Management Discussion and Analysis

CAPITAL MANAGEMENT AND DIVIDEND POLICY
  Financial Year Ended 31 March
  2020(1) 2019
Gross debt (S$ million) 13,499 10,396
Net debt(2) (S$ million) 12,499 9,883
Net debt gearing ratio(3) (%) 31.8 24.9
Net debt to EBITDA and share of associates’ pre-tax profits (number of times) 2.0 1.6
Interest cover(4) (number of times) 13.8 16.2
Notes:
  • Includes the effects from adoption of SFRS(I) 16, Leases, from 1 April 2019 on a prospective basis.
  • Net debt is defined as gross debt adjusted for related hedging balances less cash and bank balances.
  • Net debt gearing ratio is defined as the ratio of net debt to net capitalisation. Net capitalisation is the aggregate of net debt, shareholders’ funds and non-controlling interests.
  • Interest cover refers to the ratio of EBITDA and share of associates’ pre-tax profits to net interest expense.

As at 31 March 2020, the Group’s net debt was S$12.5 billion, an increase of S$2.6 billion from a year ago. The increase was due mainly to the recognition of S$2.1 billion of lease liabilities under SFRS(I) 16 and participation in Airtel’s rights issue.

The Group has one of the strongest credit ratings among telecommunication companies in the Asia Pacific region and continues to maintain a healthy capital structure. Singtel is currently rated A1 by Moody’s and A by S&P Global Ratings.

For the financial year ended 31 March 2020, the total ordinary dividend payout, including the proposed final dividend, is 12.25 cents per share or 81% of underlying net profit. This is lower than the 17.5 cents paid last year, as the Board took the prudent decision to conserve financial headroom to cope with uncertainties in the current COVID-19 operating environment and the capacity to invest in 5G.

Given the uncertainty of the impact of the COVID-19 pandemic on economic activity and the Group’s business, the Group has not provided guidance for the next financial year ending 31 March 2021. The Group continues to review its financial outlook and shareholders’ returns. It will update the market when there are material developments or when there is greater clarity in the operating environment.