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HWA - Hwange Colliery Company Limited - The company`s audited results for the

Release Date: 31/03/2010 16:10:04      Code(s): HWA
HWA - Hwange Colliery Company Limited - The company`s audited results for the   
financial year ended 31 December 2009                                           
HWANGE COLLIERY COMPANY LIMITED                                                 
(Incorporated in Zimbabwe)                                                      
Code: HWA    ISIN: ZW0009011934                                                 
Revenue                                                          66,363,128     

Cost of sales                                                  (43,047,784)     
Stock adjustment                                                                
Gross profit                                                     23,315,344     
Other income                                                        258,389     
Other gains and losses (net)                                        269,007     
Marketing costs                                                   (654,340)     
Administrative costs                                           (17,408,112)     
Operating profit                                                  5,780,288     
Finance cost                                                      (383,975)     
Share of profit / (loss) of associates                            (425,831)     

Profit before income tax                                          4,970,483     
Income tax expense                                              (2,380,962)     
Profit for the year                                               2,589,521     
Other comprehensive income, net of tax                                    -     
Total comprehensive income for the year                           2,589,521     
Attributable earnings per share                      - Basic           0.01     

                                                  - Diluted           0.01      
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2009                          
ASSETS                                                                 USD      
Non Current Assets                                                              
Property, plant and equipment                                   71,577,664      
Investment property                                              3,615,000      
Investments in associates                                        2,804,298      
Intangible assets                                                        -      
Current Assets                                                                  
Pre-stripped overburden                                          4,911,376      
Inventory                                                       17,665,738      
Trade and other receivables                                     25,377,186      
Financial assets at fair value through profit or                     2,826      
Bank and cash balances                                           1,249,983      
Total assets                                                   127,204,071      
EQUITY AND LIABILITIES                                                          
Capital and Reserves                                                            
Share capital                                                   44,448,750      
Non distributable reserves                                       5,459,681      
Retained earnings                                                2,589,521      
Non current liabilities                                                         
Deferred income tax                                             16,421,931      

Current liabilities                                                             
Borrowings                                                      28,375,606      
Trade and other payables                                        26,440,980      
Provisions                                                       2,512,306      
Current income tax liability                                       955,296      
Total equity and liabilities                                   127,204,071      
CASH GENERATED FROM OPERATIONS                                           USD    

Operating  profit                                                  4,970,483    
Adjustment for non-cash items:                                                  
- Profit from disposal of property, plant and equipment             (41,134)    
- Unrealised exchange gain                                         (267,305)    
- Unrealised exchange loss                                                 -    
- Share of profit/loss in associate                                  425,831    
- Bad debts written off                                              228,859    
- Finance cost                                                       383,975    
- Depreciation                                                     9,628,100    
- Fair value adjustment on investment property                             -    
- Fair value adjustment on financial assets at Fair                  (1,702)    
value though Profit or loss                                                     
Operating cash flow before changes in working capital             15,327,106    
Changes in working capital :                                                    
- Increase in inventory                                         (13,022,211)    
- Increase in pre-stripped overburden                            (4,911,376)    
- Increase in loans receivables                                            -    
- Decrease in receivables                                          1,920,551    
- Increase in provisions                                           1,247,172    
- Increase in payables                                             3,667,912    
Cash generated from operations                                     4,229,154    
Finance cost                                                       (162,471)    
Income tax paid                                                            -    

Net cash generated from operating activities                       4,066,683    
CASH FLOWS FROM INVESTING ACTIVITIES                                            

Increase in investments                                                    -    
Purchase of property, plant and equipment                        (3,499,436)    
Proceeds from the sale of property, plant and equipment               41,134    

Net cash flows from investing activities                         (3,458,302)    
CASH FLOWS FROM FINANCING ACTIVITIES                                            
Shares issued                                                               -   
Increase in loans                                                     600,000   
Net cash flows from financing activities                              600,000   
Net increase in cash, cash equivalents and bank                     1,208,381   
Cash, cash equivalents and bank overdrafts at beginning               206,485   
of the year                                                                     
Exchange loss on bank balances                                      (165,972)   
Cash, cash equivalents and bank overdrafts at end of                1,248,894   

