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HWA
HWHWA
HWA - Hwange Colliery Company Limited - Unaudited results for the six months
ended 30 June 2007
HWANGE COLLIERY COMPANY LIMITED
(Incorporated in Zimbabwe)
Code: HWA ZW0009011934
The company`s together with appropriate comparisons for the previous periods
were as follows::
INFLATION ADJUSTED HISTORICAL COST
6 Months 6 Months Year 6 Months 6 Months Year
ended ended Ended ended ended Ended
30.06.07 30.06.06 30.12.06 30.06.07 30.06.06 30.12.06
(Audited)
(Z$) (Z$) (Z$) (Z$) (Z$) (Z$)
SALES
HCC coal - - - 293 722 246 828 566 976
(tonnes)
HPS coal - - - 776 168 636 483 1 330 553
(tonnes)
Total coal - - - 1 069 890 883 311 1 897 529
sales
(tonnes)
Coke - - - 87 966 93 038 174 434
(tonnes)
Coke oven 7 152 650 8 393 460 17 662 576
gas (Nm3)
ABRIDGED INCOME STATEMENT - INFLATION ADJUSTED
6 Months 6 Months Year
ended ended Ended
30.06.07 30.06.06 30.12.06
(Z$) (Z$) (Z$)
Sales revenue 243 780 927 276 950 413 060 463 953 190 107
(Loss)/profit (77 742 144 902) (2 222 186 2590 222 903 172 902
before
interest
Monetary 1 507 369 165 680 249 870 519 060 306 336 900 718
adjustment
1 429 627 020 778 247 648 332 801 529 240 073 620
Net finance 18 596 376 055 55 033 442 902 64 873 009 493
income
Fixed assets (67 876 031 888) 356 940 977 414 (4 577 369 957)
impairment
(reversal)/
charge
Write down 1 712 083 035 - -
investments
Profit/(loss) 1 382 059 447 980 659 622 753 117 589 535 713 156
before
taxation
Taxation (500 358 851 701) 81 060 179 643 (13 703 863 845)
Profit/(loss) 881 700 596 279 740 682 932 760 (46 633 868 547)
for the
period
Earnings/ 495 908 544 628 789 790 323 874 040
(loss) per
share (cents)
INCOME STATEMENT - HISTORICAL COST
6 Months 6 Months Year
ended ended Ended
30.06.07 30.06.06 30.12.06
(Audited)
(Z$) (Z$) (Z$)
Sales revenue 108 775 182 085 2 697 269 334 13 258 615 530
(Loss)/profit (43 378 427 549) 187 438 973 12 511 596 651
before
interest
Monetary - - -
adjustment
(43 378 427 549) 187 438 973 12 511 596 651
Net finance 707 479 220 612 108 610 1 069 206 315
income
Fixed assets - - -
impairment
(reversal)/
Charge
Write down - - -
investments
Profit/(loss) (42 670 948 329) 799 547 583 13 580 802 966
before
taxation
Taxation (3 962 920 218) (205 432 093) (3 475 201 955)
Profit/(loss) (46 633 868 547) 594 115 490 10 105 601 011
for the
period
Earnings/ (26 229 010) 334 158 5 683 850
(loss) per
share (cents)
SUMMARISED BALANCE SHEET - INFLATION ADJUSTED
6 Months 6 Months Year
ended ended Ended
30.06.07 30.06.06 30.12.06
(Z$) (Z$) (Z$)
Assets
Fixed assets 2 416 964 457 514 175 342 748 687 745 993 012 282
and
investments
Current 476 187 490 763 733 115 618 795 851 581 520 629
assets
2 893 151 948 277 908 458 367 482 1 597 574 532 911
Equity and
Liabilities
Share capital 177 795 117 795 177 795
Reserves and 2 065 648 449 186 634 916 769 596 1 183 947 852 907
retained
profits
Shareholders 2 065 648 626 981 634 916 947 391 1 183 948 030 702
equity
Deferred 698 428 715 492 103 305 814 135 198 069 863 791
taxation
Current 110 190 125 141 160 939 529 049 189 716 189 137
liabilities
Long-term 18 884 480 663 9 296 076 907 25 840 449 281
liabilities
2 893 151 948 277 908 458 367 482 1 597 574 582 911
SUMMARISED BALANCE SHEET - HISTORICAL COST
6 Months 6 Months Year
ended ended Ended
30.06.07 30.06.06 30.12.06
(Audited)
(Z$) (Z$) (Z$)
Assets
Fixed assets 34 884 321 494 333 599 974 14 009 366 055
and
investments
Current 65 497 049 170 3 508 817 051 14 355 182 352
assets
100 381 370 664 3 842 417 025 28 364 548 407
Equity and
Liabilities
Share capital 177 795 177 795 177 795
Reserves and (36 205 176 233) 917 206 791 10 428 692 312
retained
profits
Shareholders (36 204 998 438) 917 384 586 10 428 870 107
equity
Deferred 7 507 583 372 216 204 082 3 547 083 547
taxation
Current 110 192 427 594 2 560 907 030 13 651 082 450
liabilities
Long-term 18 886 358 136 147 921 327 737 512 303
liabilities
100 381 370 664 3 842 417 025 28 364 548 407
ABRIDGED CASH FLOW STATEMENT - INFLATION ADJUSTED
6 Months 6 Months Year
