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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
On behalf of the Board of Directors, I present the restated unaudited condensed
financial results of the Company for the six (6) months ended 30 June 2015.
RE-PUBLICATION
The re-publication of the interim financial results for the half year ended 30 June
2015 has been necessitated by materiality of the final Zimbabwe Revenue Authority
(ZIMRA) liability concluded on 27 November 2015. There was a recognition of an
additional tax liability of US$28.5 million resulting in a ZIMRA liability of
US$69.1 million following finalisation of a special exercise covering the period
2009 to 2015. The amount had previously been reported as a contigent liability.
The re-publication has been done after engagements and in compliance with the
Zimbabwe Stock Exchange listing regulations.
FINANCIAL RESULTS
The sales revenue for the six (6) months under review was US$35.4 million compared
to the US$39.9 million revenue recorded during the same period last year. The
operating loss was US$48 million compared to an operating loss of US$7.6 million
for the comparative period last year. The Company incurred a loss after taxation of
US$44.1 million compared to the US$7.9 million loss recorded for the same period in
2014.
There was a notable decrease in administrative costs because of the cost containment
measures adopted by the Company. Finance costs for the period amounted to US$1.1
million compared to US$1.0 million for the same period last year. The burden of
servicing the legacy debts continued to strain the Company`s cash flows and this
presented working capital challenges.
Total non-current assets increased by 18% from US$161.8 million to US$191.2 million.
PERFORMANCE
For the six (6) month period under review, the Company sold a total of 685 759
tonnes of coal and coke products compared to 764 813 tonnes sold during the same
period last year representing a decline of 10%.
HPS coal deliveries to Hwange Power Station for the period under review were 409
843 tonnes compared to 394 451 tonnes for the same period last year representing an
increase of 4%.
HCC/HIC coal sales increased by 14% from 197 342 tonnes to 225 396 tonnes.
There was a decrease in the sales of coal fines and breeze from 154 657 tonnes to
45 045 tonnes for the comparative periods.
Coke sales volume decreased from 18 363 tonnes achieved in the first half of 2014
to 5 475 tonnes for the period under review. This was attributed to the low
production performance of the toll coking arrangements.
DIVIDEND
The Board of Directors resolved not to declare an interim dividend for the half
year ended 30 June 2015.
OUTLOOK
The Company's strategy adopted in 2014 and currently being implemented is anchored
on the following;
- Recapitalisation of the mining operations;
- Contract mining;
- Conversion of Government debt to equity;
- Divisionalisation of the organisation;
- Customer diversification; and
- Acquisition of new coal concessions.
During the period under review, the Company successfully took delivery and
commissioned mining equipment from BELAZ of Belarus worth US$18.2 million through
a facility with PTA Bank which was subsequently ceded to the Reserve Bank of Zimbabwe
(RBZ).
Delivery and commissioning of additional mining equipment worth US$13 million from
BEML of India through a line of credit from the Export and Import Bank of India was
successfully done during the period under review. The enabling borrowing was
securitised by a sovereign guarantee.
The Board and management are diligently sourcing working capital from the local
money market to inject into the operations in order to achieve maximum utilisation
of the newly acquired equipment. In order to mitigate the creditors and litigation
risks, the Company has approached the Government for a short to long term debt
instrument. This will enable the Company to clear most of the legacy debt and
reverse the negative working capital position.
The mining contractor`s contribution to coal production was satisfactory for the
period under revew.
The Company is currently at advanced stages of the conversion of Government debt,
mainly the Zimbabwe Revenue Authority (ZIMRA) liability, into equity. This will be
structured through a fully underwritten rights issue and a private placement. This
matter would be brought to an Extra Ordinary General Meeting (EGM) for Shareholders`
approval in due course.
The Company's divisionalisation strategy has started to bear fruits. There is now
undivided management focus on the mining division. The thrust being to improve on
efficiencies and cost leadership in order to realize optimum margins in the backdrop
of declining commodity prices on the local and international markets.
