Hwange Colliery narrows net loss but liabilities exceed assets by $168mln

Hwange Colliery narrows net loss but liabilities exceed assets by $168mln

HARARE, April 4 (The Source) – Hwange Colliery Company narrowed its net loss by 22 percent to $89,9 million in the full-year to December from $115 million recorded in the previous year but the coal miner’s going concern status remains in question after liabilities outstripped assets by $168 million.

But revenue declined by 41 percent to $39,9 million from $67,5 million recorded in the preceding year, chiefly on poor sales.

Cost of sales declined by nearly a quarter to $77,7 million from $101 million,  but the company made a gross loss of $37,8 million in the period from $33,8 million previously.

Administrative costs stood at $47,6 million, 22 percent lower than the $60,6 million recorded previously.

Total annual coal production volumes decreased to 38 percent as the mining contractor’s contribution to production volumes declined to 58 percent in 2016 from 63 percent in the preceding year.

The Portuguese contractor, Mota-Engil has since resumed mining after quitting over the coal miner’s failure to pay a $50 million debt.

Mota-Engil signed a five- year contract worth $260 million with HCC  in January 2014 and was producing 200,000 tonnes of coal per month but quit last year after Hwange’s obligations rose to $50 million.

Total raw coal mined also declined by 37,78  percent to 969,153 tonnes relative to 1,557,567 tonnes in 2015.

Total assets value fell  23 percent from $239 million in the prior year to $183 million.

But the coal miner’s precarious financial position continued to worsen as total liabilities exceeded total assets by $168 million.

Total liabilities stood at $350 million versus total assets of $183 million.

Accumulated losses at $258,6 million continue to chew shareholder’s equity which is now at negative $167,7 million, reflecting the company’s financial distress.

The company said it engaged its creditors in a scheme of arrangement to implement a turnaround strategy while addressing creditors’ claims in a structured manner.

Chairman Winston Chitando said a firm of chartered accountants has been hired to do a verification process of creditor claims and balances and a deposit will be paid from company’s own funds.

“Creditor balances as at 31 January 2017 shall be paid a deposit and balances remaining shall be paid over time from cash generated from the Company’s own operations,” said Chitando in the financial results.

The scheme consists of the conversion of short-term debts to medium and long-term.