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1	GENERAL INFORMATION

2	ACCOUNTING POLICIES

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The group has elected to recognise the right-of-use assets at an amount equal to the lease liability at 1 July 2019 together with the ability to set off deferred tax assets and liabilities resulting from the leased assets and liabilities. The lease liabilities were measured at the present value of the remaining lease payments at 1 July 2019 and discounted using the relevant incremental borrowing rate; and

•	The accounting for operating leases with a remaining lease term of less than 12 months as at date of adoption have been classified as short-term leases and have not been recorded on the balance sheet.

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2	ACCOUNTING POLICIES continued

•	The low value lease exemption - the group has elected to take the low value exemption with a value of R50 000 for the individual leased asset value and also applied its accounting policy on capitalisation of assets based on IAS 1 materiality assessment;

•	The short-term lease exemption - leases with a duration of less than a year will be expensed in the income statement on a straight-line basis;

•	Use of hindsight, such as in determining the lease term if the contract contains options to extend or terminate the lease where appropriate;

•	Non-lease components - the group has applied the practical expedient not to separate non-lease components from lease components, and instead account for each lease component and any associated non-lease components as a single lease component for the classes of underlying asset where it is appropriate to do so; and

•	Exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application.

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2	ACCOUNTING POLICIES continued

•	Confirm that a business must include inputs and a process, and clarified that: (i) the process must be substantive and (ii) the inputs and process must together significantly contribute to creating outputs;

•	Narrow the definitions of a business by focusing the definition of outputs on goods and services provided to customers and other income from ordinary activities, rather than on providing dividends or other economic benefits directly to investors or lowering costs; and

•	Add a test that makes it easier to conclude that a company has acquired a group of assets, rather than a business, if the value of the assets acquired is substantially all concentrated in a single asset or group of similar assets.

•	The highly probable requirement;

•	Prospective assessments; and

•	Separately identifiable risk components.

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2	ACCOUNTING POLICIES continued

2.1	Consolidation

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2	ACCOUNTING POLICIES continued

2.1	Consolidation continued

2.2	Foreign currency translation

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2	ACCOUNTING POLICIES continued

2.2	Foreign currency translation continued

•	Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet while equity items are translated at historic rates;

•	Income and expenses for each income statement are translated at average exchange rates (the rate on the date of the transaction is used if the average is not a reasonable rate for the translation of the transaction);

•	All resulting exchange differences are recognised as a separate component of other comprehensive income.

2.3	Derivatives and hedging activities

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2	ACCOUNTING POLICIES continued

2.4	Exploration expenditure

2.5	Impairment of non-financial assets

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2	ACCOUNTING POLICIES continued

2.5	Impairment of non-financial assets continued

2.6	Operating profit

3	CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

•	Estimate of taxation – note 10;

•	Recognition of deferred tax asset – note 10;

•	Gold mineral reserves and resources – note 13;

•	Production start date – note 13;

•	Stripping activities – note 13;

•	Impairment of assets – note 13;

•	Depreciation of property plant and equipment – note 13;

•	Exploration and evaluation assets – note 13;

•	Impairment of goodwill – note 14;

•	Valuation of interest in associate – note 20;

•	Provision for stock obsolescence - note 22;

•	Estimate of exposure and liabilities with regard to rehabilitation costs – note 25;

•	Estimate of provision for silicosis settlement – note 26;

•	Estimate of employee benefit liabilities – note 27;

•	Leases - note 28;

•	Fair value of share-based payments – note 34;

•	Assessment of contingencies – note 36; and

•	Valuation of derivative financial instruments – note 37.

4.	COVID-19 IMPACT

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4.	COVID-19 IMPACT continued

•	a risk awareness campaign through various communication channels;

•	identification of high-risk employees;

•	the compulsory use of preventative personal protection equipment, which includes face masks, in designated areas in the workplace, increased hand washing and social distancing;

•	the sanitation of common areas and surfaces on a regular basis during the day;

•	placement of hand sanitisers and additional hand washing stations at the surface areas of the mines;

•	group meetings are avoided and where possible, meetings are conducted virtually in the form of tele-conferences or video-conferences;

•	implementation of work from home practices for central services and corporate office;

•	implementation of a comprehensive employee wellness monitoring and support programme, which includes a COVID-19 hotline.

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4.	COVID-19 IMPACT continued

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4.	COVID-19 IMPACT continued

5	REVENUE

1	Derived from the Hidden Valley operation in Papua New Guinea.

2	Derived from the Moab Khotsong operation.

3	Relates to the realised effective portion of the hedge-accounted gold derivatives. Refer to note 18 for further information.

4	A geographical analysis of revenue is provided in the segment report in note 39.

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5	REVENUE continued

1	The gold price includes the realised effective portion of the hedge-accounted gold derivatives.

6	COST OF SALES

(a)

Production costs include mine production and transport and refinery costs, applicable general administrative costs, movement in inventories and ore stockpiles, ongoing environmental rehabilitation costs and transfers for stripping activities. Employee termination costs are included, except for employee termination costs associated with major restructuring and shaft closures, which are separately disclosed.

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6	COST OF SALES continued

(a)	Production costs continued

(b)

Lower production volumes during the 2020 year, partially due to the closure of underground mines following the announcement of the South African national lockdown due to COVID-19, impacted on the depreciation recorded and contributed to the decrease year on year. The completion of the mining of Stage 5 at Hidden Valley during the December 2019 quarter also contributed to the decrease. The impairments recognised on certain operations in South Africa during the 2019 year significantly impacted on the base which depreciation is calculated on and the lower carrying values contributed to the lower total compared to the comparative period.

