets(1) 264 - 30
Rehabilitation expenditure(2) 61 4 14
Care and maintenance cost of
restructured shafts 37 35 15
Employment termination and
restructuring costs - 26 82
Share based payments 45 28 41
Other(3) 86 5 (19)
Total cost of sales 3 491 2 623 2 649
Year ended Year ended
30 June 30 June
2011 2010
(Audited)
R million R million
Production costs 9 074 8 325
Royalty expense 96 33
Amortisation and depreciation 1 776 1 375
Impairment of assets(1) 264 331
Rehabilitation expenditure(2) 74 29
Care and maintenance cost of restructured shafts 124 57
Employment termination and restructuring costs 158 205
Share based payments 136 148
Other(3) (87) (19)
Total cost of sales 11 615 10 484
(1) During the June 2011 quarter, an impairment of R264 million relating to
President Steyn 1 and 2 shafts and St Helena was recorded. The impairments for
the year ended 30 June 2010 relates mainly to the Virginia and Evander
operations, which was recorded as a result of shaft closures. (2) The expense
for the June 2011 quarter results from the annual re-estimation of the
rehabilitation obligation. (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
Quarter ended Quarter ended Quarter ended
30 June 31 March 30 June
2011 2011 2010
(Unaudited) (Unaudited) (Unaudited)
R million R million R million
Total exploration expenditure 111 87 60
Less: expenditure capitalised(1) (9) (10) -
Exploration expenditure per
income statement 102 77 60
Year ended
30 June 30 June
2011 2010
(Audited)
R million R million
Total exploration expenditure 398 219
Less: expenditure capitalised(1) (45) -
Exploration expenditure per income statement 353 219
(1) Relates to Brownfields exploration at Hidden Valley
4. Net gain on financial instruments
During the September 2010 quarter, a gain of R273 million was recognised on the
Freegold option. This was following Harmony Gold Mining Company Limited
(Harmony) entering into two transactions with Witwatersrand Consolidated Gold
Resources Limited (Wits Gold), whereby Wits Gold obtains a prospecting right
over Harmony's Merriespruit South area and the option held by ARMgold/Harmony
Freegold Joint Venture Company (Proprietary) Limited (Freegold), a wholly owned
subsidiary of Harmony, is cancelled. The remainder of the total relates
primarily to the increase in the fair value of the Nedbank Equity Linked
Deposits held by the Environmental Trusts.
5. Deferred taxation
The deferred taxation credit of R195 million includes credits of R119 million
related to the annual re-assessment of the deferred tax rates.
The deferred taxation credit of R309 million in the March 2011 quarter includes
a deferred tax credit of R333 million relating to Freegold. South African
Revenue Service (SARS) previously disallowed Freegold's "post 1973 gold mine"
additional capital allowance claim, and also disallowed Freegold's application
of mining ringfencing. The disputed matters were setdown to be heard in the
Income Tax Court of Johannesburg on 14 March 2011, but SARS withdrew the
additional capital allowance claim on 10 March 2011, conceding that the
Freegold operations are entitled to claim this capital allowance. The inclusion
of the capital allowance caused an increase in the deferred tax asset on the
balance sheet and the resulting credit in the income statement. For additional
disclosure on the mining ringfencing application refer to note 13.
6. Disposal groups classified as held for sale and discontinued operations
Mount Magnet
The conditions precedent for the sale of Mount Magnet were fulfilled and the
transaction became effective on 20 July 2010. A total purchase consideration of
R238 million was received from Ramelius Resources Limited in exchange for 100%
of the issued shares of Mount Magnet. The group recognised a total profit of
R104 million net of tax, before the realisation of accumulated foreign exchange
losses of R84 million from other comprehensive income to the consolidated
income statement. The income statement and earnings per share amounts for all
comparative periods have been re-presented to disclose the operation as a
discontinued operation.
Investment in associate
The investment in Rand Uranium has been classified as held for sale following
the decision by the shareholders to sell the business. 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. Where the carrying value of the investment exceeds
the expected proceeds, an impairment is recognised in the income statement. An
impairment of R142 million has been recognised for the 2011 year.
