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Interim results June 2015
HWANGE COLLIERY COMPANY LIMITED
(Incorporated in Zimbabwe under registration number 381/1954)
ZSE Code: HWA
ISIN Number: ZW 0009011934
JSE Code: HWA
ISIN Number: ZW 0009011934
LSE Code: HWA
ISIN Number: ZW 0009011934
UNAUDITED CONDENSED INTERIM FINANCIAL RESULTS
For the half year ended 30 June 2015
Chairman's Statement
On behalf of the Board of Directors, I present the unaudited condensed financial results of
the Company for the six (6) months ended 30 June 2015.
FINANCIAL RESULTS
The sales revenue for the six (6) months under review was US$35.4 million compared to
the US$39.9 million revenue recorded during the same period last year. The operating loss
was US$19.5 million compared to an operating loss of US$7.6 million for the comparative
period last year. The Company incurred a loss after taxation of US$15.6 million compared
to the US$7.9 million loss recorded for the same period in 2014.
There was a notable decrease in administrative costs because of the cost containment
measures adopted by the Company. Finance costs for the period amounted to US$1.1
million compared to US$1.0 million for the same period last year. The burden of servicing
the legacy debts continued to strain the Company`s cash flows and this presented working
capital challenges.
Total non-current assets increased by 18% from US$161.8 million to US$191.2 million.
PERFORMANCE
For the six (6) month period under review, the Company sold a total of 685 759 tonnes of
coal and coke products compared to 764 813 tonnes sold during the same period last year
representing a decline of 10%.
HPS coal deliveries to Hwange Power Station for the period under review were 409 843
tonnes compared to 394 451 tonnes for the same period last year representing an increase
of 4%.
HCC/HIC coal sales increased by 14% from 197 342 tonnes to 225 396 tonnes.
There was a decrease in the sales of coal fines and breeze from 154 657 tonnes to 45 045
tonnes for the comparative periods.
Coke sales volume decreased from 18 363 tonnes achieved in the first half of 2014 to 5 475
tonnes for the period under review. This was attributed to the low production performance
of the toll coking arrangements.
OUTLOOK
The Company’s strategy adopted in 2014 and currently being implemented is anchored on
the following;
. Recapitalisation of the mining operations;
. Contract mining;
. Conversion of Government debt to equity;
. Divisionalisation of the organisation;
. Customer diversification; and
. Acquisition of new coal concessions
During the period under review, the Company successfully took delivery and commissioned
mining equipment from BELAZ of Belarus worth US$18.2 million through a facility with
PTA Bank which was subsequently ceded to the Reserve Bank of Zimbabwe (RBZ).
Delivery and commissioning of additional mining equipment worth US$13 million from
BEML of India through a line of credit from the Export and Import Bank of India was
successfully done during the period under review. The enabling borrowing was securitised
by a sovereign guarantee.
The Board and management are diligently sourcing working capital from the local money
market to inject into the operations in order to achieve maximum utilisation of the newly
acquired equipment.
The mining contractor`s contribution to coal production was satisfactory for the period
under revew.
The Company is currently at advanced stages of the conversion of Government debt,
mainly the Zimbabwe Revenue Authority (ZIMRA) liability, into equity. This will be
structured through a fully underwritten rights issue and a private placement. This
matter would be brought to an Extra Ordinary General Meeting (EGM) for Shareholders`
approval in due course.
The Company’s divisionalisation strategy has started to bear fruits. There is now
undivided management focus on the mining division. The thrust being to improve on
efficiencies and cost leadership in order to realize optimum margins in the backdrop
of declining commodity prices on the local and international markets.
The Company was awarded new coal concessions in the Western Areas, Lubimbi East and
Lubimbi West. The new coal concessions will increase the life of mine of Hwange Colliery
Company Limited by at least fifty (50) years. The focus is now on commencement of field
exploration work. The new concessions are strategic to the growth of the Company. The
new coal resources also enhance Hwange Colliery Company Limited`s capacity to fully
support power generation projects, including the expansion projects like Hwange Power
Station Stage 3.
