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HAR
HAPS
HAR - Harmony Gold Mining Company - Financial Review For The Third Quarter And
Nine Months Ended 31 March 2009
Harmony Gold Mining Company Limited
Incorporated in the Republic of South Africa
Registration Number 1950/038232/06
("Harmony" or "Company")
JSE Share code: HAR
NYSE Share code: HMY
ISIN Code: ZAE000015228
Financial review for the third quarter and nine months ended 31 March 2009
Quarter at a glance
* Continue to be safety conscious
* Achieved zero net debt
* Headline earnings up by 5%
* Strong cash flow, with cash operating profit at R1.2 billion
* Five years of accumulated losses reversed
* Capital expenditure reduced, as predicted
* Elandsrand: both production and cash operating cost (R/kg) results have
improved
* Target: improved production and cash operating cost (R/kg) results
* 3% decline in total gold production
* 2% increase in cash operating costs (R/kg)
Financial summary for the third quarter
ended 31 March 2009
Quarter Quarter Quarter
March December Q-on-Q March
2009 2008 variance 2008
Gold produced - kg 10 880 11 267 (3,4%) 10 133
- oz 349 801 362 242 (3,4%) 325 783
Cash costs - R/kg 171 361 168 299 (1,8%) 147 097
- $/oz 537 527 (1,9%) 624
Gold sold - kg 10 247 12 415 (17,5%) 10 347
- oz 329 447 399 150 (17,5%) 332 663
Cash operating
profit - Rm 1 176 1 113 5,7% 817
- US$m 118 112 5,4% 110
Basic profit - SAc/s 231 324 (28,7%) 86
- USc/s 23 33 (30,3%) 12
Headline profit - SAc/s 123 121 1,7% 63
- USc/s 12 12 - 8
Harmony`s Annual Report, Notice of Meeting, Sustainable Development Report and
its Annual Report filed on a Form 20F with the United States` Securities and
Exchange Commission for the year ended 30 June 2008 are available on our
website at www.harmony.co.za.
Chief Executive Officer`s Review
"Harmony is financially healthy. We have delivered on our promise to reduce our
debt, preserve cash and position the company to become net debt-free. Our
shareholders have invested in an uncomplicated, safety-conscious company with a
strong cash flow, growing pipeline, a steady margin, completely unhedged and
geared for gold bulls."
Graham Briggs, Chief Executive Officer
Overview
A number of initiatives have been implemented to address safety, throughput,
grade, production, costs and Harmony`s financial position.
We have made excellent progress with safety, achieving improved safety rates
and receiving safety awards. We continue to drive our behaviour-based safety
programme, which is aimed at changing the attitudes and mindsets of all within
the company on and off the mines.
We have taken cognisance of the Presidential Mine Safety Audit report that was
released in February 2009 and will continue to address safety in a pro-active
manner. Only safe production within Harmony is rewarded.
Strategic planning for the financial year 2009/2010 began during the past
quarter. Harmony`s executive management met in February 2009 to address how to
further improve safety, how production targets would be achieved and
maintained, and how sustainable profits would be generated. Planning parameters
have been agreed and shaft strategic plans will be signed off in July 2009. Our
planning has been done at a gold price of R225 000/kg, leaving Harmony with a
reasonably strong margin.
Safety
We are deeply saddened by the deaths of three of our colleagues. We extend our
heartfelt condolences to their families, friends and team members.
Those who died were: Mziwabantu Bondlani, a driller at Elandsrand;
- Zolane Maboza, a miner at Tshepong, and Patrick Mabitsoa, a loco driver at
Masimong.
Year on year, the Fatality Injury Frequency Rate (FIFR) deteriorated by 30%
quarter on quarter (from 0.10 to 0.13) as a result of the three fatalities.
Despite the deterioration, all our other rates have improved and we have seen
significant safety achievements from most of our operations. Quarter on quarter
the Lost Time Injury Frequency Rate (LTIFR) and the Reportable Injury Frequency
Rate improved.
The aforementioned deterioration in our FIFR is, of course, a cause of
considerable concern to us. Detailed investigation of recent fatalities
indicates that falls of ground (FOG) - both gravity and seismicity induced -
and trucks and tramming are the primary causes.
This finding has prompted a number of interventions. A safety workshop on 2
April 2009 focused on FOG prevention and on safer trucks and tramming
operations, amongst other safety- and health- related matters.
In respect of FOG prevention, it has been decided to: adopt the Mine
Occupational Safety and Health entry examination process in terms of which
entire crews sign safe work declarations; introduce FOG committees at all
operations; investigate the use of netting and/or mesh in development ends;
enforce effective use of rock bolting; and investigate mechanisation prospects
- specifically remote drilling - to remove workers from potential hazard
situations.
To effect safer trucks and tramming operations, we are: investigating the
implementation an anti-collision warning system; completing and implementing
the Department of Minerals and Energy`s Rail-bound Equipment Code of Practice.