(c)	For the assumptions used to calculate the rehabilitation costs, refer to note 25. This expense includes the change in estimate for the rehabilitation provision where an asset no longer exists as well as costs related to the rehabilitation process. For 2020, R47 million (2019: R86 million) (2018: R94 million) was spent on rehabilitation in South Africa. Refer to note 25.

(d)	The employment termination and restructuring expenditure for 2020, 2019 and 2018 relates to the voluntary severance program in place to reduce labour costs.

(e)	Refer to note 34 for details on the share-based payment schemes implemented by the group.

(f)

Management performed an assessment for impairment triggers as well as indications of reversal of previously recorded impairment losses at 30 June 2020. Due to the uncertainty of the impact of the COVID-19 pandemic and the South African national lockdown would have on the South African underground operations, as well as the increase in the short-term gold price, the recoverable amounts for these cash-generating units (CGUs) were calculated.

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6	COST OF SALES continued

(f)	Impairment continued

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6	COST OF SALES continued

(f)	Impairment continued

7	OTHER OPERATING EXPENSES

(a)	These losses arise from the derecognition of property, plant and equipment that is no longer in use. No future economic benefits are expected from the use or disposal of these assets. Refer to note 13 for further detail.

(b)	The foreign exchange loss is driven primarily by the prevailing exchange rates at the drawdown and repayment dates of the  US$-denominated loans as well as the exchange rate movements during the year. Refer to note 30 for the details of the foreign exchange translation loss on the US$ borrowings.

(c)	Refer to note 26 for details on the movement in the silicosis settlement provision.

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7	OTHER OPERATING EXPENSES continued

(d)

Pursuant to the adoption of IFRS 9 on 1 July 2018, the ARM BBEE Trust loan is carried at fair value through profit or loss with the movement in fair value recognised in net gains on financial instruments (refer to note 8). In 2018, the provision was reversed following an increase in African Rainbow Minerals Limited's share price and dividends paid in the period between July 2017 and June 2018, which form part of the recoverability test at 30 June 2018. Refer to note 17 for further details on the loan.

8	INVESTMENT INCOME

1	Primarily relates to the environmental trust funds and the Social Trust Fund (refer to note 16) and also includes the fair value movement of the ARM BBEE Trust loan (refer to note 17).

9	FINANCE COSTS

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9	FINANCE COSTS continued

(a)	The capitalisation rate used to determine capitalised borrowing costs is:

10	TAXATION

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10	TAXATION continued

(a)

Mining tax on gold mining taxable income in South Africa is determined according to a formula, based on the taxable income from mining operations. 5% of total revenue is exempt from taxation while the remainder is taxable at a higher rate (34%) than non-mining income (28%) as a result of applying the gold mining formula. Mining and non-mining income of Australian entities and PNG operation are taxed at a standard rate of 30%.

(b)

Non-mining taxable income of mining companies and the taxable income for non-mining companies are taxed at the statutory corporate rate of 28%.The expense for the 2019 and 2018 years relates to non-mining tax arising from derivative gains (realised and unrealised) recognised on the foreign currency derivatives as well as the realised gains on the commodity forward sale contracts. During 2020, the losses on the derivative contracts resulted in non-mining tax losses. See discussion on deferred tax below. Refer to note 18 for details on the group's derivative gains and losses recorded.

(c)	The deferred tax rate used to calculate deferred tax is based on the current estimate of future profitability when temporary differences will reverse based on tax rates and tax laws that have been enacted at the balance sheet date. Depending on the profitability of the operations, the deferred tax rate can consequently be significantly different from year to year.

•	The change in rates on temporary differences at the individual company level, other than hedge accounted derivatives, resulted in an increase in the deferred tax expense and liability to the amount of R493 million.

•	Unwinding of temporary differences related to unredeemed capital expenditure balance resulted in an increase of R298 million in the deferred tax expense.

•

The weakening of the Rand against the US$ and the increase in the commodity prices negatively impacted on the valuation of the derivative financial instruments. Refer to notes 18 and 37 for detail. The temporary differences related to the Rand gold derivatives changed from taxable temporary differences (ie resulting in a deferred tax liability) to deductible temporary differences (resulting in a deferred tax asset). Management assessed the rates at which the temporary differences are expected to reverse and as the expected non-mining losses can be set off against the mining profits, the rates have been revised from the non-mining tax rate of 28% to the weighted average deferred tax rate. This accounts for R510 million of the deferred tax credit directly charged to other comprehensive income.

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10	TAXATION continued

(c)	Deferred tax continued

•	The net deferred tax positions for each of the group's entities are assessed separately. Two companies have net deferred tax asset positions and therefore recoverability of these assets was considered. The position at 30 June 2020 was as follows:

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10	TAXATION continued

1	This mainly relates to movements in the deferred tax rate related to Harmony (25.7% to 29.8%) (2019: 10.5% to 25.7%) (2018: 19.4% to 10.5%), Freegold (8.1% to 11.4%) (2019: 8.7% to 8.1%) (2018: 12.5% to 8.7%), Randfontein Estates Limited (Randfontein) (4.5% to 10.1%) (2019: 1.8% to 4.5%) (2018: 3.8% to 1.8%) and Moab (4.7% to 17.3%) (2019: 9.1% to 4.7%) (2018: 9.1%).

2	This relates to the additional capital allowance that may be deducted from taxable income from mining operations in South Africa. A significant portion relates to Avgold Limited (Avgold) which has a 0% effective tax rate.

