| Fri 17 Sep 2010, 10:01 | | HWA - Hwange Colliery Company Limited - Unaudited Results for the six months |
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HWA
HWHWA
HWA - Hwange Colliery Company Limited - Unaudited Results for the six months
ended 30 June 2010
HWANGE COLLIERY COMPANY LIMITED
(Incorporated in Zimbabwe)
Code: HWA ISIN: ZW0009011934
("Hwange" or "the Company" or "the Group")
Unaudited Results for the six months ended 30 June 2010
Sales Performance 6 Months 6 Months 12 Months
30 June 2010 30 June 2009 31 Dec. 2009
Tonnes Tonnes Tonnes
HCC coal 319 159 103 035 429 213
HPS coal 769 340 218 683 1 033 994
Coal fines and breeze 90 225 79 396 185 726
Total coal sales 1 178 724 401 114 1 648 933
Coke 18 198 15 114 61 018
Total sales 1 196 922 416 228 1 709 951
Abridged Statement of 6 Months 6 Months 12 Months
Comprehensive Income 30 June 2010 30 June 2009 31 Dec. 2009
USD USD USD
Sales revenue 45 179 706 23 616 727 66 363 128
Profit from operations 3 986 541 1 503 739 5 780 288
Finance costs (650 256) (798 381) (383 975)
Share of profit/(loss) of - (15 597) (425 831)
equity accounted
investments
Profit before taxation 3 336 285 689 761 4 970 483
Taxation 1 170 241 969 202 (2 380 962)
Profit after taxation 4 506 526 1 658 963 2 589 521
Other comprehensive income:
Other comprehensive income - - -
for the period net of tax
Total comprehensive income 4 506 526 1 658 963 2 589 521
for the period
Basic earnings per share
- basic 0.02 0.01
- diluted 0.02 0.01
Headline earnings per share
- basic 0.02 0.01
- diluted 0.02 0.01
Abridged Statement of 6 Months 6 Months 12 Months
Financial Position 30 June 2010 30 June 2009 31 Dec. 2009
as at 30 June 2010 USD USD USD
Non- current assets
Property, plant and equipment 72 637 282 72 225 542 71 577 664
Investment property 3 615 000 3 615 000 3 615 000
Investments in associates 4 348 946 1 797 827 2 804 298
Prestripped overburden 1 809 347 - -
82 410 575 77 638 369 77 996 962
Current assets
Pre-stripped overburden 5 921 987 1 197 186 4 911 376
Inventory 18 927 970 16 102 744 17 665 738
Trade and other receivables 32 432 218 6 910 311 25 377 186
Financial assets at fair 2 317 2 851 2 826
value through profit and loss
Cash and cash equivalents 1 945 380 698 777 1 249 983
59 229 872 24 911 869 49 207 109
Total assets 141 640 447 102 550 238 127 204 071
Equity and Liabilities
Share capital 45 549 963 44,448,750 45 549 963
Non-distributable reserve 4 358 468 - 4 358 468
Retained earnings 7 096 047 1 658 963 2 589 521
57 004 478 46 107 713 52 497 952
Non-current liabilities
Deferred tax 14 860 103 10 326 654 16 421 931
Current liabilities
Trade and other payables 40 747 742 22 869 242 28 953 286
Short term borrowings 27 681 242 23 246 629 28 375 606
Current tax payable 1 346 882 - 955 296
69 775 866 46 115 871 58 284 188
Total equity and liabilities 141 640 447 102 550 238 127 204 071
Abridged Statement of Cash 6 Months 6 Months 12 Months
Flows 30 June 2010 30 June 2009 31 Dec. 2009
USD USD USD
Cash flows from operating activities
Operating profit 3 336 285 1 503 739 4 970 483
Non - cash items 4 480 488 9 064 371 10 356 624
Operating cash flow before 7 816 773 10 568 110 15 327 106
changes in working capital
Net change in working capital (2 072 019) (9 219 125) (11 097 952)
Finance cost (523 251) (798 381) (162 471)
Net cash generated from 5 221 503 550 604 4 066 683
operating activities
Cash flows from investing activities
Acquisition of plant and (4 444 791) (224 986) (3 458 302)
equipment
Net cash used in investing 776 712 325 618 608 381
activities
Cash flows from financing activities
Payment of finance lease (2 180 496) - -
liabilities
Proceeds from short term 2 100 000 - 600 000
borrowings
Net cash used in financing (80 496) - 600 000
activities
Net increase in cash, cash 696 216 325 618 1 208 381
equivalents
Cash, cash equivalents at the 1 248 894 204 493 206 485
beginning of the period
Effects of exchange rate - 168 666 (165 972)
changes on cash and cash
equivalents
Cash, cash equivalents at the 1 945 110 698 777 1 248 894
end of the period
Abridged Statement of 6 Months 6 Months 12 Months
Changes In Equity 30 June 2010 30 June 2009 31 Dec. 2009
USD USD USD
Share capital 45 549 963 44 448 750 45 549 963
Non Distributable reserve 4,358,468 - 4 358 468
Comprehensive income 7,096,047 1,658,963 2 589 521
Closing balance 57 004 478 46 107 713 52 497 952
OVERVIEW
The period under review was characterised by a challenging operating
environment. Even though inflation remained relatively stable, the borrowing
costs were significant and the market experienced persistent liquidity
challenges. There was also limited availability of foreign lines of credit.
