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Harmony - Harmony"s Annual Report for the year ended 30 June 2006
Release Date: 27/09/2006 15:23:01 Code(s): HARHarmony - Harmony"s Annual Report for the year ended 30 June 2006
Harmony Gold Mining Company Limited
Registration number 1950/038232/06
Incorporated in the Republic of South Africa
ISIN: ZAE000015228
Trading Symbols
JSE Limited HAR
New York Stock Exchange, Inc. HMY
London Stock Exchange plc HRM
Euronext Paris HG
Euronext Brussels HMY
Berlin Stock Exchange HAM1
NASDAQ HMY
Issuer code HAPS
HARMONY"S ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2006
Shareholders of Harmony are advised that the Company"s Annual Report for the
year ended 30 June 2006 will be posted to shareholders on 27 September 2006.
Below please find Harmony"s summarised financial statements of the audited
financial statements for the year ended 30 June 2006. The summarised annual
financial statements are consistent, in all material respects, with the
audited financial statements for the year ended 30 June 2006.
Shareholders" attention is brought to the fact that minor reallocations of
income statement, balance sheet and cash flow items and balances were made
from the preliminary results filed on 7 August 2006, as per the disclosure
requirements of the International Financial Reporting Standards and the
South African Companies Act requirements for annual financial statements.
The comprehensive set of audited annual financial statements is available
for inspection at the Company"s registered office.
Group Income Statement for the year ended 30 June 2006
2006 2005
R million R million
8,039 7,822 Revenue
(6,580) (6,953) Cash operating costs
1,459 869 Cash operating profit
(1,032) (1,008) Amortisation and depreciation of mining properties,
mine development costs and mine plant facilities
(127) (111) Corporate, administration and other expenditure
13 23 Reversal of provision for rehabilitation costs
313 (227) Gross profit/(loss)
(57) (34) Amortisation and depreciation of assets other than
mining properties, mine development costs and mine
plant facilities
(174) (185) Care and maintenance cost of closed shafts
78 (453) Employment termination and restructuring costs
(107) (72) Exploration expenditure
216 (1,513) Reversal of impairment/(impairment) of assets
(105) - Loss from associates
(523) 16 (Loss)/gain on financial instruments
(58) (95) Marketing and new business expenditure
(21) (26) Other (expenses)/income - net
- - Impairment of investment in associate
306 (555) Profit/(loss) on sale of listed investments
14 (1) Profit/(loss) on sale of subsidiaries
- (337) Permanent diminution in value of available-for-sale
financial asset
Profit on mark-to-market of listed investment
Profit on sale and loss on dilution of investment
in associates
- -
(7) (56) Provision for post retirement benefits
87 17 Fair value of non-derivative financial instruments
(103) (67) Share-based compensation
224 149 Investment income
(470) (505) Finance cost
(387) (3,944) Loss before tax
(138) 730 Taxation
(525) (3,214) Net loss
(133) (888) Basic loss per share (cents)
(133) (888) Fully diluted loss per share (cents)
- - Interim dividends per share (cents)
- - Proposed final dividends per share (cents)
- - Total dividends per share (cents)
Group Balance Sheet as at 30 June 2006
2006 2005
R million R million
Assets
Non-current assets
23,318 22,511 Property, plant and equipment
2,270 2,267 Intangible assets
255 52 Restricted cash
2,255 4,070 Investments in financial assets
1,909 - Investments in associates
1,975 1,811 Deferred income tax
107 84 Trade and other receivables
32,089 30,795 Total non-current assets
Current assets
666 583 Inventories
721 632 Trade and other receivables
27 27 Income and mining taxes
651 1,778 Cash and cash equivalents
2,065 3,020 Total current assets
34,154 33,815 Total assets
Equity
Share capital and reserves
25,489 25,289 Share capital
(271) (586) Other reserves
(2,015) (1,485) Accumulated loss
23,203 23,218 Total equity
Non-current liabilities
2,591 2,422 Borrowings
4,275 3,994 Deferred income tax
631 386 Derivative financial instruments
860 837 Provision for environmental rehabilitation
16 14 Provision for other liabilities and charges
107 89 Retirement benefit obligations
8,480 7,742 Total non-current liabilities
Current liabilities
1,458 1,514 Trade and other payables
1,006 1,333 Borrowings
7 8 Shareholders for dividends
2,471 2,855 Total current liabilities
10,951 10,597 Total liabilities
34,154 33,815 Total equity and liabilities
Statement of Changes in Shareholders" Equity
Number of Share Share (Accumulated Other Total
ordinary capital premium loss)/ reserves
shares retained
issued earnings
Rm Rm Rm Rm Rm
Group
Balance - 30 160 20,729 1,078 (1,186) 20,781
