JOHANNESBURG, August 20, 2018 /PRNewswire/ --
- Satisfactory operational performance across most of the value
chain
- EBITDA up 10% to R52
billion
- Core headline earnings per
share down 6% to R36,03
- Headline earnings per share
down 22% to R27,44
- Dividend per share of R12,90
(2,8x CHEPS)
- Lake Charles Chemicals Project is 88% complete and on
track
- Safety Recordable Case Rate (RCR), excluding illnesses,
improved to 0,27; regrettably four fatalities
- Invested R2 billion in skills and socio-economic development,
up 25%
- Implementation of Sasol Khanyisa Black ownership
transaction
- R39,5 billion direct and indirect taxes paid to South African
government
Sasol today released its annual financial results for the year
ended 30 June, 2018. Sasol delivered
a resilient set of results, underpinned by satisfactory sales and
production volumes, delivering a flat normalised real cash fixed
cost base and benefitting from much higher crude oil and product
margins in the second half of the financial year.
Our underlying cash flow performance was robust. Earnings before
interest, tax, depreciation and amortisation (EBITDA) increased by
10% to R52 billion when compared to the prior year. Earnings before
interest and tax (EBIT) declined to R17,7 billion from R31,7
billion in FY17. However, core headline earnings per share (CHEPS)
decreased by 6% to R36,03 compared to the prior period and Headline
Earnings Per Share (HEPS) decreased by 22% to R27,44.
The difference between CHEPS and EBITDA in the current year is
largely due to depreciation of approximately R16 billion and
employee share-based payment expenses of R1,5 billion due to the
marked improvement of the Sasol share price at the end of the
financial year. The share-based payment relating to our Sasol
Khanyisa Broad-Based Black Economic Empowerment (B-BBEE)
transaction of R3 billion is excluded from CHEPS and EBITDA as it
is considered to be a once-off and non-cash item.
A final gross cash dividend of South African 790 cents per ordinary share (30 June 2017 - 780
cents per ordinary share) has been declared for the year
ended 30 June, 2018.
"Our resilient 2018 performance was underpinned by higher sales
and production volumes, particularly in the second half of the
year. This was enabled by our continued focus on factors within our
control and higher global oil prices, resulting in improved product
prices and margins, notwithstanding continued exchange rate
volatility. Overall, our operational performance was satisfactory.
However unplanned Eskom electricity supply interruptions and two
internal outages at Secunda Synfuels Operations, negatively
impacted volumes. Enhancing our foundation businesses, a core
aspect of our value-based strategy, will be delivered through
ensuring safe and sustainable operations, robust asset management
strategies, continuous improvement and digitalisation, underscored
by disciplined capital allocation," said Joint President and Chief
Executive Officer, Bongani
Nqwababa.
"2019 will be a defining year for Sasol with the start-up of the
LCCP in the U.S., a catalyst for transforming our earnings profile.
Mozambique, our other key growth
area, remains central to our gas strategy where we are stepping up
efforts to secure long-term gas feedstock, while delivering on our
stakeholder commitments. Improving the flexibility of our balance
sheet, through increased cash flow and reduced gearing, and
managing an optimal capital structure will be a key focus ahead. We
remain confident in delivering on our strategy, which will realise
sustainable long-term value for our stakeholders," said Joint
President and Chief Executive Officer, Stephen Cornell.
Although Sasol delivered a strong business performance across
most of the value chain, Sasol's core headline earnings were
impacted by the following notable once-off and period close
items:
- Translation impact of closing exchange rate
- Mark-to-market valuation of hedges
- Implementation of Khanyisa B-BBEE transaction
- LCCP ramp-up depreciation
- Strike action at Mining and related costs
- Provision for tax litigation matters
Operational and cost performance
Sasol experienced some challenges with regards to our
operational performance during the year, largely due to planned and
unplanned production interruptions at Secunda Synfuels Operations
(SSO), Natref and Mining which impacted production and sales
volumes across the value chain. Despite these interruptions, we
delivered a stronger overall operational performance in the second
half of the year.
Our production run-rates during the fourth quarter of financial
year 2018, on an annual average basis, supports our internal
targeted run-rates. Sales volumes increased by 1% for our
Performance Chemicals business spurred by robust market demand
despite Eskom electricity supply interruptions. Base Chemicals
reported a 1% decrease in sales volumes mainly due to production
interruptions at SSO and a stock build for our high density
polyethylene joint venture in the U.S.
Excluding the impact of Eskom electricity supply interruptions,
sales volumes increased by 1%. Liquid fuels sales volumes were down
2% due to lower volumes from SSO and Natref and a challenging South
African retail liquid fuels market.