These factors impacted negatively on the company`s working capital. The
Company incurred exchange losses attributed to the strengthening of the South
African Rand against the United States Dollar.
The global financial meltdown resulted in a decrease in the demand for coal
and coke both on the domestic and export markets. However capacity utilisation
in the local manufacturing sector was on an increasing trend but still lower
than anticipated.
The prices of products were determined by market forces and were comparable to
regional and international benchmarks. The costs of logistics (both rail and
road) was high, negatively affecting both domestic and export sales.
The Company`s sales volume analysis for the first half of the year shows that
export sales now equal domestic sales.
Competition in the coal mining industry is envisaged to increase following the
recent awarding of special grants, in the Hwange area, to a number of new
players.
OPERATIONS
The recapitalisation initiatives by the Company yielded positive results as
the period under review recorded a significant increase in coal production and
sales volumes when compared to the same period last year.
Total coal sales for the six (6) month period under review increased by 198%
from 401 114 tonnes achieved during the same period last year to 1 178 724
tonnes.
HPS coal deliveries to Hwange Power Station for the period were 769 340 tonnes
compared to 218 683 tonnes for the same period last year, representing a 252%
increase.
HCC/HIC coal sales also increased by 209% from 103 035 tonnes as at 30 June
2009 to 319 159 tonnes for the period under review.
There was a 20% increase in coke sales from 15 114 tonnes for the same period
in 2009 to 18 198 tonnes. There was no coke production during the comparative
period since the coke oven battery was undergoing major repairs.
There were no coke oven gas supplies to the Hwange Power Station because the
gas pipeline has been out of commission for the past three (3) years.
FINANCIAL RESULTS
The financial performance of the company was positive despite the challenges
in the operating environment.
The Company`s sales revenue for the six (6) month period under review of USD
45.2 million was 91% above the revenue recorded during the same period last
year. The unaudited net profit after taxation was USD 4.5 million and was 172%
above the
USD 1 658 963 recorded during the same period in 2009.
The improved financial performance is attributed to the increase in production
volumes since the prices of products remained relatively static.
Total fixed assets and investments amounted to USD 82.4 million (US$77.9
million as at 30 June 2009).
OUTLOOK
The socio, economic and political stability is envisaged to continue into the
future. The expected increase in capacity utilisation will present additional
opportunities for business growth. The appetite for lending by local
institutions, at low interest rates, coupled with prospects of foreign lines
of credit will give impetus to the Company`s recapitalisation programme.
The phased recapitalisation of the opencast mine will continue. The long term
recapitalisation programme will progress when the Company completes the audit
of its coal resources and reserves.
The improved global economy implies an increase in demand for coal and coke
products. The domestic market sales will target the growing tobacco industry
and initiatives for structured coal delivery schemes are being pursued.
The Company`s coke production and sales will commence in the third quarter of
2010 following the refurbishment of the coke oven battery. This will enhance
the positive financial performance of the Company.
An exercise to rationalise the Company`s operations currently underway is
expected to improve operational efficiencies and increase profitability
margins.
Diversification into coal bed methane gas exploration and extraction is a
priority project that is being vigorously pursued.
The Board is confident that the current initiatives being pursued by the
Company, taking cognisance of the economic environment, would enable the
Company to achieve the set business plan targets for 2010.
DIVIDEND
The Board has resolved not to declare any interim dividend given the ongoing
recapitalisation programmme.
DIRECTORATE
There were no changes to the Board of Directors` composition for the period
under review.
By Order of the Board
T K NCUBE
COMPANY SECRETARY
27 August 2010
Notes To The Unaudited Consolidated Financial Statements
For the half year ended 30 June 2010
1. ACCOUNTING POLICIES
The accounting policies are consistent with those of the annual consolidated
financial statements for the year ended 31 December 2009.
2. BASIS OF PREPARATION
The abridged interim financial information for the half year ended 30 June has
been prepared in accordance with IAS 34 `Interim Financial Reporting`. It does
not include all the information required for full annual financial statements
and should be read in conjunction with the audited annual financial statements
for the year ended 31 December 2009, which have been prepared in accordance
with International Financial Reporting Standards (IFRS).
3. COMPARATIVES
Comparatives for the financial statements have been published since the use of
the multi currency applied to the comparative period last year. In preparing
the figures, the company complied with the Financial Reporting Guidance
jointly recommended by the Public Accountants and Auditors Board and the
Zimbabwe Stock Exchange.
4. SHARE CAPITAL
The authorised share capital consists of 186 000 000 ordinary shares. On 1
January 2009, the par value of these shares was denominated in Zimbabwe
dollars. Issued share capital was therefore carried at nil values. A
shareholders` resolution was passed at the Annual General Meeting, held on 26
June 2009, to convert the new par value of these shares to United States
Dollars. Subsequent to this resolution, the increase in the norminal value of
share capital was capitalised from the functional change currency reserve.
5. NON-DISTRIBUTABLE RESERVE
This represents the residual interest in the assets of the entity after
deducting all the liabilities. The company treats this reserve as a non-
distributable reserve.
DIRECTORS: T. Savanhu (Chairman), F. Moyo (Managing), F Chasi, Mrs T.T.
Mlobane, S.I. Mutumbwa, Mrs P. Mupfumira, T. Ndlovu, A.M. Ngapo, J. Nqindi, Ms
R. Sibanda
17 September 2010
Sponsor
Sasfin Capital
(a division of Sasfin Bank Limited)
Date: 17/09/2010 10:01:02 Produced by the JSE SENS Department.
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