June 2004 (as 320,741,577
previously
reported)
Change in - - - 765 - 765
accounting
policy for the
capitalisation
of development
costs (net of
income tax of
R191 million)
Adoption of - - - (17) 17 -
IFRS2 - Share-
based
compensation
Balance - 30 160 20,729 1,826 (1,169) 21,546
June 2004 (as 320,741,577
restated)
Net loss
(restated) - - - (3,214) - (3,214)
Dividends - - - (97) - (97)
declared
Issue of shares
- Acquisition 72,173,265 37 4,422 - - 4,459
of 11.5%
interest in
Gold Fields
- Exercise of 426,352 - 20 - - 20
employee share
options
Share issue - - (80) - - (80)
expenses
Treasury shares - - 1 - - 1
Foreign - - - - 349 349
exchange
translation
Deferred share- - - - - 67 67
based
compensation
Mark-to-market - - - - 173 173
of listed and
other
investments
Mark-to-market - - - - (6) (6)
of
environmental
trust funds
Balance - 30 197 25,092 (1,485) (586) 23,218
June 2005 393,341,194
Net loss - - - (525) - (525)
Dividends - - - (5) - (5)
declared
Issue of shares
- Exercise of 3,593,256 2 181 - - 183
employee share
options
Treasury shares - - 17 - - 17
Foreign - - - - 109 109
exchange
translation
Deferred share- - - - - 103 103
based
compensation
Mark-to-market - - - - 105 105
of listed and
other
investments
Mark-to-market - - - - (2) (2)
of
environmental
trust funds
Balance -
30 June 2006 396,934,450 199 25,290 (2,015) (271) 23,203
Group Statement of Cash Flows for the year ended 30 June 2006
2006 2005
R million R million
Cash flows from operating activities
690 (357) Cash generated by/(utilised in) operations
207 132 Interest received
17 17 Dividends received
(201) (261) Interest paid
(12) (55) Income and mining taxes paid
701 (524) Net cash generated by/(utilised in) operating
activities
Cash flows from investing activities
(31) (2) Net increase in amounts invested in environmental
trusts
(203) 10 Restricted cash
2 5 Cash held by subsidiaries on acquisition
- (11) Cash held by subsidiaries at disposal
- (85) Investment in Gold Fields acquired
(5) - Investment in Orpheo by Harmony acquired
(1) - Investment in MP Britz and H Taute Pharmacies
acquired
19 - Proceeds on disposal of Buffalo Creek
(344) (212) Cost on closure of hedge positions
2,462 2,546 Proceeds on disposal of available-for-sale
financial assets
(2,012) - Acquisition of associate
18 (7) Decrease/(Increase) in other non-current
investments
80 129 Proceeds on disposal of mining assets
(1,747) (1,392) Additions to property, plant and equipment
(1,762) 981 Net cash (utilised in)/generated by investing
activities
Cash flows from financing activities
1,000 1,403 Borrowings raised
(1,393) (1,212) Borrowings paid
183 20 Ordinary shares issued
- (80) Shares issue expenses
(7) (97) Dividends paid
(217) 34 Net cash (utilised in)/generated by financing
activities
151 (65) Foreign currency translation adjustments
(1,127) 426 Net (decrease)/increase in cash and cash
equivalents
1,778 1,352 Cash and equivalents - beginning of year
651 1,778 Cash and equivalents - end of year
Notes to the Financial Statements
For the year ended 30 June 2006
1. ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these
financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated.
(a) BASIS OF PREPARATION: The annual financial statements, as modified by
available-for-sale financial assets, and financial assets and liabilities
(including derivative instruments), which have been brought to account at
fair value through the income statement or through other reserves under
shareholders" equity, are prepared on the historical cost basis. The
accounting policies as set out below have been consistently applied, except
for the capitalisation of mine development cost and the adoption of Share-
based compensation (IFRS2). The financial statements are prepared in
accordance with International Financial Reporting Standards ("IFRS") and in
the manner required by the South African Companies Act.
(b) IMPLEMENTATION OF NEW ACCOUNTING POLICY
IFRS 2, Share-based payments: On 1 July 2005, the Company adopted the
requirements of IFRS 2, Share-based payments. In accordance with the
transitional provisions, IFRS 2 has been applied to all grants of equity-
settled payments after 7 November 2002 that were unvested as at 1 January
2005. The Company issues equity- settled instruments to certain qualifying
employees under an Employee Share Option Scheme to purchase shares in the
Company"s authorised but unissued ordinary shares. Equity share-based
payments are measured at fair value of the equity instruments at the date of
the grant. The deferred share-based compensation is expensed over the
vesting period, based on the Company"s estimate of the shares that are
expected to eventually vest. The Company used the binominal option pricing
model in determining the fair value of the options granted.
