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Directors' report   
  
"Interim dividend No. 72 of 50 cents per share was declared payable on 30 March 2001 and final dividend No. 73 of 70 cents was declared payable on 20 August 2001 in respect of the financial year ended 30 June 2001, thus resulting in a total dividend of 120 cents per share for the year."  
 
DIRECTORS’ REPORT

 

THE COMPANY AND ITS SUBSIDIARIES

Harmony Gold Mining Company Limited and its subsidiaries are involved in gold mining and exploration and related activities in South Africa, Canada, Australia and Peru. The Company does not have a major or controlling shareholder and is managed by its directors for and on behalf of its shareholders.


FINANCIAL STATEMENTS AND RESULTS

The directors have pleasure in submitting the financial statements of the Company, together with those of the Group, for the year ended 30 June 2001. These statements are contained in this document on pages 52 through to 77.


CAPITAL

Full details of the authorised, issued and unissued share capital of the Company as at 30 June 2001 is set out in the statement of shareholders’ equity on page 55 of this report.

The authorised preference share capital of the Company was created by the Company in a general meeting on 18 May 2001 through the creation of 10 958 904 preference shares of 50 cents each. The special resolution was registered on 23 May 2001 and the preference shares issued at par to the Industrial Development Corporation of South Africa Limited on 18 June 2001.

The ordinary share capital of the Company was increased by the Company in a general meeting on 8 June 2001 from R90 million divided into 180 000 000 shares of 50 cents each to R125 million divided into 250 000 000 shares of 50 cents each. The special resolution was registered on 13 June 2001.

The issued ordinary share capital increased during the year by R23 621 428, due mostly to the issue of 47 242 856 ordinary shares as a result of various equity placings.

The options issued during 1996 and 1997 to acquire 7 579 900 Harmony shares at R60.00 each on or before 31 July 2001 as listed on the JSE Securities Exchange ("JSE"), expired post-year end and were accordingly delisted.

Shareholders in a general meeting on 8 June 2001 granted authority to the directors to create and issue options to acquire ordinary shares at R43.00 each on or before 28 June 2003. A total of 9 027 500 options were created, issued and listed on the JSE and NASDAQ as part of the Company’s equity raising programme.

The control over the unissued shares of the Company is vested in the directors, in specific terms as regards allotments in terms of the Harmony (1994) Share Option Scheme ("the share option scheme") and the allotment of shares for cash and in general terms as regards all other allotments.

The authorities granted to directors in respect of control over the unissued shares expire on the date of the annual general meeting of members to be held on 16 November 2001. Members, therefore, will be requested to consider resolutions at the forthcoming annual general meeting, placing under the control of the directors the then unissued ordinary shares not required for the share option scheme.

Members will furthermore be requested to grant a general approval for the acquisition by the Company of its issued shares in terms of Section 85 of the Companies Act, 1973, and subject to the requirements of the JSE.

The full text of the proposed resolutions is contained in the notice of the annual general meeting.


LONG-TERM DEBT

The Company raised a long-term loan facility with a syndicate of financial institutions in March 2001, to the value of R2.1 billion. This facility was applied to retire existing debt and to fund the acquisition of the Elandsrand and Deelkraal (Elandskraal) mines as well as the acquisition of New Hampton Goldfields Limited. The Company had to provide security for these by way of cession of shares in subsidiaries. The loan facility was redeemed by year end and the security has since been released.

The Company furthermore issued an unsecured corporate bond, listed on the Bond Exchange of South Africa, to the value of R1.2 billion. The bond instruments bear interest at 13% per annum and are redeemable on 14 June 2006.


ACQUISITIONS

During the year under review, the following acquisitions were made:

The Elandsrand and Deelkraal gold mining businesses ("Elandskraal") from AngloGold Limited for a cash consideration of R1.0 billion by the Company’s wholly-owned subsidiary, Randfontein Estates Limited; and

96% of the issued share capital of New Hampton Goldfields Limited by the Company’s wholly-owned subsidiary, Harmony Gold (Australia) Pty Limited for a cash consideration of R229.4 million.


