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Hwange - Unaudited interim results for the six months ended 30 June 2005
Hwange Colliery Company Limited
(Previously Wankie Colliery Company Limited)
(Incorporated in Zimbabwe)
Code: HWA & ISIN: ZW0009011934
Still trading in South Africa as Wankie Colliery Company Limited
JSE Share code: WAN & ISIN: ZW0009011702
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005
The company"s unaudited results for the six months ended 30 June 2005 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 31/12/04
30/6/05 30/6/04 31/12/04 30/6/05 30/6/04
SALES
WCC coal tonnes 0 0 0 409,538 527,536 1,022,200
HPS coal tonnes 0 0 0 1,038,870 878,424 1,996,751
Total coal sales 0 0 0 1,448,408 1,405,960 3,018,951
Coke tonnes 0 0 0 104,710 103,266 178,711
Coke oven gas Nm3 0 0 0 12,195,210 10,149,320 19,029,290
ABRIDGED INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2005
INFLATION ADJUSTED
6 Months ended 6 Months ended Year ended
30/6/05 30/6/04 31/12/04
$000 $000 $000
Sales Revenue 346,649,229 337,407,458 946,698,642
Profit before interest (77,865,718) (32,226,302) 33,417,588
Monetary adjustment 37,841,106 (22,830,237) (7,164,175)
(40,024,612) (55,056,539) 26,253,414
Net interest income/ 20,596,992 15,771,689 (14,861,541)
(expense)
Fixed assets impairment 27,687,480 9,667,234 26,031,394
reversal
Write-down investments (261,195)
- - -
Profit before taxation 8,259,860 -29,878,811 37,423,267
Taxation (5,555,059) 7,244,248 C34,126,944)
Profit after taxation 2,704,801 (22,634,564) 3,296,323
Ordinary dividend 0 0 0
2,704,801 (22,634,564) 3,296,323
Cents Cents Cents
Earnings/(loss) per share 1,536 (13,248) 1,873
ABRIDGED INCOME STATEMENT
(Continued)
HISTORICAL COST
6 Months ended 6 Months ended Year ended
30/6/05 30/6/04 31/12/04
$000 $000 $000
Sales Revenue 266,169,432 163,916,394 374,194,693
Profit before interest 32,920,400 25,132,044 79,250,454
Monetary adjustment 0 0 0
32,920,400 25,132,044 79,250,454
Net interest income/ 17,828,549 9,051,732 (10,809,187)
(expense)
Fixed assets impairment
reversal
Write-down investments
- - -
Profit before taxation 50,748,949 34,183,776 68,441,267
Taxation (7,281,561) (11,320,439 (18,534,674)
Profit after taxation 43,467,388 22,863,337 49,906,593
Ordinary dividend 0 0 0
43,467,388 22,863,337 49,906,593
Cents Cents Cents
Earnings/(loss) per share 24,685 13,381 29,114
SUMMARISED BALANCE SHEET
INFLATION ADJUSTED
6 Months ended 6 Months ended Year ended
30/6/05 30/6/04 31/12/05
$000 $000 $000
Assets
Fixed assets and invest- 863,030,396 516,608,573 729,927,005
ments
Current assets 416,793,226 298,464,453 618,140,762
1,279,823,622 815,073,026 1,348,067,767
Equity and Liabilities
Share capital 176,087 170,859 175,998
Reserves and retained 722,062,856 451,295,504 719,351,992
profits
Shareholders equity 722,238,943 451,466,363 719,527,990
Deferred taxation 243,146,334 125,963,912 237,591,276
Current liabilities 314,438,345 237,642,751 390,948,502
1,279,823,622 815,073,026 1,348,067,767
SUMMARISED BALANCE SHEET
(Continued)
HISTORICAL COST
6 Months ended 6 Months ended Year ended
30/6/05 30/6/04 31/12/04
$000 $000 $000
Assets
Fixed assets and invest- 102,438,702 31,028,255 28,546,826
ments
Current assets 333,465,399 137,944,402 264,609,738
435,904,101 168,972,657 293,156,564
Equity and Liabilities
Share capital 176,087 170,859 175,998
Reserves and retained 98,969,596 26,580,064 55,496,679
profits
Shareholders equity 99,145,683 26,750,923 55,672,677
Deferred taxation 22,320,073 7,816,887 15,060,732
Current liabilities 314,438,345 134,404,847 222,423,155
435,904,101 168,972,657 293,156,564
ABRIDGED CASH FLOW STATEMENT
INFLATION ADJUSTED
6 Months 6 Months Year
ended ended ended
30.06.05 30.06.04 31.12.04
$000 $000 $000
Cash flows from operating
activities
Operating cash flow (40,024,612) (55,056,539) 26,253,414
Non - cash items 77,396,886 76,549,238 100,511,715
Operating cash flow before 37,372,274 21,492,698 126,765,129
