Hwange Colliery Company (HCC)’s delayed recapitalisation affected its profitability for the year ended December 2011, as sales volumes only increased by 1% from the previous year.
Company chairman Farai Mutamangira said, among other factors that militated against significantly increased production, was the persistent breakdown of the dragline, which is the major coal mining equipment.
“Production volumes, though higher than in the previous year, were affected by delays in the recapitalisation of the company operations which is long overdue,” said Mutangamira in the company’s audited financial statements.
“The major mining equipment, the dragline, had persistent breakdowns during the period under review.”
Mutamangira said the company sold a total of 2 531 620 combined tonnes of coal and coke, slightly up from the 2 510 943 tonnes sold in 2010. He said coke exports were affected by a decline in demand in both regional and international markets. Total revenue for the period under review was pegged at $107 895 986 from $98 926 994 the previous year. Gross profit was up $35 489 969 from $33 354 148. Operating profit stood at $4 130 800, which was much lower than $9 401 886 recorded in 2010.
Profit before tax was pegged at $4 495 093 from the previous year’s $10 679 412.
Profit for the year stood at $3 902 262, almost half of the previous year’s $6 231 723.
“The gross profit margin of 32% was slightly lower than the 34% for the comparative period last year. This was attributed to the sales mix,” Mutamangira said.
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The company wrote off Commonwealth Development Corporation and West gas pipeline loans amounting to $21 million.
Cash, cash equivalents and overdrafts amounted to $1,2 million, 86% above last year’s balance of $0,6million.
