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Hwa - Hwange Colliery Company Limited - Unaudited Results For The Six Months

Release Date: 09/10/2007 16:59:48      Code(s): HWA
HWA - Hwange Colliery Company Limited - Unaudited results for the six months    
                                       ended 30 June 2007                       
HWANGE COLLIERY COMPANY LIMITED                                                 
(Incorporated in Zimbabwe)                                                      
Code: HWA    ZW0009011934                                                       
The company`s 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           
         30.06.07  30.06.06   30.12.06  30.06.07    30.06.06    30.12.06        
(Audited)            
           (Z$)      (Z$)       (Z$)      (Z$)        (Z$)        (Z$)          
SALES                                                                           
HCC coal   -         -          -         293 722     246 828     566 976       
(tonnes)                                                                        
HPS coal   -         -          -         776 168     636 483     1 330 553     
(tonnes)                                                                        
Total coal -         -          -         1 069 890   883 311     1 897 529     
sales                                                                           
(tonnes)                                                                        
Coke       -         -          -         87 966      93 038      174 434       
(tonnes)                                                                        
Coke oven                                 7 152 650   8 393 460   17 662 576    
gas (Nm3)                                                                       
ABRIDGED INCOME STATEMENT - INFLATION ADJUSTED                                  
             6 Months           6 Months           Year                         
ended              ended              Ended                         
            30.06.07           30.06.06           30.12.06                      
              (Z$)               (Z$)               (Z$)                        
Sales revenue 243 780 927        276 950 413 060    463 953 190 107             
(Loss)/profit (77 742 144 902)   (2 222 186 2590    222 903 172 902             
before                                                                          
interest                                                                        
Monetary      1 507 369 165 680  249 870 519 060    306 336 900 718             
adjustment                                                                      
             1 429 627 020 778  247 648 332 801    529 240 073 620              
Net finance   18 596 376 055     55 033 442 902     64 873 009 493              
income                                                                          
Fixed assets  (67 876 031 888)   356 940 977 414    (4 577 369 957)             
impairment                                                                      
(reversal)/                                                                     
charge                                                                          
Write down    1 712 083 035      -                  -                           
investments                                                                     
Profit/(loss) 1 382 059 447 980  659 622 753 117    589 535 713 156             
before                                                                          
taxation                                                                        
Taxation      (500 358 851 701)  81 060 179 643     (13 703 863 845)            
Profit/(loss) 881 700 596 279    740 682 932 760    (46 633 868 547)            
for the                                                                         
period                                                                          
Earnings/     495 908 544        628 789 790        323 874 040                 
(loss) per                                                                      
share (cents)                                                                   
INCOME STATEMENT - HISTORICAL COST                                              
             6 Months           6 Months           Year                         
            ended              ended              Ended                         
            30.06.07           30.06.06           30.12.06                      
(Audited)                       
              (Z$)               (Z$)               (Z$)                        
Sales revenue 108 775 182 085    2 697 269 334      13 258 615 530              
(Loss)/profit (43 378 427 549)   187 438 973        12 511 596 651              
before                                                                          
interest                                                                        
Monetary      -                  -                  -                           
adjustment                                                                      
(43 378 427 549)   187 438 973        12 511 596 651               
Net finance   707 479 220        612 108 610        1 069 206 315               
income                                                                          
Fixed assets  -                  -                  -                           
impairment                                                                      
(reversal)/                                                                     
Charge                                                                          
Write down    -                  -                  -                           
investments                                                                     
Profit/(loss) (42 670 948 329)   799 547 583        13 580 802 966              
before                                                                          
taxation                                                                        
Taxation      (3 962 920 218)    (205 432 093)      (3 475 201 955)             
Profit/(loss) (46 633 868 547)   594 115 490        10 105 601 011              
for the                                                                         
period                                                                          
Earnings/     (26 229 010)       334 158            5 683 850                   
(loss) per                                                                      
share (cents)                                                                   
SUMMARISED BALANCE SHEET - INFLATION ADJUSTED                                   
6 Months           6 Months           Year                         
            ended              ended              Ended                         
            30.06.07           30.06.06           30.12.06                      
                                                                                
(Z$)               (Z$)               (Z$)                        
Assets                                                                          
Fixed assets  2 416 964 457 514     175 342 748 687       745 993 012 282       
and                                                                             
investments                                                                     
Current         476 187 490 763     733 115 618 795       851 581 520 629       
assets                                                                          
             2 893 151 948 277     908 458 367 482     1 597 574 532 911        
Equity and                                                                      
Liabilities                                                                     
Share capital 177 795            117 795            177 795                     
Reserves and  2 065 648 449 186  634 916 769 596     1 183 947 852 907          
retained                                                                        
profits                                                                         
Shareholders  2 065 648 626 981   634 916 947 391    1 183 948 030 702          
equity                                                                          
Deferred        698 428 715 492  103 305 814 135       198 069 863 791          
taxation                                                                        
