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Hwange Colliery Company Limited - Interim Results For The Half Year Ended 30 June 2017

Release Date: 29/09/2017 08:00:00      Code(s): HWA     
HWANGE COLLIERY COMPANY LIMITED
(Incorporated in Zimbabwe under registration number 381/1954)
ZSE Share Code: HCCL.ZW ISIN: ZW0009011934
JSE Share Code: HCCL.ZW ISIN: ZW0009011934
LSE Share Code: HCCL.ZW ISIN: ZW0009011934


UNAUDITED CONDENSED INTERIM FINANCIAL RESULTS
For the half year ended 30 June 2017


CHAIRMAN?S STATEMENT

On behalf of the Board of Directors, I present the unaudited condensed financial results of Hwange Colliery Company
Limited for the half year ended 30 June 2017.



FINANCIAL RESULTS
For the six (6) months under review, revenue was US$18.8 million compared to US$24.5 million recorded during the same
period last year. This represented a 23% decline and was caused by low sales volumes as a result of low production
volumes for the period January to April 2017.
The operating loss was US$16.2 million compared to an operating loss of US$25.9 million for the comparative period
last year. Despite a number of once off costs incurred during the period, the Company?s loss after tax narrowed by 5%
to US$27 million from US$28.5 million loss recorded for the same period in 2016.

The Company strategically adopted cost containment measures with a resultant effect of reducing both operating and
administrative costs. Finance costs for the period amounted to US$7.2 million compared to US$1.8 million for the same
period last year.
Total non-current assets decreased by 13% to US$141.8 million from US$162.4 million for the same period in 2016.



PERFOMANCE
The company?s performance over the last six month fell short of budgetary targets due to low production levels during
the period January to April 2017 that were attributable to working capital constraints. Monthly production average
was 94,216 tonnes compared to the budgeted monthly production of 175,425 tonnes. Whilst the monthly production for
the period January to April averaged 42 000 tonnes, a significant improvement in production was witnessed in May and
June which recorded 170 000 and 230 000 tonnes respectively.
Total sales tonnage was 450,557 against a budget of 1,082,935 and an actual of 585,689 for the same period last year.
HCC/HIC coal sales during the period increased by 37.5% from 125,544 tonnes to 172,573 tonnes.

Sales of coal fines and breeze increased by 13.7% from 41,982 tonnes to 47,749 tonnes for the comparative periods.
Coke sales volume decreased from 39 842 tonnes achieved in the first half of 2016 to 7 069 tonnes for the period
under review. This was attributed to the cancellation of toll coking arrangements.

There was a significant reduction in cost of sales which were 51% below the figure recorded for the same period last
year. This was a function of low sales volumes which were 135 132 tonnes less than same period last year as well as
improved production volumes and efficiencies as from May 2017 which lowered the unit cost. Cost reduction initiatives
also contributed to lower cost of sales than the same period last year.

Whilst the financial statements still reflect a loss position, they show remarkable progress in the Company?s
turnaround programme. One of the major objectives of the Board during the 2017 financial year is to reverse the gross
trading loss position which has been a feature over the last few years to a gross trading profit position as a major
step to achieve net profitability.

During the six month period revenue declined by 23% but however cost of sales decline by 51% which reflect a major
improvement towards achieving a gross profit trading position. There was thus a
significant reduction in the trading loss from $18 million to $2.1 million in the six month to June 2017 compared to
the same period last year.

The care and maintenance cost of $5.2 million relate to the costs of maintaining underground and the coke works which
both were not operational during the period under review. Should the $5.2 million be factored into the cost of sales
figure, there is still a reduction in the cost of sales and resultant significant improvement in the gross trading
profit position. The cost of sales improvement is largely attributable to various turnaround initiatives relating to
cost control and improvement in efficiencies.

The loss for the period has been affected by some once off items. There is a provision of redundancy costs of $3.5
million relating to a voluntary retrenchment exercise where 222 employees participated. This retrenchment exercise
will result in a reduction in the cost base in future periods. Underground operations are expected to resume towards
the end of the second half whilst there are no firm plans as yet to resume coke works operations. As such, there
will be a slight reduction in the care and maintenance costs for the second half of the financial year and a
significant reduction from the beginning of the 2018 financial year.

