THE BUSINESS
HOW SENWES
CREATES VALUE USING
THE SIX CAPITALS
Senwes relies on various forms
of capital to achieve set targets
and goals. These capitals, as
identified by the International
Integrated Reporting Council
(IIRC), can be seen as inputs
to the company’s business
model and increase, decrease
or transform according to the
activities of the company.
These capitals form the basis
of Senwes’ value creation and
are not independent of one
another, even though certain
dependencies are relatively
small or indirect.
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 in order to ensure the most optimal
outcome.
FINANCIAL
HUMAN
INTELLECTUAL
KEY INPUTS
MANUFACTURING
NATURAL
Outcomes
Actions to
improve
outcomes
2018
Capital expenditure to advance strategic projects R’m 210,0 140,6
Additional funding from financiers R’m 147,5 411,7
Opening shareholders’ equity R’bn 2,2 2,0
Market capitalisation R’bn 2,0 2,0
Strategic objectives (p. 40 for the Senwes strategy)
Future
challenges
Reassurance
in respect of
capital
Trade-offs
in our use of
capital
2019 2018
Earnings before interest and tax (EBIT) R’m 610,5 654,6
Normalised headline earnings c/share 177,5 195,5
Dividends for the year c/share 60,0 54,0
Interest cover times 3,1 3,1
Growth in net asset value c/share 100,8 137,4
Own capital ratio % 39,0 35,5
REASSURANCE IN RESPECT OF FINANCIAL CAPITAL
Unqualified external audit opinion;
An independent Audit Committee ensures integrity of controls and financial dis-
closure;
The Risk Committee’s analysis of strategic and operational risks;
An Investment Committee supervises the investment philosophy and invest-
ment management; and
Internal Audit provides an opinion on the combined control environment.
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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 busi-
ness. We continually need to decide how to allo-
cate the capital available to us, in order to maxi-
mise value. Our capital deployment decisions are
critical to our mission of creating sustained value.
ACTIONS TO IMPROVE
OUTCOMES
SOCIAL AND
RELATIONSHIP
OUTCOMES
Key inputs
2019
TRADE-OFFS IN OUR USE OF
FINANCIAL CAPITAL
SENWES INTEGRATED REPORT 2019
SENWES INTEGRATED REPORT 2019
Mitigation of risks (p. 52 for Senwes' risk mitigation)
Focused cost saving plans;
Margin management;
Optimal allocation of operating capital;
Focused cash flow management; and
Focused balance sheet management and
improved working capital.
FUTURE CHALLENGES
[Material risks and opportunities p. 52]
Credit, liquidity and market risk;
Weather and climate risk;
Market size and market share risk;
Political instability and economic climate risk;
and
Commodity price risk.
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