Current         110 190 125 141   160 939 529 049      189 716 189 137          
liabilities                                                                     
Long-term        18 884 480 663     9 296 076 907       25 840 449 281          
liabilities                                                                     
             2 893 151 948 277   908 458 367 482     1 597 574 582 911          
SUMMARISED BALANCE SHEET - HISTORICAL COST                                      
6 Months           6 Months           Year                         
            ended              ended              Ended                         
            30.06.07           30.06.06           30.12.06                      
                                                (Audited)                       
(Z$)               (Z$)               (Z$)                        
Assets                                                                          
Fixed assets   34 884 321 494     333 599 974        14 009 366 055             
and                                                                             
investments                                                                     
Current        65 497 049 170     3 508 817 051      14 355 182 352             
assets                                                                          
              100 381 370 664    3 842 417 025      28 364 548 407              
Equity and                                                                      
Liabilities                                                                     
Share capital 177 795            177 795            177 795                     
Reserves and   (36 205 176 233)   917 206 791        10 428 692 312             
retained                                                                        
profits                                                                         
Shareholders   (36 204 998 438)   917 384 586        10 428 870 107             
equity                                                                          
Deferred       7 507 583 372      216 204 082        3 547 083 547              
taxation                                                                        
Current       110 192 427 594    2 560 907 030      13 651 082 450              
liabilities                                                                     
Long-term     18 886 358 136      147 921 327       737 512 303                 
liabilities                                                                     
             100 381 370 664    3 842 417 025      28 364 548 407               
ABRIDGED CASH FLOW STATEMENT - INFLATION ADJUSTED                               
6 Months             6 Months           Year                         
          ended                ended              Ended                         
          30.06.07             30.06.06           30.12.06                      
            (Z$)                 (Z$)               (Z$)                        
Cash flows                                                                      
from                                                                            
operating                                                                       
activities                                                                      
Operating   1 429 627 020 778    247 648 332 801     529 240 073 620            
profit/                                                                         
(loss)                                                                          
Non - cash  (1 259 897 189 440)   (259 132 184 579) (408 993 123 699)           
items                                                                           
Operating     169 729 831 338    (11 483 851 778)   120 246 949 921             
cash flow                                                                       
before                                                                          
investment                                                                      
in working                                                                      
capital                                                                         
Net          (49 287 667 765)    19 631 251 574     (236 960 227 625)           
movement in                                                                     
working                                                                         
capital                                                                         
Net         18 596 376 055       55 033 442 902     64 873 009 493              
financing                                                                       
income                                                                          
           139 038 539 628      63 180 842 698      (51 840 268 211)            
Tax Paid     (4 236 448)          (702 092 290)      (155 568 891)              
Net cash    139 034 303 180      62 478 750 408     (51 995 837 102)            
flows from                                                                      
operating                                                                       
activities                                                                      
Cash flows                                                                      
from                                                                            
investing                                                                       
activities                                                                      
Net cash     (58 131 288 983)     (62 371 447 230)   (86 313 636 296)           
flow                                                                            
related to                                                                      
fixed                                                                           
assets                                                                          
Net cash    80 903 014 197         107 303 178      (138 309 473 398)           
flow before                                                                     
financing                                                                       
activities                                                                      
Cash flows                                                                      
from                                                                            
financing                                                                       
activities                                                                      
Shares      -                    -                  -                           
issued                                                                          
Net loans    (82 821 936 298)    42 346 943 457     138 762 888 427             
(repaid)/                                                                       
raised                                                                          
Net         (1 918 922 101)      42 454 246 635     453 415 029                 
movement in                                                                     
cash and                                                                        
cash                                                                            
equivalents                                                                     
Represented                                                                     
by:                                                                             
Cash and    4 475 588 923        4 022 172 525      4 022 173 899               
cash                                                                            
equivalents                                                                     
at                                                                              
beginning                                                                       
of the year                                                                     
Cash and    2 556 666 822        46 476 419 160     4 475 588 928               
cash                                                                            
equivalents                                                                     
at end of                                                                       
the period                                                                      
