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Hwange Colliery Company Limited - Cancellation Of S370175 Unaudited Condensed Interim Financial Results For The Half Year Ended 30 June 2015

Release Date: 01/04/2016 12:08:59      Code(s): HWA     
HWANGE COLLIERY COMPANY LIMITED
(Incorporated in Zimbabwe under registration number 381/1954)
ZSE Share Code: HWA ISIN: ZW0009011934
JSE Share Code: HWA ISIN: ZW0009011934
LSE Share Code: HWA ISIN: ZW0009011934


UNAUDITED CONDENSED INTERIM FINANCIAL RESULTS (RE-PUBLICATION)
For the half year ended 30 June 2015


STATEMENT TO SHAREHOLDERS

INTRODUCTION
On behalf of the Board of Directors, I present the audited financial results for
Hwange Colliery Company Limited for the year ended 31 December 2015.

OPERATING ENVIRONMENT
The Company endured an operating environment not conducive to our business. This
necessitated that the Company re - engineer its business systems and processes in
order to preserve its going concern and start to gravitate towards sustainable
viability.

The operating environment further deteriorated in 2015 evidenced by downward trend
on the major economic fundamentals like economic growth, capacity utilisation,
inflation and market liquidity.

The economic growth of 2.4% implied limited demand opportunities and presented a
lacklustre outlook for the Company.

There has been a notable erosion of commodity prices on the global economy and
this had a contagion effect on the local coal and coke industry. The commodity
prices for coal and coke declined by an average of 30%. The closure of
ferrochrome, ferroalloy, copper and cobalt operations in the SADC region during
the year worsened the market perfomance.

Liquidity challenges prevailed in the local money market making it difficult for
the Company to secure the critically required working capital for its operations.

The annual inflation for 2015 at -2.47% was lower than the 2.9% recorded in 2014
and the impact of this deflation is the market push for reduction in the prices of
coal and coke

Although the South African Rand declined materially against the United States
dollar in 2015, the Company could not take full advantage of the opportunities for
cost reduction on imported spares for the dragline and continuous miner and
consumables like magnetite because of liquidity challenges.

Coal demand and off take on the domestic market remained the anchor of the
business and competitiveness hinged on product availability.

Coke export sales to the South African and Northern markets were subdued
throughout the period under review because of the reduced offtake by the
traditional metallurgical customers who faced viability challenges.

FINANCIAL PERFORMANCE
The turnover for the year of US$67.6 million was comparably lower than the
restated turnover of US$83.9 million achieved in the previous year. Revenue was
affected by low production and sales volumes, the stagnant HPS coal prices and the
decline in the HIC/HCC coal and coke prices for both local and export markets.

The Company incurred a gross loss of $33.8 million compared to a gross loss of
$9.0 million for the 2014 financial year. The loss for the year ended 31 December
2015 was $115.1 million compared to $37.9 million recorded for the same period in
2014.

The widening of the loss is mainly attributed to the recognition of the $69.1
million Zimbabwe Revenue Authority (ZIMRA) liability covering the six (6) year
period 2009 to 2015. An amount of $40.6 million had been accrued resulting in an
adjustment of $28.5 million after conclusion of the ZIMRA verification exercise.

The amount was previously disclosed as a contingent liability. There was also a
118% increase in administrative costs mainly attributable to the adjustment for
the ZIMRA liability. The Company?s fixed overhead structure is being addressed
through the adoption of a new business model. Company operations have been
streamlined and non core costs rationalised.

Property, plant and equipment increased from $129.1 million to $136.3 million. The
total assets of the Company decreased from $247.8 million as at the previous year
to $239.1 million. The Company?s statement of financial position was eroded by the
accumulated losses and the ZIMRA liability.

The Company?s current liabilities amounted to $287.3 million compared to $209.8
million as at the comparative period last year. Some of the creditors have taken
legal action against the Company. Efforts have been made to contain the negative
effect of such action on the business. A debt redemption plan and strategy has now
been put in place which would result in most of the creditors being paid through a
debt instrument structured through the Central Bank.

Borrowings increased from $11.9 million to $51.1 million mainly as a result of
long term loans from Export Import Bank of India and RBZ/PTA Bank that financed
the mining equipment acquisitions. Also included is the ZAMCO loan of $14 million.

PRODUCTION PERFORMANCE

Sales Statistics

Product                                        2015               2014
                                               (METRIC TONNES)    (METRIC TONNES)
HPS coal                                                887 273            871 632
HCC/HIC coal                                            503 706            459 325
Coal Fines                                              113 421            375 841
Total Coal                                            1 504 400          1 706 798
Coke (Including breeze)                                  53 874             79 708
TOTAL                                                 1 558 274          1 786 506


The Company?s total sales volume decreased by 13%. Total coal and coke sales for
the year were 1 558 274 tonnes compared to 1 786 506 tonnes sold in 2014. Coal
production volumes were affected by the persistent breakdowns of the major mining
equipment compounded by inadequate working capital to support the operations.
For the period under review, the Company took delivery and commissioned mining
equipment worth $18.2 million from BELAZ of Belarus through a line of credit
structured by Reserve Bank of Zimbabwe (RBZ) and PTA Bank. A second suite of
equipment worth $13.03 million was acquired and commissioned from BEML of India
financed by Export Import Bank of India.