As part of the turnaround strategy, the Company obtained some treasury bills from the Government of Zimbabwe. The
conversion of these treasury bills to fund various turnaround initiatives resulted in a once off loss of $3.5
million. There was a significant increase in the finance cost from $1.5 million to $7.2 million. This increase is
largely as a result of the $111.5 million treasury bills which the Company obtained. This finance cost will from the
second half of the financial year and especially from 2018, be more than compensated by a significant increase in
production, volumes, sales revenue and gross trading profit position.



SCHEME OF ARRANGEMENT
The creditors? scheme of arrangement was aimed at stabilising the Company from a downward spiral in its overall
performance. The Company successfully held its Creditors? Scheme of Arrangement meeting with its Creditors on the
26th of April 2017 where 88.75% of the Creditors by number and 95.93% by value voted in favour of the scheme. The
High Court of Zimbabwe sanctioned the Company?s scheme on the 15th of May 2017.
The legal process establishing the scheme was concluded and implementation was on-going. Payments of the agreed
initial deposits to Creditors, in accordance with the scheme of arrangement, commenced by end of June 2017. The
operating space the Company needed has been created and the Board is confident the turnaround efforts shall yield the
desired results.
The Company is grateful for the support rendered by all its creditors in supporting the Company?s scheme of
arrangement. This support afforded a win-win situation for the Company and its Creditors. The Company also expresses
its gratitude to its team of advisers to the scheme of arrangement for competently and professionally advising the
Company on this transaction.



OUTLOOK
As demonstrated by the half-year results, signs of recovery are tangible. The narrowing of the loss position
especially the gross trading loss confirms the Company is on course to recovery.
The turnaround strategy gained momentum only in the last two months of the first half of the financial year. The
effect of the turnaround strategy will continue to increase gradually during the second period of the financial year
which is expected to generate a net profit for the period. The reopening of underground operations is targeted
towards the end of the second half of the year with the financial benefits only being realised in the 2018 financial
year. The strategic priorities for the company?s half-year were the following;

INCREASING AND REALIGNING PRODUCTION

The Company has deliberately taken measures to increase production and the results are visible.

OPEN CAST MINING
Given the country?s dependence on coal fired electricity generation, the Company took steps to increase production of
both thermal and industrial coal. The working capital constraints in the Company?s Open Cast production are being
addressed on an on-going basis. US$3million working capital was injected in March 2017 and resulted in a production
increase from an average of 90 000 tonnes to 170 000 tonnes in May, and 230 000 tonnes in June 2017 thus exceeding
its break-even tonnage. Engagements with financial institutions continue being made to ensure further working capital
injection.
Production increase was also a result of the successful implementation of a 100 days? change management program
dubbed "Project Gijima" aimed at improving the culture and productivity of staff. In this program, cross functional
team of teams were formed that focussed on improving equipment availability, spare parts availability, production in
the first two hours of every shift, actual production per shift and quality of products.

In the first three months of the second half of the year, teams will focus on further improvements in safety,
quality, increased throughput from processing and deliveries, overall equipment availability and increasing sales
from export markets.
Production contribution from the Company?s mining contractor continues to augment production from its own operations.

Resuscitation of Underground Mine Operations
While there has been a delay in bringing back the underground mine back into production, it remains the Company?s key
strategy that underground mine commences before the end of this financial year. The key piece of equipment for the
underground mine operations is the Continuous Miner and the Board is pleased to report that this machine was
delivered at the mine. However the other equipment such as shuttle cars, roof bolter, electrical equipment, to name a
few, are still to be delivered.
The resuscitation of underground mine operations undoubtedly increases the Company?s capacity to generate export
sales from coking coal and coke. These products make a significant contribution to the Company?s profitability. The
Company?s generation of the much needed foreign currency has spinoff effects in other sectors and re-affirms its role
as a key player to the national economy.

Coke Production
The company remains focused on the production of high value products particularly coke. To this end, the Company was
engaged in discussions aimed at facilitating the takeover of the Hwange Coal Gasification Company (HCGC) Coke Oven
Battery pursuant to a BOOT Agreement with its Chinese partners in HCGC.
Once the takeover is concluded and the resuscitation of underground mine operations is complete, coking coal supplies
to the coke oven battery for coke production is set to improve and increase the company?s capacity to generate high
value revenue.

