By Alois Vinga
HWANGE Colliery Company Limited (HCCL) has recorded a profit of $3.5 million amid significant improvement in revenue generation after a prolonged period in a loss position triggered by poor management.
HCCL acting managing director, Charles Zinyemba, Thursday said the move to place the coal mining giant under administration is bearing results.
“Financial performance for the period ending June 30 2019, improved in comparison to the same period in the 2018 financial year. The company posted a profit of $3.5 million against a loss of $23 million recorded in 2018,” said Zinyemba.
During the period under review, the company’s revenue increased by 128% from $30.5 million for the year’s first half to $70 million.
The coal mining giant resumed open cast mining in March 2019 causing a 52% production decline.
In the same period, sales tonnage declined by 16 % while sales mix improved in the latter part of the year by 4.2%.
HCCL said the cost of sales increased by 16% to $36 million from $31 million for the prior year’s comparative period resulting in the company posting a gross profit of $34 million compared to a gross loss of $144,000 in the prior year.
Turning to the scheme of arrangement entered into with creditors in May 2017 in a bid to restructure short term debt into long term debt, Zinyemba said the scheme failed to meet a number of its objectives due to lack of capacity to fund the collection account to settle interest due to creditors.
As a result, the scheme’s obligations will now be undertaken by the administrator.
HCCL recent results signify an improvement from the 79% loss increases amounting to $78 million recorded during the period ended December 31, 2018.
HCCL is saddled with a US$160 million legacy debt, which includes what is owed to; employees in unpaid salaries (US$50 million), the Mining Pension Fund (US$25 million) and the Zimbabwe Revenue Authority (Zimra) (US$69, 1 million) among other liabilities.
The company is currently under reconstruction, in terms of Section 4 of the Reconstruction of State Indebted Insolvent Companies Act, a measure which allows State related companies affairs to be taken over by government in order to avoid closure due to mismanagement.