Production and costs
In the past quarter, most of the shafts experienced a slow start-up after the
Christmas break. While underground volumes decreased, grade remained static,
resulting in a marginal decrease in gold production.
Quality training, development programmes, a motivating climate, disciplined
mining, team-building initiatives to improve team work, pro- active human
resources policies and practices, and improved logistics have all been
implemented to address productivity. We believe that improved productivity will
result in increased production and lower costs. Some mines have already shown
improvement, but it will take some time before all our mines are performing at
the desired levels.
Harmony`s operating costs for the quarter declined due mainly to lower
production and, to a limited extent, the drop in prices of consumables. The
R/kg costs were slightly higher due to lower production.
Gold market
The past quarter saw the gold price at record highs, at levels above R300
000/kg and US$900/oz. Gold has become a currency rather than a commodity - a
good reason for us to remain bullish about the gold price. We believe that the
uncertainty in world-wide markets will support a stronger gold price. Gold
remains a safe investment, as can be seen with ETF funds continuing to increase
their gold stockpile and from China`s recent announcement that it has increased
its gold reserves by 75%.
We have been a gold producer for the past 60 years and we believe that we have
the correct mix of assets to benefit from stronger gold prices. Harmony is
well-leveraged against the gold price with no hedging and an uncomplicated
structure, and we are working towards increasing gold production to benefit
from the higher gold prices.
Debt position
Harmony sold 60% of certain uranium and gold assets of Randfontein Estates
Limited (a wholly-owned subsidiary of Harmony) to Pamodzi Resources Fund 1 LLP
("PRF"). The uranium and gold assets were sold into a company, Rand Uranium
(Proprietary) Limited ("Rand Uranium"), for a purchase consideration of US$348
million. Harmony retains 40% of Rand Uranium`s shareholding and in exchange for
60% of the issued share capital of Rand Uranium, Harmony would receive US$209
million. PRF paid the first tranche of US$40 million in November 2008. The
second tranche of US$169 million, plus interest thereon at 5% per annum, was
payable in April 2009. Shareholders` attention is drawn to various
announcements made relating to the transaction on 19 December 2007, 24 October
2008 and 21 November 2008.
On 20 April 2009 PRF paid approximately US$172 million to Harmony as final
payment in terms of the Rand Uranium transaction. We are excited about the
future of Rand Uranium and look forward to sharing in Rand Uranium`s success,
together with PRF and its investors, First Reserve Corporation and AMCI
Capital.
We have completed our planned capital raising, exploiting favourable market
conditions by issuing a second tranche of shares for cash in the open market,
pursuant to our mandate given by shareholders at the Annual General Meeting.
In the capital raising, 7 540 646 shares were placed between 10 February 2009
and 6 March 2009 at an average subscription price of R124.45, raising R938
million before costs. The average issue price compares favourably with the
weighted average share price on the JSE over the same period of R122.75 per
share. The number of shares issued is equivalent to 1,9% of Harmony`s issued
share capital as at 30 September 2008. Combined with the share issue announced
in December 2008, the cumulative shares issued amounts to R1.9 billion or 4,5%
of the issued share capital. To date, the total number of shares in issue is
425 763 329. The cost of the second placement was approximately R15 million or
1,6% of the value of the shares issued.
JP Morgan Equities Limited acted as transaction advisor.
The combined effect of the above is that Harmony is net debt free.
The proceeds from the capital raising and the Rand Uranium transaction,
totalling R2.7 billion, will be used to repay Harmony`s convertible bond due in
May 2009 and its short-term debt, leaving a positive cash balance of
approximately R1.6 billion.
Class action
During January 2009, the Plaintiff filed with the Court an Amended Complaint.
The company has filed a Motion to Dismiss that Amended Complaint, and the
Plaintiff has filed an opposition to that Motion. The company will be filing a
Reply Memorandum in further support of its Motion. It is not possible to
predict with certainty when the Court will rule on the Motion, but we would
estimate that such a decision will be made within the next six months.
Mergers and acquisitions
We continue conducting due diligences but have not identified available assets
which could potentially increase the quality of our own asset base.
Royalty payment delayed
In February 2009 the National Treasury announced that the implementation of a
mining royalty would be delayed by 10 months, taking into account the potential
impact of the economic slowdown on the mining industry.
Looking forward
Harmony is in excellent financial health with a strong balance sheet,
reflecting the benefits of the various remedial measures taken in the past 18
months.
Our strategic plans support our target of achieving 2.2 million ounces in 2012.
Phakisa, Doornkop and Elandsrand will be in full production in 2012 and higher
grades from the Tshepong Decline, the Bambanani shaft pillar and the Evander 8
Decline are expected. We continue to focus on creating a better understanding
of Harmony`s orebodies through exploration drilling and development, our
interpretation of the geology, building credible geological models and
formulating clear development strategies.
