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Interim results For the half year ended 30 June 2018
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 2018
CHAIRMAN’S STATEMENT
On behalf of the Board of Directors, I present the unaudited financial
results of Hwange Colliery Company Limited for the half year ended 30
June 2018.
FINANCIAL PERFOMANCE
The Company’s financial performance for the period under review
improved in comparison to the same period in the 2017 financial year.
The Company’s revenue increased by 62% to US$30.5 million from US$18.8
million for the comparable period last year. The increase in revenue
is attributed to an increase in sales volume of 51% and increased
prime grades in the sales mix. The loss for the year decreased by 6%
to US$23 million during the period under review from US$24.5 million
recorded in 2017.
OPERATIONS
Production improved significantly to 819,859 tonnes from 565,298
achieved during the same period in 2017, representing an increase of
45%. Though favorable than the comparable period in 2017, the
company’s production performance for the period under review fell 22%
short of budgetary target of 1,047,026 tonnes. This was attribute to
working capital constraints. The improved production has seen the
Company regaining its market share lost in prior years.
Total sales tonnage was 682,152 from 450,452 for the same period last
year against a budget of 1,242,880. HPS sales to Hwange Power Station
increased by 70% from 221,646 tonnes to 376,695 tonnes and HCC/HIC
coal sales increased by 54% from 174,201 tonnes to 268,570 tonnes.
The cost of sales increased by 46% to $30.6 million from $20.9 million
in June 2017 driven by sales volumes which increased by 231,700
tonnes.
SCHEME OF ARRANGEMENT
The Company’s scheme of arrangement with its creditors afforded the
Company moratorium while building the financial resources to
capacitate the Company to meet its financial obligations in favour of
its creditors. The Board remains confident that the turnaround efforts
shall yield the desired results.
OUTLOOK
The company’s half year performance demonstrates that increased
production can be achieved. This increase will be complemented by some
targeted efficiency interventions that are expected to impact
positively on the costs of sales. That being said, the company’s
strategic priorities for the second half of the year (H2, 2018) will
continue to be the following;
a) Increased production
Through to year end, the company shall focus on a sustainable
monthly production tonnage of 300,000 tonnes per month inclusive
of the mining contractor’s contribution. Further, since the
company managed to resuscitate the underground mine operations,
it shall focus on mining high value coking coal. This is with the
resuscitation of the company’s own coke oven battery in mind that
beneficiation of coking coal to coke shall create more value for
the company. While the company has engaged the National Railways
of Zimbabwe as a solution to its external logistics, there are
still challenges which the Company is still engaging NRZ for a
solution.
b) Open Cast Mining
The Company’s open cast operation contributed 296,958 tonnes for
the half year which represents 36% of the total half year
production. There are still constraints in the internal logistics
and processing section of the value chain. Efforts continue to be
made to secure working capital to address these.
c) Resuscitation of Underground Mine Operations
The Company diligently pursued the resuscitation of its
underground mine operations which was out of production since
July 2015 after its continuous miner had a major breakdown. The
Company has managed to bring back the underground mine into
operation producing an average of 15,000 tonnes per month since
January 2018. The target is to bring the operation to 50,000
tonnes per month, which will contribute significantly to the
company’s bottom line and enhance exports.
d) Coke Production
The Company’s intended takeover project of the Hwange Coal
Gasification Company (HCGC) Coke oven battery pursuant to a BOOT
Agreement with its Chinese partners in HCGC was delayed. The
Company has placed more emphasis and attention on the
resuscitation of its own coke oven battery while it shall still
continue exploring options for the takeover of the HCGC Battery.
e) Cost Reduction
The Company adopted a low-cost high productivity strategy. This
has remained an on-going strategy and shall be monitored through
to year end.
f) Western Areas Development
The Company concluded an Exploration Agreement with Fugro Earth
Resources to undertake exploration and drilling of the Western
Areas Concession. Commencement of works is expected in the last
quarter of the current financial year.
g) Improve efficiencies and competitiveness
As the Company increases the thrust on the core business of
mining, it will also look at ways of weaning non-core activities
such as road maintenance, electrical power distribution and
sewage treatment. The adoption of enterprise resource planning
systems to automate the administration of the business will also
improve efficiencies and lower the cost per ton of coal produced.