The target market for the Company’s coal and coke products is the local and regional
markets. However the thrust for the second half of the year is to diversify the markets
for coal and coke products. The major growth opportunities lie in the regional markets
in South Africa, Zambia and the Democratic Republic of Congo.
DIRECTORATE
There were no changes in the Company’s directorships for the period under review.
APPRECIATION
I would like to express my gratitude to my fellow Directors, Management and Staff for
their collective efforts and dedication to Hwange Colliery Company Limited despite all
the challenges. I also count on all the support as we turn around the Company. I also
appreciate the support we continue to receive from all our stakeholders.
F MUTAMANGIRA
CHAIRMAN
18 September 2015
Condensed statement of profit or loss and other comprehensive income
for the six (6) months ended 30 June 2015
Restated Restated
Notes 30 June 30 June 31 December
2015 2014 2014
USD USD USD
Unaudited Unaudited Audited
Revenue 6 35 349 513 39 868 795 35 349 513
Cost of sales (47 591 594) (36 389 027) (92 873 146)
Gross loss (12 242 081) 3 479 768 (6 253 880)
Other income 212 560 269 129 694 761
Other gains and losses (net) (18 452) (172 201) (5 425 101)
Marketing costs (673 169) (754 564) (1 486 861)
Administrative costs (6 785 661) (10 454 481) (30 562 714)
Redundancy costs - - (5 053 909)
Impairment loss - - (3 452 516)
Operating loss (19 506 803) (7 632 349) (51 540 220)
Finance costs (1 110 496) (1 004 825) (3 701 723)
Share of loss from equity accounted
investments (110 348) (77 558) (1 123 788)
LOSS BEFORE TAX (20 727 647) (8 714 732) (56 365 731)
Income tax 7 5 113 418 834 339 18 499 846
LOSS FOR THE PERIOD/ YEAR (15 614 229) (7 880 393) (37 865 885)
Other comprehensive income:
Other comprehensive income for the
period/ year, net of tax - - -
TOTAL COMPREHENSIVE LOSS FOR THE
PERIOD/YEAR (15 614 229) (7 880 393) (37 865 885)
Attributable loss per share - basic 8 (0.08) (0.04) (0.21)
- diluted 8 (0.08) (0.04) (0.21)
Headline loss per share - basic 8 (0.09) (0.04) (0.21)
- diluted 8 (0.09) (0.04) (0.21)
Condensed statement of financial position
as at 30 June 2015
Notes 30June 30 June 31 December
2015 2014 2014
USD USD USD
Unaudited Unaudited Audited
ASSETS
Non Current Assets
Property, plant and equipment 9 155 104 414 138 760 304 129 078 977
Investment property 10 3 700 000 3 700 000 3 700 000
Investments accounted for using
the equity method 11 16 484 320 17 640 897 16 594 668
Intangible assets 12 1 483 610 1 696 473 1 590 041
Deferred tax asset 14 480 975 - 9 367 557
191 253 319 161 797 674 160 331 243
Current Assets
Stripping activity asset 13 8 412 361 9 420 040 7 290 468
Inventories 14 42 156 247 39 731 457 41 446 180
Trade and other receivables 15 27 291 466 37 785 401 37 784 545
Financial assets at fair value
through profit or loss 16 - 4 645 -
Cash and cash equivalents 17 312 252 1 003 188 956 810
78 172 326 87 944 731 87 478 003
Total assets 269 425 645 249 742 405 247 809 246
EQUITY AND LIABILITIES
Capital and Reserves
Share capital 18 45 962 789 45 962 789 45 962 789
Share premium 4 358 468 4 358 468 4 358 468
Non-distributable reserve 577 956 577 956 577 956
Revaluation reserve 39 948 518 39 948 518 39 948 518
Accumulated losses (69 239 419) (23 639 698) (53 625 190)
21 608 312 67 208 033 37 222 541
Non-current liabilities
Lease liability 19.1 15 043 461 850 000 800 000
Borrowings 20.1 5 990 629 - -
Deferred tax liability - 8 297 950 -
21 034 090 9 147 950 800 000
Current liabilities
Lease liability 19.2 6 951 547 103 887 261 570
