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Unaudited interim results for the six month period ended 30 June 2013
Unaudited Condensed Interim
HWANGE COLLIERY COMPANY LIMITED
(Incorporated in Zimbabwe)
Code: HWA ISIN: ZW0009011934
(“Hwange”)
UNAUDITED CONDENSED INTERIMS FOR THE 6 MONTH PERIOD ENDED 30 JUNE 2013
CHAIRMAN’S STATEMENT TO SHAREHOLDERS UNAUDITED CONDENSED STATEMENT OF FINANCIAL POSITION
as at 30 June 2013
The Company’s Board of Directors is pleased to present the unaudited condensed interim financial results for the six (6) months ended 30 June 30 June 31 December
30 June 2013. 2013 2012 2012
Note USD USD USD
OPERATING ENVIRONMENT ASSETS
Non- current assets
The macroeconomic environment was characterised by liquidity challenges even though the inflation rate remained low. The sluggish
Property, plant and equipment 7 124 379 416 125 750 063 127 346 098
economic growth at around 3% implied reduced economic activity and general low capacity utilisation across industries. Investment property 8 3 700 000 3 700 000 3 700 000
Investments accounted for using the equity method 9 18 586 177 17 628 099 18 633 455
The liquidity situation had a negative effect on availability of lines of credit against a huge working capital deficit in the business. Intangible assets 10 1 909 339 2 122 199 2 015 767
Notwithstanding the firm demand for coal and coke both on the domestic and export markets, customers’ consumption behaviour was 148 574 932 149 200 361 151 695 320
affected by the liquidity situation. There was a general decline in the coal and coke commodity prices on the local, regional and global
markets. Current assets
Stripping activity asset 11 6 067 038 5 286 853 4 522 518
FINANCIAL RESULTS Inventory 12 51 075 013 36 053 333 50 861 626
Trade and other receivables 13 43 180 195 33 396 729 47 594 961
Financial assets at fair value through profit and loss 14 2 868 2 868 2 868
The sales revenue for the six (6) months under review was US$40.4 million compared to the US$51.8 million revenue recorded during the 15
Cash and cash equivalents 1 107 047 2 823 125 1 467 190
same period last year. The operating loss was US$4.5 million compared to an operating profit of US$1.6 million for the first six (6) months
of last year. The Company incurred an unaudited loss after taxation of US$3.2 million and compares unfavourably to the US$0.5 million 101 432 161 77 562 908 104 449 163
profit recorded for the same period in 2012. The financial performance is attributed to the poor cash flow position of the Company. This
was exarcerbated by legacy debts in excess of US$140 million dating back to 2008 and antiquated equipment. Overall, this negatively
impacted on production volumes. Total assets 250 007 093 226 763 269 256 144 483
Finance costs increased from US$0.9 million to US$1.1 million because of the penalty rates applied on overdue borrowings. EQUITY AND LIABILITIES
Capital and reserves
Total assets and investments amounted to US$250 million compared to US$226.7 million as at 30 June 2012. Capital and reserves
Share capital 16 45 962 789 45 549 963 45 928 393
amounted to US$103.6 million and compares to US$103.1 million for the same period last year.
Non-distributable reserve 4 358 468 4 358 468 4 358 468
Share premium 577 956 - 529 802
PERFORMANCE Revaluation reserve 39 948 518 39 948 518 39 948 518
Retained earnings 12 719 212 13 235 512 15 854 722
Total coal sales for the six (6) months period under review amounted to 913 440 tonnes and was comparable to the 918 491 tonnes
achieved during the same period last year. 103 566 943 103 092 461 106 619 903
HPS coal deliveries to Hwange Power Station for the period under review at 580 818 tonnes were 56% above the 373 126 tonnes for the Non-current liabilities
same period last year. This resulted in Zimbabwe Power Company continuously holding adequate stock levels for uninterrupted power Deferred tax 17 19 671 104 23 141 991 24 340 137
generation. Lease liability - 741 475 -
19 671 104 23 883 466 24 340 137
HCC/HIC coal sales decreased from 270 276 tonnes for the first six (6) months of 2013 to 207 142 tonnes for the period under review. Current liabilities
Sales of coal fines and breeze decreased from 206 753 tonnes to 99 641 tonnes for the comparative periods. Trade and other payables 18 91 144 867 61 362 556 85 448 326
Borrowings 19 26 076 025 28 995 366 31 576 915
Coke sales volumes decreased from 68 336 tonnes for the first half of 2013 to 25 839 tonnes for the period under review. Provisions 20 8 471 057 7 746 616 7 082 105
Current tax 1 077 097 1 682 804 1 077 097
OUTLOOK
126 769 046 99 787 342 125 184 443
The Company has taken delivery of the mining equipment worth US$11 million from Sany Heavy Equipment Company Limited of China
and the commissioning was expected to be completed by 30 September 2013. This equipment will augment the mining machinery worth
Total equity and liabilities 250 007 093 226 763 269 256 144 483
US$7 million procured in October 2012. Another initiative to procure drilling equipment from South Africa is at an advanced stage and
should be concluded in time for delivery of the drills in the fourth quarter of 2013. There is no doubt that these recapitalisation initiatives
currently being implemented organically will result in improved production performance.