Evander 6 and Twistdraai
On 10 September 2010, Harmony concluded a sale of assets agreement with Taung
Gold Limited (Taung), in which Taung acquired the Evander 6 Shaft, the related
infrastructure and surface rights permits as well as a mining right over the
Evander 6 and Twistdraai areas. The total purchase consideration is R225
million, which will be settled in cash when all remaining conditions precedent
to the transaction have been fulfilled. In terms of an amended agreement Taung
paid an amount of R100 million in April 2011. Refer to note 12 for additional
disclosure.
7. (Loss)/earnings and net asset value per share
(Loss)/earnings per share is calculated on the weighted average number of
shares in issue for the quarter ended 30 June 2011: 430.0 million (31 March
2011: 429.5 million, 30 June 2010: 427.6 million), and the year ended 30 June
2011: 429.3 million (30 June 2010: 426.4 million).
The diluted (loss)/earnings per share is calculated on weighted average number
of diluted shares in issue for the quarter ended 30 June 2011: 431.4 million
(31 March 2011: 430.7 million, 30 June 2010: 429.1 million), and the year
ended 30 June 2011: 430.4 million (30 June 2010: 427.8 million).
Quarter ended Quarter ended Quarter ended
30 June 31 March 30 June
2011 2011 2010
(Unaudited) (Unaudited) (Unaudited)
Total (loss)/earnings per
share (cents):
Basic (loss)/earnings (10) 55 3
Diluted (loss)/earnings (10) 55 3
Headline earnings/(loss) 30 91 (10)
- from continuing operations 30 91 (6)
- from discontinued operations - - (4)
Diluted headline earnings/(loss) 30 91 (10)
- from continuing operations 30 91 (6)
- from discontinued operations - - (4)
R million R million R million
Reconciliation of headline
earnings/(loss):
Continuing operations
Net (loss)/profit (42) 238 33
Adjusted for (net of tax):
Profit on sale of property, plant
and equipment (5) (8) (101)
Taxation effect of profit on sale
of property, plant
and equipment 1 2 21
Net gain on financial instruments (6) (3) (4)
Taxation effect of net gain on
financial instruments 2 1 1
(Reversal of impairment)/impairment
of investment in associate* (18) 160 -
Foreign exchange loss/(gain)
reclassified from other
comprehensive income* - - -
Loss on sale of investment in
subsidiary - - -
Taxation effect of loss on sale of
investment in subsidiary - - -
Impairment of assets 264 - 30
Taxation effect of impairment of
assets (66) - (4)
Headline earnings/(loss) 130 390 (24)
Discontinued operations
Net (loss)/profit - - (20)
Adjusted for (net of tax):
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 loss - - (20)
Total headline earnings/(loss) 130 390 (44)
Year ended Year ended
30 June 30 June
2011 2010
(Audited)
Total (loss)/earnings per
share (cents):
Basic (loss)/earnings 144 (46)
Diluted (loss)/earnings 144 (46)
Headline earnings/(loss) 223 (7)
- from continuing operations 223 1
- from discontinued operations - (8)
Diluted headline earnings/(loss) 222 (7)
- from continuing operations 222 1
- from discontinued operations - (8)
R million R million
Reconciliation of headline earnings/(loss):
Continuing operations
Net (loss)/profit 597 (160)
Adjusted for (net of tax):
Profit on sale of property, plant and equipment (30) (104)
Taxation effect of profit on sale of property, plant
and equipment 8 22
Net gain on financial instruments (7) (7)
Taxation effect of net gain on financial instruments 2 2
(Reversal of impairment)/impairment of investment
in associate* 142 -
Foreign exchange loss/(gain) reclassified from other
comprehensive income* 47 (22)
Loss on sale of investment in subsidiary - 24
Taxation effect of loss on sale of investment in
subsidiary - (7)
Impairment of assets 264 331
Taxation effect of impairment of assets (66) (75)
Headline earnings/(loss) 957 4
Discontinued operations
Net (loss)/profit 20 (32)
Adjusted for (net of tax):
Profit on sale of investment in subsidiary (138) (1)
Taxation effect of profit on sale of investment in
subsidiary 34 -
Foreign exchange loss reclassified from other
comprehensive income* 84 -
Headline loss - (33)
Total headline earnings/(loss) 957 (29)
*There is no taxation effect on these items.
Net asset value per share (cents)
At At At
30 June 31 March 30 June
2011 2011 2010
Number of shares in issue 430 084 628 429 807 371 428 654 779
Net asset value per share (cents) 7 013 6 916 6 814
8. Property, plant and equipment and intangible assets
An impairment of R264 million has been recognised at 30 June 2011 for the
President Steyn 1 and 2 shafts and St Helena. R9 million of the impairment
relates to goodwill, which is included in intangible assets.
