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Hwange Colliery Company Limited - Interim Results June 2015

Release Date: 07/10/2015 14:54:00      Code(s): HWA     
HWANGE COLLIERY COMPANY LIMITED 
(Incorporated in Zimbabwe under registration number 381/1954)
ZSE Code: HWA
ISIN Number: ZW 0009011934
JSE Code: HWA
ISIN Number: ZW 0009011934
LSE Code: HWA
ISIN Number: ZW 0009011934

UNAUDITED CONDENSED INTERIM FINANCIAL RESULTS
For the half year ended 30 June 2015

Chairman's Statement
On behalf of the Board of Directors, I present the unaudited condensed financial results of
the Company for the six (6) months ended 30 June 2015.

FINANCIAL RESULTS
The sales revenue for the six (6) months under review was US$35.4 million compared to
the US$39.9 million revenue recorded during the same period last year. The operating loss
was US$19.5 million compared to an operating loss of US$7.6 million for the comparative
period last year. The Company incurred a loss after taxation of US$15.6 million compared
to the US$7.9 million loss recorded for the same period in 2014.

There was a notable decrease in administrative costs because of the cost containment
measures adopted by the Company. Finance costs for the period amounted to US$1.1
million compared to US$1.0 million for the same period last year. The burden of servicing
the legacy debts continued to strain the Company`s cash flows and this presented working
capital challenges.

Total non-current assets increased by 18% from US$161.8 million to US$191.2 million.

PERFORMANCE

For the six (6) month period under review, the Company sold a total of 685 759 tonnes of
coal and coke products compared to 764 813 tonnes sold during the same period last year
representing a decline of 10%.

HPS coal deliveries to Hwange Power Station for the period under review were 409 843
tonnes compared to 394 451 tonnes for the same period last year representing an increase
of 4%.

HCC/HIC coal sales increased by 14% from 197 342 tonnes to 225 396 tonnes.

There was a decrease in the sales of coal fines and breeze from 154 657 tonnes to 45 045
tonnes for the comparative periods.

Coke sales volume decreased from 18 363 tonnes achieved in the first half of 2014 to 5 475
tonnes for the period under review. This was attributed to the low production performance
of the toll coking arrangements.

OUTLOOK

The Company?s strategy adopted in 2014 and currently being implemented is anchored on
the following;

.  Recapitalisation of the mining operations;
.  Contract mining;
.  Conversion of Government debt to equity;
.  Divisionalisation of the organisation;
.  Customer diversification; and
.  Acquisition of new coal concessions

During the period under review, the Company successfully took delivery and commissioned
mining equipment from BELAZ of Belarus worth US$18.2 million through a facility with
PTA Bank which was subsequently ceded to the Reserve Bank of Zimbabwe (RBZ).

Delivery and commissioning of additional mining equipment worth US$13 million from
BEML of India through a line of credit from the Export and Import Bank of India was
successfully done during the period under review. The enabling borrowing was securitised
by a sovereign guarantee.

The Board and management are diligently sourcing working capital from the local money
market to inject into the operations in order to achieve maximum utilisation of the newly
acquired equipment.

The mining contractor`s contribution to coal production was satisfactory for the period
under revew.

The Company is currently at advanced stages of the conversion of Government debt,
mainly the Zimbabwe Revenue Authority (ZIMRA) liability, into equity. This will be 
structured through a fully underwritten rights issue and a private placement. This 
matter would be brought to an Extra Ordinary General Meeting (EGM) for Shareholders` 
approval in due course.

The Company?s divisionalisation strategy has started to bear fruits. There is now 
undivided management focus on the mining division. The thrust being to improve on 
efficiencies and cost leadership in order to realize optimum margins in the backdrop 
of declining commodity prices on the local and international markets.

The Company was awarded new coal concessions in the Western Areas, Lubimbi East and
Lubimbi West. The new coal concessions will increase the life of mine of Hwange Colliery
Company Limited by at least fifty (50) years. The focus is now on commencement of field
exploration work. The new concessions are strategic to the growth of the Company. The
new coal resources also enhance Hwange Colliery Company Limited`s capacity to fully
support power generation projects, including the expansion projects like Hwange Power
Station Stage 3.