ended ended Ended
30.06.07 30.06.06 30.12.06
(Z$) (Z$) (Z$)
Cash flows
from
operating
activities
Operating 1 429 627 020 778 247 648 332 801 529 240 073 620
profit/
(loss)
Non - cash (1 259 897 189 440) (259 132 184 579) (408 993 123 699)
items
Operating 169 729 831 338 (11 483 851 778) 120 246 949 921
cash flow
before
investment
in working
capital
Net (49 287 667 765) 19 631 251 574 (236 960 227 625)
movement in
working
capital
Net 18 596 376 055 55 033 442 902 64 873 009 493
financing
income
139 038 539 628 63 180 842 698 (51 840 268 211)
Tax Paid (4 236 448) (702 092 290) (155 568 891)
Net cash 139 034 303 180 62 478 750 408 (51 995 837 102)
flows from
operating
activities
Cash flows
from
investing
activities
Net cash (58 131 288 983) (62 371 447 230) (86 313 636 296)
flow
related to
fixed
assets
Net cash 80 903 014 197 107 303 178 (138 309 473 398)
flow before
financing
activities
Cash flows
from
financing
activities
Shares - - -
issued
Net loans (82 821 936 298) 42 346 943 457 138 762 888 427
(repaid)/
raised
Net (1 918 922 101) 42 454 246 635 453 415 029
movement in
cash and
cash
equivalents
Represented
by:
Cash and 4 475 588 923 4 022 172 525 4 022 173 899
cash
equivalents
at
beginning
of the year
Cash and 2 556 666 822 46 476 419 160 4 475 588 928
cash
equivalents
at end of
the period
(1 918 922 101) 42 454 246 635 453 415 029
ABRIDGED CASH FLOW STATEMENT - HISTORICAL COST
6 Months 6 Months Year
ended ended Ended
30.06.07 30.06.06 30.12.06
(Audited)
Cash flows (Z$) (Z$) (Z$)
from operating
activities
Operating (43 378 427 549) 187 438 973 270 943 297
profit/(loss)
Non - cash (180 454 702) (655 625 169) 1 232 563
items
Operating cash (43 558 882 251) (468 186 196) 272 175 860
flow before
investment in
working
capital
Net movement 56 285 491 680 445 304 596 (1 288 568 007)
in working
capital
Net financing 707 479 220 612 108 610 59 516 369
income
13 434 088 649 589 227 010 (956 875 778)
Tax Paid (1 712 856) (7 372 495) (2 957 054)
Net cash flows 13 432 375 793 581 854 515 (959 832 832)
from operating
activities
Cash flows
from investing
activities
Net cash flow (32 150 452 832) (563 895 787) (79 682 004)
related to
fixed assets
Net cash flow (18 718 077 039) 17 958 728 (1 039 514 836)
before
financing
activities
Cash flows
from financing
activities
Shares issued - - 3 084 315
Net loans 20 975 994 373 673 834 383 1 037 318 599
(repaid) /
raised
Net movement 2 257 917 334 691 793 111 888 078
in cash and
cash
equivalents
Represented
by:
Cash and cash 298 749 488 47 750 426 18 551 571
equivalents at
beginning of
the period
Cash and cash 2 556 666 822 739 543 537 19 439 649
equivalents at
end of the
period
2 257 917 334 691 793 111 888 078
STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2007
HISTORICAL COST
Share Capital Capital Retained Total
Reserves earnings /
(loss)
(Z$) (Z$) (Z$) (Z$)
Balance as 177 795 5 694 147 10 422 998 165 10 428 870 107
at 1
January
2007
Loss for - - (46 633 868 547) (46 633 868 547)
the half
year
Balance as 177 795 5 694 147 (36 210 870 382) (36 204 998
at 30 June 440)
2007
INFLATION ADJUSTED
Share Capital Capital Retained Total
Reserves earnings /
(loss)
(Z$) (Z$) (Z$) (Z$)
Balance as 763 038 103 386 693 465 34 216 461 753 1 183 948 030
at 1st 651 298 702
January
2007
Net profit - - 881 700 596 279 881 700 596 279
for the
half year
Balance as 763 038 103 386 693 465 915 917 058 032 2 065 648 626
at 30 June 651 298 981
2007
STATEMENT TO SHAREHOLDERS For the six months ended 30 June 2007
BUSINESS ENVIRONMENT
The first six months of 2007 were characterised by a challenging operating
environment with year on year inflation continuing to increase. The annual
inflation rate as at 30 June 2007 was
7 251% (June 2006 - 1 184%). The exchange rate remained static at $250: US$1,
however, the RBZ first Quarterly Monetary Policy Statement introduced an
exporters` exchange rate of $15 000: US$1. The interest rates were high on the
money market and not conducive to local borrowings. There was continued
unavailability of foreign currency.