Dividend
In view of the loss position, this Board has not proposed an interim
dividend for the period under review.
DIRECTORATE
During the period under review, Mr S.T Makore resigned from his
position as the Company’s Managing Director effective 23 May 2018.
There are still vacancies on the Board. The Board is engaging
shareholders in connection with filling the casual vacancies on the
Board.
APPRECIATION
Whilst the Company is still in a loss position, the financial results
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 its 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.
J. MUSKWE (MRS)
Acting Chairperson
13 August 2018
OPERATIONAL REVIEW
I have pleasure in submitting my report on the Company’s operations
for the half year ended 30 June 2018.
Overview
An operating plan for the half year was adopted from the five-year
strategic plan aimed at increased and least cost production. This
five-year strategic plan was a culmination of a company-wide approach
involving and incorporating inputs from staff in all departments.
Coal Production and Sales
Mining – Open pit mining increased from an average of 68,986 metric
tonnes per month in the first quarter and peaked at 300 000 metric
tonnes per month in June.
Local sales – The increased production and sales enabled the company
to retain key customers and grow its market share. Sales for the half
year ended 30 June 2018 were 0.68 million metric tonnes which
represented a 51% increase compared to the same period last year.
Thermal coal still contributed the largest potion of sales while
industrial coal sales to the industrial customers and the tobacco
sector also grew. Coking coal sales will be a major area of focus and
growth as the production from 3 main underground increases. The
ultimate strategy will be coke production which is hinged on the
Company’s resuscitation of its own coke oven battery.
Export sales – The Company’s largest export market was Zambia. Export
of industrial coal and coke to this market contributed to the export
revenue. Trial orders of industrial coal to new blue-chip customers in
Zambia and South Africa were also undertaken. These new customers will
be a source of market share growth for the export business. Export
sales contributed only 5% compared to the target of 20% contribution.
Coal Processing
Coke Oven Battery – Refurbishment of the Hwange Colliery coke oven
battery is planned to start in the 4th quarter of 2018.
Estate Division Performance
Revenue grew by 62% to $4.9 million compared to the previous year. The
revenue was generated from the following segments: real estate (56%),
retail (29%), hospitality (8%) and education (7%)
Medical Services Divisions Performance
The Medical Services Division generated revenue of $986,522 in the
period under review. Service provision has improved significantly due
to improved cash flows after the introduction of an externally managed
medical aid.
Safety, Health, Environment and Quality
The Company’s objective is zero harm to the environment, people and
equipment. During the period under review, no fatality was recorded.
The company is pursuing recertification on ISO 9001:2015 by the month
of August 2018 and has also embarked on Integrated Business management
system (IBMS) targeting certification by third quarter 2019.
OUTLOOK
The Operating plan for the second half of the year (H2, 2018) will
continue to focus on increased production and improved efficiencies.
However, increased production requires that the company allocates more
funding to its operations focusing on its core business of mining and
reducing non-mining costs in line with industry best practices.
Innovative ways to deal with the scheme obligations will be explored
while production of high margin and value coking coal will be
increased.
Appreciation
The board, management and staff showed resilience and remained focused
on its turnaround plan implementation. I would like to thank the
Acting Chairperson, Mrs J. Muskwe and the entire board, management and
staff for their support, dedication and relentless commitment during
the period under review and look forward to their support through to
year end.
S. Manamike
Managing Director (Acting)
13August 2018
STATEMENT OF CORPORATE GOVERNANCE
Hwange Colliery Company Limited follows the principles and general
guidelines set out by the King Reports on Corporate Governance and the
National Code on Corporate Governance. As a tri-listed Company, it
also complies with the listing requirements of the Zimbabwe Stock
Exchange, Johannesburg Stock Exchange and the London Stock Exchange.
CODES OF PRACTICE
The Board has established policies and procedures regulating its own
processes to ensure good corporate governance.
DIRECTORATE
The Company’s Articles of Association provide for a maximum of ten
(10) directors of which one (1) of them is a Managing Director who is
given executive functions. The Board is chaired by a non-executive
director. Directors meet at least quarterly and these directors are
subject to retirement by rotation and re-election by Shareholders in
accordance with the Company’s Articles of Association.