The target market for the Company?s coal and coke products is the local and regional 
markets. However the thrust for the second half of the year is to diversify the markets 
for coal and coke products. The major growth opportunities lie in the regional markets 
in South Africa, Zambia and the Democratic Republic of Congo.

DIRECTORATE

There were no changes in the Company?s directorships for the period under review.

APPRECIATION

I would like to express my gratitude to my fellow Directors, Management and Staff for 
their collective efforts and dedication to Hwange Colliery Company Limited despite all 
the challenges. I also count on all the support as we turn around the Company. I also 
appreciate the support we continue to receive from all our stakeholders.


F MUTAMANGIRA
CHAIRMAN
18 September 2015


Condensed statement of profit or loss and other comprehensive income
for the six (6) months ended 30 June 2015
    
                                                                  Restated        Restated
                                     Notes          30 June        30 June     31 December
                                                      2015            2014            2014 
                                                       USD             USD             USD
                                                 Unaudited       Unaudited         Audited
      
Revenue                                   6     35 349 513      39 868 795      35 349 513      
Cost of sales                                  (47 591 594)    (36 389 027)    (92 873 146)
Gross loss                                     (12 242 081)      3 479 768      (6 253 880)
Other income                                       212 560         269 129         694 761
Other gains and losses (net)                       (18 452)       (172 201)     (5 425 101)
Marketing costs                                   (673 169)       (754 564)     (1 486 861)
Administrative costs                            (6 785 661)    (10 454 481)    (30 562 714)
Redundancy costs                                         -               -      (5 053 909)
Impairment loss                                          -               -      (3 452 516)
Operating loss                                 (19 506 803)     (7 632 349)    (51 540 220)
Finance costs                                   (1 110 496)     (1 004 825)     (3 701 723)
Share of loss from equity accounted 
investments                                       (110 348)        (77 558)     (1 123 788)

LOSS BEFORE TAX                                (20 727 647)     (8 714 732)    (56 365 731)

Income tax                                 7       5 113 418         834 339    18 499 846

LOSS FOR THE PERIOD/ YEAR                      (15 614 229)     (7 880 393)    (37 865 885)

Other comprehensive income:
Other comprehensive income for the 
period/ year, net of tax                                 -               -               -

TOTAL COMPREHENSIVE LOSS FOR THE
PERIOD/YEAR                                    (15 614 229)     (7 880 393)    (37 865 885)

Attributable loss per share   - basic      8         (0.08)          (0.04)          (0.21)
                              - diluted    8         (0.08)          (0.04)          (0.21)

Headline loss per share       - basic      8         (0.09)          (0.04)          (0.21)
                              - diluted    8         (0.09)          (0.04)          (0.21) 


Condensed statement of financial position      
as at 30 June 2015
                                               
                                       Notes        30June         30 June     31 December
                                                      2015            2014            2014
                                                       USD             USD             USD
                                                 Unaudited       Unaudited         Audited

ASSETS     
Non Current Assets
Property, plant and equipment               9  155 104 414     138 760 304     129 078 977
Investment property                        10    3 700 000       3 700 000       3 700 000
Investments accounted for using 
the equity method                          11   16 484 320      17 640 897      16 594 668
Intangible assets                          12    1 483 610       1 696 473       1 590 041
Deferred tax asset                              14 480 975               -       9 367 557
                                               191 253 319     161 797 674     160 331 243

Current Assets
Stripping activity asset                   13    8 412 361       9 420 040       7 290 468
Inventories                                14   42 156 247      39 731 457      41 446 180
Trade and other receivables                15   27 291 466      37 785 401      37 784 545
Financial assets at fair value 
through profit or loss                     16            -           4 645               -
Cash and cash equivalents                  17      312 252       1 003 188         956 810
                                                78 172 326      87 944 731      87 478 003
                                                  
Total assets                                   269 425 645     249 742 405     247 809 246

