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HWA
HWHWA
HWA - Hwange Colliery Company Limited - Unaudited Statement Of Financial
Position As At 31 December 2008
HWANGE COLLIERY COMPANY LIMITED
Incorporated in Zimbabwe
Code: HWA & ISIN: ZW009011934
HWANGE COLLIERY COMPANY LIMITED
UNAUDITED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2008
For convenience purposes only
ASSETS 2008
US$
Property, plant and equipment 187 590 880
Investment property
4 985 000
Inventory
7 834 522
Receivables and prepayments
8 161 949
Financial assets at fair value through
profit and loss 1 124
Bank and cash balances
133 971
Total assets 208 707 446
EQUITY AND LIABILITIES
Share Capital and reserves 129 587 910
Deferred taxation
40 823 840
Loans payable within one year
15 389 536
Lease liability
5 312 944
Payables
17 386 484
Provisions
196 680
Current tax liability
10 052
Total equity and liabilities 208 707 446
The Statement of financial position in United States dollars
(USD) has been prepared for convenience purposes as
supplementary information to the historical financial
statements.
The Statement of financial position has been
computed as follows:
- All foreign currency denominated
balances were translated to USD at
closing exchange rates.
- Zimbabwe dollar denominated balances
were translated at the United Nations
rate of 1 USD to 35 quadrillion
Zimbabwe dollars.
However, IAS 21 requires an entity operating in a
hyperinflationary economy to restate its financial statements
in accordance with IAS 29 and then translate to a currency of a
non - hyperinflationary economy.
In this regard, the Statement of financial position in USD is
not compliant with the requirements of IAS 21.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER
2008
HISTORICAL
COST
2008 2007
Z$ trillion Z$
trillion
Revenue 3 296 214 299
-
Cost of sales ( 1 929 675 440)
-
Gross profit 1 366 538 859
-
Investment revenue 13
-
Other gains and losses 174 675 237 129
-
Marketing costs (1)
-
Administrative costs ( 294 643)
-
Profit from operations 176 041 481 357
-
Finance cost (710 538)
-
Share of profit of -
associates -
Profit before taxation 176 040 770 819
-
Taxation (35 286 713 047)
-
Profit after taxation 140 754 057 772
-
Other comprehensive
income:
Gains on property 4 875 145 332 750
revaluation -
Other comprehensive 4 875 145 332 750
income net of tax -
TOTAL COMPREHENSIVE INCOME FOR THE 5 015 899 390 522
YEAR -
Attributable earnings per - 773
share basic -
- 773
diluted -
Headline earnings per - 773
share basic -
- 773
diluted -
HWANGE COLLIERY COMPANY
LIMITED
STATEMENT OF FINANCIAL
POSITION
AS AT 31 DECEMBER 2008
HISTORICAL
COST
2008 2007
Non Current Assets
Property, plant and 6 565 852 300 000
equipment
Investment property
174 475 000 000 -
Investments in associates -
6 740 327 300 00
Current Assets
Pre-stripped overburden
2 362 -
Inventory
248 809 421 -
Receivables and prepayments 3 767 049 789
-
Financial assets at fair
value through profit and 199 530 600 -
loss
Bank and cash balances
23 272 362 -
4 238 664 534
-
Total assets 6 744 565 964 534
-
EQUITY AND LIABILITIES
Capital and Reserves
Share capital and reserves 4 875 145 332 750
-
Retained profit 140 754 057 772
-
5 015 899 390 522
-
Non current liabilities
Deferred taxation 1 725 641 873 971
-
Current liabilities
Overdrafts
350 -
Loans payable within one year
77 -
Lease liability
25 -
Payables 2 672 893 260
-
Provisions
25 -
Current tax liability
351 806 304 -
3 024 700 041
-
Total equity and 6 744 565 964 534
liabilities -
HWANGE COLLIERY COMPANY
LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31
DECEMBER 2008
HISTORICAL
COST
2008 2007
Z$ trillion Z$
trillion
CASH FLOWS FROM OPERATING
ACTIVITIES
Profit from 176 041 481 357
operations -
Adjustment for non-cash
items:
- Unrealised exchange
losses 275
- Unrealised exchange
gains (23)
- Fair value adjustment on (174 475 000 000)
investment property -
Fair value adjustment on financial (199 530 600)
assets at fair value through profit -
and loss
Operating cash flow before
changes in working capital 1 366 951 009 -
Increase in (248 809 421)
inventory -
Increase in pre-strip
overburden (2 362) -
Increase in receivables (3 767 049 767)
-
Increase in
provisions 25 -
Increase in
payables 2 672 893 089 -
Cash flow utilised in
operations 23 982 573 -
Finance cost
(710 538) -
Income tax paid
(23) -
Cash flows utilised from
operating activities 23 272 012 -
Net cash flows from
financing activities - -
Increase in cash and cash 23 272 012
equivalents -
Represented by:
Cash and cash equivalents at
beginning of the year - -
Cash and cash equivalents
at end of the year 23 272 012 -
Increase in cash and cash 23 272 012
equivalents -
HWANGE COLLIERY COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2008
1 Currency revaluation
The Zimbabwe currency was revalued on 1 August 2008 by the removal of
ten zeros.
