Hwange Colliery Company Limited - Abridged Audited Financial Results For The Year Ended 31 December 2014Release Date: 22/04/2015 15:20:00 Code(s): HWA
HWANGE COLLIERY COMPANY LIMITED
(Incorporated in Zimbabwe)
JSE Code: HWA
ISIN Number: ZW 0009011934
ABRIDGED AUDITED FINANCIAL RESULTS
For the year ended 31 December 2014
Production Volumes UP 23%
1 802 362 tonnes 1468 566 tonnes
Sales Volumes UP 6%
1 691 981 tonnes 1 602 187 tonnes
Revenue UP 1%
$72.0 Million $71.5 Million
Recapitalisation UP 65%
$31 Million $10 Million
Loss (excluding non-recurring items) DOWN 25%
$23.8 Million $31.6 Million
On behalf of the Board of Directors, I present to the Shareholders, the audited financial
results for Hwange Colliery Company Limited for the year ended 31 December 2014.
The economic environment for the year under review remained very challenging for
business in general, and particularly impacted adversely on the financial performance
of the Company.
The Zimbabwean economy grew by 3.1% and was below the initial projection of 6.1%
that was subsequently revised to 4.4%. The further decrease of the capacity utilization
from 39% in 2013 to 36% in 2014 meant that the productive sectors experienced
low business activity. This coupled with deflation exerted price pressure across the
high margin products against the background of tight liquidity conditions and the
depreciation of the South African rand against the major trading currencies.
The persistent liquidity challenges and the legacy debts slowed down the Company's
effort to bring up to date staff salaries. Staff salaries therefore remained in arrears for
periods ranging from between 6-12 months for the lower grades and more than 12
months for managerial staff. At planned levels of production and sales, the backlog of
salaries will be cleared in the second half of 2015.
The persistent liquidity challenges in the operating environment did not deter the
Company's pursuit of its recapitalisation strategy as a permanent and sustainable
solution to its challenges.
Following the procurement and commissioning of mining equipment worth US$12
million from Sany Heavy Equipment Company of China late in 2013, the Company
finalised a US$18.22 million facility with PTA Bank and a US$13.03 million a line of
credit from Export and Import Bank of India, for the importation of mining equipment.
The Company also secured a US$6 million working capital facility structured through a
prepayment arrangement with one of the major customers. The Company adopted a
judicious working capital management system in order to avail cash for the business.
The funds from internal and external sources were mainly applied to productive areas
with positive effects on performance showing in the last quarter of the year.
The Company is targeting a production of more than 450 000 tonnes per month, as
from June 2015, through own mining and contribution by the contractor. The Company
has also adopted an aggressive marketing strategy to push back competition and grow
its exports where Massive opportunities exist subject to addressing competitiveness
from a logistics perspective. In this regard, the Company has already signed a supplier
contract with Glencore, one of the world's leading commodity companies.
Hwange Colliery Company Limited has fully embraced the country's economic blueprint,
Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZIMASSET), whose
main thrust is the beneficiation of the mineral resources. The Company is one of the key
enablers of the economic policy with its anticipated production ramp up of up to five (5)
million tonnes of coal per annum.
Production for the year was 23% above the volume for the previous year. Sales statistics
below show a similar growth trend evidenced by an increase of 6% between the
volumes for 2013 and 2014.
Product 2014 2013
(METRIC TONNES) (METRIC TONNES)
HPS coal 996 200 924 659
HCC/HIC coal 439 909 393 408
Coal Fines 242 802 201 610
Total Coal 1 678 911 1 519 677
Coke (Incl breeze) 13 070 82 510
TOTAL 1 691 981 1 602 187
The improved overall sales performance was attributed to increased production
throughput. The major mining contractor, Mota Engil's contribution was notable in
the last quarter of the year following full mobilisation hence attainment of monthly
contractual obligations of 200 000 tonnes.
Export sales of coke and coke breeze significantly decreased because of the controlled
cooling of the coke oven battery in June 2014 after the antiquated plant developed
some drop in temperatures. This product line normally accounts for up to 30% of the
Company's revenue. To mitigate this, the Company entered into toll coking arrangements
with South Mining Company and Hwange Coal Gasification Company.