EQUITY AND LIABILITIES

Capital and Reserves
Share capital                              18   45 962 789      45 962 789      45 962 789
Share premium                                    4 358 468       4 358 468       4 358 468
Non-distributable reserve                          577 956         577 956         577 956
Revaluation reserve                             39 948 518      39 948 518      39 948 518
Accumulated losses                             (69 239 419)    (23 639 698)    (53 625 190)
                                                                                          
                                                21 608 312      67 208 033      37 222 541
Non-current liabilities
Lease liability                          19.1   15 043 461         850 000         800 000
Borrowings                               20.1    5 990 629               -               -
Deferred tax liability                                                   -       8 297 950               -
                                                21 034 090       9 147 950         800 000
Current liabilities
Lease liability                          19.2    6 951 547         103 887         261 570
Borrowings                               20.2   17 187 926      19 673 043      10 790 113
Trade and other payables                   21  191 188 672     142 686 117     187 482 799
Provisions                                 22   11 051 598       9 846 278      10 848 723
Current tax liability                              403 500       1 077 097         403 500

                                               226 783 243     173 386 422     209 786 705

Total equity and liabilities                   269 425 645     249 742 405     247 809 246

Condensed statement of cash flows
for the six (6) months ended 30 June 2015
                                     
                                        Notes      30June         30 June      31 December
                                                     2015            2014             2014
                                                      USD             USD              USD
                                                Unaudited       Unaudited          Audited
Cash generated form operating 
activities

Loss before taxation                          (20 727 647)     (8 714 732)     (56 365 731)
Adjustment for non-cash items                   8 018 796       7 955 512       20 949 227
Net effect of changes in working 
capital                                        12 569 868       7 201 496       53 558 672

Net cash (utilised in)/ generated from 
operations                                       (138 983)      6 442 276       18 142 168

Interest paid                                    (126 274)     (1 004 825)     (3 249 810)
Tax paid                                                -               -        (673 597)

Net cash (utilised in)/ generated from
operating activities                             (265 257)       5 437 451     14 218 761

Cash flows from investing activities
Purchase of property, plant and equipment     (30 804 938)      (1 086 072)      (346 840)

Net cash utilised in investing activities     (30 804 938)      (1 086 072)      (346 840)

Cash flows from financing activities
Proceeds from borrowings                       30 804 938          366 910      1 511 204
Repayment of borrowings                          (410 310)      (1 118 000)   (10 631 690)

Net cash generated from/ (utilised in)
financing activities                           30 394 628         (751 090)    (9 120 486)

Net (decrease)/increase in cash and cash 
equivalents                                      (675 567)       3 600 289      4 751 435

Cash and cash equivalents at 
beginning of the period/year                      761 924       (3 989 511)    (3 989 511)
Cash and cash equivalents at end 
of period/year                              17     86 357         (389 222)       761 924


Condensed statement of changes in equity     
for the six (6) months ended 30 June 2015

                                        Non-             
                         Share distributable    Share Revaluation Accumulated 
                       capital      reserves  premium     reserve      losses       Total
                           USD           USD      USD         USD         USD         USD
Balance at
1 January 2015      45 962 789      4 358 468  577 956  39 948 518 (53 625 190)37 222 541

Total comprehensive
loss for the period
(unaudited)                  -              -        -           - (15 614 229)(15 614 229)

Balance at 
30 June 2015
(unaudited)         45 962 789      4 358 468   577 956  39 948 518(69 239 419) 21 608 312

Balance at 
1 January 2014      45 962 789      4 358 468   577 956  39 948 518(15 759 305) 75 088 426

Total comprehensive
loss for the year 
(unaudited)                  -              -         -           - (7 880 393) (7 880 393)

Balance at 
30 June 2014
(unaudited)         45 962 789      4 358 468   577 956   39 948 518(23 639 698)67 208 033

Balance at 
1 January 2014      45 962 789      4 358 468   577 956   39 948 518(15 759 305)75 088 426

Total comprehensive
loss for the year 
(audited)                    -              -         -            -(37 865 885)(37 865 885)

Balance at 
31 December 2014
(audited)           45 962 789       4 358 468   577 956  39 948 518(53 625 190) 37 222 541


Notes to the unaudited condensed financial statements
for the six (6) months ended 30 June 2015

1   Nature of operations
    Hwange Colliery Company Limited is a company that extracts, processes and distributes
    coal and coke products. The company operates a coal mine situated at Hwange and sells
    mainly within Zimbabwe and elsewhere in Sub Saharan Africa. 
             