HPS coal supplied to Zimbabwe Power Company`s Hwange Power Station accounted for
57% of coal produced in 2015 and contributed 42% of the revenue. A total of 887
273 tonnes were supplied to the power station compared to the 871 632 tonnes
delivered the previous year, representing a 2% increase in performance.

The Hwange Coking Coal (HCC) and Hwange Industrial Coal (HIC) sales were the major
contributors to revenue for the year at 45% and yet accounted for 32% of
production volumes. A deliberate production and sales mix was done to optimise
this product line. The 503 706 tonnes sold during the year was 10% higher than the
tonnage achieved the previous year.

Coal fines sales amounting to 113 421 tonnes constituted 7% of sales volume and
accounted for 5% of revenue.

Coke sales, including breeze, amounted to 53 874 tonnes and was below the 79 806
tonnes sold the previous year. The bulk of the coke sales were to South Africa and
Zambia

DIVIDEND
In light of the financial performance of the Company, the Board has resolved not
to consider declaration of a dividend.

QUALITY, SAFETY, HEALTH AND ENVIRONMENT
The Company went through routine QMS internal audits to ensure processes,
procedures and standards are followed. The ISO 9001:2008 Quality Management System
re certification audit by Standards Association of Zimbabwe (SAZ) was done in
February 2016.

The Company?s safety programmes are sound and enable the Company to achieve a
safeworking environment.

Rehabilitation of the mined out areas at the opencast mines is still in abeyance
but adequate provision is being done in the financial statements for compliance.
The Company had no new incident of acid mine drainage pollution into the
environment. There were no reported incidents of pollution of public streams
adjacent to the concession area.

The Company?s divisionalised health delivery system and public health programmes
effectively prevented adverse diseases like malaria, cholera and typhoid. The
opportunistic infections outreach programme and awareness campaigns were used to
manage the HIV and AIDS pandemic.

CORPORATE SOCIAL RESPONSIBILITY
Despite the challenges facing the Company, it has not reneged on its corporate
social responsibility programmes though now being done on a reduced scale.

For the year under review the Company managed to assist in the construction of
Nkayi Vocational Training College for the youths. Donations were made to the
schools feeding programmes and drought relief initiatives in the Hwange District.
The Company funded the provincial educational merit awards and was involved in a
number of sporting and recreational activities.
The Company?s municipal responsibilities of housing, social amenities and
schooling fall under the Estates and Medical divisions. The main thrust was self
sustainability driven by infrastructure sharing with other mining companies in the
Hwange area.

The apprenticeship training, nurses training and graduate learnership programme
remained but are being reviewed for possible transfer to the Ministries of Higher
and Tertiary Education and Health and Child Welfare.

STRATEGIC THRUST
The Board of Directors? strategy to immediately start turning around the fortunes
of the Company is premised on the following pillars;

? Divisionalisation into strategic business units;
? Recapitalisation of the mining operations;
? Contract mining;
? Balance sheet restructuring through debt to equity conversion of the ZIMRA
liability;
? Customer diversification and focus on key markets; and
? Development of new coal concessions and extension of life of mine.

 To complement the long term turnaround plan, the following short term actions are
being implemented;

? Production reconfiguration for effective cost management, enhancing efficiency
levels and volume growth
The Company?s own production has been below target mainly due to the working
capital challenges which resulted in low plant and machinery availability.

Given the high prevalence of water at JKL and the undulating nature of the coal
seam, the Company relocated its open cast operations to Chaba. Mine development at
the Chaba pit will be done in March and April 2016. Production will comence in May
2016 at 150 000 tonnes per month. Total opencast production, inclusive of the
contractor, shall reach a minimum of 300 000 tonnes per month.

3 Main Underground operations require capital injection of approximately $6,3
million for the refurbishment of the continuous miner, shuttle cars, replace roof
bolter and other related new equipment supply. Production is planned to resume by
July 2016. The resumption of underground mining will add high value coal and coke
to the Company?s product mix.

? Strengthening Corporate Governance Structures
The audit committee in liason with independent advisors have been tasked to come
up with measures of strengthening the governance structures of the Company.

? Restructuring the Company?s Management
The Board has approved that a leaner management structure with fewer levels of
hierarchy be implemented in the second quarter. In addition, Board fees and
management salaries have been reduced by 50%. The above initiatives coupled with
the unbundling of the training centre and school of nursing, sharing of
infrastructure costs and rationalisation of staff will reduce the company?s cost
structure significantly.

? Improvement of gross margins
The reduction in cost of sales and the relocation to the Chaba area, where it is
dry and does not require expensive water resistant explosives, will mean improved
gross profit margins will be realised. The restructuring measures will address
both the direct and indirect overhead costs. Improvement in overall business
performance is expected in the third quarter of 2016. With the resuscitation of
the underground operations and the takeover of the HCGC Battery, business
performance will significantly improve from July 2016 onwards.