Represented by                                                      1,249,983   
Bank and Cash Balance                                                 (1,089)   
Bank overdraft                                                      1,248,894   
                              Share            Non    Retained        Total     
                            Capital  Distributable    Earnings          USD     
                                USD       Reserves         USD                  
Total comprehensive                0              0   2,589,521    2,589,521    
income for the year                                                             
Changes in Share          44,448,750              0          00   44,448,750    
Change in functional              00      5,459,681           0    5,459,681    
Balance at 31 December    44,448,750      5,459,681   2,589,521   52,497,952    
CHAIRLMAN`S STATEMENT TO SHAREHOLDERS                                           
It is my pleasure to present the audited company results for the financial      
year ended 31 December 2009. This is the first time that the company is         
reporting its performance in United States Dollars following the introduction   
of the multicurrency system in February 2009.                                   
OPERATING ENVIRONMENT                                                           
There was relative macro economic stability as a result of the dollarization    
of the economy. The year was characterized by interest rate and inflation       
rate stability. However, the fluctuations between the United States dollar      
and the South African rand negatively affected the cost of imported spares.     
The pricing of products was market determined and comparable to regional and    
international commodity prices. There were also some liquidity challenges and   
limited availability of foreign lines of credit.                                
The demand for coal and coke products in the domestic market was not as         
anticipated because most sectors operated below capacity. However demand in     
the export markets remained strong.                                             
Production Statistics                                                           
Product                                          2009                2008       
Tonnes                                         Tonnes              Tonnes       
HPS coal                                    1 033 968           1 140 542       
HCC/HIC coal                                  478 609             671 507       
Coal Fines                                    185 723             134 937       
Total Coal                                  1 698 300           1 946 986       
Coke                                           43 383             111 748       
TOTAL                                       1 741 683           2 058 734       
The company operated all its three (3) mines namely the JKL, Chaba, and 3       
Main Underground mines. The decrease in production was caused by the            
persistent breakdowns of the existing aged plant and equipment. The dragline    
was down for the first (3) three quarters of the year.                          
TRADING PERFORMANCE                                                             
Total coal and coke sales for the year at 1 709 952 tonnes ended marginally     
lower than 1 722 801 tonnes achieved in 2008. Export sales stood at 138 062     
tonnes against 251 575 tonnes for the previous year.                            
The Hwange Coking Coal (HCC) and Hwange Industrial Coal (HIC) sales amounted    
to 429 213 tonnes and were slightly below the tonnage of 494 990 achieved the   
previous year. A total of 185 726 tonnes of coal fines were sold during the     
year locally and to export markets and this was 26% above the 147 228 tonnes    
sold the previous year.                                                         
HPS coal supplies to Zimbabwe Power Company (ZPC)`s Hwange Power Station        
amounted to 1 033 602 tonnes and is comparable to the 1 073 602 tonnes          
delivered the previous year.                                                    
Coke sales, including breeze, amounted to 47 785 tonnes of which 80% was        
exported and this was far less than the 154 529 tonnes sold the previous        
year. The coke oven battery was out of production for the first three (3)       
quarters of the year.                                                           
FINANCIAL RESULTS                                                               
The company complied with the International Financial Reporting Standard        
(IFRS) in all material respects except for IAS 21 (The Effects of Foreign       
Exchange Rates), IAS 29 (Financial Reporting in Hyper Inflationary Economies)   
and   IAS 1 (Presentation of Financial Statements). This was applicable to      
all companies operating in Zimbabwe.                                            
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 Zimbabwean dollar and there is no comparative information.                  
The company has, in all material respects, complied with the guidelines of      
the Public Accountants and Auditors Board, the Zimbabwe Accounting Practices    
Board and the Zimbabwe Stock Exchange.                                          
The turnover for the year amounted to US$66.4 million and the gross profit      
was US$23.3 million. The company realized an operating profit of US$6           
million. The attributable profits for the year amounted to US$2.6 million.      
The property, plant and equipment amounted to US$71.6 million. Share Capital    
and reserves amounted to US$52 million.                                         
Current assets amounted to US$49 million and included the trade receivables     
of US$25 million mainly attributable to the company`s major customer Zimbabwe   
Power Company.                                                                  
The current liabilities of US$58.3 million comprised mainly of trade            
creditors and borrowings.                                                       
The Board has resolved not to consider payment of a dividend in view of the     
challenges facing the company and the need to recapitalize the business.        