2   Basis of preparation of the condensed financial statements
    The condensed interim financial statements for the six (6) months ended 30 June 2015 have
    been prepared in accordance with IAS 34, ?Interim financial reporting?. They do not include
    all of the information required for full annual financial statements and should be read in
    conjunction with the audited annual financial statements for the year ended 31 December
    2014, which have been prepared in accordance with International Financial Reporting
    Standards; Companies Act(Chapter 24:03) and the relevant statutory instruments (SI 33/99
    and SI 62/96).

    This condensed interim financial information has been reviewed, not audited.
 
3   Significant accounting policies
    The interim financial statements have been prepared in accordance with the accounting
    policies adopted in the Company?s most recent annual financial statements for the year
    ended 31 December 2014 except for the change in accounting policy in note 5 below.

4   Estimates
    In preparing the condensed interim financial statements, the significant judgements made
    by management in applying the Company?s accounting policies and the key sources of
    estimation were the same as those that applied to the audited annual financial statements
    for the year ended 31 December 2014.

5   Change in accounting policy     
    The Company?s business model has been reviewed and a divisionalisation strategy has been
    implemented. This has resulted in a change in the revenue recognition policy in respect of
    revenue earned from Medical Services and Estates business units, previously set off against
    administrative expenses. This change has no effect on equity. The effect of the change in
    accounting policy on the financial results presented is as follows:

                                                  6 months       6 months           Year to
                                                   30 June        30 June       31 December
                                                      2015           2014              2014
                                                       USD            USD               USD
                                                 Unaudited      Unaudited           Audited

   Increase in revenue                           5 015 841      6 820 628        14 587 815
   Increase in cost of sales                    (6 690 139)    (4 714 714)      (10 285 660)
   Decrease/(increase) in 
   administrative expenses                       1 674 298     (2 105 914)       (4 302 155)

6  Revenue
                                                    Tonnes         Tonnes            Tonnes
   Coal sales
   HCC/HIC                                         225 396        197 342           393 408
   HPS coal                                        409 843        394 451           924 659
   Coal fines and breeze                            45 045        154 657           201 610
    
   Total coal sales                                680 284        746 450         1 519 677
   Coke tonnes                                       5 475         18 363            82 510
    
   Total sales                                     685 759        764 813         1 602 187
                                                       USD            USD               USD
   Mining                                       30 333 672     33 048 167        72 031 451
   Estates                                       4 486 687      5 321 896        10 943 432
   Medical services                                529 154      1 498 732         3 644 383
    
   Total                                        35 349 513     39 868 795        86 619 266

7  Taxation
                                                                     
   Current tax                                          -               -                 -
   Deferred tax                                 5 113 418         834 339        18 499 846
                                                5 113 418         834 339        18 499 846
       
8  Loss per share

   8.1 Basic
       Basic loss per share is calculated 
       by dividing the loss attributable 
       to shareholders by the weighted 
       average number of ordinary shares
       in issue during the period/year.

       Loss attributable to shareholders       (15 614 229)     (7 880 393)    (37 865 885)
       Weighted average number of ordinary
       shares in issue                         183 757 366     183 757 366     183 757 366
       
       Basic loss per share                          (0.08)          (0.04)          (0.21)

                                                  
                                                  6 months        6 months         Year to
                                                   30 June         30 June     31 December
                                                      2015            2014            2014
                                                       USD             USD             USD
                                                 Unaudited       Unaudited         Audited

   8.2 Diluted
      
       Loss used to determine diluted loss
       per share                               (15 614 229)     (7 880 393)    (37 865 885)
      
       The weighted average number of ordinary
       shares for the purpose of diluted loss 
       per share, reconciles to the weighted 
       average number of ordinary shares used 
       in the calculation of basic loss per 
       share as follows:

       Weighted average number of ordinary
       shares in issue                         183 757 366      183 757 366    183 757 366

       Weighted average number of ordinary
       shares for diluted loss per share       183 757 366      183 757 366    183 757 366