3	This relates to tax losses and deductible temporary differences for which future taxable profits are uncertain and are not considered probable.

4	Harmony company has sufficient future profits as well as taxable temporary differences which the deductible temporary differences can be reversed against. Therefore the deferred tax asset not recognised in the 2019 year has been recognised.

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10	TAXATION continued

1	Unredeemed capital expenditure mainly consists of Hidden Valley R4 555 million (2019: R3 745 million).

2	The majority of the amount relates to Hidden Valley's tax losses of R1 327 million (2019: R1 066 million).

3	The majority of the deferred tax asset not recognised of R6 499 million relates to Harmony's PNG operations (2019: R5 293 million).

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10	TAXATION continued

1	Includes Avgold R21 483 million (2019: R19 086 million), Randfontein R2 261 million (2019: R2 134 million), Moab Khotsong R625 million (2019: R1 755 million) and Hidden Valley R18 847 million (2019: R16 333 million). These have an unlimited carry-forward period.

2	Relates mainly to Hidden Valley and the PNG exploration operations. These have an unlimited carry-forward period.

3	Relates to Avgold and Hidden Valley.

4	The CGT losses relate to the gross CGT losses available to be utilised against future CGT gains.

11	EARNINGS/(LOSS) PER SHARE

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11	EARNINGS/(LOSS) PER SHARE continued

1	Due to the net loss attributable to shareholders, the inclusion of the share options as potential ordinary shares had an anti-dilutive effect on the loss. The issue price and the exercise price of share options issued to employees include the fair value of any service to be supplied to the entity in the future under the share option or other share-based payment arrangement.

2

The dilution is as a result of the potential reduction in earnings attributable to equity holders of the parent company as a result of the exercise of the Tswelopele Beneficiation Operation (TBO) option. TBO contributed a profit for the six months ended 31 December 2019 and therefore the reduction in earnings attributable to Harmony would increase the loss and loss per share. Following the vesting of the option (refer to note 34), there has been no further impact.

•	On 17 August 2017, the board declared a final dividend of 35 cents for the year ended 30 June 2017. R154 million million was paid on 16 October 2017. No dividends were paid on ordinary shares by Harmony during the 2020 and 2019 financial year. The payment in 2020 relates to the non-controlling interest in Tswelopele Beneficiation Operation. Refer to note 34.

•	Harmony declares an annual preference share dividend to the Harmony Gold Community Trust (the Trust). On 30 July 2019, Harmony declared a preference dividend of R9 million to the Trust which was paid on 2 September 2019. As the Trust is consolidated by Harmony, the dividend is eliminated on consolidation.

12	ACQUISITIONS AND BUSINESS COMBINATIONS

•	The Mponeng mine and its associated assets and liabilities;

•	The Tau Tona and Savuka mines and associated rock-dump and tailings storage facility reclamation sites, mine rehabilitation and closure activities located in the West Wits region and their associated assets and liabilities;

•	First Uranium (Pty) Limited which owns Mine Waste Solutions (Pty) Limited and Chemwes (Pty) Limited as well as associated tailings assets and liabilities (the FUSA Group);

•	Covalent Water Company (Pty) Limited (CWC), AngloGold Security Services (Pty) Limited and Masakhisane Investments (Pty) Limited; and

•	Certain rock-dump reclamation, mine rehabilitation and closure activities located in the Vaal River region and their associated assets and liabilities (the VR Remaining assets).

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12.	ACQUISITIONS AND BUSINESS COMBINATIONS continued

•	US$260 per ounce payable on all underground production from the Mponeng, Savuka and Tau Tona mines in excess of 250 000 ounces per year for six years commencing 1 January 2021; and

•	US$20 per ounce payable on underground production from the Mponeng, Savuka and Tau Tona mines sourced from levels

•	A general authority to issue ordinary shares for cash, subject to the restrictions set out in the JSE Listings Requirements including that only public shareholders may participate;

•	A vendor consideration placement as set out in the JSE Listings Requirements, which would enable non-public shareholders to participate subject to certain conditions; and

•	Or a combination of the above.

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13	PROPERTY, PLANT AND EQUIPMENT

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13	PROPERTY, PLANT AND EQUIPMENT continued

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13	PROPERTY, PLANT AND EQUIPMENT continued

•	Asset carrying values may be affected due to changes in estimated cash flows;

•	Scrapping of assets to be recorded in the income statement following the derecognition of assets as no future economic benefit expected;

•	Depreciation and amortisation charged in the income statement may change as they are calculated on the units-of-production method;

•	Environmental provisions may change as the timing and/or cost of these activities may be affected by the change in mineral reserves; and

•	Useful life and residual values may be affected by the change in mineral reserves.

•	The level of capital expenditure compared to the total project cost estimates;

•	The ability to produce gold in a saleable form (where more than an insignificant amount of gold has been produced); and

•	The ability to sustain the ongoing production of gold.

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13	PROPERTY, PLANT AND EQUIPMENT continued

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13	PROPERTY, PLANT AND EQUIPMENT continued

•	Infection rates and the timing of the expected peaks in the provinces that Harmony's operations are situated in, based on models prepared by the South African government;

•	Expected disruptions to production together with the mitigation strategies management has in place;

•	Potential duration of the impact of the virus and the related restrictions in operations; and

•	Potential changes of the timing of various cash flows due to shortened production breaks.

