Coal miner Hwange narrows loss

HARARE - Troubled coal miner, Hwange Colliery Company Limited (HCCL), narrowed its half year losses to $28,4 million from $44,1 million recorded last year on the back of reduced administration costs and a string of other cost-containment measures implemented during the period.

HCCL chairman Winston Chitando yesterday said the group, which is due to retrench nearly a third of its

3 000 workforce, also adopted a leaner management structure in May as part of its cost containment.

“The operating loss was $25,9 million compared to an operating loss of $48 million for the comparative period last year,” he said.

“There was a notable decrease in administrative costs resultant from the cost-containment measures adopted by the company which saw finance costs at $1,8 million compared to $1,1 million,” he added.

Chitando noted that the cost of servicing the coal miner’s over $300 million legacy debts continued to strain cash flows presenting working capital challenges.

“Following the adoption of a leaner management structure . . . board fees and executive management, middle level management and low level management salaries were reduced by

50 percent, 25 percent and 20 percent respectively for the six-month period.

“The company expects to extend the reduction of salaries for another six months from September 2016,” he said.

In the six-month period, total non-current assets were down five percent to $163,2 million from $172,2 million.

“Performance over the last six months fell short of budgetary targets due to low production levels that were attributable to working capital constraints with the monthly production average at 113 862 tonnes compared to the budgeted 340 000 tonnes,” he said.

Total sales tonnage was 585 689 against a budget of 1,7 million and an actual of 842 871 for the same period last year while coal sales decreased by 35 percent to 211 858 tonnes 326 075.

The Zimbabwe and Johannesburg-listed coal miner is consummating a scheme of arrangement with its creditors in order to present a structured plan for liquidating amounts owed to its various creditors, after a High Court-granted leave.

“The scheme is due to be finalised with the company’s creditors in the last quarter of this financial year. It is predicted the scheme will ensure that there is a structured plan for paying the company’s debts,” the HCCL boss said.

HCCL expects the scheme to unlock potential capital avenues and has anchored its outlook on the successful implementation of a mutually beneficial scheme.

At the moment, the miner is working on securing two working capital facilities.

“A prepayment from one of the company’s major customers through a local bank amounting to $7,5 million for working capital and a working capital facility with a bank amounting to $3,5 million,” Chitando added.

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