QUALITY, SAFETY, HEALTH AND ENVIRONMENT                                         
The company went through the ISO 9001:2000 Quality Management System re         
certification audit.                                                            
The company continued with its safety programmes aimed at an accident free      
working environment. There was no fatality during the year. The company         
experienced acid mine drainage from the closed old underground mine and         
measures to manage the risk have been put in place.                             
The company`s health programmes effectively dealt with malaria. The awareness   
campaigns enabled the company to manage the HIV and AIDS related diseases.      
The country`s economy is projected to grow in 2010 and this is expected to      
translate into increased domestic demand. The demand for both coal and coke     
is expected to start improving towards midyear. The export market will remain   
The company is currently negotiating recapitalization loans with development    
financial institutions. This is expected to materialize during the year and     
this will resolve most production bottlenecks.                                  
Mrs Priscah Mupfumira was appointed to the Board on 10 July 2009 and there      
have been no other changes to the company`s Board of Directors.                 
I would like to thank the Board, management and staff for their endurance and   
commitment that ensured that the company withstood most of the challenges       
during the year.                                                                
I would also like to express my sincere gratitude to all the stakeholders for   
their continued support to the company.                                         
MR. T. SAVANHU                                                                  
Annual Report and Accounts                                                      
The annual report and accounts for the year ended 31 December 2009 will be      
distributed to members on or before 31 May 2010 and the annual general          
meeting will be held on Wednesday 30 June 2010.                                 
By Order of the Board                                                           
T K Ncube                                                                       
COMPANY SECRETARY                                                               
26 March 2010                                                                   
1. ACCOUNTING POLICIES                                                          
The principal accounting policies applied in the preparation of these           
financial statements have been consistently applied to all the previous years   
unless otherwise as stated below.                                               
2. BASIS OF PREPARATION                                                         
These financial statements have been prepared under the historical cost         
convention and comply with International Financial Reporting Standards and      
the requirements of the Companies Act (Chapter 24:03), with the exception of    
International Accounting Standard (IAS) 1, "Presentation of Financial           
Statements", (IAS) 21, "The Effects of Foreign Exchange Rates" and (IAS) 29,    
"Financial Reporting in Hyperinflationary Economies" .                          
The Zimbabwe economy was recognised as hyperinflationary for financial          
reporting purposes up to 31 January 2009. IAS 21 required that the company      
restate its financial statements as at that date and for the month ended 31     
January 2009 in accordance with IAS 29, before translating the financial        
statements at the closing rate as at 31 January 2009, and to translate the      
comparative financial information at the closing rate as at 31 December 2008.   
Inflation indices required to prepare inflation adjusted financial statements   
were last issued by the Central Statistics Office in August 2008 and the        
existence of market distortions made the measurement of inflation by other      
means difficult.                                                                
The company changed its functional and presentation currency from Zimbabwe      
Dollars to United States Dollars with the effect from 1 January 2009            
following the liberalisation of the exchange controls and the introduction of   
multiple currencies as announced in both the Budget and Monetary Policy         
statement of 29 January 2009. Accordingly the Zimbabwe Accounting and           
Auditor`s Board, Zimbabwe Accounting Procedures Board, and the Zimbabwe Stock   
Exchange jointly provided guidance to determine a foreign currency opening      
statement of financial position on the date of change in functional currency.   
Only those assets and liabilities that could either be settled or recovered     
in foreign currency have been recorded as take on balances for the year ended   
31 December 2009.                                                               
Professional judgement was also used in the preparation of these financial      
results. The preparation of financial statements in conformity with IFRS        
requires the use of certain critical accounting estimates. It also requires     
management to exercise its judgement in the process of applying the company`s   
accounting policies.                                                            
3. COMPARATIVES                                                                 
The Directors have not presented comparative information as required by IAS 1   
(revised) "Presentation of Financial Statements" because they believe they      
are misleading due to limitations in financial reporting.                       
4. SHARE CAPITAL                                                                
On 1 January 2009, the par value of the authorized and issued share capital     
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.                                                        
31 March 2010                                                                   
Sasfin Capital (A division of Sasfin Bank Limited)                              
Date: 31/03/2010 16:10:03 Supplied by www.sharenet.co.za                     
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