HPS coal supplies to Zimbabwe Power Company (ZPC)'s Hwange Power Station
increased by 8% and should continue to increase. This coal grade accounted for 58% of
coal sales volumes with its contribution to revenue at 38% compared to HCC/HIC coal
sales volume of 26% and a revenue contribution of 38%. The re-pricing of HPS coal is
long overdue and it must be based on calorifc value of the coal and be benchmarked
to regional comparative standards. The current prices of $29 per tonne of HPS coal is
unsustainable and Hwange Colliery Company will be pushing for a price increase of up
to $35 per tonne. This is essential to ensure that coal supplies to all power stations
remain stable. Hwange Colliery Company is of the view that this should not translate
into a power tariff increase as the price of our HPS coal is relatively underpriced.
Sales of coal fines of 242 735 tonnes were 20% above the 201 610 tonnes sold the
previous year. This was attributed to the increased demand for coal fines from cement
The Company signed an offtake agreement with Co-Ash Resources (Private) Limited for
the beneficiation of coal fines and use as primary energy for the generation of electricity.
The Company recorded a turnover for the year of US$72.0 million which is US$0.5
million above the US$71.5 million turnover achieved in the previous year. Though
production and sales volumes showed an incremental trend, the product prices for
both local and export markets continued to decrease hence eroding the anticipated
sales value. The production volumes were also below the expected levels because the
Company's plant and equipment requires major overhauls and replacements.
The impact of the legacy debts on current cash flows continued to inflict pain on the
operations of the Company and torpedoed the turnaround initiatives. During the year
under review, a total of US$25 million was paid towards liquidation of legacy debts
whose balance has come down to US$136 million. This is in addition to $35 million
which was applied to legacy debts in 2013. A review of the legacy debts established
delinquent conduct on the part of the parties involved and in due course, the Company
will take appropriate action.
The Company's gross loss was US$10.3 million against a comparable gross loss of
US$10.4 million for the same period last year.
The Company incurred a loss for the year ended 31 December 2014 of US$37.2 million
compared to a loss of US$31.6 million posted in 2013. Included in the loss for the year
are non-recurring items amounting to US$13.4 million comprising of assets impairment
of US$3.4 million, accrued retrenchment costs of US$5 million and Palehouse (Private)
Limited contract costs of US$4.9 million.
The Company's loss position excluding non-recurring items was US$23.7 million which
is less than the US$31.6 million posted in the previous year.
Property, plant and equipment decreased from US$139.1 million to US$129.1 million
because of impairment of the coke oven battery and depreciation. The amount is
expected to increase when the new equipment is commissioned.
There was a 43% reduction in borrowings following the repayment of the BancABC loan
which left the loan balance at US$10.6 million as at 31 December 2014. Trade payables
increased because of the continued reliance on creditors to finance the business.
Some of the creditors ended up litigating against the Company and settlement
agreements were successfully negotiated and implemented.
Though the legal risk continues to be glaring, the Company has put in place mutually agreed
payment plans such that the Company's ability to continue as a going concern remains intact.
Quality, safety, health and environment
The Company continues to be certified with the ISO 9001:2008 Quality Management System by the
Standards Association of Zimbabwe (SAZ).
The safety programmes continue to guarantee an accident free working environment. The
Company's ?no fatal accident? record now stretches over a period of seven (7) years.
The provision for rehabilitation of the mined out areas at the opencast mines was increased from
US$3.9 million to US$4.9 million. Actual rehabilitation work was done on containing the underground
fire at the old No 3 Underground mine.
The Company was compliant with most of the Environmental Management Agency (EMA) regulations
with no reported incidents of environmental pollution. There were no incidents of surface and
underground water pollution.
The Company's health delivery systems and public health programmes were successfully
divisionalised and are now operating on a self-sustenance financial model. The Colliery Hospital met
stakeholder expectations as the referral medical facility for Matebeleland North province.
Corporate social responsibility
Despite the challenges facing the Company, the corporate social responsibility programmes
continued to be given priority in line with good corporate governance practice.
For the year under review, the Company undertook a number of projects. The Company performed
medical outreach to outlying areas in the district and conducted routine clinics at no charge to the
patients. The district and provincial awards for best performing primary and secondary schools were
financed by the Company.
