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Hwange Colliery Company Limited (HCCL)

Oliver Kazunga, Senior Business Reporter
HWANGE Colliery Company Limited (HCCL)’s liability has narrowed by 77.2 percent to $77.2 million from $311 million, the firm’s financial results for the half year ended June 30, 2017 show.

The decline in liabilities is largely driven by the implementation of the firm’s turnaround strategy which is anchored on the scheme of arrangement, restructuring of the balance sheet and increasing production levels.

Although HCCL was still distressed, the coal producer marginally reduced its net loss to $24.6 million from $28.5 million as at June 30, 2016.

In a statement accompanying the financial results, HCCL chairman Mr Winston Chitando attributed the loss for period to some off items such as redundancy costs of $3.5 million relating to voluntary retrenchment.

“There is a provision of redundancy costs of $3.5 million relating to a voluntary retrenchment exercise where 222 employees participated. This retrenchment exercise will result in a reduction in the cost base in future periods,” he said.

Mr Chitando said as part of the turnaround strategy, HCCL obtained some treasury bills from the Government and the conversion of the bills to fund the turnaround initiatives amounted to a loss of $3.5 million.

During the period under review, he said, finance costs amounted to $7.2 million compared to $1.8 million last year while administrative costs were down 14 percent to $6.4 million.

“This increase is largely as a result of the $111.5 million treasury bills, which the company obtained.

“This finance cost will from the second half of the financial year and especially from 2018, be more than compensated by a significant increase in production volumes, sales revenue and gross trading profit position,” he said.

Once Zimbabwe’s largest coal miner, HCCL is showing signs of recovery and expects to post profits in the second half.

During the period under review, HCCL’s assets improved to $74.5 million from $61.4 million as at June 30, 2016 HCCL also pins its hopes on the $1 billion Zisco revival deal the Government has entered with R and F Company of China as well as the resuscitation of the National Railways of Zimbabwe.
Zisco was Hwange colliery’s biggest customer before the steel manufacturing company closed down in 2008 after it faced increased financial challenges.

The colliery’s performance of the last six months fell short of budgetary targets due to low production targets between January and April.

Mr Chitando said this was attributable to working capital constraints.

“Monthly production average was 94 216 tonnes compared to the budgeted monthly production of 175 425 tonnes.

“While the monthly production for the period January to April averaged 42 000 tonnes, a significant improvement in production was witnessed in May and June which recorded 170 000 and 230 000 tonnes respectively,” he said. — @okazunga