Anglo American Platinum (Amplats) will reward shareholders with a R15.7bn special dividend aimed at realigning the group’s capital structure ahead of its demerger from mining giant Anglo American.
After ending last year with a strong net cash position of R17.6bn, Amplats declared a special cash dividend of R59 a share, which shareholders will receive on top of the R3 a share — representing 40% of headline earnings — provided under its normal dividend policy.
The parting gift will provide a $600m (R11bn) windfall to parent company Anglo, which plans to spin off and separately list its 67% stake in the platinum group metals (PGM) miner as part of a larger, portfolio transformation.
The demerger is expected to be completed by June. To make the transition smoother, Anglo will retain a 19.9% stake in Amplats at first, which it will exit responsibly over time.
Amplats CEO Craig Miller said the special dividend was the most efficient way to realign the group’s capital structure ahead of the demerger and reflects Amplats’ confidence in its ongoing ability to generate cash flow.
The additional payout is intended to support a robust independent capital structure using the well-proven method of returning capital, the company said.
“We ended the year with cash on our balance sheet and we thought distributing this excess cash to our shareholders, including our majority shareholder, was the appropriate thing to do,” Amplats CFO Sayurie Naidoo said.
The strong cash reserves came courtesy of cost cuts, which caused the group to record R12bn in annual savings for the period under review, well above the R10bn target.
The restructuring of Amplats’ workforce early last year, in which the group retrenched 3,700 employees largely due to persistently low PGM prices, cost about R1.5bn, Naidoo said.
The group also reviewed all 620 of its contractors and exited about 400 of them, resulting in another R500m in savings, while R500m more was saved by putting the Mortimer smelter on care and maintenance in the first half of 2024, she said.
“We’re looking at another R4bn of cost savings off the 2024 base that we could achieve in 2025,” she said, as the full benefit of last year’s labour and contract reductions come through and operational efficiencies at the Mogalakwena operation generate further savings.
The group will maintain the same capital allocation framework this year that includes its balance sheet policy of maintaining leverage less than 1x net debt to earnings before interest, tax, depreciation and amortisation (ebitda).
This policy, with a robust opening capital structure, is intended to protect Amplats against “a range of possible PGM market scenarios and so absorb near term market volatility”, Miller said.
“We have had positive and extensive engagement with local and international lender banks, who have expressed strong interest in supporting the stand-alone business,” he said.
However, Amplats’ results for the year to end-December reflected the pressure imposed by low PGM prices and restructurings last year, with headline earnings at R8.4bn, down 40% from the previous year, while ebitda was down 19% at R19.8bn.
The drop was attributed primarily to a 13% decrease in rand PGM prices. The price of platinum remains suppressed, as does that of palladium and rhodium, with realised dollar prices falling 24% and 30% in the period.
The group’s recent operational and corporate restructuring, including its demerger and losses from associates, resulted in it reporting R3.5bn in nonrecurring costs, which further weighed on earnings. These challenges were offset by a slight improvement in refined PGM production, which rose 3% year on year, resulting in a 4% increase in sales volumes.
On top of a new capital structure, Miller said the demerger from Anglo would result in a name change for Amplats: “That process is under way, and we’ll be looking for shareholder support for that name when we convene the AGM in May.”
In the new chapter, Amplats will receive a secondary listing on the London Stock Exchange on top of its primary JSE listing that will help enhance its share trading liquidity and support its global shareholder base, the company said.
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