       Diluted loss per share                        (0.08)           (0.04)         (0.21)

    8.3 Headline loss per share
       
        Headline loss per share excludes all
        items of a capital nature and represents
        an after tax amount. It is calculated by
        dividing the headline loss shown below
        by the number of shares in issue during
        the period/ year:

        Reconciliation between headline loss and
        basic loss:

        IAS 33 - Losses                         (15 614 229)       (7 880 393)  (37 865 885)

        Non - recurring items:
        Proceeds on sale of scrap                   (25 108)                -      (352 848)
        Impairment of property, plant and 
        equipment                                         -                 -     3 452 516
        Loss from sale of assets                          -           139 904             -
       
        Headline losses                         (15 639 337)       (7 740 489)  (38 218 733)
       
        Weighted average number of ordinary
        shares in issue                         183 757 366       183 757 366   183 757 366

        Headline loss per share                       (0.09)            (0.04)        (0.21)

9   Property, plant and equipment
    Carrying amount at the beginning of the
    period/year                                 129 078 977       139 129 468   139 129 468
    Additions                                    32 311 385         5 459 391     5 638 479
    Depreciation charge for the period/year      (6 285 948)       (5 828 555)  (12 236 454)
    Impairment                                            -                 -    (3 452 516)
   
    Carrying amount at the end of the 
    period/year                                 155 104 414       138 760 304   129 078 977

10  Investment property
  
    Fair value                                    3 700 000         3 700 000     3 700 000
    Investment property comprises of:
    -   Land situated at Lot 7 of Stand 2185,
        Salisbury Township Harare with an
        administration building thereon.
    -   Land situated at Stand 555, Bulawayo
        Township Bulawayo with an administration
        building thereon.

    10.1 The following amount has been recognised
        in profit or loss:

        Rental income                              136 298            129 418      301 232

11  Investment in equity accounted investments
    
    Investments in associates (note 11.1)          335 857            894 401      446 205
    Investment in joint venture (note 11.2)     16 148 463         16 746 496   16 148 463
                                                16 484 320         17 640 897   16 594 668
    11.1 Investments in associates

         Carrying amount as at beginning of
         period/year                               446 205            897 168      897 168
         Share of loss                            (110 348)            (2 767)    (450 963)

         Carrying amount at the end of the
         period/year                               335 857            894 401      446 205

         The Company holds a 49% voting and equity interest in Clay Products (Private) Limited.
         The Company also holds a 44% voting and equity in Zimchem Refineries (Private) Limited.

         The Company did not recognise losses for the period ammounting to USD 374 603
         (30 June 2014: USD 234 224) for Zimchem as the cumulative losses exceeded the carrying
         ammount of the investment.

    11.2 Investment in joint venture
         Carrying amount as at 1 January        16 148 463         16 821 287   16 821 287
         Share of loss                                   -            (74 791)    (672 824)

         Carrying amount at the end of the
         period/year                            16 148 463         16 746 496   16 148 463

         Hwange Coal Gasification Company (Private) Limited is the only joint venture entity and the
         interest is 25%. The investment in the joint venture has been accounted for using the equity
         method.

         *The financial information for Hwange Coal Gasification Company (Private) Limited for
         the six (6) months ended 30 June 2015 was not available for inclusion in these financial 
         statements.

12  Intangible assets
    
    Opening carrying amount                       1 590 041         1 802 904    1 802 904
    Amortisation charge                            (106 431)         (106 431)    (212 863)
   
    Closing carrying amount                       1 483 610         1 696 473    1 590 041

13  Stripping activity asset

    Carrying amount at 1 January                  7 290 468         6 774 204    6 774 204
    Pre-stripping costs                           1 012 748         2 596 663    1 796 730
    Costs charged/(credited) to cost of sales       109 145            49 173   (1 280 466)
    
    Closing carrying amount                       8 412 361         9 420 040    7 290 468

14  Inventories
   
    Raw materials                                 5 039 725         5 973 194    4 881 326
    Consumables                                           -                 -       72 895