Borrowings 20.2 17 187 926 19 673 043 10 790 113
Trade and other payables 21 191 188 672 142 686 117 187 482 799
Provisions 22 11 051 598 9 846 278 10 848 723
Current tax liability 403 500 1 077 097 403 500
226 783 243 173 386 422 209 786 705
Total equity and liabilities 269 425 645 249 742 405 247 809 246
Condensed statement of cash flows
for the six (6) months ended 30 June 2015
Notes 30June 30 June 31 December
2015 2014 2014
USD USD USD
Unaudited Unaudited Audited
Cash generated form operating
activities
Loss before taxation (20 727 647) (8 714 732) (56 365 731)
Adjustment for non-cash items 8 018 796 7 955 512 20 949 227
Net effect of changes in working
capital 12 569 868 7 201 496 53 558 672
Net cash (utilised in)/ generated from
operations (138 983) 6 442 276 18 142 168
Interest paid (126 274) (1 004 825) (3 249 810)
Tax paid - - (673 597)
Net cash (utilised in)/ generated from
operating activities (265 257) 5 437 451 14 218 761
Cash flows from investing activities
Purchase of property, plant and equipment (30 804 938) (1 086 072) (346 840)
Net cash utilised in investing activities (30 804 938) (1 086 072) (346 840)
Cash flows from financing activities
Proceeds from borrowings 30 804 938 366 910 1 511 204
Repayment of borrowings (410 310) (1 118 000) (10 631 690)
Net cash generated from/ (utilised in)
financing activities 30 394 628 (751 090) (9 120 486)
Net (decrease)/increase in cash and cash
equivalents (675 567) 3 600 289 4 751 435
Cash and cash equivalents at
beginning of the period/year 761 924 (3 989 511) (3 989 511)
Cash and cash equivalents at end
of period/year 17 86 357 (389 222) 761 924
Condensed statement of changes in equity
for the six (6) months ended 30 June 2015
Non-
Share distributable Share Revaluation Accumulated
capital reserves premium reserve losses Total
USD USD USD USD USD USD
Balance at
1 January 2015 45 962 789 4 358 468 577 956 39 948 518 (53 625 190)37 222 541
Total comprehensive
loss for the period
(unaudited) - - - - (15 614 229)(15 614 229)
Balance at
30 June 2015
(unaudited) 45 962 789 4 358 468 577 956 39 948 518(69 239 419) 21 608 312
Balance at
1 January 2014 45 962 789 4 358 468 577 956 39 948 518(15 759 305) 75 088 426
Total comprehensive
loss for the year
(unaudited) - - - - (7 880 393) (7 880 393)
Balance at
30 June 2014
(unaudited) 45 962 789 4 358 468 577 956 39 948 518(23 639 698)67 208 033
Balance at
1 January 2014 45 962 789 4 358 468 577 956 39 948 518(15 759 305)75 088 426
Total comprehensive
loss for the year
(audited) - - - -(37 865 885)(37 865 885)
Balance at
31 December 2014
(audited) 45 962 789 4 358 468 577 956 39 948 518(53 625 190) 37 222 541
Notes to the unaudited condensed financial statements
for the six (6) months ended 30 June 2015
1 Nature of operations
Hwange Colliery Company Limited is a company that extracts, processes and distributes
coal and coke products. The company operates a coal mine situated at Hwange and sells
mainly within Zimbabwe and elsewhere in Sub Saharan Africa.
2 Basis of preparation of the condensed financial statements
The condensed interim financial statements for the six (6) months ended 30 June 2015 have
been prepared in accordance with IAS 34, ‘Interim financial reporting’. They do not include
all of the information required for full annual financial statements and should be read in
conjunction with the audited annual financial statements for the year ended 31 December
2014, which have been prepared in accordance with International Financial Reporting
Standards; Companies Act(Chapter 24:03) and the relevant statutory instruments (SI 33/99
and SI 62/96).