9. Inventories
A write down of R41 million was recorded for the Steyn plant demolishment
project as well as R21 million for the net realisable value adjustment for
other gold in lock-up. In addition, a write down of R30 million was recorded
for certain stockpiles.
10. Provision for environmental rehabilitation
An adjustment of R157 million was made to the liability following the annual
re-estimation of the rehabilitation obligation.
11. Borrowings
30 June 31 March 30 June
2011 2011 2010
(Unaudited) (Audited)
R million R million R million
Total long-term borrowings 1 229 1 487 981
Total current portion of borrowings 330 336 209
Total borrowings(1)(2) 1 559 1 823 1 190
(1) In December 2009, the Company entered into a loan facility with Nedbank
Limited, comprising of a Term Facility of R900 million and a Revolving Credit
Facility of R600 million. Interest accrues on a day to day basis over the term
of the loan at a variable interest rate, which is fixed for a three month
period, equal to JIBAR plus 3.5%. Interest is repayable quarterly. The Term
Facility is repayable bi-annually in equal instalments of R90 million over five
years. The first instalment was paid on 30 June 2010.
In December 2010, the Company entered into an additional loan facility with
Nedbank Limited, comprising of a Term Facility of R500 million and a Revolving
Credit Facility of R250 million. Interest terms are identical to the original
facility. The Term Facility is repayable bi-annually in equal instalments of
R62.5 million over four years. The first instalment was paid on 30 June 2011.
The terms of the original Revolving Credit Facility were amended to coincide
with the repayment terms of the new Revolving Credit Facility, being payable
after three years from December 2010.
At 30 June 2011, R400 million (31 March 2011: R300 million, 30 June 2010: R300
million) of these facilities had not been drawn down.
(2) Included in the borrowings is R51 million (31 March 2011: R58 million; June
2010: R91 million) owed to Westpac Bank Limited in terms of a finance lease
agreement. The future minimum lease payments are as follows:
30 June 31 March 30 June
2011 2011 2010
(Unaudited) (Audited)
R million R million R million
Due within one year 29 29 33
Due between one and five years 22 30 60
51 59 93
Future finance charges (1) (1) (2)
Total future minimum lease payments 50 58 91
12. Trade and other payables
Included in the balance at 30 June 2011 is an amount of R100 million paid by
Taung to Harmony in terms of the amended agreement for the purchase of the
Evander 6 shaft and Twistdraai areas. In terms of the amended agreement, the
amount is repayable to Taung should the outstanding conditions for the
transactions not be fulfilled.
13. Commitments and contingencies
30 June 31 March 30 June
2011 2011 2010
(Unaudited) (Audited)
R million R million R million
Capital expenditure commitments:
Contracts for capital expenditure 194 191 335
Authorised by the directors but not
contracted for 1 504 2 175 1 006
1 698 2 366 1 341
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 annual
report for the financial year ended 30 June 2010, available on the group's
website at www.harmony.co.za. In addition the following contingencies have been
added or amended:
(a) During March 2011, the Constitutional Court handed down judgement in the
case of Mr Thembekile Mankayi v AngloGold Ashanti Limited (AGA) regarding
litigation in terms of the Occupational Diseases in Mines and Works Act
(ODIMWA). The judgement allows Mr Mankayi's executor to proceed with the case
in the High Court of South Africa. Harmony was named as a second defendant in
the original case. Should anyone bring similar claims against Harmony in
future, those claimants would need to provide evidence proving that silicosis
was contracted while in the employment of the Company and that it was
contracted due to negligence on the Company's part. The link between the cause
(negligence by the Company while in its employ) and the effect (the silicosis)
will be an essential part of any case. It is therefore uncertain as to whether
the Company will incur any costs related to silicosis claims in the future and
due to the limited information available on any potential claims and the
uncertainty of the outcome of these claims, no estimation can be made for the
possible obligation.
(b) The Court's decision on Freegold's appeal regarding the South African
Revenue Service's (SARS) application of mining tax ring-fencing was received on
1 August 2011 and the Court found in favour of SARS. The case was concluded in
March 2011, but judgement was reserved at that time. The Company has decided to
appeal the finding by the Court. Any additional income taxes payable are
expected to be offset by additional deferred tax credits due to the impact this
application will have on unredeemed capital.