The Company’s coal and coke products will remain targeted at the local and regional markets. The commodity prices are forecast to
UNAUDITED CONDENSED STATEMENT OF CHANGES IN EQUITY
stabilise before end of the third quarter and start to increase in the fourth quarter. for the six (6) months ended 30 June 2013
Non-
The Company will intensify its cost containment thrust through rationalisation of its operations and aligning the business model to Share Share distributable Revaluation Retained
international benchmarks. capital premium reserve reserve earnings Total
USD USD USD USD USD USD
The Board and management has confidence in the current recapitalisation initiatives being implemented that will result in immediate Balance at 1 January 2013 45 928 393 529 802 4 358 468 39 948 518 15 854 722 106 619 903
increase in coal and coke production. Positive financial performance is projected for the year end.
Share option scheme 34 396 48 154 - - - 82 550
DIRECTORATE
Total comprehensive loss for the period - - - - (3 135 510) (3 135 510)
Ms. S Mapfuwa resigned from the Board on 28 June 2013 and on behalf of the Company, the Board of Directors would like to thank her
Balance at 30 June 2013 45 962 789 577 956 4 358 468 39 948 518 12 719 212 103 566 943
for the invaluable contribution to the business.
Mr. Jemister Chininga was appointed Acting Managing Director as from 01 August 2013. The Board is still in the process of recruiting a Balance at 1 January 2012 45 549 963 - 4 358 468 39 948 518 12 723 506 102 580 455
substantive Managing Director.
Total comprehensive income for the period - - - - 512 006 512 006
APPRECIATION
Balances at 30 June 2012 45 549 963 - 4 358 468 39 948 518 13 235 512 103 092 461
I would like to express my gratitude to my fellow Directors, Management and Staff for their collective efforts and dedication to the cause
of Hwange Colliery Company despite the challenges faced for the period under period review. I also appreciate the support we continue
Balance at 1 January 2012 45 549 963 - 4 358 468 39 948 518 12 723 506 102 580 455
to receive from all our stakeholders.
Share option scheme 378 430 529 802 - - - 908 232
Total comprehensive income for the year - - - - 3 131 216 3 131 216
Balances at 31 December 2012 45 928 393 529 802 4 358 468 39 948 518 15 854 722 106 619 903
F. MUTAMANGIRA
CHAIRMAN
UNAUDITED CONDENSED STATEMENT OF CASH FLOWS
20 September 2013 for the six (6) months ended 30 June 2013
6 months to 6 months to Year to
Registered Office 30 June 30 June 31 December
7th Floor, Coal House, 17 Nelson Mandela Avenue, P O Box 2870, Harare, Zimbabwe 2013 2012 2012
Note USD USD USD
CASH FLOWS FROM OPERATING ACTIVITIES
(Loss) / profit before tax (5 705 475) 698 187 3 909 835
Non - cash items
UNAUDITED CONDENSED STATEMENT OF COMPREHENSIVE INCOME Other gains and losses 279 213 - 356 269
for the six (6) months ended 30 June 2013 Depreciation and amortisation expense 5 851 708 6 344 740 12 824 202
Finance costs 1 111 298 834 057 4 187 327
6 months to 6 months to Year to
30 June 30 June 31 December Share of profit/losses of equity accounted investments 47 278 24 847 (980 509)
2013 2012 2012 Allowances for credit losses 1 517 723 77 988 -
Note USD USD USD
Operating cash flow before changes in working capital 3 101 745 7 979 819 20 297 124
Revenue 4 40 408 139 51 819 059 104 277 375
Net movement in working capital 6 634 354 (6 488 127) (12 629 143)
