THE BUSINESS
FINANCIAL CAPITAL
This is the pool of available funds, which can be used in the achievement of the strategy
of Senwes, thereby creating value for all stakeholders and unlocking such value at a
suitable time. It includes debt, equity and cash gene rated by business units, as well as
investments. It is important for Senwes to invest funds allocated by shareholders and
financiers at the most optimal investment rates, in order to ensure share growth and
divi dend yield for shareholders, as well as interest and the required capi tal redemption
for financiers. Capital is allocated to each focus area in a balan ced manner in order to
ensure the most optimal outcome for all of the stakeholders.
KEY INPUTS 2020 2019
Capital expenditure to advance strategic projects R‘m 268 210
Increase/(decrease) in interest-bearing current loans R‘m 1 630 (148)
Opening shareholders' equity R‘bn 2,3 2,2
Loan facilities * R‘bn 5,2 4,6
Unutilised loan facilities * R‘bn 1,1 1,8
Market capitalisation R‘bn 2,0 2,0
*Including headroom for mergers and acquisitions
OUTCOMES 2020 2019
Earnings before interest and tax (EBIT) R‘m 532 478
Net cash flow generated by business units R‘m 994 139
Normalised headline earnings c/share 144,2 177,5
Dividends for the year c/share 60,0 60,0
Interest cover times 7,0 6,7
Increase in net asset value c/share 101,4 100,8
Own capital ratio % 34,8 39,0
Natural interest rate hedging:
Interest-earning assets R‘bn 5,2 4,2
Interest-bearing liabilities R‘bn 4,3 2,9
REASSURANCE IN RESPECT OF FINANCIAL CAPITAL
Unqualified external audit opinion;
An independent Audit Committee ensures integrity of controls and financial disclosure;
The Risk Committee's analysis of strategic and operational risks;
An Investment Committee supervises the investment philosophy and investment
management;
Internal Audit provides an opinion on the combined control environment; and
Commitments from financiers - additional funding allocation of R500m.
TRADE-OFFS IN OUR USE OF
FINANCIAL CAPITAL
Financial capital enables Senwes to grow the business in
a sustainable manner, with a positive impact on manufacturing,
human, intellectual, social and relationship, as
well as natural capital. Access to financial capital is critical
for our business. We need to decide how to allocate
the capital available to us on a continuous basis in order
to maximise value. Our capital deployment decisions are
critical to our mission of creating sustainable value
ACTIONS TO IMPROVE
OUTCOMES
Focused cost saving plans;
Margin management;
Optimal allocation of operating capital;
Focused cash flow management;
Focused balance sheet management and improved
working capital ratios;
Efficiency programmes;
Operational and geographical diversification
through business consolidations, such as the acquisition
of KLK, Grainovation and Falcon;
Re-evaluation of product offerings, such as the
reduction of product lines offered by Hinterland
Wholesale; and
Increased focus on the debtor’s book management.
Strategic objectives (p. 44 for the Senwes strategy)
Mitigation of risks (p. 82 for Senwes’ risk mitigation)
FUTURE
CHALLENGES
Credit, liquidity and market risk;
Weather and climate risk;
Market size and market share risk;
Political instability and economic climate risk;
Commodity price risk;
Transition and customer risk;
Diversification and agricultural industry risk;
Unique competitor risk;
Regulation and compliance requirements risk;
Urbanisation, scarcity and retention of skills risk;
Systems risk;
Theft and fraud risk;
Environmental, health and safety requirements risk;
and
Covid-19 group-wide measures to be implemented.
Material risks and opportunities p 83
SENWES INTEGRATED REPORT 2020
21