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Hwa - Hwange Colliery Company Limited - Unaudited Statement Of Financial

Release Date: 01/04/2009 11:19:05      Code(s): HWA
HWA - Hwange Colliery Company Limited - Unaudited Statement Of Financial        
Position As At 31 December 2008                                                 
HWANGE COLLIERY COMPANY LIMITED                                                 
Incorporated in Zimbabwe                                                        
Code: HWA & ISIN: ZW009011934                                                   
HWANGE COLLIERY COMPANY LIMITED                                                 
                                                                                

UNAUDITED STATEMENT OF FINANCIAL POSITION                                       
AS AT 31 DECEMBER 2008                                                          
                                                                                
For convenience purposes only                                                   
                                                                                
ASSETS                                            2008                          
                                                 US$                            

Property, plant and equipment                      187 590 880                  
Investment property                                                             
                                                 4 985 000                      
Inventory                                                                       
                                                 7 834 522                      
Receivables and prepayments                                                     
                                                 8 161 949                      
Financial assets at fair value through                                          
profit and loss                                   1 124                         
Bank and cash balances                                                          
                                                 133 971                        

Total assets                                       208 707 446                  
                                                                                
                                                                                
EQUITY AND LIABILITIES                                                          
                                                                                
Share Capital and reserves                        129 587 910                   
Deferred taxation                                                               
40 823 840                     
Loans payable within one year                                                   
                                                 15 389 536                     
Lease liability                                                                 
5 312 944                      
Payables                                                                        
                                                 17 386 484                     
Provisions                                                                      
196 680                        
Current tax liability                                                           
                                                 10 052                         
                                                                                
Total equity and liabilities                      208 707 446                   
                                                                                
                                                                                
The Statement of financial position in United States dollars                    
(USD) has been prepared for convenience purposes as                             
supplementary information to the historical financial                           
statements.                                                                     
                                                                                
The Statement of financial position has been                                    
computed as follows:                                                            
    -                  All foreign currency denominated                         
                       balances were translated to USD at                       
closing exchange rates.                                  
    -                  Zimbabwe dollar denominated balances                     
                       were translated at the United Nations                    
                       rate of  1 USD to 35 quadrillion                         
Zimbabwe dollars.                                        
                                                                                
However, IAS 21 requires an entity operating in a                               
hyperinflationary economy to restate its financial statements                   
in accordance with IAS 29 and then translate to a currency of a                 
non - hyperinflationary economy.                                                
                                                                                
In this regard, the Statement of financial position in USD is                   
not compliant with the requirements of IAS 21.                                  
                                                                                
                                                                                
                                                                                
STATEMENT OF COMPREHENSIVE INCOME                                               
FOR THE YEAR ENDED 31 DECEMBER                                                  
2008                                                                            
                                                                                
HISTORICAL                
                                                      COST                      
                                                                                
                                  2008                            2007          
Z$ trillion                     Z$            
                                                                  trillion      
                                                                                
Revenue                            3 296 214 299                                
-             
                                                                                
Cost of sales                      ( 1 929 675 440)                             
                                                                  -             

Gross profit                       1 366 538 859                                
                                                                  -             
                                                                                
Investment revenue                 13                                           
                                                                  -             
Other gains and losses             174 675 237 129                              
                                                                  -             
Marketing costs                    (1)                                          
                                                                  -             
Administrative costs               ( 294 643)                                   
                                                                  -             

Profit from operations             176 041 481 357                              
                                                                  -             
                                                                                
Finance cost                       (710 538)                                    
                                                                  -             
Share of profit of                 -                                            
associates                                                         -            

Profit before taxation             176 040 770 819                              
                                                                  -             
                                                                                
Taxation                           (35 286 713 047)                             
                                                                  -             
                                                                                
Profit after taxation              140 754 057 772                              
-             
                                                                                
Other comprehensive                                                             
income:                                                                         

Gains on property                  4 875 145 332 750                            
revaluation                                                        -            
                                                                                
Other comprehensive                4 875 145 332 750                            
income net of tax                                                  -            
                                                                                
TOTAL COMPREHENSIVE INCOME FOR THE 5 015 899 390 522                            
YEAR                                                               -            
                                                                                
                                                                                
                                                                                

Attributable earnings per  -       773                                          
share                     basic                                    -            
                                                                                
-       773                                           
                         diluted                                  -             
                                                                                
Headline  earnings per     -       773                                          
share                     basic                                    -            
                                                                                
                          -       773                                           
                         diluted                                  -             