Operational highlights
The highlights of our operational performance can be summarised
as follows:
- Production volumes from SSO decreased by 3% to 7,6 million tons
mainly as a result of unplanned Eskom supply interruptions (1%) and
internal outages (2%) during the year. Our production run rates
achieved during May and June 2018,
supports full year production of approximately 7,8 million
tons.
- Production volumes at our Eurasian Operations increased by 3%
compared to the prior year largely due to stronger product demand
and increased plant availability.
- ORYX GTL delivered a strong production performance, with an
average utilisation rate of 95% exceeding our market guidance of
92%.
- Natref's production volumes were 9% lower due to planned
shutdowns and an unexpected electricity supply interruption at the
start of the financial period. The second half of the year however
yielded much improved production rates despite a planned shutdown
in quarter four. The increased volumes in the second half of 2018
partially offsets the lower production volumes recorded in the
first half of the year. The production run rate for quarter four
was 600m³/h resulting in a full year run rate of 536m³/h. This
compares to a run rate of 592m³/h in 2017.
- In terms of our cost performance, cash fixed costs were up 2%
in real terms in the first half of the year mainly as a result of
mentioned planned and unplanned production interruptions. In the
second half of the year, we increased our focus on improving our
cost efficiency and managed to keep our normalised cash fixed costs
for the year flat in real terms. Our cost management processes
remain robust to protect and improve our cost competitive position
and still position us in managing our cost base to within our
inflation target, while ensuring that we maintain safe and
sustainable operations.
Continuous improvement and digitalisation
Our low oil price Response Plan (RP) achieved cumulative cash
savings of R85,3 billion since January
2015, exceeding our target range of R65-75 billion. The RP,
which we have no formally close at the end of June 2018, has delivered sustainable annual cash
fixed cost savings of R3,5 billion. This is in addition to the R5,4
billion sustainable cost savings from our Business Performance
Enhancement Programme (BPEP). This brings our cumulative
sustainable cost savings to R8,9 billion. At the end of
June 2018, we formally closed the RP.
This proactive initiative enabled us to manage the balance sheet
through periods of oil price volatility, while maintaining our
investment grade and ability to fund our growth projects.
To ensure that we remain relevant and competitive and to reap
the benefits of a higher oil price, we have introduced a Continuous
Improvement (CI) programme. CI is building on the solid foundation
established by the BPEP and the RP, and is aimed at ensuring our
continued competitiveness at an oil price of US$40/bbl, while enhancing our offering to
markets across all the industries in which we compete.
Our medium-term target is to increase our Return on Invested
Capital (ROIC) for our foundation businesses by at least two
percentage points to 19% by 2022.
Value adding digitalisation improvements, process
simplification, selective core function repositioning and asset
performance reviews, are also being considered across all our
businesses globally as key enablers to achieving our CI
targets.
Cash and capital performance
Our net cash position decreased by 42% from R29,3 billion in
June 2017 to R17 billion at
30 June 2018, due to the funding of
the LCCP and investments to fund growth projects.
Loans raised during the year amounted to R25 billion, mainly for
the funding of our U.S. growth project. Short-term debt increases
relates to the Sasol Inzalo Public transaction unwinding in
September 2018.
Due to the funding of the LCCP, more than 80% of our debt is now
U.S. dollar denominated. Given the significantly weaker closing
exchange rate of R13,73 and the related translation loss of R4,8
billion arising on the valuation of the balance sheet at year end,
gearing increased to 43,2%, which is slightly below our internal
ceiling and market guidance. Included in net debt is R6,1 billion
of new finance leases mainly relating to Oxygen Train 17 in Secunda
and rail storage facilities at the LCCP.
We are actively reviewing our capital structure and funding plan
to ensure that we maintain an optimum solvency and liquidity
profile.
The unwinding of the Sasol Inzalo transaction has been
structured to ensure that our credit ratings are maintained at
investment grade and with the least amount of dilution to our
shareholders. The Sasol Limited Board approved that Sasol
repurchase the shares from Sasol Inzalo Public and settle the
outstanding debt of R7,4 billion and a cash top-up for value
realised of approximately R600 million in September 2018. This step will eliminate any
shareholder dilution as a result of the unwind of the Sasol Inzalo
B-BBEE structure.
We therefore expect our gearing to remain around peak levels of
40% to 44% in 2019 due the higher debt associated with the Sasol
Inzalo unwind. Accordingly, the Sasol Limited Board approved that
we manage the balance sheet to below our peak internal gearing
ceiling of 44% for the 2019 financial year.
Advancing projects to enable future
growth
We are making steady progress in delivering on our growth
pipeline:
Growing our footprint in North
America
- We are progressing with the Lake Charles Chemicals Project
(LCCP). Overall, the project is 88% complete with capital
expenditure amounting to US$9,8
billion. The project remains on track to start up the first
three manufacturing units by the end of December 2018. A significant milestone was
achieved when steam system went into commissioning earlier than
planned. The expected start-up date of the remainder of the
manufacturing units remains in the second half of the year. All
indications are that the cost of the project will remain within the
previous market guidance of US$11,13
billion.
