| Wed 31 Mar 2010, 16:10 | | HWA - Hwange Colliery Company Limited - The company`s audited results for the |
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HWA
HWHWA
HWA - Hwange Colliery Company Limited - The company`s audited results for the
financial year ended 31 December 2009
HWANGE COLLIERY COMPANY LIMITED
(Incorporated in Zimbabwe)
Code: HWA ISIN: ZW0009011934
THE COMPANY`S AUDITED RESULTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2009
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2009
2009
USD
Revenue 66,363,128
Cost of sales (43,047,784)
Stock adjustment
Gross profit 23,315,344
Other income 258,389
Other gains and losses (net) 269,007
Marketing costs (654,340)
Administrative costs (17,408,112)
Operating profit 5,780,288
Finance cost (383,975)
Share of profit / (loss) of associates (425,831)
Profit before income tax 4,970,483
Income tax expense (2,380,962)
Profit for the year 2,589,521
Other comprehensive income, net of tax -
Total comprehensive income for the year 2,589,521
Attributable earnings per share - Basic 0.01
- Diluted 0.01
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2009
2009
ASSETS USD
Non Current Assets
Property, plant and equipment 71,577,664
Investment property 3,615,000
Investments in associates 2,804,298
Intangible assets -
77,996,962
Current Assets
Pre-stripped overburden 4,911,376
Inventory 17,665,738
Trade and other receivables 25,377,186
Financial assets at fair value through profit or 2,826
loss
Bank and cash balances 1,249,983
49,207,109
Total assets 127,204,071
EQUITY AND LIABILITIES
Capital and Reserves
Share capital 44,448,750
Non distributable reserves 5,459,681
Retained earnings 2,589,521
52,497,952
Non current liabilities
Deferred income tax 16,421,931
Current liabilities
Borrowings 28,375,606
Trade and other payables 26,440,980
Provisions 2,512,306
Current income tax liability 955,296
58,284,188
Total equity and liabilities 127,204,071
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2009
2,009
CASH GENERATED FROM OPERATIONS USD
Operating profit 4,970,483
Adjustment for non-cash items:
- Profit from disposal of property, plant and equipment (41,134)
- Unrealised exchange gain (267,305)
- Unrealised exchange loss -
- Share of profit/loss in associate 425,831
- Bad debts written off 228,859
- Finance cost 383,975
- Depreciation 9,628,100
- Fair value adjustment on investment property -
- Fair value adjustment on financial assets at Fair (1,702)
value though Profit or loss
Operating cash flow before changes in working capital 15,327,106
Changes in working capital :
- Increase in inventory (13,022,211)
- Increase in pre-stripped overburden (4,911,376)
- Increase in loans receivables -
- Decrease in receivables 1,920,551
- Increase in provisions 1,247,172
- Increase in payables 3,667,912
Cash generated from operations 4,229,154
Finance cost (162,471)
Income tax paid -
Net cash generated from operating activities 4,066,683
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in investments -
Purchase of property, plant and equipment (3,499,436)
Proceeds from the sale of property, plant and equipment 41,134
Net cash flows from investing activities (3,458,302)
CASH FLOWS FROM FINANCING ACTIVITIES
Shares issued -
Increase in loans 600,000
Net cash flows from financing activities 600,000
Net increase in cash, cash equivalents and bank 1,208,381
overdrafts
Cash, cash equivalents and bank overdrafts at beginning 206,485
of the year
Exchange loss on bank balances (165,972)
Cash, cash equivalents and bank overdrafts at end of 1,248,894
year
Represented by 1,249,983
Bank and Cash Balance (1,089)
Bank overdraft 1,248,894
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2009
Share Non Retained Total
Capital Distributable Earnings USD
USD Reserves USD
USD
Total comprehensive 0 0 2,589,521 2,589,521
income for the year
Changes in Share 44,448,750 0 00 44,448,750
Capital
Change in functional 00 5,459,681 0 5,459,681
currency
Balance at 31 December 44,448,750 5,459,681 2,589,521 52,497,952
2009
CHAIRLMAN`S STATEMENT TO SHAREHOLDERS
It is my pleasure to present the audited company results for the financial
year ended 31 December 2009. This is the first time that the company is
reporting its performance in United States Dollars following the introduction
of the multicurrency system in February 2009.