HWANGE COLLIERY COMPANY                                                         
LIMITED                                                                         
                                                                                
STATEMENT OF FINANCIAL                                                          
POSITION                                                                        
AS AT 31 DECEMBER 2008                                                          
                                                                                
HISTORICAL                     
                                                 COST                           
                                                                                
                           2008                              2007               
Non Current Assets                                                              
Property, plant and         6 565 852 300 000                                   
equipment                                                                       
Investment property                                                             
174 475 000 000                   -                  
Investments in associates                                     -                 
                            6 740 327 300 00                                    
Current Assets                                                                  
Pre-stripped overburden                                                         
                           2 362                             -                  
Inventory                                                                       
                           248 809 421                       -                  
Receivables and prepayments      3 767 049 789                                  
                                                             -                  
Financial assets at fair                                                        
value through profit and    199 530 600                       -                 
loss                                                                            
Bank and cash balances                                                          
                           23 272 362                        -                  
                                4 238 664 534                                   
-                  
Total assets                  6 744 565 964 534                                 
                                                             -                  
                                                                                
EQUITY AND LIABILITIES                                                          
                                                                                
Capital and Reserves                                                            
Share capital and  reserves   4 875 145 332 750                                 
-                    
Retained profit                 140 754 057 772                                 
                                                           -                    
                                                                                
5 015 899 390 522                                 
                                                           -                    
                                                                                
Non current liabilities                                                         
Deferred taxation              1 725 641 873 971                                
                                                           -                    
                                                                                
                                                                                
Current liabilities                                                             
Overdrafts                                                                      
                             350                           -                    
                                                                                
Loans payable within one year                                                   
                             77                            -                    
Lease liability                                                                 
                             25                            -                    
Payables                      2 672 893 260                                     
                                                           -                    
Provisions                                                                      
                             25                            -                    
Current tax liability                                                           
                             351 806 304                   -                    
                                                                                
                             3 024 700 041                                      
-                    
                                                                                
                                                                                
Total equity and              6 744 565 964 534                                 
liabilities                                                 -                   
                                                                                
                                                                                
HWANGE COLLIERY COMPANY                                                         
LIMITED                                                                         
                                                                                
STATEMENT OF CASH FLOWS                                                         
FOR THE YEAR ENDED 31                                                           
DECEMBER 2008                                                                   
                                                                                
                                                       HISTORICAL               
                                                       COST                     

                                    2008                          2007          
                                    Z$ trillion                   Z$            
                                                                  trillion      

CASH FLOWS FROM OPERATING                                                       
ACTIVITIES                                                                      
                                                                                
Profit from                          176 041 481 357                            
operations                                                         -            
Adjustment for non-cash                                                         
items:                                                                          
- Unrealised exchange                                                           
losses                               275                                        
- Unrealised exchange                                                           
gains                                (23)                                       
- Fair value adjustment on          (174 475 000 000)                           
investment property                                                -            
Fair value adjustment on financial   (199 530 600)                              
assets at fair value through profit                                -            
and loss                                                                        
                                                                                
Operating cash flow before                                                      
changes in working capital           1 366 951 009                 -            

Increase in                          (248 809 421)                              
inventory                                                          -            
Increase in pre-strip                                                           
overburden                           (2 362)                       -            
Increase in receivables              (3 767 049 767)                            
                                                                  -             
Increase in                                                                     
provisions                           25                            -            
Increase in                                                                     
payables                             2 672 893 089                 -            
                                                                                
Cash flow utilised in                                                           
operations                           23 982 573                    -            
                                                                                
Finance cost                                                                    
(710 538)                     -             
Income tax paid                                                                 
                                    (23)                          -             
                                                                                

Cash flows utilised from                                                        
operating activities                 23 272 012                    -            
                                                                                
Net cash flows from                                                             
financing activities                 -                             -            
                                                                                
Increase in cash and cash            23 272 012                                 
equivalents                                                        -            
                                                                                
Represented by:                                                                 
Cash and cash equivalents at                                                    
beginning of the year                -                             -            
Cash and cash equivalents                                                       
at end of the year                   23 272 012                    -            
                                                                                
Increase in cash and cash            23 272 012                                 
equivalents                                                        -            
                                                                                
                                                                                
HWANGE COLLIERY COMPANY LIMITED                                                 
                                                                                
NOTES TO THE FINANCIAL STATEMENTS                                               
FOR THE YEAR ENDED 31 DECEMBER 2008                                             

1 Currency revaluation                                                          
 The Zimbabwe currency was revalued on 1 August 2008 by the removal of          
 ten zeros.                                                                     