PROPERTY

Full details of the property, mineral and participation rights holdings of the Company and its subsidiaries are available on request.


INVESTMENTS

Other than investments in subsidiary undertakings (refer to page 77), the Company and Group hold both listed and unlisted investments (refer to note 13 in the Financial Statements).


DIVIDENDS

Interim dividend No. 72 of 50 cents per share was declared payable on 30 March 2001 and final dividend No. 73 of 70 cents was declared payable on 20 August 2001 in respect of the financial year ended 30 June 2001, thus resulting in a total dividend of 120 cents per share for the year.


SHARE OPTION SCHEME

At 30 June 2001 there were 4 887 700 options to acquire Harmony shares outstanding under the Harmony (1994) Share Option Scheme. A total of 2 835 700 options were exercised during the year under review, of which 389 000 were exercised at an average price of R20.89 per share by the executive directors.

The share option scheme was introduced in 1994 and subsequently amended in 1997 to provide for a specific set of circumstances. The directors are of the opinion that the scheme has served its purpose and should be replaced with a scheme that will serve the needs of the company. Such a new scheme should also conform to the amended requirements of the JSE Securities Exchange. The introduction of a new scheme will furthermore require the amendment of certain rules of the share trust created by shareholders in 1999.

Shareholders will accordingly be requested to consider and, if deemed appropriate, adopt resolutions to approve the proposed Harmony (2001) Share Option Scheme and to amend the rules of the Harmony Share Trust.

The full text of the proposed resolutions, as well as a summary of the rules of the proposed new scheme, is contained in the notice of the annual general meeting. The proposed scheme may be inspected at the business office of the company secretary.


DIRECTORATE

The board of the Company was restructured in November 2000 in order to provide for a majority of non-executive directors in line with the Company’s commitment to sound corporate governance. This restructuring led to the resignation from the board of Dr NV Armstrong and Messrs RAL Atkinson, NJ Froneman and FR Sullivan. In addition, Messrs G Mowatt, PC Pienaar, P McKenna, GP Briggs and P Kotze resigned as alternate directors during the year under review.

In terms of the Company’s Articles of Association, Messrs TSA Grobicki, MF Pleming and ZB Swanepoel retire by rotation at the forthcoming annual general meeting of members. The retiring directors are eligible, and have made themselves available, for re-election to the board.


DIRECTORS’ INTERESTS

The following ordinary shares and share options are held by directors of the company:


NAME

ORDINARY SHARES

SHARE OPTIONS

  Number of Shares Nature of Holding Number of Options Average Strike Price
F Abbott 90 100 Indirect 130 000 25.96
F Dippenaar 63 400 Indirect 150 000 27.22
AM Edwards - - - -
AR Fleming 5 258 868 Indirect - -
TSA Grobicki 160 800 Indirect 158 000 27.65
MF Pleming - - - -
RW Renwick 5 105 Direct - -
GS Sibiya - - - -
ZB Swanepoel 120 500 Indirect 196 700 27.47


DIRECTORS’ EMOLUMENTS

Directors’ emoluments for the years ended 30 June 2000 and 30 June 2001 were as follows:


 

FEES

SALARIES

BONUSES

  2001 2000 2001 2000 2001 2000
Executive directors
(R million)
- - 4.2 9.8 1.3 1.6
Non-executive directors
(R million)
0.5 0.6 - - - -
TOTAL 0.5 0.6 4.2 9.8 1.3 1.6


COMPANY SECRETARY

The secretary of the company is FW Baker. His business address is Randfontein Office Park, corner of Main Reef Road and Ward Avenue, Randfontein (PO Box 2, Randfontein, 1760). The secretary has, in terms of Section 286G(d) of the Companies Act, 1973, certified that:

"All such returns as are required of a public company in terms of the Companies Act have been made and are true, correct and up to date."