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Hwa - Hwange Collliery Company - Consolidated Interim Results For The Six Months

Release Date: 30/09/2009 07:10:02      Code(s): HWA
HWA - Hwange Collliery Company - Consolidated Interim Results For the six months
                             ended 30 June 2009                                 
HWANGE COLLLIERY COMPANY LIMITED                                                
(Incorporated in Zimbabwe)                                                      
Code: HWA      ISIN: ZW0009011934                                               
CONSOLIDATED INTERIM RESULTS                                                    
(For the six months ended 30 June 2009)                                         
OVERVIEW                                                                        
The period under review witnessed significant changes in the macro and micro    
economic environment in particular the introduction of the multicurrency system.
Political and economic stability followed the formation of the inclusive        
Government and this boosted the business climate in Zimbabwe.                   
While generally welcome, the dollarisation of the economy resulted in liquidity 
challenges for most industries. The demand for coal and coke was therefore      
adversely affected.                                                             
The prices of products were low and were market determined and comparable to    
regional and international benchmarks. Even though the foreign exchange         
management system was liberalised, there was limited availability of foreign    
lines of credit because of the global recession. There were many company        
closures around the country thereby negating coal demand.                       
OPERATIONS                                                                      
Coal production was adversely affected by the frequent breakdowns that          
characterised the aged mining and processing equipment, and the outage of the   
dragline pending major repairs and service. This was coupled with the low demand
for products by the market consequent to the low capacity utilisation in        
industry as well as the liquidity crunch affecting the company.                 
Total coal sales for the six months period under review decreased from 862 392  
tonnes achieved during the same period last year to 401 114 tonnes. Total coal  
exports amounted to 4 271 tonnes, the bulk of which were coal fines for the     
cement industry. Local coal fines despatches to cement industry amounted to 79  
396 tonnes.                                                                     
HPS coal deliveries to Hwange Power Station for the period under review were 218
683 tonnes compared to 589 329 tonnes for the same period last year. HCC coal   
sales decreased from 198 086 tonnes as at 30 June 2008 to 103 035 tonnes as at  
30 June 2009.                                                                   
Coke sales decreased from 72 494 tonnes for the same period last year to 15 114 
tonnes. There was limited coke production during the period under review because
the coke oven battery was not operational. The bulk of the tonnage (14 075      
tonnes) was exported because local customers were on production stoppage.       
There were no coke oven gas supplies to the Hwange Power Station as was the case
during the same period last year due to the gas pipeline being out of           
commission.                                                                     
FINANCIAL RESULTS                                                               
This is the first time the Company is reporting its results in United States    
Dollars following the introduction of the multi currency system.                
The Company`s sales revenue for the six (6) months under review was US$23.6     
million. The revenue was negatively affected by the combined effect of the      
decline in demand for products and the prevailing low prices.                   
The company`s cost management programmes resulted in an operating profit of US$1
503 739. The net profit after taxation for the first six (6) months of the year 
amounted to US$1 658 963.                                                       
Total fixed assets and investments were revalued to US$77.6 million as at 30    
June 2009 from an amount of US$ 192.6 million as at 31 December 2008.  The      
property, plant and equipment as well as investment properties in Harare and    
Bulawayo were revalued by professional valuers.                                 
OUTLOOK                                                                         
The operating environment presents some opportunities for business stability and
growth. The local and regional industries, which had been affected by the global
economic crisis, are expected to increase capacity utilisation. This implies an 
increase in demand for coal and coke products.                                  
Following the servicing of the dragline and refurbishment of the coke oven      
battery, the production volumes are expected to increase. Focus would also be on
recapitalizing the other key sections of the production process that support    
this increase in coal and coke volumes.                                         
The company`s profitability will be driven by competitive cost structures and   
improved margins through increased productivity.                                
Despite the brain drain that affected all companies in Zimbabwe, Hwange Colliery
Company has managed to retain its core skills base that will support the        
company`s initial production ramp up programme.                                 
DIVIDEND                                                                        
The Board has resolved not to consider any interim dividend given the need for  
the company to recapitalise its operations.                                     
DIRECTORATE                                                                     
Mrs Priscah Mupfumira was appointed to the Board of Directors on 10 July 2009.  
By Order of the Board                                                           
T K NCUBE                                                                       
COMPANY SECRETARY                                                               
24 September 2009                                                               
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUNE 2009               
1. ACCOUNTING POLICIES                                                          
These financial statements have been prepared under the historical cost         
convention except for certain financial instruments and investment properties,  
which are stated at fair value.                                                 
2. BASIS OF PREPARATION                                                         
The abridged interim financial statements for the half year ended 30 June 2009  
have been prepared in accordance with IAS 34, `Interim financial reporting`.    
The abridged financial statements have been prepared in United States Dollars   
(USD). The Zimbabwe dollar became inactive following the liberalization of the  
exchange controls and the introduction of multiple currencies as announced in   
both the Budget and Monetary Policy statement of 2 February 2009. The company   
adopted the US dollar as its functional and presentation currency after this    
pronouncement.                                                                  
These abridged financial statements have been prepared in compliance with the   
"Draft Guidance: change in functional currency 2009" as circulated by the       
Institute of Chartered Accountants (ICAZ) to its members. The guidance took into
account the financial reporting principles inherent in International Financial  
Reporting Standards (IFRSs). Professional judgement was also used in the        
preparation of these financial results.                                         
3. COMPARATIVES                                                                 
Comparatives for the financial statements have not been published because it was
not practical to determine these figures as described above. The Board is of the
view that the cost of preparing these numbers outweighs the benefits and could  
mislead users of financial information.                                         
4. SHARE CAPITAL                                                                
The authorised and issued share capital consists of 186 000 000 ordinary shares.
On 1 January 2009, the par value of these shares was denominated in Zimbabwe    
dollars.  Issued share capital was therefore carried at nil values. A           
shareholders` resolution was passed at the Annual General Meeting, held on 26   
June 2009, to convert the new par value of these shares to United States        
Dollars. Subsequent to this resolution, the increase in the nominal value of    
share capital was capitalised from the functional change currency reserve.      