•	The potential impact on production and therefore on the revenue cash flows, based on historical trends that have been extrapolated to account for varying disruption levels;

•	The duration of potential disruptions to production, ranging from 12 months to 24 months;

•	The infection rates and associated costs. Where infections were assumed to continue into Year 2, the rate was dependant on the assumed infections in Year 1, with a higher rate in Year 1 resulting in a lower rate in Year 2, and vice versa.

•	Changes to proved and probable ore reserves;

•	Economical recovery of resources;

•	The grade of the ore reserves may vary significantly from time to time;

•	Review of strategy;

•	Unforeseen operational issues at the mines;

•	Differences between actual commodity prices and commodity price assumptions;

•	Changes in the discount rate and foreign exchange rates;

•	Changes in capital, operating mining, processing and reclamation costs;

•	Mines' ability to convert resources into reserves;

•	Potential production stoppages for indefinite periods;

•	The impact of the COVID-19 pandemic on the global economy, commodity prices and exchange rates, as well as the impact in the countries the group operates in, resulting in production curtailment; and

•	Carbon tax.

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13	PROPERTY, PLANT AND EQUIPMENT continued

1	The carrying amounts of these CGUs include goodwill and any impairment losses are allocated first to goodwill and then to the identifiable assets.

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13	PROPERTY, PLANT AND EQUIPMENT continued

1	Included in additions for 2020 is an amount of R97 million (2019: R173 million) for capitalised depreciation associated with stripping activities at the Hidden Valley operations.

•	Capital expenditure is 98% of project cost estimates;

•	More than an insignificant amount of gold is being produced in a saleable form; and

•	The level has the ability to sustain the ongoing production of gold.

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13	PROPERTY, PLANT AND EQUIPMENT continued

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13	PROPERTY, PLANT AND EQUIPMENT continued

•	Vehicles at 20% per year.

•	Computer equipment at 33.3% per year.

•	Furniture and equipment at 16.67% per year.

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13	PROPERTY, PLANT AND EQUIPMENT continued

14	INTANGIBLE ASSETS

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1	In 2020 no impairment on goodwill was recorded as the recoverable amounts exceeded the carrying values. In 2019 an impairment of R6 million on goodwill was recorded for Bambanani as the carrying values exceeded the recoverable values of the related cash generating units. Refer to note 6 for further details on the impairment assessment.

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14	INTANGIBLE ASSETS continued

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•

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the group provides money, goods or services directly to a debtor with no intention of trading the receivable. Loans and receivables are subsequently measured at amortised cost using the effective interest method. Loans and receivables include trade and other receivables (excluding VAT and prepayments), restricted cash and cash and cash equivalents.

	Cash and cash equivalents are defined as cash on hand, deposits held at call with banks and short-term highly liquid investments with original maturities of three months or less. Cash and cash equivalents exclude restricted cash.

Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. If collection of the trade receivable is expected in one year or less it is classified as current assets. If not, it is presented as non-current assets. A provision for impairment of receivables is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The carrying amount of the asset is reduced through the use of a provision for impairment (allowance account) and the amount of the loss is recognised in the income statement. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited in the income statement.

•

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of the investment within 12 months of the balance sheet date. Available-for-sale financial assets are subsequently carried at fair value. The fair values of quoted investments are based on current bid prices. If the fair value for a financial instrument cannot be obtained from an active market, the group establishes fair value by using valuation techniques. The group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired.

•

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the group’s management has the positive intention and ability to hold to maturity. The group’s held-to-maturity investments are subsequently measured at amortised cost using the effective interest method. The group assesses at the end of each reporting period whether there is objective evidence that a held-to-maturity investment is impaired as a result of an event.

•

Financial assets at fair value through profit or loss have two sub-categories: financial assets held-for-trading, and those designated at fair value through profit or loss at inception. Derivative assets are categorised as held for trading unless designated as hedging instruments (refer to note 2.3). These assets are subsequently measured at fair value with gains or losses arising from changes in fair value recognised in the income statement in the period in which they arise.

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15	RESTRICTED CASH

(a)	The amount primarily relates to funds set aside to serve as collateral against guarantees made to the Department of Mineral Resources and Energy (DMRE) in South Africa for environmental and rehabilitation obligations. Refer to note 25. The funds are invested in short-term money market funds and call accounts.

(b)	Cash of R22 million (2019: R20 million) relates to monies released from the environmental trusts as approved by the DMRE which may only be used for further rehabilitation. Cash of R32 million (2019: R24 million) relates to monies set aside for affected communities in the group’s PNG operations. Cash of R8 million relates to monies held by Harmony Gold Community Trust.

16	RESTRICTED INVESTMENTS

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16	RESTRICTED INVESTMENTS continued

17	OTHER NON-CURRENT ASSETS

(a)	A loan of R116 million (2019: R116 million) owed by Pamodzi Gold Limited (Pamodzi) who were placed into liquidation during 2009 was provided for in full. Harmony is a concurrent creditor in the Pamodzi Orkney liquidation.

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17	OTHER NON-CURRENT ASSETS continued

(b)

During 2016, Harmony advanced R200 million to the ARM BBEE Trust, a shareholder of African Rainbow Minerals Limited (ARM). The trust is controlled and consolidated by ARM, who holds 12.38% of Harmony's shares at 30 June 2020. Harmony is a trustee of the ARM BBEE Trust. The loan is subordinated and unsecured. The interest is market related (3 months JIBAR plus 4.25%) and is receivable on the maturity of the loan on 31 December 2022.

