| Thu 12 Apr 2001, 0:00 | | Wankie Colliery Company Limited - Financial Result |
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WANKIE COLLIERY COMPANY LIMITED
(Incorporated in Zimbabwe)
FINANCIAL RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2000
The audited results for the year ended 31 December 2000 with the comparative
figures for the previous period are as follows:-
Year ended Year ended
Sales 31/12/00 31/12/99
WCC coal tonnes 1,429,123 1,610,410
HPS coal tonnes 1,885,137 2,121,846
3,314,260 3,732,256
Coke tonnes 411,409 509,040
Coke oven gas Nm3 29,497,320 27,237,390
Income Statement
Inflation Adjusted Historical Cost
Year ended Year ended Year ended Year ended
31/12/00 31/12/99 31/12/00 31/12/99
$000 $000 $000 $000
Turnover 3,870,245 4,005,401 3,305,414 2,211,231
Operating (loss)/profit (395,938) (56,340) 256,556 463,585
No. 3 Colliery closure
costs (22,522) (375,507) (18,777) (222,174)
(418,460) (431,847) 237,779 241,411
Monetary adjustment 64,736 (151,579) - -
(353,724) (583,426) 237,779 241,411
Finance costs (148,291) (370,006) (107,739) (202,007)
(Loss)/profit before
taxation (502,015) (953,432) 130,040 39,404
Taxation 951,765 309,351 145,050 4,459
Profit/(loss) after
taxation 449,750 (644,081) 275,090 43,863
Basic earnings/(loss)
per share (cents) 265 (380) 162 26
Headline earnings/(loss)
per share (cents) 279 (153) 174 152
Dividends per
share (cents) - 12.2 - 7.5
Dividend cover (times) - - - 3.45
Inflation indices 1,844.2 1,188.2 - -
Year ended Year ended Year ended Year ended
31/12/00 31/12/99 31/12/00 31/12/99
$000 $000 $000 $000
Balance Sheet
Capital employed
Share capital 5,214,486 5,214,486 169,378 169,378
Reserves and retained
profits 610,524 160,774 1,223,555 948,465
Shareholders' equity 5,825,010 5,375,260 1,392,933 1,117,843
Deferred taxation 1,876,793 2,828,558 470,345 615,396
Long term loans 373,570 708,223 373,570 456,301
8,075,373 8,912,041 2,236,848 2,189,540
Represented by:
Fixed assets and
investments 7,089,729 8,055,563 1,572,366 1,655,905
Recoverable foreign
currency differences 456,225 694,118 456,225 447,213
Current assets 2,414,743 2,202,437 2,093,581 1,303,102
Stocks and stores 959,818 948,919 638,656 495,473
Debtors 1,360,955 1,115,613 1,360,955 718,778
Bank balances and cash 93,970 137,905 93,970 88,851
Current liabilities 1,885,324 2,040,077 1,885,324 1,216,680
Short term borrowings 549,116 811,016 549,116 522,529
Creditors 1,336,208 1,229,061 1,336,208 694,151
Net current assets 529,419 162,360 208,257 86,422
8,075,373 8,912,041 2,236,848 2,189,540
Cash Flow Statement
Year ended Year ended Year ended Year ended
31/12/00 31/12/99 31/12/00 31/12/99
$000 $000 $000 $000
Cash flows from
operating activities
Operating cashflow (353,729) (583,426) 232,779 241,411
Depreciation and other
non cash items 1,002,817 1,214,203 215,461 208,691
Operating cashflow
before investment
in working capital 649,088 630,777 448,240 450,102
Net movement in working
capital (97,335) 183,461 (108,395) (84,911)
Net financing costs paid (148,235) (370,007) (107,739) (202,007)
Dividends
received/(paid) 6,047 (82,604) 5,000 (38,109)
Taxation paid (52,563) - (33,866) -
357,002 361,627 203,240 125,075
Cash flows from
investing activities
Net cash flow from
fixed assets &
investments (59,783) (211,069) (138,625) (218,630)
Net cashflow before
financing activities 297,219 150,558 64,615 (93,555)
Cash flows from
financing activities
Net loans repaid
and other (142,044) (336,991) (37,949) (67,433)
Net cash
inflow/(outflow) 155,175 (186,433) 26,666 (160,988)
Overdraft and acceptances
less bank and
cash balances
31 December 1999 361,275 174,842 232,766 71,778
31 December 2000 (206,100) (361,275) (206,100) 232,766
155,175 (186,433) 26,666 (160,988)
Supplementary Information
Year ended Year ended Year ended Year ended
31/12/00 31/12/99 31/12/00 31/12/99
$000 $000 $000 $000
1. Depreciation of
fixed assets charged
to operating income 1,135,134 1,270,202 215,345 217,993