The Company's municipal responsibilities of housing, social amenities and schooling continued but
this time under the auspices of the new divisionalised structure of the stand alone Estates and
The two hundred (200) bed hospital and its five (5) satellite industrial clinics were refurbished to
enhance health service delivery not only for Company employees, but the community in the Hwange
District and its traditional leaders.
Hwange Colliery Company Limited's grand strategy is to grow the business by first fully recapitalizing
its operations. In the three (3) years to 31 December 2014 an amount of US$33 million was injected
into the business for capital projects. A further US$31.2 million has been secured and equipment
currently under delivery and commissioning bringing the total capital injected in the past 3 years
to US$66.2 million.
The Company takes cognizance of the importance of its human capital on its brand, and in the short
term all efforts will be directed at addressing the plight of the employees in bringing all salaries
to date. For this to be sustainable, Hwange Colliery Company will relaunch a staff rationalization
exercise which will see the head count reducing by at least a third. Rationalisation will be subject
to funding and will be implemented in the least disruptive manner, cordial and on a win win basis.
The Company is at advanced stages of a fully underwritten rights offer for an amount of US$88
million and a conditional private placement of US$51 million. The main objective is to restructure
the Company's balance sheet, complete the recapitalization programme and retire the Government
and other legacy debts. The shareholder consultations have been completed and subject to further
approvals, stakeholders will be informed by way of the usual and relevant notices.
The business model has been reviewed and a divisionalisation strategy implemented. The Estates
and Medical Divisions are now separate strategic business units fully discharging of their monthly
financial obligations including staff salaries. The financial statements of the Company have also
been divisionalised. As from 2015, the financial reporting will reflect this new model.
The Board and Management will continue with endeavors to achieve a sustainable and permanent
solution to the challenges of the Company envisaging the improvement in the performance of the
economy driven by ZIMASSET and its enabling policies.
Mota Engil, the Company's major mining contractor, commenced operations at the beginning of
August 2014 and contribution to coal production at contractual capacities will have a significant and
positive impact on Hwange Colliery Company's performance for 2015.
As previously reported, the Company finalised a US$18.2 million facility with PTA Bank for the
importation of mining equipment from Europe. Delivery of the mining equipment is currently
underway and the commissioning is expected to be done by 31 May 2015. The acquisition of
additional mining equipment worth US$13.03 million through a Government guaranteed line of
credit from Export and Import Bank of India is in progress and delivery and commissioning is
expected to be effected by 30 June 2015.
The interventions and recapitalisation initiatives mentioned above will result in improved production
performance expected to be at least 450 000 tonnes per month.
In line with the beneficiation thrust of the national economic blueprint, the Company has signed
a memorandum of understanding with an international consultancy firm for the rebuild and
refurbishment of the existing coke oven battery and the resuscitation of the gas pipeline plant. This
will be done through vendor financing.
The target market for the Company's coal and coke products remain the local and regional markets
but now with deliberate inclination to supply Asian markets.
With the current pressure on commodity prices, the Company will intensify its cost containment
strategies to attain margins that would yield profitability at the end of the year 2015.
The Company's current initiatives will no doubt overturn the loss position and return to profitability
in the medium-to-short term given the strong operational base attributed to capitalisation and
With the economy forecasted to grow by 3.2% in 2015 driven by increased agricultural and mining
activities, there is opportunity for increased demand for coal and coke. A strong branding based
marketing strategy will see the Company gradually regaining its market share.
The demand for coal on domestic and export markets is expected to begin to firm up in the second
half of the year 2015. The sales mix to be adopted will be in favour of the high contribution coal and
coke grades while maintaining the contractual volume for thermal coal. This will ensure significant
improvements in the gross margins which is currently in the negative.
The Company's new business model will be key in increasing production and rationalisation of direct
and overhead costs.
The Company is at advanced stages of being allocated new coal concessions which are located
west of the mine. The new reserves will boost the Company's life of mine and ability to attract new
investment. This will also augment Hwange Colliery Company's capacity to supply coal to Hwange
Power Station stage 3 and other thermal power stations. Coke requirements for iron and steel
furnaces and ferro alloy smelters would be adequatley covered.
Hwange Colliery Company has adopted the dematerialization of its shares on the Zimbabwe Stock
Exchange through the Central Securities Depository system, in line with the new listing requirements
and the global trends.
