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HWA
HWHWA
Hwange - Unaudited results for the six months ended 30 June 2006
HWANGE COLLIERY COMPANY LIMITED
(Previously Wankie Colliery Company Limited)
(Incorporated in Zimbabwe)
Code: HWA & ZW0009011934
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2006
The company"s unaudited results for the six months ended 30 June 2006
together with appropriate comparisons for the previous periods were as
follows:
INCOME STATEMENT - INFLATION ADJUSTED
6 Months 6 Months Year
ended ended Ended
30/06/06 30/06/05 31/12/05
$000 $000 $000
SALES 0 0 0
HCC coal tonnes 0 0 0
HPS coal tonnes 0 0 0
Total coal sales 0 0 0
Coke tonnes 0 0 0
Coke oven gas Nm3 0 0 0
Sales Revenue 4,406,899,063 4,453,245,306 8,344,106,803
Profit before interest -35,359,942 -1,000,305,537 -312,449,159
Monetary adjustment 3,975,997,523 486,127,513 -135,802,762
3,940,637,581 -514,178,024 -448,251,921
Net interest 875,704,879 264,600,208 348,299,515
income/(expense)
Fixed assets -5,679,727,434 355,688,489 422,889,510
impairment reversal
Write-down investments
Profit before taxation -863,384,974 106,110,673 322,937,104
Taxation 1,289,848,337 -71,363,322 88,231,382
Profit after taxation 426,463,363 34,747,351 411,168,486
Ordinary dividend 0 0 0
426,463,363 34,747,351 411,168,486
(Loss)/earnings per 240,258 19,576 231,642
share (cents) (basic)
(Loss)/earnings per 239,863 19,544 231,260
share cents (Diluted)
INCOME STATEMENT - HISTORICAL COST
6 Months 6 Months Year
ended ended Ended
30/06/06 30/06/05 31/12/05
$000 $000 $000
SALES
HCC coal tonnes 246,828 409,538 2,033,516
HPS coal tonnes 636,483 1,038,870 832,664
Total coal sales 883,311 1,405,960 2,866,180
Coke tonnes 93,038 104,710 196,523
Coke oven gas Nm3 8,393,460 11,173,960 24,356,880
Sales Revenue 2,697,269,334 266,169,432 988,933,644
Profit before interest 187,438,973 32,920,400 270,943,297
Monetary adjustment 0 0 0
187,438,973 32,920,400 270,943,297
Net interest 612,108,610 17,828,549 59,516,369
income/(expense)
Fixed assets
impairment reversal
Write-down investments - - -
Profit before taxation 799,547,583 50,748,949 330,459,666
Taxation -205,432,093 -7,281,561 -65,947,562
Profit after taxation 594,115,491 43,467,388 264,512,104
Ordinary dividend 0 0 0
594,115,491 43,467,388 264,512,104
(Loss)/earnings per 334,709 24,685 149,460
share (cents) (Basic)
(Loss)/earnings per 334,158 24,685 148,779
share (cents)
(Diluted)
SUMMARISED BALANCE SHEET - INFLATION ADJUSTED
6 Months 6 Months Year
ended ended Ended
30/06/06 30/06/05 31/12/05
$000 $000 $000
Assets
Fixed assets and 2,790,094,394 11,086,959,780 8,507,115,724
investments
Current assets 11,665,505,380 5,354,353,398 9,229,003,947
14,455,599,774 16,441,313,178 17,736,119,671
Equity and Liabilities
Share capital 177,795 176,088 177,795
Reserves and retained 10,102,767,601 9,278,099,799 9,676,304,238
profits
Shareholders equity 10,102,945,396 9,278,275,887 9,676,482,033
Deferred taxation 1,643,826,021 3,123,590,592 2,933,673,433
Current liabilities 2,560,907,030 4,039,446,699 4,872,160,184
PLARP 147,921,327 - 253,804,021
14,455,599,774 16,441,313,178 17,736,119,671
SUMMARISED BALANCE SHEET - HISTORICAL COST
6 Months 6 Months Year
ended ended Ended
30/06/06 30/06/05 31/12/05
$000 $000 $000
Assets
Fixed assets and 333,599,974 102,438,702 106,832,703
investments
Current assets 3,508,817,051 333,465,399 1,845,259,179
3,842,417,025 435,904,101 1,952,091,882
Equity and Liabilities
Share capital 177,795 176,087 177,795
Reserves and retained 917,206,791 98,969,596 323,091,301
profits
Shareholders equity 917,384,586 99,145,683 323,269,096
Deferred taxation 216,204,082 22,320,073 71,881,591
Current liabilities 2,560,907,030 314,438,345 1,479,851,711
PLARP 147,921,327 77,089,484
3,842,417,025 435,904,101 1,952,091,882