2. Capital expenditure
on fixed assets 118,390 102,835 138,534 157,276
3. Commitment for
capital expenditure: 161,933 53,522 161,933 34,484
Authorised and
contracted 118,570 21,051 118,570 13,563
Authorised but not yet
contracted 43,363 32,471 43,363 20,921
Statement of changes in equity for the year ended 31 December 2000 - Inflation
Adjusted
Share General Capital Retained Total
Capital Reserve Reserve Profit
$000 $000 $000 $000 $000
Balances at
1 January 1999 5,214,477 4,063,605 2,482,578 (5,720,618) 6,040,042
Issue of share
capital 9 9 18
Loss for the year (644,081) (644,081)
Transfer to
capital reserve 17,020 (17,020) -
Transfer to
general reserve 31,042 (31,042) -
Dividend paid (20,719) (20,719)
Balances at
31 December 1999 5,214,486 4,094,647 2,499,607 (6,433,480) 5,375,260
Profit for the year 449,745 449,745
Transfer to
capital reserve 68,773 (68,773) -
Transfer to general
reserve 206,000 (206,000) -
Balances at
31 December 2000 5,214,486 4,300,647 2,568,380 (6,258,503) 5,825,010
Statement of changes in equity for the year ended 31 December 2000 - Historical
Cost
Share General Capital Retained Total
Capital Reserve Reserve Profit
$000 $000 $000 $000 $000
Balances at
1 January 1999 169,373 411,000 500,424 5,876 1,086,673
Net profit for
the year 43,863 43,863
Transfer to capital
reserve 10,966 (10,966) -
Transfer to general
reserve 20,000 - (20,000) -
Issue of share
capital under
the share option
scheme 5 5 10
Balances at
31 December 1999 169,378 431,000 511,395 6,070 1,117,843
Net profit for
the year 275,090 275,090
Transfer to capital
reserve 68,773 (68,773) -
Transfer to general
reserve 206,000 (206,000) -
Balances at
31 December 2000 169,378 637,000 580,168 6,387 1,392,933
Earnings per share
The calculation of earnings per share is based on profit after taxation of $449
745 000 (1999 - $644 081 000 loss) and on 169 377 965 ordinary shares in issue
during the year (1999 - 169 377 965 shares).
Dividend
The directors have decided not to declare a final dividend.
Annual report and accounts
The annual report and accounts for the year ended 31 December 2000 will be
posted to members on or about 1 June 2001 and the annual general
meeting will be held on 29 June 2001.
By order of the Board
C BORIWONDO
Secretary
Harare, 6 April 2001
DIRECTORS: N. KUDENGA (CHAIRMAN), O.K. BWERINOFA (MANAGING), C. CHIPATO, D.J.
FRY, N.D. KITIKITI, D.J.KWIDINI, E. W. SANSOLE, PROF. J.G. VOSS.
CHAIRMAN'S STATEMENT
In the half year statement to shareholders published in July 2000, it was
forecast that coal and coke sales would improve in the second half of the year.
In the event, demand for these products remained strong resulting in an
increase of 26 % in volumes sold in the second half. However, overall volume
sales performance for the year was lower than that of the previous year.
Trading Performance
Coal sales for the year at 3 314 260 tonnes, were 417 996 tonnes or 11% lower
than the 3 732 256 tonnes achieved in the previous year. WCC coal sales were
mainly affected by the significant shortfall and increasingly erratic supply of
empty wagons by the National Railways of Zimbabwe (NRZ). Some delivery delays
were experienced due to equipment breakdowns in the processing plant and the
ongoing crushing and screening plant upgrade work. In addition, the early
delivery scheme for farmers could not be fully utilised. HPS coal sales to the
Zimbabwe Electricity Supply Authority (ZESA) were 11% lower than the previous
year. Offtake levels were inhibited by operational problems within the Hwange
Power Station. Coke sales of 411 409 tonnes were 19% lower than the previous
year due to the reduced capacity following the unilateral cancellation of the
Toll Coking Agreement by the Zimbabwe Iron and Steel Company (ZISCO). Coke oven
gas delivered to ZESA's Hwange
Power Station increased by a modest 8% from 27 237 390 normal cubic metres
(Nm3) to 29 497 320 Nm3.
