Sasol Integrated Report 2024 - Book - Page 53
INTRODUCTION
ABOUT SASOL
STRATEGIC OVERVIEW
BUSINESSES
ESG
REMUNERATION REPORT
DATA AND ASSURANCE / ADMINISTRATION
CHIEF FINANCIAL OFFICER’S STATEMENT continued
DISCIPLINED CAPITAL MANAGEMENT
Our capital allocation framework remains pivotal to our investment
decisions and the foundation of our financial strategy. The level of
cash generation and resultant net debt reduction anticipated when
we held our Capital Markets Day in 2021 has not materialised primarily
due to the significant change in the global economic landscape since
2021. The significant disconnect between headline earnings and cash
flow generation, alongside elevated leverage levels, has necessitated
a revision in our dividend approach. Under this new policy dividends
will be based on 30% of free cash flow and will be paid only when net
debt (excluding leases) is sustainably below US$4 billion. The Board
will maintain discretion to consider balance sheet flexibility, and
prevailing market conditions in declaring interim and final dividend
distributions. Further capital returns will be considered as part of
second order capital allocation including distributions such as special
dividends and share buy-backs.
reinstated over the long term. Unfortunately, given that we ended
the year marginally above the US$4 billion net debt threshold,
we did not declare a final dividend further to the interim dividend
of R2 per share.
We also continue to refine our approach to maintenance capital,
optimising spend while ensuring the safety and reliability of our
operations. Additionally, we are carefully balancing our “transform”
capital to enable our GHG roadmap in balancing our commitments
to sustainability, growth, and delivering value to our shareholders.
Our level of capital investment for “maintain and transform” is
expected to be R27 billion – R34 billion per annum range in 2024
real terms. This includes the investments in the mining coal
quality solution as well as peak environmental compliance spend.
Additionally, we have included approximately R1 billion towards
growth-focused projects, including those in our Zaffra Joint Venture.
It is imperative that focus and priority remains to strengthen
the balance sheet so that sustainable returns to shareholders is
UPDATED DIVIDEND POLICY LINKED TO FREE CASH FLOW GENERATION
1ST ORDER
ALLOCATION
Maintain capital
safe and reliable
operations
Transform capital
deliver greenhouse
gas (GHG) reduction
targets
R27 – 34bn per annum1
Selective growth
small high-return,
short payback
projects
Optimisation of maintenance capex ongoing
Balance transform capex in GHG roadmap
UPDATED
Net debt2 sustainably
