26 Aug - 7 min read

Trading statement and operating update for the year ended 30 June 2021

Trading statement and operating update for the year ended 30 June 2021

Harmony Gold Mining Company Limited
Registration number 1950/038232/06
Incorporated in the Republic of South Africa
ISIN: ZAE000015228
JSE share code: HAR
(“Harmony” and/or “the Company”)

Trading statement and operating update for the year ended 30 June 2021

Johannesburg, Thursday, 26 August 2021. In terms of paragraph 3.4(b) of
the Listings Requirements of the JSE Limited (JSE), a company listed on
the JSE is required to publish a trading statement as soon as they are
satisfied that a reasonable degree of certainty exists that the financial
results for the period to be reported upon next will differ by at least
20% from the financial results for the previous corresponding period.

Expected headline and basic earnings for the financial year ended June
2021 (“FY21”)

Shareholders of Harmony are advised that a reasonable degree of certainty
exists that basic earnings for FY21 will be higher than for the year
ended 30 June 2020 (“the previous comparable period” or “FY20”) primarily
due to:
    • an increase in revenue due to the operational expansion following
      the acquisition of AngloGold Ashanti Limited’s remaining South
      African assets (Mponeng operations and related assets or acquired
      assets) and a higher gold price;
    • a higher reported translation gain on the US$ denominated debt at
      30 June 2021 (compared to a loss in FY20);
    • a derivative gain recorded in FY21 compared to a loss in FY20;
      and
    • a gain on bargain purchase recognised for the acquisition of the
      asset and liabilities of Mponeng operations and related assets.

The increase in earnings were partially offset by the recognition of an
impairment loss on assets and an increase in the taxation expense.

Earnings per share (“EPS”) are expected to improve to earnings of between
850 and 990 South African cents per share – which is an improvement of
more than 100% on the loss of 164 South African cents per share reported
for the previous comparable period. In US dollar terms, the earnings per
share is expected to be between 53 and 63 US cents per share, which is
an improvement of more than 100% on a loss of 10 US cents per share
reported for the previous comparable period.

Headline earnings per share (“HEPS”) are expected to be earnings of
between 857 and 994 South African cents, which represents a year-on-year
                                    
increase of more than 100% from the headline earnings loss per share of
154 South African cents reported in the previous comparable period. In
US dollar terms, the headline earnings per share is expected to be
between 56 and 65 US cents per share, which is an increase of more than
100% on the headline loss of 10 US cents per share reported for the
previous comparable period. Headline earnings exclude impairments and
the gain on bargain purchase (from acquisitions) recorded.

The expected movements in earnings for FY21 compared to the previous
corresponding period are due mainly to:

    Acquisition of Mponeng operations and related assets

    The acquired assets contributed R7.9 billion (US$513 million) in
    revenue and R1.8 billion (US$116 million) to net profit. Further,
    the fair value of the assets and liabilities acquired exceeds the
    consideration paid, resulting in a gain on bargain purchase of R1.2
    billion (US$69 million).

    Revenue

    The increase in the gold price received from R735 569/kg in FY20 to
    R851 045/kg in FY21 as well as an increase in the quantity of gold
    sold by 23% to 47 353kg contributed to the revenue increase from
    R29.2 billion for FY20 compared to R41.7 billion in FY21. In US
    dollar terms the increase in the average gold price received from
    US$1 461/oz in FY20 to US$1 719/oz in FY21 contributed to the
    increase in revenue from US$1.9 billion for FY20 compared to $2.7
    billion in FY21.

    Impairment on assets

    An impairment loss on assets of between R1 050 million and R1 200
    million (in US dollar terms between US$72 million and US$85 million),
    attributable to various mining operations, namely Bambanani, Target
    3 and Tshepong Operations, has been recognised for FY21.

    Translation gain year on year

    A translation gain of approximately R878 million (US$57 million) was
    recognised on the US$ denominated debt as at 30 June 2021, compared
    to a translation loss of R967 million (US$62 million) recorded in
    the previous comparable period. The translation gain is primarily
    the result of the strengthening of the Rand exchange rate against
    the US Dollar.