Construction of the Hidden Valley gold mine in Papua New Guinea has progressed
well and the mine will be commissioned mid-2009. Final commissioning of the
overland conveyor in September 2009 will mean that both Hidden Valley ore and
ore from the Hamata pit will be processed through the metallurgical plant,
adding to production volumes.
The Evander South project and the St Helena tailings project in the Free State
provide us with exciting organic growth opportunities to take us to greater
levels of production post-2012.
We have positioned the company in such a way that we are able to deliver on our
promise of paying a dividend in future. Our focus now remains on achieving our
overall targets and delivering consistent results.
Chief Executive Officer
Graham Briggs
CONDENSED CONSOLIDATED INCOME STATEMENT (Rand)(Unaudited)
Quarter ended
March December March
2009 2008 2008
Notes R million R million R million
Continuing operations
Revenue 3 005 3 146 2 334
Cost of sales 2 (2 206) (2 383) (1 820)
Production cost (1 830) (2 033) (1 517)
Amortisation and
depreciation (303) (310) (189)
Employment termination
and restructuring costs (11) (16) (86)
Other items (62) (24) (28)
Gross profit 799 763 514
Corporate,
administration and
other expenditure (80) (92) (55)
Exploration expenditure (71) (75) (55)
Other income/(expenses)
- net 3 326 78 (16)
Operating profit 974 674 388
Profit/(loss) from
associates 14 (52) (10)
Profit on sale of
investment in associate - - -
Impairment of
investment in associate - - -
Profit on sale of
investment in
subsidiary 6 - -
Mark-to-market of
listed investments - - -
Loss on sale of listed
investments - - -
Investment income 152 107 54
Finance cost (40) (61) (123)
Profit/(loss) before
taxation 1 106 668 309
Taxation (125) (220) (156)
Net profit/(loss) from
continuing operations 981 448 153
Discontinued operations 4
(Loss)/profit from
discontinued operations (9) 868 192
Net profit/(loss) 972 1 316 345
Earnings/(loss) per
ordinary share (cents) 5
- Earnings/(loss) from
continuing operations 233 110 38
- (Loss)/earnings from
discontinued operations (2) 214 48
Total earnings/(loss)
per ordinary share
(cents) 231 324 86
Diluted earnings/(loss)
per ordinary share
(cents) 5
- Earnings/(loss) from
continuing operations 232 110 38
- (Loss)/earnings from
discontinued operations (2) 213 48
Total diluted
earnings/(loss) per
ordinary share (cents) 230 323 86
Nine months ended
March March
2009 2008
R million R million
Continuing operations
Revenue 8 833 6 590
Cost of sales (6 814) (5 893)
Production cost (5 737) (5 048)
Amortisation and depreciation (921) (618)
Employment termination and restructuring costs (39) (162)
Other items (117) (65)
Gross profit 2 019 697
Corporate, administration and other expenditure (263) (196)
Exploration expenditure (191) (141)
Other income/(expenses) - net 910 (127)
Operating profit 2 475 233
Profit/(loss) from associates (37) (10)
Profit on sale of investment in associate 1 -
Impairment of investment in associate (112) -
Profit on sale of investment in subsidiary 6 -
Mark-to-market of listed investments - 33
Loss on sale of listed investments - (459)
Investment income 337 194
Finance cost (186) (383)
Profit/(loss) before taxation 2 484 (392)
Taxation (580) (207)
Net profit/(loss) from continuing operations 1 904 (599)
Discontinued operations
(Loss)/profit from discontinued operations 785 424
Net profit/(loss) 2 689 (175)
Earnings/(loss) per ordinary share (cents)
- Earnings/(loss) from continuing operations 464 (150)
- (Loss)/earnings from discontinued operations 191 106
Total earnings/(loss) per ordinary share (cents) 655 (44)
Diluted earnings/(loss) per ordinary share (cents)
- Earnings/(loss) from continuing operations 462 (150)
- (Loss)/earnings from discontinued operations 190 106
Total diluted earnings/(loss) per ordinary share
(cents) 652 (44)
The accompanying notes are an integral part of these condensed consolidated
financial statements.