OPERATING ENVIRONMENT
There was relative macro economic stability as a result of the dollarization
of the economy. The year was characterized by interest rate and inflation
rate stability. However, the fluctuations between the United States dollar
and the South African rand negatively affected the cost of imported spares.
The pricing of products was market determined and comparable to regional and
international commodity prices. There were also some liquidity challenges and
limited availability of foreign lines of credit.
The demand for coal and coke products in the domestic market was not as
anticipated because most sectors operated below capacity. However demand in
the export markets remained strong.
OPERATIONS
Production Statistics
Product 2009 2008
Tonnes Tonnes Tonnes
HPS coal 1 033 968 1 140 542
HCC/HIC coal 478 609 671 507
Coal Fines 185 723 134 937
Total Coal 1 698 300 1 946 986
Coke 43 383 111 748
TOTAL 1 741 683 2 058 734
The company operated all its three (3) mines namely the JKL, Chaba, and 3
Main Underground mines. The decrease in production was caused by the
persistent breakdowns of the existing aged plant and equipment. The dragline
was down for the first (3) three quarters of the year.
TRADING PERFORMANCE
Total coal and coke sales for the year at 1 709 952 tonnes ended marginally
lower than 1 722 801 tonnes achieved in 2008. Export sales stood at 138 062
tonnes against 251 575 tonnes for the previous year.
The Hwange Coking Coal (HCC) and Hwange Industrial Coal (HIC) sales amounted
to 429 213 tonnes and were slightly below the tonnage of 494 990 achieved the
previous year. A total of 185 726 tonnes of coal fines were sold during the
year locally and to export markets and this was 26% above the 147 228 tonnes
sold the previous year.
HPS coal supplies to Zimbabwe Power Company (ZPC)`s Hwange Power Station
amounted to 1 033 602 tonnes and is comparable to the 1 073 602 tonnes
delivered the previous year.
Coke sales, including breeze, amounted to 47 785 tonnes of which 80% was
exported and this was far less than the 154 529 tonnes sold the previous
year. The coke oven battery was out of production for the first three (3)
quarters of the year.
FINANCIAL RESULTS
The company complied with the International Financial Reporting Standard
(IFRS) in all material respects except for IAS 21 (The Effects of Foreign
Exchange Rates), IAS 29 (Financial Reporting in Hyper Inflationary Economies)
and IAS 1 (Presentation of Financial Statements). This was applicable to
all companies operating in Zimbabwe.
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 Zimbabwean dollar and there is no comparative information.
The company has, in all material respects, complied with the guidelines of
the Public Accountants and Auditors Board, the Zimbabwe Accounting Practices
Board and the Zimbabwe Stock Exchange.
The turnover for the year amounted to US$66.4 million and the gross profit
was US$23.3 million. The company realized an operating profit of US$6
million. The attributable profits for the year amounted to US$2.6 million.
The property, plant and equipment amounted to US$71.6 million. Share Capital
and reserves amounted to US$52 million.
Current assets amounted to US$49 million and included the trade receivables
of US$25 million mainly attributable to the company`s major customer Zimbabwe
Power Company.
The current liabilities of US$58.3 million comprised mainly of trade
creditors and borrowings.
DIVIDEND
The Board has resolved not to consider payment of a dividend in view of the
challenges facing the company and the need to recapitalize the business.
QUALITY, SAFETY, HEALTH AND ENVIRONMENT
The company went through the ISO 9001:2000 Quality Management System re
certification audit.