Cost Reduction
The Company?s deliberate cost reduction strategy contributed to the reduction of both the operating and
administrative costs. Administrative costs were 14% below the same period last year with the reduction mainly on the
employment costs following the Company?s short working months for the period January to March 2017 as well as the
changes in the company?s employment cost structure.
It remains the Company?s commitment that the comprehensive cost cutting initiatives coupled with other measures on
production increase, the Company shall turn from a gross loss to a gross profit position by end of the year.
Marketing costs were however 14% above costs for the same period last year as a result of the drive to increase
market share in order to sale the increased stock volumes.

Improvement in operational and equipment efficiencies remain a key area of focus. Review of input and contractor
costs remains ongoing.
The commencement of the Company?s medical aid scheme and funeral insurance cover has underpinned Company?s conviction
to improve the welfare of its staff at optimal cost.

Zimbabwe Power Company?s Stage 3 Expansion
The expansion of Zimbabwe Power Company?s Stage 3 shall result in increased coal demand where it is expected that the
Company shall supply an additional 200,000 tonnes of coal per month for power generation purposes. To this end, HCCL
will commence exploration and drilling of the Western Areas Concession. Thereafter, mine development will follow
after securing funding for this phase.

Lumimbi West Coal Concession
A 25 year coal supply agreement was signed with an Independent Power Producer (IPP). This IPP will construct a coal
fired power station which will initially consume 200 000 tonnes per month of coal in approximately 3 years? time.

Market Dominance
The international prices of coal remain firm. The government?s initiatives to promote locally manufactured goods have
caused an increase in capacity utilisation of the local industry. In addition, tobacco production has continued to
grow year on year. These demand side factors have created a pull effect for the Company?s coal. The Company?s
products will be available to its customer base directly or through its partners where it does not have foot print.
Close collaboration with the National Railways of Zimbabwe and with Beitbridge-Bulawayo Railway for deliveries in the
southern region is the hallmark for this success.

REALISATION OF POTENTIAL
Strategic plans to unearth the Company?s potential are being developed and these include:-
a) Development of Western Areas and Lubimbi West coal concessions granted by the Government of Zimbabwe and
   exploration is due to commence beginning quarter 4, 2017.
b) Development of the coal bed methane opportunity.
c)   Explore the potential, if any, of converting coal into fuels.
d)   Utilise the vast coal fines dumps to fire a thermal power plant or convert the material into
     briquettes.



DIRECTORATE
Post the reporting date, Messrs W. T. Kutekwatekwa and A. M Ngapo resigned from the Board of Directors effective 18th
and 28th July 2017 respectively. The Company acknowledges the contribution made by the two resigned Directors and
wishes them well in their current and future endeavours.
There are still vacancies on the Board which require shareholders to make appointments in order to strengthen the
Board.

CORPORATE GOVERNANCE
The Board is committed to ensuring good corporate governance. To confirm this commitment, the Board attended a
refresher course on good corporate governance on the 23rd of February 2017 under the facilitation of the Zimbabwe
Leadership Forum (Quality Corporate Governance Centre).
The Board and Management shall attend a joint refresher session on good corporate governance in the last quarter of
2017.

APPRECIATION
Whilst the half year results are still disappointing, they demonstrate signs of recovery resultant from a concerted
team effort to turnaround the Company. The Board is grateful for the support rendered by all stakeholders to the
Company?s turnaround plans.
I would like to express my gratitude to my fellow Directors, Management and Staff for their collective efforts and
dedication to the Company.


W. Chitando Board Chairman
21 August 2017




CONDENSED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
For the six months ended June 2017