2 Comparatives                                                                  
 Comparative figures for 31 Decenber 2007 are not shown in the                  
 financial statements because they are insignificant due to the                 
revaluation of the Zimbabwe dollar.                                            
                                                                                
3 Accounting policies                                                           
 The principal accounting policies applied in the preparation of these          
financial statements have been consistently applied to all the years           
 presented except for non - compliance with IAS 29 as highlighted below         
 in note 3.1.                                                                   
                                                                                
3.1  IAS 29 - Financial Reporting in                                           
      Hyperinflationary Economies                                               
      The financial statements are based on the historical cost and             
      have not been restated to take account of the effects of                  
inflation in accordance with the International Accounting                 
      Standard (IAS 29): " Financial Reporting in Hyperinflationary             
      Economies".  This is due to the non - availability of inflation           
      indices.                                                                  

 3.2  IAS 21 -  Effects of Changes in Foreign                                   
      Exchange Rates                                                            
      All foreign currency transactions are translated into the                 
reporting currency using the official exchange rates prevailing           
      at the date of the transactions. Foreign exchange gains and               
      losses resulting from the settlement of such transactions, and            
      from the translation at year end of monetary assets and                   
liabilities denominated in foreign currencies are recognised in           
      the statement of comprehensive income.                                    
                                                                                
      The closing official exchange rate  as at 31 December 2008 was 1          
USD to 5 million Zimbabwe dollars.                                        
                                                                                
      Revaluation of Plant and                                                  
 3.3  Equipment                                                                 
Plant and equipment were revalued by a professional valuer to             
      determine their fair values as at 31 December 2008. The values            
      were determined based on current prices in an active  market for          
      similar plant and equipment in the same location and condition.           