The Company was awarded new coal concessions in the Western Areas, Lubimbi East and
Lubimbi West. The new coal concessions will increase the life of mine of Hwange
Colliery Company Limited by at least fifty (50) years. The Company has advertised
for expressions of interest for field exploration work. The evaluation and
adjudication is expected to be completed in early 2016. The new concessions are
strategic to the growth of the Company. The new coal resources also enhance Hwange
Colliery Company Limited`s capacity to fully support power generation projects,
including the expansion projects like Hwange Power Station Stage 3.
The target market for the Company's coal and coke products is the local and regional
markets. However the thrust for the second half of the year is to diversify the
markets for coal and coke products. The major growth opportunities lie in the
regional markets in South Africa, Zambia and the Democratic Republic of Congo.
The synergies for the increased usage of coal for tobacco curing is being finalised
with the Tobacco Industry Marketing Board (TIMB). This will reduce the current
deforestation challenges.
In the processing of coal, the Company generates significant quantities of coal
fines. A briquetting project is being inestigated jointly with TIMB, for the the
beneficiation of coal fines into briquettes for sale to the tobacco industry.
The Company has introduced cost cutting measures that will reduce the cost of coal.
The infrastructure costs of maintaning the town and utilities will be shared with
other coal mining companies and stakeholders around Hwange. The reduction of
overheads through management salaries and benefits cut is being finalised.
The Company has resuscitated the conveyor belt that delivers coal to Hwange Power
Station. The conveyor belt that delivers coal to No 2 processing plant is undergoing
refurbishment. These measures will reduce the cost of transporting coal currently
being done by road haulage.
APPRECIATION
I would like to express my gratitude to my fellow Directors, Management and Staff
for their collective efforts and dedication to Hwange Colliery Company Limited
despite all the challenges. I also count on all the support as we turn around the
Company. I also appreciate the support we continue to receive from all our
stakeholders.
J CHININGA
ACTING CHAIRMAN
12 February 2016
Registered Office
7th Floor, Coal House
17 Nelson Mandela Avenue
P 0 Box 2870, Harare
Condensed statement of profit or loss and other comprehensive income
for the six (6) months ended 30 June 2015
Re-published Restated Restated
30 June 30 June 31 December
2015 2014 2014
USD USD USD
Note Unaudited Unaudited Audited
Revenue 6 35 349 513 39 868 795 83 918 846
Cost of sales (47 591 594) (36 389 027) (92 873 146)
Gross (loss)/profit (12 242 081) 3 479 768 (8 954 300)
Other income 269 129 694 761
212 560
Other gains and losses (net) (18 452) (172 201) (5 425 101)
Marketing costs (673 169) (754 564) (1 486 861)
Administrative costs
(restated) (35 277 577) (10 454 481) (27 862 294)
Redundancy costs - - (5 053 909)
Impairment loss - - (3 452 516)
Operating loss (47 998 719) (7 632 349) (51 540 220)
Finance costs (1 110 496) (1 004 825) (3 701 723)
Share of loss from equity
accounted investments (110 348) (77 558) (1 123 788)
LOSS BEFORE TAX (49 219 563) (8 714 732) (56 365 731)
Income tax 7 5 113 418 834 339 18 499 846
LOSS FOR THE PERIOD/ YEAR (44 106 145) (7 880 393) (37 865 885)
Other comprehensive income:
Other comprehensive income for
the period/ year,
net of tax - - -
TOTAL COMPREHENSIVE LOSS FOR THE
PERIOD/YEAR (44 106 145) (7 880 393) (37 865 885)
Attributable loss per share
- basic 8 (0.24) (0.04) (0.21)
- diluted 8 (0.24) (0.04) (0.21)
Headline loss per share 8 (0.24) (0.04) (0.21)
- basic
- diluted 8 (0.24) (0.04) (0.21
Condensed statement of financial position
as at 30 June 2015
30 June 30 June 31 December
2015 2014 2014
USD USD USD
Note Unaudited Unaudited Audited
ASSETS
Non- current assets
Property, plant and equipment 9 155 104 414 138 760 304 129 078 977
Investment property 10 3 700 000 3 700 000 3 700 000