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME (Rand)(Unaudited)
Quarter ended
March December March
2009 2008 2008
R million R million R million
Net profit/(loss) for the period 972 1 316 345
Attributable to:
Owners of the parent 972 1 316 345
Non-controlling interest - - -
Other comprehensive (loss)/income for
the period, net of income tax (220) (115) 643
Foreign exchange translation
(loss)/profit (203) (208) 696
Mark-to-market of available-for-sale
investments (17) 93 (53)
Total comprehensive income for the
period 752 1 201 988
Attributable to:
Owners of the parent 752 1 201 988
Non-controlling interest - - -
Nine months ended
March March
2009 2008
R million R million
Net profit/(loss) for the period 2 689 (175)
Attributable to:
Owners of the parent 2 689 (175)
Non-controlling interest - -
Other comprehensive (loss)/income for the period,
net of income tax (247) 1 057
Foreign exchange translation (loss)/profit (292) 623
Mark-to-market of available-for-sale investments 45 434
Total comprehensive income for the period 2 442 882
Attributable to:
Owners of the parent 2 442 882
Non-controlling interest - -
CONDENSED CONSOLIDATED BALANCE SHEET (Rand)
At At At
March December June
2009 2008 2008
(Unaudited) (Audited)
Notes R million R million R million
ASSETS
Non-current assets
Property, plant and
equipment 28 103 27 786 27 556
Intangible assets 2 223 2 223 2 209
Restricted cash 167 169 78
Restricted investments 1 608 1 567 1 465
Investments in
financial assets 17 28 67
Investments in
associates 6 242 228 145
Trade and other
receivables 73 56 137
32 433 32 057 31 657
Current assets
Inventories 914 898 693
Trade and other
receivables 2 871 2 732 875
Income and mining
taxes 58 108 82
Cash and cash
equivalents 2 839 1 645 413
6 682 5 383 2 063
Non-current assets
classified as held
for sale 4 425 407 1 537
7 107 5 790 3 600
Total assets 39 540 37 847 35 257
EQUITY AND LIABILITIES
Share capital and
reserves
Share capital 7 28 081 27 126 25 895
Other reserves 503 671 676
Retained
earnings/(accumulated
loss) 857 (114) (1 832)
29 441 27 683 24 739
Non-current
liabilities
Borrowings 8 159 188 242
Deferred income tax 3 796 3 699 2 990
Provisions for other
liabilities and
charges 1 366 1 342 1 273
5 321 5 229 4 505
Current liabilities
Trade and other
payables 1 489 1 613 1 372
Provisions and
accrued liabilities 268 273 287
Borrowings 8 2 681 2 671 3 857
4 438 4 557 5 516
Liabilities directly
associated with
non-current assets
classified as held
for sale 4 340 378 497
4 778 4 935 6 013
Total equity and
liabilities 39 540 37 847 35 257
Number of ordinary
shares in issue 425 763 329 417 637 697 403 253 756
Net asset value per
share (cents) 6 915 6 628 6 135
The accompanying notes are an integral part of these condensed consolidated
financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Rand)(Unaudited)
Retained
Issued earnings/
share Other (accumulated
capital reserves loss) Total
R million R million R million R million
Note 7
Balance - 30 June
2008 25 895 676 (1 832) 24 739
Issue of share
capital 2 186 - - 2 186
Deferred share-based
payments - 74 - 74
Comprehensive
(loss)/income for
the period - (247) 2 689 2 442
Balance as at 31
March 2009 28 081 503 857 29 441
Balance - 30 June
2007 25 636 (349) (1 581) 23 706
Issue of share
capital 230 - - 230
Deferred share-based
payments - 23 - 23
Comprehensive
income/(loss) for
the period - 1 057 (175) 882
Balance as at 31
March 2008 25 866 731 (1 756) 24 841
CONDENSED CONSOLIDATED CASH FLOW STATEMENT (Rand)(Unaudited)
Three months ended
March December March
2009 2008 2008
(Restated)
Notes R million R million R million
Cash flow from operating
activities
Cash generated by
operations 13 985 623 794
Interest and dividends
received 156 112 64
Interest paid (41) (62) (123)
Income and mining taxes
paid (133) (142) (41)
Cash generated by
operating activities 967 531 694
Cash flow from investing
activities
Decrease/(increase) in
restricted cash 1 13 20
Net proceeds on disposal
of listed investments - - -
Net additions to property,
plant and equipment 13 (645) (308) (884)
Other investing activities (163) 64 6
Cash utilised by investing
activities (807) (231) (858)
Cash flow from financing
activities
Long-term loans raised - - -
Long-term loans repaid (20) (698) (6)
Ordinary shares issued -
net of expenses 955 980 40
Cash generated by
financing activities 935 282 34
Foreign currency
translation adjustments 99 (122) 43
Net increase/(decrease) in
cash and cash equivalents 1 194 460 (87)
Cash and cash equivalents
- beginning of period 1 646 1 186 435
Cash and cash equivalents
- end of period 2 840 1 646 348
Cash and cash equivalents
comprises:
Continuing operations 2 839 1 645 346
Discontinued operations 1 1 2
Total cash and cash
equivalents 2 840 1 646 348
Nine months ended
March March
2009 2008
R million R million
Cash flow from operating activities
Cash generated by operations 1 871 472
Interest and dividends received 350 209
Interest paid (215) (300)
Income and mining taxes paid (276) (62)
Cash generated by operating activities 1 730 319
Cash flow from investing activities
Decrease/(increase) in restricted cash (89) 223
Net proceeds on disposal of listed investments - 1 310
Net additions to property, plant and equipment 7 (2 451)
Other investing activities (89) 20
Cash utilised by investing activities (171) (898)
Cash flow from financing activities
Long-term loans raised - 2 098
Long-term loans repaid (1 306) (1 808)
Ordinary shares issued - net of expenses 1 943 64
Cash generated by financing activities 637 354
Foreign currency translation adjustments 229 79
Net increase/(decrease) in cash and cash equivalents 2 425 (146)
Cash and cash equivalents - beginning of period 415 494
Cash and cash equivalents - end of period 2 840 348
Cash and cash equivalents comprises:
Continuing operations 2 839 346
Discontinued operations 1 2
Total cash and cash equivalents 2 840 348
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2009
1. Accounting policies
(a) Basis of accounting
The condensed consolidated interim financial statements for the period ended 31
March 2009 have been prepared using accounting policies that comply with
International Financial Reporting Standards (IFRS), which are consistent with
the accounting policies used in the audited annual financial statements for the
year ended 30 June 2008. These condensed consolidated interim financial
statements are prepared in accordance with IAS 34, Interim Financial Reporting,
and should be read in conjunction with the financial statements for the year
ended 30 June 2008.