(c)

On adoption of IFRS 9 on 1 July 2018, an irrevocable election was made to classify the equity instruments previously classified as available-for-sale as at FVOCI. The new standard impacted the measurement of the group's unquoted equity investments as IFRS 9 eliminated the exemption provided under IAS 39 where unquoted equity investments were measured at cost when fair value could not be reliably measured. This change resulted in revaluing the unlisted investment in Rand Mutual Assurance, which had a cost of Rnil to fair value of R82 million in 2019. The difference between the carrying amounts of financial instruments before the adoption of IFRS 9 and the new carrying amount calculated in accordance with the standard at 1 July 2018 was recognised directly in the opening balance of equity. Refer to the statements of changes in equity.

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18	DERIVATIVE FINANCIAL INSTRUMENTS

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18	DERIVATIVE FINANCIAL INSTRUMENTS continued

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18	DERIVATIVE FINANCIAL INSTRUMENTS continued

(a)	Rand gold contracts

(b)	US$ commodity contracts

(c)	Foreign exchange contracts

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18	DERIVATIVE FINANCIAL INSTRUMENTS continued

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19	TRADE AND OTHER RECEIVABLES

1	The gross amount includes the full trade receivables (metals) balance, which has no attributable loss allowance.

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19	TRADE AND OTHER RECEIVABLES continued

20	INVESTMENTS IN ASSOCIATES

(a)	Harmony acquired a 32.4% interest in Pamodzi on 27 February 2008, initially valued at R345 million. Pamodzi was listed on the JSE and had interests in operating gold mines in South Africa. Pamodzi was placed in liquidation in March 2009. As at 30 June 2020, the liquidation process has not been concluded. Refer to note 17(a) for details of the loan and provision of impairment of the loan.

(b)

Rand Refinery provides precious metal smelting and refining services in South Africa. Harmony holds a 10.38% share in Rand Refinery. This investment is a strategic investment for the group as Rand Refinery is the only company that provides such services in South Africa. Although the group holds less than 20% of the equity shares of Rand Refinery, the group is able to exercise significant influence by virtue of having a right to appoint a director on the board. Through the 10.38% shareholding and the right to appoint a director on the board, the investment has been accounted for as an associate.

21	INVESTMENT IN JOINT OPERATIONS

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22	INVENTORIES

(a)

The run-of-mine (ROM) stock at the Hidden Valley operations increased R294 million year on year following the commencement of the stage 6 cut-back. The increase includes approximately R72 million which is attributable to translation. This was offset by gold in-process which decreased R169 million year on year due to the lower production during the last quarter of the 2020 financial year as well as the plants being cleaned out during the South African COVID-19 national lockdown.

(b)	The consumables’ balance increased R298 million year on year, primarily as a result of the impact of the weakening of the Rand against the Australian dollar from R9.91/A$1 at 30 June 2019 to R11.96/A$1 at 30 June 2020 and the resultant movement when translating the balance for the Hidden Valley operations at year-end.

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23	SHARE CAPITAL

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23	SHARE CAPITAL continued

1	A wholly-owned subsidiary.

2	Trust controlled by the group.

3	The issue of the convertible preference shares did not impact the group's consolidated financial statements as the Harmony Gold Community Trust is controlled by the group.

24	OTHER RESERVES

(a)	The balance of the foreign exchange translation reserve movement represents the cumulative translation effect of the group's off-shore operations.

(b)	Harmony has entered into gold hedging contracts. Cash flow hedge accounting is applied to these contracts, resulting in the effective portion of the unrealised gains and losses being recorded in other comprehensive income (other reserves). Refer to note 18 for further information.

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24	OTHER RESERVES continued

(b)	Hedge reserve continued

(c)	The reconciliation of the movement in the share-based payments is as follows:

(i)

The group issues equity-settled instruments to certain qualifying employees under an employee share option scheme and employee share ownership plan (ESOP) to award shares from the company’s authorised but unissued ordinary shares. Equity share-based payments are measured at the fair value of the equity instruments at the grant date and are expensed over the vesting period, based on the group’s estimate of the shares that are expected to vest. Refer to note 34 for more details.

(d)	The actuarial gains or losses related to the post-retirement benefit obligation will not be reclassified to the income statement. The movement is as follows:

(e)	On 15 March 2004, Harmony announced that it had made an off-market cash offer to acquire all the ordinary shares, listed and unlisted options of Abelle Limited, held by non-controlling interests. The excess of the purchase price of R579 million over the carrying amount of non-controlling interest acquired, amounting to R381 million, has been accounted for under other reserves.

(f)	On 24 May 2004, the group issued a convertible bond. The amount representing the value of the equity conversion component is included in other reserves, net of deferred income taxes. The equity conversion component is determined on the issue of the bonds and is not changed in subsequent periods. The convertible bonds were repaid in 2009.

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24	OTHER RESERVES continued

(g)

On 19 March 2010, Harmony Gold Mining Company Limited concluded an agreement with African Vanguard Resources (Proprietary) Limited (AVRD), for the purchase of its 26% share of the mining titles of the Doornkop South Reef. The original sale of the 26% share in the mining titles was accounted for as an in-substance call option by AVRD over the 26% mineral right. The agreement to purchase AVRD's 26% interest during the 2010 financial year was therefore considered to be a repurchase of the option (equity interest). The 26% interest was transferred from AVRD to Harmony in exchange for Harmony repaying the AVRD Nedbank loan and the issue of 2 162 359 Harmony shares. The difference between the value of the shares issued of R152 million, the liability to the AVRD and transaction costs, have been taken directly to equity.