? Working Capital Facility of $7.5 million
The new production configuration and sales plan depends on availability of $7.5
million working capital. The working capital facility has been structured as a
prepayment for coal by one of the major customers.


? Review of supply contracts in order to address any anomalies that are
responsible for negative gross margins
The Board and management have started negotiations with major contractors to
reduce charges based on low prices for fuel, commodities and equipment. All
contractors? agreements are being reviewed.

? Creditors and Litigations
Hwange Colliery Company is facing numerous litigations from creditors that
threaten the going concern of the Company. The total amount owed to creditors is
$287.3 million. Debt instruments are being set up and once approved will stand as
payment guarantee to creditors.

? BELAZ and BEML Equipment
Since the commissioning of the new mining equipment in July 2015, the Company
experienced major technical challenges with the BEML excavators. There have been
rigorous engagements with BEML to resolve the problems by supplying new spare
parts and deploying technical experts at own expense. In addition, the warranty
for these machines has been extended by a further six (6) months or 1 000 hours
and the supplier has guaranteed availability of the machines.

The BEML excavators will be tested under full load and capacity for a period of
one month. The working capital facility from Agribank will enable the Company to
purchase requisite fuel, explosives, lubricants and spares. Thereafter it will be
ascertained whether or not the machines meet the performance specifications.

? Offtake agreements with key customers
As the Company takes actions to reduce its costs and become competitive, it is
also driving initiatives to enter into one year supply contracts with its key
customers. It is also reviewing transport costs, both rail and road so that the
delivered price of coal and coke products is attractive for the customers.

OUTLOOK
The short term recovery plan premised on a new business model will address the
viability challenges of the Company.

The $7.5 million coal pre-financing facility structured through a major customer
and syndicated by two (2) local financial institutions will give impetus to the
new business plan and ensure attainment of the monthly production targets of 350
000 tonnes per month from July 2016 onwards. The mining contractor, Mota Engil, is
expected to continue to meet its monthly tonnage target.

The production is matched to current market demand. The cost focus approach will
yield the desired margins given the decline in commodity prices.
The conversion of the ZIMRA debt into equity is in progress and the exercise
should be complete by the end of the second quarter of 2016. This transaction is
structured through a fully underwritten rights issue that will be brought before
the Shareholders for approval in April 2016.

The Company commenced pre-exploration and development work at the three (3) new
coal concessions that were awarded in July 2015. The process of identifying the
technical and financial strategic partners was done through a public invitation
for expressions of interest in the exploration of the concessions. The
adjudications would be finalised beginning of the second quarter of 2016. The new
concessions will be developed as a separate business unit to enable bankability
and project financial and resource mobilisation.

Coal supply off take agreements were concluded with two (2) major new thermal
power station developers. Coal supply to these new power stations will be from the
new concession areas.

Hwange Colliery Company?s own coke oven battery was systematically shut down in
June 2014. A consultant was appointed to determine the scope and financing for
either a rebuild of this coke oven battery or a replacement. Negotiations to
terminate the Build Own Operate and Transfer (BOOT) agreement signed with Hwange
Coal Gasification Company (HCGC) in 2007 is at an advanced stage. This takeover
will include the construction of phase II of the coke oven battery which will add
another 12 500 tonnes per month production capacity.

The Company, in liaison with Tobacco Industry Marketing Board, has appraised the
feasibility of beneficiating the coal fines through a briquetting project.
The Board is confident that fruition of the current initiatives will reverse the
adverse statement of financial position of the Company and a tenable status quo is
envisaged in the short term.

DIRECTORATE
Mr Farai Mutamangira, who was the Chairman of the Company since 11 August 2011,
resigned on 09 October 2015. Messrs Norman Shingirayi Chibanguza and Ian
Chamunorwa Haruperi resigned as Directors of the Company on 29 February 2016
having served the Company since 11 August 2011. On behalf of the Board of
Directors, I would like to thank Messrs Mutamangira, Chibanguza and Haruperi for
their invaluable contribution to the Company over the years and wish them all the
best in their future endeavours.
Mr Jemister Chininga was appointed Acting Chairman of the Company on 14 October
2015.

APPRECIATION
I would like to take this opportunity to thank our various stakeholders, my fellow
Board Members, the management team and staff for their commitment and dedication
to ensure that the Company remains afloat against the myriad of challenges.
Their continued commitment and support would be key as the Company embarks on a
new era journeying towards its inevitable profitability performance in the short
term.



J CHININGA
ACTING CHAIRMAN

24 March 2016

Auditor?s Statement
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 2015, which have been audited by Messrs Grant Thornton
Chartered Accountants (Zimbabwe). The audit opinion on the financial statements is
qualified in respect of going concern and the inclusion of the financial results
of the Company`s investments in associates and the joint venture company for the
year ended 31 December 2015, which have not been audited. The auditor?s report on
the financial statements is available for inspection at the Company?s registered
office.

