Time for government to bow out of Hwange Colliery

Hwange Colliery Company’s financial results over the last five years make for sorry reading. On Monday, the coal miner reported a $28 million net loss for the six-month period to June 30.

This has become a familiar script for the miner, which has become a by-word for corporate inefficiency.

In 2013 the company reported a 31.39 percent drop in revenue to $71.54 million from $104.28 million recorded for the full year 2012. That year, it reported a net loss of $30.68 million from after-tax profit of $3.13 million in 2012.

For 2014, revenue increased to $83.92 million but it reported a net loss of $37.86 million. Revenue plummeted to $67.58 million as the miner reported a loss of $155.06 million in 2015.

Sales of Hwange’s major products coal and coke dropped from 1.8 million tonnes in 2012 to 1.5 million tonnes in 2015 and 108 408 tonnes to 53 874 tonnes recorded in 2015, respectively. Subdued commodity prices also contributed to the fall in revenue.

Finance costs have also been rising since 2014 as the company continues to finance its operations with borrowings. The finance costs increased by 8 percent to $3.7 million in 2014 and 50 percent in last year to $5.54 million.

The increase in the finance costs was attributed to the increase in the company’s borrowings, which rose from $10.8 million in 2014 to $29.8 million in 2015. Trade and other payables shot up from $85.45 million reported for the full year 2012 to $241.5 million in 2015.

The company’s persistent losses have chewed shareholder value, as reflected by a decline in total equity since 2013. Total equity dropped from $106.62 million recorded in 2012 to a negative $77.83 million in 2015.

In the half-year results released on Monday, the company reported a negative $106.32 million compared to a negative $6.88 million recorded in the same period last year.

As a result of accumulated losses, the company has failed to honour its obligations and the company has so far lost litigation cases amounting to $44.9 million.

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