(h)	Includes R106 million (2019: R82 million) related to the fair value movement of Harmony's interest in Rand Mutual Assurance. Refer to note 17.

25	PROVISION FOR ENVIRONMENTAL REHABILITATION

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25	PROVISION FOR ENVIRONMENTAL REHABILITATION continued

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25	PROVISION FOR ENVIRONMENTAL REHABILITATION continued

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26	PROVISION FOR SILICOSIS SETTLEMENT continued

1	Change in benefit take-up rate: the take-up rate does not affect the legal cost allocation, but a 10% change results in a proportionate change in the other values.

2	Change in the silicosis prevalence: the assumptions that will result in a change in the estimated number of cases are either a 10% change in the assumed labour number or a 10% change in the disease risk.

3	Change in disease progression rates: a 10% shorter/longer disease progression period was used. This assumption is not applicable to the dependant or TB classes.

27	RETIREMENT BENEFIT OBLIGATION

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27	RETIREMENT BENEFIT OBLIGATION continued

•	It is assumed that all Continuation and Widow Members (CAWMs) will remain on the current benefit option and income band. For employed members, post-employment contributions were assumed to be equal to the average payable for the current CAWMs membership;

•	It is assumed that not all employed members will remain employed until retirement therefore estimated resignation and ill-health retirement rates are also taken into account;

•	It is assumed that 90% of employed members will be married at retirement or earlier death and that wives are four years younger than their husbands.

•	Change in bond yields: A decrease in the bond yields will increase the plan liability.

•	Inflation risk: The obligation is linked to inflation and higher inflation will lead to a higher liability.

•	Life expectancy: The obligation is to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plan’s liabilities.

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27	RETIREMENT BENEFIT OBLIGATION continued

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•	Fixed lease payments (including in-substance fixed payments), less any lease incentives;

•	Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;

•	The amount expected to be payable by the lessee under residual value guarantees;

•	The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and

•	Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease.

•	The lease term has changed or there is a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate;

•	The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using the initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used).

•	A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.

•	Periods covered by an option to extend the lease if management is reasonably certain to make use of that option; and / or

•	Periods covered by an option to terminate the lease, if management is reasonably certain not to make use of that option.

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28	LEASES continued

•	Assessing whether an arrangement contains a lease: various factors are considered, including whether a service contract includes the implicit right to the majority of the economic benefit from assets used in providing the service;

•

Determining the lease term: management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within the control of the lessee. The company applies the considerations for short-term leases where leases are modified to extend the period by 12 months or less on expiry and these modifications are assessed on a standalone basis; and

•	Determining the discount rate: in determining the incremental borrowing rates, management considers the term of the lease, the nature of the asset being leased, in country borrowings as well as other sources of finance.

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1	The lease commitments represent solely payments under non-cancellable periods per the contracts and exclude any options to extend the lease term.

1	Included in depreciation and amortisation.

2	Included in finance costs.

3	Included in production costs and corporate, administration and other expenditure.

4	The amount includes leases that expire within 12 months of adoption as management elected the short-term expedient.

5	These payments relate mostly to mining and drilling contracts. Variable lease payments made comprise 81% of the total lease payments made during the period. The majority of the variable lease payments made relate to the contracting of specialists for mining operations at Harmony's open pit mines and are determined on a per tonne or square metre basis.

29	OTHER NON-CURRENT LIABILITIES

1	The increase is mainly due to the estimated gold allocation increasing from 220kgs to 1 862kgs based on approved life-of-mine plans.

2	Refer to note 28 for an analysis of the lease liability.

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•

Borrowings are initially recognised at fair value net of transaction costs incurred and subsequently measured at amortised cost, comprising original debt less principal payments and amortisation, using the effective yield method. Any difference between proceeds (net of transaction cost) and the redemption value is recognised in the income statement over the period of the borrowing using the effective interest rate method.

•	Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Payables are classified as current liabilities if payment is due within a year or less. If not, they are presented as non-current liabilities.

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30	BORROWINGS

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1	The syndicate of lenders for the US$400 million facility agreed to the one year extension during July 2020, extending the maturity date to September 2023. Refer to note 38 for details on subsequent events.

2	This facility was subsequently cancelled on 6 July 2020. Refer to note 38 for details on subsequent events.

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30	BORROWINGS continued

•	The group's interest cover ratio shall be more than five times (EBITDA1/ Total interest paid);

•	Tangible Net Worth2 to total net debt ratio shall not be less than four times or six times when dividends are paid;

•	Leverage3 shall not be more than 2.5 times.

1	Earnings before interest, taxes, depreciation and amortisation (EBITDA) as defined in the agreement excludes unusual items such as impairment and restructuring cost.

2	Tangible Net Worth is defined as total equity less intangible assets. During June 2020, lenders agreed to relax the Tangible Net Worth to total net debt covenant from four times to two times until December 2020, in order to provide flexibility to the group following the disruptions from the COVID-19 pandemic.

3	Leverage is defined as total net debt to EBITDA.

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30	BORROWINGS continued

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30	BORROWINGS continued

31	TRADE AND OTHER PAYABLES

(a)	Includes a loan from Village Main Reef Limited of R55 million. The loan was taken on with the acquisition of the Moab Khotsong operations. The loan is unsecured, interest free and has no fixed terms of payment.

