Wrap Text
HWA - Hwange Colliery Company Limited - Statement to shareholders (For the six
months ended 30 June 2011)
HWANGE COLLIERY COMPANY LIMITED
(Incorporated in Zimbabwe)
Code: HWA ISIN: ZW0009011934
STATEMENT TO SHAREHOLDERS (For the six months ended 30 June 2011)
The Company is pleased to present its unaudited consolidated financial
performance for the six (6) months ended 30 June 2011.
OVERVIEW
The period under review was characterised by continued stabilisation of the
National economy as inflation remained low and stable. The liquidity crunch
affecting industry constrained normal trading activity.
Export marketing efforts were negatively affected by the world recession that
depressed demand and prices for fossil fuels in general. The demand for coke
products on both the domestic and international markets remained depressed.
Cost of freight to regional and offshore markets remained competitive against
firm demand for thermal coal. Social and employment costs continued to impact
negatively on the business as the mine continues to carry a municipal
responsibility over Hwange Town.
During the period under review, there were some strategic coal supply
discussions with new potential clients such as New Zim Steel (formerly
Ziscosteel). The Company`s capitalisation efforts are ongoing and business
outlook is bright.
OPERATIONS
The continued recapitalisation initiatives by the company yielded some results
with the commissioning of additional mining equipment through a structured
funding from a local bank. A more holistic funding programme remains
outstanding. There is need to re-tool the total process flow in order to usher
in volume growth and process efficiency.
Total coal sales for the six (6) months period under review of 1 161 427 tonnes
were comparable to 1 178 724 tonnes achieved during the same period last year.
Hwange Power Station (HPS) coal deliveries to Zimbabwe Power Company (ZPC) for
the period were 688 263 tonnes compared to 769 340 tonnes for the same period
last year, representing a marginal decrease of 10%. Efforts were directed at
supporting urban thermal power stations as Hwange Power Station held adequate
strategic stocks on the ground.
Hwange Coking Coal and Hwange Industrial Coal (HCC/HIC) coal sales increased by
14% from 319 159 tonnes for the same period last year to 364 688 tonnes achieved
during the period under review. The sales increase was anchored by urban
thermal power stations.
The Company recorded a 5% increase in coke sales from 18 198 tonnes for the
first half of 2010 to 18 943 tonnes for same period 2011.
Export sales of coal to Zambia and Tanzania remained firm although logistics
challenges continue.
FINANCIAL RESULTS
The Company`s sales revenue for the six (6) months period under review was
USD48.6 million, 8% above the USD45.2 million revenue recorded during the
same period last year. The Company incurred an unaudited net loss after
taxation of USD1.5 million and this compared unfavourably to the USD4.5
million profit recorded for the same period in 2010. This negative financial
performance is attributed to the increase in overhead costs against stagnant
production volumes and prices of products. The cost of short term borrowings,
increase in fuel prices as well as mining contract costs impacted negatively
on the Company.
A property revaluation surplus of USD39.9 million was realised for the period
under review. This resulted in a total comprehensive income for the half year
of USD38.4 million compared to USD 4.5 million for the same period last year.
Total fixed assets and investments increased to USD153.8 million from
USD103 80 million as at 31 December 2010. This was because of the revaluation
of property and acquisition of new mining equipment.
OUTLOOK
The economy is envisaged to grow by 9.3% by the end of the year. The Medium
Term Plan (MTP) presented by the Government of Zimbabwe priorities capacity
utilisation in the manufacturing sector. There is expectation for a general
increase in lending capacity of local financial institutions with competitive
interest rates. These factors present some opportunities for business.
The Company remains focussed on the long term recapitalisation programme that
should permanently address the perennial problems of the aged and obsolete
plant and machinery. The prospects of foreign lines of credit from regional
financial institutions are being pursued and look positive.
The second half of the year should see the Company entering new continental
and overseas markets for coal and coke. Emphasis will also be on consolidating
the domestic market focussing on power generation, tobacco industry and
manufacturing. Focus will also be directed at compliance issues around
environmental, empowerment and corporate social responsibility programmes.
Acquisition and development of new coal concessions will be a strategic
priority.
High level strategic dialogue will be enhanced between the Company and ZESA
Holdings, National Railways of Zimbabwe, and New Zim Steel.
Skills and competency training will receive priority in order to support
recapitalisation efforts.
The Company is currently rationalising its overhead cost burden borne out of
its municipality role over Hwange Town. A strategy to rationalise the
company`s social programmes is also currently underway and is expected to
improve efficiencies and profit margins for the Company.
The Company is optimistic that the current initiatives being pursued by the
Board and management coupled with the conducive economic environment will
result in improved financial performance.
DIVIDEND
The Board of Directors has resolved not to consider any interim dividend given
the Company`s financial performance for the first six (6) months of the year.
DIRECTORATE
The eighty - eighth (88th) Annual General Meeting (AGM) of the Company was
postponed from 30 June 2011 to 03 August 2011. This was after a motion was
proposed and adopted to include an agenda on the restructuring of the Company.
At the AGM of 03 August 2011, Messrs T Ndlovu, A M Ngapo, J Nqindi and Ms R
Sibanda retired by rotation in terms of the Articles of Association and did
not seek re-election. A resolution was also passed for the removal from the
Board of Messrs F Chasi, S I Mutumbwa, T Savanhu, Mrs T T Mlobane and Mrs P
Mupfumira, notwithstanding their tenure of office.