                             Notes         30 June         30 June      31 December
                                              2017            2016             2016
                                               USD             USD              USD
                                         Unaudited       Unaudited        Unaudited
Revenue                         5       18 814 733      24 481 645       39 911 465
Cost of sales                         (20 957 538)        (42 783 403 )     (77 742 700)
Gross(loss)/profit                    (2 142 805 )        (18 301 758 )    (37 831 235 )
Other Income                               218 760              218 534          545 008
Other   gains   and   losses               (3 609)                    -          790 000
(net)
Marketing costs                             (333   237)       (292 314)      (2 473 101)
Administrative costs                   (6    415   219)     (7 492 249)     (47 582 295)
Care and maintenance costs             (5    278   313)               -                -
Redundancy costs                       (2    345   979)               -                -
Operating loss                        (16    300   402)    (25 867 787)     (86 551 623)
Loss    on    disposal    of
treasury bills                         (3 575 410)                    -                -
Finance Cost                           (4 623 896)          (1 852 830)      (1 992 977)
Share of loss from equity                 (63 113)            (765 952)      (1 365 390)
accounted investments
LOSS BEFORE TAX                       (24 562 821)         (28 486 569)     (89 909 990)
Income tax                     6                 -                    -                -
LOSS FOR THE PERIOD/YEAR              (24 562 821)         (28 486 569)      (89 909 990
Other comprehensive income:
Other comprehensive income                           -               -                -
for the period/year, net of
tax
TOTAL COMPREHENSIVE LOSS
FOR THE PERIOD/ YEAR                  (24 562 821)         (28 486 569)      (89 909 990
Attributable loss per share    6            (0.13)               (0.16)           (0.49)
-basic
                    -diluted   6              (0.13)            (0.16)           (0.49)
Headline loss per share        6              (0.13)            (0.16)           (0.48)
-basic
                    -diluted   6              (0.13)            (0.16)           (0.48)


CONDENSED STATEMENT OF FINANCIAL POSITION
As at 30 June 2017
                              Notes            30 June           30 June    31 December
                                                  2017              2017           2017
                                                   USD               USD            USD
Assets
Non-current assets
Property, plant and            7       112 433 601     127 210 600    119 261 362
equipment
Investment property            8         4 490 000       3 700 000      4 490 000
Investments accounted for      9        14 753 031      15 415 582     14 816 144
using the equity method
Intangible assets             10           862 411       1 131 940        968 842
Inventories non-current                  9 218 421      15 009 021      9 218 421
portion
                                       141 757 464     162 467 143    148 754 769
Current assets
Stripping activity asset      11                 -       4 804 187              -
Inventories                   12        22 381 506      25 470 961     15 228 838
Trade and other receivables   13        22 021 505      30 778 163     18 295 306
Cash and cash equivalents     14           511 763         360 488        340 024
Treasury bills                15        29 618 795               -              -
                                        74 533 569      61 413 799     33 864 168
Total assets                           216 291 033     223 880 942    182 618 937
EQUITY AND LIABILITIES
Capital reserves
Share Capital                 16        45 962 789      45 962 789      45 962 789
Non-distributable reserves               4 358 468       4 358 468       4 358 468
Share premium                              577 956         577 956         577 956
Revaluation reserve                     39 948 518      39 948 518      39 948 518
Accumulated losses                   (283 154 774)   (197 168 532)   (258      591
                                                                     953)
                                     (192 307 043)   (106 320 801)   (167      744
                                                                     222)
Non-current Liabilities
Lease Liability               17.1         700 000       2 013 044        700 000
Borrowings                     18      145 940 958      17 237 866     78 634 350
Payables                      19.1     184 776 428               -              -
                                       331 417 386      19 250 910     79 334 350
Current liabilities
      Lease Liabilities               17.2             397 723        19   949   799         377   161
      Borrowing                       18.2                   -        12   589   456    12   396   334
      Trade and other payables         19         53   162 651       256   199   532   237   037   122
      Provisions                       20         13   565 466        12   157   196    11   163   342
      Current tax liability                       10   054 850        10   054   850    10   054   850
                                                  77   180 690       310   950   833   271   028   809
      Total Equity and                           216   291 033       233   880   942   182   618   937
      liabilities



      CONDENSED STATEMENT OF CHANGES IN EQUITY
      for the six months ended 30 June 2017
                                                 Non-
                             Share      distributable              Share    Revaluation                  Accumulated
                           Capital           Reserves            Premium        reserve                       Losses            Total
                               USD                USD                USD            USD                          USD              USD
Balance at
1 January 2017
                         45 962 789          4 358 468           577 956     39 948 518              (258 592 953)      (167 744 222)
Total
comprehensive loss
for the period                   -                     -              -                -                 (24 562 821)    (24 562 821)
(unaudited)
Balance at 30 June
2017 (unaudited)
                         45 962 789          4 358 468           577 956     39 948 518              (283 154 774)      (192 307 043)
Balance at 1
January 2016             45 962 789          4 358 468           577 956     39 948 518              (168 681 963)       (77 834 232)
Total
Comprehensive loss
for the period                   -                     -              -                -                 (28 486 569)    (28 486 569)
(unaudited)
Balances at June
2016 (unaudited)         45 962 789          4 358 468           577 956     39 948 518              (197 168 532)      (106 320 801)
Balance at 1
January 2016             45 962 789          4 358 468           577 956     39 948 518              (168 681 963)       (77 834 232)
Total
Comprehensive loss
for the year                      -                 -             -                 -              (89 909 990)    (89 909 990)
(audited)
Balances at 31
December 2016
(audited0                45 962 789         4 358 468       577 956    39 948 518              (258 591 953)      (167 744 222)



