Johannesburg – Harmony in its Trading statement and operating update for the six months ended 31 December 2021 states that a reasonable degree of certainty exists that basic earnings for H1FY22 will be 68-72% lower than for H1FY21 primarily due to:
- a non-recurring gain on bargain purchase recognised for the acquisition of the assets and liabilities of Mponeng operations and related assets in H1FY21;
- a decreased gross profit as result of higher production costs, which offset the increase in production and revenue;
- a translation loss on the US$ denominated debt at 31 December 2021 (compared to a gain at 31 December 2020); and
- a derivative loss recorded in H1FY22 compared to a gain in H1FY21.
The decrease in earnings were partially offset by the decrease in the taxation expense due to changes in the utilisation of unredeemed capital allowances and assessed losses period on period.
The expected movements in earnings for H1FY22 compared to the previous corresponding period are due mainly to:
- Production costs – Production costs increased mainly due to the inclusion of six months of costs in respect of Mponeng and related assets in H1FY22 compared to three months in H1FY21. Inflationary increases also impacted on various facets such as labour and consumables costs.
- Foreign exchange rate movement impact – A foreign exchange translation loss of approximately R298 million (US$20 million), compared to a R652 million gain (US$40 million) in H1FY21, is predominantly attributable to the Rand weakening against the US dollar.