ABRIDGED CASH FLOW STATEMENT - INFLATION ADJUSTED
6 Months 6 Months Year
ended ended Ended
30/06/06 30/06/05 31/12/05
$000 $000 $000
Cash flows from
operating activities
Operating cash flow 3,940,637,581 -514,178,024 -448,251,921
Non - cash items -4,123,371,288 1,054,991,508 -1,657,481,502
Operating cash flow -182,733,707 540,813,484 -2,105,733,423
before investment in
working capital
Net movement in 312,377,018 1,606,813,576 -3,155,905,867
working capital
Net financing income 875,704,878 264,600,208 348,299,515
/(cost)
Dividends paid - - -
1,005,348,190 2,412,227,268 -4,913,339,775
Taxes Paid
Zimbabwe Income Tax -11,171,855 -62,195,590 -40,299,156
Net cash flows from 994,176,335 2,350,031,678 -4,953,638,931
operating activities
Cash flows from
investing activities
Net cash flow related -992,468,902 -2,349,922,871 -721,029,663
to fixed assets
Net cash flow before 1,707,433 108,807 -5,674,668,594
financing activities
Cash flows from
financing activities
Shares issued - 79,032 21,866,010
Net loans 673,834,364 10,215,895 5,297,908,012
raised/revalued
Net cash 675,541,797 10,403,734 -354,894,572
inflow/(outflow)
Overdraft and
acceptances less bank
balances and cash
31 December 2005 64,001,740 418,896,312 418,896,312
30 June 2006 739,543,537 429,300,046 64,001,740
675,541,797 10,403,734 -354,894,572
ABRIDGED CASH FLOW STATEMENT - HISTORICAL COST
6 Months 6 Months Year
ended ended Ended
30/06/06 30/06/05 31/12/05
$000 $000 $000
Cash flows from
operating activities
Operating cash flow 187,438,973 32,920,400 270,943,297
Non - cash items -627,314,392 3,201,079 1,232,563
Operating cash flow
before investment
in working capital -439,875,419 36,121,479 272,175,860
Net movement in 445,304,596 -33,001,923 -1,288,568,007
working capital
Net financing income 612,108,610 17,828,549 59,516,369
/(cost)
Dividends paid - - -
617,537,787 20,948,105 -956,875,778
Taxes Paid
Zimbabwe Income Tax -7,372,495 -2,149,526 -2,957,054
Net cash flows from 610,165,292 18,798,579 -959,832,832
operating activities
Cash flows from
investing activities
Net cash flow related -563,895,787 -74,466,798 -79,682,004
to fixed assets
Net cash flow before 46,269,505 -55,668,219 -1,039,514,836
financing activities
Cash flows from
financing activities
Shares issued - 5,618 3,084,315
Net loans raised/re- 673,834,383 70,528,576 1,037,318,599
valued
Net cash 720,103,888 14,865,975 888,078
inflow/(outflow)
Overdraft and
acceptances less
bank balances and cash
31 December 2005 19,439,649 18,551,571 18,551,571
30 June 2006 739,543,537 33,417,546 19,439,649
720,103,888 14,865,975 888,078
STATEMENT OF CHANGES IN EQUITY
Share Capital Capital General
Reserves Reserves
$000 $000 $000
Balance 177,795 5,694,147 0
As at 1 January 2006:
Historic Cost
Net profit for the half
year
Dividends
Adjustments to Capital 0 0 0
Reserve
Adjustments to General 0
Reserve
Issue of Share Capital 0
under Option Scheme
Adjustment to Share 0 0
Capital
Balance as at 30 June 177,795 5,694,147 0
2006:
Historic Cost
Balance as at 1 January 12,141,638,438 6,153,155,695 0
2006:
Current Cost
Net profit for the half
year
Dividends
Adjustments to Capital 0 0 0
Reserve
Adjustments to General
Reserve
Issue of Share Capital
Under Option Scheme
Adjustment to Share
Capital
Balance as at 30 June 12,141,638,438 6,153,155,695 0
2006:
Current Cost
(Continued)
Retained Profit Total
$000 $000
Balance As at 1 January 317,397,154 323,269,096
2006:
Historic Cost
Net profit for the half 594,115,491 594,115,491
year
Dividends 0 0
Adjustments to Capital 0 0
Reserve
Adjustments to General 0
Reserve
Issue of Share Capital 0
under Option Scheme
Adjustment to Share 0
Capital
Balance as at 30 June 911,512,645 917,384,587
2006:
Historic Cost
Balance as at 1 January -8,618,312,100 9,676,482,033
2006:
Current Cost
Net profit for the half 426,463,363 426,463,363
year