investment in working
capital
Net movement in working 125,077,477 (16,781,983) (209,278,722)
capital
Net financing income /(cost) 20,596,992 15,771,689 (14,861,541)
Dividends paid 0 0 0
183,046,743 20,482,404 (97,375,134)
Taxes Paid
Zimbabwe Income Tax (4,841,425) (2,058,569) (6,197,987)
Net cash flows from 178,205,318 18,423,835 (103,573,121)
operating activities
Net cash flows from
operating activities
Cash flows from investing
activities
Net cash flow related to (182,922,542) (47,825,591) (60,431,321)
fixed assets
Net cash flow before (4,717,224) (29,401,756) (164,004,443)
financing activities
Cash flows from financing
activities
Shares issued 6,152 3,315,007
Net loans raised/revalued 795,225 23,475,645 178,888,217
Net cash inflow/(outflow) (3,915,847) (5,926,111) 18,198,781
Overdraft and acceptances
less bank balances and cash
"31 December 2004 37,333,393 9,582,068 14,408,925
"30 June 2005 33,417,546 3,655,956 32,607,706
(3,915,847) (5,926,111) 18,198,781
ABRIDGED CASH FLOW
STATEMENT
(Continued)
HISTORICAL COST
6 Months 6 Months Year
ended ended ended
30.06.05 30.06.04 31.12.04
$000 $000 $000
Cash flows from operating
activities
Operating cash flow 32,920,400 25,132,044 79,250,454
Non - cash items 512,484 1,785,902 1,920,416
Operating cash flow before 33,432,884 26,917,946 81,170,870
investment in working
capital
Net movement in working (33,001,923) (23,270,437) (105,517,317)
capital
Net financing income /(cost) 17,828,549 9,051,732 (10,809,187)
Dividends paid 0 0 0
18,259,510 12,699,241 (35,155,634)
Taxes Paid
Zimbabwe Income Tax (2,149,526) (1,171,186) (1,453,341)
Net cash flows from 16,109,984 11,528,055 (36,608,975)
operating activities
Net cash flows from
operating activities
Cash flows from investing
activities
Net cash flow related to (74,466,798) (26,308,183) (24,831,818)
fixed assets
Net cash flow before (58,356,814) (14,780,128) (61,440,793)
financing activities
Cash flows from financing
activities
Shares issued 5,618 1,881,089
Net loans raised/revalued 70,528,576 13,337,964 74,589,120
Net cash inflow/(outflow) 12,177,380 (1,442,164) 15,029,416
Overdraft and acceptances
less bank balances and cash
"31 December 2004 21,240,166 3,522,155 3,522,155
"30 June 2005 33,417,546 2,079,991 18,551,571
12,177,380 (1,442,164) 15,029,416
STATEMENT OF CHANGES IN EQUITY FOR THE 6 MONTHS ENDED 30 JUNE 2005
Share Capital Capital General
$000 Reserves Reserves
$000 $000
Balance as at 1 January 175,998 2,611,630 0
2005: Historic Cost
Net profit for the half
year
Dividends 0 0 0
Adjustments to Capital 0 0 0
Reserve
Adjustments to General
Reserve 0 0 0
Issue of Share Capital 90
under Option Scheme
0 0
Adjustment to Share Capital 0 5,527
0
Balance as at 30 June 2005: 176,088 2,617,157 0
Historic Cost
Balance as at 1st January 945,127,052 477,272,876 0
2005 : Current Cost
Net profit for the half
year
Dividends 0 0 0
Adjustments to Capital 0 0 0
Reserve
Adjustments to General
Reserve 0 0 0
Issue of Share Capital 108
under Option Scheme 0 0
Adjustment to Share Capital 6,044
Balance as at 30 June 2005: 945,127,160 477,278,920 0
Current Cost
STATEMENT OF CHANGES IN
EQUITY
(Continued)
Retained Total
Profit$ $000
000
Balance as at 1 January 52,885,050 55,672,678
2005: Historic Cost
Net profit for the half 43,467,388 43,467,388
year
Dividends 0 0
Adjustments to Capital 0 0
Reserve
Adjustments to General
Reserve 0 0
Issue of Share Capital 90
under Option Scheme 0
Adjustment to Share Capital 0 5,527
Balance as at 30 June 2005: 96,352,438 99,145,683
Historic Cost
Balance as at 1st January (702,871,938) 719,527,990
2005: Current Cost
Net profit for the half 2,704,801 2,704,801
year
Dividends 0 0
Adjustments to Capital 0 0
Reserve
Adjustments to General 0
Reserve 0
Issue of Share Capital 108
under Option Scheme
0
Adjustment to Share Capital 6,044
Balance as at 30 June 2005: (700,167,137) 722,238,943
Current Cost
STATEMENT TO SHAREHOLDERS AS AT 30 JUNE 2005.