At the same AGM, Messrs S Chibanguza, J Chininga, I C Haruperi, N Jiyane,
J R Mawere, F Mutamangira, L Nkomo, V Vera and Ms S Mapfuwa, were elected
Directors of the Company.
Mr F Mutamangira was elected Chairman at the Board Meeting of 17 August 2011.
By Order of the Board
T K NCUBE
COMPANY SECRETARY
02 September 2011
Registered Office
7th Floor, Coal House
17 Nelson Mandela Avenue
P O Box 2870
Harare
Zimbabwe
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUNE 2011
1 ACCOUNTING POLICIES
These financial statements have been prepared under the historical cost
convention.
2 BASIS OF PREPARATION
This abridged interim financial information for the half year ended
30 June 2011 has been prepared in accordance with IAS 34, `Interim
financial reporting`.
The abridged financial statements have been prepared in United States
Dollars (USD).
These abridged financial statements have been prepared in compliance
with the International Financial Reporting Standards (IFRSs).
Professional judgment was also used in the preparation of these
financial results.
3. COMPARATIVES
Comparatives for the financial statements have also been published.
ABRIDGED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE
2011
6 Months 6 Months
30-Jun-11 30-Jun-10
USD USD
Cash flows from operating
activities
Operating profit (4 877 3 336 285
241)
Non - cash items 4 775 185 4 480 488
Operating cash flow before
investment
in working capital (102 056) 7 816 773
Net movement in working capital (7 362 (2 072 019)
844)
Finance cost (309 283) (523 251)
Income tax paid - -
Net cash generated from operating (7 774 5 221 503
activities 184)
Cash flows from investing
activities
Acquisition of plant and (3 206 (4 444 791)
equipment 300)
Net cash used in investing (10 980 776 712
activities 483)
Cash flows from financing
activities
Lease repayments - (2 180 496)
Increase in loans 11 649 202 2 100 000
Net cash used in financing 11 649 202 (80 496)
activities
Net increase in cash, cash 668 718 696 216
equivalents and bank overdrafts
Cash, cash equivalents and bank 647 420 1 248 894
overdrafts at beginning of the
period/year
Effects of exchange rates changes
on cash and cash equivalents
Cash, cash equivalents and bank 1 316 138 1 945 110
overdrafts at end of period
6 Months 12 Months 6 Months
30 June 31 Dec 30 June
2011 2010 2010
SALES TONNAGE
HCC coal 364 688 533 298 319 159
HPS coal 688 263 1 759 095 769 340
Coal fines and breeze 108 476 177 103 90 225
Total coal sales 1 161 2 469 496 1 178
427 724
Coke tonnes 18 943 41 447 18 198
Total sales 1 180 2 510 943 1 196
370 922
Abridged statement of
comprehensive income
for the six months ended 30 June
2011
6 Months 6 Months
30 June 30 June
2011 2010
USD USD
Sales revenue 48 580 45 179
754 706
Loss from operations (3 131 3 986 54
442)
Finance costs (453 684) (650
256)
Share of loss from equity 1 178 285 -
accounted investments
Profit before taxation (2 406 3 336
841) 285
Taxation 923 297 1 170
241
Profit after taxation (1 483 4 506
544) 526
Other comprehensive income:
Gain on revaluation of land and 39 882 -
buildings, net of tax 274
TOTAL COMPREHENSIVE INCOME FOR 38 398 4 506
THE HALF YEAR 730 526
Basic earnings per share (0.01) 0.02
Headline earnings per share (0.01) 0.02
ABRIDGED STATEMENT OF
FINANCIAL POSITION
AS AT 30 JUNE 2011
30 June 31
December
2011 2010
ASSETS USD USD
Non- current assets
Property, plant and 92 229 8 249
equipment 960 605
Investment property 3 700 3 700
000 000
Investments accounted for 12 640 11 835
using the equity method 150 967
108 570 103 785
110 572
Current assets
Pre-stripped overburden 7 430 3 809
654 866
Inventory 20 850 16 699
357 214
Trade and other receivables 50 370 45 289
359 062
Financial assets at fair 3 413 2 918
value through profit and
loss
Bank and cash balances 3 455 1 203
004 216
82 109 67 004
787 276
190 679 170 789
897 848
EQUITY AND LIABILITIES
Capital and reserves
Share capital 45 549 45 549
963 963
Non-distributable reserve 4 358 4 358
468 468
Retained earnings 5 606 8 887
213 488
55 514 58 795
644 919
Non-current liabilities
Lease liability 2 938 2 938
939 939
Deferred tax 20 695 20 869
932 620
23 634 23 808
871 559
Current liabilities
Trade and other payables 60 468 57 366
948 782
Borrowings 43 870 26 014
745 401
Provisions 6 113 3 848
591 891
Current tax liability 1 077 955 296
098
111 530 88 185
383 370
190 679 170 789
898 848
T. Savanhu F. Moyo T.K. Ncube
Chairman Managing Company Secretary
Director
28 September 2011
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
Date: 28/09/2011 07:46:01 Supplied by www.sharenet.co.za
Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