This condensed interim financial information has been reviewed, not audited.
3 Significant accounting policies
The interim financial statements have been prepared in accordance with the accounting
policies adopted in the Company’s most recent annual financial statements for the year
ended 31 December 2014 except for the change in accounting policy in note 5 below.
4 Estimates
In preparing the condensed interim financial statements, the significant judgements made
by management in applying the Company’s accounting policies and the key sources of
estimation were the same as those that applied to the audited annual financial statements
for the year ended 31 December 2014.
5 Change in accounting policy
The Company’s business model has been reviewed and a divisionalisation strategy has been
implemented. This has resulted in a change in the revenue recognition policy in respect of
revenue earned from Medical Services and Estates business units, previously set off against
administrative expenses. This change has no effect on equity. The effect of the change in
accounting policy on the financial results presented is as follows:
6 months 6 months Year to
30 June 30 June 31 December
2015 2014 2014
USD USD USD
Unaudited Unaudited Audited
Increase in revenue 5 015 841 6 820 628 14 587 815
Increase in cost of sales (6 690 139) (4 714 714) (10 285 660)
Decrease/(increase) in
administrative expenses 1 674 298 (2 105 914) (4 302 155)
6 Revenue
Tonnes Tonnes Tonnes
Coal sales
HCC/HIC 225 396 197 342 393 408
HPS coal 409 843 394 451 924 659
Coal fines and breeze 45 045 154 657 201 610
Total coal sales 680 284 746 450 1 519 677
Coke tonnes 5 475 18 363 82 510
Total sales 685 759 764 813 1 602 187
USD USD USD
Mining 30 333 672 33 048 167 72 031 451
Estates 4 486 687 5 321 896 10 943 432
Medical services 529 154 1 498 732 3 644 383
Total 35 349 513 39 868 795 86 619 266
7 Taxation
Current tax - - -
Deferred tax 5 113 418 834 339 18 499 846
5 113 418 834 339 18 499 846
8 Loss per share
8.1 Basic
Basic loss per share is calculated
by dividing the loss attributable
to shareholders by the weighted
average number of ordinary shares
in issue during the period/year.
Loss attributable to shareholders (15 614 229) (7 880 393) (37 865 885)
Weighted average number of ordinary
shares in issue 183 757 366 183 757 366 183 757 366
Basic loss per share (0.08) (0.04) (0.21)
6 months 6 months Year to
30 June 30 June 31 December
2015 2014 2014
USD USD USD
Unaudited Unaudited Audited
8.2 Diluted
Loss used to determine diluted loss
per share (15 614 229) (7 880 393) (37 865 885)
The weighted average number of ordinary
shares for the purpose of diluted loss
per share, reconciles to the weighted
average number of ordinary shares used
in the calculation of basic loss per
share as follows:
Weighted average number of ordinary
shares in issue 183 757 366 183 757 366 183 757 366
Weighted average number of ordinary
shares for diluted loss per share 183 757 366 183 757 366 183 757 366
Diluted loss per share (0.08) (0.04) (0.21)
8.3 Headline loss per share
Headline loss per share excludes all
items of a capital nature and represents
an after tax amount. It is calculated by
dividing the headline loss shown below
by the number of shares in issue during
the period/ year:
Reconciliation between headline loss and
basic loss:
IAS 33 - Losses (15 614 229) (7 880 393) (37 865 885)
Non - recurring items:
Proceeds on sale of scrap (25 108) - (352 848)
Impairment of property, plant and
equipment - - 3 452 516
Loss from sale of assets - 139 904 -
Headline losses (15 639 337) (7 740 489) (38 218 733)
Weighted average number of ordinary
shares in issue 183 757 366 183 757 366 183 757 366
Headline loss per share (0.09) (0.04) (0.21)
9 Property, plant and equipment
Carrying amount at the beginning of the
period/year 129 078 977 139 129 468 139 129 468
Additions 32 311 385 5 459 391 5 638 479
Depreciation charge for the period/year (6 285 948) (5 828 555) (12 236 454)
Impairment - - (3 452 516)
Carrying amount at the end of the
period/year 155 104 414 138 760 304 129 078 977
10 Investment property
Fair value 3 700 000 3 700 000 3 700 000
Investment property comprises of:
- Land situated at Lot 7 of Stand 2185,
Salisbury Township Harare with an
administration building thereon.