The impact of this adjustment was as follows:
2006 2005
Group: R million R million
Effect on net loss:
Increase in expense (103) (67)
Income tax - -
Increase in net loss (103) (67)
Effect on opening accumulated loss:
Increase in expense (17)
Income tax -
Increase in accumulated loss (17)
(c) CHANGE IN ACCOUNTING POLICY
During the financial year, the Group retrospectively changed their
accounting policy on the capitalisation of ongoing development cost.
Previously mine development costs were capitalised only until the reef
horizon was intersected. Further costs to develop the ore body were expensed
as normal working cost. Under the revised accounting policy expenditure for
all development incurred after intersecting the reef horizon that will give
access to proven and probable ore reserves will now be capitalised.
Capitalised costs are amortised over the estimated life of the proven and
probable reserves to which the costs give access.
The Group believes that the newly adopted principle is preferable because:
(i) it aligns its policy with those of its global mining industry peers;
(ii) allows for a direct link between revenue and associated expenditure;
(iii) allows for better componentisation; and
(iv) the additional costs capitalised under the revised policy meet the
definition of an asset.
The impact of this adjustment was as follows:
2006 2005
Group: R million R million
Effect on net loss:
Decrease in cash operating cost 659 595
Increase in amortisation and depreciation (314) (213)
of mining properties, mine development
costs and mine plant facilities
Increase in taxation (74) (73)
Decrease in loss 270 308
Effect on opening retained earnings:
Decrease in cash operating cost 1,406
Increase in amortisation and depreciation (450)
of mining properties, mine development
costs and mine plant facilities
Increase in taxation (191)
Increase in retained earnings 765
This report was approved by the Board of directors and is signed on their
behalf by:
Z B Swanepoel N V Qangule
Chief Executive Financial Director
Virginia
13 September 2006
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting of Harmony will be
held on Friday, 10 November 2006 at 10:00 (SA time) at Harmony"s Corporate
Offices, Randfontein Office Park, corner Main Reef Road and Ward Avenue,
Randfontein to transact business as stated in the Notice of Annual General
Meeting, which will be issued together with the annual financial statements
contained in the Annual Report of Harmony for the year ended 30 June 2006.
CONTACT DETAILS
Harmony Gold Mining Company Limited
Corporate Office
Suite No. 1
Private Bag X1
Melrose Arch, 2076
South Africa
First Floor
4 The High Street
Melrose Arch, 2196
Johannesburg
South Africa
Telephone: +27 11 684 0140
Fax: +27 11 684 0188
Website: http://www.harmony.co.za
Directors
P T Motsepe (Chairman)*
Z B Swanepoel (Chief Executive)
F Abbott*, J A Chissano**,
Dr D S Lushaba*, F T De Buck*, M Motloba*,
N V Qangule, C M L Savage*
(*non-executive) (**Mozambique)
Investor Relations
Amelian Soares
Investor Relations Manager
Telephone: +27 11 684 0140
Fax: +27 11 684 0188
Cell: +27(0)82 654 9241
E-mail: amelia.soares@harmony.co.za
Lizelle du Toit
Investor Relations Officer
Telephone: +27 11 684 0149
Fax: +27 11 684 0188
Cell: +27 (0) 82 465 1244
E-mail: lizelle.dutoit@harmony.co.za
Marian van der Walt
Company Secretary
Telephone: +27 11 411 2037
Fax: +27 11 411 2398
Cell: +27 (0) 82 888 1242
E-mail: marian.vanderwalt@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
Telephone: +27 11 832 2652
Fax: +27 11 834 4398
United Kingdom Registrars
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Telephone: +44 870 162 3100
Fax: +44 208 639 2342
ADR Depositary
The Bank of New York
101 Barclay Street
New York, NY 10286
United States of America
Telephone: +1888-BNY ADRS
Fax: +1 212 571 3050
Trading Symbols
JSE Limited HAR
New York Stock Exchange, Inc. HMY
London Stock Exchange plc HRM
Euronext Paris HG
Euronext Brussels HMY
Berlin Stock Exchange HAM1
NASDAQ HMY
Issuer code HAPS
Registration number 1950/038232/06
Incorporated in the Republic of South Africa
ISIN: ZAE000015228
Date: 27/09/2006 03:23:12 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department