Sasol passed its final dividend for the year to June 30, after its board revised the dividend policy so that it is paid from 30 of free cash-flow generated, provided that net debt is below 4 billion R71.2bn at year-end, the net debt was 4.1bn which exceeded the new debt trigger.
President and CEO of the group that provides employment for more than 500 000 people Simon Baloyi said they would, in the new financial year focus on improving free cash-flow generation and better returns for shareholders. The full-year dividend thus came to R2 per share, which was paid out at the interim stage.
Sanlam Private Wealth Investment analyst Christiaan Bothma said the decision to rebase the dividend to free cash flow was widely expected given the increasing disconnect between earnings and cash flows.
We think that prioritising debt reduction is the right decision at this stage of the cycle. It was encouraging to finally see some fruit from their cost-savings initiatives, with fixed costs increasing by only 1 year on year. These savings, along with better working capital management, resulted in much-improved cash generation for the second half, said Bothma.
Sasol reported a R27.3bn loss before interest and tax Lbit, compared to earnings before interest and tax Ebit of R21.5bn in the prior year. This sharp decline was mainly due to increased asset impairments, lower earnings before interest, tax, depreciation and amortisation, translation losses and reduced derivative gains.