    Finished goods

    Coal and coal fines                          34 129 814        30 086 865   34 282 926
    Coke                                          2 986 708         3 671 398    2 209 033
                                                 42 156 247        39 731 457   41 446 180

15  Trade and other receivables
    
    Trade                                        12 266 435        19 620 194   15 373 035
    Other                                        15 025 031        18 165 207   22 411 510
                                                 27 291 466        37 785 401   37 784 545

                                                   6 months          6 months      Year to
                                                    30 June           30 June  31 December
                                                       2015              2014         2014
                                                        USD               USD          USD
                                                  Unaudited         Unaudited      Audited

16  Financial assets at fair value through
    profit or loss

    Carrying amount 1 January                            -              4 645       4 645
    Fair value adjustment                                -                  -      (4 645)

    Fair value at the end of the period/year             -              4 645           -

    The fair value of all equity securities is based on their current bid prices on the Zimbabwe

17  Cash and cash equivalents
    
    For the purposes of 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 period/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                         312 252       1 003 188           956 810
    Bank overdraft                                (225 895)     (1 392 410)         (194 886)
                                                    86 357        (389 222)          761 924

18  Share capital
    Authorised

    204 000 000 ordinary shares of USD0.25 each 51 000 000      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        27 559 358
    5 962 366 Ordinary shares issued under
    share option scheme                          1 514 039       1 514 039         1 514 039

                                                29 073 397      29 073 397        29 073 397
    67 557 568 ??A?? Ordinary shares of
    USD0.25 each                                16 889 392      16 889 392        16 889 392
                                                45 962 789      45 962 789        45 962 789

19  Lease liability
    
    19.1 Non current

         Finance lease liabilities due after
         one year                               15 043 461        850 000           800 000

    19.2 Current

         Finance lease liabilities due
         within one year                         6 951 547         103 887          261 570

20  Borrowings
    
    20.1 Non current
         Loans due after one year                5 990 629              -                 -

    20.2 Current
         Bank overdraft                            225 895      1 392 410           194 886
         Loans payable within one year          16 962 031     18 280 633        10 595 227
                                                17 187 926     19 673 043        10 790 113
21  Trade and other payables
    
    Trade                                       78 944 668     64 200 483       106 604 119
    Other                                      112 244 004     78 485 634        80 878 680
                                               191 188 672    142 686 117       187 482 799

22  Provisions
    
    22.1 Provision for rehabilitation
         At the beginning of the period/year     4 893 360      3 893 360        3 893 360
         Additional provisions made during
         the period/year                           500 000        500 000        1 000 000
         
         At the end of the period/year           5 393 360      4 393 360        4 893 360

    22.2 Other provisions
         
         Leave pay and other provisions          5 658 238      5 452 918        5 955 363
         Total Provisions                       11 051 598      9 846 278       10 848 723

23  Segment reporting
    The Company currently has three business units operating as segments. These operating
    segments are monitored by the Company?s Board of Directors and strategic decisions are
    made on the basis of adjusted segment operating results.
    
    Segment information for the reporting periods is as follows:

                                                                  Medical
                                        Mining         Estates   services           Total
                                           USD             USD        USD             USD

30 June 2015
Revenue
From external customers             30 333 672       4 486 687    529 154      35 349 513
From other segments                          -         690 730  1 485 529       2 176 259
Total segment revenues              30 333 672       5 177 417  2 014 683      37 525 772
Segment operating loss             (17 600 922)       (791 099)(1 114 782)    (19 506 803)
Segment assets                     253 806 655       7 612 572  8 006 418     269 425 645
Segment liabilities                215 072 830      16 310 785 16 433 718     247 817 333

30 June 2014
Revenue
From external customers             33 048 167       5 321 856   1 498 772     39 868 795
From other segments                          -         592 892   1 173 612      1 766 504
Total segment revenues              33 048 167       5 914 748   2 672 384     41 635 299
Segment operating loss              (6 675 922)       (279 980)   (676 447)    (7 632 349)
Segment assets                     236 323 323       6 785 315   6 633 767    249 742 405
Segment liabilities                152 209 475      16 310 785  14 014 112    182 534 372