Abridged audited statement of profit or loss and other comprehensive income
for the year ended 31 December 2015

                                         Note        31 December      31 December
                                                            2015             2014
                                                             USD              USD
Revenue                                     5         67 576 220       83 918 846
Cost of sales                                      (101 345 965)     (92 873 146)
Gross loss                                          (33 769 745)      (8 954 300)
Other income                                             470 858          694 761
Other gains and losses                                  (19 007)      (5 425 101)
Marketing costs                                      (1 314 953)      (1 486 861)
Administrative costs                                (60 628 370)     (27 862 294)
Redundancy costs                                               -      (5 053 909)
Impairment loss                             6        (4 465 881)      (3 452 516)
Operating loss before interest and                  (99 727 098)     (51 540 220)
tax
Finance costs                               7        (5 548 984)      (3 701 723)
Share of loss from equity accounted
investments                                            (413 134)      (1 123 788)
Loss before tax                                    (105 689 216)     (56 365 731)
Income tax expense/(credit)                 9        (9 367 557)       18 499 846
LOSS FOR THE YEAR                                                    (37 865 885)
                                                   (115 056 773)
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              (115 056 773)     (37 865 885)
Attributable loss per share
- basic                                  10.1            (0.63)               (0.21)
- diluted                                10.2            (0.63)               (0.21)
Headline loss per share
- basic                                  10.3            (0.61)               (0.19)
- diluted                                10.4            (0.61)               (0.19)


Abridged audited statement of financial position
as at 31 December 2015

                                         Note        31 December      31 December
                                                            2015             2014
                                                             USD              USD
                                                         Audited          Audited
ASSETS
Non current assets
Property, plant and equipment              10        136 344 524      129 078 977
           Investment property                             11            3 700 000               3 700 000

           Investments accounted for using the             12                                   16 594 668
           equity method                                              16 181 534
           Intangible assets                                           1 238 371                 1 590 041
           Deferred tax asset                                                  -                 9 367 557
           Inventory - non current portion                 15    15 009 021                              -
                                                                172 473 450                    160 331 243
           Current assets
           Stripping activity asset                        16            4 849 819               7 290 468
           Inventories                                     17           29 389 463              41 446 180
           Trade and other receivables                     18           31 887 617              37 784 545
           Cash and cash equivalents                       19              502 630                 956 810
                                                                        66 629 529              87 478 003
           Total assets                                                239 102 979             247 809 246
           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                                        (168 681 963)           (53 625 190)
                                                                      (77 834 232)             37 222 541
           Non-current liabilities
           Finance lease liability                         21            3 834 644                 800 000
           Borrowings                                      22           25 824 359                       -
                                                                        29 659 003                 800 000
           Current liabilities
           Finance lease liability                         21           17   491   624             261 570
           Borrowings                                      22            3   960   469          10 790 113
           Trade and other payables                        23          241   505   888         187 482 799
           Provisions                                      24           14   265   377          10 848 723
           Current income tax liability                    25           10   054   850             403 500
                                                                       287   278   208         209 786 705
           Total equity and liabilities                                239   102   979         247 809 246


           Abridged audited statement of changes in equity for the year ended 31 December
           2015


                                                              Non-
                                   Share     Share   distributable    Revaluation           Accumulated           Total
                                 capital   premium        reserves        reserve                losses
                                                                                                                    USD
                                     USD       USD             USD            USD                   USD
Balance at 1 January 2014     45 962 789   577 956       4 358 468     39 948 518          (15 759 305)      75 088 426
Total comprehensive
loss for the year                      -         -               -                 -       (37 865 885)    (37 865 885)
Balance at 31 December
2014                          45 962 789   577 956      4 358 468      39 948 518          (53 625 190)      37 222 541
Balance at 1 January 2015     45 962 789   577 956      4 358 468      39 948 518          (53 625 190)      37 222 541
Total comprehensive
loss for the year                      -         -              -               -        (115 056 773)    (115 056 773)
Balance at 31 December 2015   45 962 789   577 956      4 358 468      39 948 518        (168 681 963)    (77 834 232)



           Abridged audited statement of cash flows
for the year ended 31 December 2015

                                         Note         31 December     31 December
                                                             2015            2014
                                                              USD             USD
                                                        Unaudited         Audited
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax                                      (105 689 216)   (56 365 731)
Adjustment for non-cash items:
Unrealised exchange loss                                   19 007        430 101
Share of loss from equity accounted
investments                                                413 134      1 123 788
Finance costs                                            5 548 984      3 701 723
Depreciation and amortisation charge
for the year                                           16 947 750      12 236 454
Impairment loss                                         4 465 881       3 452 516
Inventory write down and other                                                  -
                                                         6 677 787
Fair value adjustment on financial                               -          4 645
assets
Operating cash flow before changes in
working capital                                      (71 616 673)    (35 416 504)
Changes in working capital:
(Increase)/decrease in inventory                      (2 952 304)         906 797
Decrease(increase) in receivables                       5 896 928     (3 166 030)
Increase in provisions                                  3 416 654       1 224 685
Increase in current tax liability                       9 651 350               -
Increase in payables                                   54 023 089      54 593 220
Cash (utilised in)/ generated from
operating activities                                  (1 580 956)      18 142 169
Interest paid                                           (571 910)     (3 249 810)
Tax paid                                                        -       (673 597)
Net cash flows (utilised in) /
generated from operating activities                   (2 152 866)      14 218 762
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and                   (30 804 938)       (346 840)
equipment
Proceeds from the disposal of assets
                                                                -               -
Net cash flows utilised in investing                 (30 804 938)       (346 840)
activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings                               33 095 739       1 511 203
Repayment of borrowings                                 (433 882)    (10 631 690)
Net cash flows utilised in financing
activities                                             32 661 857     (9 120 487)
Net increase / (decrease) in cash and
cash equivalents                                         (295 947)      4 751 435
Cash and cash equivalents at
beginning of the year                                     761 924     (3 989 511)
Cash and cash equivalents at end of
year                                       19             465 977        761 924