(1 918 922 101)     42 454 246 635     453 415 029                  
ABRIDGED CASH FLOW STATEMENT - HISTORICAL COST                                  
              6 Months           6 Months           Year                        
             ended              ended              Ended                        
30.06.07           30.06.06           30.12.06                     
                                                 (Audited)                      
Cash flows      (Z$)               (Z$)               (Z$)                      
from operating                                                                  
activities                                                                      
Operating       (43 378 427 549)  187 438 973        270 943 297                
profit/(loss)                                                                   
Non - cash        (180 454 702)    (655 625 169)     1 232 563                  
items                                                                           
Operating cash  (43 558 882 251)   (468 186 196)      272 175 860               
flow before                                                                     
investment in                                                                   
working                                                                         
capital                                                                         
Net movement   56 285 491 680     445 304 596        (1 288 568 007)            
in working                                                                      
capital                                                                         
Net financing  707 479 220        612 108 610        59 516 369                 
income                                                                          
              13 434 088 649     589 227 010         (956 875 778)              
Tax Paid        (1 712 856)        (7 372 495)        (2 957 054)               
Net cash flows 13 432 375 793     581 854 515        (959 832 832)              
from operating                                                                  
activities                                                                      
Cash flows                                                                      
from investing                                                                  
activities                                                                      
Net cash flow   (32 150 452 832)   (563 895 787)      (79 682 004)              
related to                                                                      
fixed assets                                                                    
Net cash flow  (18 718 077 039)   17 958 728         (1 039 514 836)            
before                                                                          
financing                                                                       
activities                                                                      
Cash flows                                                                      
from financing                                                                  
activities                                                                      
Shares issued  -                  -                  3 084 315                  
Net loans      20 975 994 373     673 834 383        1 037 318 599              
(repaid) /                                                                      
raised                                                                          
Net movement   2 257 917 334      691 793 111        888 078                    
in cash and                                                                     
cash                                                                            
equivalents                                                                     
Represented                                                                     
by:                                                                             
Cash and cash  298 749 488        47 750 426         18 551 571                 
equivalents at                                                                  
beginning of                                                                    
the period                                                                      
Cash and cash  2 556 666 822      739 543 537        19 439 649                 
equivalents at                                                                  
end of the                                                                      
period                                                                          
              2 257 917 334      691 793 111        888 078                     
STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2007            
HISTORICAL COST                                                                 
           Share Capital     Capital      Retained         Total                
                         Reserves       earnings /                              
(loss)                                   
            (Z$)            (Z$)           (Z$)             (Z$)                
Balance as  177 795         5 694 147      10 422 998 165   10 428 870 107      
at 1                                                                            
January                                                                         
2007                                                                            
Loss for    -               -              (46 633 868 547) (46 633 868 547)    
the half                                                                        
year                                                                            
Balance as  177 795         5 694 147      (36 210 870 382)  (36 204 998        
at 30 June                                               440)                   
2007                                                                            
INFLATION ADJUSTED                                                              
           Share Capital     Capital      Retained         Total                
                         Reserves       earnings /                              
                                       (loss)                                   
(Z$)            (Z$)           (Z$)             (Z$)                
Balance as  763 038 103     386 693 465    34 216 461 753   1 183 948 030       
at 1st      651             298                            702                  
January                                                                         
2007                                                                            
Net profit  -               -              881 700 596 279  881 700 596 279     
for the                                                                         
half year                                                                       
Balance as  763 038 103     386 693 465    915 917 058 032  2 065 648 626       
at 30 June  651             298                            981                  
2007                                                                            
STATEMENT TO SHAREHOLDERS For the six months ended 30 June 2007                 
BUSINESS ENVIRONMENT                                                            
The first six months of 2007 were characterised by a challenging operating      
environment with year on year inflation continuing to increase. The annual      
inflation rate as at 30 June 2007 was                                           
7 251% (June 2006 - 1 184%). The exchange rate remained static at $250: US$1,   
however, the RBZ first Quarterly Monetary Policy Statement introduced an        
exporters` exchange rate of $15 000: US$1. The interest rates were high on the  
money market and not conducive to local borrowings. There was continued         
unavailability of foreign currency.                                             
OPERATIONS                                                                      
The operations were characterised by frequent breakdowns of the aged fleet. Cash
flow challenges constrained the expedient procurement of the requisite spares   
and consumables.                                                                
Demand for coal and coke remained firm. The Company could not meet this demand. 