(b)	Employee entitlements to annual leave are recognised on an ongoing basis. An accrual is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date. The movement in the liability recognised in the balance sheet is as follows:

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32	CASH GENERATED BY OPERATIONS

(a)	Acquisitions of investments/business

(b)	Principal non-cash transactions

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33	EMPLOYEE BENEFITS

•

Pension, provident and medical benefit plans are funded through monthly contributions. The group pays fixed contributions into a separate entity in terms of the defined contribution pension, provident and medical plans which are charged to the income statement in the year to which they relate. The group's liability is limited to its monthly determined contributions and it has no further liability, legal or constructive, if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Refer to note 27 for details of the post-retirement medical benefit plan.

•

Termination benefits are payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The group recognises termination benefits at the earlier of the following dates: (a) when the group can no longer withdraw the offer of those benefits; and (b) when the entity recognises costs for a restructuring that is within the scope of IAS 37, Provisions, Contingent Liabilities and Contingent Assets, and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after balance sheet date are discounted to present value.

1	The Wafi-Golpu joint operation's employees included in the total is 81 (2019: 194).

2	These amounts have been included in cost of sales, corporate expenditure and capital expenditure.

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34	SHARE-BASED PAYMENTS

•	The 2006 equity-settled share-based payments plan;

•	The equity-settled Sisonke Employee Share Ownership Plan (ESOP) awarded in 2019; and

•	The equity-settled Management Deferred Share Plan (DSP) awarded during the 2020 financial year.

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34	SHARE-BASED PAYMENTS continued

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34	SHARE-BASED PAYMENTS continued

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34	SHARE-BASED PAYMENTS continued

•	Facilitate economic empowerment of Harmony’s employees;

•	Incentivise Harmony’s employees, so as to promote the shared interests of employees and shareholders in the value growth of Harmony; and

•	Further align the interests of the Harmony shareholders and those of the employees of Harmony.

*	The term Participation Units means the vested rights of a beneficiary to an equal number of Harmony shares held by the Trust.

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34	SHARE-BASED PAYMENTS continued

*	Deferred shares

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34	SHARE-BASED PAYMENTS continued

35	RELATED PARTIES

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35	RELATED PARTIES continued

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36	COMMITMENTS AND CONTINGENCIES

(a)

On 1 December 2008, Harmony issued 3 364 675 Harmony shares to Rio Tinto Limited (Rio Tinto) for the purchase of Rio Tinto’s rights to the royalty agreement entered into prior to our acquisition of the Wafi deposits in PNG. The shares were valued at R242 million on the transaction date. An additional US$10 million in cash will be payable when the decision to mine is made. Of this amount, Harmony is responsible for paying the first US$6 million, with the balance of US$4 million being borne equally by the joint operators.

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36	COMMITMENTS AND CONTINGENCIES continued

(b)

The group may have a potential exposure to rehabilitate groundwater and radiation that may exist where the group has and/or continues to operate. The group has initiated analytical assessments to identify, quantify and mitigate impacts if and when (or as and where) they arise. Numerous scientific, technical and legal studies are underway to assist in determining the magnitude of the contamination and to find sustainable remediation solutions. The group has instituted processes to reduce future potential seepage and it has been demonstrated that Monitored Natural Attenuation (MNA) by the existing environment will contribute to improvement in some instances. Water treatment facilities were successfully implemented at Doornkop, Tshepong Operations and Kusasalethu. These facilities are now assisting in reducing our dependency on state supplied potable water and will be key in managing any post closure decant should it arise.

(c)

Due to the interconnected nature of mining operations in South Africa, any proposed solution for potential flooding and potential decant risk posed by deep groundwater needs to be a combined one, supported by all the mines located in these goldfields. As a result, the Department of Mineral Resources and Energy and affected mining companies require the development of a regional mine closure strategy. Harmony operations have conducted a number of specialist studies and the risk of surface decant due to rising groundwater levels has been obviated at the entire Free State region and Kalgold. In addition, the decant from the KOSH groundwater system tied with our Moab Khotsong operation has been managed through an appropriate groundwater closure plan and sufficient provision has been set aside for this. Therefore, there is no contingency arising from these operations. Additional studies have been commissioned at Doornkop and Kusasalethu. Studies that have been conducted indicate that there is no risk of decant from Doornkop and Kusasalethu, but it is recommended that confirmatory studies be completed. In view of the limitation of current information for accurate estimation of a liability, no reliable estimate can be made for these operations.

(d)

The individual Harmony mining operations have applied for the respective National Water Act, Section 21 Water Use Licenses (WUL) to the Department of Water and Sanitation (DWS). The respective Water Use License Applications (WULA’s) have subsequently not yet been approved by DWS. Two WUL have been issued by DWS for Kalgold and Kusasalethu (amendment currently being drafted for both operations), with neither licence having any material impact to the operation. The remaining WULA’s have not yet been approved by DWS. The WUL conditions for the respective operations are subsequently not yet known and the subsequent potential water resource impact liability as part of the mine rehabilitation and closure process (to which DWS is an important participant and decision maker) is uncertain. The existing WUL for Moab Khotsong, which was recently acquired by Harmony, has already been approved by the DWS. The transferral of the licence and its conditions to Harmony is currently being processed. All operations continue to operate legally and responsibly.

(e)

In terms of the sale agreements entered into with Rand Uranium, Harmony retained financial exposure relating to environmental disturbances and degradation caused by it before the effective date, in excess of R75 million of potential claims. Rand Uranium is therefore liable for all claims up to R75 million and retains legal liability. The likelihood of potential claims cannot be determined presently and no provision for any liability has been made in the financial statements.

