JOHANNESBURG - ROYAL Bafokeng Platinum (RBPlats), which listed on the JSE 10 years ago as the first community company to do so, rewarded shareholders with a maiden R1.5 billion dividend during the 12 months ended December 2020 on the significant growth in its cash flows.
RBPlats, which operates the Bafokeng Rasimone Platinum Mine and Styldrift mines, declared a R5.75 a share dividend equating to R1.5bn as the group rode the wave of the strong platinum group metals (PGM) environment.
The dividend payout was 50 percent of free cash flow, given the strong cash flow generation in 2020, with R3bn of free cash flow before growth capex.
Speaking during the group’s virtual annual financial results presentation, chief executive Stephen Phiri said the dividend declaration was informed by the group’s capital allocation policy.
“What we looked at was the kind of cash that we have, and obviously how long we have been operating without a dividend to the shareholders. We have no immediate need to use that money internally and, therefore, we believe that the shareholders need to get the money back,” he said, adding that declaring the dividend did not inhibit the company’s performance.
“Following our policy of a minimum 10 percent dividend, we believe that given the sufficient cash in our hands we should return it to shareholders at 50 percent of free cash flow,” said Phiri.
Some of the financial highlights included a whopping 2 734.2 percent increase in headline earnings to R3.488bn, a 78.6 percent increase in revenue to R13.37bn due to a strong PGM basket price compared to R7.49bn in 2019.
Platinum contributed less at 26.7 percent towards revenue at operations, down from 38.4 percent a year earlier, while palladium and rhodium contributed 62.5 percent, up from 47.2 percent in 2019. The group also recorded a 278.4 percent increase in earnings before interest, taxes, depreciation, and amortisation to R6.64bn.
Anchor Capital’s investment analyst, Seleho Tsatsi, said the PGM sector would increasingly have cash returns to shareholders via either dividends and or buybacks given the strong price environment.
“The big question for not just RBPlats but the sector as a whole is what will it do with the significant free cash flow that it is generating? We believe capital allocation is now key to monitor in the sector,” Tsatsi said.
RBPlats lost 45 production days after the production halt to curb the spread of the Covid-19 pandemic and despite the days lost reported a 9.2 percent a year-on-year increase in tons hoisted, a 3.7 percent increase in tons milled and a 4.5percent increase in 4E metals in concentrate.
The business was impacted by unexpected variables, including Eskom load curtailments during the first and third quarters.
RBPlats was also impacted by the Anglo American Platinum force majeure declaration, which resulted in the temporary suspension of concentrate deliveries, and increased costs associated with managing the pandemic.
Royal Bafokeng’s share price closed 2.98 percent higher at at R104.76 on the JSE yesterday.
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