Investments accounted for using 11 16 484 320 17 640 897 16 594 668
the equity method
Intangible assets 12 1 483 610 1 696 473 1 590 041
Deferred tax asset 14 480 975 - 9 367 557
191 253 319 161 797 674 160 331 243
Current assets
Stripping activity asset 13 8 412 361 9 420 040 7 290 468
Inventories 14 42 156 247 39 731 457 41 446 180
Trade and other receivables 15 27 291 466 37 785 401 37 784 545
Financial assets at fair value 16 - 4 645 -
through profit or loss
Cash and cash equivalents 17 312 252 1 003 188 956 810
78 172 326 87 944 731 87 478 003
Total assets 269 425 645 249 742 405 247 809 246
EQUITY AND LIABILITIES
Capital and reserves
Share capital 18 45 962 789 45 962 789 45 962 789
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 (97 731 335) (23 639 698) (53 625 190)
(6 883 604) 67 208 033 37 222 541
Non-current liabilities
Lease liability 19.1 15 043 461 850 000 800 000
Borrowings 20.1 5 990 629 - -
Deferred tax liability - 8 297 950 -
21 034 090 9 147 950 800 000
Current liabilities
Lease liability 19.2 6 951 547 103 887 261 570
Borrowings 20.2 17 187 926 19 673 043 10 790 113
Trade and other payables 21 219 680 588 142 686 117 187 482 799
Provisions 22 11 051 598 9 846 278 10 848 723
Current tax liability 403 500 1 077 097 403 500
255 275 159 173 386 422 209 786 705
Total equity and liabilities 269 425 645 249 742 405 247 809 246
Condensed statement of cash flows
for the six (6) months ended 30 June 2015
30 June 30 June 31 December
2015 2014 2014
USD USD USD
Note Unaudited Unaudited Audited
Cash generated form operating
activities
Loss before taxation (49 219 563) (8 714 732) (56 365 731)
Adjustment for non-cash items 36 510 712 7 955 512 20 949 227
Net effect of changes in
working capital 12 569 868 7 201 496 53 558 672
Net cash (utilised in)/
generated from operations (138 983) 6 442 276 18 142 168
Interest paid (126 274) (1 004 825) (3 249 810)
Tax paid - - (673 597)
Net cash (utilised in)/
generated from operating
activities (265 257) 5 437 451 14 218 761
Cash flows from investing
activities
Purchase of property, plant and
equipment (30 804 938 ) (1 086 072) (346 840)
Net cash utilised in investing
activities (30 804 938) (1 086 072) (346 840)
Cash flows from financing
activities
Proceeds from borrowings 30 804 938 366 910 1 511 204
Repayment of borrowings (410 310) (1 118 000) (10 631 690)
Net cash generated from/
(utilised in)
financing activities 30 394 628 (751 090) (9 120 486)
Net (decrease)/increase in cash
and cash equivalents (675 567) 3 600 289 4 751 435
Cash and cash equivalents at
beginning of the period/year 761 924 (3 989 511) (3 989 511)
Cash and cash equivalents at end
of period/year 17 86 357 (389 222) 761 924
Condensed statement of changes in equity
for the six (6) months ended 30 June 2015
Non-
Share distributable Share Revaluation Accumulated Total
capital reserves premium reserve losses
USD
USD USD USD USD USD
Balance at 1 January 2015 45 962 789 4 358 468 577 956 39 948 518 (53 625 190) 37 222 541
Total comprehensive loss
for the period (unaudited) - - - - (44 106 145) (44 106 145)
Balance at 30 June 2015
(unaudited) 45 962 789 4 358 468 577 956 39 948 518 (97 731 335) (6 883 604)
Balance at 1 January 2014 45 962 789 4 358 468 577 956 39 948 518 (15 759 305) 75 088 426
Total comprehensive loss
for the period (unaudited) - - - - (7 880 393) (7 880 393)
Balances at 30 June 2014
(unaudited) 45 962 789 4 358 468 577 956 39 948 518 (23 639 698) 67 208 033
Balance at 1 January 2014 45 962 789 4 358 468 577 956 39 948 518 (15 759 305) 75 088 426
Total comprehensive loss
for the year (audited) - - - - (37 865 885) (37 865 885)
Balances at 31 December 2014
(audited) 45 962 789 4 358 468 577 956 39 948 518 (53 625 190) 37 222 541
Notes to the unaudited condensed financial statements
for the six (6) months ended 30 June 2015
1. Nature of operations
Hwange Colliery Company Limited is a company that extracts, processes and
distributes coal and coke products. The company operates a coal mine situated at
Hwange and sells mainly within Zimbabwe and elsewhere in Sub Saharan Africa.