(Loss)/profit from operations (4 546 899) 1 622 343 7 116 653 Interest paid (1 111 298) (834 057) (4 187 327)
Finance costs (1 111 298) (899 309) (4 187 327) Net cash generated from operating activities 8 624 801 657 635 3 480 654
Share of (loss)/profit from equity accounted investments (47 278) (24 847) (980 509) CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment (2 778 598) (716 537) (3 696 017)
(Loss)/profit before taxation (5 705 475) 698 187 3 909 835
Cash flows from financing activities
Taxation 5 2 569 965 (186 181) (778 619) Proceeds from/(repayments of) borrowings - 1 734 526 (5 423 874)
(Loan repayments)/proceeds from loans raised (5 528 117) (935 575) 5 046 371
(Loss)/profit after taxation (3 135 510) 512 006 3 131 216
Net cash (utilised) in/generated from financing activities (5 528 117) 798 951 (377 503)
Other comprehensive income for the period/year, net of tax - - -
TOTAL COMPREHENSIVE (LOSS)/ INCOME FOR THE PERIOD/ YEAR (3 135 510) 512 006 3 131 216 Net increase/(decrease) in cash and cash equivalents 318 086 740 049 (592 866)
Cash and cash equivalents at beginning of the period/year 613 132 1 205 998 1 205 998
Basic (loss) / earnings per share 6.1 (0.02) 0.003 0.02
Cash, cash equivalents at end of period/year 15 931 218 1 946 047 613 132
Headline (loss) /earnings per share 6.2 (0.02) 0.003 0.02
www.Interim
NOTES TO THE UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS
for the six (6) months ended 30 June 2013
1. General information
Hwange Colliery Company Limited is a company that extracts, processes and distributes coal and coke products. The company 6 months to 6 months to Year to
operates a coal mine situated at Hwange and sells mainly within Zimbabwe and elsewhere in the Sub Saharan Africa. 30 June 30 June 31 December
2013 2012 2012
This condensed interim financial information has been reviewed, not audited. USD USD USD
2. Basis of preparation of the condensed financial statements 12. Inventory
The condensed interim unaudited financial statements for the six (6) months ended 30 June 2013 have been prepared in accordance Raw materials 8 004 104 5 246 209 6 306 706
with IAS 34, ‘Interim financial reporting’. They do not include all of the information required for full annual financial statements and Consumables - - 53 956
should be read in conjuction with the audited annual financial statements for the year ended 31 December 2012, which have been Finished goods
prepared in accordance with International Financial Reporting Standards (IFRSs). - Coal 8 033 328 11 836 051 8 306 006
3. Estimates - Coke 5 337 581 9 098 433 6 494 958
- Coal fines 29 700 000 9 872 640 29 700 000
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 expenses. 51 075 013 36 053 333 50 861 626
6 months to 6 months to Year to
13. Trade and other receivables
30 June 30 June 31 December
2013 2012 2012 Trade 24 080 617 24 426 027 25 450 763
USD USD USD Other 19 099 578 8 970 702 22 144 198
4. Revenue 43 180 195 33 396 729 47 594 961
Coal sales 14. Financial assets at fair value through profit or loss
HCC/HIC 207 142 270 276 546 264
HPS coal 580 818 373 126 901 480
Coal fines and breeze 99 641 206 753 353 246 Carrying amount at beginning of period/year 2 868 2 868 2 868
Fair value adjustments - - -
Total coal sales 887 601 850 155 1 800 990
2 868 2 868 2 868
Coke tonnes 25 839 68 336 108 407
The fair value of all equity securities is based on their current bid prices on
Total sales - Tonnes 913 440 918 491 1 909 397 the Zimbabwe Stock Exchange.
