| Fri 6 Sep 2002, 0:00 | | Wankie Colliery Company Limited - Statement To Sha |
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Wankie Colliery Company Limited - Statement To Shareholders
WANKIE COLLIERY COMPANY LIMITED
(Incorporated in Zimbabwe)
STATEMENT TO SHAREHOLDERS
The company`s unaudited results for the six months ended 30 June 2002 with
appropriate comparisons for the previous periods were as follows:
6 Months 6 Months Year
ended ended ended
30.06.02 30.06.01 31.12.01
SALES
WCC coal tonnes 696,400 818,382 1,432,619
HPS coal tonnes 1,202,250 1,007,662 2,318,799
Total coal sales 1,898,650 1,826,044 3,751,418
Coke tonnes 111,441 138,053 245,822
Coke oven gas Nm3 12,649,360 14,177,000 27,075,060
CURRENT COST HISTORICAL COST
6 Months 6 Months Year 6 Months 6 Months Year
ended ended ended ended ended ended
30.06.02 30.06.01 31.12.01 30.06.02 30.06.01 31.12.01
INCOME STATEMENT $000 $000 $000 $000 $000 $000
Sales Revenue 4,450,082 5,578,050 9,740,141 3,858,150 2,244,986 4,777,885
(Loss)/Profit
before interest (1,394,597) (517,974) (2,136,316) 163,121 355,155 244,469
Monetary
adjustment 96,730 282,451 (1,579,482) - - -
(1,297,867) (235,522) (3,715,798) 163,121 355,155 244,469
Net interest (167,682) 107,545 171,998 (152,083) 37,170 139,670
(Loss)/Profit
before taxation (1,130,185) (343,068) (3,543,800) 315,204 317,985 384,139
Taxation 53,984 196.813 (952.282) 53,985 91,733 99,508
(Loss)/Profit
after taxation (1,184,169) (539,881) (2,591,518) 261,219 226,252 284.631
Cents Cents Cents Cents Cents Cents
Earnings per
share (698) (319) (1,528) 154 134 168
6 Months 6 Months Year 6 Months 6 Months Year
ended ended ended ended ended ended
30.06.02 30.06.01 31.12.01 30.06.02 30.06.01 31.12.01
ABRIDGED
BALANCE SHEET $000 $000 $000 $000 $000 $000
Capital employed:
Share capital 169,723 169,378 169,553 169,723 169,378 169,553
Reserves and
retained profits 13,441,999 16,677,018 14,625,835 1,769.874 1,449,807 1,508,342
Shareholders
equity 13,611,722 16,846,396 14,795,388 1,939,597 1,619,185 1,677,895
Deferred taxation 4,578,402 5,258,686 4,578,403 573,669 482,546 519,329
Long term loans 751,252 605,025 170,259 751,252 281,997 120,989
18,941,376 22,710,107 19,544,050 3,210,178 2,383,728 2,318,213
Represented by:
Fixed assets
and Investments 16,257,848 20,267,146 17,372,318 2,117,989 1,692,235 1,718,113
Deferred foreign
currency
differences 137,250 678,942 304,602 137,250 316,449 216,456
Current assets 6,398,271 6,182,876 5,931,749 4,806,932 2,434,635 3,272,038
Current
liabilities 3,851,993 4,418,857 4,064,619 3,851,993 2,059,591 2,888,394
Net current
assets 2,546,278 1,764,019 1,867,130 954,939 375,044 383,644
18,941,376 22,710,107 19,544,050 3,210,178 2,383,728 2,318,213
ABRIDGED CASH FLOW STATEMENT
6 Months 6 Months Year 6 Months 6 Months Year
ended ended ended ended ended ended
30.06.02 30.06.01 31.12.01 30.06.02 30.06.01 31.12.01
$000 $000 $000 $000 $000 $000
Cash flows from
operating activities
Operating cash
flow (1,297,866) (235,522) (3,715,796) 163,121 355,155 244,469
Non-cash items 1,866,716 2,075,363 3,907,528 190,053 212,406 210,439
Operating cash
flow before
investment in
working capital 568,850 1,839,841 191,732 353,174 567,561 454,908
Net movement in
Working capital (472,145) 501,790 983,286 (691,963) 4,540 (289,500)
Net financing
costs paid 167,682 (107,545) 171,998 152,083 (37,170) 139,670
264,387 2,234,086 1,347,015 (186,706) 534,931 305,078
Taxes Paid
Zimbabwe Income
Tax (58,864) (318) - (38,289) (108) -
Net cash flows
From operating
activities 205,523 2,233,768 1,347,015 (224,995) 534,823 305,078
Cash flows from
investing
activities
Net cash flow
related
to fixed assets (584,895) (875,380) (152,715) (510,723) (234,208) (367,589)
Net cash flow
Before financing
activities (379,372) 1,358,388 1,194,300 (735,718) 300,615 (62,511)