2. Basis of preparation of the condensed financial statements
The condensed interim financial statements for the six (6) months ended 30 June
2015 have been prepared in accordance with IAS 34, 'Interim financial reporting'.
They do not include all of the information required for full annual financial
statements and should be read in conjunction with the audited annual financial
statements for the year ended 31 December 2014, which have been prepared in
accordance with International Financial Reporting Standards; Companies Act(Chapter
24:03) and the relevant statutory instruments (SI 33/99 and SI 62/96).
This condensed interim financial information has been reviewed, not audited.
3. Significant accounting policies
The interim financial statements have been prepared in accordance with the
accounting policies adopted in the Company's most recent annual financial statements
for the year ended 31 December 2014 except for the change in accounting policy in
note 5 below.
4. Estimates
In preparing the condensed interim financial statements, the significant judgements
made by management in applying the Company's accounting policies and the key sources
of estimation were the same as those that applied to the audited annual financial
statements for the year ended 31 December 2014.
5. Change in accounting policy
The Company's business model has been reviewed and a divisionalisation strategy
has been implemented. This has resulted in a change in the revenue recognition
policy in respect of revenue earned from Medical Services and Estates business
units, previously set off against administrative expenses. This change has no
effect on equity. The effect of the change in accounting policy on the financial
results presented is as follows:
6 months 6 months Year to
30 June 30 June 31 December
2015 2014 2014
USD USD USD
Unaudited Unaudited Audited
Increase in revenue 5 015 841 6 820 628 11 887 395
Increase in cost of sales (6 690 139) (4 714 714) (10 552 883)
Decrease/(increase) in administrative
expenses 1 674 298 (2 105 914) (1 334 512)
Effect on equity - - -
6. Revenue
Tonnes Tonnes Tonnes
Coal sales
HCC/HIC 225 396 197 342 393 408
HPS coal 409 843 394 451 924 659
Coal fines and breeze 45 045 154 657 201 610
Total coal sales 680 284 746 450 1 519 677
Coke tonnes 5 475 18 363 82 510
Total sales 685 759 764 813 1 602 187
Mining 30 333 672 33 048 167 72 031 451
Estates 4 486 687 5 321 896 10 943 432
Medical services 529 154 1 498 732 3 644 383
Total 35 349 513 39 868 795 86 619 266
7. Taxation
Current tax - - -
Deferred tax 5 113 418 834 339 18 499 846
5 113 418 834 339 18 499 846
8. Loss per share
8.1 Basic
Basic loss per share is calculated by
dividing the loss attributable to
shareholders by the weighted average
number of ordinary shares in issue
during the period/year.
Loss attributable to shareholders (44 106 145) (7 880 393) (37 865 885)
Weighted average number of ordinary
shares in issue 183 757 366 183 757 366 183 757 366
Basic loss per share (0.24) (0.04) (0.21)
Notes to the unaudited condensed financial statements
for the six (6) months ended 30 June 2015 (continued)
6 months 6 months Year to
30 June 30 June 31 December
2015 2014 2014
USD USD USD
Unaudited Unaudited Audited
8.2 Diluted
Loss used to determine diluted loss
per share (44 106 145) (7 880 393) (37 865 885)
The weighted average number of ordinary
shares for the purpose of diluted loss
per
share, reconciles to the weighted
average
number of ordinary shares used in the
calculation of basic loss per share as
follows:
Weighted average number of ordinary
shares in issue 183 757 366 183 757 366 183 757 366
Weighted average number of ordinary
shares for diluted loss per share 183 757 366 183 757 366 183 757 366
Diluted loss per share (0.24) (0.04) (0.21)
8.3 Headline loss per share
Headline loss per share excludes all
items of a capital nature and
represents an after tax amount. It is
calculated by dividing the headline
loss shown below by the number of
shares in issue during the period/
year:
Reconciliation between headline loss
and basic loss:
IAS 33 - Losses (44 106 145) (7 880 393) (37 865 885)
Non - recurring items:
Proceeds on sale of scrap (25 108) - (352 848)
Impairment of property, plant and
equipment - - 3 452 516
Loss from sale of assets - 139 904 -
Headline losses (44 131 253) (7 740 489) (38 218 733)
Weighted average number of ordinary
shares in issue 183 757 366 183 757 366 183 757 366
Headline loss per share (0.24) (0.04) (0.21)
9. Property, plant and equipment
Carrying amount at the beginning of the
period/year 129 078 977 139 129 468 139 129 468
Additions 32 311 385 5 459 391 5 638 479
Depreciation charge for the
period/year (6 285 948) (5 828 555) (12 236 454)
Impairment - - (3 452 516)
Carrying amount at the end of the
period/year 155 104 414 138 760 304 129 078 977
10. Investment property
Fair value 3 700 000 3 700 000 3 700 000
Investment property comprises of:
- Land situated at Lot 7 of Stand
2185, Salisbury Township Harare with
an administration building thereon.
