Debt-ridden Hwange Colliery Company Limited (HCCL) which recorded 64 percent net loss during the first quarter of 2020, is slowly returning to profitability with the coal miner’s latest financial results showing an after-tax profit of ZWL$577 million.
The financially-troubled company, which was placed under administration in terms of the Reconstruction of State-Indebted Companies Act [Chapter 24:27] on 26 October 2018 had its listing on the Zimbabwe Stock Exchange subsequently suspended on 2 November the same year.
“On an inflation-adjusted basis, the performance improved from a gross profit of ZWL$354 million and a net loss of ZWL$ 2.3 billion to a gross profit of ZWL$ 560 million and after tax profit of ZWL 577 million, which is pleasing,” said the company’s administrator, Bekithemba Moyo, in a statement accompanying HCCL financial results for six months ended June 30, 2020.
“On a historic cost basis, the company’s performance improved from a gross profit of ZWL$ 34 million for the same period in 2019 to a gross profit of ZWL 357 million for the half year under review. It is interesting to note that prior to the company being placed under administration, it was making gross losses for a sustained period. The company however had a net loss position of ZWL 992 million for the period under review compared to the net profit of ZWL$ 3.5 million for the same period in 2019 due to an exchange loss of ZWL$1 billion on legacy foreign creditors. Total legacy foreign creditors currently stand at USD 20 million and therefore this problem will persist until these have been fully settled.”
Moyo said the revenue increased by 28 percent from ZWL$ 827 million in 2019 to ZWL 1 billion for the half year under review on an inflation adjusted basis adding on historical basis it increased by 916 percent from ZWL$ 70 million to ZWL$709 million.
“This was largely due to a combination of an increase in high value coking coal sales as well as frequent adjustments to product prices in line with changes to the interbank rates,” he explained.
The administrator further said a lot of work had gone into stabilisation of the operations of the business but due to the current status of the company, it has been challenging to obtain both working capital and long term financing for the business.
“It is however pleasing to note that as the company’s fortunes continue to improve a lot of funders are now interested in extending lines of credit to the business,” he said.
“As a result we are confident that the operations will stabilize within the next 6 to 12 months. Our immediate target is to consistently produce at least 200,000 tonnes a month by the end of the first quarter next year. Plans are currently underway to settle all local currency-denominated legacy creditors, save for government within the next six months.”
