CAPITAL STRUCTURE TO SUPPORT THE ACCELERATED INVESTMENT PROGRAMME
During the year, and following the conclusion of the acquisition of Monash South Africa, which was still conditional at year-end, and taking into account the significant investment opportunities the group wishes to explore, new long-term funding agreements for facilities totalling R2.85 billion were entered into to replace the existing facilities of R1.6 billion. These increased facilities are expected to provide sufficient funding for the roll-out of the planned investment programme while still allowing for headroom against the covenants.
Net borrowings increased to R1.9 billion (2017: R1.6 billion) due to the funding required for capex and to settle the purchase consideration of acquisitions exceeding the net cash inflows from operating activities. The group remains well within its covenants at year-end, with net borrowings equating to approximately 2.0 times (2017: 2.0 times) EBITDA, while gearing increased to 60% (2017: 56%).
The group's inherently strong organic cash flow, which is expected to increase in line with earnings growth, together with the funding facilities in place, positions the group well to fund its future investment programme and enables it to consider significant additional growth opportunities.