- Land situated at Stand 555,
Bulawayo Township Bulawayo with an
administration building thereon.
10.1 The following amount has been
recognised in profit or loss:
Rental income 136 298 129 418 301 232
11. Investment in equity accounted
investments
Investments in associates (note 11.1) 335 857 894 401 446 205
Investment in joint venture (note 11.2) 16 148 463 16 746 496 16 148 463
16 484 320 17 640 897 16 594 668
11.1 Investments in associates
Carrying amount as at beginning of
period/year 446 205 897 168 897 168
Share of loss (110 348) (2 767) (450 963)
Carrying amount at the end of the
period/year 335 857 894 401 446 205
The Company holds a 49% voting and equity interest in Clay Products (Private)
Limited. The Company also holds a 44% voting and equity in Zimchem Refineries
(Private) Limited.
The Company did not recognise losses for the period ammounting to USD 374 603
(30 June 2014: USD 234 224) for Zimchem as the cumulative losses exceeded the
carrying
11.2 Investment in joint venture
Carrying amount as at 1 January 16 148 463 16 821 287 16 821 287
Share of loss - (74 791) (672 824)
Carrying amount at the end of the
period/year 16 148 463 16 746 496 16 148 463
Hwange Coal Gasification Company (Private) Limited is the only joint venture entity
and the interest is 25%. The investment in the joint venture has been accounted for
using the equity method.
*The financial information for Hwange Coal Gasification Company (Private) Limited
for the six (6) months ended 30 June 2015 was not available for inclusion in these
financial statements.
12. Intangible assets
Opening carrying amount 1 590 041 1 802 904 1 802 904
Amortisation charge (106 431) (106 431) (212 863)
Closing carrying amount 1 483 610 1 696 473 1 590 041
13. Stripping activity asset
Carrying amount at 1 January 7 290 468 6 774 204 6 774 204
Pre-stripping costs 1 012 748 2 596 663 1 796 730
Costs charged/(credited) to cost of
sales 109 145 49 173 (1 280 466)
Closing carrying amount 8 412 361 9 420 040 7 290 468
14. Inventories
Raw materials 5 039 725 5 973 194 4 881 326
Consumables - - 72 895
Finished goods
Coal and coal fines 34 129 814 30 086 865 34 282 926
Coke 2 986 708 3 671 398 2 209 033
42 156 247 39 731 457 41 446 180
15. Trade and other receivables
Trade 12 266 435 19 620 194 15 373 035
Other 15 025 031 18 165 207 22 411 510
27 291 466 37 785 401 37 784 545
6 months 6 months Year to
30 June 30 June 31 December
2015 2014 2014
USD USD USD
Unaudited Unaudited Audited
16. Financial assets at fair value
through profit or loss
Carrying amount 1 January - 4 645 4 645
Fair value adjustment - - (4 645)
Fair value at the end of the
period/year - 4 645 -
The fair value of all equity securities is based on their current bid prices on the
Zimbabwe Stock Exchange.