DIRECTORS’ INTERESTS
In terms of good corporate governance and as provided by the Companies
Act (Chapter 24:03) and the Company’s Articles of Association,
directors are required to declare in writing during the year, whether
they have material interests in any contracts or arrangements of
significance with the Company which could give rise to conflict of
interest. No such conflicts have been reported during the period under
review.
BOARD MEETING ATTENDANCE
Details of attendance by the Directors at Board and Committee meetings
for the half year ended 30 June 2018 are set below:
NAME MAIN BOARD HUMAN AUDIT MARKETING TECHNICAL
OF RESOURCES
DIRECT
OR
ATT POSSI ATTEN POSSI ATTEN POSSI ATTEN POSSI ATTEN POSSI
END BLE DED BLE DED BLE DED BLE DED BLE
ED
Mrs 3 4 4 4 - - 4 4 - -
J.Musk
we
Mr S T 4 4 4 4 4 4 4 4 4 4
Makore
Mrs 4 4 - - 4 4 - - 4 4
N.Masu
ku
Mr E.N 3 4 - - 3 4 3 4 3 4
Tome
Mr V 4 4 - - 2 4 3 4 2 4
Vera
INTERNAL CONTROLS
The board reviews the effectiveness of the internal controls through
the Audit Committee and through executive management reporting to the
Board. Business plans, budgets and authorisation limits for the
approval of significant expenditure, including investments are
appraised and approved by the Board.
The Company complies with the Zimbabwe Stock Exchange listing rules
regarding dealings in the Company’s shares and has adopted a share
dealing code to ensure compliance by the directors and applicable
employees.
SHAREHOLDER RELATIONSHIPS
During the year the Company met with shareholders at an annual general
meeting which was held on 29 June 2018.
A.MASIYA
Company Secretary
20 September 2018
Condensed Statement of Profit or loss and other comprehensive income
for the six months ended 30 June 2018
6 months to 6 months to 31 December
30 June 2018 30 June 2017 2017
USD USD USD
Notes
Unaudited Unaudited Audited
Revenue 5 30 538 196 18 814 733 54 497 858
Cost of sales (30 682 115) (20 957 538) (53 150 059)
Gross (143 919) (2 142 805) 1 347 799
(loss)/profit
Other Income 558 174 218 760 795 358
Other gains and - (3 609) (3 609)
losses (net)
Marketing costs (323 038) (333 237) (1 232 479)
Administrative (10 825 269) (6 415 219) (25 098 636)
costs
Care and (4 119 607) (5 278 313) -
maintenance costs
Operating costs (14 853 659) (13 954 423) (24 191 567)
Loss on disposal - (5 921 389) (6 521 040)
of treasury bills
Finance costs (8 147 736) (4 623 896) (13 062 019)
Share of loss - (63 113) (63 113)
from equity
accounted
investments
LOSS BEFORE TAX (23 001 395) (24 562 821) (43 837 739)
Income Tax 6 - - -
LOSS FOR THE (23 001 395) (24 562 821) (43 837 739)
PERIOD/YEAR
Other
comprehensive
Income:
Other - - -
Comprehensive
Income for the
period/year, net
of tax
TOTAL (23 001 395) (24 562 821) (43 837 739)
COMPREHENSIVE
LOSS FOR THE
PERIOD/YEAR
Attributable loss 6 (0.13) (0.13) (0.49)
per share - basic
-diluted 6 (0.13) (0.13) (0.49)
Headline loss per 6 (0.13) (0.13) (0.48)
share - Basic
-diluted 6 (0.13) (0.13) (0.48)
-diluted 6 (0.13) (0.13) (0.13)
Condensed Statement of Financial Position as at 30 June 2018
31 December
30June2018 30 June 2017 2017
Notes USD USD Unaudited USD
Unaudited Audited
Assets
Non-current
assets
Property, 7 104 062 428 112 433 601 107 569 137
plant and
equipment
Investment 8 4 490 000 4 490 000 4 490 000
Property
Investments 9 14 753 031 14 753 031 14 753 031
accounted for
using the
equity method
Intangible 10 592 882 862 411 699 313
assets
Exploration 685 813 - -
and
evaluation
Inventories 8 138 714 9 218 421 8 138 714
non-current
portion
132 722 868 141 757 464 135 650 195
Current
assets
Stripping 11 6 462 360 - 8 871 563
activity
asset
Inventories 12 19 151 915 22 381 506 13 413 017
Trade and 13 18 339 519 22 021 505 31 427 775
other
receivables