Notes to the abridged audited financial statements
for the year ended 31 December 2015
1 Nature of operations and general information
Hwange Colliery Company Limited is a Company whose principal activities include
extraction, processing and distribution of coal and coal products and provision
of health services and various retail goods and services. Its activities are
grouped into the following three (3) main segments which are mining, medical
services and estates

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 24th of March 2016.

Presentation currency
These financial statements are presented in United States Dollars being the
functional and reporting currency of the primary economic environment in which
the Company operates.

2 Basis of preparation
The summary financial statements for the year ended 31 December 2015 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 2015, which have been
prepared in accordance with International Financial Reporting Standards.

3 Statement of compliance
The financial statements of the Company have been prepared in accordance with
International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB). The financial statements are based on
statutory records that are maintained under the historical cost convention.

4. Summary of accounting policies

4.1 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 or
receivable by the Company for goods supplied and services provided, excluding
sales taxes, rebates, and trade discounts.

4.2 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.

4.3 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.

             4.4 Depreciation
             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 useful lives.

             4.5 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.


                                                                                                  Restated
                                                                              2015                    2014
                                                                               USD                     USD
             6 Revenue
             Mining                                                     57 966   532            72   031   451
             Medical services                                              999   131             1   039   529
             Estates                                                     8 610   557            10   847   866
                                                                        67 576   220            83   918   846



             5.1 Change in acounting policy
             The company?s business model was reviewed and a divisional strategy was
             implemented in 2015. As a result, the company changed its accounting policy with
             effect to the recognition of revenue earned from Medical Services and Estates
             business units. In accordance with International Accounting Standards 8
             ?Accounting Polices, Changes in Accounting Estimates and Errors', the financial
             statements have therefore been prepared on the basis of a retrospective
             application of the voluntary change in accounting policy.
             The previous accounting policy was to offset the revenue against the divisional
             expenses. The new accounting policy was adopted on 30 June 2015 and has been
             applied retrospectively. The effect of this change is as follows:


             Notes to the abridged audited financial statements
             as at 31 December 2015

Revenue                     As reported    As reported    Adjustments    Adjustments           Restated             Restated
                                   2014           2013           2014           2013               2014                 2013
                                    USD            USD            USD            USD                USD                  USD
Revenue                      72 031 451     71 540 667     11 887 395     13 910 979         83 918 846           85 451 646
Cost of sales                             (81 957 758)   (10 552 883)   (11 664 785)       (92 873 146)
                           (82 320 263)                                                                      (93 622 543)
Gross loss                 (10 288 812)   (10 417 091)              -                  -   (8 954 300)
                                                                                                                 (8 170 897)
Other income                    694 761        936 849              -                  -       694 761               936 849
Other gains(or losses)      (5 425 101)      (504 314)                                                             (504 314)
net                                                                    -               -    (5   425   101)
Marketing costs             (1   486   861)    (2 738 360)             -               -    (1   486   861)      (2 738 360)
Administrative expenses    (26   527   782)   (27 652 799)   (1 334 512)     (2 246 194)   (27   862   294)     (29 898 993)
Other operating expenses    (8   506   425)              -             -               -    (8   506   425)                -
Profit/(loss) from         (51   540   220)   (40 375 715)             -               -   (51   540   220)     (40 375 715)
operations

                                                                                  2015                     2014
                                                                                   USD                      USD
           6 Impairment loss Impairment of coke oven
           battery                                                           3 648 127             2 478      958
           Impairment of Terex coal haulers                                          -               880      934
           Impairment of buildings                                                   -                84      435
           Impairment of motor vehicles                                          2 000                 8      189
           Impairment of Enterprise Resource Planning
           software and Mining rights                                          118 734                     -
           Impairment of plant and machinery                                   697 020                     -
           Total                                                             4 465 881             3 452 516
           7 Finance costs Interest on loans and
           overdrafts                                                        3 445 250             3 104 112
           Interest on leases                                                2 103 734               597 611
                                                                             5 548 984             3 701 723
           8 Loss before tax
           Loss before tax for the year has been arrived
           at after charging the following:
           Depreciation on property, plant and equipment                    16 707   109          12 236      454
           Directors? emoluments                                               582   976             671      151
           Allowance for credit losses                                       2 008   114           1 346      703
           Impairment loss (note 9)                                          4 465   881           3 452      516

           Zimbabwe Revenue Authority investigation                         28 491 916                          -
           penalty (note 12.1)
           Employee benefits expense                                        41 777 078            43 318 976


           The Company was under a ZIMRA tax investigation in relation to employee tax (Pay
           As You Earn), Value Added Tax, Witholding Tax and Income tax. The final tax
           assessment was issued by the tax authority on 20 November 2015, confirming an
           additional liability of USD 28 491 916. This increase in the tax liability was
           included in administration expenses.