17. Cash and cash equivalents
For the purposes of statement of cash flows, cash and cash equivalents include cash
on hand and in banks and investments in money market instruments, net of outstanding
bank overdrafts. Cash and cash equivalents at the end of the period/year as shown
in the statement of cash flows can be reconciled to the related items in the
statement of financial position as follows:
Bank and cash balances 312 252 1 003 188 956 810
Bank overdraft (225 895) (1 392 410) (194 886)
86 357 (389 222) 761 924
18. Share capital
Authorised
204 000 000 ordinary shares of USD0.25
each 51 000 000 51 000 000 51 000 000
Issued and fully paid
110 237 432 Ordinary shares of
USD0.25 each 27 559 358 27 559 358 27 559 358
5 962 366 Ordinary shares issued under
share option scheme 1 514 039 1 514 039 1 514 039
29 073 397 29 073 397 29 073 397
67 557 568 ''A'' Ordinary shares of
USD0.25 each 16 889 392 16 889 392 16 889 392
45 962 789 45 962 789 45 962 789
19. Lease liability
19.1 Non current
Finance lease liabilities due after
one year 15 043 461 850 000 800 000
19.2 Current
Finance lease liabilities due
within one year 6 951 547 103 887 261 570
20. Borrowings
20.1 Non current
Loans due after one year 5 990 629 - -
20.2 Current
Bank overdraft 225 895 1 392 410 194 886
Loans payable within one year 16 962 031 18 280 633 10 595 227
17 187 926 19 673 043 10 790 113
21. Trade and other payables
Trade 78 944 668 64 200 483 106 604 119
Other 140 735 920 78 485 634 80 878 680
219 680 588 142 686 117 187 482 799
22. Provisions
22.1 Provision for rehabilitation
At the beginning of the period/year 4 893 360 3 893 360 3 893 360
Additional provisions made during
the period/year 500 000 500 000 1 000 000
At the end of the period/year 5 393 360 4 393 360 4 893 360
22.2 Other provisions
Leave pay and other provisions 5 658 238 5 452 918 5 955 363
Total Provisions 11 051 598 9 846 278 10 848 723
23. Segment reporting
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.
Medical
Mining Estates services Total
USD USD USD USD
30 June 2015
Revenue
From external customers 30 333 672 4 486 687 529 154 35 349 513
From other segments - 690 730 1 485 529 2 176 259
Total segment revenues 30 333 672 5 177 417 2 014 683 37 525 772
Segment operating loss (17 600 922) (791 099) (1 114 782) (19 506 803)
Segment assets 253 806 655 7 612 572 8 006 418 269 425 645
Segment liabilities 215 072 830 16 310 785 16 433 718 247 817 333
30 June 2014
Revenue
From external customers 33 048 167 5 321 856 1 498 772 39 868 795
From other segments - 592 892 1 173 612 1 766 504
Total segment revenues 33 048 167 5 914 748 2 672 384 41 635 299
Segment operating loss (6 675 922) (279 980) (676 447) (7 632 349)
Segment assets 236 323 323 6 785 315 6 633 767 249 742 405
Segment liabilities 152 209 475 16 310 785 14 014 112 182 534 372
31 December 2014
Revenue
From external customers 72 031 451 10 847 866 1 039 529 83 918 846
From other segments - 95 566 2 540 564 2 636 130
Total segment revenues 72 031 451 10 943 432 3 580 093 86 554 976
Segment operating
(loss)/profit (53 381 778) (1 135 679) 341 107 (54 176 350)
The totals presented for the Company's operating segments reconcile to the key
financial figures as presented in its financial statements as follows:
Medical
Mining Estates services Total
USD USD USD USD
30 June 2015
Revenue
Total reportable segment
revenue 30 333 672 5 177 417 2 014 683 37 525 772
Elimination of
intersegment
revenue - (690 730) (1 485 529) (2 176 259)
Total Company revenue 30 333 672 4 486 687 529 154 35 349 513
30 June 2014
Revenue
Total reportable segment
revenue 33 048 167 5 914 748 2 672 384 41 635 299
Elimination of
intersegment
revenue - (592 892) (1 173 612) (1 766 504)
Total Company revenue 33 048 167 5 321 856 1 498 772 39 868 795
31 December 2014
Revenue
Total reportable segment
revenue 72 031 451 10 943 432 3 580 093 86 554 976
Elimination of
intersegment
revenue - (95 566) (2 540 564) (2 636 130)
Total Company revenue 72 031 451 10 847 866 1 039 529 83 918 846
24. ZIMRA liability adjustment
As disclosed under note 26 in the 30 June 2015 financial statements which were
previously published, the Company was under tax investigation with ZIMRA which had
not been finalised at the time of publication. The Company had recognised a ZIMRA
tax liability of USD 40 621 203.13 as at 30 June 2015 with other amounts disclosed