The company continued with its safety programmes aimed at an accident free
working environment. There was no fatality during the year. The company
experienced acid mine drainage from the closed old underground mine and
measures to manage the risk have been put in place.
The company`s health programmes effectively dealt with malaria. The awareness
campaigns enabled the company to manage the HIV and AIDS related diseases.
OUTLOOK
The country`s economy is projected to grow in 2010 and this is expected to
translate into increased domestic demand. The demand for both coal and coke
is expected to start improving towards midyear. The export market will remain
buoyant.
The company is currently negotiating recapitalization loans with development
financial institutions. This is expected to materialize during the year and
this will resolve most production bottlenecks.
DIRECTORATE
Mrs Priscah Mupfumira was appointed to the Board on 10 July 2009 and there
have been no other changes to the company`s Board of Directors.
APPRECIATION
I would like to thank the Board, management and staff for their endurance and
commitment that ensured that the company withstood most of the challenges
during the year.
I would also like to express my sincere gratitude to all the stakeholders for
their continued support to the company.
MR. T. SAVANHU
CHAIRMAN
Annual Report and Accounts
The annual report and accounts for the year ended 31 December 2009 will be
distributed to members on or before 31 May 2010 and the annual general
meeting will be held on Wednesday 30 June 2010.
By Order of the Board
T K Ncube
COMPANY SECRETARY
26 March 2010
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2009
1. ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these
financial statements have been consistently applied to all the previous years
unless otherwise as stated below.
2. BASIS OF PREPARATION
These financial statements have been prepared under the historical cost
convention and comply with International Financial Reporting Standards and
the requirements of the Companies Act (Chapter 24:03), with the exception of
International Accounting Standard (IAS) 1, "Presentation of Financial
Statements", (IAS) 21, "The Effects of Foreign Exchange Rates" and (IAS) 29,
"Financial Reporting in Hyperinflationary Economies" .
The Zimbabwe economy was recognised as hyperinflationary for financial
reporting purposes up to 31 January 2009. IAS 21 required that the company
restate its financial statements as at that date and for the month ended 31
January 2009 in accordance with IAS 29, before translating the financial
statements at the closing rate as at 31 January 2009, and to translate the
comparative financial information at the closing rate as at 31 December 2008.
Inflation indices required to prepare inflation adjusted financial statements
were last issued by the Central Statistics Office in August 2008 and the
existence of market distortions made the measurement of inflation by other
means difficult.
The company changed its functional and presentation currency from Zimbabwe
Dollars to United States Dollars with the effect from 1 January 2009
following the liberalisation of the exchange controls and the introduction of
multiple currencies as announced in both the Budget and Monetary Policy
statement of 29 January 2009. Accordingly the Zimbabwe Accounting and
Auditor`s Board, Zimbabwe Accounting Procedures Board, and the Zimbabwe Stock
Exchange jointly provided guidance to determine a foreign currency opening
statement of financial position on the date of change in functional currency.
Only those assets and liabilities that could either be settled or recovered
in foreign currency have been recorded as take on balances for the year ended
31 December 2009.
Professional judgement was also used in the preparation of these financial
results. The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the company`s
accounting policies.
3. COMPARATIVES
The Directors have not presented comparative information as required by IAS 1
(revised) "Presentation of Financial Statements" because they believe they
are misleading due to limitations in financial reporting.
4. SHARE CAPITAL
On 1 January 2009, the par value of the authorized and issued share capital
was denominated in Zimbabwe dollars. Issued share capital was therefore
carried at nil values. A shareholders` resolution was passed at the Annual
General Meeting, held on 26 June 2009, to convert the new par value of these
shares to United States Dollars. Subsequent to this resolution, the increase
in the nominal value of share capital was capitalised from the functional
change currency reserve.
Zimbabwe
31 March 2010
Sponsor
Sasfin Capital (A division of Sasfin Bank Limited)
Date: 31/03/2010 16:10:03 Produced by the JSE SENS Department.
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