The Board resolved not to consider payment of a dividend in view of the current Company's
performance, the current recapitalization initiatives and the need to turnaround the business in a
Mr Stenjwa Thomas Makore was appointed Managing Director of the Company with effect from 01
June 2014. Mr Jemister Chininga, who acted as Managing Director since 01 August 2013, reverted
back to his position as Non Executive Director.
There have been no other changes to the Board of Directors since the last Annual General Meeting.
I express my sincere gratitude to my fellow Board Members, all our stakeholders, the management
team and staff for their commitment and dedication to the Company.
26 March 2015
These summary financial statements should be read in conjunction with the complete set of the
audited financial statements of Hwange Colliery Company Limited for the year ended 31 December
2014, which have been audited by Messrs Grant Thornton Chartered Accountants (Zimbabwe). The
audit opinion on the financial statements is unqualified with an emphasis of matter on going concern.
As disclosed in note 14, these summary financial statements do not include the financial results of
Hwange Coal Gasification Company (Private) Limited (HCGC). These results are not likely to have
a material effect on these financial statements. The auditor's report on the financial statements is
available for inspection at the Company's registered office.
Statement of profit or loss and other comprehensive income
for the year ended 31 December 2014
Notes 2014 2013
Revenue 72 031 451 71 540 667
Cost of sales (82 320 263) (81 957 758)
Gross loss (10 288 812) (10 417 091)
Other income 694 761 936 849
Other gains and losses (5 425 101) (504 314)
Marketing costs (1 486 861) (2 738 360)
Administrative costs (26 527 782) (27 652 799)
Redundancy costs (5 053 909) -
Impairment loss (3 452 516) -
Operating loss before interest and tax (51 540 220) (40 375 715)
Finance costs (3 701 723) (3 432 092)
Share of profit from equity accounted investments (450 964) (915 000)
Loss before tax (55 692 907) (44 722 807)
Income tax credit 10 18 499 846 13 108 780
Loss for the year (37 193 061) (31 614 027)
Other comprehensive income:
Share of other comprehensive income of equity
accounted investments, net of tax - -
Other comprehensive income, net of tax - -
Total comprehensive loss for the year (37 193 061) (31 614 027)
Attributable earnings per share - basic 11 (0.20) (0.17)
- diluted 11 (0.20) (0.17)
Headline earnings per share - basic 11 (0.19) (0.17)
- diluted 11 (0.19) (0.17)
Statement of financial position
as at 31 December 2014
Notes 2014 2013
Non Current Assets
Property, plant and equipment 12 129 078 977 139 129 468
Investment property 13 3 700 000 3 700 000
Investments accounted for using the equity method 14 17 267 492 17 718 455
Intangible assets 1 590 041 1 802 904
Deferred tax asset 9 367 557 -
161 004 067 162 350 827
Stripping activity asset 15 7 290 468 6 774 204
Inventory 16 41 446 180 42 869 241
Trade and other receivables 17 37 784 545 34 618 515
Financial assets at fair value through profit or loss 18 - 4 645
Cash and cash equivalents 19 956 810 830 420
87 478 003 85 097 025
Total assets 248 482 070 247 447 852
EQUITY AND LIABILITIES
Capital and Reserves
Share capital 20 45 962 789 45 962 789
Share premium 577 956 577 956
Non-distributable reserve 4 358 468 4 358 468
Revaluation reserve 39 948 518 39 948 518
Accumulated losses (52 952 366) (15 759 305)
37 985 365 75 088 426
Lease liability 21 800 000 900 000
Deferred income tax - 9 132 289
800 000 10 032 289
Borrowings 22 11 051 683 19 410 020
Trade and other payables 23 187 482 799 132 889 579
Provisions 24 10 848 723 8 950 441
Current income tax liability 403 500 1 077 097
209 786 705 162 327 137
Total equity and liabilities 248 482 070 247 447 852
Statement of changes in equity
for the year ended 31 December 2014
Share Share distributable Revaluation Retained
capital premium reserve reserve earnings Total
USD USD USD USD USD USD
1 January 2013 45 928 393 529 802 4 358 468 39 948 518 15 854 722 106 619 903
loss for the year - - - - (31 614 027) (31 614 027)
Exercise of share
options 34 396 48 154 - - - 82 550
Balance at 1
January 2014 45 962 789 577 956 4 358 468 39 948 518 (15 759 305) 75 088 426
loss for the year - - - - (37 193 061) (37 193 061)
Balance at 31
December 2014 45 962 789 577 956 4 358 468 39 948 518 (52 952 366) 37 985 365
Statement of cash flows
for the year ended 31 December 2014
Notes USD USD
CASH FLOWS GENERATED FROM OPERATIONS
Loss before tax (55 629 907) (44 722 807)
Adjustment for non-cash items 20 276 403 15 937 744
Operating cash flow before
changes in working capital (35 416 504) (28 785 063)
Changes in working capital 53 558 672 66 676 940