Cash and cash 14 5 056 509 30 130 558 8 864 181
equivalents
49 010 303 74 533 569 62 576 536
Total assets 181 733 171 216 291 033 198 226 731
EQUITY AND
LIABILITIES
Capital and
reserves
Share Capital 15 45 962 789 45 962 789 45 962 789
Non- 4 358 468 4 358 468 4 358 468
distributable
reserves
Share premium 577 956 577 956 577 956
Revaluation 39 948 518 39 948 518 39 948 518
reserve
Accumulated (325 431 087) (283 154 774) (302 429 692)
losses
(234 583 356) (192 307 043) (211 581 961)
Non-current
liabilities
Finance lease 16.1 600 000 700 000 600 000
liabilities
Borrowings 17.1 154 003 630 145 940 958 150 312 838
Long term 18.2 59 703 306 184 776 428 210 226 851
creditors
4% debentures 19 123 999 364 - -
Income tax 10 054 850 - 10 054 850
liability
348 361 150 331 417 386 371 194 539
Current
Liabilities
Finance lease 16.2 390 969 397 723 390 969
liability
Borrowings 17.2 12 605 825 - -
Trade and 18.1 35 845 937 53 162 651 24 364 013
other
payables
Debentures 19 4 093 352 - -
Provisions 20 15 019 294 13 565 466 13 859 171
Current tax - 10 054 850 -
liability
67 955 377 77 180 690 38 614 153
Total equity 181 733 171 216 291 033 198 226 031
and
liabilities
Condensed statement of cash flows for the six months ended 30 June
2018
31 December
30 June 2018 30 June 2017 2017
USD USD USD
Notes Unaudited Unaudited Audited
Cash generated
from operating
activities
Loss before (23 001 395) (24 562 821) (43 837 739)
taxation
Adjustments for 14 036 861 11 820 397 25 040 660
non-cash items
Net effect of 22 400 608 16 523 635 (229 085 781)
changes in
working capital
Net cash 13 436 074 3 781 211 (247 882 860)
(utilised
in)/generated
from operations
Interest paid - (28 656) -
Tax paid - - -
Net cash 13 436 074 3 752 555 (247 882 860)
(utilised
in)/generated
from operating
activities
Cash flows from
investing
activities
Purchase of (2 551 902) (13 443) (1 707 063)
property, plant
and equipment
Proceeds from - - -
disposal of
assets
Exploration and (685 813) - -
evaluation
Net cash (3 237 715) (13 443) (1 707 063)
utilised in
investing
activities
Cash flows from
financing
activities
Proceeds from 12 518 150 - 52 284 000
borrowings
Repayment of - (125 000) (4 335 506)
borrowings
Long term (26 524 181) - 210 226 979
creditors
Net cash (14 006 031) (125 000) 258 175 473
generated from/
(utilised in)
financing
activities
Net (decrease)/ (3 807 672) 3 614 112 8 585 550
increase in cash
and cash
equivalent
Cas and cash 8 864 181 465 977 278 631
equivalents at
beginning of the
period
Cash and cash 14 5 056 509 4 080 089 8 864 181
equivalents at
end of
period/year
Condensed statement of changes in equity for the six months ended 30
June 2018
Share Non- Share Revaluatio
Capita distributab Premiu n Reserve Tota
l le reserves m USD Accumulate l
USD USD USD d losses USD
USD
Balance as 45 962 4 358 468 577 39 948 518 (302 429 (211
at 1 789 956 692) 581
January 961)
2018
Total - - - - (23 001 (23
Comprehensi 395) 001
ve loss for 395)
the period
(unaudited)
Balance at 45 962 4 358 468 577 39 948 518 (325 431 (234
30 June 789 956 087) 583
2018 356)
(Unaudited)
Balance at 45 962 4 358 468 577 39 948 518 (258 591 (167
1 January 789 956 953) 744
2017 222)
Total - - - - (24 562 (24
comprehensi 821) 562
ve loss for 821)
the period
(unaudited)
Balances at 45 962 4 358 468 577 39 948 518 (283 154 (192
30 June 789 956 774) 307
2017 043)
(unaudited)
Balance at 45 962 4 358 468 577 39 948 518 (258 591 (167
1 January 789 956 953) 744
2017 222)
Total - - - - (43 837 (43
comprehensi 739) 837
ve loss for 739)
the year
(audited)
Balances at 45 962 4 358 468 577 39 948 518 (302 429 (211
31 December 789 956 692) 581
2017 961)
(audited)
Notes to the condensed interim financial statements for the six months
ended 30 June 2018.