Cash flows from
financing activities
Net loans repaid 406,653 (666,622) (1,082,993) 617,194 (58,810) (89,436)
Net cash inflow/
(outflow) 27,281 691,766 111,307 (118,524) 241,805 (151,947)
Overdraft and
acceptances less
bank balances
and cash
31 December 2001 (503,853) (615,160) (615,160) (358,047) (206,100) (206,100)
30 June 2002 (476,572) 76,605 (503,853) (476,571) 35,705 (358,047)
27,281 691,766 111,307 (118,524) 241,805 (151,947)
STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2002 -
CURRENT COST
Share Capital General Accumulated Total
Capital Reserves Resesrve Loss
$000 $000 $000 $000 $000
Balance as at 1st January 2002:
Current Cost 15,564,273 7,766,447 13,136,150 (21,671,482) 14,795,388
Net loss for the year (1,184,168) (1,184,168)
Issue of Share Capital
under Option Scheme 177 177
Share Premium 325 325
Balance as at
30 June 2002 :
Current Cost 15,564,450 7,766,772 13,136,150 (22,855,650) 13,611,722
STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2002 -
HISTORICAL COST
Share Capital General Retained Total
Capital Reserves Reserve Profit
$000 $000 $000 $000 $000
Balance as at
31 December 2001 :
Historical Cost 169,553 651,481 850,000 6,861 1,677,895
Net profit for the year 261,219 261,219
Issue of Share Capital
under Option Scheme 170 170
Share Premium 313 313
Balance as at 30 June
2002 : Historical Cost 169,723 651,794 850,000 268,080 1,939,597
Earnings Per Share
The calculation of earnings per share is based on loss after tax of $1 184 169
000 (2001 -$539 881 000) and on 169 722 965 (2001 -169 377 965) ordinary shares
in issue during the year.
COMMENT
Introduction
The company went through one of its most difficult operating periods during the
past six months. The external environment deteriorated further, with annual
inflation reaching a record high of 122% in May 2002. In addition, foreign
currency shortages persisted throughout the period, thus impacting adversely on
the company`s performance.
Trading Performance
Overall coal sales of 1 898 650 tonnes increased by 4%, compared to 1 826 044
tonnes sold in the same period last year. WCC coal sales at 696 400 tonnes were
15% lower than 818 382 tonnes sold in the first half of the previous year. The
availability of machinery and equipment throughout the mining and processing
operations was erratic. Delays were experienced while the company waited for the
delivery of critical spares from external sources. The sourcing of these spares
was difficult due to cash flow and foreign currency constraints. The supply of
wagons by the National Railways of Zimbabwe to transport coal to the market
continued to be below requirement and deteriorated throughout the period.
Road transportation has become a necessary alternative for our customers.
HPS coal sales improved by 19% from 1 007 662 to 1 202 250 tonnes over the same
period. The demand for HPS coal remained high due to increased generation
capacity at the Hwange Power Station. Coal offtake was not able to meet demand
however, due to plant and equipment availability constraints at the opencast
mine.
Coke sales of 111 441 tonnes declined by 19% when compared to 138 053 tonnes
achieved in the first six months of 2001. The company has an agreement with
ZISCO to utilize its excess coke oven capacity at Redcliff. There were limited
benefits derived from this agreement, mainly due to coking coal production
constraints experienced at the colliery, coupled with the reduced capacity of
ZISCO`s liner train designed to move coking coal from Hwange to Redcliff.
A total of 12 649 360 Normal Cubic Metres (Nm3) of coke oven gas was sold to
Hwange Power Station. This was 1 527 640 Nm3 or 11% less than 14 177 000 Nm3
achieved in the same period last year. The decline in coke oven gas delivered
was caused by the unavailability of imported compressor spares.