                                    
    Gains on derivatives

    Included in FY21 were derivative gains of close to R1.0 billion
    (US$66 million) compared to losses of R1.7 billion (US$107 million)
    in FY20. The derivative gains are primarily as a result of the
    strengthening of the Rand exchange rate against the US Dollar.

    Taxation

    An increase in taxable profits due to the factors discussed above
    contributed to an increased current tax expense. These factors also
    resulted in the utilisation of assessed losses and unredeemed
    capital expenditure, which together with the impact of tax rate
    increases on certain statutory companies across the group resulted
    in a higher deferred tax expense.

    The financial information on which this trading statement has been
    based has not been reviewed or reported on by Harmony’s external
    auditors.


Harmony will publish its financial results for the year ended 30 June
2021 on Tuesday, 31 August 2021. Please see Harmony’s website for more
details: www.harmony.co.za.


For more details, contact:

Jared Coetzer
Head of Investor Relations
+27 (0) 82 746 4120

Johannesburg, South Africa
26 August 2021


Sponsor:
J.P. Morgan Equities South Africa Proprietary Limited




                                   
FORWARD-LOOKING STATEMENTS


This market release contains forward-looking statements within the meaning of the safe
harbour provided by Section 21E of the Exchange Act and Section 27A of the Securities
Act of 1933, as amended (the “Securities Act”), with respect to our 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.

These forward-looking statements, including, among others, those relating to our
future business prospects, revenues, and the potential benefit of acquisitions
(including statements regarding growth and cost savings) wherever they may occur in
this market release and the exhibits, are necessarily estimates reflecting the best
judgement of our senior management 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
market release.

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 South Africa, Papua New
Guinea, Australia and elsewhere (including as a result of the coronavirus disease
("COVID-19” or “pandemic”); estimates of future earnings, and the sensitivity of
earnings to gold and other metals prices; estimates of future gold and other metals
production and sales; estimates of future cash costs; estimates of future cash flows,
and the sensitivity of cash flows to gold and other metals prices; estimates of
provision for silicosis settlement; statements regarding future debt repayments;
estimates of future capital expenditures; the success of our business strategy,
exploration and development activities and other initiatives; future financial
position, plans, strategies, objectives, capital expenditures, projected costs and
anticipated cost savings and financing plans; estimates of reserves statements
regarding future exploration results and the replacement of reserves; the ability to
achieve anticipated efficiencies and other cost savings in connection with past and
future acquisitions, as well as at existing operations; fluctuations in the market
price of gold; the occurrence of hazards associated with underground and surface gold
mining; the occurrence of labour disruptions related to industrial action or health
and safety incidents; power cost increases as well as power stoppages, fluctuations
and usage constraints; supply chain shortages and increases in the prices of
production imports and the availability, terms and deployment of capital; our ability
to hire and retain senior management, sufficiently technically-skilled employees, as
well as our ability to achieve sufficient representation of historically disadvantaged
HDSAs in management positions; our ability to comply with requirements that we operate
in a sustainable manner and provide benefits to affected communities; potential
liabilities related to occupational health diseases; changes in government regulation
and the political environment, particularly tax and royalties, mining rights, health
and safety, environmental regulation and business ownership including any
interpretation thereof; court decisions affecting the South African mining industry,
including, without limitation, regarding the interpretation of mining rights; our
ability to protect our information technology and communication systems and the
personal data we retain; risks related to the failure of internal controls; the
outcome of pending or future litigation or regulatory proceedings; fluctuations in
exchange rates any further downgrade of South Africa’s credit rating; and currency
devaluations and other macroeconomic monetary policies; the adequacy of the Group’s
insurance coverage; and socio-economic or political instability in South Africa, Papua
New Guinea, Australia and other countries in which we operate.




                                          
For a more detailed discussion of such risks and other factors (such as availability
of credit or other sources of financing), see the Company’s latest Integrated Annual
Report and Form 20-F which is on file with the Securities and Exchange Commission, as
well as the Company’s other Securities and Exchange Commission filings. The Company
undertakes no obligation to update publicly or release any revisions to these forward
looking statements to reflect events or circumstances after the date of this market
release or to reflect the occurrence of unanticipated events, except as required by
law. The foregoing factors and others described under “Risk Factors” should not be
construed as exhaustive.




                                          

Date: 26-08-2021 09:49:00
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