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 and
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 2018 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 2017, which have been
prepared in accordance with International Financial Reporting
Standards; Companies Act (Chapter 24:03) and the relevance
statutory instruments (SI 33/99 and SI 63/96).
The Company is a limited liability company 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 has been reviewed,
not audited.
These condensed interim financial statements were approved for
issue by the Board of directors on 19 September 2018.
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 2017.
4. Estimates
The preparation of interim financial requires management to make
judgments, estimates and assumptions that affect the application
of accounting policies and 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 judgments 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 end of the year ended 31
December 2017.
6 months Year Ended
6 months to 30 June 31 December
to 30 June 2017 2017
2018 USD USD USD
Unaudited Unaudited Audited
5
Revenue
Coal sales
HCC/HIC 268 570 174 021 510 459
HPS coal 376 695 221 646 669 124
Coal fines and breeze 36 724 51 542 103 922
Total Coal sales 681 989 447 209 1 283 506
Coke tonnes 163 3 243 4 979
Total sales 682 152 450 452 1 288 485
USD USD USD
Mining 24 507 948 15 457 085 44 292 950
Estates 4 980 727 3 082 171 668 434
Medical services 986 522 275 477 9 536 474
Total 30 538 196 18 814 733 54 497 858
6
Taxation
Current tax - - -
Deferred tax - - -
6 Loss per share
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 to (23 001 (24 562 (43 837
shareholders 395) 821) 740)
Weighted average number of 183 757 183 757 183 720 699
ordinary shares in issue 366 366
Basic loss per share (0.13) (0.13) (0.24)
6.2 Diluted
Loss used to determine (23 001 (24 562 (43 837
diluted loss per share 395) 821) 740)
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:
The weighted average 183 757 183 757 183 720 699
number of ordinary shares 366 366
in issue
Weighted average number of 183 757 183 757 183 720 699
ordinary shares for 366 366
diluted loss per share
Diluted loss per share (0.13) (0.13) (0.24)
Notes to the condensed interim financial statements for the six months
ended 30 June 2018
30 June 31 December
30 June 2018 2017 2017
USD USD USD
Unaudited Unaudited Audited
6 Loss per share
(Continued)
6.2 Diluted (continued)
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
lose:
ISA 33 - losses (23 001 395) (24 562 (43 837
821) 740)
Non-recurring items:
Proceeds on sale of scrap (234 205) (3 198) (90 037)
Retrenchment costs - - 4 382 064
Loss on disposal of - - 6 521 040
treasury bills
Tax effect of the above - - (2 260 089)
Headline losses (23 235 600) (24 566 (35 284
019) 762)
Weighted average number 183 757 366 183 757 183 720 699
of ordinary shares in 366
issue
Headline loss per share (0.13) (0.13) (0.19)
7 Property, plant and
equipment
Carrying amount at the 107 569 137 119 261 119 261 362
beginning of the 362
period/year
Additions 2 551 902 77 120 1 707 063
Disposals - - -
Depreciation charge for (6 058 611) (6 904 (13 399
the period/year 881) 288)
Carrying amount at the 104 062 428 112 433 107 569 137
end of the period/year 601
8 Investment property
Fair value 4 490 000 4 490 000 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
or loss:
Rental income 226 162 175 318 528 879
9 Investment in equity
accounted investments
Investments in associates - - -
(note 11.1)
Investments in joint 14 753 031 14 753 031 14 753 031
venture (11.2)
14 753 031 14 753 031 14 753 031
9.1 Investments in associates
Carrying amount as at - 63 113 63 113
beginning of period/year
Share of loss - (63 113) (63 113)
Carrying amount at the - - -
end of the period/year
The company holds 49%
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
the equity method.