2 Comparatives
Comparative figures for 31 Decenber 2007 are not shown in the
financial statements because they are insignificant due to the
revaluation of the Zimbabwe dollar.
3 Accounting policies
The principal accounting policies applied in the preparation of these
financial statements have been consistently applied to all the years
presented except for non - compliance with IAS 29 as highlighted below
in note 3.1.
3.1 IAS 29 - Financial Reporting in
Hyperinflationary Economies
The financial statements are based on the historical cost and
have not been restated to take account of the effects of
inflation in accordance with the International Accounting
Standard (IAS 29): " Financial Reporting in Hyperinflationary
Economies". This is due to the non - availability of inflation
indices.
3.2 IAS 21 - Effects of Changes in Foreign
Exchange Rates
All foreign currency transactions are translated into the
reporting currency using the official exchange rates prevailing
at the date of the transactions. Foreign exchange gains and
losses resulting from the settlement of such transactions, and
from the translation at year end of monetary assets and
liabilities denominated in foreign currencies are recognised in
the statement of comprehensive income.
The closing official exchange rate as at 31 December 2008 was 1
USD to 5 million Zimbabwe dollars.
Revaluation of Plant and
3.3 Equipment
Plant and equipment were revalued by a professional valuer to
determine their fair values as at 31 December 2008. The values
were determined based on current prices in an active market for
similar plant and equipment in the same location and condition.
Investment Property
3.4
Investment properties are carried at fair value based on a
valuation by an independent valuer on 31 December 2008. The
fair values were determined based on current prices in an active
market for similar property in the same location and condition.
Chairman`s Statement to Shareholders
It is my pleasure to present the audited company results for the financial year
ended 31 December 2008.
OPERATING ENVIRONMENT
The year ended 2008 was characterized by an extremely challenging operating
environment. The high inflation, last recorded in June 2008 at 231 million
percent, continued to negatively affect the cost of inputs whilst product prices
in the domestic market remained regulated for the greater part of the year.
The demand for coal and coke products in the domestic market was firm in the
first three (3) quarters of the year but decreased significantly in the fourth
(4th) quarter as the global economic crisis began to unfold. By the end of the
year, most of the local and export customers in the mining, ferrochrome and
manufacturing industries had scaled down their operations and some even closed.
The demand in the export markets was also low in the last quarter of 2008. The
decline in the commodity price on the international markets led to a decrease in
the prices of coal and coke
OPERATIONS
Production Statistics
Product 2008 2007
HPS coal 1 140 542 1 261 539
HCC/HIC coal 806 444 923 422
Total Coal 1 946 986 2 184 961
Coke 111 748 157 783
TOTAL 2 058 734 2 342 744
The production tonnage for 2008 was lower than that of 2007 because the
envisaged recapitalisation of the business was not achieved.
The sources of coal for the period under review were the JKL and Chaba Opencast
Mines, and 3 Main Underground Mine. Since there was no major equipment purchases
during the year, the existing aged plant and equipment had frequent breakdowns
that constrained the company`s operations.
The company continued to lose critical and experienced skills mainly to
neighbouring countries and abroad. However the company intensified its in house
skills development training to mitigate skills attrition.
.
TRADING PERFORMANCE
Total coal and coke sales for the year amounted to 1 722 801 tonnes and was 17%
below the 2 071 526 tonnes achieved the previous year.