Financial Results
The company continues to comply with International Accounting Standard (IAS)29
(Financial Reporting in Hyperinflationary Economies). The financial statements
and the corresponding figures for the previous period have therefore been
restated to take account of the changes in the purchasing power of the Zimbabwe
Dollar. Consequently, the financial statements are stated in terms of the
measuring unit current at the balance sheet date. The following comments on the
financial statements relate to the current cost (hyper inflated) figures.
Turnover at $4 450 082 000 was $1 127 968 000 or 20% lower than that achieved in
the previous period. The company was notable to increase the price of HPS coal
in January 2002 as scheduled, due to protracted negotiations with the Zimbabwe
Power Company (ZPC). The Government intervened and determined a price increase,
which was below expectations and was effective from 1 June 2002 and not 1
January 2002 as envisaged. The price of HPS coal remained below operating costs
throughout the period. This had a negative impact on our cash flows and
profitability. Efforts are in progress to redress this untenable situation
through continued negotiations with ZPC and the Government. Turnover was also
adversely affected by low sales volumes of WCC coal and coke.
Operating loss was $1 394 597 000. This was $877 052 000 or 169% more than the
loss of $517 545 000 incurred in the first half of the previous year. This is a
true reflection, once again, of the company`s predicament, whereby it sources
from local suppliers some critical, imported maintenance spares, which are
priced on the basis of unofficial exchange rates. On the other hand, the
revenue earned from exports is converted to Zimbabwean dollars at official
exchange rates, which are significantly lower.
The prevailing favourable interest rate regime has significantly benefited the
company. Net finance income of $167 682 000 was recorded during the period. This
was $275 227 000 or 256% below finance charges of $107 545 000 recorded for the
same period last year.
Loss after taxation of $1 184 169 000 was $644 288 000 or 119% more than the
loss of $539 881 000 incurred in the corresponding period of the previous year.
Fixed assets and investments at $16 257 848 000 were $4 009 293 000 or 20% lower
than the same period last year. This decline is reflective of the high
depreciation charge, which is based on the inflation adjusted asset values. It
is also a clear indication of the magnitude of the investment required in order
to replace the asset base in current cost terms.
The company secured a medium term loan of $600 000 000 from a local bank for
working capital requirements. Following successful negotiations with offshore
lenders for a review of repayment terms, the company has resumed servicing its
existing offshore loans. It is envisaged that the loans will be fully repaid by
the end of 2003.
The ZISCO debt amounted to $2 400 000 000 at the end of June 2002. At the annual
general meeting of Wankie, held on 28 June 2002, shareholders authorized the
Board to convert $1 753 000 000 of this debt to an equity investment in a Joint
Venture company with ZISCO.
Outlook
The ongoing erratic supply of railway wagons will continue to affect the
company`s ability to distribute products to the market. Efforts to encourage
customers to collect coal from the colliery by road will therefore continue.
This will alleviate the shortage of coal on the market. Government intervention
in the pricing of HPS coal is cause for concern and does not augur well for the
future. The shortage of foreign currency to import critical spares will continue
to be a major challenge. The recently concluded internal collective bargaining
process resulted in an effective 95% increase in salaries and wages for NEC
graded employees. This will have a significant impact on the cost of producing
coal.
The Reserve Bank of Zimbabwe has granted the company a concession to retain 100%
of its export proceeds. While this has mitigated the severe foreign currency
shortages, it is not adequate for the company`s overall requirements.
Approaches have therefore been made to the
Government to provide the company with additional foreign currency. These
measures will enable the company to import critical spares for the repair and
maintenance of machinery and equipment.
Dividend
In light of the difficult economic environment and the losses incurred, it is
not possible for the company to declare a dividend.
Directorate
The Managing Director, Mr O K Bwerinofa, retires at the end of August 2002,
after serving the company for the past 19 years. He has, however, agreed to stay
on until 31 December 2002 to allow the company to finalise the recruitment of
his successor.
By order of the Board
C BORIWONDO
SECRETARY
HARARE
30 August 2002
Directors: N. Kudenga (Chairman), O.K. Bwerinofa (Managing), R. Bottomley, G.A.
Chigora, S.P. Chimbodza, C. Chipato, Dr. S.Z. Gata, N.D. Kitikiti, D.J. Kwidini,
E.W. Sonsole
Date: 06/09/2002 02:00:15 PM Produced by the JSE SENS Department
