Budget’s withholding tax rise may alter Sibanye’s dividend stance
JOHANNESBURG (miningweekly.com) – The change in the withholding tax position introduced in Wednesday's Budget may result in precious metals mining company Sibanye changing its stance on dividends.
Up to now, Sibanye’s first call on free cash after stay-in-business capital expenditure has been to pay dividends amounting to at least 35% of normalised earnings.
But now that the withholding tax rate has been raised from 15% to 20% in the latest Budget, that stance may need to be reconsidered, Sibanye CEO Neal Froneman said on Thursday, when the Johannesburg- and New York-listed company declared a final dividend of 60c a share, amounting to R560-million, taking the total dividend for the year ended December 31 to 145c a share, equivalent to 37% of normalised earnings.
The Chamber of Mines of South Africa described the increase in the dividend withholding tax rate from 15% to 20% as being a “potentially worrisome” feature of the Budget’s revenue-enhancing measures.
The chamber made the point that the combination of company tax and the dividend withholding tax raised the overall tax rate to above the Organisation for Economic Cooperation and Development average and warned of its potential negative impacts on investment.
“After yesterday, seeing a 33% increase in withholding tax means that we do need to rethink our dividend policy. I’m not sure that our shareholders are going to get the benefit of a dividend with a 20% holding tax.
“That’s something new. Let us reconsider it. We’ve had brief discussions on it and it may change our view,” Froneman said in response to Standard Bank Group Securities mining analyst Adrian Hammond.
Precious metals mining company Sibanye, which on Thursday reported record operating profit of R10.5-billion for the six months and year ended December 31, 2016, a 60% increase on the previous year, is currently also having to reconsider its capital expenditure allocations as a result of the strengthening South African rand.
With the final dividend of 60c a share, amounting to R560-million for the 12 months to December 31, Froneman noted that the company was providing an industry leading dividend yield of over 5% to shareholders.
Comments
Press Office
Announcements
What's On
Subscribe to improve your user experience...
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation