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Hwange - Unaudited Results For The Six Months Ended 30 June 2006

Release Date: 29/09/2006 14:54:02      Code(s): HWA
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 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                                             
                                                                                
                                                                                
                                                                                



                                        
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