Cash generated from operations 18 142 168 31 891 877
Interest paid (3 249 810) (3 432 092)
Tax paid (673 597) -
Net cash flows generated from operating activities 14 218 761 28 459 785
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment (346 840) (22 993 932)
Proceeds from the disposal of assets - 260 080
Net cash flows utilised in investing activities (346 840) (22 733 852)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings (10 631 690) (11 201 576)
Proceeds from loans raised 1 511 204 873 000
Net cash flows utilised in financing activities (9 120 486) (10 328 576)
Net increase/(decrease) in cash and cash equivalents 4 751 435 (4 602 643)
Cash and cash equivalents at beginning of the year (3 989 511) 613 132
Cash and cash equivalents at end of year 19 761 924 (3 989 511)
Notes to the audited financial statements
for the year ended 31 December 2014
1. General information
Hwange Colliery Company Limited is a Company that extracts, processes and distributes
coal and coal products. The Company operates a coal mine situated in Hwange and
sells its products mainly within Zimbabwe and in Sub Saharan Africa.
The Company is a limited liability Company incorporated and domiciled in Zimbabwe. It
is listed primarily on the Zimbabwe Stock Exchange (ZSE), and has secondary listing on
the Johannesburg Stock Exchange (JSE) and London Stock Exchange (LSE).
The Company's financial statements were authorised for issue by the board of directors
on the Thursday 19th of March 2015.
These financial statements are presented in United States Dollars being the functional
and reporting currency of the primary economic environment in which the Company
2. Basis of preparation of the abridged financial statements
The summary financial statements for the year ended 31 December 2014 have been
prepared in accordance with IAS 34, Interim Financial Reporting and in terms of
Zimbabwe Stock Exchange (ZSE) listing rules and the Companies Act (Charter 24:03).
They do not include all of the information required for full annual financial statements
for the year ended 31 December 2014, which have been prepared in accordance with
International Financial Reporting Standards.
3. Statement of compliance
In the current year, the Company has adopted amendments to the following International
Adoption of 'Presentation of Items of Other Comprehensive
Income' (Amendments to IAS 1)
(i) Offsetting financial assets and financial liabilities (amendments to IAS 32)
(ii) Recoverable amount disclosures for non-financial assets (amendments to
4. Summary of accounting policies
The financial statements have been prepared using the measurement bases specified by
IFRS for each type of asset, liability, income and expense. The accounting policies are
consistent with those adopted in the company's last annual financial statements.
5. Revenue recognition
Revenue comprises revenue from the sale of goods and the rendering of services. Revenue
is measured by reference to the fair value of consideration received orreceivable by the
Company for goods supplied and services provided, excluding sales taxes, rebates, and
6. Earnings per share
The Company presents basic and diluted earnings per share (EPS) data for its ordinary
shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary
shareholders of the Company by the weighted average number of ordinary shares
outstanding during the period. Diluted EPS is determined by adjusting the profit or
loss attributable to ordinary shareholders and the weighted average number of ordinary
shares outstanding for the effects of all dilutive potential ordinary shares, which comprise
share options granted to employees.
7. Property, plant and equipment
Freehold land and buildings and plant and machinery are shown at fair value, based on
periodic, but at least annual, valuations by external independent valuers, less subsequent
accumulated depreciation for buildings. All other property, plant and equipment is
stated at historical cost less depreciation and impairment losses. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Land, capital work in progress and prestripped overburden are not depreciated. All other
property, plant and equipment are depreciated on a straight line basis or amortised at
rates estimated to write-off the cost or valuation of such assets over their expected
9. Intangible assets
Intangible assets include acquired mining rights and acquired and internally developed
software used in production or administration that qualify for recognition as an intangible
assets. They are accounted for using the cost model whereby capitalised costs are
amortised on a straight-line basis over their estimated useful lives, as these assets are
considered finite. Residual values and useful lives are reviewed at each reporting date.