      CONDENSED STATEMENT OF CASH FLOWS
      for the six months ended 30 June    2017
                                         Notes        30 June        30 June        31 December
                                                         2017           2016               2016
                                                          USD            USD                USD
                                                    Unaudited      Unaudited          Unaudited
Cash generated from operating
activities
Loss before taxation                             (24 562 821)   (28 486 569)     (89 909 990)
Adjustment for non-cash items                      11 782 590     11 820 397       22 838 277
Net Effect of changes in working
capital                                          (37 193 581)     16 523 635         25 972 734
Net cash (utilised in)/generated from
operations                                       (49 973 812)      (142 537)     (41 098 979)
Interest paid                                               -       (28 656)         (19 725)
Tax paid                                                    -              -                -
Net cash (utilised in)/ generated
from operating activities                        (49 973 812)      (171 193)     (41 118 704)
Cash flows from investing activities
Purchase of property                                (77 120)          (13 443)          (68 642)
Net cash utilised in investing                      (77 120)          (13 443)          (68 642)
activities
Cash flows from financing activities
Proceeds from borrowings                           53 375 561              -       59 216 000
Repayment of borrowings                           (3 091 497)      (125 000)     (18 216 000)
Net cash generated from/(utilised in)
financing activities                             50 284 064      (125 000)     41 000 000
Net (decrease)/increase in cash and
cash equivalents                                    233 132      (309 636)      (187 346)
Cash and cash equivalents at
beginning of the period/year                        278 631        465 977        465 977
Cash and cash equivalents at          14            511 763        156 341        278 631
beginning of the period/year




      NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
      for the six months ended 30 June 2017

      1 Nature of operations
      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, provision of properties for rental and
      various retail goods and services.


      2 Basis of preparation of the condensed financial statements
       The condensed interim financial statements for the six months ended 30 June 2017 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 2016, 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).

      The company is a limited liability company incorporated and domiciled in Zimbabwe. It is listed primarily on the
         Zimbabwe Stock Exchange (ZSE), and also on the Johannesburg Stock Exchange (JSE) and London Stock Exchange (LSE).
         This condensed interim financial information have been reviewed, not audited. These condensed interim financial
         statements were approved for issue by the board of directors on 19 September 2017.


      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 2016.

      4 Estimates
The preparation of interim financial statements requires management to make judgements, estimates and assumptions
   that affect the application of accounting policies and the reported amounts of assets and liabilities, income and
   expense. Actual results may differ from these 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 uncertainty were the same as those that applied
to the audited annual financial statements as at and for the year ended 31 December 2016.

5 Revenue

                             6 Months to           6 Months to          6 Months to
                                 30 June               30 June          31 December
                                    2017                  2016                 2016
                                  Tonnes                Tonnes               Tonnes
Coal Sales
HCC/HIC                          172 573               125 544              291 457
HPS coal                         223 166               378 321              545 617
Coal fines and                    47 749                41 982              101 019
breeze
Total coal sales                 443 488               545 847              938 093
Coke tonnes                        7 069                39 842                4 653
Total sales                      450 557               585 689              942 746
                                     USD                   USD                  USD
Mining                        15 457 085            20 460 370           32 274 013
Estates                        3 082 171             3 645 564            7 075 689
Medical Services                 275 477               375 711              561 763
Total                         18 814 733            24 481 645           39 911 465

6 Taxation

6.1 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           (24 562 821)          (28 486 569)         (89 909 990)
to shareholders
Weighted average
number of ordinary             183 757 366            183 757 366           183 720 699
shares in issue
Basic loss per                     (0.13)                   (0.16)              (0.49)
share

6.2 Diluted
Loss used to
determine diluted             (24 562 821)           (28 486 569)          (89 909 990)
loss per share

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.