as contingent liabilities. However, on 27 November 2015, ZIMRA confirmed that after
the investigation exercise, Hwange Colliery Company Limited owed ZIMRA an amount of
USD69 113 118.81. The financial statements have been adjusted to reflect the correct
ZIMRA liability as at 30 June 2015 as follows:
Increase in expenses (28 491 916)
Increase in trade and other payables 28 491 916
The ZIMRA liability of USD69 113 118.81 is included in trade and other payables in
the statement of financial position whilst the USD28 491 916 is included in
administration expenses in the statement of profit or loss and other comprehensive
income.
25. Going concern
The Company is experiencing matters that may cast significant doubt on its ability
to continue as a going concern. Management has considered the following matters:
Net current liability position
The company's current liabilities exceeded its current assets by USD 177 102 833 as
at 30 June 2015 (30 June 2014: 85 441 691; 31 December 2014: USD 122 308 702). This
unfavourable position is a result of the delayed realisation of capitalisation
projects as a result of the adverse liquidity situation affecting the economy as a
whole. The market demand currently remains unsatisfied and there are opportunities
for growth of the company. The company has adequate coal reserves and contracted
stocks of coal fines to enable it to continue operating for the forseeable future.
The company has engaged a contractor to provide mining services at its open cast
mine in line with its strategy to expand its mining activity. The company acquired
mining equipment in June 2015 and this is expected to improve production output.
Management, therefore, believes that the company's ability to continue to operate
is dependent upon future profitability.
Operating loss
The operating loss of USD 47 998 719 (30 June 2014: USD 7 632 349; 31 December 2014:
USD 51 540 220) is mainly attributable to the lower revenue recorded in the period
under review. The Company's current initiatives are expected to reverse the general
poor production and trading performance.
Litigation cases
The company had litigation cases brought against it during the period. The summary
of significant legal cases for Hwange Colliery Company Limited as at 30 June 2015
are as follows:
USD
Value of cases for which judgement has been passed against the
company 20 106 710
Estimated value of cases pending judgements at the courts 20 611 536
Total value of litigation cases 40 718 246
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 the main risks arising from the Company`s financial instruments.
26.1 Credit risk Management has a credit policy in place and the exposure to credit
risk is monitored on an ongoing basis. The Company assumes foreign credit risk only
on customers approved by the Board and follows credit review procedures for local
credit customers.
Investments are allowed only in liquid securities and only with approved financial
institutions. At the reporting date there were no significant concentrations of
credit risk. The maximum exposure to credit risk is represented by the carrying
amounts of each financial asset in the statement of financial position.
26.2 Interest rate risk The Company's exposure to the risk of changes in market
interest rates relates primarily to the Company's long and short term debt
obligations and bank overdrafts. The Company's policy is to manage its interest
cost using a mix of fixed and variable rate debts.
26.3 Currency risk
The Company is exposed to foreign currency risk on transactions that are denominated
in a currency other than the United States Dollar. The currency giving rise to this
risk is primarily the South African Rand.
In respect of all monetary assets and liabilities held in currencies other than the
United States Dollar, the Company ensures that the net exposure is kept to an
acceptable level, by buying or selling foreign currencies at spot rates where
necessary to address short-term imbalances.
The Company's exposure to foreign currency changes for all the other currencies is
not significant.
Johannesburg
29 February 2016
Sponsor: Sasfin Capital (a division of Sasfin Bank Limited)
Date: 29/02/2016 10:10:00 Supplied by www.sharenet.co.za
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