The Company did not
recognise losses for the
period accounting to USD
146 254 (2017: USD 336
428) for Zimchem
Refineries (Private)
Limited as the cumulative
losses exceed the
carrying amount of the
investment in associate.
The Company did not
recognise losses for the
period amounting to USD
35 371 (2017: 887) for
Clay products (Private)
Limited at the cumulative
losses exceed the
carrying amount of the
investment in associate.
9.2 Investment in joint
venture
Carrying amount as at 1 14 753 031 14 753 031 14 753 031
January
Share of loss - - -
Carrying amount at the 14 753 031 14 753 031 14 753 031
end of the period/year
Hwange coal gasification
Company (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 699 313 968 842 968 842
Additions - - -
Impairment losses - - -
Amortisation charge (106 431) (106 431) (269 529)
Closing carrying amount 592 882 862 411 699 313
Intangible assets comprise of mining rights and an enterprise
resource planning (ERP) software. The Company acquires 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 been pledged as security
for liabilities.
11 Stripping activities
Carrying amount as at 1 8 871 563 - -
January
Pre-stripping costs 2 895 112 - 8 871 563
incurred
Costs charged/(credited) (5 304 315) - -
to cost of sales
Closing carrying amount 6 462 360 - 8 871 563
12 Inventories
Raw materials/consumables 10 089 391 13 107 614 9 144 098
Finished goods
Coal and coal fines 9 062 524 9 273 892 4 268 919
coke - - -
19 151 915 22 381 506 13 413 017
13 Trade and other
receivables
trade 16 414 023 16 746 975 22 013 350
Other 1 925 495 5 274 530 9 414 425
18 339 519 22 021 505 31 427 775
14 Cash and cash equivalence
For the purposes of
statement of cash flows,
cash and cash equivalents
include cash on hand and
cash 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 reconciled to
the related items in the
statement of financial
position as follows:
Bank and cash balances 5 056 509 30 130 558 8 864 181
Bank overdraft - - -
5 056 509 30 130 558 8 864 181
15 Share capital
Authorised
204 000 000 0rdinary 51 000 000 51 000 000 51 000 000
shares of USD 0.25 each
Issued and fully paid
110 237 432 ordinary 27 559 358 27 559 358 27 559 358
shares of USD 0.25 each
5 962 366 ordinary shares 1 514 039 1 514 039 1 514 039
issued under share option
scheme
29 073 397 29 073 397 29 073 397
67 557 568 “A” Ordinary 16 889 392 16 889 392 16 889 392
shares of USD 0.25 each
45 962 789 45 962 789 45 962 789
16 Lease liability
16.1 Non-current
Finance lease liabilities 600 000 700 000 600 000
due after one year
17 Borrowings
Borrowings relate to loans from the Government of Zimbabwe, CABS and
CBZ with an average borrowing cost of 7%. CBZ loan is securitized
against immovable property and an assignment of proceeds from two
major customers in a ring fence arrangement. The CABS loan is
guaranteed by the Reserve Bank of Zimbabwe.
17.1 Non-current
Loans due after one year 154 003 630 145 940 150 312 838
958
17.2 Current
Bank overdraft - - -
Loans payable within one 12 605 825 - 12 605 825
year
18 Trade and other payables
18.1 Trade and other payables
- current
Trade 1 485 510 23 356 436 9 382 539
Other 34 360 427 29 806 215 14 981 474
35 845 937 53 162 651 24 364 013
18.2 Trade and other payables
– long term
Trade - 60 843 209 73 277 839
Other 59 703 306 123 933 136 949 011
219
59 703 306 184 776 210 226 850
428
19 Debentures
Debentures have been issued to creditors as per the terms of the
creditors scheme of arrangement. Regulatory approvals were obtained
prior to the issuing of the debentures will be paid quarterly with
effect from June 2019.
