Wescoal managed to keep on the financial “ straight and narrow” in the six months to end-September making a net profit of R81m (previous comparable period – R11m profit) and holding operating costs down to R165m (R160m) while knocking R100m off its net debt.
Reporting interim results today interim CEO Robinson Ramaite said the group reduce its net debt to R905m (R1bn) through loan repayments which brought Wescoal’s gearing ratio down to 49% (55%).
He commented, “the group has met all four of its financial covenants during the period. The last breach to financial covenants was on March 31, 2020 which was due to late payment from a customer.
“The group continues to focus on aggressive debt reduction to free up excess cash in the future to reward shareholders. As at the date of reporting the group has fully caught up on the R76m that was deferred in the prior year due to the negative impact of COVID-19.”
Wescoal’s improved operating performance has eased the financial pressure on the group as shown by the improvement in the share price from around 80c in July to around 200c currently.
Six months ago Wescoal’s debt was more than double its market capitalisation whereas the latest net debt figure of R905m compares with a market cap of around R800m.
Ramaite said the group’s saleable volumes will be boosted as the Moabsvelden project continues to ramp up to steady state and he believed coal stockpiles built up during the first half of the financial year will will sustain sales volumes in the second half which are traditionally hit by the rainy season and the number of holidays.