Financial capital

The funds generated by our operations and borrowings raised from financial institutions constitute our financial capital inputs. These funds are used to run our business and to finance both expansion and replacement capital expenditure. They are also used to pay interest on borrowed money and, where appropriate, to distribute dividends to our shareholders. Our financial capital is reinvested in all the other capitals in a considered manner to ensure the sustainability of our business.

The targeted return on capital is an important consideration when making investment decisions.



Inputs
2016 2015
Market capitalisation R billion 13.4 18.1
Total equity R billion 9.4 9.2
Capital investment R billion 1.4 2.2
Net interest-bearing debt R billion 4.6 6.6
Net interest incurred R billion 485.5 279.0
Outcomes
2016 2015
Operating profit* R billion 2.2   1.7  
Cash generated from operations R billion 2.8   1.7  
Net borrowings to shareholders’ equity (gearing) % 49.0   71.8  
Headline earnings per share* cents 107.6   208.2  
Earnings attributable to shareholders R billion 1.6   1.0  
Dividends paid to shareholders R billion 576** 946  
Return on net assets* % 11.2   10.7  
Employment costs* R billion 3.1   2.8  
Interest paid to providers of capital R billion 521   376  
Earnings per share* cents 254.5   228.3  
Net cash generated/(utilised) R billion 1.8   (0.1)
* Continuing operations
** Final dividend for 2015

How we achieved our outcomes
  • Concluded R1.7 billion sale and leaseback of properties
  • Achieved the benefits of our buy better, make better, sell better strategic imperative
  • Realised the returns expected from capital investment projects
  • Increased our focus on working capital management
  • Tightly controlled the capital investment programme
  • Implemented new focused cash management system
  • Strictly monitored liquidity issues in Rest of Africa

Balance sheet optimisation
  • Released cash of approximately R487.8 million from inventories
  • Restructured loan covenants
  • Restructured R2 billion short-term debt to long-term debt


Trade-offs in our use of financial capital

Our financial capital benefits from the installation of modern equipment but this has been at the expense of jobs which negatively impacts our human capital. The suspension of the 2016 dividend has assisted in deleveraging the balance sheet and is consistent with the group’s strategy to conserve cash.