           9 Income tax expense / (credit)
           Current tax                                                               -                  -
           Deferred tax                                                      9 367 557       (18 499 846)
                                                                             9 367 557       (18 499 846)

           10 Loss per share

           10.1 Basic
           Loss attributable to shareholders                          (115 056 773)          (37 865 885)
           Weighted average number of ordinary shares in
           issue                                                           183 851 154           183 851 154
           Basic loss per share                                                 (0.63)                (0.21)
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
year, excluding the average number of ordinary shares purchased by the Company and
held as treasury shares.

10.2 Diluted
For diluted loss 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 employees.

The loss used in the calculation of all diluted loss per share measures are the
same as those for the equivalent basic loss per share measures, as outlined above.

Loss used to determine diluted loss per share     (115 056 773)      (37 865 885)
Weighted average number of ordinary shares in
issues                                              183 851 154       183 851 154

Diluted loss per share                                   (0.63)            (0.21)


10.3 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 year:

IAS 33 - Loss for the year                         (115 056 773      (37 865 885)
Non - recurring items:
Proceeds on sale of scrap                              (50 463)         (352 848)
Impairment of property, plant and equipment           4 465 881         3 452 516
Tax effect of the above                             (1 136 970)         (798 165)
Headline loss                                    (111 778 325 )      (35 564 382)
Weighted average number of ordinary shares in
issue                                               183 851 154       183 851 154
Headline loss per share                                  (0.61)            (0.19)


10.4 Diluted headline loss per share

Headline loss                                    (111 778 325 )      (35 564 382)
Weighted average number of ordinary shares in
issue                                               183 851 154       183 851 154

Headline loss per share                                  (0.61)            (0.19)


11 Property, plant and equipment

Carrying amount at the beginning of the year        129 078 977       139 129 468
Additions                                            32 680 228         5 638 479
Charge to profit or loss                            (4 360 425)                 -
Impairment                                          (4 347 147)       (3 452 516)
Depreciation charge for the year                   (16 707 109)      (12 236 454)
Carrying amount at the end of the year              136 344 524       129 078 977


12 Investment property
Valuation at 1 January                                3 700 000         3 700 000
Fair value gains (included in other gains and
losses)                                                       -                 -
At 31 December                                        3 700 000         3 700 000
The following amount has been recognised in
the profit or loss:
Rental income                                           336 303           301 232


13 Investments accounted for using the equity
method
Investments in associates                               231 148           446 205
Investments in joint venture                         15 950 386        16 148 463
                                                     16 181 534        16 594 668
13.1 Investments in associates
Carrying amount as at 1 January                         446 205           897 168
Share of loss                                         (215 057)         (450 963)
Share of other comprehensive income                           -                 -
Dividends paid                                                -                 -
Carrying amount as at 31 December                       231 148           446 205


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

The Company did not recognise its share of losses for the year amounting to USD
608 355 (2014: USD 268 417) for Zimchem Refiners (Private) Limited as the share of
cumulative losses exceed the carrying amount of the investment in the associate.
Unaudited financial information for the associate has been included in these
summary financial statements as the audited financial information was not
available.

13.2 Investment in joint venture Carrying
amount as at 1 January                               16 148 463        16 821 287
Additional investment                                         -                 -
Share of loss                                         (198 077)         (672 824)
Dividends paid                                                -                 -
Carrying amount as at 31 December                    15 950 386        16 148 463

Hwange Coal Gasification Company (Private) Limited is the only jointly controlled
entity and the ultimate ownership interest is 25%. Unaudited financial information
for the joint venture has been included in these summary financial statements as
the audited financial information was not available


14 Zimbabwe Revenue Authority investigation penalty
The Company was under a ZIMRA tax investigation in relation to an amount of USD7
412 990 for employee tax (Pay As You Earn) and USD35 928 420 in respect of Value
Added Tax and Witholding Tax. The final tax assessment was issued by the tax
authority on 20 November 2015, confirming an additional liability of USD 28 491
916. The financial statements have been adjusted to reflect this position.


                                                           2015              2014
                                                            USD               USD
15 Inventory - non-current portion
Balance at 1 January                                 25 735 845        30 200 876
Additions to stockpiles                                  65 385         3 710 473
Sales                                               (2 475 635)       (8 175 504)
                                                     23 325 595        25 735 845
Balance at end of year is classified        as
follows:
Non-current assets                                   15 009 021                 -
Current portion (included in inventories)             8 316 574        25 735 845
                                                     23 325 595        25 735 845


The Company accumulated coal fines over the years for which an active market was
identified in 2009. During the year, some of the customers did not take up the
product as had been agreed in the signed contracts. As a result, coal fines in
excess of the average annual uptake of the product have been reclassified to non-
current assets.


