Senwes Integrated Report 2021

OVERVIEW THE BUSINESS STRATEGIC AND OPERATING CONTEXT CORPORATE GOVERNANCE FINANCIAL REVIEW

TRADE-OFFS IN OUR USE OF FINANCIAL CAPITAL

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 generated 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 dividend yield for shareholders , as well as interest and the
required capital redemption for financiers . Capital is allocated to each focus area in
a balanced manner to ensure the most optimal outcome for all the stakeholders .
KEY INPUTS		2021	2020
Capital expenditure to advance strategic projects	R ‘ m	188	268
Opening shareholders ' equity	R ‘ m	2 560	2 336
Market capitalisation	R ‘ m	2 079	1 989
Financing facilities *	R ‘ bn	5,7	5,2
Unutilised financing facilities *	R ‘ bn	1,3	1,1
* Including headroom for mergers and acquisitions .
OUTCOMES		2021	2020
Earnings before interest and tax ( EBIT )	R ' m	868	532
Cash from operating activities	R ' m	910	545
Normalised headline earnings	c / share	244,4	144,2
Dividends for the year	c / share	90,0	60,0
Interest cover	times	9,9	7,0
Increase in net asset value per share	c / share	214,0	101,4
Own capital ratio	%	31,9	34,8
Gearing ratio	%	138,3	143,7
Natural interest rate hedging : Interest-earning assets	R ' m	5 823	5 227
Interest-bearing liabilities	R ' m	4 630	4 347
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 ; and
� Internal Audit provides an opinion on the combined control environment .

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 continuously need to decide how to allocate the capi tal available to us , to maximise value . Our capital deployment decisions are critical to our mission of creating sustainable value .

ACTIONS TO IMPROVE OUTCOMES

� Focused cost saving / cost optimisation plans ;

� Margin management ;

� Optimal allocation of operating capital ;

� Focused cash flow management ;

� Focused balance sheet management and improved working capital ;

� Efficiency programmes ;

� Operational and geographical diversification and horizontal integration through business consolidations , such as the acquisition of Suidwes Holdings which occurred during the period under review ;

� Re-evaluation of product and services offerings ; and

� Increased focus on debtors ’ book management .

Strategic objectives ( p 50 for the Senwes strategy )

FUTURE CHALLENGES

� Environmental , health and safety requirements risk ;

� Political instability and economic climate risk ;

� Credit , liquidity and market risk ;

� Market size and market share risk ;

� Commodity price risk ;

� Weather and climate risk ;

� Information technology risk - systems and cyber ;

� Transition and customer risk ;

� Diversification and agricultural industry risk ;

� Unique competitor risk ;

� Urbanisation , scarcity and retention of skills risk ;

� Regulation and compliance requirement risk ; and

� Theft and fraud risk .

Material risks and opportunities p 86

RESILIENCE SENWES INTEGRATED REPORT 2021

Senwes Integrated Report 2021 | Page 28