Current 4 093 352 - -
Long term 123 999 364 - -
128 092 716 - -
20 Provisions
20.1 Provisions of
rehabilitation
At the beginning of the 7 217 507 6 371 883 6 371 883
period/year
Additional provisions 733 084 370 024 845 624
made during the
period/year
At the end of the 7 950 591 6 741 907 7 217 507
period/year
20.2 Other provisions
Leave pay and other 7 068 703 6 823 559 6 641 664
provisions
Total provisions 15 019 294 13 565 466 13 859 171
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 Director’s 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 2018
Revenue
From external 24 570 944 4 980 395 986 522 30 537 860
customers
From other segments - 199 218 70 726 269 944
Total segments 24 570 944 5 179 612 1 057 248 30 807 804
revenues
Segment operating (14 862 735 827 (726 724) (14 853
(loss)/profit 762) 659)
Segment assets 154 942 934 12 685 795 14 104 443 181 733 171
Segment liabilities 363 873 959 24 319 525 28 123 043 416 316 527
30 June 2017
Revenue
From external 15 457 085 3 082 172 238 332 18 777 588
customers
From other segments - 239 111 813 377 1 052 488
Total segment 15 457 085 3 321 283 1 051 709 19 830 076
revenues
Segment operating (14 783 (852 602) (633 329) (16 269
loss 974) 906)
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 2017
Revenue
From external 44 292 950 9 536 474 668 434 54 497 858
customers
From other segments - 540 728 1 327 596 1 868 324
Total segment 44 292 950 10 077 202 1 996 030 56 366 182
revenue
Segment operating (29 592 (210 158) (909 514) (30 712
(loss)/profit 836) 508)
Segment assets 106 838 702 - 7 345 987 114 184 689
22 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
17 677 138 as at 30 June 2018 (30 June 2017: 2 747 121; 31 December
2017 current assets exceeded current liabilities: USD 23 962 383).
This is attributable to a portion of the scheme debt which is now due
within the next 12 months and losses incurred in the 6-month period.
The losses are a result of high fixed overheads associated with the
company’s operations and lower than plan production in the period. In
mitigation the company has reengaged a contractor to provide mining
services at its open cast mine and has relocated the company’s open
cast operation to JKL pit in a n effort to increase high margin coking
coal production. The following plans are also being implemented to
ensure that the operation returns to profitability:
3 Main Underground Mine Resuscitation
Resuscitation of 3 Main underground mine is on course with receipt of
the underground mining suite having began mid-June and by mid-July all
equipment was on site and in the process of being commissioned. The
receipt of equipment will see underground mining operations coming
back online with full production capacity of 50,000 tonnes per month
expected to be achieved by end of September 2018.The operation will be
producing coking coal.
Expansion of 3 main Underground mine
The Company is actively looking at ways to increase production from
its underground mine through the introduction of a second continuous
miner section. This should see production from the underground
operations doubling from 50,000 tonnes per month to 100.000 tonnes per
month This project is being aggressively persued to ensure adequate
feed is available for the former ZISCO cokeworks now under ZIMCOKE.The
cokeworks expected to be operational from the 2nd quarter 2019.
Coke Oven Battery
Following the resuscitation of underground mining operations which
provide the coking coal feed for the HCCL battery the Company put out
a tender for the refurbishment of its coke oven battery. The tender is
currently being adjudicated. Resuscitation of the battery should see
the company’s profitability improve in the medium term.
Disposal of houses and town infrastructure
The Company is also looking at disposing part of its housing stock and
town infrastructure to reduce its debt and financing cost. Valuations
have been analysed.
Operating loss
The operating loss of USD 14 853 661 (30 June 2017: USD 13 954 423; 31
December 2017: USD 24 191 567) 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.
23 Financial risk management objectives and policies
The company’s principal financial liabilities comprise finance lease
liabilities, loans payable, bank overdrafts and trade payable. 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.
23.1 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.
23.2 Interest rate risk
The company’s exposure to the risk of changes in market interest rates
relates primarily to the company’s long term 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.
Harare
28 September 2018
Sponsor: Sasfin Capita (a member of the Sasfin group)
Date: 28/09/2018 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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