2. Cost of sales
Quarter ended
March December March
2009 2008 2008
(Unaudited) (Unaudited) (Unaudited)
R million R million R million
Production costs 1 830 2 033 1 517
Amortisation and depreciation 303 310 189
(Reversal of
provision)/provision for
rehabilitation costs (1) 4 -
Care and maintenance cost of
restructured shafts 11 10 24
Employment termination and
restructuring costs 11 16 86
Share-based compensation 52 9 4
Provision for post-retirement
benefits - 1 -
Total cost of sales 2 206 2 383 1 820
Nine months ended
March March
2009 2008
(Unaudited) (Unaudited)
R million R million
Production costs 5 737 5 048
Amortisation and depreciation 921 618
(Reversal of provision)/provision for
rehabilitation costs 9 -
Care and maintenance cost of restructured shafts 33 42
Employment termination and restructuring costs 39 162
Share-based compensation 74 23
Provision for post-retirement benefits 1 -
Total cost of sales 6 814 5 893
3. Other income/(expenses) - net
Included in other income in the March 2009 quarter is R437 million profit on
sale of 10% of Harmony`s Papua New Guinea gold and copper assets to Newcrest
Mining Limited in terms of the farm-in agreement. The total included for the
year to date relating to the Newcrest transaction is R852 million.
4. Non-current assets held for sale and discontinued operations
The assets and liabilities related to Mount Magnet (operations in Australia)
have been presented as held for sale following approval of the intention to
dispose of the assets by the Group`s management on 20 April 2007. Management is
still intent on the disposal of Mount Magnet despite the asset being classified
as held for sale for more than 12 months.
The assets and liabilities relating to the Cooke 1, Cooke 2, Cooke 3 and Cooke
plant and relating surface operations (operations in the Gauteng area) have
been presented as held for sale following the approval of the intention to
dispose of the assets by the Group`s management on 16 October 2007. These
operations were also deemed to be discontinued operations.
The conditions precedent on the sale of Randfontein`s Cooke assets to Rand
Uranium have been fulfilled and the transaction became effective on 21 November
2008. In exchange for 60% of the issued share capital of Rand Uranium, Harmony
received US$40 million out of the total purchase consideration of US$209
million on the effective date of the transaction. The balance of the
consideration, amounting to US$172 million including interest, was received on
20 April 2009.
As a result of the transaction, the Group recognised a profit on sale of assets
of R1 722 million before tax in the income statement in the December 2008
quarter.
5. Earnings/(loss) per ordinary share
Earnings/(loss) per ordinary share is calculated on the weighted average number
of ordinary shares in issue for the quarter ended 31 March 2009: 421.0 million
(31 December 2008: 406.8 million, 31 March 2008: 400.7 million) and the nine
months ended 31 March 2009: 410.3 million (31 March 2008: 400.0 million).
The fully diluted earnings/(loss) per ordinary share is calculated on weighted
average number of diluted ordinary shares in issue for the quarter ended 31
March 2009: 423.6 million (31 December 2008: 409.1 million, 31 March 2008:
403.5 million) and the nine months ended 31 March 2009: 412.4 million (31 March
2008: 402.5 million).