Total coal sales for the six months period under review increased by 21% from   
883 311 tonnes achieved during the same period last year to 1 069 890 tonnes.   
HPS coal deliveries to Hwange Power Station amounted to 776 168 tonnes compared 
to 636 483 tonnes achieved for the same period last year (i.e. 22% increase).   
HCC coal deliveries increased by 19% to 293 722 tonnes (June 2006 - 246 828     
tonnes).                                                                        
Coke sales were 87 966 tonnes against 93 038 tonnes for the same period in 2006.
Coke oven gas supplies to the Hwange Power Station were 7 152 650 Nm3 as        
compared to 8 393 460 Nm3 supplied during the same period last year.            
FINANCIAL REVIEW                                                                
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 Zimbabwean dollar currency.                              
The Company achieved sales revenue of $108.8 billion for the six months under   
review, which was above the $2.7 billion for the same period last year.         
The Company recorded a net loss after taxation of $46.6 billion compared to a   
net profit of $594 million earned for the same period last year. This was       
attributed to the Company`s inability to fully recover input costs from selling 
prices of products especially HPS coal, prices of which remained below cost     
throughout the period under review.                                             
Fixed assets and investments increased to $34.9 billion as compared to $333.6   
million for the same period last year. This is attributed to the refurbishment  
of some of the opencast equipment and the revaluation of the investment         
properties in Bulawayo and Harare.                                              
OUTLOOK                                                                         
A short-term recovery plan has been put in place focusing on optimizing         
production from JKL Opencast and 3 Main Underground mines.                      
Work is in progress for the acquisition and delivery of the coal fines recovery 
plant from Republic of South Africa.                                            
As a long term measure, the Company has come up with a recapitalization         
programme that would be able to significantly boost production and should be    
able to achieve sustainable production output that meets market demand.         
The demand for coal and coke products is expected to remain firm in both the    
domestic and export markets.                                                    
The focus for the second half of the year would be on improving margins through 
increased productivity, tight cost control measures and viable product pricing  
in order to reverse the interim loss position.                                  
DIVIDEND                                                                        
In light of the performance of the Company and the need for recapitalization of 
the business, the Board has not considered the declaration of any interim       
dividend.                                                                       
DIRECTORATE                                                                     
Mr Ternard Kwashirai retired from the Board at the Annual General Meeting held  
on 29 June 2007 after serving the Company for a period of four (4) years. The   
Company wishes to express its appreciation for the valuable contribution made by
Mr Kwashirai during his directorship.                                           
Mr Alpheus Motampe Ngapo joined the Board on 01 July 2007. Mr Fred Gandiwa Moyo 
joined the Company as Managing Director on 11 July 2007. The Company warmly     
welcomes the new directors.                                                     
By Order of the Board                                                           
T K NCUBE                                                                       
COMPANY SECRETARY                                                               
31 August 2007                                                                  
Registered Office                                                               
7th Floor, Coal House                                                           
17 Nelson Mandela Avenue                                                        
P O Box 2870                                                                    
Harare, Zimbabwe                                                                
SPONSOR: Imara Corporate Finance South Africa (Pty) Limited                     
8 October 2007                                                                  
Date: 09/10/2007 16:59:47 Supplied by www.sharenet.co.za                     
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