OPERATIONS
The operations were characterised by frequent breakdowns of the aged fleet. Cash
flow challenges constrained the expedient procurement of the requisite spares
and consumables.
Demand for coal and coke remained firm. The Company could not meet this demand.
Total coal sales for the six months period under review increased by 21% from
883 311 tonnes achieved during the same period last year to 1 069 890 tonnes.
HPS coal deliveries to Hwange Power Station amounted to 776 168 tonnes compared
to 636 483 tonnes achieved for the same period last year (i.e. 22% increase).
HCC coal deliveries increased by 19% to 293 722 tonnes (June 2006 - 246 828
tonnes).
Coke sales were 87 966 tonnes against 93 038 tonnes for the same period in 2006.
Coke oven gas supplies to the Hwange Power Station were 7 152 650 Nm3 as
compared to 8 393 460 Nm3 supplied during the same period last year.
FINANCIAL REVIEW
The unaudited accounts were prepared in compliance with International Accounting
Standard (IAS) 29 (Financial Reporting in Hyperinflationary Economies). However,
the following comments on the financial statements are based on the historical
cost figures using the Zimbabwean dollar currency.
The Company achieved sales revenue of $108.8 billion for the six months under
review, which was above the $2.7 billion for the same period last year.
The Company recorded a net loss after taxation of $46.6 billion compared to a
net profit of $594 million earned for the same period last year. This was
attributed to the Company`s inability to fully recover input costs from selling
prices of products especially HPS coal, prices of which remained below cost
throughout the period under review.
Fixed assets and investments increased to $34.9 billion as compared to $333.6
million for the same period last year. This is attributed to the refurbishment
of some of the opencast equipment and the revaluation of the investment
properties in Bulawayo and Harare.
OUTLOOK
A short-term recovery plan has been put in place focusing on optimizing
production from JKL Opencast and 3 Main Underground mines.
Work is in progress for the acquisition and delivery of the coal fines recovery
plant from Republic of South Africa.
As a long term measure, the Company has come up with a recapitalization
programme that would be able to significantly boost production and should be
able to achieve sustainable production output that meets market demand.
The demand for coal and coke products is expected to remain firm in both the
domestic and export markets.
The focus for the second half of the year would be on improving margins through
increased productivity, tight cost control measures and viable product pricing
in order to reverse the interim loss position.
DIVIDEND
In light of the performance of the Company and the need for recapitalization of
the business, the Board has not considered the declaration of any interim
dividend.
DIRECTORATE
Mr Ternard Kwashirai retired from the Board at the Annual General Meeting held
on 29 June 2007 after serving the Company for a period of four (4) years. The
Company wishes to express its appreciation for the valuable contribution made by
Mr Kwashirai during his directorship.
Mr Alpheus Motampe Ngapo joined the Board on 01 July 2007. Mr Fred Gandiwa Moyo
joined the Company as Managing Director on 11 July 2007. The Company warmly
welcomes the new directors.
By Order of the Board
T K NCUBE
COMPANY SECRETARY
31 August 2007
Registered Office
7th Floor, Coal House
17 Nelson Mandela Avenue
P O Box 2870
Harare, Zimbabwe
SPONSOR: Imara Corporate Finance South Africa (Pty) Limited
8 October 2007
Date: 09/10/2007 16:59:47 Produced by the JSE SENS Department.
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