Dividends 0
Adjustments to Capital 0 0
Reserve
Adjustments to General 0
Reserve
Issue of Share Capital 0
Under Option Scheme
Adjustment to Share 0
Capital
Balance as at 30 June -8,191,848,737 10,102,945,396
2006:
Current Cost
Statement to Shareholders
BUSINESS ENVIRONMENT
The first six months of 2006 continued to be characterized by a challenging
operating environment manifested by the high year on year inflation which
closed the half year at 1 184% (June 2005 164.4%). The inter bank exchange
rate remained generally static during the period under review.
OPERATIONS
The new Chaba Opencast Mine was successfully brought into production during
the first quarter using the company"s internal resources.
Demand for coal and coke remained well above product availability. This was
due to the reduced production capacity consequent to the low equipment
availability. The aged fleet, coupled with cashflow challenges constrained
the expedient procurement of the requisite spares and consumables.
Total coal sales for the six months period under review decreased to 883 311
tonnes as compared to 1 405 960 tonnes achieved during the same period last
year.
HPS coal deliveries to Hwange Power Station were 636 483 tonnes and were
below the 1 038 870 tonnes achieved for the same period last year.
Coke sales were 93 038 tonnes and comparable to 104 710 tonnes for the same
period in 2005.
Coke oven gas supplies to the Hwange Power Station were 8 393 460 Nm3 as
compared to 11 173 960 Nm3 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 using the pre 01 August 2006 Zimbabwean
dollar currency.
The company achieved a turnover of $2.7 trillion for the six months ended 30
June 2006, which was above the $266.1 billion for the same period last year.
Net profit after taxation for the company increased to $594.1 billion from
the $43.5 billion profit earned for the same period last year. This was
attributed to the company"s focus on improving margins through efficiencies,
tight cost control measures and viable product pricing.
Fixed assets and investments increased to $333.6 billion as compared to $102
billion for the same period last year. This was attributed to the
acquisition of two drilling machines from Europe and capital developments on
the 3 Main Underground mine and the new Chaba Opencast mine.
The company managed the major debtors through the continuous engagement of
the main stakeholders and at the time of reporting, the outstanding debts
had been cleared.
OUTLOOK
The delivery of the mining equipment from abroad is expected within the
third quarter of 2006. This equipment will be additional to the two new
drilling machines acquired from Europe, and two new shuttle cars for the
underground mine from South Africa. Work is in progress for the acquisition
and delivery of the coal fines recovery plant. The company"s capitalization
initiative is expected to improve production.
The Company is confident that sustainable production output to meet market
demand will be realised before the end of the year. The current plant and
equipment will be refurbished. In the meantime, the company has hired mining
equipment from a contractor in order to augment the existing production
equipment.
The demand for coal and coke products is expected to remain firm in both the
domestic and export markets.
Focus on optimum cashflow generation and stringent cost containment will
continue during the second half of the year.
DIVIDEND
In light of the recapitalization initiatives, the Board has not considered
the declaration of any interim dividend.
By Order of the Board
T.K NCUBE
COMPANY SECRETARY
Sponsor
Imara Corporate Finance South Africa (Pty) Ltd
29 September 2006
Date: 29/09/2006 02:54:14 PM Produced by the JSE SENS Department
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