- Land situated at Stand 555, Bulawayo
Township Bulawayo with an administration
building thereon.
10.1 The following amount has been recognised
in profit or loss:
Rental income 136 298 129 418 301 232
11 Investment in equity accounted investments
Investments in associates (note 11.1) 335 857 894 401 446 205
Investment in joint venture (note 11.2) 16 148 463 16 746 496 16 148 463
16 484 320 17 640 897 16 594 668
11.1 Investments in associates
Carrying amount as at beginning of
period/year 446 205 897 168 897 168
Share of loss (110 348) (2 767) (450 963)
Carrying amount at the end of the
period/year 335 857 894 401 446 205
The Company holds a 49% voting and equity interest in Clay Products (Private) Limited.
The Company also holds a 44% voting and equity in Zimchem Refineries (Private) Limited.
The Company did not recognise losses for the period ammounting to USD 374 603
(30 June 2014: USD 234 224) for Zimchem as the cumulative losses exceeded the carrying
ammount of the investment.
11.2 Investment in joint venture
Carrying amount as at 1 January 16 148 463 16 821 287 16 821 287
Share of loss - (74 791) (672 824)
Carrying amount at the end of the
period/year 16 148 463 16 746 496 16 148 463
Hwange Coal Gasification Company (Private) Limited is the only joint venture entity and the
interest is 25%. The investment in the joint venture has been accounted for using the equity
method.
*The financial information for Hwange Coal Gasification Company (Private) Limited for
the six (6) months ended 30 June 2015 was not available for inclusion in these financial
statements.
12 Intangible assets
Opening carrying amount 1 590 041 1 802 904 1 802 904
Amortisation charge (106 431) (106 431) (212 863)
Closing carrying amount 1 483 610 1 696 473 1 590 041
13 Stripping activity asset
Carrying amount at 1 January 7 290 468 6 774 204 6 774 204
Pre-stripping costs 1 012 748 2 596 663 1 796 730
Costs charged/(credited) to cost of sales 109 145 49 173 (1 280 466)
Closing carrying amount 8 412 361 9 420 040 7 290 468
14 Inventories
Raw materials 5 039 725 5 973 194 4 881 326
Consumables - - 72 895
Finished goods
Coal and coal fines 34 129 814 30 086 865 34 282 926
Coke 2 986 708 3 671 398 2 209 033
42 156 247 39 731 457 41 446 180
15 Trade and other receivables
Trade 12 266 435 19 620 194 15 373 035
Other 15 025 031 18 165 207 22 411 510
27 291 466 37 785 401 37 784 545
6 months 6 months Year to
30 June 30 June 31 December
2015 2014 2014
USD USD USD
Unaudited Unaudited Audited
16 Financial assets at fair value through
profit or loss
Carrying amount 1 January - 4 645 4 645
Fair value adjustment - - (4 645)
Fair value at the end of the period/year - 4 645 -
The fair value of all equity securities is based on their current bid prices on the Zimbabwe
17 Cash and cash equivalents
For the purposes of statement of cash flows, cash and cash equivalents include cash on
hand and in banks and investments in money market instruments, net of outstanding bank
overdrafts. Cash and cash equivalents at the end of the period/year as shown in the statement
of cash flows can be reconciled to the related items in the statement of financial position as
follows:
Bank and cash balances 312 252 1 003 188 956 810
Bank overdraft (225 895) (1 392 410) (194 886)
86 357 (389 222) 761 924
18 Share capital
Authorised
204 000 000 ordinary shares of USD0.25 each 51 000 000 51 000 000 51 000 000
Issued and fully paid
110 237 432 Ordinary shares of
USD0.25 each 27 559 358 27 559 358 27 559 358
5 962 366 Ordinary shares issued under
share option scheme 1 514 039 1 514 039 1 514 039
29 073 397 29 073 397 29 073 397
67 557 568 ‘’A’’ Ordinary shares of
USD0.25 each 16 889 392 16 889 392 16 889 392
45 962 789 45 962 789 45 962 789
19 Lease liability
19.1 Non current
Finance lease liabilities due after
one year 15 043 461 850 000 800 000
19.2 Current
Finance lease liabilities due
within one year 6 951 547 103 887 261 570
20 Borrowings
20.1 Non current
Loans due after one year 5 990 629 - -
20.2 Current
Bank overdraft 225 895 1 392 410 194 886
Loans payable within one year 16 962 031 18 280 633 10 595 227
