Cash flow generation of the company improved in the first quarter of its 2021 financial year.
Wescoal Holdings’ cash flow generation strengthened in the first quarter of the 2021 financial year as outstanding debtors had settled. CFO Izak van der Walt says that the outlook for the next covenant test, which is held quarterly, is that the company will be “within limits”.
The group reported a 32.67 cents per share headline earnings loss for the 2020 financial year, down from a 17.5 cents per share profit in its 2019 financial year. Wescoal’s balance sheet also took a blow after R433 million in customer receipts went unpaid.
As of 31 March, the net debt of the company totalled R1.22 billion, a doubling year-on-year. This resulted in the net debt to earnings before EBITDA ratio rising to 3.4:1, breaching the 2.5:1 covenant required by Wescoal’s lenders, who have subsequently waived the covenant test.
Wescoal had also been affected by “unprecedented rainfall” of 343mm in December against a budget assumption of 100mm.This resulted in 15 days equivalent production losses at each of Wescoal’s operations.
The tail-end of the previous year, ended 31 March, was impacted by the hard lockdown imposed by the government as a response to Covid-19. The outcome was a cash outflow of R184 million from mining for the year.
However, there was a vast improvement in production performance in the fourth quarter in which a record 1.8 million tons of coal was produced.