Quarter ended
March December March
2009 2008 2008
(Unaudited) (Unaudited) (Unaudited)
Total earnings/(loss) per
ordinary share (cents):
Basic earnings/(loss) 231 324 86
Fully diluted earnings/(loss) 229 323 86
Headline earnings 123 121 63
- Continuing operations 131 129 39
- Discontinued operations (8) (8) 24
R million R million R million
Reconciliation of headline
earnings/(loss):
Continuing operations
Net profit/(loss) 981 448 153
Adjusted for (net of tax):
(Profit)/loss on sale of
property, plant and equipment (431) 78 (1)
Loss on sale of listed
investment - - -
Impairment of investment in
associates - - -
Provision for doubtful debt - - 4
Headline profit/(loss) 550 526 156
Discontinued operations
Net (loss)/profit (9) 868 192
Adjusted for (net of tax):
Profit on sale of property,
plant and equipment (28) (901) (100)
Impairment of property, plant
and equipment 3 (1) 4
Headline (loss)/profit (34) (34) 96
Total headline profit 516 492 252
Nine months ended
March March
2009 2008
(Unaudited) (Unaudited)
Total earnings/(loss) per ordinary share
(cents):
Basic earnings/(loss) 655 (44)
Fully diluted earnings/(loss) 652 (44)
Headline earnings 275 34
- Continuing operations 271 (45)
- Discontinued operations 4 79
R million R million
Reconciliation of headline earnings/(loss):
Continuing operations
Net profit/(loss) 1 904 (599)
Adjusted for (net of tax):
(Profit)/loss on sale of property, plant and
equipment (904) (28)
Loss on sale of listed investment - 392
Impairment of investment in associates 112 -
Provision for doubtful debt - 57
Headline profit/(loss) 1 112 (178)
Discontinued operations
Net (loss)/profit 785 424
Adjusted for (net of tax):
Profit on sale of property, plant and equipment (921) (49)
Impairment of property, plant and equipment 154 (55)
Headline (loss)/profit 18 320
Total headline profit 1 130 142
6. Investment in associates
Harmony Gold Mining Company owns 32,4% of Pamodzi Gold Limited. During the
December 2008 quarter the Group recognised a loss of R34 million, its share of
the associate loss, resulting in a carrying value of R0.
On 21 November 2008, Harmony Group sold 60% of the issued share capital of Rand
Uranium to PRF. Refer to note 4 for details. This resulted in the Group owning
40% of Rand Uranium. The book value of the investment at 31 March 2009 was R242
million (December 2008:
R228 million).
7. Share capital
Wafi-Golpu royalty
On 1 December 2008, Harmony issued 3 364 675 shares to Rio Tinto Limited. The
Harmony shares were issued to cancel the Rio Tinto royalty rights over
Wafi-Golpu in Papua New Guinea. The value of issued shares was R242 million
(US$24 million) at R71.98 per share.
Capital raising
Harmony engaged in capital raising by issuing two tranches of shares following
the resolution passed by shareholders at the Annual General Meeting held on 24
November 2008. The first tranche was issued into the open market between 25
November 2008 and 19 December 2008.
In this tranche, 10 504 795 Harmony shares were issued at an average
subscription price of R93.20, resulting in R979 million before costs being
raised. The cost of the issue was R15 million or 1,5% of the value of shares
issued.
A second tranche of shares was issued for cash into the open market between 10
February 2009 and 6 March 2009. This tranche consisted of 7 540 646 Harmony
shares issued at an average subscription price of R124.45, resulting in R938
million before costs being raised. The cost of the issue was R15 million or
1,6% of the value of shares issued. The combined share issue amounts to R1.9
billion or 4,5% of the issued share capital as at 30 September 2008.
8. Borrowings
March December June
2009 2008 2008
(Unaudited) (Audited)
R million R million R million
Total long-term borrowings 159 188 242
Total current portion of borrowings 2 681 2 671 3 857
Total borrowings* 2 840 2 859 4 099
* Included in the borrowings is R168 million (December 2008: R198 million) owed
to Wespac Bank Limited in terms of a finance lease agreement. The future
minimum lease payments to the loan are as follows:
March December June
2009 2008 2008
(Unaudited) (Audited)
R million R million R million
Due within one year 45 63 57
Due between one and five years 133 156 228
178 219 285
Future finance charges (10) (21) (27)
Total future minimum lease payments 168 198 258
9. Commitments and contingencies
March December June
2009 2008 2008
(Unaudited) (Audited)
R million R million R million
Capital expenditure commitments
Contracts for capital expenditure 790 692 1 164
Authorised by the directors but not
contracted for 1 478 1 689 1 720
2 268 2 381 2 884
This expenditure will be financed from existing resources.
Contingent liability
Class action
During January 2009, the Plaintiff filed with the Court an Amended Complaint.
The company has filed a Motion to Dismiss that Amended Complaint and the
Plaintiff has filed an opposition to that Motion. The company will be filing a
Reply Memorandum in further support of its Motion. It is not possible to
predict with certainty when the Court will rule on the Motion, but we would
estimate that such a decision will be made within the next six months.
10. Subsequent events
On 17 April 2009, the Group entered into an agreement with Avoca Resources
Limited (Avoca), in which Avoca purchased the Group`s Dioro Exploration NL
shares, totalling 11 428 572 shares, in exchange for 3 809 524 Avoca shares.
The total consideration received by the Group was A$5.7 million.
On 20 April 2009, Harmony received approximately US$172 million from PRF as a
final payment in terms of the Rand Uranium transaction (for details refer to
note 4).
On 21 April 2009, the Nedbank loan of R750 million was settled.
11. Segment report
The segment report follows after note 13.