6.3 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.

Reconciliation between headline loss and basic loss:

                                                  30 June        30 June    31 December
                                                     2017           2016           2016
                                                      USD            USD            USD
                                                Unaudited      Unaudited        Audited
IAS 33 - Losses                              (24 562 821)   (28 486 182)   (89 909 990)
Non-recuring items:
Proceeds on sale of scrap                         (3 198)        (7 307)       (12 312)
Retrenchment costs                                      -              -      2 020 787
Tax effect of the above                                 -              -      (517 182)
Headline losses                              (24 566 019)   (28 493 480)   (88 418 697)
Weighted average number of ordinary
shares in issue                               183 757 366    183 757 366    183 720 699
Headline                                           (0.13)         (0.16)         (0.48)
7. Property, plant and equipment
Carrying amount at the beginning of
the period/year
                                          119 261 362       136 344 524    136 344 524
Additions                                      77 120            31 425        102 142
Disposals                                           -       (1 075 376)    (1 075 367)
Charge to profit or loss                            -                 -              -
Depreciation charge for the period
/year                                     (6 904 881)       (8 089 973)   (16 109 937)
Carrying amount at the end of the
period/year                               112 433 601       127 210 600    119 261 362
8. Investment property

Fair Value                                  4 490 000         3 700 000      4 490 000

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.


8.1 The following amount has been recognised in profit and loss:

Rental income                                   175 318         124 795       407 193
9. Investment in equity accounted
investments

Investments in associates (note 11.1)                   -       174 982        63 113
Investments in Joint venture (note
11.2)                                        14 753 031      15 240 600    14 753 031
                                                             15 415 582    14 816 144

9.1   Investment in associates

Carrying amount as at beginning of
period/year                                      63 113         231 148       231 148
Share of loss                                  (63 113)        (56 166)     (168 035)
Carrying amount as at end of                          -         174 982        63 113
period/year
The Company holds a 49% of voting and equity interest in clay products (Private) Limited. The Company also holds a
44% voting and equity interest in Zimchem Refineries (Private) Limited. The investments are accounted for using
equity method.

The Company did not recognise losses for the period amounting to USD 336 429 (2016: USD 333 390) for Zimchem
Refineries (Private) Limited as the cumulative losses exceed the carrying amount of the investment in associate.

9.2 Investment in joint venture
Carrying amount as at 1 January            14 753 031     15 950 386     15 950 386
Share of loss                                       -      (709 786)    (1 197 355)
Carrying amount at the end of the          14 753 031     15 240 600     14 753 031
period/year
 Hwange Coal Gasification (Private) Limited is the only jointly controlled entity and the ultimate ownership interest
is 25%. The investment in the joint venture has been accounted for using the equity method.

10 Intangible assets.
Opening Carrying amount                      968 841      1 238 371       1 238 371
Additions                                          -              -               -
Impairment losses                                  -              -               -
Amortisation charge                        (106 431)      (106 431)        269 530)
Closing carrying amount                      862 410      1 131 940         968 841

Intangible assets comprise of mining rights and an enterprise resource planning (ERP) software. The Company acquired
the ERP software to support the administration and control of the Company. Some modules for mine planning and
marketing are still to be developed. Mining rights comprise new coal mining claims acquired during the year. No
intangible assets have pledged as security for liabilities.




11 Stripping activity assets.
 Carrying amount at 1 January                      -      4 849 819       4 849 819
Pre-stripping costs incurred                       -        464 400               -
Impairment of stripping activity asset             -              -       4 849 819
Costs charged/(credited) to cost of                -        510 032               -
sales
Closing carrying amount                            -      4 804 187               -
12 Inventories
Raw Materials                             13 107 614          7 766 184        8 656 781
Finished goods
Coal and coal fines                        9 273 892         15 098 800        5 709 283
Coke                                               -          2 605 977          862 744
                                          22 381 506         25 470 961       15 228 838
13 Trade and other payables
Trade                                     16 746 975         16 717 650       12 886 722
Other                                      5 274 530         14 060 513        5 408 584
                                          22 021 505         30 778 163       18 295 306

14 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                         511 763          360 488         340 024
Bank overdraft                                       -        (204 147)        (61 393)
                                               511 763          156 341         278 631
15 Treasury bills
Government of Zimbabwe                  29 618 795       -                -


As part of the ongoing restructuring plan, the Government of Zimbabwe through the Ministry of Finance and Economic
Development issued treasury bills of USD 41 million and USD 18.216 million in settlement of the Mota Engil and
RBZ/PTA Bank loan, respectively. The Government of Zimbabwe indicated that Hwange Colliery Company should issue
preference shares against these treasury bills once due process and approvals have been sought and as such the USD
111.3 million has been recognised as a non-interest bearing loan in June 2017.