17 187 926 19 673 043 10 790 113
21 Trade and other payables
Trade 78 944 668 64 200 483 106 604 119
Other 112 244 004 78 485 634 80 878 680
191 188 672 142 686 117 187 482 799
22 Provisions
22.1 Provision for rehabilitation
At the beginning of the period/year 4 893 360 3 893 360 3 893 360
Additional provisions made during
the period/year 500 000 500 000 1 000 000
At the end of the period/year 5 393 360 4 393 360 4 893 360
22.2 Other provisions
Leave pay and other provisions 5 658 238 5 452 918 5 955 363
Total Provisions 11 051 598 9 846 278 10 848 723
23 Segment reporting
The Company currently has three business units operating as segments. These operating
segments are monitored by the Company’s Board of Directors and strategic decisions are
made on the basis of adjusted segment operating results.
Segment information for the reporting periods is as follows:
Medical
Mining Estates services Total
USD USD USD USD
30 June 2015
Revenue
From external customers 30 333 672 4 486 687 529 154 35 349 513
From other segments - 690 730 1 485 529 2 176 259
Total segment revenues 30 333 672 5 177 417 2 014 683 37 525 772
Segment operating loss (17 600 922) (791 099)(1 114 782) (19 506 803)
Segment assets 253 806 655 7 612 572 8 006 418 269 425 645
Segment liabilities 215 072 830 16 310 785 16 433 718 247 817 333
30 June 2014
Revenue
From external customers 33 048 167 5 321 856 1 498 772 39 868 795
From other segments - 592 892 1 173 612 1 766 504
Total segment revenues 33 048 167 5 914 748 2 672 384 41 635 299
Segment operating loss (6 675 922) (279 980) (676 447) (7 632 349)
Segment assets 236 323 323 6 785 315 6 633 767 249 742 405
Segment liabilities 152 209 475 16 310 785 14 014 112 182 534 372
31 December 2014
Revenue
From external customers 72 031 451 10 943 432 3 644 383 86 619 266
From other segments - 478 604 261 388 1 739 992
Total segment revenues 72 031 451 12 422 036 3 905 771 88 359 258
Segment operating
(loss)/profit (50 803 922) (1 077 405) 341 107 (51 540 220)
The totals presented for the Company’s operating segments reconcile to the key financial figures as
presented in its financial statements as follows:
Medical
Mining Estates services Total
USD USD USD USD
30 June 2015
Revenue
Total reportable segment
revenue 30 333 672 5 177 417 2 014 683 37 525 772
Elimination of intersegment
revenue - (690 730) (1 485 529) (2 176 259)
Total Company revenue 30 333 672 4 486 687 529 154 35 349 513
30 June 2014
Revenue
Total reportable segment
revenue 33 048 167 5 914 748 2 672 384 41 635 299
Elimination of intersegment
revenue - (592 892) (1 173 612) (1 766 504)
Total Company revenue 33 048 167 5 321 856 1 498 772 39 868 795
31 December 2014
Revenue
Total reportable segment
revenue 72 031 451 12 422 036 3 905 771 88 359 258
Elimination of intersegment
revenue - (478 604) (261 388) (1 739 992)
Total Company revenue 72 031 451 10 943 432 3 644 383 86 619 266
24 Going concern
The Company is experiencing matters that may cast significant doubt on its ability to continue as a
going concern. Management has considered the following matters:
Net current liability position
The company’s current liabilities exceeded its current assets by USD 148 610 917 as at 30 June
2015 (30 June 2014: 85 441 691; 31 December 2014: USD 122 308 702). This unfavourable position
is a result of the delayed realisation of capitalisation projects as a result of the adverse liquidity
situation affecting the economy as a whole. The market demand currently remains unsatisfied and
there are opportunities for growth of the Company. The Company has adequate coal reserves and
contracted stocks of coal fines to enable it to continue operating for the forseeable future. The
Company has engaged a contractor to provide mining services at its open cast mine in line with its
strategy to expand its mining activity. The Company also took delivery of mining equipment in June
2015 and this is expected to improve production output. Management, therefore, believes that the
Company’s ability to continue to operate is dependent upon future profitability.