16 Stripping activity asset
Balance at beginning of year                          7 290 468         6 774 204
Current year pre-stripping costs                        227 825         1 796 730
Costs charged to cost of sales                      (2 668 474)       (1 280 466)
Balance at end of year                                4 849 819         7 290 468


17 Inventories
Raw materials / consumables                           9 430 728         4 954 221
Finished goods
- Coal                                                8   447   093     8   547   081
- Coal fines(note 15)                                 8   316   574    25   735   845
- Coke                                                3   195   068     2   209   033
                                                     29   617   288    41   446   180


18 Trade and other receivables
Trade receivables, gross                             33 338 281        23 116 766
Allowance for credit losses                         (9 751 845)       (7 743 731)
Trade receivables, net                               23 586 436        15 373 035
Other receivables                                     8 301 181        22 411 510
                                                     31 887 617        37 784 545

All of the Company?s trade and other receivables have been reviewed for indicators
of impairment. Certain trade receivables were found to be impaired and an increase
in allowance for credit losses of USD 2 008 114 (2013:USD 1 346 703) has been
recognised.

19 Cash and cash equivalents
For the purposes of statement of cash flows, cash and cash equivalents include
cash on hand and in banks net of outstanding bank overdrafts.

Bank and cash balances                                  502 630           956 810
Bank overdrafts                                        (36 653)         (194 886)
                                                        465 977           761 924


20 Share capital and reserves
Authorised
204 000 000 Ordinary shares of USD0.25 each          51 000 000         51 000 000
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
Non current                                           3 834 644             800 000
Current                                              17 491 624             261 570
                                                     21 326 268           1 061 570

The finance lease liability carrying amount is disclosed as follows:


21.1 OK Zimbabwe
Long term portion                                       700 000             800 000
Less: Short term portion                                414 756             261 570
                                                      1 114 756           1 061 570


21.2 The Reserve Bank of Zimbabwe (RBZ)/Eastern and Southern African Trade and
Development Bank (PTA) Loan

Long term portion                                     3   134   644              -
Short term portion                                   15   081   356              -
Total                                                18   216   000              -
Principal                                            18   216   000              -
Interest                                              1   995   512              -
                                                     20   211   512              -

This is a lease of Belaz coal mining equipment amounting to USD 18 216 000 to the
Company by (RBZ)/ PTA Bank over a four (4) year period, interest is charged at
LIBOR + 9% per annum secured against immovable property and movable assets



22 Borrowings
22.1 Long term loans
Zimbabwe Asset Management Corporation (ZAMCO)        14 868 435                   -
Export Import Bank of India (EXIM)                   12 879 740                   -
BanABC*                                              10 595 227          10 595 227
                                                     38 343 402          10 595 227
less - current portion of long term loans           (1 923 816)        (10 595 227)
- BanABC loan restructured                         (10 595 227)                   -
                                                     25 824 359                   -


22.2 Short term loans
Overdrafts                                               36 653             194 886
Agribank                                              2 000 000                   -
Add current portion of long term loans                1 923 816          10 595 227
                                                      3 960 469          10 790 113
The stripping activity asset balance of USD 7 290 468 as at 31 December 2014 has
been reclassified as inventory in these summary financial statements.


23 Trade and other payables
Trade                                               127 474 568       106 604 119
Other                                               114 031 320        80 878 680
                                                    241 505 888       187 482 799


24 Provisions
24.1 Provision for rehabilitation
At 1 January                                          4 893 360         3 893 360
Charged to profit or loss:
Additional provisions made during the year              833 333         1 000 000
Amounts used during the year                                  -                 -
At 31 December                                        5 726 693         4 893 360

The Company has an obligation to undertake rehabilitation and restoration when
environmental disturbance is caused by the ongoing mining activities. The
provision for rehabilitation costs recognised in these financial statements
relates to previously mined areas.


24.2 Other provisions
Death Benefits                                        3 267 913         2 491 991
Leave pay and bonus provisions                        5 270 771         3 463 372
Total provisions                                     14 265 377        10 848 723


25 Current tax liability
Balance at 1 January                                    403 500           403 500
Movement                                              9 651 350                 -
Balance at 31 December                               10 054 850           403 500

The movement in the current tax liability is attributable to the tax assessment
concluded by ZIMRA on 27 November 2015. The amount is included in the USD USD 28
491 916 ZIMRA liability recognised under administration costs.

25 Going concern
The Company is experiencing the following challenges which have an effect on its
ability to continue operating as a going concern:

25.1 Gross loss and net loss for the year
The Company incurred a gross loss for the year ended 31 December 2015 of USD 33
769 745(2014: USD 8 954 300) and a loss for the year of USD114 643 639 (2014 : USD
37 865 885). This was attributable to a reduction in the production volumes from 1
802 362 tonnes in 2014 to 1 557 567 tonnes in 2015 on the backdrop of high fixed
overheads associated with the Company?s operations. The losses were also a result
of challenges experienced with the new equipment commissioned in June 2015
resulting in an increase in direct costs of production without a corresponding
increase in output.