Financial Results
The company has complied with International Accounting Standard (IAS) 29
(Financial Reporting in Hyper-inflationary Economies). The financial statements
and the corresponding figures for the previous period have therefore been
restated to take account of changes in the purchasing power of the Zimbabwe
dollar. Consequently, the financial results are stated in terms of the
measuring unit current as at the balance sheet date. It must be mentioned,
however, that the company's interim results for the six months ended 30 June
2000 were reported in historical cost terms. My comments on the financial
results which follow relate to current cost (hyper-inflated) figures.
In spite of the reduction in sales volumes, turnover at $3 870 245 000 was only
3% lower than that of the previous year.
Proceeds from export sales were enhanced by the devaluation of the Zimbabwe
dollar during the year, albeit to a limited extent as the foreign exchange rate
remained under tight management by the Exchange Control Authorities. Turnover
was further enhanced by the coal and coke price increases effected during the
year. Operating loss for the year amounting to $395 938 000 was significantly
increased when compared to $56 340 000 in the previous year mainly as a result
of provisions for doubtful debts.
Closure of No. 3 Colliery was completed during the year. An amount of $22 522
000 being closure costs was spent, compared with $375 507 000 in the previous
year. Net interest paid of $148 291 000 was 60% lower than the $370 006 000
paid in 1999.
The reduction was in line with the improvement in the cashflow position, which
enabled the company to significantly reduce its borrowings.
There was a significant reversal of the deferred tax charge amounting to $951
765 000 as a result of the reduction in the income tax rate applicable to
mining companies. This had a positive impact on profit after taxation which
increased to $449 750 000 compared with the loss of $644 081 000 recorded in
the previous year.
The ZISCO debt amounted to $1 028 000 000 at the end of the year. The payment
plan to liquidate the debt in twelve months as provided by the ZISCO Board in
July 2000 did not materialise. A provision amounting to $520 000 000 has been
made against this debt. Your Board is currently exploring alternative ways of
recovering the debt in full. This could involve the debt owed to the company
being converted into an equity investment in a joint venture with ZISCO.
Working capital management efforts continued throughout the year. Additions to
fixed assets amounted to $118 390 000 compared to $102 835 000 in the previous
year. An additional $397 443 000 was spent on loan repayments.
The company however still managed to close the year with a positive net
cashflow of $155 175 000 compared with a net borrowed cashflow of $186 443 000
at the end of the previous year.
Dividend
Although profitability and working capital management have improved, it is
considered imprudent for the company to declare a dividend in the light of the
macro economic conditions prevailing in the country, characterised by diesel
shortages, high inflation and the unavailability of foreign currency. These
factors, coupled with the erratic supply of railway wagons by the NRZ and the
problems associated with the ZISCO debt have, in the opinion of the directors,
weighed heavily in favour of a cash and profit conservation strategy. This
position will be reviewed in future, taking into account the performance of the
company.
Projects
In response to the increasing demand for small coal sizes, the company has
installed a crushing and screening plant. As at year end the plant was almost
complete and is expected to be fully commissioned in the first half of the
current year. The total capital expenditure approved for the project was $70
000 000. There are encouraging signs that the new crushing and screening plant
has begun to contribute significantly to the production of washed peas.
Future Outlook
Demand for coal and coke continues to be high. The company is gearing itself to
meet this demand, by minimising bottlenecks in the production and distribution
processes. Of concern, however, is the inability to meet fully the demand for
coke in the South African market, as a result of the unilateral cancellation by
ZISCO of the Toll Coking Agreement which significantly reduced the company's
capacity to produce coke. In addition, the new NRZ tariffs have already started
to impact negatively on the market's cost structures. Indications are that it
has become cheaper to transport the product to certain market destinations by
road than by rail. Evidence of this seems to be in the increased number of
lorries loaded at the colliery. This, coupled with NRZ's inability to supply
sufficient wagons on a consistent basis will present major challenges to the
company in the new year.
Directorate
Dr P Munezvenyu and Mr D E H Murangari resigned from the Board on 31 March
2001, each after serving as director for more than 12 years. I thank them both
for their valuable contribution. I welcome Mr N D Kitikiti who joined the Board
on 1 April 2001.
Conclusion
I wish, on behalf of the Board to thank the Managing Director, his management
team and all employees for their hard work, loyalty and resilience during yet
another difficult year. Finally, I wish to thank my colleagues on the Board and
various committees for their continued support and contribution to the
activities of the company.
N KUDENGA
Chairman
Harare, 12 April 2001