12. Reconciliation of segment information to consolidated income statements and
balance sheets
Nine months ended
March March
2009 2008
(Unaudited) (Unaudited)
R million R million
The "reconciliation of segment data to
consolidated financials" line item in the
segment reports
are 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 614 1 913
Production costs from:
Discontinued operations 447 1 472
Reconciliation of cash operating profit to
gross profit:
Total segment revenue 9 447 8 503
Total segment production costs (6 184) (6 520)
Cash operating profit as per segment report 3 263 1 983
Less: Discontinued operations (167) (441)
Cash operating profit as per segment report 3 096 1 542
Cost of sales items other than production costs (1 077) (845)
Amortisation and depreciation (921) (618)
Employment termination and restructuring costs (39) (162)
Share-based compensation (74) (23)
Rehabilitation costs (9) -
Care and maintenance costs of restructured
shafts (33) (42)
Provision for former employees` post-retirement
benefits (1) -
Gross profit as per income statements * 2 019 697
Reconciliation of total segment mining assets to
consolidated property, plant and equipment:
Property, plant and equipment not allocated to
a segment:
Mining assets 496 416
Undeveloped property 4 809 4 809
Other non-mining assets 53 78
Less: Discontinued operations (268) (1 125)
5 090 4 179
* The reconciliation was done up to the first identifiable line item on the
income statement. The reconciliation to profit before taxation and discontinued
operations would comprise of the income statement line items after that.
13. Adjustments to previously issued cash flow statements
Included as capital expenditure in the cash flow statements for the quarter
ended 31 December 2008, was an amount of R532 million contributed by Newcrest
in terms of the Papua New Guinea ("PNG") farm-in agreement. The group only
accounts for its interest in capital expenditures by Newcrest, together with
the additional interest in the PNG joint venture to be transferred to Newcrest
in exchange for such capital expenditures, upon completion of the relevant
milestones in terms of the PNG farm-in agreement. Therefore, as the relevant
milestone of US$150 million was not yet met on 31 December 2008, the capital
expenditure incurred by Newcrest was correctly excluded from the balance sheets
and income statements, but not from the cash flow statements. The adjustments,
which decrease cash generated from operations and additions to property, plant
and equipment, offset each other and therefore have no impact on the net
increase in the cash balance, net profit or shareholders` equity for any of the
periods presented.
The adjustments are as follows:
Previously shown Adjustments Restated
R million R million R million
Cash generated by operations 1 155 (532) 623
Additions to property, plant
and equipment (840) 532 (308)
Effect on Net increase in
cash and cash equivalents -
SEGMENT REPORT FOR THE NINE MONTHS ENDED 31 MARCH 2009 (Unaudited)(Rand/Metric)
Production Operating Mining
Revenue cost profit assets
R million R million R million R million
Continuing operations
South Africa
Underground
Tshepong 1 407 743 664 3 637
Phakisa 117 72 45 3 541
Bambanani 728 499 229 671
Doornkop 248 214 34 2 396
Elandsrand 1 090 827 263 2 642
Target 500 385 115 2 730
Masimong 907 488 419 674
Evander 1 166 736 430 1 185
Virginia 1 568 1 095 473 932
Other(1) 394 278 116 240
Surface
Other(2) 708 400 308 148
Total South Africa 8 833 5 737 3 096 18 796
International
Papua New Guinea(3) - - - 3 949
Total international - - - 3 949
Total continuing
operations 8 833 5 737 3 096 22 745
Discontinued operations
Cooke operations 614 447 167 -
Other operations - - - 268
Total discontinued
operations 614 447 167 268
Total operations 9 447 6 184 3 263 23 013
Reconciliation of the
segment
information to the
consolidated
income statement and
balance
sheet (refer to note 12) (614) (447) 5 090
8 833 5 737 28 103
Capital Tonnes
expenditure Kilograms milled
R million sold t`000
Continuing operations
South Africa
Underground
Tshepong 181 5 561 1 027
Phakisa 357 449 118
Bambanani 34 2 930 379
Doornkop 302 950 401
Elandsrand 311 4 345 729
Target 249 1 960 477
Masimong 97 3 563 668
Evander 154 4 657 877
Virginia 127 6 181 1 696
Other(1) 38 1 572 382
Surface
Other(2) 52 2 836 6 470
Total South Africa 1 902 35 004 13 224
International
Papua New Guinea(3) 1 376 - -
Total international 1 376 - -
Total continuing operations 3 278 35 004 13 224
Discontinued operations
Cooke operations 87 2 667 1 287
Other operations - - -
Total discontinued operations 87 2 667 1 287
Total operations 3 365 37 671 14 511
Reconciliation of the segment
information to the consolidated
income statement and balance
sheet (refer to note 12)
Notes:
(1) Includes Joel and St Helena.
(2) Includes Kalgold, Phoenix and Dumps.
(3) Included in the capital expenditure is an amount of R1 137 million
contribution by Newcrest in terms of the farm-in agreement.