25.2 Negative equity
As at 31 December 2015, the Company?s total liabilities exceeded total assets
resulting in a negative equity position of USD 77 421 098. This was attributable
to recurring losses which eroded the capital and reserves and the ZIMRA obligation
of USD 28 141 192, which was confirmed as being a liability on 27 November 2015.

25.3 Litigation cases
The Company had litigation claims brought against it during the year ended 31
December 2015 as follows:

Value of cases for which judgement has been
passed
against the Company*                                 21 297 555   25 913 125
Value of cases pending judgement at the              21 276 848   21 033 375
courts
Total value of litigation cases                      42 574 403   46 946 500


*At the time of reporting, the amounts outstanding in respect of cases for which
judgement has been passed are USD 21 331 613.

25.4 Debt/lease covenants not met
As part of the ZAMCO loan agreement, the Company was obliged to insure all its
movable assets and stocks valued at USD 15 000 000 as part of collateral for the
loan of USD 14 868 435. The Company has not been able to insure these assets due
to liquidity constraints.

The Company has been facing challenges in meeting scheduled repayments on loans
and leases owing to liquidity challenges.

25.5 Low machine availability
The Company acquired mining equipment worth USD 12 879 740 from BEML, a Company
incorporated in India, which was commissioned in July 2015. The Company
experienced low machine availability mainly as a result of technical challenges
faced in operating the equipment.

In view of the above, the Directors have assessed the ability of the Company to
continue to operate as a going concern and are of the view that the preparation of
these financial statements on a going concern basis is appropriate as supported by
the following plans which are intended to address these challenges:

Rights issue
The Company is pursuing a rights issue which will result in a debt to equity swap
of USD 69 100 000 in relation to the ZIMRA liability. The proposed transaction is
also expected to result in a cash injection of USD 39 400 000 if all existing
shareholders exercise their rights.

Settlement of creditors through issuance of debt instruments
A debt restructuring plan has been put in place which is expected to result in the
issuance of debt instruments with an extended tenure by the Central Bank to
existing creditors as part of settlement of outstanding amounts.

Working capital facility of USD7.5 million
The Company has entered into a prefinancing arrangement of USD 7.5 million with
one of its major customers for the supply of coal which will be channelled towards
production.

Review of contractor pricing
The Directors have initiated negotiations with major contractors to reduce
charges. This is expected to result in a reduction in the cost of sales as well as
improving product profitability.

Extension of warranty period on BEML equipment
The Directors and management engaged BEML and negotiated for a warranty extension
by a further six (6) months or 1 000 hours on the equipment.

Equipment refurbishment
The Directors are sourcing approximately USD 6.3 million to refurbish the
continuous miner, shuttle cars and other equipment necessary for the underground
mining operations which will add high value coal and coke to the Company?s product
mix.

Restructuring of Company?s management
The Directors have approved the adoption of a leaner management structure with
fewer levels of hierarchy in the second quarter of 2016. In addition, board fees
and management salaries will be reduced by 50% effective April 2016.

As a consequence, the Directors believe that the Company will continue to operate
as a going concern and that the realisation of assets and the settlement of
liabilities will occur in the ordinary course of business. These financial
statements have therefore been prepared on a going concern basis.

26 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.

The Board of Directors reviews and agrees policies for managing each of these
risks which are summarised below:

26.1 Credit risk
Management has a credit policy in place and the exposure to credit risk is
monitored on an on-going 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.

24.2 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 fixed rate
debts.

24.2 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.

27 Contingent liabilities

27.1 Significant litigation cases
The following cases have been included in the value of cases pending judgement at
the courts in note 32 above:

The Company is being sued by the former employees to the amount of USD 1 970 348
for termination of employment and unfair labour practices.

28 Events after the reporting date
No adjusting or significant non-adjusting events have occurred between the
reporting date and the date of authorisation of these financial statements.
By Order of the Board


Annual Report and Audited Financial Statements
The annual report and audited financial statements for the year ended 31 December
2015 will be distributed to Shareholders on or before 31 May 2016 and the Annual
General Meeting will be held on Thursday 30 June 2016.

T K Ncube
COMPANY SECRETARY
24 March 2016


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


Johannesburg
Sponsor: Sasfin Capital
(A Division of Sasfin Bank Limited)

Financial Advisor
Brainworks

Sponsoring Broker
ABC Stockbrokers


www.hwangecolliery.net

Directors: J. Chininga (AChairman); S. T. Makore* (Managing); J. Muskwe (Mrs.);
V. Vera (*Executive)

1 April 2016
Johannesburg
Sponsor: Sasfin Capital
(A Division of Sasfin Bank Limited)

Date: 01/04/2016 12:08:59 Supplied by www.sharenet.co.za                     
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