In addition, they are subject to impairment testing.
Current tax - -
Deferred tax (18 499 846) (13 108 780)
Income tax credit (18 499 846) (13 108 780)
11. Earnings per share
Loss attributable to Shareholders (37 193 061) (31 614 027)
Weighted average number of ordinary
shares in issue 183 851 154 183 851 154
Basic earnings per share (0.20) (0.17)
Basic earnings per share is calculated by dividing the loss attributable to Shareholders
by the weighted average number of ordinary shares in issue during the year, excluding
the average number of ordinary shares purchased by the Company and held as treasury
For diluted earnings per share the weighted average number of ordinary shares in issue
is adjusted to assume conversion of all dilutive potential ordinary shares. The Company
has one category of dilutive potential ordinary shares being share options granted to
The earnings used in the calculation of all diluted earnings per share measures are the
same as those for the equivalent basic earnings per share measures, as outlined above.
Loss used to determine diluted earnings per share (37 193 061) (31 614 027)
The weighted average number of ordinary shares for
the purpose of diluted earnings per share, reconciles
to the weighted average number of ordinary shares
used in the calculation of basic earnings per share
Weighted average number of ordinary
shares in issues 183 851 154 183 713 570
Adjustments for share options - 137 584
Weighted average number of ordinary shares for
diluted earnings per share 183 851 154 183 851 154
Diluted earnings per share (0.20) (0.17)
11.3 Headline earnings per share
Headline earnings per share excludes all items of a capital nature and represents an
after tax amount. It is calculated by dividing the headline earnings shown below by the
number of shares in issue during the year:
Reconciliation between headline earnings and basic earnings:
IAS 33 - Earnings (37 193 061) (31 614 027)
Proceeds on sale of scrap (352 848) (329 352)
Impairment of property, plant and equipment 3 452 516 -
Headline earnings (34 093 393) (31 943 379)
Weighted average number of ordinary
shares in issue 183 851 154 183 851 154
Headline earnings per share (0.19) (0.17)
12. Property, plant and equipment
Carrying amount at the beginning of the year 139 129 468 127 346 098
Additions 5 638 479 22 993 932
Disposals - (122 447)
Impairment (3 452 516) -
Depreciation charge for the year (12 236 454) (11 088 115)
Carrying amount at the end of the year 129 078 977 139 129 468
13. Investment property
Valuation at 1 January 3 700 000 3 700 000
Fair value gains (included in other gains and losses) - -
Valuation at 31 December 3 700 000 3 700 000
14. Investments accounted for using the equity method
Investments in associates (note 14.1) 446 204 897 168
Investments in joint venture 16 821 288 16 821 287
17 267 492 17 718 455
14.1 Investments in associates
Carrying amount as at 1 January 897 168 1 062 468
Share of loss (450 964) (165 300)
Carrying amount as at 31 December 446 204 897 168
The financial results for Hwange Coal Gasification Company (Private) Limited were not
available for inclusion in these summary financial statements.