                                                                                
THE COMPANY`S CONSOLIDATED UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE   
2009 ARE AS FOLLOWS:                                                            

                                6 MONTHS        12 MONTHS      6 MONTHS         
                                30 JUNE 2009    31 DEC 2008    30 JUNE 2008     
SALES                                                                           
HCC coal tonnes                      103 035         661 444         198 086    
HPS coal tonnes                      218 683       1 140 542         589 329    
Coal fines                            79 396         145 000          74 977    
Total coal sales                     401 114       1 946 986         862 392    
Coke tonnes                           15 114         111 748          72 494    
Coke oven gas Nm3                        -               -               -      
                                                                                
                                                                                
ABRIDGED CONSOLIDATED STATEMENT OF                                              
COMPREHENSIVE INCOME                                                            
For the six months ended 30 June 2009                                           
                                                               6 MONTHS         
30 JUNE 2009     
                                                               USD              
                                                                                
Sales revenue                                                     23 616 727    

Profit from operations                                             1 503 739    
                                                                                
Finance costs                                                    (798 381)      

Share of loss of equity accounted investments                      ( 15 597)    
                                                                                
Profit before taxation                                               689 761    

Taxation                                                             969 202    
                                                                                
Profit after taxation                                              1 658 963    

Other comprehensive income:                                                     
                                                                                
Other comprehensive income net of tax                                    -      

TOTAL COMPREHENSIVE INCOME FOR THE HALF YEAR                       1 658 963    
                                                                                
Basic earnings and                                                              
headline earnings per                                                           
share                                                           0.01            
ABRIDGED STATEMENT OF FINANCIAL POSITION                                        
As at 30 June 2009                                                              
6 MONTHS                
                                                        30 JUNE 2009            
                                                        USD                     
Non- current assets                                                             
Property, plant and equipment                               72 225 542          
Investment property                                          3 615 000          
Investments in associates                                    1 797 827          
                                                                                
77 638 369           
                                                                                
Current assets                                                                  
Pre-stripped overburden                                      1 197 186          
Inventory                                                   16 102 744          
Trade and other receivables                                  6 910 311          
Financial assets at fair value                                   2 851          
through profit and loss                                                         
Bank and cash balances                                         698 777          
                                                                                
                                                           24 911 869           
                                                                                
102 550 238           
                                                                                
Equity and Liabilities                                                          
Share capital                                               44 448 750          
Revenue reserves                                             1 658 963          
                                                                                
                                                           46 107 713           
                                                                                
Non-current liabilities                                                         
Deferred tax                                                10 326 654          
                                                                                
Current liabilities                                                             
Trade and other payables                                    22 869 242          
Outstanding loans                                           23 246 629          
                                                                                
                                                           46 115 871           

Long Term Liabilities                                                           
                                                          102 550 238           
ABRIDGED STATEMENT OF CHANGES IN EQUITY                                         
For the six months ended 30 June 2009                                           
                                                                                
                                                 Equity and                     
                                                 reserves                       
USD                            
                                                                                
Share capital                                        44 448 750                 
                                                                                
Total comprehensive income for the half year          1 658 963                 
                                                                                
Balance as at 30 June 2009                           46 107 713                 
                                                                                
Zimbabwe                                                                        
30 September 2009                                                               
Sponsor                                                                         
Sasfin Capital (a division of Sasfin Bank Limited)                              
Date: 30/09/2009 07:10:02 Supplied by www.sharenet.co.za                     
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