The auditor general’s report for the financial years ended 31st December 2021 and 2022 has revealed that Mpulungu Harbour Corporation Limited (MHCL) Company’s profit reduced by 93% from over K4 million in 2021 to about K363 thousand in 2022.
Mpulungu Harbour Corporation Limited (MHCL), is a company wholly owned by the Industrial Development Corporation (IDC) operates Zambia’s only water-based Port. The Port opens up the country to a regional market made up of Eastern Democratic Republic of Congo, Burundi and Western Tanzania, extending further to Rwanda and South Sudan.
MHCL is in the business of facilitating cargo movement that is imported or exported through the Lake Tanganyika Transport Corridor. Various cargo such as cement, sugar, coal, other construction materials and frozen foods like chicken or fish transit through the Port.
According to the audit findings seen by the Zambian Business Times – ZBT, the reduction in profit was mainly attributable to a reduction in cargo volume passing through the Port from 231,000 metric tons in 2021 to 185,000 metric tons in 2022.
The auditor general’s reports also revealed that, MHCL failed to meet its targeted revenue in 2021 by over 1 million representing 2%.
The report further revealed that in 2022 the company’s situation worsened as the company failed to meet its budgeted targets by over 17 million representing 28%
“The company’s Profit reduced by 93% from K4, 935,431 in 2021 to K363, 419 in 2022. The reduction in profit was mainly attributable to reduction in cargo volume passing through the Port from 231,000 metric tons in 2021 to 185,000 metric tons in 2022,” the report revealed.
“MHCL projected to raise amounts totalling K68, 134,567 in 2021 and K62, 617,563 in 2022 through provision of various harbour and port facility services. However, a scrutiny of the financial statements and other financial documentation revealed that the company failed to meet its targeted revenue in 2021 by K1, 218,778 representing 2%. In 2022 the situation worsened as the company failed to meet its budgeted targets by K17, 483,326 representing 28%,” revealed the report.
The auditor general’s report findings also revealed that during the period from 1st January 2021 to 31st December 2022, MHCL also failed to meet its income budget of over 11 million.
The report further revealed that MHCL revenue decreased from K66.9 million in 2021 to K45.1 million in 2022.
“During the period from 1st January 2021 to 31st December 2022, the Corporation had a total income budget of K130, 752,130 out of which amounts totaling K119, 188,585 were realized resulting in a negative variance of K11, 563,545. Revenue decreased from K66.9 million in 2021 to K45.1 million in 2022; whereas other income increased from K3.2 million in 2021 to K3.8 million in 2022,” revealed the report.
The audit finding’s also revealed that MHCL’s turnover ratio declined from 1.6 in 2021 to 1.1 in 2022, indicating a reduced asset efficiency.
A company’s asset turnover ratio measures how profitably a company uses its assets to produce revenue. A higher ratio denotes an efficient use of assets while a lower ratio indicates poor efficiency.
“The asset turnover ratio declined from 1.6 in 2021 to 1.1 in 2022, indicating a reduced asset efficiency,” revealed the report.