The Hwange Coking Coal (HCC) and Hwange Industrial Coal (HIC) sales amounted to
494 990 tonnes and were slightly below the tonnage of 541 357 tonnes achieved
the previous year. A total of 147 228 tonnes of coal fine were sold during the
year locally and to export markets.
Deliveries of coal to Zimbabwe Power Company`s Hwange Power Station amounted to
1 073 602 tonnes compared to 1 315 799 tonnes delivered for the same period last
year. There were no coke oven gas supplies during the year because of the major
breakdown on the gas pipeline.
Coke sales, including breeze, accounted for 154 529 tonnes of which 70% was
exported. A tonnage of 213 370 tonnes was sold the previous year.
FINANCIAL RESULTS
The company complied with the IFRS in all material respects except IAS 29
(Financial Reporting in Hyper Inflationary Economies). The financial statements
and corresponding figures for the previous period could not be restated to take
account of changes in the purchasing power of the Zimbabwe dollar because of the
unavailability of inflation indices as at 31 December 2008.
The company therefore produced the audited financial statements and also
prepared unaudited convenience accounts as at
31 December 2008 following the communication by the Zimbabwe Stock Exchange.
The truncating of zeros on the Zimbabwe dollar has eroded the historical
comparative figures and now showed nil balances.
The turnover for the year was $3.3 sextillion and there was a gross profit of
$1.4 sextillion. There was a fair value adjustment of $174.4 sextillion because
of the revaluation of investment properties in Harare and Bulawayo.
The company realized an operating profit of $176 sextillion. The attributable
profits for the year amounted to $140.8 sextillion. Gains on property
revaluation amounted to $4.9 septillion resulting in total comprehensive income
after tax of $5 septillion.
The property, plant and equipment amounted to $6.6 septillion of which $4.9
septillion is a result of the revaluation exercise.
The result of the revaluation of the Zimbabwe dollar in 2008 was that the
nominal value of the company`s issued share capital was eroded to zero (0).
Receivables amounted to $3.8 sextillion mainly attributable to the company`s
major customers, Zimbabwe Iron and Steel Company, Zimbabwe Power Company and
Zimasco.
The current liabilities of $3 sextillion comprised mainly the revalued foreign
currency denominated loans translated at prevailing exchange rates.
The servicing of foreign loans was affected by the company`s liquidity position
and unavailability of foreign currency.
DIVIDEND
The Board has resolved not to consider payment of a dividend in view of the
challenges in the operating environment.
SAFETY, HEALTH AND ENVIRONMENT
The company successfully went through two (2) ISO 9001:2000 Quality Management
System surveillance audits during the year.
The company continued with its efforts to ensure an accident free working place
and there was no fatality during the year.
The HIV and AIDS education campaigns and therapy were undertaken. Preventive
measures ensured there was no outbreak of cholera in the Hwange area.
OUTLOOK
There is a new economic and operating environment ushered in by the multi
currency system. The financial statements for 2009 will be reported in foreign
currency.
The envisaged improvements in country risk perception due to the advent of the
inclusive Government would enable the company to access funding for its capital
expenditure programme which has been on the cards for the past six (6) years.
Procurement of mining equipment and refurbishment of major machinery will be
priority during 2009 and this is expected to restore production capacity in the
short to medium term.
The demand for both coal and coke is expected to start improving towards mid
year. Some local mining and ferrochrome companies have presented their plans to
restart their operations.
DIRECTORATE
There have been no changes to the company`s Board of Directors for the year
ended 31 December 2008.
I am thankful to my fellow Directors who, throughout the year, worked tirelessly
to ensure the company remained afloat despite the challenges to the mining
industry.
APPRECIATION
The Board would like to express its sincere gratitude to all the stakeholders
who have supported the company and continue to support despite the difficulties
in the operating environment.
MR. T. SAVANHU
CHAIRMAN
23 March 2009
BASIC EARNINGS PER SHARE (HISTORICAL COST)
The calculation of basic earnings per share is based on profit after taxation of
$176 sextillion and on 182 199 850 weighted average ordinary shares in issue
during the year.
Annual Report and Accounts
The annual report and accounts for the year ended 31 December 2008 will be
distributed to members on or before 31 May 2009 and the annual general meeting
will be held on Friday 26 June 2009.
By Order of the Board
T K Ncube
SECRETARY
31 March 2009
Sponsor: Sasfin Bank Limited
Date: 01/04/2009 11:19:04 Produced by the JSE SENS Department.
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