      Investment Property                                                       
 3.4                                                                            
      Investment properties are carried at fair value based on a                
valuation by an independent valuer on 31 December 2008.  The              
      fair values were determined based on current prices in an active          
      market for similar property in the same location and condition.           
Chairman`s Statement to Shareholders                                            
It is my pleasure to present the audited company results for the financial year 
ended 31 December 2008.                                                         
OPERATING ENVIRONMENT                                                           
The year ended 2008 was characterized by an extremely challenging operating     
environment. The high inflation, last recorded in June 2008 at 231 million      
percent, continued to negatively affect the cost of inputs whilst product prices
in the domestic market remained regulated for the greater part of the year.     
The demand for coal and coke products in the domestic market was firm in the    
first three (3) quarters of the year but decreased significantly in the fourth  
(4th) quarter as the global economic crisis began to unfold. By the end of the  
year, most of the local and export customers in the mining, ferrochrome and     
manufacturing industries had scaled down their operations and some even closed. 
The demand in the export markets was also low in the last quarter of 2008. The  
decline in the commodity price on the international markets led to a decrease in
the prices of coal and coke                                                     
OPERATIONS                                                                      
Production Statistics                                                           
Product                  2008           2007                                    
HPS coal                 1 140 542      1 261 539                               
HCC/HIC coal             806 444        923 422                                 
Total Coal               1 946 986      2 184 961                               
Coke                     111 748        157 783                                 
TOTAL                    2 058 734      2 342 744                               
The production tonnage for 2008 was lower than that of 2007 because the         
envisaged recapitalisation of the business was not achieved.                    
The sources of coal for the period under review were the JKL and Chaba Opencast 
Mines, and 3 Main Underground Mine. Since there was no major equipment purchases
during the year, the existing aged plant and equipment had frequent breakdowns  
that constrained the company`s operations.                                      
The company continued to lose critical and experienced skills mainly to         
neighbouring countries and abroad. However the company intensified its in house 
skills development training to mitigate skills attrition.                       
.                                                                               
TRADING PERFORMANCE                                                             
Total coal and coke sales for the year amounted to 1 722 801 tonnes and was 17% 
below the 2 071 526 tonnes achieved the previous year.                          
The Hwange Coking Coal (HCC) and Hwange Industrial Coal (HIC) sales amounted to 
494 990 tonnes and were slightly below the tonnage of 541 357 tonnes achieved   
the previous year. A total of 147 228 tonnes of coal fine were sold during the  
year locally and to export markets.                                             
Deliveries of coal to Zimbabwe Power Company`s Hwange Power Station amounted to 
1 073 602 tonnes compared to 1 315 799 tonnes delivered for the same period last
year. There were no coke oven gas supplies during the year because of the major 
breakdown on the gas pipeline.                                                  
Coke sales, including breeze, accounted for 154 529 tonnes of which 70% was     
exported. A tonnage of 213 370 tonnes was sold the previous year.               
FINANCIAL RESULTS                                                               
The company complied with the IFRS in all material respects except IAS 29       
(Financial Reporting in Hyper Inflationary Economies). The financial statements 
and corresponding figures for the previous period could not be restated to take 
account of changes in the purchasing power of the Zimbabwe dollar because of the
unavailability of inflation indices as at 31 December 2008.                     
The company therefore produced the audited financial statements and also        
prepared unaudited convenience accounts as at                                   
31 December 2008 following the communication by the Zimbabwe Stock Exchange.    
The truncating of zeros on the Zimbabwe dollar has eroded the historical        
comparative figures and now showed nil balances.                                
The turnover for the year was $3.3 sextillion and there was a gross profit of   
$1.4 sextillion. There was a fair value adjustment of $174.4 sextillion because 
of the revaluation of investment properties in Harare and Bulawayo.             
The company realized an operating profit of $176 sextillion. The attributable   
profits for the year amounted to $140.8 sextillion. Gains on property           
revaluation amounted to $4.9 septillion resulting in total comprehensive income 
after tax of $5 septillion.                                                     
The property, plant and equipment amounted to $6.6 septillion of which $4.9     
septillion is a result of the revaluation exercise.                             
The result of the revaluation of the Zimbabwe dollar in 2008 was that the       
nominal value of the company`s issued share capital was eroded to zero (0).     
Receivables amounted to $3.8 sextillion mainly attributable to the company`s    
major customers, Zimbabwe Iron and Steel Company, Zimbabwe Power Company and    
Zimasco.                                                                        
The current liabilities of $3 sextillion comprised mainly the revalued foreign  
currency denominated loans translated at prevailing exchange rates.             
The servicing of foreign loans was affected by the company`s liquidity position 
and unavailability of foreign currency.                                         
DIVIDEND                                                                        
The Board has resolved not to consider payment of a dividend in view of the     
challenges in the operating environment.                                        
SAFETY, HEALTH AND ENVIRONMENT                                                  
The company successfully went through two (2) ISO 9001:2000 Quality Management  
System surveillance audits during the year.                                     
The company continued with its efforts to ensure an accident free working place 
and there was no fatality during the year.                                      
The HIV and AIDS education campaigns and therapy were undertaken. Preventive    
measures ensured there was no outbreak of cholera in the Hwange area.           
OUTLOOK                                                                         
There is a new economic and operating environment ushered in by the multi       
currency system. The financial statements for 2009 will be reported in foreign  
currency.                                                                       
The envisaged improvements in country risk perception due to the advent of the  
inclusive Government would enable the company to access funding for its capital 
expenditure programme which has been on the cards for the past six (6) years.   
Procurement of mining equipment and refurbishment of major machinery will be    
priority during 2009 and this is expected to restore production capacity in the 
short to medium term.                                                           
The demand for both coal and coke is expected to start improving towards mid    
year. Some local mining and ferrochrome companies have presented their plans to 
restart their operations.                                                       
DIRECTORATE                                                                     
There have been no changes to the company`s Board of Directors for the year     
ended 31 December 2008.                                                         
I am thankful to my fellow Directors who, throughout the year, worked tirelessly
to ensure the company remained afloat despite the challenges to the mining      
industry.                                                                       
APPRECIATION                                                                    
The Board would like to express its sincere gratitude to all the stakeholders   
who have supported the company and continue to support despite the difficulties 
in the operating environment.                                                   
MR. T. SAVANHU                                                                  
CHAIRMAN                                                                        
23 March 2009                                                                   
BASIC EARNINGS PER SHARE (HISTORICAL COST)                                      
The calculation of basic earnings per share is based on profit after taxation of
$176 sextillion and on 182 199 850 weighted average ordinary shares in issue    
during the year.                                                                
Annual Report and Accounts                                                      
The annual report and accounts for the year ended 31 December 2008 will be      
distributed to members on or before 31 May 2009 and the annual general meeting  
will be held on Friday 26 June 2009.                                            
By Order of the Board                                                           
T K Ncube                                                                       
SECRETARY                                                                       
 31   March 2009                                                                
Sponsor:  Sasfin Bank Limited                                                   
Date: 01/04/2009 11:19:04 Supplied by www.sharenet.co.za                     
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