16 Share Capital

Authorised

204 000 000 ordinary shares of USD
0.25 each                                 51 000 000         51 000 000       51 000 000
Issued and fully paid
110 237 432 Ordinary shares of USD        27 559 358    27 559 358   27 559 358
0.25 each
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 USD
0.25 each                                 16 889 392    16 889 392   16 889 392
                                          45 962 789    45 962 789   45 962 789
17 Lease liability

17.1 Non-current


Finance lease liabilities due after
one year                                    700 000      2 013 044     700 000
17.2 Current

Finance lease liabilities due within        397 723     19 949 799     377 161
one year
18 Borrowings

Average interest on borrowings was
7.14%
18.1 Non-current

Loans due after one year                 145 940 958    17 237 866   78 634 350
18.2 Current

Bank overdraft                                    -        204 147       61 393
Loans payable within one year                     -     12 385 309   12 334 941
                                                  -     12 589 456   12 396 334
19. Trade and other payables

Current
Trade                                     23 356 436   121 801 922   60 741 155
Other                                       29 806 215   134 397 610       176 295 967
                                            53 162 651   256 199 532       237 037 122
Non-current
Trade                                       60 843 209   121 801 922        60 741 155
Other                                      123 933 219   134 397 610       176 295 967
                                           184 776 428   256 199 532       237 037 122

19.1 Non-current liabilities ? Payables
Payables amount of $184,776,428 relates to trade creditors, statutory creditors and employee obligations which will
be paid over a period exceeding 12 months as per the terms and conditions of the creditors? scheme of arrangement.

20. Provisions

20.1 Provisions for rehabilitation

At the beginning of the period/year          6 371 883        5 726 693      5 726 693
Additional provisions made during the
period/year                                    370 024          499 999        645 190
At the end of the period/year                6 741 907        6 226 692      6 371 883
20.2 Other provisions
Leave pay and other provisions               6 823 559        5 930 504      4 791 459
Total provisions                            13 565 466       12 157 196     11 163 342


21 Segment Reporting
Management currently identifies the Company?s three business units as its operating 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:

                                        Mining     Estates       Medical
                                           USD         USD      Services          Total
                                                                     USD            USD
30 June 2017
Revenue


From external customers
                                  15 457 085    3 082 172       238 332      18 777 588
From other segments
                                           -     239 111        813 377       1 052 488
Total segments revenue
                                  15 457 085    3 321 283      1 051 709     19 830 076
Segment operating loss/profit

                                (14 783 974)    (852 602)      (633 329)   (16 269 906)
30 June 2016

Revenue
From external customers           20 460 370    3 645 564       375 711      24 481 645
From other segments                        -      580   713      967 166      1 547 879
Total segments revenues           20 460 370    4 226   278    1 342 877     26 029 524
Segment operating loss          (25 671 399)      676   731    (872 731)   (25 867 399)
Segment assets                   300 973 607   11 700   447   13 584 191    326 258 245
Segment liabilities              300 973 607   19 225   347   23 194 584    343 393 538
31 December 2016

Revenue
From external customers           32 274 013    7 075 689       561 763      39 911 465
From other segments                        -      729 371      1 891 206      2 620 577
Total Segment revenues            32 274 013    7 805 060      2 452 696     42 532 042
Segment operating               (78 585 623)    1 208 227         (1 463   (78 840 468)
(loss)/profit                                                       072)
Segment assets                   168 286 636    6 986 314      7 345 987    182 618 937
Segment liabilities              319 148 715   16 310 785     14 903 659    350 363 159

Harare
29 September 2017
Sponsor: Sasfin Capital (a member of the Sasfin group)

Date: 29/09/2017 08:00:00 Supplied by www.sharenet.co.za                     
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