BUSINESS ENVIRONMENT
The first six months of 2005 experienced an upward movement in the year on year
inflation as shown by the increase in the rate from 123.7% in March 2005 to
164.4% in June 2005. There was a devaluation of the auction exchange rate.
Fuel shortages saw the company experience challenges on the transportation of
coal and coke by both road and rail to the market. Joint stakeholder
initiatives were undertaken to mitigate logistical challenges. The company
benefited from interventions from the Reserve Bank of Zimbabwe in terms of
working capital support.
OPERATIONS
The company continued with its turnaround programme. The new 3 Main Underground
Mine was successfully commissioned during the first quarter using the company"s
internal resources.
Demand for coal and coke remained firm and total coal sales for the six months
period under review increased to 1 448 408 tonnes as compared to 1 405 960
tonnes achieved during the same period last year.
HPS coal deliveries were 1 038 870 tonnes and were above the 878 424 tonnes
achieved for the same period last year. This was due to the production mix that
was geared at supplying adequate coal stocks for electricity generation.
Coke sales were stable at 104 710 tonnes and comparable to 103 266 tonnes for
the same period in 2004.
Coke oven gas supplies to the Hwange Power Station were 12 195 210 Nm(3) as
compared to 10 149 320Nm(3) supplied during the same period last year.
FINANCIAL OVERVIEW
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.
The company recorded a turnover of $266.1 billion and was significantly above
that of the same period last year.
A net profit of $43.5 billion was realised compared to $22.9 billion profit
earned for the same period last year. This was attributed to the company"s
focus on improving margins through efficiencies and cost control measures. The
company"s turnaround programme that emphasised increased production volumes was
on course.
Fixed assets and investments increased to $102 billion as compared to $31
billion as at 30 June 2004. This is attributed to the acquisition of a mineral
sizer and expenditure on the new 3 Main underground mine.
OUTLOOK
The spares acquired utilising a US$4 million loan from the central bank are
currently being delivered and this is expected to increase equipment
availability and subsequently production.
The company signed a contract for the supply of opencast mining equipment.
Delivery of the equipment is expected soon if all conditions precedent are met.
This capitalisation is expected to significantly boost production. Another loan
agreement is being finalised for the financing of the 3 Main Underground Mine
and Opencast Mine recapitalisation.
Hwange Colliery Company Limited is considering a rights issue before the end of
the year in order to raise funds to recapitalise the company. After the
recapitalisation programme, the company"s production is expected to increase to
six (6) million tonnes per annum, compared to 3.7 million tonnes achieved in
2004.
The demand for coal and coke products are expected to remain firm in both the
domestic and export markets.
The information technology and the ISO 9001:2000 certification projects are at
advanced stages of implementation. These will improve the management of the
business and enhance the quality of products and services to our customers.
The company has secured funding from the Reserve Bank of Zimbabwe for the
exploration of coal bed methane gas within the Hwange area. This will enable
the exploitation of new business opportunities.
DIVIDEND
In light of the recapitalisation initiatives, the Board has agreed that no
interim dividend will be declared.
DIRECTORATE
Eng M T A Mutezo, who was the Chairman of the Board of Directors, resigned from
the Board in June 2005 following his appointment as Minister of Water and
Infrastructure Development. The company wishes to sincerely acknowledge Eng
Mutezo"s valuable contributions during his tenure as both Director and Chairman
of Hwange Colliery Company Limited.
By Order of the Board
T.K NCUBE
COMPANY SECRETARY
26 August 2005
Sponsor
Imara Corporate Finance South Africa Limited
Date: 29/09/2005 09:47:18 AM
Produced by the JSE SENS Department
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