Operating loss
The operating loss of USD 19 506 803 (30 June 2014: USD 7 632 349; 31 December 2014: USD 51 540
220) is mainly attributable to the lower revenue recorded in the period under review. The Company’s
current initiatives are expected to reverse the general poor production and trading performance.
Litigation cases
The company had litigation cases brought against it during the period. The summary of significant
legal cases for Hwange Colliery Company Limited as at 30 June 2015 are as follows:
USD
Value of cases for which judgement has been passed against the company 20 106 710
Value of cases pending judgements at the courts 20 611 536
Total value of litigation cases 40 718 246
25 Financial risk management objectives and policies
The Company’s principal financial liabilities comprise finance lease liabilities, loans payable, bank
overdrafts and trade payables. The main purpose of these financial liabilities is to raise finance for
the Company’s operations. The Company has various financial assets such as trade receivables
and cash and short term deposits, which arise directly from its operations. Exposure to credit,
interest rate and currency risk arises in the normal course of Company’s business and these are
the main risks arising from the Company`s financial instruments.
25.1 Credit risk
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing
basis. The Company assumes foreign credit risk only on customers approved by the Board and
follows credit review procedures for local credit customers.
Investments are allowed only in liquid securities and only with approved financial institutions. At
the reporting date there were no significant concentrations of credit risk. The maximum exposure
to credit risk is represented by the carrying amounts of each financial asset in the statement of
financial position.
25.2 Interest rate risk
The Company’s exposure to the risk of changes in market interest rates relates primarily to the
Company’s long and short term debt obligations and bank overdrafts. The Company’s policy is to
manage its interest cost using a mix of fixed and variable rate debts.
25.3 Currency risk
The Company is exposed to foreign currency risk on transactions that are denominated in a
currency other than the United States Dollar. The currency giving rise to this risk is primarily the
South African Rand.
In respect of all monetary assets and liabilities held in currencies other than the United States
Dollar, the Company ensures that the net exposure is kept to an acceptable level, by buying or
selling foreign currencies at spot rates where necessary to address short-term imbalances.
The Company’s exposure to foreign currency changes for all the other currencies is not
significant.
26 Contingent liability
The Company is currently under tax investigation in relation to amounts of USD 23 983 568 for
employee tax (Pay-As-You-Earn) and USD 35 928 420 in respect of Value-Added-Tax, Corporate tax
and Withholding tax. The final tax assessment has not yet been issued by the tax authorities.
27 Events after the reporting date
No significant adjusting events have occurred between the reporting date and the date of
authorisation of these financial statements.
REGISTERED OFFICE
7th Floor, Coal House
17 Nelson Mandela Avenue
Harare
ZIMBABWE
7 October 2015
Directors: F Mutamangira (Chairman); S T Makore* (Managing); N S Chibanguza; J Chininga; I C Haruperi; J Muskwe (Mrs); V Vera (*Executive)
www.hwangecolliery.co.zw
Sponsor: Sasfin Capital (a division of Sasfin Bank Limited)
Date: 07/10/2015 02:54:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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