(c) On 18 April 2008, Harmony Gold Mining Company Limited was made aware that
it had been named or might 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 Depository Receipts (ADRs) and
options with regard to certain of its business practices. Harmony has retained
legal counsel. During January 2009, the plaintiff filed an Amended Complaint
with the United States District Court (Court). Subsequently, the Company filed
a Motion to Dismiss all claims asserted in the Class Action Case. On 19 March
2010, the Court denied the Company's application for dismissal and subsequently
the Company filed a Motion for Reconsideration in which it requested the Court
to reconsider its judgement. This matter was heard on 27 April 2010 and the
Company's request for reconsideration of judgement was denied. The Company has
subsequent to 30 June 2011 reached a mutually acceptable settlement with the
lead plaintiff. The settlement requires final approval from the Court and no
assurance can be given that the settlement will ultimately be approved.
14. Subsequent events
(a) Refer to note 13(b) for details on the post balance sheet date event
relating to the Freegold court case.
(b) On 11 August 2011, the group entered into a US$300 million Revolving Credit
Facility. The facility has a term of four years and attracts interest at LIBOR
plus 260 basis points. This arrangement is subject to certain conditions
precedent being satisfied. The facility was jointly arranged by Nedbank Limited
and Firstrand Bank Limited (acting through its Rand Merchant Bank division).
(c) On 12 August 2011 the board approved a payment of dividend of 60 SA cents
per share for the year ended 30 June 2011.
15. Segment report
The segment report follows on page 28 and 29.
16. Reconciliation of segment information to consolidated income statements and
balance sheets
30 June 30 June
2011 2010
(Audited)
R million R million
The "Reconciliation of segment information to
consolidated income statement and balance
sheet" 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, balance sheet and
segment report:
Revenue from:
Discontinued operations - -
Production costs from:
Discontinued operations - -
Reconciliation of production profit to gross profit:
Total segment revenue 12 445 11 284
Total segment production costs and royalty expense (9 170) (8 358)
Production profit as per segment report 3 275 2 926
Less: discontinued operations - -
3 275 2 926
Cost of sales items other than production costs and
royalty expense (2 445) (2 126)
Amortisation and depreciation (1 776) (1 375)
Impairment of assets (264) (331)
Employment termination and restructuring costs (158) (205)
Share-based payments (136) (148)
Rehabilitation costs (74) (29)
Care and maintenance costs of restructured shafts (124) (57)
Other 87 19
Gross profit as per income statements * 830 800
Reconciliation of total segment mining assets to
consolidated property, plant and equipment:
Property, plant and equipment not allocated to a segment:
Mining assets 871 786
Undeveloped property 5 139 5 139
Other non-mining assets 70 72
Less: Non-current assets classified as held for sale - (226)
6 080 5 771
* The reconciliation was done up to the first recognisable line item on the
income statement. The reconciliation will follow the income statement after
that.
17. Audit review
The condensed consolidated financial statements for the year ended 30 June 2011
on pages 18 to 29 have been reviewed in accordance with the 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 YEAR ENDED 30 JUNE 2011 (Rand/Metric)
Production Production Mining
Revenue cost(1) profit assets
R million R million R million R million
Continuing operations
South Africa
Underground
Bambanani(2) 921 828 93 965
Doornkop 781 601 180 3 085
Evander 717 622 95 946
Joel 454 417 37 183
Kusasalethu 1 774 1 321 453 3 220
Masimong 1 326 756 570 899
Phakisa 551 473 78 4 317
Target(2) 1 080 815 265 2 729
Tshepong 2 007 1 172 835 3 589
Virginia 682 562 120 672
Surface
All other surface
operations(3) 1 176 888 288 155
Total South Africa 11 469 8 455 3 014 20 760
International
Papua New Guinea 976 715 261 4 381
Total international 976 715 261 4 381
Total operations 12 445 9 170 3 275 25 141
Reconciliation of the
segment information to
the consolidated
income statements and
balance sheets (refer
to note 16)
- - 6 080
12 445 9 170 31 221
Capital Kilograms Tonnes
expenditure(4) produced milled
R million kg* t'000*
Continuing operations
South Africa
Underground
Bambanani(2) 321 3 051 426
Doornkop 292 2 512 718
Evander 196 2 302 541
Joel 73 1 449 407
Kusasalethu 380 5 609 1 099
Masimong 178 4 280 868
Phakisa 369 1 762 387
Target(2) 439 3 981 805
Tshepong 273 6 468 1 343
Virginia 79 2 213 576
Surface
All other surface operations(3) 147 3 790 10 431
Total South Africa 2 747 37 417 17 601
International
Papua New Guinea 289 3 118 1 679
Total international 289 3 118 1 679
Total operations 3 036 40 535 19 280
(1) Production costs includes royalty expense.