15. Stripping activity asset
Balance at beginning of year 6 774 204 4 522 518
Current year pre-stripping costs 1 796 730 2 251 686
Costs charged to cost of sales (1 280 466) -
Balance at end of year 7 290 468 6 774 204
Raw materials 4 881 326 5 596 027
Consumables 72 895 72 897
- Coal and coal fines 34 282 926 32 127 882
- Coke 2 209 033 5 072 435
41 446 180 42 869 241
17. Trade and other receivables
Trade receivables - gross 23 116 766 19 092 310
Allowance for credit losses (7 743 731) (6 397 028)
Trade receivables - net 15 373 035 12 695 282
Other receivables 22 411 510 21 923 233
37 784 545 34 618 515
18. Financial assets at fair value through profit or loss
Listed equity securities - held for trading - Zimbabwe
- fair value as at 1 January 4 645 2 868
- fair value adjustment (4 645) 1 777
Fair value - 4 645
19. Cash and cash equivalents
For the purposes of the statement of cash flows, cash and cash equivalents include cash
on hand and in banks and investments in money market instruments, net of outstanding
bank overdrafts. Cash and cash equivalents at the end of the financial year as shown in the
statement of cash flows can be reconciled to the related items in the statement of financial
position as follows:
Bank and cash balances 956 810 830 420
Bank overdrafts (note 22) (194 886) (4 819 931)
761 924 (3 989 511)
20. Share capital
204 000 000 Ordinary shares of USD0.25 each 51 000 000 51 000 000
Issued and fully paid
110 237 432 Ordinary shares of USD0.25 each 27 559 358 27 559 358
4 404 850 ordinary shares issued under share
option scheme 1 514 039 1 514 039
67 557 568 "A" Ordinary shares of USD0.25 each 16 889 392 16 889 392
45 962 789 45 962 789
21. Finance lease liability
Finance lease liability 1 061 570 1 000 000
Less: Short-term portion (261 570) (100 000)
Long-term portion 800 000 900 000
Bank overdrafts (note 19) 194 886 4 819 931
Loans payable within one year 10 595 227 14 490 089
Finance lease liability 261 570 100 000
Total borrowings 11 051 683 19 410 020
23. Trade and other payables
Trade payables 106 604 119 86 840 255
Other payables 80 878 680 46 049 324
187 482 799 132 889 579
Provision for rehabilitation
- At 1 January 3 893 360 2 893 360
- Charged to the profit or loss
- Additional provisions made during the year 1 000 000 1 000 000
- Amounts used during the year - -
- At 31 December 4 893 360 3 893 360
Death benefits 2 491 991 1 633 282
Leave pay provisions 3 463 372 3 423 799
Total provisions 10 848 723 8 950 441
25. Financial risk management objectives and policies
The Company's principal financial liabilities comprise finance lease liabilities, loans payable,
bank overdrafts and trade payables. The main purpose of these financial liabilities is to raise
finance for the Company's operations. The Company has various financial assets such as
trade receivables and cash and short term deposits, which arise directly from its operations.
Exposure to credit, interest rate and currency risk arises in the normal course of Company's
business and these are main risks arising from the Company`s financial instruments.
26. Credit risk
Management has a credit policy in place and the exposure to credit risk is monitored on
an ongoing basis. The Company assumes foreign credit risk only on customers approved
by the Board and follows credit review procedures for local credit customers.
Investments are allowed only in liquid securities and only with approved financial institutions.
At the reporting date there were no significant concentrations of credit risk. The maximum
exposure to credit risk is represented by the carrying amounts of each financial asset in the
statement of financial position.
27. Interest rate risk
The Company's exposure to the risk of changes in market interest rates relates primarily to
the Company's long and short term debt obligations and bank overdrafts. The Company's
policy is to manage its interest cost using a mix of fixed and variable rate debts.
28. Currency risk
The Company is exposed to foreign currency risk on transactions that are denominated in a
currency other than the United States Dollar. The currency giving rise to this risk is primarily
the South African Rand.In respect of all monetary assets and liabilities held in currencies
other than the United States Dollar, the Company ensures that the net exposure is kept to
an acceptable level, by buying or selling foreign currencies at spot rates where necessary to
address short-term imbalances.
The Company's exposure to foreign currency changes is not significant.
29. Liquidity risk
Liquidity risk is that the Company might be unable to meet its obligations. The Company
manages its liquidity needs by monitoring scheduled debt servicing payments for long-term
financial liabilities as well as forecast cash inflows and outflows due in day-to-day business.
Annual Report and Audited Financial Statements
The annual report and audited financial statements for the year ended 31 December 2014 will
be distributed to Shareholders on or before 29 May 2015 and the Annual General Meeting will be
held on Tuesday 30 June 2015.
By Order of the Board
T K Ncube
26 March 2015
7th Floor, Coal House
17 Nelson Mandela Avenue
Directors: F Mutamangira (Chairman); S T Makore* (Managing); N S Chibanguza; J Chininga; I C Haruperi; J Muskwe (Mrs); V Vera (*Executive)
Date: 22/04/2015 03:20:00 Supplied by www.sharenet.co.za
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