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37	FINANCIAL RISK MANAGEMENT

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37	FINANCIAL RISK MANAGEMENT continued

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37	FINANCIAL RISK MANAGEMENT continued

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37	FINANCIAL RISK MANAGEMENT continued

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37	FINANCIAL RISK MANAGEMENT continued

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37	FINANCIAL RISK MANAGEMENT continued

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37	FINANCIAL RISK MANAGEMENT continued

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37	FINANCIAL RISK MANAGEMENT continued

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37	FINANCIAL RISK MANAGEMENT continued

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37	FINANCIAL RISK MANAGEMENT continued

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37	FINANCIAL RISK MANAGEMENT continued

Level 1:	Quoted prices (unadjusted) in active markets;

Level 2:	Inputs other than quoted prices included within level 1 that are observable for the asset, either directly (that is, as prices) or indirectly (that is, derived from other prices);

Level 3:	Inputs for the asset that are not based on observable market data (that is, unobservable inputs).

(a)

The increase in level 3 fair value measurement relates to the equity investment in Rand Mutual Assurance previously carried at cost. The fair value of the investment was estimated with reference to an independent valuation. A combination of the "Embedded Valuation" and "Net Asset Value" techniques were applied to revalue the investment as at 30 June 2020. In evaluating the group's share of the business, common practice marketability and minority discounts as well as additional specific risk discounts were applied.

(b)	The majority of the balance is directly derived from the Top 40 index on the JSE, and is discounted at market interest rate. This relates to equity-linked deposits in the group's environmental rehabilitation trust funds. The balance of the environmental trust funds are carried at amortised cost and therefore not disclosed here.

(c)	The mark-to market remeasurement of the derivative contracts was determined as follows:

•

Foreign exchange contracts comprise of zero cost collars and FECs: The zero cost collars were valued using a Black-Scholes valuation technique derived from spot Rand/US$ exchange rate inputs, implied volatilities on the Rand/US$ exchange rate, Rand/US$ inter-bank interest rates and discounted at market interest rate (zero-coupon interest rate curve). The value of the FECs is derived from the forward Rand/US$ exchange rate and discounted at market interest rate (zero-coupon interest rate curve).

•	Rand gold contracts (forward sale contracts): spot Rand/US$ exchange rate, Rand and dollar interest rates (forward points), spot US$ gold price, differential between the US interest rate and gold lease interest rate which is discounted at market interest rate.

•	US$ gold contracts (forward sale contracts): spot US$ gold price, differential between the US interest rate and gold lease interest rate and discounted at market interest rate.

•	Silver contracts (zero cost collars): a Black-Scholes valuation technique, derived from spot US$ silver price, strike price, implied volatilities, time to maturity and interest rates and discounted at market interest rate.

(d)

The increase in level 3 fair value measurement relates to the ARM BBEE loan that was carried at amortised cost prior to 1 July 2018. Refer to note 17. The fair value was calculated using a discounted cash flow model taking into account projected interest payments and the projected share price for African Rainbow Minerals Limited (ARM) on the expected repayment date. A 10% change in the discount rate of 9.8% would not cause a material change to the fair value of the loan. The fair value of the loan balance is limited to the sum of the capital amounts plus cumulative interest not paid, being R316 million.

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38	SUBSEQUENT EVENTS

(a)	On 6 July 2020 Harmony and its subsidiaries cancelled the bridge loan of US$200 million (refer to note 30). The cancellation followed the successful equity raise on 24 June 2020 (refer to note 12).

(b)

On 6 July 2020 a payment of R300 million was made on the R2 billion facility while two payments of US$20 million each were made on 2 July 2020 (R340 million) and 8 July 2020 (R339 million) respectively on the US$400 million facility. Additional payments were made on the R2 billion facility and US$400 million facility of R600 million on 6 October 2020 and of US$30 million (R497 million) on 8 October 2020 respectively.

(c)	The syndicate of lenders for the US$400 million million facility agreed to the one year extension during July 2020, extending the maturity date to September 2023.

(d)	On 14 August 2020, Ms Shela Mohatla was appointed as Group Company Secretary by the board of directors. At the same time Mrs Marian van der Walt was appointed as Senior Group Executive: Enterprise Risk and Investor Relations and will be regarded as a prescribed officer going forward.

(e)	By 1 September 2020, Harmony had completed the recall of all operational employees.

(f)	The last condition precedent for the acquisition of AGA's remaining South African assets (refer note 12 for further detail) was fulfilled during September 2020. The cash consideration of US$200 million was paid on 30 September 2020 and amounted to R3.366 billion based on the average exchange rate set out in the agreement. Control transferred to Harmony on 1 October 2020.

(g)	On 30 September 2020, Harmony announced the resignations of Mr Ken Dicks and Mr Max Sisulu as independent non-executive directors as well as the retirement of Mr Frank Abbott as executive director with immediate effect.

39	SEGMENT REPORT

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39	SEGMENT REPORT continued

#	Capital expenditure for international operations excludes expenditure spent on Wafi-Golpu of R54 million (2019: R350 million) (2018: R288 million).

(a)	Capital expenditure for 2018 comprises of expenditure of R2 609 million net of capitalised revenue of R1 046 million. No revenue was capitalised in 2019 or 2020.

*	Production statistics are unaudited.

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40	RECONCILIATION OF SEGMENT INFORMATION TO CONSOLIDATED INCOME STATEMENTS AND BALANCE SHEETS

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40	RECONCILIATION OF SEGMENT INFORMATION TO CONSOLIDATED INCOME STATEMENTS AND BALANCE SHEETS continued