(2) Production statistics for Steyn 2 and up to March 2011 for Target 3 are
included for information purposes. Steyn 2 is in build-up phase and revenue and
costs are currently capitalised until commercial levels of production are
reached. Target 3 had reached commercial production levels in April 2011.
(3) Includes Kalgold, Phoenix, Dumps and President Steyn plant clean-up.
(4) The total excludes non-operational capital expenditure of R67 million
relating to Papua New Guinea.
* Production statistics are not reviewed
SEGMENT REPORT FOR THE YEAR ENDED 30 JUNE 2010 (Rand/Metric)
Production Operating Mining
Revenue cost profit assets
R million R million R million R million
Continuing operations
South Africa
Underground
Bambanani(2) 1 114 745 369 954
Doornkop 517 410 107 2 837
Evander 910 859 51 922
Joel 524 379 145 175
Kusasalethu 1 392 1 091 301 2 974
Masimong 1 277 702 575 799
Phakisa 375 326 49 4 065
Target(2) 878 664 214 2 537
Tshepong 1 823 1 147 676 3 645
Virginia 1 415 1 340 75 682
Surface
All other surface
operations(1) 980 632 348 127
Total South Africa 11 205 8 295 2 910 19 717
International
Papua New Guinea(3) 79 63 16 3 771
Total international 79 63 16 3 771
Total continuing
operations 11 284 8 358 2 926 23 488
Discontinued operations
Mount Magnet - - - 226
Total discontinued
operations - - - 226
Total operations 11 284 8 358 2 926 23 714
Reconciliation of the
segment
information to the
consolidated
income statement and
balance sheet (refer to
note 16)
- - 5 771
11 284 8 358 29 485
Capital Kilograms Tonnes
expenditure produced milled
R million kg* t'000*
Continuing operations
South Africa
Underground
Bambanani(2) 207 4 137 528
Doornkop 342 1 950 540
Evander 175 3 475 788
Joel 88 2 006 439
Kusasalethu 430 5 444 1 035
Masimong 177 4 840 899
Phakisa 486 1 371 339
Target(2) 382 3 539 777
Tshepong 261 6 749 1 518
Virginia 180 5 288 1 656
Surface
All other surface operations(1) 84 3 731 9 140
Total South Africa 2 812 42 530 17 659
International
Papua New Guinea(3) 541 1 903 304
Total international 541 1 903 304
Total continuing operations 3 353 44 433 17 963
Discontinued operations
Mount Magnet - - -
Total discontinued operations - - -
Total operations 3 353 44 433 17 963
Notes:
(1) Includes Kalgold, Phoenix, Dumps and President Steyn plant clean-up
(2) Production statistics for President Steyn and Target 3 are included for
information purposes. These mines are in build-up phase and revenue and costs
are currently capitalised until commercial levels of production are reached.
(3) Production statistics for Papua New Guinea are included for the full year
for information purposes. The mine was in build-up phase until the end of April
2010, when commercial levels of production were reached. Revenue and costs up
to this date were capitalised.
* Production statistics are not reviewed
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
South Africa
Telephone: +27 11 411 2000
Website: http://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 Nokó*^,
C M L Savage*^, A J Wilkens*, J Wetton*^
* 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
Annamarie van der Merwe
Telephone: +27 86 111 1010
Fax: +27 86 504 1315
Mobile: +27 83 264 0328
E-mail: avdm@ithemba.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
8:30 am to 5:30 pm (Monday to Friday)
or +44 (0) 20 8639 3399 (calls from overseas)
Fax: +44 (0) 20 8639 2220
ADR Depositary
BNY Mellon
101 Barclay Street
New York, NY 10286
United States of America
Telephone: +1888-BNY-ADRS
Fax: +1 212 571 3050
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
END
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