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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): HAR
Harmony - 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                                             
                                                                                
                                                                                
                                                                                



                                        
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