31 December 2014
Revenue
From external customers             72 031 451      10 943 432  3 644 383      86 619 266
From other segments                          -         478 604    261 388       1 739 992
Total segment revenues              72 031 451      12 422 036  3 905 771      88 359 258
Segment operating
(loss)/profit                      (50 803 922)     (1 077 405)   341 107     (51 540 220)

The totals presented for the Company?s operating segments reconcile to the key financial figures as
presented in its financial statements as follows:
                                                                  Medical
                                        Mining         Estates   services           Total
                                           USD             USD        USD             USD

30 June 2015
Revenue
Total reportable segment
revenue                             30 333 672       5 177 417   2 014 683     37 525 772
Elimination of intersegment
revenue                                      -        (690 730) (1 485 529)    (2 176 259)
Total Company revenue               30 333 672       4 486 687     529 154     35 349 513

30 June 2014
Revenue
Total reportable segment
revenue                             33 048 167       5 914 748   2 672 384     41 635 299
Elimination of intersegment
revenue                                      -        (592 892) (1 173 612)    (1 766 504)

Total Company revenue               33 048 167       5 321 856   1 498 772     39 868 795

31 December 2014
Revenue
Total reportable segment
revenue                             72 031 451      12 422 036   3 905 771     88 359 258
Elimination of intersegment
revenue                                      -        (478 604)   (261 388)    (1 739 992)
Total Company revenue               72 031 451      10 943 432   3 644 383     86 619 266

24  Going concern
    The Company is experiencing matters that may cast significant doubt on its ability to continue as a
    going concern. Management has considered the following matters:
    
    Net current liability position
    The company?s current liabilities exceeded its current assets by USD 148 610 917 as at 30 June
    2015 (30 June 2014: 85 441 691; 31 December 2014: USD 122 308 702). This unfavourable position
    is a result of the delayed realisation of capitalisation projects as a result of the adverse liquidity
    situation affecting the economy as a whole. The market demand currently remains unsatisfied and
    there are opportunities for growth of the Company. The Company has adequate coal reserves and
    contracted stocks of coal fines to enable it to continue operating for the forseeable future. The
    Company has engaged a contractor to provide mining services at its open cast mine in line with its
    strategy to expand its mining activity. The Company also took delivery of mining equipment in June
    2015 and this is expected to improve production output. Management, therefore, believes that the
    Company?s ability to continue to operate is dependent upon future profitability.

    Operating loss
    The operating loss of USD 19 506 803 (30 June 2014: USD 7 632 349; 31 December 2014: USD 51 540
    220) is mainly attributable to the lower revenue recorded in the period under review. The Company?s
    current initiatives are expected to reverse the general poor production and trading performance.
    
    Litigation cases
    The company had litigation cases brought against it during the period. The summary of significant
    legal cases for Hwange Colliery Company Limited as at 30 June 2015 are as follows:
                                                                                                  USD
    Value of cases for which judgement has been passed against the company                 20 106 710
    Value of cases pending judgements at the courts                                        20 611 536
    Total value of litigation cases                                                        40 718 246

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
    the main risks arising from the Company`s financial instruments.
  
    25.1 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.
   
    25.2 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.

    25.3 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 for all the other currencies is not
    significant.

26  Contingent liability
    The Company is currently under tax investigation in relation to amounts of USD 23 983 568 for
    employee tax (Pay-As-You-Earn) and USD 35 928 420 in respect of Value-Added-Tax, Corporate tax
    and Withholding tax. The final tax assessment has not yet been issued by the tax authorities.

27  Events after the reporting date
    No significant adjusting events have occurred between the reporting date and the date of
    authorisation of these financial statements.

REGISTERED OFFICE
7th Floor, Coal House
17 Nelson Mandela Avenue
Harare
ZIMBABWE

7 October 2015

Directors: F Mutamangira (Chairman); S T Makore* (Managing); N S Chibanguza; J Chininga; I C Haruperi; J Muskwe (Mrs); V Vera (*Executive)   

www.hwangecolliery.co.zw

Sponsor:  Sasfin Capital (a division of Sasfin Bank Limited)
Date: 07/10/2015 02:54:00 Supplied by www.sharenet.co.za                     
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