We have updated the LCCP economics with the current view of
long-term market assumptions obtained from independent market
consultants. Due to the volatile market and differing views of
where ethane will be sourced from, the assumptions from the market
consultants differ significantly. In a scenario where ethane is
sourced from the Gulf area, the internal rate of return (IRR) is
8,0% - 8,5% and assumes an ethane price of between US$30-40 cents per
gallon. The alternative view which assumes that ethane is sourced
further away from the Gulf yields an IRR of 5,2% - 5,7% as the
ethane price is between US$60-65 cents per
gallon. In both of these scenarios the oil price is assumed to be
US$60-80/bbl and the EBITDA at steady
state ranges between US$1,2 billion
to US$1,3 billion. At spot prices,
using the last quarter of 2018 as a reference, the IRR is 8,5% -
8,9%. The spot WACC rate for the U.S. at 30
June 2018 was 7,68%.
Focusing on our asset base in Africa
- Our strategic R14 billion mine replacement programme is nearing
completion. Phase two of the Impumelelo colliery project is on
track to be completed within budget, late in the 2019 calendar
year. The Shondoni colliery underground infrastructure was
completed during May 2018 and the
colliery was officially inaugurated on 5
July 2018. The phases completed to date were completed
within budget and schedule.
- In Mozambique, the Production
Sharing Agreement (PSA) Phase 1 and Phase 2 drilling activities
have been completed. In total, 11 wells were drilled comprising
seven oil wells and four gas wells.
- In continuing to execute our strategy, we have concluded a
farm-in into the DE8 block in Gabon where we now hold 40% working interest
of that block. An exploration well drilled during the year was
unsuccessful and written off.
Unwinding of Sasol Inzalo B-BBEE
transaction
- As announced on 26 June 2018,
Sasol settled the Sasol Inzalo Groups debt of approximately R4,6
billion in June 2018 by utilising
existing cash to repurchase up to 9,5 million preferred ordinary
shares from Sasol Inzalo Groups Funding (Pty) Ltd at a 30 day VWAP
of R475,03, and funded the residual shortfall on the third party
debt of R59 million. The Sasol Inzalo Public debt becomes due in
September 2018. The Sasol Limited
Board has approved that Sasol settle the Sasol Inzalo Public debt
in the same manner as Sasol Inzalo Groups so as to limit dilution
on our shareholders, while maintaining investment grade ratings by
utilising existing cash or credit facilities to repurchase up to
16,1 million preferred ordinary shares from Sasol Inzalo Public
Funding (Pty) Ltd. Based on current share price and forecast debt
balances, there could be residual value, after settlement of third
party debt, which would be distributed to Sasol Inzalo
participants.
Profit outlook* - strong production performance and cost
reductions to continue
The current economic climate continues to remain highly volatile
and uncertain. While oil price and foreign exchange movements are
outside our control and may impact our results, our focus remains
firmly on managing factors within our control, including volume
growth, cost optimisation, effective capital allocation, focused
financial risk management and maintaining an investment grade
credit rating.
We expect an overall strong operational performance for 2019,
with:
- SSO volumes of between 7,6 to 7,7 million tons impacted by a
planned full shutdown in 2019;
- Liquid fuels sales of approximately 57 to 58 million barrels
due to a planned full shutdown at SSO;
- Base Chemicals sales volumes, excluding U.S. produced products,
to be 2% - 3% higher than the prior year, with U.S. dollar product
pricing expected to follow Brent crude oil prices. Our U.S. HDPE
plant will contribute for the full year, while LCCP is expected to
start contributing during the second half of the year.
- Performance Chemicals sales volumes to be 2% - 4% higher,
excluding the LCCP;
- Gas production volumes from the Petroleum Production Agreement
in Mozambique to be between 114
bscf to 118 bscf;
- We expect to achieve an average utilisation rate of 95% at ORYX
GTL in Qatar;
- Normalised cash fixed costs to remain in line within our
inflation assumption of 6%;
- Capital expenditure, including capital accruals, of R38 billion
for 2019 and R30 billion for 2020 as we progress with the execution
of our growth plan and strategy. Capital estimates may change as a
result of exchange rate volatility and other factors;
- Our balance sheet gearing to range between 40 - 44%;
- Rand/U.S. dollar exchange rate to range between R12,50 and
R13,50; and
- Average Brent crude oil prices to remain between US$65/bbl and US$75/bbl.
* The financial information contained in this business
performance outlook is the responsibility of the directors and in
accordance with standard practice, it is noted that this
information has not been audited and reported on by the company's
auditors.