Total sales - USD 40 408 139 51 819 059 104 277 375
15. Cash and cash equivalents
5. Taxation 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 half year as shown in
Current tax on profit for the period/year - 605 707 - the statement of cash flows can be reconciled to the related items in the statement of financial position as follows:
Deferred tax movement (2 569 965) (419 526) 778 619
(2 569 965) 186 181 778 619 Bank and cash balances 1 107 047 2 823 125 1 467 190
Bank overdraft (175 829) (877 078) (854 058)
6. Earnings per share
931 218 1 946 047 613 132
6.1 Basic
Profit attributable to shareholders (3 135 510) 512 006 3 131 216 16. Share capital
Weighted average number of ordinary shares in issue 183 851 154 182 199 850 183 713 570
Basic (loss)/earnings per share (0.02) 0.003 0.02 Authorised
6.2 Headline 186 000 000 ordinary shares of USD0.25 each 46 500 000 46 500 000 46 500 000
Reconciliation between headline earnings and basic earnings:
Issued and fully paid
Basic earnings (3 135 510) 512 006 3 131 216
110 237 432 Ordinary shares of USD0.25 each 27 559 358 27 559 358 27 559 358
Non-recurring items: 4 542 434 Ordinary shares issued under share option scheme 1 514 039 1 101 213 1 479 643
Proceeds on sale of scrap - - (44 812)
Headline earnings (3 135 510) 512 006 3 086 404 114 779 866 Ordinary shares of USD0.25 each 29 073 397 28 660 571 29 039 001
Weighted average number of ordinary shares in issue 183 851 154 182 199 850 183 713 570 67 557 568 ''A'' Ordinary shares of USD0.25 each 16 889 392 16 889 392 16 889 392
Headline (loss)/earnings per share (0.02) 0.003 0.02 45 962 789 45 549 963 45 928 393
17. Deferred tax
7. Property, plant and equipment
Deferred tax assets:
Carrying amount at the beginning of the period/year 127 346 098 129 367 047 129 364 842
Additions 2 778 598 2 621 325 10 805 458 Deferred tax asset to be recovered after more than 12 months (6 055 433) (6 055 433) (6 055 433)
Depreciation charge for the period/year (5 745 280) (6 238 309) (12 824 202) Deferred tax asset to be recovered within 12 months (4 669 033) (419 526) -
Carrying amount at the end of the period 124 379 416 125 750 063 127 346 098 (10 724 466) (6 474 959) (6 055 433)
Deferred tax liabilities:
8. Investment property Deferred tax liability to be recovered after more than 12 months 30 395 570 29 616 950 30 395 570
Deferred tax liability to be recovered within 12 months - - -
Fair value 3 700 000 3 700 000 3 700 000
30 395 570 29 616 950 30 395 570
The following amount has been recognised in the statement of
comprehensive income: Deferred tax liabilities (net) 19 671 104 23 141 991 24 340 137
Rental income 117 006 75 978 230 299
18. Trade and other payables
9. Investments accounted for using the equity method
Trade payables 47 786 029 41 848 736 46 104 858
Investments in associates (note 9.1) 1 000 466 1 148 024 1 062 468 Other payables 43 358 838 19 513 820 39 343 468
Investments in joint venture (note 9.2) 17 585 711 16 480 075 17 570 987
91 144 867 61 362 556 85 448 326
18 586 177 17 628 099 18 633 455
19. Borrowings
9.1 Investments in associates
Carrying amount at beginning of period/year 1 062 468 1 172 871 1 172 871 Bank overdraft 175 829 4 489 623 854 058
Share of (loss)/profit (62 002) (24 847) (110 403) Loans payable within one year 7 233 295 16 128 960 14 662 885
Share of other comprehensive income - - - Finance lease liabilities 18 666 901 8 376 783 16 059 972
Carrying amount at the end of the period/year 1 000 466 1 148 024 1 062 468 26 076 025 28 995 366 31 576 915
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) Limited. The investments are accounted for using the equity
method. 20. Provisions
9.2 Investments in joint venture 20.1 Provision for rehabilitation
Carrying amount at beginning of period/year 17 570 987 16 480 075 16 480 075
Share of profits 14 724 - 1 090 912 At beginning of period/year 2 893 360 1 893 360 1 893 360
Charged to the statement of comprehensive income:
Carrying amount at the end of the period/year 17 585 711 16 480 075 17 570 987 Additional provisions made during the period/year 500 000 1 000 000 1 000 000
Hwange Coal Gasification Company (Private) Limited is a jointly controlled entity and the ultimate ownership interest is 25%. Hwange 3 393 360 2 893 360 2 893 360
Colliery Company Limited’s investment in the joint venture is being acquired on a piecemeal basis and by 30 June 2013, the Company
had acquired 20.04% of its total investment. The investment in the joint venture has been accounted for using the equity method. 20.2 Other provisions
Leave pay and other provisions 5 077 697 4 853 256 4 188 745
10. Intangible assets
Grand total 8 471 057 7 746 616 7 082 105
Opening carrying amount 2 015 767 2 228 630 2 228 630
Amortisation charge (106 428) (106 431) (212 863)
Closing carrying amount 1 909 339 2 122 199 2 015 767
11. Stripping activity asset
T. K. NCUBE
Carrying amount at beginning of period/year 4 522 518 7 274 611 7 274 611 COMPANY SECRETARY
Pre-stripping costs 1 671 770 - 179 075
Costs charged to cost of sales (127 250) (1 987 758) (2 931 168) 20 September 2013
6 067 038 5 286 853 4 522 518
F Mutamangira (Chairman), N.S. Chibanguza, J. Chininga (Acting Managing Director), I.C. Haruperi, N. Jiyane, J. Muskwe (Mrs), L. Nkomo, V. Vera.
www.hwangecolliery.net
7 October 2013
Johannesburg
sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
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