SEGMENT REPORT FOR THE NINE MONTHS ENDED 31 MARCH 2008 (Unaudited)(Rand/Metric)
Production Operating Mining
Revenue cost profit/(loss) assets
R million R million R million R million
Continuing
operations
South Africa
Underground
Tshepong 1 183 697 486 3 563
Phakisa 15 9 6 3 044
Bambanani 707 596 111 748
Doornkop 181 174 7 2 005
Elandsrand 617 543 74 2 296
Target 354 257 97 2 496
Masimong 500 483 17 600
Evander 1 055 717 338 1 330
Virginia 1 091 958 133 910
Other(1) 278 301 (23) 236
Surface
Other(2) 609 313 296 228
Total South Africa 6 590 5 048 1 542 17 456
International
Papua New Guinea - - - 3 869
Total international - - - 3 869
Total continuing
operations 6 590 5 048 1 542 21 325
Discontinued
operations
Cooke operations 1 056 690 366 599
Other operations 857 782 75 518
Total discontinued
operations 1 913 1 472 441 1 117
Total operations 8 503 6 520 1 983 22 442
Reconciliation of
the segment
information to the
consolidated
income statement
and balance
sheet (refer to
note 12) (1 913) (1 472) 4 179
6 590 5 048 26 621
Capital Tonnes
expenditure Kilograms milled
R million sold t`000
Continuing operations
South Africa
Underground
Tshepong 145 6 538 1 100
Phakisa 196 71 15
Bambanani 85 3 936 694
Doornkop 249 1 030 322
Elandsrand 223 3 394 597
Target 165 1 978 464
Masimong 88 2 771 605
Evander 186 5 920 1 012
Virginia 110 6 009 1 608
Other(1) 34 1 552 349
Surface
Other(2) 91 3 334 6 386
Total South Africa 1 572 36 533 13 152
International
Papua New Guinea 760 - -
Total international 760 - -
Total continuing operations 2 332 36 533 13 152
Discontinued operations
Cooke operations 119 5 787 2 723
Other operations 147 5 039 1 827
Total discontinued operations 266 10 826 4 550
Total operations 2 598 47 359 17 702
Reconciliation of the segment
information to the consolidated
income statement and balance
sheet (refer to note 12)
Notes:
(1) Includes Joel and St Helena.
(2) Includes Kalgold, Phoenix and Dumps.
No material changes were made to Harmony`s Mineral Resources and Ore Reserves
for the period ended March 2009. Taking into account the last nine months`
depletion of reserves, the Harmony Mineral Resources and Ore Reserves as
stated in Harmony`s 2008 Annual Report are an accurate reflection of the
company`s current position. The Mineral Resources and Ore Reserves are
comprehensively audited by a team of internal competent persons that operate
independently from the operating units.
CONTACT DETAILS
HARMONY GOLD MINING COMPANY LIMITED
Corporate Office
Randfontein Office Park
PO Box 2
Randfontein, 1760
South Africa
Corner Main Reef Road and Ward Avenue
Randfontein, 1759
Johannesburg
South Africa
Telephone : +27 11 411 2000
Website : http://www.harmony.co.za
Directors
P T Motsepe (Chairman)*
G Briggs (Chief Executive Officer)
F Abbott (Interim Financial Director)
J A Chissano*^
F F T De Buck*, Dr C Diarra*+,
K V Dicks*, Dr D S Lushaba*, C Markus*,
M Motloba*, C M L Savage*, A J Wilkens*
(* non-executive)
(^ Mocambican)
(+ US/Mali Citizen)
Investor Relations Team
Esha Brijmohan
Investor Relations Officer
Telephone : +27 11 411 2314
Fax : +27 11 692 3879
Mobile : +27 82 922 4584
E-mail : esha@harmony.co.za
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
Khanya Maluleke
Telephone : +27 11 411 2019
Fax : +27 11 411 2070
E-mail : Khanya.maluleke@harmony.co.za
South African Share Transfer Secretaries
Link Market Services South Africa (Proprietary) Limited
(Registration number 2000/007239/07)
5th Floor, 11 Diagonal Street
Johannesburg, 2001
PO Box 4844
Johannesburg, 2000
South Africa
Telephone : +27 86 154 6572
Fax : +27 11 834 4389
United Kingdom Registrars
Capita Registrars
The Registry
34 Beckenham Road
Bechenham
Kent BR3 4TU
United Kingdom
Telephone : +44 870 162 3100
Fax : +44 208 636 2342
ADR Depositary
The Bank of New York Mellon Inc
101 Barclay Street
New York, NY 10286
United States of America
Telephone : +1888-BNY-ADRS
Fax : +1 212 571 3050
Sponsors
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
NASDAQ HMY
London Stock Exchange Plc HRM
Euronext, Paris HG
Euronext, Brussels HMY
Berlin Stock Exchange HAM1
Registration Number 1950/038232/06
Incorporated in the Republic of South Africa
ISIN: ZAE000015228
Date: 08/05/2009 08:00:04 Produced by the JSE SENS Department.
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