Declaration of cash dividend number 78
A final gross cash dividend of South African 790 cents per share (30
June 2017 - 780 cents per
ordinary share) has been declared for the year ended 30 June 2018. The cash dividend is payable on the
ordinary shares and the Sasol BEE ordinary shares. The Board is
satisfied that the liquidity and solvency of the company, as well
as capital adequacy remaining after payment of the dividend is
sufficient to support the current operations for the ensuing year.
The dividend has been declared out of retained earnings (income
reserves). The South African dividend withholding tax rate is 20%.
At the declaration date, there are 623 081 550 ordinary, 16 085 199
preferred ordinary and 6 394 179 Sasol BEE ordinary shares in
issue. The net dividend amount payable to shareholders who are not
exempt from the dividend withholding tax, is 632 cents per share, while the dividend amount
payable to shareholders who are exempt from dividend withholding
tax is 790 cents per share.
The salient dates for holders of ordinary shares and Sasol BEE
ordinary shares are:
Declaration date Monday, 20 August 2018
Last day for trading to qualify for and participate in the final dividend
(cum dividend) Tuesday, 4 September 2018
Trading ex dividend commences Wednesday, 5 September 2018
Record date Friday, 7 September 2018
Dividend payment date
(electronic and certificated register) Monday, 10 September 2018
The salient dates for holders of our American Depository
Receipts are:[1]
Ex dividend on New York Stock Exchange (NYSE) Wednesday, 5 September 2018
Record date Friday, 7 September 2018
Approximate date for currency conversion Wednesday, 12 September 2018
Approximate dividend payment date Friday, 21 September 2018
[1] All dates approximate as the NYSE sets the record
date after receipt of the dividend declaration.
On Monday, 10 September 2018,
dividends due to certificated shareholders on the South African
registry will either be electronically transferred to shareholders'
bank accounts or, in the absence of suitable mandates, dividend
cheques will be posted to such shareholders. Shareholders who hold
dematerialised shares will have their accounts held by their CSDP
or broker credited on Monday, 10 September
2018. Share certificates may not be dematerialised
or rematerialised between 5 September
2018 and 7 September 2018,
both days inclusive.
Comprehensive additional information is available on our
website:
https://www.sasol.com/investor-centre/financial-reporting/annual-integrated-reporting-set
Sasol may, in this document, make certain statements that are
not historical facts and relate to analyses and other information
which are based on forecasts of future results and estimates of
amounts not yet determinable. These statements may also relate to
our future prospects, developments and business strategies.
Examples of such forward-looking statements include, but are not
limited to, statements regarding exchange rate fluctuations, volume
growth, increases in market share, total shareholder return,
executing our growth projects (including LCCP) oil and gas reserves
and cost reductions, including in connection with our Business
Performance Enhancement Programme, Response Plan, Continuous
Improvement programme and our business performance outlook. Words
such as "believe", "anticipate", "expect", "intend", "seek",
"will", "plan", "could", "may", "endeavour", "target", "forecast",
"project" and similar expressions are intended to identify such
forward-looking statements, but are not the exclusive means of
identifying such statements. By their very nature, forward-looking
statements involve inherent risks and uncertainties, both general
and specific, and there are risks that the predictions, forecasts,
projections and other forward-looking statements will not be
achieved. If one or more of these risks materialise, or should
underlying assumptions prove incorrect, our actual results may
differ materially from those anticipated. You should understand
that a number of important factors could cause actual results to
differ materially from the plans, objectives, expectations,
estimates and intentions expressed in such forward looking
statements. These factors are discussed more fully in our most
recent annual report on Form 20-F filed on 28 August 2017 and in other filings with the
United States Securities and Exchange Commission. The list of
factors discussed therein is not exhaustive; when relying on
forward-looking statements to make investment decisions, you should
carefully consider both these factors and other uncertainties and
events. Forward-looking statements apply only as of the date on
which they are made, and we do not undertake any obligation to
update or revise any of them, whether as a result of new
information, future events or otherwise.
About Sasol:
Sasol is a global integrated chemicals and energy company.
Through our talented people, we use selected technologies to safely
and sustainably source, produce and market chemical and energy
products competitively to create superior value for our customers,
shareholders and other stakeholders.
Media Contact:
Investor Relations:
Alex Anderson, Head of Group Media
Relations
Direct telephone: +27(0)10-344-6509; Mobile: +27(0)71-600-9605
alex.anderson@sasol.com
Matebello Motloung, Specialist: Media Relations
Direct telephone: +27(0)11-344-9256, Mobile: +27(0)82-773-9457
matebello.motloung@sasol.com
Moveshen Moodley, Chief Investor Relations Officer
Direct telephone: +27(0)10-344-8052
investor.relations@sasol.com
SOURCE Sasol Limited